-----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, OGyOCZ9pZ88+zn0kFuMAbZhyO92xPKtKVLrRebpx27kcyBNqwn1OUQAVW+FVVD2o M+XoynWZz88avGi28gFuAQ== 0000950135-96-003900.txt : 19960906 0000950135-96-003900.hdr.sgml : 19960906 ACCESSION NUMBER: 0000950135-96-003900 CONFORMED SUBMISSION TYPE: S-1/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19960904 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TRANSKARYOTIC THERAPIES INC CENTRAL INDEX KEY: 0000885259 STANDARD INDUSTRIAL CLASSIFICATION: BIOLOGICAL PRODUCTS (NO DIAGNOSTIC SUBSTANCES) [2836] IRS NUMBER: 043027191 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-10845 FILM NUMBER: 96625743 BUSINESS ADDRESS: STREET 1: 195 ALBANY STREET CITY: CAMBRIDGE STATE: MA ZIP: 02138 BUSINESS PHONE: 6173490200 S-1/A 1 TRANSKARYOTIC THERAPIES, INC. AMEND. NO. 2 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 4, 1996 REGISTRATION NO. 333-10845 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ AMENDMENT NO. 2 TO FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ TRANSKARYOTIC THERAPIES, INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) DELAWARE 2836 04-3027191 (State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer of incorporation or organization) Classification Code Number) Identification Number)
195 ALBANY STREET CAMBRIDGE, MASSACHUSETTS 02139 (617) 349-0200 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) RICHARD F SELDEN PRESIDENT AND CHIEF EXECUTIVE OFFICER TRANSKARYOTIC THERAPIES, INC. 195 ALBANY STREET CAMBRIDGE, MASSACHUSETTS 02139 (617) 349-0200 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------------ COPIES TO: PETER WIRTH, ESQ. BRUCE K. DALLAS, ESQ. PALMER & DODGE LLP DAVIS POLK & WARDWELL One Beacon Street 450 Lexington Avenue Boston, Massachusetts 02108 New York, New York 10017 (617) 573-0100 (212) 450-4000
------------------------ APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. ------------------------ If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. / / If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. / / If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. / / ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 EXPLANATORY NOTE This Amendment No. 2 to the Form S-1 Registration Statement is a Part II filing solely to file exhibits and make related technical changes. Accordingly, a preliminary prospectus has been omitted. 3 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a) The following exhibits are filed herewith: 1.1* -- Form of Underwriting Agreement. 3.1* -- Amended and Restated Certificate of Incorporation of the Registrant. 3.2* -- Form of Amended and Restated Certificate of Incorporation of the Registrant. 3.3* -- By-Laws of the Registrant. 3.4* -- Form of Amended and Restated By-Laws of the Registrant. 4.1 -- Specimen certificate for shares of Common Stock of the Registrant. 5.1* -- Opinion of Palmer & Dodge LLP as to legality of the shares being registered. 9.1* -- Amended and Restated Voting Rights Agreement, dated November 3, 1993 and amended on May 18, 1994, March 1, 1995, October 26, 1995, July 10, 1996 and August 7, 1996, by and among the Registrant and certain holders of the Registrant's Preferred Stock named therein. 10.1* -- Stock Purchase Agreement, dated July 1988, by and between Warburg, Pincus Capital Company, L.P. ("Warburg") and the Registrant. 10.2* -- Stockholders' Agreement, dated September 16, 1988, by and among Warburg, certain individual investors and the Registrant. 10.3* -- Class B Preferred Stock Purchase Agreement, dated February 14, 1992 and amended on April 20, 1993, by and among certain Purchasers and the Registrant. 10.4* -- Class B Preferred Stock Purchase Agreement, dated April 20, 1993, by and among certain Purchasers and the Registrant. 10.5* -- Class C Preferred Stock and Warrant Purchase Agreement, dated November 3, 1993, by and among the Registrant and certain Purchasers named therein. 10.6* -- Class D Preferred Stock Purchase Agreement, dated May 18, 1994, by and among the Registrant and certain Purchasers named therein. 10.7* -- Class E Preferred Stock Purchase Agreement, dated March 1, 1995, by and among the Registrant and certain Purchasers named therein. 10.8* -- Class F Preferred Stock Purchase Agreement, dated October 26, 1995, by and among the Registrant and certain Purchasers named therein. 10.9* -- Class G Preferred Stock Purchase Agreement, dated July 10, 1996, by and among the Registrant and certain Purchasers named therein. 10.10* -- Supplemental Class G Preferred Stock Purchase Agreement, dated August 7, 1996, by and among the Registrant and certain Purchasers named therein. 10.11* -- Amended and Restated Registration Rights Agreement, dated November 3, 1993 and amended on May 13, 1994, March 1, 1995, October 26, 1995, July 10, 1996 and August 7, 1996, by and among the Registrant and certain holders of the Registrant's Preferred Stock named therein. 10.12* -- Lease Agreement, dated January 1, 1994, by and between the Trust under the Will of Harry F. Stimpson for office space at 195 Albany Street, Cambridge, Massachusetts. 10.13* -- Sublease Agreement, dated April 7, 1992, by and between the Massachusetts Institute of Technology and the Registrant, for office space located at 185 Albany Street, Cambridge, Massachusetts. 10.14* -- 1993 Non-Employee Directors' Stock Option Plan. 10.15* -- 1993 Long-Term Incentive Plan. 10.16* -- Form of Letter Agreement re: Confidentiality, Inventions and Non-Disclosure. 10.17* -- Form of Letter Agreement re: Restricted Stock. 10.18* -- Form of Scientific Advisor Agreement.
II-1 4 10.19* -- Amended and Restated Promissory Note, dated June 16, 1993, issued by the Registrant to Dr. Richard F Selden, in the original principal amount of $125,000. 10.20* -- Amended and Restated Promissory Note, dated June 16, 1993, issued by the Registrant to Dr. Douglas A. Treco, in the original principal amount of $60,000. 10.21* -- Amended and Restated Promissory Note, dated April 21, 1995, issued by the Registrant to Dr. Christoph M. Adams, in the original principal amount of $15,000. 10.22* -- Amended and Restated Promissory Note, dated May 5, 1995, issued by the Registrant to Dr. Christoph M. Adams, in the original principal amount of $20,000. 10.23* -- Employment Agreement, dated July 19, 1991, by and between Dr. Richard F Selden and the Registrant. 10.24* -- Pledge Agreement, dated May 14, 1991, by and between Dr. Richard F Selden and the Registrant. 10.25* -- Employment Agreement, dated July 26, 1991, by and between Dr. Douglas A. Treco and the Registrant. 10.26* -- Pledge Agreement, dated August 15, 1991, by and between Dr. Douglas A. Treco and the Registrant. 10.27* -- Employment Agreement, dated November 20, 1993, by and between Dr. Christoph M. Adams and the Registrant. 10.28* -- Pledge Agreement, dated April 21, 1995, by and between Dr. Christoph M. Adams and the Registrant. 10.29* -- Agreement, dated September 1, 1991, by and between Mr. William R. Miller and the Registrant. 10.30* -- Agreement, dated July 30, 1993, by and between Warburg and the Registrant. 10.31* -- Common Stock Purchase Warrant, dated September 12, 1991. 10.32+ -- Collaboration and License Agreement, dated July 22, 1993 and amended on May 30, 1996, by and between Genetics Institute, Inc. and the Registrant. 10.33+ -- Amended and Restated License Agreement, dated March 1, 1995, by and between Hoechst Marion Roussel, Inc. ("HMRI") and the Registrant. 10.34+ -- License Agreement, dated March 1, 1995, by and between HMRI and the Registrant. 11.1* -- Statement re: computation of earnings (loss) per share -- pro forma. 23.1* -- Consent of Palmer & Dodge LLP (included in Exhibit 5.1). 23.2* -- Consent of Hamilton, Brook, Smith & Reynolds, P.C. 23.3* -- Consent of Ernst & Young LLP. 24.1* -- Power of Attorney (included on the signature pages to this Registration Statement) 27* -- Financial Data Schedule
- --------------- * Previously filed. + Certain confidential material contained in the document has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. (b) Financial Statement Schedules All schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto. II-2 5 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cambridge, Commonwealth of Massachusetts, on September 4, 1996. TRANSKARYOTIC THERAPIES, INC. By: /s/ ANTHONY R. HALL ------------------------------------ Anthony R. Hall Vice President, Finance and Administration; Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment to the Registration Statement has been signed below by the following persons in the capacities indicated.
SIGNATURE TITLE DATE - --------------------------------------------- ---------------------------- ------------------ RICHARD F SELDEN* President, Chief Executive September 4, 1996 - --------------------------------------------- Officer, Treasurer and Richard F Selden Director (principal executive officer) /s/ ANTHONY R. HALL Vice President, Finance and September 4, 1996 - --------------------------------------------- Administration; Chief Anthony R. Hall Financial Officer (principal financial and accounting officer) WILLIAM R. MILLER* Director September 4, 1996 - --------------------------------------------- William R. Miller RODMAN W. MOORHEAD, III* Director September 4, 1996 - --------------------------------------------- Rodman W. Moorhead, III JAMES E. THOMAS* Director September 4, 1996 - --------------------------------------------- James E. Thomas *By: /s/ ANTHONY R. HALL - --------------------------------------------- Anthony R. Hall Attorney-in-fact
II-3 6 EXHIBIT INDEX
SEQUENTIALLY NUMBERED PAGE ------------ 1.1* -- Form of Underwriting Agreement. ....................................... 3.1* -- Amended and Restated Certificate of Incorporation of the Registrant. ........................................................... 3.2* -- Form of Amended and Restated Certificate of Incorporation of the Registrant. ........................................................... 3.3* -- By-Laws of the Registrant. ............................................ 3.4* -- Form of Amended and Restated By-Laws of the Registrant. ............... 4.1 -- Specimen certificate for shares of Common Stock of the Registrant. .... 5.1* -- Opinion of Palmer & Dodge LLP as to legality of the shares being registered. ........................................................... 9.1* -- Amended and Restated Voting Rights Agreement, dated November 3, 1993 and amended on May 18, 1994, March 1, 1995, October 26, 1995, July 10, 1996 and August 7, 1996, by and among the Registrant and certain holders of the Registrant's Preferred Stock named therein. ............ 10.1* -- Stock Purchase Agreement, dated July 1988, by and between Warburg, Pincus Capital Company, L.P. ("Warburg") and the Registrant. .......... 10.2* -- Stockholders' Agreement, dated September 16, 1988, by and among Warburg, certain individual investors and the Registrant. ............. 10.3* -- Class B Preferred Stock Purchase Agreement, dated February 14, 1992 and amended on April 20, 1993, by and among certain Purchasers and the Registrant. ........................................................... 10.4* -- Class B Preferred Stock Purchase Agreement, dated April 20, 1993, by and among certain Purchasers and the Registrant. ...................... 10.5* -- Class C Preferred Stock and Warrant Purchase Agreement, dated November 3, 1993, by and among the Registrant and certain Purchasers named therein. .............................................................. 10.6* -- Class D Preferred Stock Purchase Agreement, dated May 18, 1994, by and among the Registrant and certain Purchasers named therein. ............ 10.7* -- Class E Preferred Stock Purchase Agreement, dated March 1, 1995, by and among the Registrant and certain Purchasers named therein. ............ 10.8* -- Class F Preferred Stock Purchase Agreement, dated October 26, 1995, by and among the Registrant and certain Purchasers named therein. ........ 10.9* -- Class G Preferred Stock Purchase Agreement, dated July 10, 1996, by and among the Registrant and certain Purchasers named therein. ............ 10.10* -- Supplemental Class G Preferred Stock Purchase Agreement, dated August 7, 1996, by and among the Registrant and certain Purchasers named therein. .............................................................. 10.11* -- Amended and Restated Registration Rights Agreement, dated November 3, 1993 and amended on May 13, 1994, March 1, 1995, October 26, 1995, July 10, 1996 and August 7, 1996, by and among the Registrant and certain holders of the Registrant's Preferred Stock named therein. ............ 10.12* -- Lease Agreement, dated January 1, 1994, by and between the Trust under the Will of Harry F. Stimpson for office space at 195 Albany Street, Cambridge, Massachusetts. ............................................. 10.13* -- Sublease Agreement, dated April 7, 1992, by and between the Massachusetts Institute of Technology and the Registrant, for office space located at 185 Albany Street, Cambridge, Massachusetts. ......... 10.14* -- 1993 Non-Employee Directors' Stock Option Plan. ....................... 10.15* -- 1993 Long-Term Incentive Plan. ........................................ 10.16* -- Form of Letter Agreement re: Confidentiality, Inventions and Non-Disclosure. ....................................................... 10.17* -- Form of Letter Agreement re: Restricted Stock. ........................ 10.18* -- Form of Scientific Advisor Agreement. ................................. 10.19* -- Amended and Restated Promissory Note, dated June 16, 1993, issued by the Registrant to Dr. Richard F Selden, in the original principal amount of $125,000. ...................................................
7
SEQUENTIALLY NUMBERED PAGE ------------ 10.20* -- Amended and Restated Promissory Note, dated June 16, 1993, issued by the Registrant to Dr. Douglas A. Treco, in the original principal amount of $60,000. .................................................... 10.21* -- Amended and Restated Promissory Note, dated April 21, 1995, issued by the Registrant to Dr. Christoph M. Adams, in the original principal amount of $15,000. .................................................... 10.22* -- Amended and Restated Promissory Note, dated May 5, 1995, issued by the Registrant to Dr. Christoph M. Adams, in the original principal amount of $20,000. ........................................................... 10.23* -- Employment Agreement, dated July 19, 1991, by and between Dr. Richard F Selden and the Registrant. ............................................ 10.24* -- Pledge Agreement, dated May 14, 1991, by and between Dr. Richard F Selden and the Registrant. ............................................ 10.25* -- Employment Agreement, dated July 26, 1991, by and between Dr. Douglas A. Treco and the Registrant. .......................................... 10.26* -- Pledge Agreement, dated August 15, 1991, by and between Dr. Douglas A. Treco and the Registrant. ............................................. 10.27* -- Employment Agreement, dated November 20, 1993, by and between Dr. Christoph M. Adams and the Registrant. ................................ 10.28* -- Pledge Agreement, dated April 21, 1995, by and between Dr. Christoph M. Adams and the Registrant. ............................................. 10.29* -- Agreement, dated September 1, 1991, by and between Mr. William R. Miller and the Registrant. ............................................ 10.30* -- Agreement, dated July 30, 1993, by and between Warburg and the Registrant. ........................................................... 10.31* -- Common Stock Purchase Warrant, dated September 12, 1991. .............. 10.32+ -- Collaboration and License Agreement, dated July 22, 1993 and amended on May 30, 1996, by and between Genetics Institute, Inc. and the Registrant. ........................................................... 10.33+ -- Amended and Restated License Agreement, dated March 1, 1995, by and between Hoechst Marion Roussel, Inc. ("HMRI") and the Registrant. ..... 10.34+ -- License Agreement, dated March 1, 1995, by and between HMRI and the Registrant. ........................................................... 11.1* -- Statement re: computation of earnings (loss) per share -- pro forma. ................................................................ 23.1* -- Consent of Palmer & Dodge LLP (included in Exhibit 5.1). .............. 23.2* -- Consent of Hamilton, Brook, Smith & Reynolds, P.C. .................... 23.3* -- Consent of Ernst & Young LLP. ......................................... 24.1* -- Power of Attorney (included on the signature pages to this Registration Statement)............................................................. 27* -- Financial Data Schedule................................................
- --------------- * Previously filed + Certain confidential material contained in the document has been omitted and filed separately with the Securities and Exchange Commission pursuant to Rule 406 of the Securities Act of 1933, as amended. EX-4.1 2 SPECIMEN CERTIFICATE OF SHARES 1 EXHIBIT 4.1 TKT NUMBER SHARES TRANSKARYOTIC THERAPIES, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE THIS CERTIFICATE IS TRANSFERABLE IN BOSTON, MASSACHUSETTS AND NEW YORK, NEW YORK COMMON STOCK CUSIP 893735 10 0 THIS CERTIFIES THAT SEE REVERSE FOR CERTAIN DEFINITIONS SPECIMEN is the owner of fully-paid and non-assessable shares of the COMMON STOCK, $0.01 par value, of TRANSKARYOTIC THERAPIES, INC. transferable on the books of the Corporation by the holder hereof in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This certificate and the shares of Common Stock represented hereby are received and held subject to the laws of the State of Delaware and to the Restated Certificate of Incorporation and the By-Laws of the Corporation, all as from time to time amended, and the owner of this certificate by accepting the same expressly assents thereto. This Certificate is not valid unless countersigned by the Transfer Agent and registered by the Registrar. IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by the facsimile signatures of its duly authorized officers and a facsimile of its corporate seal to be hereunto affixed. Dated TRANSKARYOTIC THERAPIES, INC. [seal] PRESIDENT AND CHIEF EXECUTIVE OFFICER TREASURER COUNTERSIGNED AND REGISTERED THE FIRST NATIONAL BANK OF BOSTON TRANSFER AGENT AND REGISTRAR BY AUTHORIZED SIGNATURE 2 TRANSKARYOTIC THERAPIES, INC. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM -as tenants in common UNIF GIFT MIN ACT -____ Custodian TEN ENT -as tenants by the entirety (Cust) JT TEN -as joint tenants with right _____ under of survivorship and not as (Minor) tenants in common Uniform Gifts to Minors Act ------------- (State) Additional abbreviations may also be used though not on the above list. For value received, ________________________________________ hereby sell, assign and transfer unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE - --------------------------------------- - -------------------------------------------------------------------------------- PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Shares of the common stock represented by the within Certificate, and do hereby irrevocably constitute and appoint ________________________________________________________Attorney to transfer the said stock on the books of the within named Corporation with full power of substitution in the premises. Dated, ---------------------------------------- - ----------------------------------------------- NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. Signature(s) Guaranteed: - ------------------------------------------------ THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION, (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM) PURSUANT TO S.E.C. RULE 17Ad-15. EX-10.32 3 COLLABORATION AND LICENSE AGREEMENT 1 EXHIBIT 10.32 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS 7-22-93 COLLABORATION AND LICENSE AGREEMENT THIS COLLABORATION AND LICENSE AGREEMENT (together with the attached Schedules, the "Agreement") is made as of July 22, 1993 (the "Effective Date") by and between Genetics Institute, Inc., a Delaware corporation with a business address at 87 CambridgePark Drive, Cambridge, Massachusetts 02140 ("GI") and Transkaryotic Therapies, Inc., a Delaware corporation with a business address at 193 Albany Street, Cambridge, Massachusetts 02139 ("TKT"). 1. BACKGROUND. 1.1. FACTOR VIII. GI has developed and produced cDNA for full length and B-domain deleted recombinant human Factor VIII (the "Factor VIII Gene", more fully defined below). TKT desires to obtain a non-exclusive license from GI to use the Factor VIII Gene in its Research in the Licensed Field and to develop and commercialize Factor VIII Gene Therapy Products for distribution by TKT in the TKT Territory and by GI in the GI Territory (all capitalized terms are defined below). 1.2. AGREEMENT. GI is willing to grant TKT these rights on the terms and conditions set forth in this Agreement. 2. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below. 2.1. "AFFILIATE" means any corporation, company, partnership, joint venture and/or firm which controls, is controlled by or is under common control with a Party. For purposes of this Section 2.1, "control" means (a) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares entitled to vote for the election of directors; and (b) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the 2 Page 2 of 37 power to direct the management and policies of such noncorporate entities. Notwithstanding this definition, American Home Products Corporation shall be deemed to be an Affiliate of GI for purposes of this Agreement. 2.2. "CONFIDENTIAL INFORMATION" includes, without limitation, any scientific, technical, trade or business information disclosed by one party to the other which is treated by the party providing such information as confidential or proprietary, whether or not such information is labelled or identified as "Confidential". "Confidential Information" does not include information which (a) was known to the receiving party at the time it was disclosed, other than by previous disclosure by the disclosing party, as evidenced by written records at the time of disclosure; (b) is at the time of disclosure or later becomes publicly known under circumstances involving no breach of this Agreement; (c) is lawfully and in good faith made available to the receiving party by a third party who did not derive it from the disclosing party and who imposes no obligation of confidence on the receiving party; or (d) is developed by the receiving party independent of any disclosure by the disclosing party. 2.3. "CORE CLINICAL TRIALS" means the human clinical trials which generate data submitted by a Party in a PLA and which serve as the basis for (a) initial regulatory approval of the Factor VIII Gene Therapy Products by (i) the FDA in the United States or (ii) the Health Protection Bureau in Canada, or (b) initial recommendation for approval of the Factor VIII Gene Therapy Products from the CPMP in the European Community. Core Clinical Trials do not include any Phase IV or post-marketing clinical trials, which will be separately conducted and funded by the Parties, as set forth in Section 6.5 below; provided, however, if the FDA, the Health Protection Bureau or the CPMP require post-marketing surveillance and/or trials as a precondition to initial regulatory approval, Core Clinical Trials will include such post-marketing surveillance and/or trials. 2.4. "CPMP" means either (a) the Committee for Proprietary Medicinal Products of the European Community; (b) its 3 Page 3 of 37 procedures for clinical testing, registration, and approval of the Factor VIII Gene Therapy Products; or (c) the marketing authorization applications as per such procedures; as the case may be in the context used in a particular section of the Agreement. 2.5. "DEVELOPMENTS" include, without limitation, ideas, concepts, discoveries, inventions, developments, patents and patent rights, know-how, trade secrets, techniques, methodologies, modifications, innovations, improvements, writings, documentation, data and rights (whether or not protectible under state, federal, or foreign patent, trademark, copyright or similar laws) that are conceived, discovered, invented, developed, created, made or reduced to practice by or on behalf of the Parties in conducting the Research and clinical trials for, and in commercializing, the Factor VIII Gene Therapy Products during the Term. 2.6. "DIRECT MANUFACTURING COST" means (a) costs directly attributable to manufacturing, quality assurance and quality control related to a unit of product (i.e., those costs which vary with production), including, but not limited to, direct labor and benefit expenses for manufacturing, and consumable bulk and other production materials, as determined in accordance with generally accepted cost accounting practices in the country of manufacture, plus (b) fixed manufacturing overhead costs allocable to the product based on the actual percentage utilization (including start-up and shut-down time) of the capacity of the manufacturing facility, including, but not limited to, direct benefit and labor expenses for technical services and support services, depreciation, maintenance and repairs and insurance costs associated with such utilization of the manufacturing facility, as determined in accordance with generally accepted cost accounting practices in the country of manufacture. Without limiting the generality of the foregoing, Direct Manufacturing Cost shall be deemed to include (x) the full cost associated with quality control samples, retention samples, manufacturing losses and production rejects and (y) payments (including, without limitation, royalties, option fees or license fees) made to one or more third parties to obtain a license or similar right in the absence of which manufacture could not be legally undertaken. 4 Page 4 of 37 2.7. "DISTRIBUTOR" means a third party which is not an Affiliate or Sublicensee of a Party and which is a distributor, wholesaler or other entity purchasing Factor VIII Gene Therapy Products from a Party or an Affiliate or Sublicensee for resale. 2.8. "FACTOR VIII" means the protein product expressed from the Factor VIII Gene. 2.9. "FACTOR VIII GENE" means the DNA sequences covered by any claim in U.S. Patents 4,757,006 and 4,868,112, together with any and all muteins, allelic variations, recombinant analogues, corresponding RNA and other variants thereof or therefrom, whether made by GI or TKT. 2.10. "FACTOR VIII GENE THERAPY PRODUCTS" means any product developed by or on behalf of TKT which incorporates or utilizes the Licensed Rights in the Licensed Field, whether such Licensed Rights are used in whole or in part, or are used as a component part, of the Factor VIII Gene Therapy Products, or are used in conjunction with such Factor VIII Gene Therapy Products. 2.11. "FACTOR VIII LICENSE" means the license granted by GI to TKT in Section 3.1 below. 2.12. "FACTOR VIII LICENSE FEE" means the license fee set forth in Section 3.4 below. 2.13. "FDA" means the United States Food and Drug Administration. 2.14. "GENE THERAPY FIELD" means the genetic modification of human somatic cells by the introduction of exogenous DNA or RNA into those somatic cells for the purpose of expressing protein in vivo for the treatment or prevention of disease or genetic defect. 2.15. "GI TERRITORY" means the countries, territories and possessions listed in Schedule 2.15 to this Agreement. 2.16. "GMP" means the then-current Good Manufacturing Practice regulations of the FDA as described in the United States Code of Federal Regulations or any successor regulations and any similar or equivalent regulations in the European Community or Japan. 5 Page 5 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 2.17. "IND" means an Investigational New Drug application or its equivalent for initiating clinical trials in the United States or any corresponding foreign application, registration, or certification. 2.18. "LICENSED FIELD" means the specific area of the Gene Therapy Field involving treatment for hemophilia A by insertion of the Factor VIII Gene into human somatic cells by the following technologies: ************************************************* *********************************************************** or *********. Licensed Field does not include the *****************************. 2.19. "LICENSED RIGHTS" means the Factor VIII Gene, Factor VIII, the Licensed Patent Rights, the Licensed Technology, or any combination of the above. 2.20. "LICENSED PATENT RIGHTS" means the following patent rights: Full-length Gene US 4,757,006 B-domain Deleted Gene US 4,868,112 Licensed Patent Rights shall include any reissues, extensions (or other, governmental acts which effectively extend the period of exclusivity by the patent holder), substitutions, confirmations, registrations, revalidations, additions, continuations, continuations-in-part, divisions or foreign applications and counterparts of or to the foregoing patent rights. 2.21. "LICENSED TECHNOLOGY" means GI's information, data, trade secrets, processes, inventions, improvements and know-how related to the technology described in the Licensed Patents and any future information, patent rights, or know-how arising out of, and during the term of, the work undertaken by GI pursuant to this Agreement that relates solely, or is reasonably necessary, to the use of the Factor VIII Gene Therapy Products in the Licensed Field. 2.22. "MILES RIGHTS" means the non-exclusive patent license from GI to Miles, Inc. in the agreement dated as of December 19, 1988. 6 Page 6 of 37 2.23. "NET SALES" means the aggregate United States dollar equivalent of gross revenues derived by or payable to a Party, its Affiliates and Sublicensees from or on account of the sale or distribution of Factor VIII Gene Therapy Products to third parties, less (a) reasonable credits or allowances, if any, actually granted on account of price adjustments, recalls, rejection or return of items previously sold, (b) excises, sales taxes, value added taxes, consumption taxes, duties or other taxes imposed upon and paid with respect to such sales (excluding income or franchise taxes of any kind) and (c) separately itemized insurance and transportation costs incurred in shipping Factor VIII Gene Therapy Products to such third parties. No deduction shall be made for any item of cost incurred by a Party, its Affiliates or Sublicensees in preparing, manufacturing, shipping or selling Factor VIII Gene Therapy Products except as permitted pursuant to clauses (a), (b) and (c) of the foregoing sentence. Net Sales shall not include any transfer between a Party and any of its Affiliates or Sublicensees for resale. If a Party or an Affiliate or Sublicensee sells Factor VIII Gene Therapy Products to a Distributor, the gross revenues derived by or payable to that Party or the applicable Affiliate or Sublicensee on account of such sale shall be the gross revenues received by the Party and/or the applicable Affiliate or Sublicensee from the sale of Factor VIII Gene Therapy Products to the Distributor. If a Party or an Affiliate or Sublicensee sells Factor VIII Gene Therapy Products to a Distributor, Net Sales shall be calculated from the gross revenues received by that Party and/or the applicable Affiliate or Sublicensee from the sale of Factor VIII Gene Therapy Products to the Distributor. In the event that a Party or any of its Affiliates or Sublicensees shall make any transfer of Factor VIII Gene Therapy Products to third parties for other than monetary value, such transfer shall be considered a sale hereunder for accounting and royalty purposes. Net Sales for any such transfers shall be determined on a country-by-country basis and shall be the average price of "arms length" sales by that Party, its Affiliates or Sublicensees in such country during the royalty reporting period in which such transfer occurs 7 Page 7 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. or, if no such "arms length" sales occurred in such country during such period, during the last period in which such "arms length" sales occurred. If no "arms length" sales have occurred in a particular country, Net Sales for any such transfer in such country shall be the average price of "arms length" sales in all countries in the selling Party's assigned territory. Notwithstanding the foregoing, no transfer of Factor VIII Gene Therapy Products for testing, pre-clinical, clinical or developmental purposes or as samples shall be considered a sale hereunder for accounting and royalty purposes. In the event a Factor VIII Gene Therapy Product is incorporated into a service which is offered to end-users, in calculating Net Sales the monetary value of such service component shall be deducted from the price to the end-user for such product/service. For purposes of this Section, the monetary value of the service component shall be the cost to GI or TKT, as the case may be, in providing that service plus one hundred percent (100%) of such costs. 2.24. "PARTY" means GI or TKT; "PARTIES" means GI and TKT. 2.25. "PLA" means a Product License Application or its equivalent in the United States or any corresponding foreign application, registration, or certification. 2.26. "RESEARCH" means (a) development of non-viral DNA insertion technologies for the purpose of inserting the Factor VIII Gene into somatic cells; (b) research relating to insertion of the Factor VIII Gene into target cells; (c) verification of in vitro expression of the Factor VIII Gene by such target cells; (d) application of the TKT Rights to increase in vitro expression of the Factor VIII Gene by such target cells; (e) administration to non-human animals of the target cells into which the Factor VIII Gene has been transfected; and (f) evaluation of the safety and efficacy of the Factor VIII Gene's expression in non-human animal subjects. 2.27. ******************************* means the specific field that would have been part of the Licensed Field were it not for the exclusion set forth in Section 2.18 above, in which any ****************** containing 8 Page 8 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. *************************************************** *********************************** the Factor VIII Gene and which are **************************************** is used for the purpose of ********** Factor VIII *******. 2.28. "SUBLICENSEE" means a third party to whom a Party has granted a sublicense to develop, manufacture, use, distribute and/or sell the Factor VIII Gene Therapy Products. 2.29. "TKT TERRITORY" means the rest of the world outside the GI Territory. 2.30. "TKT PATENT RIGHTS" means any and all patents and patent applications owned or licensed by TKT in which TKT has a licensable interest and which exists as of the date of this Agreement or which comes into existence during the term of this Agreement, which in TKT's reasonable and good faith judgement are necessary and desirable for GI and its Affiliates to perform under this Agreement. TKT Patent Rights shall include any reissues, extensions (or other governmental acts which effectively extend the period of exclusivity by the patent holder), substitutions, confirmations, registrations, revalidations, additions, continuations, continuations-in-part, divisions or foreign counterparts of or to the foregoing patent rights. 2.31. "TKT RIGHTS" means any of the TKT Patent Rights or the TKT Technology, or both. 2.32. "TKT TECHNOLOGY" means TKT's information, data, trade secrets, processes, inventions, improvements and know-how related to the technology described in the TKT Patent Rights and any future information, patent rights, or know-how arising out of, and during the term of, the work undertaken by TKT pursuant to this Agreement that relates solely, or is reasonably necessary, to the use of the Factor VIII Gene Therapy Products in the Licensed Field. 2.33. "TOOLE INTERFERENCE" means Capon et al. v. Kuo et al. v. Toole et al., Interference No. 102,331, which, if lost by GI, would result in the loss of the material 9 Page 9 of 37 benefit of the claims in U.S. Patent No. 4,757,006 included in the Licensed Patent Rights. 3. LICENSE FROM GI TO TKT. 3.1. GRANT. Subject to the fulfillment of the terms and conditions of this Agreement, including without limitation (i) the preexisting Miles Rights and (ii) with respect to the full-length sequence to the Factor VIII Gene only, Section 3.2 below and a decision in GI's favor in the Toole Interference, GI grants to TKT: a. a non-exclusive license under the Licensed Patent Rights; and b. a non-exclusive license to use the Licensed Technology, without any right to grant sublicenses (other than the right to contract with third parties to make Factor VIII Gene Therapy Products for distribution and sale by TKT (or its Distributors) under Sections 5.3 and 7.1 below and the right to sublicense Distributors under Section 8.3 below) and without any obligation to pay royalties (other than those obligations set forth in Section 3.3 below), for the sole and exclusive purposes, restricted to the Licensed Field, of (i) performing preclinical trials on, developing, making, having made and using Factor VIII Gene Therapy Products worldwide, (ii) performing clinical trials and obtaining regulatory approvals on, and distributing and selling Factor VIII Gene Therapy Products only in the TKT Territory and (iii) selling Factor VIII Gene Therapy Products to GI and its Affiliates and Sublicensees for marketing, distribution and sale in the GI Territory. The license granted pursuant to Section 3.1.a. shall continue in effect until the expiration of the last patent licensed to TKT hereunder. The license granted pursuant to Section 3.1.b. shall continue in effect for twelve (12) years from the date of first commercial sale of Factor VIII Gene Therapy Products within the TKT Territory; provided, however, TKT shall have a renewable right to extend such license for successive twelve (12) year terms on terms that are substantially the same as those contained in this Agreement, by delivery of written notice to GI. 10 Page 10 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 3.2. RIGHT TO SETTLE CLAIMED RIGHTS. GI's grant to TKT of the Factor VIII License in Section 3.1 above is subject to the prior rights, if any, asserted by Baxter Healthcare Corporation ("Baxter") to have been granted by GI to Baxter and its affiliates to make, use and sell Factor VIII gene therapy products which use the full-length sequence of the Factor VIII Gene (the "Claimed Rights"). If, in the sole opinion of GI's patent counsel, Baxter has asserted a colorable claim to the Claimed Rights, GI may settle such claim by conceding to Baxter that it and its affiliates have the right to make, use and sell Factor VIII gene therapy products which use the full-length sequence of the Factor VIII Gene. In the event of such settlement, the Licensed Patent Rights thereafter shall not include such Claimed Rights, to the extent such Claimed Rights are acknowledged, as part of such settlement, to have been granted to Baxter. Any such settlement by GI shall not give rise to a claim by TKT against GI for breach of this Agreement, including without limitation, any of the representations and warranties contained herein, or for any other cause of action. 3.3. TKT RIGHTS LN GI TERRITORY. In the event that GI, its Affiliates or Sublicensees: a. have not filed, within eighteen (18) months of TKT having filed a PLA for a Factor VIII Gene Therapy Product with either *******, the ************************** or the *********************************, a marketing authorization application for a Factor VIII Gene Therapy Product with ******************* (for submission to the ****); or b. if approval is obtained in a country in the GI Territory, elect not to market and sell that Factor VIII Gene Therapy Product in that country; or c. if approval is obtained in a country in the GI Territory, fail to make a commercial sale of that Factor VIII Gene Therapy Product within six (6) months following final commercial approval in that country; or 11 Page 11 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. d. if approval is obtained in a country in the GI Territory, fail to use commercially reasonable efforts to market that Factor VIII Gene Therapy Product in that country; then TKT shall have the right itself or through one or more Affiliates or Sublicensees to make, use and sell that Factor VIII Gene Therapy Product in that country (or, with respect to Subsection 3.3(a), above, in *********************************** ***) and the terms of the Factor VIII License shall be deemed to permit such manufacture and, notwithstanding Section 3.l(iii) above, the use and sale of such Factor VIII Gene Therapy Product by TKT (and such Affiliates and Sublicensees) in that country. TKT shall pay to GI **************** of Net Sales of Factor VIII Gene Therapy Products sold by TKT or its Affiliate or Sublicensee in such country. In those countries where another licensee has been given rights to the same Licensed Field as TKT, TKT's obligations to pay royalties to GI under this Section 3.3 shall be *************************** of Net Sales. Royalties which have accrued in any calendar quarter shall be payable within sixty (60) days of the end of such calendar quarter. Royalties shall be payable by wire transfer of good and immediately available funds to a bank and account, as specified in writing by GI, or by bank check or by any other means agreed upon by the Parties. Each royalty payment shall be accompanied by a report for the applicable calendar quarter setting forth, in reasonable detail, the Factor VIII Gene Therapy Products sold and the Net Sales value thereof. 3.4. FACTOR VIII LICENSE FEE. a. PAYMENT. In consideration of the Factor VIII License, TKT will pay to GI a Factor VIII License Fee in the amount of **************************************, payable within ten (10) days of the Effective Date, by wire transfer of good and immediately available funds to a bank and account, as specified in writing by GI, or by bank check or by any other means agreed upon by the Parties. b. REFUND. GI will refund to TKT the Factor VIII License Fee upon achievement by TKT of Milestone I as set forth on Schedule 13.2. This refund shall 12 Page 12 of 37 be paid by GI to TKT, without interest, by wire transfer of good and immediately available funds to a bank and bank account, as specified in writing by TKT, or by bank check or by any other means agreed upon by the Parties, when due. In the event TKT fails to achieve Milestone I as set forth on Schedule 13.2, the Factor VIII Licensee Fee shall become non-refundable. 3.5. REPRESENTATIONS AND WARRANTIES. GI hereby represents and warrants to TKT that without special inquiry (a) it has title to, and the right to license under this Agreement, the Licensed Patent Rights; (b) the Licensed Patent Rights have not been invalidated; (c) no legal proceedings are pending, except for the Toole Interference, which could result in the loss of the material benefit of the claims in U.S. Patent No. 4,757,006 included in such Licensed Patent Rights; and (d) it is not aware of any other facts (other than those asserted in the Toole Interference) that would result in the loss or invalidation of the claims contained in either of the U.S. patents included in such Licensed Patent Rights (it being understood that such factual determination involves difficult matters of law as applied to any facts and that therefore the results may not be capable of accurate prediction). 4. GRANTS OF RIGHTS FROM TKT TO GI. 4.1. GRANT OF TKT RIGHTS. Subject to the terms and conditions of this Agreement, TKT grants to GI and its Affiliates: a. a non-exclusive, royalty-free license under the TKT Patent Rights; and b. a non-exclusive, royalty-free license to use the TKT Technology, including the right to grant sublicenses to such third parties as are approved by TKT (such approval not to be unreasonably withheld or delayed), for the sole and exclusive purpose, restricted to the Licensed Field, of performing clinical trials and obtaining regulatory approvals on, and distributing and selling Factor VIII Gene Therapy Products in the GI Territory. 13 Page 13 of 37 Pursuant to Section 7.1, GI has certain rights to manufacture Factor VIII Gene Therapy Products. GI also may be required to supplement TKT's Research with its own research in order to satisfy the regulatory requirements of certain countries in the GI Territory. Therefore, in addition to the licenses granted in subsections (a) and (b) of this Section, TKT grants to GI and its Affiliates: c. a non-exclusive, royalty-free license under the TKT Patent Rights; and d. a non-exclusive, royalty-free license to use the TKT Technology, including the right to grant sublicenses to such third parties as are approved by TKT (such approval not to be unreasonably withheld or delayed), for the sole and exclusive purpose of developing, making, using, performing pre-clinical and clinical trials and obtaining regulatory approvals on, Factor VIII Gene Therapy Products worldwide, to the extent such rights are necessary for GI, its Affiliates or Sublicensees to exercise such rights to manufacture Factor VIII Gene Therapy Products or to satisfy such research or regulatory requirements. The licenses granted pursuant to Sections 4.1.a. and 4.1.c. shall continue in effect until the expiration of the last patent licensed to GI hereunder. The licenses granted pursuant to Sections 4.1.b. and 4.1.d. shall continue in effect for twelve (12) years from the date of first commercial sale of Factor VIII Gene Therapy Products outside the TKT Territory; provided, however, GI shall have a renewable right to extend such licenses for successive twelve (12) year terms on terms that are substantially the same as those contained in this Agreement, by delivery of written notice to TKT. 4.2. TKT AGREEMENTS WITH THIRD PARTIES. a. AGREEMENTS. To the extent that any TKT Rights licensed to GI under this Agreement are licensed to TKT by a third party, a copy of the third party agreement granting those rights will be delivered to GI. With GI's prior written consent, the sublicense from TKT to GI then will be subject to the terms, restrictions and obligations of the 14 Page 14 of 37 third party agreement. In such case, GI will be bound by and perform all of the obligations, terms and conditions applicable to a sublicensee under the third party agreement. b. THIRD PARTY ROYALTIES. In the event GI accepts a sublicense under Section 4.2(a) above to TKT Rights which are licensed by TKT from a third party, GI will pay directly or reimburse TKT for any royalties due to such third party under the terms of the applicable license agreement which arise from the sales of Factor VIII Gene Therapy Products in the GI Territory, which sales, but for that license, would infringe such third party's rights. GI and TKT will agree on royalty reporting and payments provisions for this purpose at the time the Parties enter into supply agreement for any such products. In no event shall the royalty rate payable by GI exceed the royalty rate payable by TKT in the TKT Territory for such rights. 5. PRODUCT DEVELOPMENT AND CLINICAL SUPPLY. 5.1. OBLIGATIONS OF GI. GI agrees to use commercially reasonable efforts, consistent with prudent business practice, to: a. supply TKT with sufficient quantities of the Factor VIII Gene and to disclose to TKT, on an on-going basis, in writing, all pertinent scientific data in GI's possession, as is necessary for TKT to perform its responsibilities hereunder; and b. upon TKT's request, provide, at GI's own expense, collaborative assistance on the optimization of Factor VIII Gene insertion and expression, with the scope and level of GI's assistance subject to prior agreement by the Parties. 5.2. OBLIGATIONS OF TKT. TKT agrees, at its own expense, to use commercially reasonable efforts, consistent with prudent business practice, to: a. research and develop Factor VIII Gene Therapy Products which the Parties believe will be suitable for obtaining regulatory approval to 15 Page 15 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. develop, use, distribute and sell the Factor VIII Gene Therapy Products; b. subject to Section 5.3, supply itself or through a third party all Factor VIII Gene Therapy Products reasonably required by GI for use in its research, pre-clinical and clinical activities hereunder; c. subject to Section 5.3, prepare, file, and diligently prosecute by itself or through a third party all governmental applications necessary to obtain approvals of manufacturing and quality control processes for manufacture of each Factor VIII Gene Therapy Product for use in clinical trials; and d. disclose to GI, on an on-going basis, in writing, all material laboratory, animal, pre-clinical, manufacturing and other scientific data in TKT's possession relating to the Research and the manufacture of each of the Factor VIII Gene Therapy Products for pre-clinical and clinical trials, which is necessary to support GI's rights and obligations under this Agreement. Except as otherwise provided in the clinical supply agreement, GI's sole and exclusive remedy for TKT's failure to meet its obligations under Subsection 5.2(b) and (c) is for GI, its Affiliates and Sublicensees to manufacture and/or have manufactured their clinical and commercial requirements for Factor VIII Gene Therapy Products for sale in the GI Territory. Upon execution, the terms and conditions of the clinical supply agreement will supersede the terms and conditions of Subsections 5.2(b) and (c). 5.3. CLINICAL SUPPLY. TKT shall have the right and obligation to supply GI, its Affiliates and Sublicensees with one hundred percent (100%) of their requirements of each Factor VIII Gene Therapy Product. Factor VIII Gene Therapy Products supplied by TKT for preclinical and clinical purposes pursuant to the foregoing right shall be supplied at TKT's Direct Manufacturing Cost, F.O.B. TKT's manufacturing plant, subject to reasonable and customary GI audit rights. ************************************************** 16 Page 16 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ******************************************************************* ************************************************, the Parties shall negotiate and enter into a clinical supply agreement (the "Clinical Supply Agreement") with respect to such Factor VIII Gene Therapy Product. The Clinical Supply Agreement shall provide that such product shall be manufactured in accordance with GMP and that the product and manufacturing process specifications shall meet such other mutually agreed upon written specifications which are necessary to comply with the applicable requirements of the FDA, the CPMP and the Canadian Health Protection Bureau for clinical testing and for use in Core Clinical Trials for ultimate product approval. In addition, the Clinical Supply Agreement shall, at a minimum, contain terms regarding quarterly twelve-month rolling forecast procedures, order and delivery times, minimum and maximum quantities, warranties, indemnities for product liability, guaranteed supply, termination conditions, conditions under which GI or its Affiliates or Sublicensees may manufacture, equitable allocation of shortages of supply, and other usual and customary terms. The Clinical Supply Agreement also shall contain a commitment as to the timing and plans for the scale-up and development of commercial manufacturing capacity which is sufficient to meet the supply requirements anticipated under Section 7.1. In addition, the Clinical Supply Agreement shall provide that in the event TKT is unable to manufacture a Factor VIII Gene Therapy Product to meet GI's (and its Affiliates' and Sublicensees') good faith forecasted clinical supply requirements, TKT shall promptly notify GI. GI shall have the right to give **************** notice of its intent to manufacture. During this *************** period, TKT shall provide GI with a plan to meet GI's requirements in as timely a manner as possible. Should these plans still not meet ***************************** of GI's forecasted clinical supply requirements over a ******** period, GI shall have the right to put in place manufacturing capacity, internally or through its Affiliates, Sublicensees or third parties, ********************************* of its ************************************************************ *****************************************************; provided, however, TKT shall have the right to approve GI's selection of third party contract manufacturers, which approval shall not be unreasonably withheld or 17 Page 17 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. delayed. Should such clinical supply capacity be put in place by GI, its Affiliates, Sublicensees or third parties, GI or its Affiliates, Sublicensees or third parties shall then have the right to manufacture, or to have manufactured, for ongoing commercial supply, (a) the production level put into place by GI, its Affiliates, Sublicensees or third parties to meet ************************* of their ********************************** in any given year of the clinical trials or (b) if triggered under Section 7.1 below, any higher production level specified thereunder. In the event that the Parties have not entered into the Clinical Supply Agreement with respect to a Factor VIII Gene Therapy Product ***************************** to the scheduled completion of Milestone **** on Schedule 13.2, senior executives of both Parties shall meet promptly following a notice from either Party in order to discuss and resolve, within sixty (60) days, the outstanding issues facing the Parties. If the Parties fail to reach agreement during this sixty (60) day period, the senior executive representatives of both Parties shall meet promptly with a mediator acceptable to both Parties in order to continue to discuss and resolve, within thirty (30) additional days, the outstanding issues facing the Parties. The costs of such mediation will be borne equally by the Parties. If the Parties, with the assistance of the mediator, fail to reach agreement during this additional thirty (30) day period, the Parties shall enter into binding arbitration with respect to the outstanding issues facing the Parties, in accordance with the arbitration provisions set forth in Schedule 5.3 of this Agreement. 6. COLLABORATION IN CLINICAL TRIALS AND REGULATORY REGISTRATION. 6.1. CO-MANAGEMENT. TKT and GI will co-manage the clinical development and regulatory registration of the Factor VIII Gene Therapy Products worldwide. GI shall have primary responsibility for clinical development and registration activities in the GI Territory; TKT shall have primary responsibility for such activities in the TKT Territory. Each Party will advise the other of its clinical development and regulatory registration plans on a timely basis, with the intention, but not the obligation, of soliciting the 18 Page 18 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. other Party's comments on such plans prior to taking significant actions to effectuate such plans. 6.2. PRODUCT COORDINATION COMMITTEE. No later than ******************** ****************************************************************** *******************************, the Parties shall form a Product Coordination Committee (or "PCC") for each Factor VIII Gene Therapy Product. The goal of the PCC is to facilitate communication and cooperation between the Parties in their clinical and regulatory activities. The PCC shall consist of four (4) coordinators, two (2) of which shall be designated by GI and two (2) of which shall be designated by TKT. Communications between the Parties with respect to the clinical development and regulatory registration of a Factor VIII Gene Therapy Product shall be directed to each Party's respective coordinators. Each Party will notify the other in writing of the individuals it appoints as its coordinators for a Factor VIII Gene Therapy Product and may replace its coordinators at any time by giving written notice to the other Party. The PCC will meet at least once per calendar quarter to review the progress of the Parties with respect to its Factor VIII Gene Therapy Product. 6.3. PCC SERVES IN ADVISORY CAPACITY ONLY. The PCC will serve in an advisory capacity only. TKT will retain the final authority to make an clinical and regulatory decisions, in its own discretion, for clinical trials conducted, and regulatory registrations sought, in the TKT Territory; GI will retain the final authority to make all such decisions in the GI Territory. 6.4. CLINICAL DATA AND REGULATORY FILINGS. With respect to each Factor VIII Gene Therapy Product, each Party shall make available to the other all of its clinical data and regulatory filings free of charge. The Parties shall discuss and coordinate the further exchange of information and data as is necessary to obtain and maintain regulatory approval of the Factor VIII Gene Therapy Products. Each Party shall have a royalty-free, non-exclusive license, with the right to sublicense to third parties upon the consent of the other Party, which consent shall not be unreasonably withheld or delayed, to use an of the data and information furnished under this Section for the sole and exclusive purposes of conducting clinical 19 Page 19 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. testing and obtaining or maintaining regulatory approval of the relevant Factor VIII Gene Therapy Product, in the TKT Territory in the case of TKT, and in the GI Territory in the case of GI. Each Party agrees, to the extent practical, to provide the other Party with the timely opportunity to review and comment on an regulatory filings and material correspondence with regulatory agencies. Each Party shall have the right to attend meetings the other Party has with regulatory authorities which relate to the Factor VIII Gene Therapy Products. 6.5. COSTS. TKT and GI will agree upon budgets for, and will share *************************************************************** **************************), the costs of, the Core Clinical Trials and the initial regulatory registration of the Factor VIII Gene Therapy Products in the United States, Canada and the European Community. Each Party shall have the right to audit the other Party's costs for the Core Clinical Trials. The Parties will separately bear the costs of any Phase IV, post-marketing and other clinical trials and any subsequent regulatory registration activities resulting therefrom. The costs of clinical trials and regulatory registrations in any country other than the United States, Canada and - European Community countries shall be borne by the Party with distribution rights in that country, as provided for in Sections 8.1 and 8.2 below. 7. COMMERCIAL MANUFACTURE AND SUPPLY. 7.1. COMMERCIAL SUPPLY AGREEMENT. The Parties shall negotiate and enter a separate commercial supply agreement for each Factor VIII Gene Therapy Product within *************************************************** *************. Pursuant to this commercial supply agreement, TKT shall use commercially reasonable best efforts, consistent with prudent business practice, to (a) develop, at its own expense, the capability to manufacture sufficient quantities of the Factor VIII Gene Therapy Products to meet the commercial requirements of the Parties under this Agreement, (b) prepare, file, and diligently prosecute all governmental applications necessary to obtain approvals of its manufacturing and quality control processes for commercial sale of the Factor VIII Gene Therapy Products, and (c) supply GI and its Affiliates 20 Page 20 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. and Sublicensees with ********************************************* ******************************************************************* ******************************************* at the price set forth in Section 7.2, below. In addition, each supply agreement shall, at a minimum, contain terms regarding quarterly twelve-month rolling forecast procedures, order and delivery times, minimum and maximum quantities, warranties, indemnities for product liability, estimated payments and reconciliations, guaranteed supply, termination conditions, conditions under which GI or its Affiliates or Sublicensees may manufacture, equitable avocation of shortages of supply, and other usual and customary terms. In particular, in the event TKT is unable to manufacture a Factor VIII Gene Therapy Product to meet GI's (and its Affiliates' and Sublicensees') good faith forecasted requirements, TKT shall promptly notify GI. ********* ******************************************************************** ******************************************************************** ******************************************************************** ******************************************************************** ******************************************************************* ***************************************************************** ***************************************************************** **************************************************************** ***************************************************************** ****************************************** provided, however, TKT shall have the right to approve GI's ***********************************************, which approval shall not be unreasonably withheld or delayed. Should ************************************ its Affiliates, Sublicensees or a third party, GI or its Affiliates or Sublicensees shall then have *** ***************************************************************** *********************************************************** ***************************************************************** ************************************************************ ********************************************* Factor VIII Gene Therapy Products for the *********************** *************************************************************** *******************************************************, regardless of TKT's then-current or future ability to ************************. In addition, GI always shall have the right to ********************** ******************************************************************** ********************************************** results in a continuing 21 Page 21 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ************************************************************** ****************. 7.2. PRICING. The commercial supply agreement shall include provisions which incorporate the following pricing principles. ***************************************** ************************************************* ***************************************************** ************************; provided that this price shall be adjusted if it does not provide TKT with at ************************************************* ************************************************************* on sales of Factor VIII Gene Therapy Products by TKT to GI, its Affiliates or Sublicensees. This adjustment shall increase the applicable supply price to a new supply price which provides TKT ************************************************************** ************************************************** *************************************************** ************************************************** ****************************************************** *******************************, then the supply price shall be adjusted to a level which provides the same percentage margin to both parties. Upon expiration of the Licensed Patent Rights (insofar as the Licensed Patent Rights relate to the Licensed Field), the Parties will renegotiate in good faith the foregoing pricing principles and the pricing provisions of the commercial supply agreement to appropriately reflect such expiration. 7.3. DISPUTE RESOLUTION. In the event that the Parties (a) have not entered into a commercial supply agreement with respect to a Factor VIII Gene Therapy Products within one (1) year after initiation of Milestone II, or (b) are deadlocked with respect to expiration of the Licensed Patent Rights or the renegotiation of the pricing provisions of the commercial supply agreement, as set forth in the last sentence of Section 7.2 above, senior executives of both Parties shall meet promptly following a notice from either Party in order to discuss and resolve, within sixty (60) days, the outstanding issues facing the Parties. If the Parties fail to reach agreement during this sixty (60) day period, the senior executive representatives of both Parties shall meet promptly with a mediator acceptable to both Parties in order to continue to discuss and resolve, within thirty (30) additional days, the 22 Page 22 of 37 outstanding issues facing the Parties. The costs of such mediation will be borne equally by the Parties. If the Parties, with the assistance of the mediator, fail to reach agreement during this additional thirty (30) day period, the Parties shall enter into binding arbitration with respect to the outstanding issues facing the Parties, in accordance with the arbitration provisions set forth in Schedule 5.3 of this Agreement. 8. MARKETING AND DISTRIBUTION. 8.1. TKT TO MARKET AND DISTRIBUTE IN TKT TERRITORY. TKT, its Affiliates and Sublicensees will have the exclusive right to market and distribute the Factor VIII Gene Therapy Products in the TKT Territory. GI shall not enter into any agreements with third parties which would prevent TKT from exercising its rights under this Section 8.1. 8.2. GI TO MARKET AND DISTRIBUTE IN GI TERRITORY. Subject to the terms and conditions of this Agreement, GI, its Affiliates and Sublicensees will have the exclusive right to market and distribute the Factor VIII Gene Therapy Products in the GI Territory. TKT shall not enter into any agreements with third parties (including, without limitation, in-license agreements with third parties, as described in Section 4.2(a) above) which would prevent GI from exercising its rights under this Section 8.2. 8.3. SUBLICENSING AND DISTRIBUTION RIGHTS. Each Party will have the right to sublicense to an Affiliate or to a Distributor, whether wholly or through a co-marketing or co-promotion arrangement, its marketing and/or distribution rights under this Agreement; provided, however, the Party intending to sublicense its marketing and/or distribution rights shall first notify the other Party in writing of such intention, and other Party shall have a right of first refusal, exercisable within sixty (60) days of receipt of such written notice, to negotiate for such marketing and/or distribution rights. In the event the Parties do not execute a final agreement with respect to such rights within ninety (90) days of exercise of the right of first refusal, then the Party intending to sublicense its rights shall have the right to negotiate with a third party with respect to such rights; provided, 23 Page 23 of 37 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. however, before entering into an agreement with a third party on terms more favorable than those offered to the other Party, the Party intending to sublicense its rights will inform the other Party of the terms of such proposed agreement and shall allow the other Party a period of sixty (60) days in which to elect whether to acquire such rights under such terms as are offered to the third party. This Section shall not be read to limit GI's right to grant sublicenses under Sections 4.1, 9.3(d)(ii) and 9.4 of this Agreement. 8.4. COMMERCIALLY REASONABLE EFFORTS. Each Party agrees to use commercially reasonable best efforts, consistent with prudent business practice, to diligently market, promote, and detail Factor VIII Gene Therapy Products in the GI Territory, in the case of GI, and Factor VIII Gene Therapy Products in the TKT Territory, in the case of TKT, on a commercial basis after receipt of the necessary approvals for marketing by applicable government regulatory agencies. 8.5. GI MARKETING OF COMPETITIVE PRODUCT. In the event GI elects to file a PLA for a gene therapy product competitive with a Factor VIII Gene Therapy Product in any country, GI will provide TKT on an annual basis with a detailed plan outlining the promotion programs and detailing effort GI will devote to the Factor VIII Gene Therapy Product in that country. TKT shall have the right to propose modifications to the promotion program and detailing effort for GI to retain its exclusive right to market in that county for the following year. Should GI not agree to those modifications, TKT shall have the right to select itself or a third party as a co-exclusive distributor of the Factor VIII Gene Therapy Products with GI in that country, provided that TKT or the third party agrees to provide at least as great a promotional and detailing effort as requested by TKT and rejected by GI. ************************************************* **************************************************** ******************************************************* *************************************************. 8.6. GI LICENSES THIRD PARTY. In the event GI licenses the Licensed Rights to a third party within the Licensed Field (other than an Affiliate or third party Distributor, as permitted under Section 8.3 above), 24 Page 24 of 37 TKT shall have the right to select itself or a third party as a co-exclusive distributor of the Factor VIII Gene Therapy Products with GI in the GI Territory. 9. INTELLECTUAL PROPERTY RIGHTS. 9.1. LICENSED RIGHTS. GI has developed the Licensed Rights over a substantial period of time at substantial expense, and the Licensed Rights are of great importance to GI's business. TKT acknowledges that GI is and shall at all times remain the owner of the Licensed Rights. 9.2. TKT RIGHTS. TKT has developed the TKT Rights over a substantial period of time at substantial expense, and the TKT Rights are of great importance to TKT's business. GI acknowledges that TKT is and shall at all times remain the owner of the TKT Rights. 9.3. DEVELOPMENTS. a. OWNERSHIP. Each Party shall own for itself all Developments conceived, discovered, invented, developed, created, made or reduced to practice solely by that Party, and each Party shall have the right to decide whether to seek or continue to seek or maintain patent protection thereon. The Parties shall jointly own all Developments conceived, discovered, invented, developed, created, made or reduced to practice by representatives of both Parties. Each Party shall be free to exploit its half-interest in the jointly-developed Developments throughout the world without the consent of the other Party. b. FILING AND MAINTENANCE OF PATENTS ON JOINT DEVELOPMENTS. TKT shall have the right and responsibility to decide whether or not to seek or continue to seek or maintain patent protection on jointly-developed Developments in any country in the world, and shall have the right (jointly in its and GI's names) to-file for, procure, and maintain patents on any such joint Developments in any country in the world, with the expenses being borne by TKT. If TKT elects not to seek or continue to seek or maintain patent protection on any joint Developments in any country in the world, GI shall have the right (jointly in its and 25 Page 25 of 37 TKT's names) to file, procure and maintain in such countries patents on such joint Developments, with the expenses being borne by GI. TKT agrees to advise GI of all decisions taken under this Subsection in a timely manner, in order to allow GI to protect the Parties' interests in the joint Developments. c. PATENT COOPERATION. Each Party shall provide the other Party with copies of all substantive communications from all patent offices regarding applications or patents on any joint Developments promptly after the receipt thereof. Each Party shall provide the other Party with copies of all proposed substantive communications to such patent offices regarding applications or patents on any such joint Developments in sufficient time before the due date in order to enable the other Party an opportunity to comment on the content thereof. Each Party shall make available to the other Party or its authorized attorneys, agents, or representatives, such of its employees whom the other Party in its reasonable judgment deems necessary in order to assist it in obtaining patent protection for the joint Developments. Each Party shall sign or use its best efforts to have signed all legal documents necessary to file and prosecute patent applications or to obtain or maintain patents at no cost to the other Party. d. CROSS LICENSE OF RIGHTS TO SOLELY-DEVELOPED DEVELOPMENTS. i. GI TO TKT. GI grants to TKT a worldwide, non-exclusive, royalty-free perpetual right and license, with the right to grant sublicenses, to GI's interests in GI's solely-developed Developments, for the purposes set forth in Section 3.1 above. ii. TKT TO GI. TKT grants to GI and its Affiliates a worldwide, non-exclusive, perpetual right and license, with the right to grant sublicenses to such third parties as are approved by TKT (such approval not to be unreasonably withheld or delayed), to TKT's interests in TKT's solely-developed 26 Page 26 of 37 Developments, for the purposes set forth in Section 4.1 above. 9.4. MANUFACTURING RIGHTS. Pursuant to Section 7.1, GI has certain rights to manufacture Factor VIII Gene Therapy Products. Therefore, in addition to the license granted in Subsections 9.3(d)(ii) above, TKT grants to GI and its Affiliates an non-exclusive, worldwide, royalty-free, perpetual right and license, with the right to grant sublicenses, to TKT's solely-developed Developments, solely for the purposes of developing, making, using, performing pre-clinical and clinical trials and obtaining regulatory approvals on, Factor VIII Gene Therapy Products worldwide, to the extent such rights are necessary for GI, its Affiliates or Sublicensees to exercise such rights to manufacture Factor VIII Gene Therapy Products. 10. INFRINGEMENT. 10.1. INFRINGEMENT OF TKT RIGHTS. a. Each Party shall promptly report in writing to the other Party during the term of this Agreement any (i) known infringement or suspected infringement of any of the TKT Rights, or (ii) unauthorized use or misappropriation of any of the TKT Rights by a third party of which it becomes aware, and promptly shall provide the other Party with all available evidence supporting said infringement, suspected infringement, or unauthorized use or misappropriation. b. TKT shall have the exclusive right and the obligation to elect whether or not to initiate an infringement or other appropriate suit against any third party who at any time has infringed, or is suspected of infringing, any of or of using without proper authorization all or any portion of such TKT Rights. Such election shall be made by TKT in writing no later than ninety (90) days following written notice to TKT by GI of infringement pursuant to Subsection (a) above. TKT shall give GI sufficient advance notice of its intent to file said suit and the reasons therefor, and shall provide GI with an opportunity to make suggestions and comments regarding such suit. TKT shall keep GI promptly informed, and shall from 27 Page 27 of 37 time-to-time consult with GI regarding the status of any such suit and shall provide GI with copies of all documents filed in, and all written communications relating to, such suit. c. TKT shall have the sole and exclusive right to select counsel for any suit referred to in Subsection (b) above and shall, except as provided below, pay all expenses of the suit, including without limitation attorneys' fees and court costs. TKT and/or its Affiliates (except as provided below) shall be entitled to retain any damages, royalties, settlement fees, or other consideration for infringement resulting therefrom. If necessary, GI shall join as a party to the suit but shall be under no obligation to participate except to the extent that such participation is required as the result of being a named party to the suit. GI shall offer reasonable assistance to TKT in connection therewith at no charge to TKT except for reimbursement of reasonable out-of-pocket expenses incurred rendering such assistance. GI shall have the right to participate and be represented in any such suit by its own counsel at its own expense. TKT shall not settle any such suit involving rights of GI without obtaining the prior written consent of GI, which consent shall be promptly given and shall not be unreasonably withheld. d. TKT's rights and obligations under this Section may be assigned by TKT to a Sublicensee, however, such assignment shall not relieve TKT of its obligations to GI under this Section. 10.2. INFRINGEMENT OF THE LICENSED RIGHTS. a. Each Party shall promptly report in writing to the other Party during the term of this Agreement any (i) known infringement or suspected infringement of any of the Licensed Rights, or (ii) unauthorized use or misappropriation of any Licensed Rights by a third party of which it becomes aware, and promptly shall provide the other Party with an available evidence supporting said infringement, suspected infringement, or unauthorized use or misappropriation. 28 Page 28 of 37 b. GI shall have the exclusive right and the obligation to elect whether or not to initiate an infringement or other appropriate suit against any third party who at any time has infringed, or is suspected of infringing, any of such Licensed Rights, or of using without proper authorization all or any portion of the Licensed Rights. Such election shall be made by GI in writing no later than ninety (90) days following written notice to GI by TKT of infringement pursuant to Subsection (a) above. GI shall give TKT sufficient advance notice of its intent to file said suit and the reasons therefor, and shall provide TKT with an opportunity to make suggestions and comments regarding such suit. GI shall keep TKT promptly informed, and shall from time-to-time consult with TKT regarding the status of any such suit and shall provide TKT with copies of all documents filed in, and all written communications relating to, such suit. c. GI shall have the sole and exclusive right to select counsel for any suit referred to in Subsection (b) above and shall, except as provided below, pay an expenses of the suit, including without limitation attorneys' fees and court costs. GI and/or its Affiliates (except as provided below) shall be entitled to retain any damages, royalties, settlement fees, or other consideration for infringement resulting therefrom. If necessary, TKT shall join as a party to the suit but shall be under no obligation to participate except to the extent that such participation is required as the result of being a named party to the suit. TKT shall offer reasonable assistance to GI in connection therewith at no charge to GI except for reimbursement of reasonable out-of-pocket expenses incurred in rendering such assistance. TKT shall have the right to participate and be represented in any such suit by its own counsel at its own expense. GI shall not settle any such suit involving rights of TKT without obtaining the prior written consent of TKT, which consent shall be promptly given and shall not be unreasonably withheld. 29 Page 29 of 37 d. GI's rights and obligations under this Section may be assigned by GI to an Affiliate or a Sublicensee, however, such assignment shall not relieve GI of its obligations to TKT under this Section. 10.3. CLAIMED INFRINGEMENT. a. In the event that a third party at any time provides written notice of a claim to, or brings an action, suit, or proceeding against, either Party or any of their respective Affiliates or Sublicensees, claiming infringement of its patent rights or unauthorized use or misappropriation of its know-how, based upon an assertion or claim arising out of the development, use, manufacture, distribution, or sale of a Factor VIII Gene Therapy Product, such Party shall promptly notify the other Party of the claim or the commencement of such action, suit, or proceeding, enclosing a copy of the claim and/or an papers served. Each party agrees to make available to the other party its advice and counsel regarding the technical merits of any such claim at no cost to the other party. b. THE FOREGOING STATES THE ENTIRE RESPONSIBILITY OF THE PARTIES IN THE CASE OF ANY CLAIMED INFRINGEMENT OR VIOLATION OF ANY THIRD PARTY'S RIGHTS OR UNAUTHORIZED USE OR MISAPPROPRIATION OF ANY THIRD PARTY'S KNOW-HOW. 11. CONFIDENTIAL INFORMATION. 11.1. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Each Party shall not directly or indirectly publish, disseminate or otherwise disclose, deliver or make available to any person outside its organization any of the other Party's Confidential Information. Each Party may disclose the other Party's Confidential Information to persons within its organization and to its Affiliates and Sublicensees who/which have a need to receive such Confidential Information in order to further the purposes of this Agreement and who/which are bound to protect the confidentiality of such Confidential Information, as set forth in Section 11.5 below. Each Party may disclose the other Party's Confidential Information to a governmental authority or by order of 30 Page 30 of 37 a court of competent jurisdiction, provided that such disclosure is subject to all applicable governmental or judicial protection available for like material and reasonable advance notice is given to the other Party. 11.2. GI TO DESIGNATE PERSONNEL TO RECEIVE CONFIDENTIAL INFORMATION. GI will designate a project manager or managers to supervise GI's responsibilities under this Agreement with respect to each Factor VIII Gene Therapy Product. Unless permitted by TKT, these project managers will not have responsibilities for the development, by GI alone or with third parties, of any product in the Gene Therapy Field which uses a Factor VIII gene. GI will use commercially reasonable efforts, consistent with reasonable business practices, to prevent disclosure of TKT's Confidential Information by these project managers to other GI personnel who have responsibilities for the research or clinical development of any product in the Gene Therapy Field. Notwithstanding the foregoing, these project managers may disclose TKT's Confidential Information to senior management at GI who may have access to information regarding other products in the Gene Therapy Field. TKT will, to the extent practical, use commercially reasonable efforts, consistent with reasonable business practices, (a) to label or identify as "TKT CONFIDENTIAL INFORMATION", at the time of disclosure, all such information which is disclosed in writing or other tangible form and (b) reduce to writing or other tangible form and similarly label, within thirty (30) days of disclosure, all such information which is disclosed verbally. 11.3. USE OF CONFIDENTIAL INFORMATION. Each Party shall use the other party's Confidential Information solely for the purposes contemplated in this Agreement or for such other purposes as may be agreed upon by the Parties in writing. 11.4. PHYSICAL PROTECTION OF CONFIDENTIAL INFORMATION. The Parties shall exercise all commercially reasonable precautions to physically protect the integrity and confidentiality of the other Party's Confidential Information. 11.5. AGREEMENTS WITH PERSONNEL AND THIRD PARTIES. The Parties have or shall obtain agreements with all personnel and third parties who will have access to 31 Page 31 of 37 the other Party's Confidential Information which impose comparable confidentiality obligations as are set forth in this Agreement on such personnel and third parties. 12. PRODUCT LIABILITY INDEMNIFICATION. 12.1. TKT agrees to defend GI and its Affiliates and Sublicensees, their agents, directors, officers, employees, and licensors of rights to a product (the "Indemnitees") (other than in settlement of a claim of infringement, as described in Sections 10.1 and 10.2 of this Agreement), at TKT's cost and expense, and will indemnify and hold harmless the Indemnitees from and against any and all liabilities, losses, costs, damages, fees, or expenses claimed by or paid to a third party attributable to injury to persons or damage to property ("Losses") arising out of or in connection with the making, using, development, testing, registration, distribution, and/or sale of any product in the TKT Territory by TKT, it's Affiliates, or permitted sublicensees (other than GI); provided that such Losses do not arise out of the gross negligence or willful misconduct of GI. 12.2. GI agrees to defend TKT and its Affiliates and permitted sublicensees, their agents, directors, officers, employees, and licensors of rights to a product (other than in settlement of a claim of infringement, as described in Sections 10.1 and 10.2 of this Agreement), at GI's cost and expense, and will indemnify and hold harmless TKT and its Affiliates and permitted sublicensees, their agents, directors, officers, employees, and licensors of rights to a product (other than in settlement of a claim of infringement) from and against any and all liabilities, losses, costs, damages, fees, or expenses claimed by or paid to a third party attributable to injury to persons or damage to property ("Losses") arising out of or in connection with the making, using, development, testing, registration, distribution, and/or sale of any product in the GI Territory by GI, its Affiliates, or Sublicensees (other than EKE); provided that such Losses do not arise out of (i) the gross negligence or willful misconduct of TKT or (ii) the breach of any GMP or product specification requirements by TKT in connection with the supply of any clinical or 32 Page 32 of 37 commercial products pursuant to Sections 5.3 and 7.1, for which GI, its Affiliates or Sublicensees will be indemnified by TKT under the clinical and commercial supply agreements. 12.3. In the event of any such claim against a Party or its Affiliates or sublicensees or any of their agents, directors, officers, employees, or licensors of rights to a product (other than in settlement of a claim of infringement, as described in Sections 10.1 and 10.2 of this Agreement), the indemnified Party shall promptly notify the indemnifying Party in writing of the claim and the indemnifying Party shall manage and control, at its sole expense, the defense of the claim and its settlement. The indemnified Party shall cooperate with the indemnifying Party and may, at its option and expense, be represented in any such action or proceeding. The indemnifying Party shall not be liable for any settlements, litigation costs, or expenses incurred by the indemnified Party without the indemnifying Party's written consent, such consent to be promptly given and not unreasonably withheld. 13. TERM AND TERMINATION. 13.1. TERM. This Agreement shall remain in effect until terminated in accordance with the provisions of this Section 13 or until the last to expire of any of the licenses granted pursuant to this Agreement. 13.2. TERMINATION FOR BREACH. Each Party shall be entitled to terminate this Agreement and the licenses granted hereunder to the other Party by written notice to the other Party in the event that the other Party shall be in default of any of its material obligations hereunder (including, without limitation, TKT's failure to satisfy the Conditions or meet the Milestones listed in Schedule 13.2 attached to this Agreement), and shall fail to remedy any such default within sixty (60) days after notice thereof by the non-breaching Party. Any such notice shall specifically state that the non-breaching Party intends to terminate this Agreement in the event that the breaching Party shall fail to remedy the default. Upon any termination of this Agreement pursuant to this Section 13.2, neither Party shall be relieved of any obligations incurred prior to such termination. 33 Page 33 of 37 13.3. DISPOSITION OF FACTOR VIII GENE THERAPY PRODUCTS. Upon any termination of this Agreement or a license pursuant to Section 13.2 hereof, the terminated party shall, within thirty (30) days of the effective date of such termination, notify the other Party in writing of the amount of Factor VIII Gene Therapy Products which the terminated Party, its Affiliates and Sublicensees then have completed on hand, the sale of which would, but for the termination, be subject to the license, and the terminated Party, its Affiliates and Sublicensees shall thereupon be permitted during the six (6) months following such termination to sell that amount of Factor VIII Gene Therapy Products. All sublicenses granted by a terminated party shall forthwith terminate upon such termination unless the Sublicensee has not been in default, is reasonably acceptable to the non-terminated Party, and agrees in writing to fully comply with the terms and conditions of this Agreement. 13.4. SURVIVAL OF OBLIGATIONS; RETURN OF CONFIDENTIAL INFORMATION. Notwithstanding any termination of this Agreement, the obligations of the Parties under Sections 9, 10, 11, 12, 13 and 14, as well as under any other provisions which by their nature are intended to survive any such termination, shall survive and continue to be enforceable. Upon any termination of this Agreement pursuant to Section 13.2 hereof, each Party shall promptly return to the other Party all written Confidential Information, and all copies thereof, of the other Party which is not covered by a license surviving such termination. 14. MISCELLANEOUS. 14.1. PUBLICITY. Neither Party, nor any of its Affiliates, shall originate any publicity, news release or other public announcement, written or oral, relating to this Agreement or the existence of an arrangement between the Parties, without the prior written approval of the other Party, which approval shall not be unreasonably withheld, except as otherwise required by law. It is expressly understood that nothing in this Section 14.1 shall prevent a Party from making a disclosure in connection with any required filings with the Securities and Exchange Commission or in connection with the offering of securities or any financing. Upon release of information, with approval pursuant to 34 Page 34 of 37 this Section 14.1, further release of substantially the same information shall not require approval under this Section 14.1. 14.2. EXPORT CONTROL. The Parties acknowledge that the export of technical data, materials, or products is subject to the exporting Party receiving the necessary export licenses and that the Parties cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either Party. The Parties agree that regardless of any disclosure made by the Party receiving an export of an ultimate destination of any technical data, materials, or products, the receiving Party will not reexport either directly or indirectly, any technical data, material, or products without first obtaining the applicable validated or general license from the United States Department of Commerce, United States Food and Drug Administration, and/or any other agency or department of the United States Government, as required. The receiving Party shall provide the exporting Party with any information, materials, certifications, or other documents which may be reasonably required in connection with such exports under the Export Administration Act of 1979, as amended, its rules and regulations, the Federal Food, Drug and Cosmetic Act, and other applicable export laws. 14.3. CONDUCT OF STUDIES. All studies, research and testing done by or on behalf of each Party under this Agreement shall be performed in strict compliance with any applicable federal, state, or local laws, rules, and regulations governing the conduct of studies, research, and testing at the site where such studies, research, and testing are being conducted. 14.4. NO IMPLIED LICENSES. Only the licenses granted pursuant to the express terms of this Agreement shall be of any legal force and effect. No license rights shall be created by implication or estoppel. 14.5. NO AGENCY. Nothing herein shall be deemed to constitute either Party as the agent or representative of the other Party, or both Parties as joint venturers or partners for any purpose. Each Party shall be an independent contractor, not an employee or partner of the other Party, and the manner in which each Party 35 Page 35 of 37 renders its services under this Agreement shall be within its sole discretion. Neither Party shall be responsible for the acts or omissions of the other Party, and neither Party will have authority to speak for, represent or obligate the other Party in any way without prior written authority from the other Party. 14.6. NOTICE. All notices required under this Agreement to be given by one Party to the other shall be in writing and shall be given by addressing the same to the other at the address or facsimile number set forth below, or at such other address or facsimile number as either may specify in writing to the other. All notices shall become effective when deposited in the United States Mail with proper postage for first class registered or certified mail prepaid, return receipt requested, or when delivered personally, or, if promptly confirmed by mail as provided above, when dispatched by facsimile. GI: Genetics Institute, Inc. 87 CambridgePark Drive Cambridge, Massachusetts 02140 Telecopier (617) 876-5851 Attn: Legal Department TKT: Transkaryotic Therapies, Inc. 193 Albany Street Cambridge, Massachusetts 02139 Telecopier (617) 491-7903 Attn: President and CEO 14.7. ASSIGNMENT. This Agreement, and the rights and obligations hereunder, may not be assigned or transferred, in whole or in part, by either Party without the prior written consent of the other Party, except that (a) either Party may assign this Agreement to an Affiliate, provided that such Party remains primarily liable and/or responsible for the performance of such obligations and such Affiliate, and provided further that such Affiliate agrees to be bound to the terms and conditions of this Agreement and (b) either Party may transfer this Agreement in connection with the merger, consolidation or sale of all or substantially all of that Party's assets. 14.8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the Parties with regard to its 36 Page 36 of 37 subject matter, and supersedes all previous written or oral representations, agreements and understandings between the Parties. 14.9. NO MODIFICATION. This Agreement may be changed only by a writing signed by the Parties. 14.10. HEADINGS. The headings contained in this Agreement are for convenience of reference only and shall not be considered in construing this Agreement. 14.11. WAIVER. The waiver by either Party of a breach or a default of any provision of this Agreement by the other Party shall not be construed as a waiver of any 4 succeeding breach of the same or any other provision, nor shall any delay or omission on the part of either Party to exercise or avail itself of any right, power or privilege that it has or may have hereunder operate as a waiver of any right, power, or privilege by such Party. 14.12. SURVIVAL. Notwithstanding any termination of this Agreement (in part or in its entirety), the obligations of the Parties under Sections 9, 10, 11, 12, 13 and 14, as well as under any other provisions which by their nature are intended to survive any such termination, shall survive and continue to be enforceable. Upon any termination of this Agreement pursuant to Sections 13.2, each Party shall promptly return to the other Party all written Confidential Information, and all copies thereof, of the other Party. 14.13. SEVERABILITY. In the event that any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, and all other provisions shall remain in full force and effect. If any of the provisions of this Agreement is held to be excessively broad or invalid, illegal or unenforceable in any jurisdiction, it shall be reformed and construed by limiting and reducing it so as to be enforceable to the maximum extent permitted by law in conformance with its original intent. In the event that after such reformation, a Party's rights or obligations are materially changed, then such Party may terminate this Agreement. 37 Page 37 of 37 14.14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their successors and permitted assigns. 14.15. THIRD PARTIES. None of the provisions of this Agreement shall be for the benefit of or enforceable by any third party. 14.16. COUNTERPARTS. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 14.17. APPLICABLE LAW. This Agreement shall in all events and for all purposes be governed by, and construed in accordance with, the law of The Commonwealth of Massachusetts without regard to any choice of law principle that would dictate the application of the law of another jurisdiction. IN WITNESS WHEREOF, duly-authorized representatives of the parties have signed this Agreement as a document under seal as of the Effective Date. GENETICS INSTITUTE, INC. APPROVED By /s/ Gabriel Schmergel AS TO FORM -------------------------------------- Print Name Gabriel Schmergel GI LEGAL AFFAIRS -------------------------------------- Title President and Chief Executive Officer BY G.A.C. -------------------------------------- --------------- duly authorized TRANSKARYOTIC THERAPIES, INC. By /s/ K. Michael Forrest -------------------------------------- Print Name K. Michael Forrest -------------------------------------- Title President and Chief Executive Officer -------------------------------------- duly authorized 38 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Schedule 2.15 GI Territory ************** ************** ******* ******** ****** ******* ****** ****** ******* ******* ******* ******** ******* ******* ******* ****** *************** ******* ******* ****** ********** ********* ****** ******* ***** ********** ******** ********** ***** ********* ****** ******* ********** ********** *********** ************ ************* ********** ******* ******* ****** ****************** ****** ******* ******* ******* ***************************** 39 Schedule 5.3 Arbitration Provision In the event the Parties' are unable to enter into a clinical or commercial supply agreement in a timely manner, as prescribed in Sections 5.3 and 7.3 of the Agreement, as applicable, the terms and conditions of the applicable supply agreement will be determined through binding arbitration in Cambridge, Massachusetts in accordance with the Commercial Rules of Arbitration of the American Arbitration Association. The arbitration panel shall be comprised of three (3) arbitrators. Each Party shall be entitled to appoint one arbitrator. The Parties shall appoint their respective arbitrators within ten (10) days of the expiration of the time allotted for mediation in Sections 5.3 or 7.3 of the Agreement, as applicable. If either Party shall fail to make timely appointment of its arbitrator, the arbitration shall be heard and decided by the sole arbitrator duly appointed by the other Party. Where both Parties have timely appointed their respective arbitrators, the two arbitrators so appointed shall agree on the appointment of the third arbitrator from the list of arbitrators maintained by the American Arbitration Association. If the Parties' appointed arbitrators shall fail to agree, within thirty (30) days from the date both Parties' arbitrators have been appointed, on the identity of the third arbitrator, then such arbitrator shall be appointed by the appropriate administrative body of the American Arbitration Association. Within ten (10) days of appointment of the full arbitration panel, the Parties shall exchange their final proposed supply agreements. Within thirty (30) days of appointment of the arbitration panel, each Party shall submit to the arbitrators a copy of the proposed agreement which it previously delivered to the other Party, together with a brief or other written memorandum supporting the merits of its proposed agreement. The arbitration panel shall promptly convene a hearing, at which time each Party shall have one (1) hour to argue in support of its proposed agreement. The Parties will not call any witnesses in support of their arguments. The arbitration panel shall select either of the Party's proposed agreements as the binding final supply agreement to be executed by the Parties. In making their selection, the arbitrators shall not modify the terms or conditions of either Party's proposed agreement; nor will the arbitrators combined provisions from both proposed agreements. In making their selection, the arbitrators shall consider the terms and conditions of this Agreement, the relative merits of the proposed agreements and the written and oral arguments of the Parties. In the event the arbitrators seek the guidance of the law of any jurisdiction, the law of The Commonwealth of Massachusetts shall govern. 40 The arbitrators shall make their decision known to the Parties as quickly as possible by delivering written notice of their decision to both Parties. Such written notice need not justify their decision. The Parties will execute the supply agreement selected by the arbitration panel within five (5) days of receipt of notice of such selection. The decision of the arbitrators shall be final and binding on the parties, and specific performance may be ordered by any court of competent jurisdiction. The Parties will bear their own costs in preparing for the arbitration. The costs of the arbitrators will be equally divided between the Parties. 41 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Schedule 13.2 Factor VIII Gene Therapy Products Conditions and Milestones Conditions I. TKT's manufacture, use or sale of a Factor VIII Gene Therapy Product does not infringe the valid patent claims of any third party, as evidenced, on a country-by-country basis, by the lack of a final decision of a court of competent jurisdiction to the contrary II. TKT uses commercially reasonable best efforts, consistent with prudent business practices, to diligently commercialize the Factor VIII Gene Therapy Products in the TKT Territory, and TKT devotes sufficient scientific staff in order to achieve the Milestones set forth below Milestones I. ********************************************************* ********************************************************* ***************************************************** II. ******************************************************* III. ********************************************************* *********************************** 42 CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. CONFIDENTIAL May 30, 1996 Genetics Institute Legal Department 87 Cambridge Park Drive Cambridge, MA 02140 Dear Sir: Re: Collaboration and License Agreement between Genetics Institute, Inc. and Transkaryotic Therapies, Inc. This letter is to amend the Collaboration and License Agreement between Genetics Institute, Inc., and Transkaryotic Therapies, Inc. and dated July 22, 1993, on the following terms: In Section 7.2, Pricing, replace the second sentence with the following: **************************************************************** **************************************************************** ***************************************; In Schedule 13.2 referenced in Section 13.2 replace Milestone **** and Milestone **** by the following: Milestone **** ************************************* ***************** Milestone **** ******************************************* ***************************************. Please countersign both copies of this letter and return the enclosed duplicate copy to me to effectuate this amendment of our agreement. Very truly yours TRANSKARYOTIC THERAPIES, INC. /s/ C. Adams - ------------------------------------ Christoph M. Adams Vice President, Business Development For Genetics Institute, Inc. /s/ Jack Morgan - ------------------------------------ EX-10.33 4 AMENDED AND RESTATED LICENSE AGREEMENT 1 EXHIBIT 10.33 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. AMENDED AND RESTATED LICENSE AGREEMENT between TRANSKARYOTIC THERAPIES, INC. and MARION MERRELL DOW INC. dated as of March 1, 1995 2 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. TABLE OF CONTENTS ARTICLE 1. DEFINITIONS.................................................. 1 1.1. "Affiliate".......................................... 1 1.2. "Customer"........................................... 2 1.3. "Development Committee".............................. 2 1.4. "Development Phase" ................................. 2 1.5. "Effective Date"..................................... 2 1.6. "ELA"................................................ 2 1.7. "GA-EPO"............................................. 2 1.8. "First Commercial Sale".............................. 2 1.9. "FDA"................................................ 2 1.10. "Fully Absorbed Costs"............................... 2 1.11. "Gross Margin"....................................... 3 1.12. "IND"................................................ 3 1.13. "MMD Territory"...................................... 3 1.14. "Manufacturing Know-How"............................. 3 1.15. "Net Revenues"....................................... 3 1.16. "Net Sales".......................................... 3 1.17. "PLA"................................................ 4 1.18. "Program"............................................ 5 1.19. "R&D Oversight Committee"............................ 5 1.20. "Research Phase"..................................... 5 1.21. "Research Program"................................... 5 1.22. "Third Party"........................................ 5 1.23. "TKT Patent Rights".................................. 5 1.24. "TKT Technology"..................................... 5 ARTICLE 2. SCOPE AND STRUCTURE.......................................... 6 2.1. General.............................................. 6 2.2. Relationship of TKT and MMD.......................... 6 2.3. Commercialization of *******************............. 6 2.3.1. ************************** ********************************** *****************************.............. 6 2.3.2. ************************************** ********************************** *****************************.............. 6 2.3.3. *********************************** ***********************************........ 7 2.3.4. Payments................................... 7 2.3.5. *********************...................... 7 2.3.6. ******************......................... 8 ARTICLE 3. LICENSE GRANTS; MANUFACTURING AND MARKETING RIGHTS.......................................................... 8 3.1. Grant of License Rights by TKT to MMD................ 8 3.1.1. Exclusive GA-EPO License................... 8 3.1.2. Sublicenses of GA-EPO...................... 8 3.1.3. Exclusive Manufacturing Know-How License.................................... 8 (i) 3 3.1.4. Sublicenses of Manufacturing Know-How...... 9 3.2. Grant of License Rights by MMD to TKT................ 9 3.3. Reservation of Rights................................ 9 3.3.1. TKT Reservation............................ 9 3.3.2. MMD Reservation............................ 9 3.3.3. Manufacture of GA-EPO...................... 10 ARTICLE 4. THE RESEARCH PHASE........................................... 10 4.1. Conduct of the Research Program...................... 10 4.1.1. General.................................... 10 4.1.2. Research Plan.............................. 10 4.1.3. Subcontracts............................... 10 4.1.4. Data....................................... 10 4.1.5. Quarterly Reports by TKT................... 11 4.1.6. Assistance by MMD.......................... 11 4.2. Funding of the Research Program...................... 11 4.3. Term of the Research Phase........................... 11 4.3.1. Completion of the Research Phase........... 11 4.3.2. Term of the Research Phase................. 12 ARTICLE 5. THE DEVELOPMENT PHASE........................................ 12 5.1. Conduct of the Development Phase..................... 12 5.1.1. Commencement of the Development Phase...... 12 5.1.2. Development Phase.......................... 12 5.1.3. Annual Development Plan.................... 13 5.1.4. Adjustment of Development Phase Milestones................................. 13 5.1.5. Attendance at Regulatory Meetings.......... 13 5.2. Funding of the Development Phase..................... 13 5.3. Development Information.............................. 13 5.3.1. Information for Regulatory Submissions..... 13 5.3.2. Reports to Development Committee........... 14 5.3.3. Regulatory Submissions. .................. 14 5.3.4. Adverse Event Information.................. 14 5.4. Certain Prohibited Actions........................... 14 5.5. Development Phase Manufacturing...................... 14 5.6. Manufacturing Costs.................................. 14 5.7. Assistance by TKT.................................... 15 5.8. Regulatory Matters and Commercialization............. 15 5.8.1. Commercialization.......................... 15 5.8.2. Marketing Plans............................ 15 5.8.3. Co-Development, Co-Promotion and Co- Marketing.................................. 15 ARTICLE 6. RESEARCH, DEVELOPMENT AND REGULATORY COORDINATION.................................................... 16 6.1. R&D Oversight Committee.............................. 16 6.1.1. General.................................... 16 6.1.2. Minutes.................................... 17 6.2. Development Committee................................ 17 6.2.1. General.................................... 17 6.2.2. Minutes.................................... 17 (ii) 4 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 6.3. General Disagreements................................ 17 6.4. Visit of Facilities.................................. 18 6.5. Annual Review and Planning Meeting................... 18 ARTICLE 7. MILESTONES AND ROYALTIES..................................... 18 7.1. Milestone Payments................................... 18 7.2. Royalties............................................ 19 7.2.1. Royalties Based on Net Sales of GA-EPO..... 20 7.2.2. Alternative Royalty Based on Gross Margin..................................... 20 7.2.3. Sharing of Revenues From Sublicensees...... 20 7.2.4. Adjustment of Royalty Rates................ 20 7.3. Royalty Reports, Exchange Rates...................... 21 7.4. Audits............................................... 22 7.4.1. Procedure.................................. 22 7.4.2. Expenses................................... 22 7.4.3. Sublicenses................................ 22 7.4.4. Confidential Treatment..................... 22 7.5. Royalty Payment Terms................................ 22 7.6. Form of Payment...................................... 23 7.7. Withholding Taxes.................................... 23 7.8. Interest on Late Payments............................ 23 ARTICLE 8. INTELLECTUAL PROPERTY RIGHTS................................. 23 8.1. Ownership............................................ 23 8.1.1. Ownership of Discoveries and Improvements............................... 23 8.1.2. Cooperation of Employees................... 24 8.2. Filing, Prosecution and Maintenance of TKT Patent Rights and TKT Technology............................ 24 8.2.1. ***********************************........ 24 8.2.2. Patent Filing Costs........................ 25 8.3. Cooperation.......................................... 25 8.4. Notification of Patent Term Restoration.............. 25 8.5. No Other Technology Rights........................... 26 8.6. Enforcement of TKT Patent Rights and TKT Technology; Defense of Infringement Actions.......... 26 8.6.1. ****************************............... 26 8.6.2. ********************************* *******.................................... 26 8.6.3. *********************************** ********................................... 26 8.6.4. *****************************. ........... 27 8.6.5. **************************** ******************************** ****************........................... 27 8.7. ********************************************** ***************************............................... 28 ARTICLE 9. CONFIDENTIALITY.............................................. 28 9.1. Nondisclosure Obligations............................ 28 9.1.1. General.................................... 28 (iii) 5 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 9.1.2. Limitations................................ 28 9.2. Materials............................................ 29 9.2.1. ******************************............. 29 9.2.2. Samples.................................... 29 9.3. Terms of this Agreement.............................. 29 9.4. Publications......................................... 30 9.4.1. Procedure.................................. 30 9.4.2. Delay...................................... 30 9.4.3. Resolution................................. 30 9.5. Injunctive Relief.................................... 30 ARTICLE 10. REPRESENTATIONS AND WARRANTIES.............................. 30 10.1. General.............................................. 30 10.1.1. Authorization.............................. 30 10.1.2. No Inconsistent TKT Arrangements........... 30 10.1.3. Exclusivity................................ 31 10.1.4. Licensed Technology........................ 31 10.2. Patent Validity...................................... 31 10.2.1. Title...................................... 31 10.2.2. No Encumbrances............................ 31 10.2.3. Non-Infringement........................... 31 10.3. Financial Statements................................. 31 ARTICLE 11. INDEMNITY................................................... 32 11.1. MMD Indemnity Obligations............................ 32 11.2. TKT Indemnity Obligations............................ 32 11.3. Procedure............................................ 32 11.4. Insurance............................................ 33 ARTICLE 12. TERM AND TERMINATION........................................ 33 12.1. Expiration........................................... 33 12.2. Termination.......................................... 33 12.3. Effect of Termination................................ 34 ARTICLE 13. MISCELLANEOUS............................................... 35 13.1. Force Majeure........................................ 35 13.2. Assignment........................................... 35 13.3. Severability......................................... 35 13.4. Notices.............................................. 36 13.5. Applicable Law....................................... 37 13.6. Dispute Resolution................................... 37 13.7. Entire Agreement..................................... 37 13.8. Headings............................................. 38 13.9. Independent Contractors.............................. 38 13.10. Agreement Not to Solicit Employees....................... 38 13.11. Exports.................................................. 38 13.12. Waiver................................................... 38 13.13. Counterparts............................................. 38 (iv) 6 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. AMENDED AND RESTATED LICENSE AGREEMENT THIS AMENDED AND RESTATED LICENSE AGREEMENT dated as of March 1, 1995 (the "Agreement") is made between TRANSKARYOTIC THERAPIES, INC., a Delaware corporation having its principal place of business at 195 Albany Street, Cambridge, Massachusetts 02139 ("TKT"), and MARION MERRELL DOW INC., a Delaware corporation having its principal place of business at 9300 Ward Parkway, Kansas City, Missouri 64114-0480 ("MMD"). RECITALS WHEREAS, TKT has filed patent applications necessary to exploit discoveries relating to the expression of gene-activated erythropoietin protein in eukaryotic cells and possesses certain related know-how and expertise. WHEREAS, MMD desires to license TKT's patent rights and certain related know-how and expertise relating to gene-activated erythropoietin protein and obtain TKT's assistance for development of such discoveries. WHEREAS, TKT and MMD previously entered into that certain License Agreement dated as of May 18, 1994 (the "Original License Agreement") regarding gene-activated erythropoietin protein and now desire to amend and restate the Original License Agreement in its entirety as follows. NOW THEREFORE, in consideration of the premises and of the covenants herein contained, the parties hereto mutually agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement, the terms defined in this Article shall have the meanings specified below: 1.1. "AFFILIATE" shall mean any corporation or other entity which controls, is controlled by, or is under common control with a party to this Agreement. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the corporation or other entity. Notwithstanding the foregoing, the Dow Chemical Company shall not be considered an Affiliate of MMD for purposes of this Agreement. -1- 7 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 1.2. "CUSTOMER" shall have the meaning set forth in Section 1.15. 1.3. "DEVELOPMENT COMMITTEE" shall mean the joint committee composed of representatives of TKT and MMD described in Section 6.2 of this Agreement. 1.4. "DEVELOPMENT PHASE" shall mean the second phase of the Program, which shall commence ********************************** *********************************************************** ********************************************************* ****************************** covered by the TKT Patent Rights or which uses the TKT Technology and the preparation and filing of supporting regulatory submissions until, with respect to each country in the MMD Territory, final marketing approval for GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology is obtained in such country. 1.5. "EFFECTIVE DATE" shall mean May 18, 1994. 1.6. "ELA" shall mean the Establishment License Application filed with the FDA to obtain approval of the facility to be used to manufacture GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology for sale in the United States or any comparable application filed with the regulatory authorities of a country other than the United States to obtain approval of production facilities to be used to manufacture GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology for sale in such country. 1.7. "GA-EPO" shall mean all pharmaceutical and other formulations of gene-activated erythropoietin protein, including all injectable and orally available formulations, line extensions, combination products, delivery systems, and dosage forms related thereto, ************** ************************** ************ 1.8. "FIRST COMMERCIAL SALE" of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology shall mean the first sale for use or consumption by the general public of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in a country in the MMD Territory after required marketing and pricing approval has been granted by the governing health authority of such country. 1.9. "FDA" shall mean the United States Food and Drug Administration. 1.10. "FULLY ABSORBED COSTS" shall mean the direct variable and direct fixed costs associated with the conduct of the Research Phase or the Development Phase. Direct variable costs shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the conduct of the Research Phase or the Development Phase. Direct fixed costs shall be deemed to be the cost of utilities, insurance, equipment -2- 8 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. depreciation and other fixed costs directly related to the conduct of the Research Phase or the Development Phase. Fixed costs shall be allocated based upon the proportion of such costs directly attributable to support of the Research Phase or the Development Phase. All cost determinations made hereunder shall be made in accordance with generally accepted accounting principles consistently applied. 1.11. "GROSS MARGIN" with respect to GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology shall mean Net Revenues from sales of such GA-EPO less the cost of goods sold of MMD or its Affiliates for such GA-EPO, determined in accordance with generally accepted accounting principles consistently applied for all products manufactured by MMD. 1.12. "IND" shall mean an investigational new drug application filed with the FDA prior to beginning clinical trials in humans or any comparable application filed with the regulatory authorities of a country other than the United States prior to beginning clinical trials in humans in that country, with respect to GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology. 1.13. "MMD TERRITORY" shall mean all of the countries in the world, which shall be divided into the following groupings of countries: ************************************************** ******************************************************* ************************************************************** ************************************************************ *************************************************************** ********************************************************* ***************************************************************** ************************************************************** **************************************************************** *********************************************************** *****. Each of the foregoing groupings of countries is referred to as a "Territory Block." 1.14. "MANUFACTURING KNOW-HOW" shall mean all inventions, discoveries, improvements and other technology, whether or not patentable or copyrightable, and any patent applications, patents or copyrights based thereon, relating to or necessary or useful for the production and packaging of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology. 1.15. "NET REVENUES" with respect to GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology shall mean the invoiced amount billed by MMD or its Affiliates for GA-EPO finished product in final packing form (whether or not with final labels) to any MMD distributors or sublicensees which are not Affiliates, including any royalties due to MMD or its Affiliates with respect to such sales, less, whether or not such costs are invoiced separately to such person or entity, the costs -3- 9 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. identified in clauses (a) through (d) of subsection 1.16. The definitions of Bundled Product and Combination Product set forth in subsection 1.16. shall also apply to such sales mutatis mutandis. 1.16. "NET SALES" with respect to GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology shall mean the invoiced amount billed for GA-EPO finished product in final packing form to the first Third Party trade purchaser (a "Trade Customer") by MMD or its Affiliates or any MMD distributors which are not Affiliates, or, to the extent permitted in subsection 3.1.2, by permitted sublicensees of MMD (it being understood that wholesalers which are not Affiliates of MMD shall be considered Third Party trade purchasers), less, whether or not such costs are invoiced separately to such Trade Customer, (a) amounts refunded or credited for GA-EPO which was rejected, spoiled, damaged, out-dated or returned, (b) freight, shipment and insurance costs incurred in transporting GA-EPO to such customers, (c) quantity, trade, cash, and other discounts, rebates (including, without limitation, pursuant to governmental regulation), chargebacks, retroactive price reductions, credits or allowances allowed or taken (subject to post-period adjustment if allowed but not taken within three months of the end of the calendar year in which such credit or allowance is allowed), and (d) taxes, tariffs, customs duties and surcharges and other governmental charges incurred in connection with the sale, exportation or importation of GA-EPO. The transfer of GA-EPO by MMD or one of its Affiliates to another Affiliate of MMD shall not be considered a sale; in such cases, Net Sales shall be determined based on the invoiced sales price by the Affiliate to the Trade Customer, less the deductions allowed under this Section. MMD shall be deemed to have sold a "Bundled Product" if GA-EPO finished product is sold by MMD pursuant to an agreement with a Trade Customer specifying, for a combination of products or services, (i) a single price, (ii) other terms of purchase not separately identifying either a price per product or the effective deductions referred to above per product or (iii) a price for units of GA-EPO which is discounted below MMD's standard invoice price per unit of GA-EPO by at least five percentage points more than the amount that any other product or service in the Bundled Product is discounted below such other product's or service's standard invoice price. In order to calculate the Net Sales of GA-EPO included in a Bundled Product (a) in the case of the foregoing clauses (i) and (ii), the total Net Sales of the Bundled Product shall be multiplied by a fraction, the numerator of which shall be ************************************************************************** ********************************** and the denominator of which shall be ************************************************************************** ************************************************************************** ************************************************************************** *********************** and (b) in the case of the foregoing clause (iii), the parties will determine whether an adjustment to Net Sales is appropriate and, if so, a mutually agreeable method of calculation. If GA- -4- 10 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. EPO is formulated by MMD with one or more different active biological or chemical ingredients and such formulation is sold in finished product form, then MMD shall be deemed to have sold a "Combination Product." In order to calculate the Net Sales of GA-EPO included in a Combination Product, the total invoice price for the Combination Product shall be multiplied by a fraction, the numerator of which shall be ******************************** ********************************************************* ***********************************************, and the denominator of which shall be ********************************** *************************************************************** ********************************************************** *************************************************************** ********************. If it is not possible to determine the standard invoice price for an active ingredient of the Combination Product, then the standard invoice price for such individual active ingredient shall be the fully allocated cost of manufacture therefor determined in accordance with standard cost accounting principles, as adjusted to reflect MMD's standard profit margin for like products. The amount of Net Sales for any period shall be determined on the basis of sales recorded in the ordinary course on the books and records of MMD (or any Affiliate of MMD) during such period in accordance with Generally Accepted Accounting Principles and with past practice, without reference to the effects of any subsequent audit adjustments which result in any of such sales being recognized by MMD in another period. 1.17. "PLA" shall mean a product license application filed with the FDA after completion of human clinical trials to obtain marketing approval for GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in the United States or any comparable application filed with the regulatory authorities of a country other than the United States to obtain marketing approval for GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in that country. 1.18. "PROGRAM" shall mean the collaboration by TKT and MMD described in this Agreement. 1.19. "R&D OVERSIGHT COMMITTEE" shall mean the joint committee composed of representatives of TKT and MMD described in Section 6.1 of this Agreement. 1.20. "RESEARCH PHASE" shall mean the first stage of the Program commencing on the Effective Date, ******************* *********************************************************** *************************************************************** ********************* The Research Phase is more fully described in Article 4. 1.21. "RESEARCH PROGRAM" shall mean the GA-EPO research program described in Section 4.1 of this Agreement. 1.22. "THIRD PARTY" shall mean any entity other than TKT or MMD and their respective Affiliates. -5- 11 1.23. "TKT PATENT RIGHTS" shall mean all present and, at MMD's election, future patents, patent applications, patent extensions, certificates of invention, or applications for certificates of invention, together with any divisions, continuations or continuations-in-part thereof, which are owned or controlled by TKT relating to or necessary or useful for the manufacture, use, distribution or sale of GA-EPO, including without limitation those specified on Schedule 1.23 hereto. 1.24. "TKT TECHNOLOGY" shall mean all present and future inventions, trade secrets, copyrights, know-how, data, regulatory submissions and other intellectual property of any kind (including any proprietary biological materials, compounds or reagents but not including TKT Patent Rights) which are owned or controlled by, or licensed ( with the right to sublicense) to, TKT relating to or necessary or useful for the manufacture, use, distribution or sale of GA-EPO, including but not limited to any patents or patent applications licensed from Third Parties. With respect to TKT Technology which has been licensed to TKT by a Third Party, (i) MMD agrees to assume and pay for its portion of any costs, expenses, fees or royalties associated with its use of sublicense rights relating to such licensed TKT Technology to the extent described in Section 8.7, and (ii) if TKT does not currently have the right to sublicense such intellectual property to MMD hereunder, such license is listed on Schedule 1.24 hereto and TKT shall use commercially reasonable efforts to obtain the right to sublicense such intellectual property (as well as any intellectual property licensed to TKT hereafter which is included in the TKT Technology), to MMD hereunder. -6- 12 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ARTICLE 2. SCOPE AND STRUCTURE 2.1. GENERAL. TKT and MMD wish to establish an agreement with respect to GA-EPO. During the course of the Program, TKT and MMD shall communicate regularly and shall assume different rights and responsibilities, all as more specifically described herein. 2.2. RELATIONSHIP OF TKT AND MMD. During the term of this Agreement, neither TKT or MMD, nor any of their Affiliates shall independently, or with a Third Party, conduct research regarding, or engage in the development, manufacture, marketing or sale of, pharmaceutical formulations of erythropoietin protein, other than as part of the Program, except that either TKT or MMD may develop, manufacture, market, distribute or sell "generic" or "non-branded" pharmaceutical formulations of erythropoietin protein in any country if (i) there are imminent Third Party sales of "generic" erythropoietin protein in such country and (ii) GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology may not lawfully be substituted in such country as a "generic" equivalent product for any prescription for a branded or "generic" form of erythropoietin protein with respect to which sales by such Third Party are imminent. 2.3. COMMERCIALIZATION OF *******************. TKT agrees that it shall not develop, manufacture, promote or market **************************************** *********************************************************** ************************************************************** ************************************************************* ********************************************************** ********************************************** 2.3.1. ***************************************** *************************************************. ************ *************************************************************** *********************************************** 2.3.2. ************************************** ****************************************************************. ************************************************************ *********************************************************** ***************************************************************** *********************************************************** ***************** 2.3.2.1. ************************. ******** ***************************************************************** ********************************************************** ************** -7- 13 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 2.3.2.2. ***************************. Prior to entering into any agreement regarding a ********************, TKT shall deliver a written notice (the ********************* ) to MMD disclosing in reasonable detail the terms and conditions of the proposed ********************. 2.3.2.3. RIGHT OF FIRST REFUSAL. MMD shall have the right (the "FIRST REFUSAL RIGHT") at any time within ****** ********* after receipt of the ******************** to accept the terms thereof, in which event the parties shall use their best efforts to enter into an agreement, ************** after such acceptance, regarding a ******************** upon the terms specified in the ********************. If MMD does not exercise the First Refusal Right then TKT shall be free, for a period of ******** from the expiration of such *******, to enter into an agreement regarding a ******************** upon the terms and with the Third Party specified in the ********************. Following the ************** specified in the preceding sentence, TKT shall not enter into an agreement regarding a ******* ************** without complying with the terms of this subsection 2.3.2. 2.3.3. ***************************************** *****************************. ********* the ***** ****************************************, or any earlier termination of MMD's rights under this Section pursuant to subsection 2.3.5, TKT shall be under no obligation to enter into a ******************** with MMD but shall promptly notify MMD if it enters into negotiations for a ********************. 2.3.4. PAYMENTS. In consideration of the obligations of TKT pursuant to this Section 2.3.1, MMD shall pay to TKT the following amounts every ********** following the date of this Agreement (with the first payment due on the date hereof): Anniversary Amount ----------- ------ *********** $************ ********** $************ ************* $************ *************** $************ ****************** $************ ************* $************ ***************** $************ **************** $************ ****************** $************ -8- 14 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ***************** $************ 2.3.5. *********************. ****************** ************************************************************** ********************************************************** ******************************************************** *************************************************************** **************************************************************** ************************************************************** ********************************************************* ************************************************************ ******************************************************* *************************************************************** following the delivery of such written notice. In either event, *************************************** at the end of the period with respect to which payments have been made under subsection 2.3.4. Except as provided in subsection 2.3.6, **************** ****** pursuant to subsection 2.3.4 *****************. 2.3.6. ******************. ********************** ***************************************************************** *********************************************************** **************************************************************** ************************************************************ ************************************************************* ********************************************************** **************************************************************** *************************************************************** ***************************************************************** *************************************************************** ************************************************************* ************************************************************* ******************. ARTICLE 3. LICENSE GRANTS; MANUFACTURING AND MARKETING RIGHTS 3.1. GRANT OF LICENSE RIGHTS BY TKT TO MMD. 3.1.1. EXCLUSIVE GA-EPO LICENSE. TKT hereby grants to MMD the worldwide, perpetual, and exclusive right and license under the TKT Patent Rights and the TKT Technology to develop, make, have made, use, distribute for sale and sell GA-EPO. 3.1.2. SUBLICENSES OF GA-EPO. MMD shall have the right to grant sublicenses under the TKT Patent Rights and the TKT Technology license granted by TKT to MMD under subsection 3.1.1 to Affiliates of MMD and, with the written consent of TKT, which shall not be unreasonably withheld, to entities which are not Affiliates of MMD. In connection with such sublicense, MMD may provide that the sublicensee shall pay directly to TKT any amounts which may become due in accordance with Section 7.2, PROVIDED, HOWEVER, that MMD shall in any event remain liable for the payment of all such amounts notwithstanding any such -9- 15 provision between MMD and its sublicensee. Upon TKT's request, and to the extent that MMD is not contractually prohibited from doing so, MMD will provide a copy of such sublicenses to TKT. 3.1.3. EXCLUSIVE MANUFACTURING KNOW-HOW LICENSE. TKT hereby grants to MMD a worldwide, perpetual, and exclusive and, except as provided below, fully paid-up and royalty-free right and license under Manufacturing Know-How owned or controlled by, or licensed (subject to the provisions of this subsection 3.1.3, with the right to sublicense) to, TKT to make or have made GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology. With respect to Manufacturing Know-How which has been licensed to TKT by a Third Party, (i) MMD agrees to assume and pay for any costs, expenses, fees or royalties associated with its sublicense of such Manufacturing Know-How, and (ii) if TKT does not currently have the right to sublicense such intellectual property to MMD hereunder, such license is listed on Schedule 3.1.3 hereto and TKT shall use commercially reasonable efforts to obtain the right to sublicense such intellectual property (as well as any intellectual property licensed to TKT hereafter which is included in the Manufacturing Know-How) to MMD hereunder for such limited purposes. 3.1.4. SUBLICENSES OF MANUFACTURING KNOW-HOW. MMD shall have the right to grant sublicenses under the Manufacturing Know-How license granted by TKT to MMD under subsection 3.1.3 to Affiliates of MMD and, with the written consent of TKT, which shall not be unreasonably withheld, to entities which are not Affiliates of MMD. MMD will provide a copy of such sublicenses to TKT. 3.2. GRANT OF LICENSE RIGHTS BY MMD TO TKT. Subject to the last sentence of this Section 3.2, upon the request of TKT, (i) MMD shall grant to TKT a worldwide, perpetual, non-exclusive and fully paid-up and royalty-free right and license, with the right to sublicense, under Manufacturing Know-How owned or controlled by, or licensed (subject to the provisions of this Section 3.2, with the right to sublicense) to MMD which is developed by a Third Party contract manufacturer engaged by MMD and working with or receiving assistance from TKT, to make or have made products (other than pharmaceutical formulations of erythropoietin protein) worldwide which are not competitive with GA-EPO, and (ii) MMD shall negotiate in good faith with TKT the terms of a license, with the right to sublicense, which shall be on reasonable commercial terms, under Manufacturing Know-How owned or controlled by, or licensed (subject to the provisions of this Section 3.2, with the right to sublicense) to MMD to make or have made products (other than pharmaceutical formulations of erythropoietin protein) worldwide which are not competitive with GA-EPO. With respect to Manufacturing Know-How described above which has been licensed to MMD by a Third Party, (i) TKT agrees to assume and pay for any costs, expenses, fees or royalties associated with its sublicense of such Manufacturing Know-How, and (ii) if MMD does not have the right to sublicense such intellectual property to TKT hereunder, MMD shall use -10- 16 commercially reasonable efforts, as determined in good faith by MMD, to obtain the right to sublicense such intellectual property to TKT hereunder for such limited purposes. 3.3. RESERVATION OF RIGHTS. 3.3.1. TKT RESERVATION. Notwithstanding the license grants set forth above, and subject to the provisions of Section 5.4 hereof, TKT at all times reserves the right under the TKT Patent Rights, TKT Technology, and Manufacturing Know-How owned either exclusively by TKT or jointly with MMD (i) to make, have made and use GA-EPO for research and development uses as part of the Program and (ii) subject, with respect to Manufacturing Know-How owned jointly by TKT and MMD, to the consent of MMD, which consent shall not be unreasonably withheld, to make, have made, use, sublicense, distribute for sale and sell products other than GA-EPO. 3.3.2. MMD RESERVATION. Notwithstanding the license grants set forth above, MMD at all times reserves the right under Manufacturing Know-How owned either exclusively by MMD or jointly with TKT (i) to make, have made and use GA-EPO for research and development uses as part of the Program, (ii) to make, have made, use, sublicense, distribute for sale and sell GA-EPO and (iii) subject, with respect to Manufacturing Know-How owned jointly by TKT and MMD, to the consent of TKT, which consent shall not be unreasonably withheld, to make, have made, use, sublicense, distribute for sale and sell products other than GA-EPO. 3.3.3. MANUFACTURE OF GA-EPO. Notwithstanding anything else contained in this Agreement, MMD shall have the right to make or have made GA-EPO in any country in the world for use, distribution for sale or sale by itself, its Affiliates or its permitted licensees or sublicensees in the territories allocated to it under this Agreement. ARTICLE 4. THE RESEARCH PHASE 4.1. CONDUCT OF THE RESEARCH PROGRAM. 4.1.1. GENERAL. The conduct of the Research Program shall be the primary responsibility of TKT and shall take place primarily at TKT's facilities in Cambridge, Massachusetts. The Research Program shall be conducted in good scientific manner, and in compliance with all applicable good laboratory practices and applicable legal requirements to achieve efficiently and expeditiously its objectives. TKT shall proceed diligently with the work set out in the Research Program using its best efforts using commercially reasonable means consistent with those used by TKT for other projects with a similar commercial potential. 4.1.2. RESEARCH PLAN. The Research Program shall be conducted under a research plan which describes the work to be pursued by TKT during the Research Phase and which has been -11- 17 approved by the R&D Oversight Committee prior to the date hereof. If at any time during the Research Phase, TKT or MMD determine that a significant change to the research plan is necessary or desirable, it shall prepare a written description detailing the change to the research plan and shall submit such description to the R&D Oversight Committee for its approval. An outline of the research plan is attached to the Original License Agreement and describes the work to be pursued during the Research Phase, including: (i) identifying the technical problems involved and the general projects to be carried out regarding GA-EPO, (ii) estimating the personnel to be committed for each project, and (iii) setting forth a projected timetable for the work to be performed. 4.1.3. SUBCONTRACTS. Subject to the approval of the R&D Oversight Committee and the provisions of Article 9, TKT may subcontract portions of the Research Program to be performed by it in the normal course of its business to a Third Party. 4.1.4. DATA. TKT shall maintain records in sufficient detail and in good scientific manner appropriate for regulatory filings and patent purposes and as will properly reflect all work done and results achieved in the performance of the Research Program (including all data in the form required to be maintained under any applicable governmental regulations). Such records shall include books, records, reports, research notes, charts, graphs, comments, computations, analyses, recordings, photographs, computer programs and documentation thereof, computer information storage means, samples of materials and other graphic or written data generated in connection with the Research Program. TKT shall provide MMD the right to inspect such records, and shall provide copies of all requested records, to the extent reasonably required for the performance of MMD's obligations under this Agreement; provided, however, that MMD shall maintain such records and the information of TKT contained therein in confidence in accordance with Article 9 hereof and shall not use such records or information except to the extent otherwise permitted by this Agreement. 4.1.5. QUARTERLY REPORTS BY TKT. Within fourteen (14) days following the end of each calendar quarter, or at the reasonable request (with mutually agreed advance notice) of the R&D Oversight Committee, TKT shall provide to the members of the R&D Oversight Committee a written report which shall summarize in reasonable detail the work TKT has performed under the Research Program during the preceding calendar quarter. 4.1.6. ASSISTANCE BY MMD. MMD shall provide such assistance to TKT in conducting the Research Program as TKT may reasonably request, and TKT will reimburse MMD for its documented Fully Absorbed Costs incurred in providing such assistance; provided, however, that prior to providing such assistance MMD shall have provided to TKT an estimate of such Fully Absorbed Costs and TKT shall have approved such estimate; PROVIDED, FURTHER, that no failure of MMD to undertake or successfully -12- 18 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. complete such assistance shall relieve TKT from its obligations hereunder or affect MMD's right to terminate this Agreement pursuant to Section 12.2. 4.2. FUNDING OF THE RESEARCH PROGRAM. TKT shall bear all costs and expenses in connection with the Research Program. 4.3. TERM OF THE RESEARCH PHASE. 4.3.1. COMPLETION OF THE RESEARCH PHASE. The term of the Research Phase shall commence as of the first day of the month following the Effective Date. **************************** ***************************************************************** **************************************************************** ************************************************************** **************************************************************** *********************************************************** ************************************************************ ************************************************************ ************************************************************** ******* The R&D Oversight Committee shall promptly evaluate the data submitted by TKT and determine, in its reasonable discretion,****************************** ************************************************************************** ************************************************. The R&D Oversight Committee shall provide TKT and MMD with prompt written notice of its decision. Upon notification of ******************************************* ************************************************************************** ************************************************************************** **************************************************************. 4.3.2. TERM OF THE RESEARCH PHASE. The term of the Research Phase ************************************************ ************************************************************** *************************************************************** *************************************************************** ************************************* shall jointly determine on what terms the Research Phase shall be extended and what additional terms, if any, in this Agreement shall be modified as a result of such extension. If such a determination cannot be reached within ******************** after the expiration of the initial term of the Research Phase, then such determination shall be made by arbitration in accordance with the procedures for arbitration described in Section 13.6, unless the parties mutually agree to terminate this Agreement. ARTICLE 5. THE DEVELOPMENT PHASE 5.1. CONDUCT OF THE DEVELOPMENT PHASE. 5.1.1. COMMENCEMENT OF THE DEVELOPMENT PHASE. The Development Phase will commence ****************************** *************************************************************** -13- 19 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. **************************************************************** *************************************************************** ***********. 5.1.2. DEVELOPMENT PHASE. The conduct of the Development Phase shall be the primary responsibility of MMD. MMD may subcontract with Third Parties for portions of the Development Phase and for all or a portion of the manufacture of GA-EPO. The Development Phase shall consist of the preparation and filing of regulatory submissions and the preclinical and clinical development of GA-EPO until, with respect to each country in the MMD Territory, final marketing approval for GA-EPO is obtained in such country. MMD and TKT will cooperate to achieve the milestones described in APPENDIX A using their respective best efforts using commercially reasonable means consistent with those used by them for other projects with a similar commercial potential. If MMD has been unable to achieve any of the milestones described in APPENDIX A within the time period indicated in APPENDIX A for reasons other than those described in subsection 5.1.4, then the Chief Executive Officer of each of TKT and MMD or their respective designees shall jointly determine on what terms the time period for achieving such milestones should be extended and what additional terms, if any, in this Agreement shall be modified as a result of such extension. If such a determination cannot be reached within ******************** after the time period for any such milestone has expired, then such determination shall be made by arbitration in accordance with the procedures for arbitration described in Section 13.6, unless the parties mutually agree to terminate this Agreement. MMD shall have primary responsibility for supervision of the scale-up and the further characterization of the master cell bank, the characterization of clinical trial material, and the supervision of the assembly of all characterization data and other information required for regulatory submissions. At MMD's request, TKT will perform, or assist MMD in performing, the work described in the preceding sentence and provide such other assistance to MMD as may be reasonably necessary to enable MMD to achieve the milestones described in APPENDIX A, and TKT shall be compensated for such assistance in accordance with Section 5.9. MMD will determine, in its sole discretion after consultation with TKT, the appropriate entity to file and hold the PLA and the ELA. MMD will coordinate preclinical and clinical testing of GA-EPO and work with designated individuals at MMD and TKT in the preparation of regulatory filings for GA-EPO within the MMD Territory. 5.1.3. ANNUAL DEVELOPMENT PLAN. The Development Phase shall be conducted under an annual development plan which shall describe the work to be pursued by MMD and TKT under the supervision of the Development Committee with respect to the development of GA-EPO. The first Development Plan will be prepared by MMD for submission to the Development Committee within ********************************************************** ****************************************************************. Thereafter, the annual development plan will be prepared by MMD -14- 20 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. for submission to the Development Committee no later than ****** ********* prior to the beginning of each calendar year. 5.1.4. ADJUSTMENT OF DEVELOPMENT PHASE MILESTONES. If at any time during the Development Phase MMD determines and is able to demonstrate to TKT's reasonable satisfaction that ***** *************************************************************** ***************************************************************** ************************************************************* *********************************************************** ****************************************************** **************************************************************** **************************************************************** ***************************************************************** then the Chief Executive Officer of each of MMD and TKT, or their respective designees, shall determine on what terms the Research Phase shall be reinitiated and how the milestones described in APPENDIX A are to be adjusted. 5.1.5. ATTENDANCE AT REGULATORY MEETINGS. MMD will provide TKT with prior notice of all meetings between its representatives and drug regulatory authorities regarding marketing approval of GA-EPO. TKT shall have the right to have a representative present at all important meetings in the United States, and upon request at all important meetings in other countries; provided, however, that MMD may revoke this right with respect to any particular meeting if, in its good faith reasonable judgment, the presence of any other party will be a detriment to the success of the meeting. TKT will furnish, at MMD's request, a representative to attend drug regulatory meetings regarding marketing approval of GA-EPO. 5.2. FUNDING OF THE DEVELOPMENT PHASE. MMD shall bear all costs and expenses in connection with the Development Phase. The assistance by TKT to MMD and reimbursement to be provided by MMD to TKT during the Development Phase is set forth in Section 5.7 hereof. 5.3. DEVELOPMENT INFORMATION. 5.3.1. INFORMATION FOR REGULATORY SUBMISSIONS. TKT will provide MMD with all documentation available to TKT reasonably required for regulatory submissions by MMD, based on work performed during the Research Phase, including ********** ************************************************************ ************************************************************* ********************************************************* *************************************************************** ***************************************************************** ******************************************************* ***************************. -15- 21 5.3.2. REPORTS TO DEVELOPMENT COMMITTEE. MMD shall keep the Development Committee informed as to its progress in the Development Phase of GA-EPO. Within thirty (30) days following the end of each six month period during the Development Phase, MMD shall provide a reasonably detailed report to the Development Committee which shall describe the progress of the Development Phase of GA-EPO. 5.3.3. REGULATORY SUBMISSIONS. MMD shall provide TKT with copies of all submissions to United States drug regulatory authorities. Upon the reasonable request of TKT, MMD shall also provide TKT with copies of all submissions to drug regulatory authorities of other countries and the results of all clinical trials conducted by, or under the supervision of, MMD with respect to GA-EPO; provided, however, that MMD reserves the right to assess reasonable copying charges for any such materials requested by TKT which exceed approximately two cartons of material. 5.3.4. ADVERSE EVENT INFORMATION. Within six months after the commencement of the Development Phase, MMD will establish a protocol for the timely handling and transmission of adverse event information. MMD and TKT shall promptly notify each other of any adverse event information relating to GA-EPO in accordance with such protocol. 5.4. CERTAIN PROHIBITED ACTIONS. Notwithstanding the provisions of Section 2.2, TKT and its Affiliates shall not, directly or indirectly, market, distribute or sell GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in the MMD Territory. 5.5. DEVELOPMENT PHASE MANUFACTURING. Provided that TKT has successfully met its obligations under the Research Program in the Research Phase, MMD shall be primarily responsible for the production of GA-EPO during the Development Phase. MMD will consult with TKT to determine the appropriate manufacturing process for GA-EPO necessary for the Development Phase and for commercial production, including selecting a suitable production process. 5.6. MANUFACTURING COSTS. MMD shall bear all costs associated with the manufacture of GA-EPO during the Development Phase, in accordance with the provisions of this Article 5, and for commercial production for sale by MMD or its sublicensees in the MMD Territory. 5.7. ASSISTANCE BY TKT. At MMD's request, TKT will cooperate with MMD to provide such technical assistance and characterization work as may be necessary in connection with the manufacture and production of GA-EPO during the Development Phase and subsequently in commercial production, and MMD will reimburse TKT for its documented Fully Absorbed Costs incurred in connection with providing such assistance; provided, however, that prior to providing such assistance, TKT shall have provided -16- 22 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. to MMD an estimate of such Fully Absorbed Costs and MMD shall have approved such estimate and, provided further, that no failure of TKT to undertake or successfully complete such assistance shall relieve MMD from its obligation to achieve the milestones described in APPENDIX A or affect TKT's right to terminate this Agreement pursuant to subsection 12.2.5. TKT will provide such assistance to MMD as is consistent with the capacity and capabilities of TKT. 5.8. REGULATORY MATTERS AND COMMERCIALIZATION. 5.8.1. COMMERCIALIZATION. Upon the successful completion of the Research Phase and Development Phase, MMD agrees to use its best efforts to commercialize GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology throughout the MMD Territory using commercially reasonable means consistent with those used for MMD products with similar commercial potential. 5.8.2. MARKETING PLANS. MMD shall promptly provide TKT with copies of its United States marketing plans for GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology, and shall provide TKT with copies of its marketing plans for other countries upon the reasonable request of TKT. Such marketing plans shall not be disclosed to any Third Party without the prior written consent of MMD. 5.8.3. CO-DEVELOPMENT, CO-PROMOTION AND CO- MARKETING. In the event that MMD determines, in its sole discretion, that co-development, co-promotion or co-marketing of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology is appropriate in any of the countries in the ***** *********************************************************** ******, then TKT shall have the right of first negotiation (the "First Negotiation Right") to become MMD's co-development, co-promotion or co-marketing partner, as the case may be, in any such country on terms no less favorable to TKT than those which MMD proposes to offer to any other co-development, co-promotion or co-marketing partner for such country. MMD shall notify TKT in writing of its determination to pursue co-development, co-promotion or co-marketing of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in a country in the ***** ***************************************************************** (the "Negotiation Notice"); provided, however, that, in the case of co-promotion or co-marketing only and in the absence of co-development, MMD shall not be entitled without TKT's consent, which shall not be unreasonably withheld, to give TKT a Negotiation Notice with respect to any country in the MMD Territory until all clinical trials necessary for the submission for regulatory approval to market GA-EPO in that country are substantially complete. Unless TKT shall have waived the First Negotiation Right in writing within 30 days following receipt by TKT of the Negotiation Notice, MMD and TKT shall negotiate in -17- 23 good faith a termsheet for such co-development, co-promotion or co-marketing arrangement for a period of up to 60 days commencing on the date of the Negotiation Notice and a definitive agreement for such co-development, co-promotion or co-marketing for an additional period of up to 60 days commencing on the date of such termsheet. If, at the end of either of such periods, MMD and TKT are unable to agree on terms for the co-development, co-promotion or co-marketing of GA-EPO in such country, then, unless the parties agree to extend the negotiation period, MMD shall promptly deliver to TKT a final proposal detailing the terms on which it would enter into such a co-development, co-promotion or co-marketing arrangement (the "Final Proposal"). TKT shall have thirty (30) days from receipt of the Final Proposal to notify MMD of its desire to enter into an arrangement on such terms. If TKT does not so notify MMD, then MMD shall be free, for a period of one year (which shall be extended for an additional four-month period if MMD has certified to TKT that it is then in active negotiations with a single Third Party with respect thereto) from the expiration of such 30 days, to enter into a co-development, co-promotion or co-marketing arrangement for GA-EPO in the country identified in the Negotiation Notice with a Third Party on terms no more favorable to the Third Party than the terms contained in the Final Proposal. Following such negotiation period, MMD shall not enter into a co-development, co-promotion or co-marketing arrangement for GA-EPO in any country in the MMD Territory with a Third Party without first complying with the provisions of this subsection. Except as otherwise provided in this subsection 5.8.2, it is understood and agreed to by the parties hereto that MMD shall have no obligation to enter into a co-development, co-promotion, or co-marketing arrangement with respect to any country in the MMD Territory with TKT. In the event that MMD enters into a co-development arrangement for GA-EPO in a country with a Third Party after complying with the provisions of this subsection, then TKT shall cooperate with such Third Party in such country during the Development Phase to the same extent that TKT would cooperate with MMD. ARTICLE 6. RESEARCH, DEVELOPMENT AND REGULATORY COORDINATION 6.1. R&D OVERSIGHT COMMITTEE. 6.1.1. GENERAL. Promptly after the Effective Date, a joint committee comprised of up to three named representatives of MMD and up to three named representatives of TKT (the "R&D Oversight Committee") shall be appointed. One of the representatives of TKT shall act as Chairman of the R&D Oversight Committee. The R&D Oversight Committee shall be responsible for the supervision of the Research Program. Such meetings shall be held at TKT's facilities located in Cambridge, Massachusetts, and at such times as are agreed to by TKT and MMD, or at such other locations or in such other form (e.g., telephone or video conference) as the members of the R&D Oversight Committee shall agree, but no less frequently than three times per year. At such meetings, the principal function of the R&D Oversight Committee -18- 24 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. will be to discuss the Research Program ************************* ************************************************************* ************************************************** A party may change one or more of its representatives to the R&D Oversight Committee at any time. Members of the R&D Oversight Committee may be represented at any meeting by another member of the R&D Oversight Committee so designated by the absent member, or by a deputy. Any approval, determination or other action shall require the affirmative vote of both TKT and MMD************************* ******** as determined by each party's representatives who are members of the R&D Oversight Committee. Employees, subcontractors or consultants of either TKT and MMD who are involved with the Program and who are not members of the R&D Oversight Committee may attend meetings of the Committee as guests of either party. 6.1.2. MINUTES. The R&D Oversight Committee shall keep accurate minutes of its deliberations. The Chairman shall be responsible for the preparation of draft minutes. Draft minutes shall be sent to all members of the R&D Oversight Committee within ten (10) business days after each meeting. All records of the R&D Oversight Committee shall be available to both parties. 6.2. DEVELOPMENT COMMITTEE. 6.2.1. GENERAL. Promptly after the Effective Date, a joint committee comprised of up to four named representatives of MMD and up to four named representatives of TKT (the "Development Committee") shall be appointed. One of the representatives of MMD shall act as Chairman of the Development Committee. Such meetings shall be held at TKT's facilities in Cambridge, Massachusetts during the Research Phase, and thereafter in Kansas City, Missouri, and, in any event, at times and places or in such form (e.g., telephone or video conference) as the members of the Development Committee shall agree but no less frequently than three times per year. At such meetings, the Development Committee will discuss the Development Phase of GA-EPO, including but not limited to, preclinical and clinical testing and the preparation of regulatory submissions for approval of GA-EPO in the MMD Territory. To the extent reasonable or appropriate, meetings of the Development Committee will be coordinated and held jointly with the R&D Oversight Committee. A party may change one or more of its representatives to the Development Committee at any time. Members of the Development Committee may be represented at any meeting by another member of the Development Committee so designated by the absent member, or by a deputy. Any approval, determination or other action shall require the affirmative vote of a majority of the votes entitled to be cast, ********************************* ***************, and with such votes being cast as determined by each party's representatives who are members of the Development Committee. Employees, subcontractors or consultants of either TKT and MMD who are involved with the Program and who are not -19- 25 members of the Development Committee may attend meetings of the Committee as guests of either party. 6.2.2. MINUTES. The Development Committee shall keep accurate minutes of its deliberations. The Chairman shall be responsible for the preparation of draft minutes. Draft minutes shall be sent to all members of the Development Committee within ten (10) business days after each meeting. All records of the Development Committee shall at all times be available to both parties. 6.3. GENERAL DISAGREEMENTS. All disagreements within the R&D Oversight Committee and the Development Committee shall be resolved in accordance with the provisions of Section 13.6. 6.4. VISIT OF FACILITIES. Representatives of MMD may, upon reasonable notice and at times reasonably acceptable to TKT, visit TKT's facilities where the Research Program is being conducted and consult with personnel of TKT performing work on the Research Program, and those of any permitted subcontractors of TKT. Representatives of TKT and MMD may, with the other party's prior approval, which approval shall not be unreasonably withheld, visit manufacturing sites and the sites of any clinical trials or other experiments being conducted by such other party in connection with the Development Phase. If requested by the other party, TKT and MMD shall cause appropriate individuals working on the Development Phase to be available for meetings at the location of the facilities where such individuals are employed at times reasonably convenient to the party responding to such request. 6.5. ANNUAL REVIEW AND PLANNING MEETING. No less frequently than annually, representatives of TKT and MMD shall meet at a place mutually agreed to by the parties (which, prior to the First Commercial Sale, will be one of the R&D Oversight Committee or Development Committee meetings)(the "Annual Meeting"), at which meeting MMD shall review the clinical, regulatory and marketing activities undertaken by MMD or its Affiliates since the previous Annual Meeting and shall present its clinical, regulatory and marketing plans for GA-EPO for the ensuing year. Within 30 days following each Annual Meeting, MMD shall submit to TKT a written report detailing the information reviewed and presented at such Annual Meeting. ARTICLE 7. MILESTONES AND ROYALTIES 7.1. MILESTONE PAYMENTS. MMD and TKT acknowledge payment by MMD to TKT of $1,000,000 ************************************* ***********************************************************. In consideration of TKT's work on the Research Program and the licenses granted to MMD hereunder, MMD has paid or shall pay the following additional amounts to TKT upon the achievement of each of the following milestones (except as noted below), prior to any expiration or termination of this Agreement under Article 12 with respect to the country to which such milestone relates, it being -20- 26 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. understood and agreed to that TKT shall use a portion of such payments as necessary to fund the performance of its obligations under the Program: --------------------------------------------------------------------------- Milestone Payment --------- ------- --------------------------------------------------------------------------- Execution of the Original License $9,000,000 (Paid) Agreement $5,000,000 Preferred Stock Investment(1) (Paid) --------------------------------------------------------------------------- Initial Public Offering (as defined $5,000,000 Common Stock in the Class D Stock Purchase Investment(2) Agreement) ("IPO") by TKT Additional $5,000,000 Common Stock Investment (2) --------------------------------------------------------------------------- ***************** Cell Line ****** $2,000,000 ******************* --------------------------------------------------------------------------- ******************************** $************** --------------------------------------------------------------------------- ********************************** $************** --------------------------------------------------------------------------- ******************************** $************** --------------------------------------------------------------------------- ******************* $************** --------------------------------------------------------------------------- ************************************ $************** ************************************ *************** --------------------------------------------------------------------------- ****************************** $************** --------------------------------------------------------------------------- (1) On the terms and subject to the conditions of the Class D Preferred Stock Purchase Agreement dated as of May 18, 1994, by and between MMD and TKT (the "Class D Stock Purchase Agreement"). (2) MMD shall purchase shares Common Stock of TKT in the IPO upon the terms and subject to the conditions of the Class D Stock Purchase Agreement. Either TKT or MMD shall notify the other in writing within ten (10) business days following the occurrence of each of the milestones set forth above. Within ten (10) business days after receipt of such notice, MMD shall pay to TKT in United States dollars by check or other means acceptable to TKT, the milestone payments set forth above. Milestone payments made to TKT pursuant to this Section 7.1 are not refundable under any circumstances and will not be credited against royalty payments due TKT under Section 7.2. -21- 27 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 7.2. ROYALTIES. In consideration of the licenses granted to MMD hereunder, MMD shall pay to TKT royalties as follows: 7.2.1. ROYALTIES BASED ON NET SALES OF GA-EPO. Except as otherwise provided in this Section 7.2., MMD shall pay to TKT a royalty based on the Net Sales of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in each Territory Block, from the launch of such sales in such Territory Block until, with respect to any country, the expiration or termination of this Agreement, at the rates set forth below: ********************************* *************** ******************************************* ************** ------------------------------------------- -------------- ************************** ***** ********* ***** *********************************************************** ************************. For the purpose of calculating ******************** in a Territory Block: (i) Net Sales for the ************* and ***** ******* Territory Blocks *****************, and such ************ ***** shall be deemed to be the ******************** for each of the ******************************* Territory Blocks; (ii) *** ******************************* Territory Blocks ******** ************************************* shall be deemed to be the ******************** for each of the ***************** Territory Blocks; and (iii) with respect to sales in the *************, ********************** Territory Blocks by a Third Party sublicensee or a distributor which is not an Affiliate of MMD, the Net Revenues shall be used in lieu of the Net Sales in the foregoing calculation of ********************. 7.2.2. ALTERNATIVE ROYALTY BASED ON GROSS MARGIN. Notwithstanding the provisions of subsection 7.2.1., in ***** ************************************ Territory Blocks, the royalty payable by MMD to TKT shall be as follows: (i) if MMD sells GA-EPO finished product in final packing form (whether or not with final labels) covered by the TKT Patent Rights or which uses the TKT Technology to a Third Party sublicensee or distributor which is not an Affiliate of MMD, MMD shall pay to TKT a royalty equal to ***************************************** *************; or (ii) if MMD does not sell such GA-EPO finished product in final packing form (whether or not with final labels) to such Third Party sublicensee or distributor, then TKT and MMD shall negotiate in good faith to share ********************* all other monetary consideration received by MMD from such Third Party sublicensee or distributor. 7.2.3. SHARING OF REVENUES FROM SUBLICENSEES. If MMD grants a sublicense hereunder to any Third Party to make, -22- 28 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. have made, use, distribute for sale or sell GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in any country in the MMD Territory, MMD shall share with TKT, *************** *****, all up front monetary consideration received by MMD from such Third Party in connection therewith which are not based upon Net Sales or Net Revenues, as applicable, of GA-EPO sold by such Third Party sublicensee in such country. 7.2.4. ADJUSTMENT OF ROYALTY RATES. At the request of MMD, the royalty rates set forth in subsection 7.2.1. shall be appropriately adjusted by TKT and MMD (i) with respect to sales of "generic" or "non-branded" GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology by MMD in any country within a Territory Block in which MMD elects to make such sales to compete with sales by any Third Party of a "generic" or "non-branded" pharmaceutical formulation of erythropoietin protein or (ii) with respect to sales of "branded" GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology by MMD in any country within the MMD Territory in which MMD experiences competition in the market for GA-EPO which was not in existence on the Effective Date and the TKT Patent Rights have been judged to be invalid or unenforceable. In addition, TKT agrees to meet with MMD at its request and negotiate in good faith concerning whether other adjustments to the royalty rates set forth in subsection 7.2.1. should be made in the event that MMD demonstrates to TKT's reasonable satisfaction that there have been structural changes in the market for GA-EPO in any country which have rendered the royalty rates set forth in subsection 7.2.1. commercially unreasonable. At the request of MMD, the royalty rates set forth in subsection 7.2.2. shall be appropriately adjusted by TKT and MMD (i) with respect to sales of "branded", "non-branded" or "generic" GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in any country within a Territory Block in which competitive conditions make it not feasible for MMD to maintain the level of its Gross Margin or (ii) as may otherwise be necessary to maintain the commercial viability of the product as contemplated by this Agreement. 7.3. ROYALTY REPORTS, EXCHANGE RATES. During the term of this Agreement, following the First Commercial Sale of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in any country in the MMD Territory, MMD shall furnish to TKT a written quarterly report showing with respect to GA-EPO, on a country by country basis (except as provided below): (i) the gross sales (except for sales to which subsection 7.2.2 applies) of all GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology sold by MMD and its Affiliates, its distributors and its permitted sublicensees in the MMD Territory during the reporting period; (ii) the calculation of Net Sales (except for sales to which subsection 7.2.2 applies) from such gross sales; (iii) the Gross Margin related to sales to which subsection 7.2.2 applies and the calculation of such Gross Margin; (iv) any revenues from sublicensees received by MMD during the reporting -23- 29 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. period; (v) the royalties and other payments payable in United States dollars which shall have accrued hereunder in respect of such Net Sales, Gross Margin and sublicensee payments; (vi) withholding taxes, if any, required by law to be deducted as a payment by TKT in respect of such Net Sales, Gross Margin and sublicensee payments; (vii) the dates of the First Commercial Sales of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in any country in the MMD Territory during the reporting period; and (viii) the exchange rates used in determining the amount of United States dollars. All amounts payable will first be calculated in the currency of sale and then converted into United States dollars on a quarterly basis using as a rate of exchange the actual foreign currency exchange rate on the last day of the month preceding the end of the quarter or such other method as is consistent with MMD's internal foreign currency translation procedures. MMD shall use its best efforts to provide such reports on the sixtieth (60th) day following the close of each quarter. If no royalty is due for any royalty period hereunder, MMD shall so report. MMD shall keep complete and accurate records in sufficient detail to properly reflect all gross sales, Net Sales and Gross Margin and to enable the royalties payable hereunder to be determined. 7.4. AUDITS. 7.4.1. PROCEDURE. Upon the written request of TKT or MMD, the other party shall permit an internal auditor or independent public accountant selected by TKT or MMD, as the case may be, and acceptable to the other party, which acceptance shall not be unreasonably withheld, to have access during normal business hours to such of the records of MMD or TKT, as the case may be, as may be reasonably necessary to verify the accuracy of the royalty reports, cost computations and final cost amounts described hereunder, in respect of any fiscal year ending not more than *********************** prior to the date of such request. All such verifications shall be conducted at TKT's or MMD's, as the case may be, expense and not more than ******** in each calendar year. 7.4.2. EXPENSES. In the event such accountant concludes that additional royalties or lower expense reimbursement were required during such period, and the party receiving such audit request agrees with such conclusion, the additional royalty shall be paid in accordance with Section 7.5 or the excess expense reimbursement shall be promptly repaid. The fees charged by such accountant shall be paid by the party requesting such audit, unless the audit discloses and the party receiving such audit request agrees (i) in the case of an audit by TKT, that the royalties payable by MMD, or, (ii) in the case of an audit by MMD, that the cost computation estimates and final amounts hereunder, for the audited period are incorrect by more than *****************, in which case the audited party shall pay the reasonable fees and expenses charged by the accountant. -24- 30 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 7.4.3. SUBLICENSES. MMD shall use reasonable efforts to include in each Third Party sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee to make reports to MMD, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by TKT's independent accountant to the same extent required of MMD under this Agreement. Upon the expiration of *********************** following the end of any fiscal year, the calculation of royalties payable with respect to such year shall be binding and conclusive upon TKT; and MMD and its sublicensees shall be released from any liability or accountability with respect to royalties for such year. 7.4.4. CONFIDENTIAL TREATMENT. Each party agrees that all information subject to review under this Section 7.4 or under any sublicense agreement is confidential and that such party shall cause its accountant to retain all such information in confidence. 7.5. ROYALTY PAYMENT TERMS. Royalties shown to have accrued by each royalty report provided for under this Agreement shall be due and payable on the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date. Royalties determined to be owing, and any overpayments to be credited, with respect to any prior quarter shall be added or credited, as the case may be, to the next quarterly payment hereunder. 7.6. FORM OF PAYMENT. All research payments, milestone payments, royalties and other payments due hereunder shall be paid in United States dollars. If at any time legal restrictions prevent the prompt remittance of part or all royalties with respect to any country of the MMD Territory where GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology is sold, payment shall be made through such lawful means or methods as MMD may determine. 7.7. WITHHOLDING TAXES. All royalties payable to TKT hereunder shall be paid without deductions of any withholding taxes, value-added taxes or other taxes, levies or charges applicable to such payments, other than (i) United States taxes payable by TKT and (ii) foreign taxes payable by TKT to the extent that such taxes are imposed by reason of TKT's having a permanent establishment in any country within the MMD Territory or otherwise being subject to taxation by such country (except foreign taxes imposed solely by reason of the license granted to MMD hereunder). MMD shall be credited for the net benefit realized by TKT for any foreign tax deductions or credits taken by TKT with respect to such amounts paid by MMD. In addition, any reorganization of TKT or an Affiliate of TKT with or into an entity organized outside the United States shall not result in any increased costs to MMD under this Agreement. Each party will assist the other party in claiming tax refunds, deductions or credits at the other party's request and will cooperate to -25- 31 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. minimize the withholding tax, if available, under various treaties applicable to any payment made hereunder. 7.8. INTEREST ON LATE PAYMENTS. Any payments by either party that are not paid on or before the date such payments are due under this Agreement shall bear interest, to the extent permitted by law, at the London Interbank Offering Rate as set by Citibank, N.A. from time to time, plus 50 basis points, calculated on the number of days payment is delinquent. ARTICLE 8. INTELLECTUAL PROPERTY RIGHTS 8.1. OWNERSHIP. 8.1.1. OWNERSHIP OF DISCOVERIES AND IMPROVEMENTS. All right, title and interest in all writings, inventions, discoveries, improvements and other technology, whether or not patentable or copyrightable, and any patent applications, patents or copyrights based thereon (collectively, the "Inventions") that are discovered, made or conceived during and as a result of the Research Phase or the Development Phase solely by employees of TKT or others acting on behalf of TKT ("TKT Inventions") shall be owned by TKT. *********************************************** ************************************************************* ******************************************************** ************************************************************** ***************************************************************** ************************************************************* **************************************************************** ********. All right, title and interest in all Inventions that are discovered, made or conceived during and as a result of the Research Phase or the Development Phase or thereafter solely by employees of MMD or others acting on behalf of MMD ("MMD Inventions") shall be owned by MMD. All right, title and interest in all Inventions that are discovered, made or conceived during and as a result of the Research Phase or the Development Phase or thereafter jointly by employees of TKT and MMD or others acting on their behalf (the "Joint Inventions") shall be jointly owned by MMD and TKT. Each party shall promptly disclose to the other party the making, conception or reduction to practice of Inventions by employees or others acting on behalf of such party. The parties acknowledge that the ownership rights set forth above are subject to the license grants set forth in Article 3. 8.1.2. COOPERATION OF EMPLOYEES. Each party represents and agrees that its employees and consultants shall be obligated under a binding written agreement to assign to such party, or as such party shall direct, all Inventions made or conceived during and as a result of the Research Phase or the Development Phase by such employee or consultant. In the case of non-employees working for other companies or institutions on behalf of TKT or MMD, TKT or MMD, as applicable, shall use reasonable efforts to obtain the right to license all Inventions made by such non-employees on behalf of TKT or MMD, as -26- 32 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. applicable, in accordance with the policies of the company or institution employing such non-employee. TKT and MMD agree to undertake to enforce such agreements with employees or others or such rights pertaining to non-employees (including, where appropriate, by legal action) considering, among other things, the commercial value of such Inventions. 8.2. FILING, PROSECUTION AND MAINTENANCE OF TKT PATENT RIGHTS AND TKT TECHNOLOGY. 8.2.1. ************************************. *** * ***************************************************************** ***************************************************************** ********************************************************** ***************************************************************** ************************************************************* *************************************************************** ***************************************************************** ************************************************************** ***************************************************************** **************************************************************** *************************************************************** *************************************************************** **************************************************************** ************************************************************ *************************************************************** **************************************************************** **************************************************************** ************************************************************** ************************************************************** ********************************************************** ******************************************************* ************************************************************ ***************************************************************** ***************************************************************** **************************************************************** ************************************************************** ********************************************************** ***************************************************************** ************************************************************ ***************************************************************** ***************************************************************** ***************************************************************** **************************************************************** ************************************************************* ************************************************************** **************************************************************** ********************************************************* ********************************************************** *************************************************************** ******************************************************* *************************************************************** ***************************************************************** ************************************************************** ***************** -27- 33 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ******************************************************** ***************************************************************** ***************************************************************** ************************************************************** *************************************************************** ***************************************************************** ********************************************************** *************************************************************** ***************************************************************** *************************************************************** ********************************************************** **************************************************************** *********************************** 8.2.2. PATENT FILING COSTS. *** shall bear all costs associated with filing, prosecuting and maintaining patent applications and patents covering the TKT Patent Rights in all countries in the MMD Territory. 8.3. COOPERATION. Each party shall make available to the other party (or to the other party's authorized attorneys, agents or representatives), its employees, agents, subcontractors or consultants to the extent reasonably necessary or appropriate to enable the appropriate party to file, prosecute and maintain patent applications and resulting patents with respect to Inventions owned by a party and for periods of time reasonably sufficient for such party to obtain the assistance it needs from such personnel. Where appropriate, each party shall sign or cause to have signed all documents relating to said patent applications or patents at no charge to the other party. Notwithstanding the foregoing, MMD shall not be precluded from contesting the validity or enforceability of the TKT Patent Rights or TKT Technology. 8.4. NOTIFICATION OF PATENT TERM RESTORATION. *** shall notify *** of (i) the issuance of each patent included within the TKT Patent Rights, giving the date of issue and patent number for each such patent, and (ii) each notice pertaining to any patent included within the TKT Patent Rights which it receives as patent owner pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (hereinafter called the "Act"), or other similar laws now or hereafter in effect, or pursuant to comparable laws or regulations in other countries in the MMD Territory. The parties shall cooperate with each other in applying for patent term extensions (including Supplementary Protection Certificates in European Community Countries) where applicable in any country of the MMD territory. *** shall also notify *** of each application filed for patent term extension, any allegations of failure to show due diligence and all awards of patent term extensions with respect to the TKT Patent Rights. Such notices shall be given promptly, but in any event within ten (10) business days after receipt of each such notice pursuant to the Act (or comparable laws or regulations in other countries in the MMD Territory). *** shall notify *** of each filing for patent term restoration under the Act (or comparable laws or -28- 34 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. regulations in other countries in the MMD Territory), any allegations of failure to show due diligence and all awards of patent term restoration (extensions) with respect to the TKT Patent Rights. 8.5. NO OTHER TECHNOLOGY RIGHTS. Except as otherwise expressly provided in this Agreement, under no circumstances shall a party hereto, as a result of this Agreement, obtain any ownership interest in or other right to any technology, know-how, patents, pending patent applications, products, or biological materials of the other party, including items owned, controlled or developed by the other party, or transferred by the other party to said party, at any time pursuant to this Agreement. It is understood and agreed that this Agreement does not grant MMD any license or other right in the TKT Patent Rights for uses other than the production, manufacture, use, distribution for sale and sale of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology. 8.6. ENFORCEMENT OF TKT PATENT RIGHTS AND TKT TECHNOLOGY; DEFENSE OF INFRINGEMENT ACTIONS. TKT and MMD shall each promptly, but in any event no later than ten (10) business days after receipt of notice of such action, notify the other in writing of any patent nullity actions, any declaratory judgment actions or any alleged or threatened infringement of patents or patent applications or misappropriation of intellectual property comprising the TKT Patent Rights or the TKT Technology or if either party, or any of their respective Affiliates, shall be individually named as a defendant in a legal proceeding by a Third Party alleging infringement of a patent or other intellectual property right as a result of the manufacture, production, use, distribution for sale or sale of GA-EPO, or of any other information or notification regarding the TKT Patent Rights or TKT Technology. 8.6.1. ****************************. ************** *************************************************************** *************************************************************** *************************************************************** ************************************************************** *************************************************************** ************************************************************ ************************************************************* ************************************************************* ************************************************************ *************************. 8.6.2. *****************************************. *************************************************************** ************************************************************** ******************************************************. 8.6.3. ************************************ ********. ***************************************************** ************************************************* -29- 35 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ********************************************************* **************************************************************** ********************************************************* **************************************************************** ************************************************************ **************************************************************** ************************************************************** ***************************************************************** **************************************************************** ************************************************************* ************************************************************* ***************************************************************** **************************************************************** ************************************************************* ***************************************************************** ************************************************************** ***************************************************************** ********************************************************* ********************************************************* **************************************************************** ************************************************************* ********************************************************* *********************************************************** ***************************************************************** ************************************************************ ************************************************************** ***************************************************************** 8.6.4. *****************************. ************ ********************************************************** ******************************************************** ************************************************************** ***************************************************************** **************************************************** **************************************************************** *********************************************************** ************************************************************** ***************************************************************** **********************************. 8.6.5. ***************************************** ************************************. ************************ ***************************************************************** ****************************************************** *********************************************************** *************************************************************** ************************************************************** ***************************************************************** *********************************************************** ************************************************************* ************************************************************* *************************************************************** ************************************************************** ******************************************************** -30- 36 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. **************************************************************** *************************************************************** *************************************************************** **************************************************************** ************************************************************** **************************************************************** ************************************************************* *********************************************************** ***************************************************************** *************************************************************** ***************************************************************** ************************************************************ ***************************************************************** ****************************************************** *************************************************************** **************************************************************** ************************************************************* ************************************************************** ********************************************************* ************************************************************ ******************************************************. 8.7. *************************************************** **********************. ******************************** **************************************************************** *************************************************************** ******************************************************* *************************************************************** **************************************************************** ************************************************************** *************************************************************** ***************************************************************** ************************************************************* ************************************************************** ************************************************. ARTICLE 9. CONFIDENTIALITY 9.1. NONDISCLOSURE OBLIGATIONS. 9.1.1. GENERAL. Except as otherwise provided in this Article 9, during the term of this Agreement and for a period of ten (10) years thereafter, both parties shall maintain in confidence and use only for purposes specifically authorized under this Agreement (i) confidential information and data received from the other party resulting from or related to the development of GA-EPO and (ii) all information and data not described in clause (a) but supplied by the other party under this Agreement marked "Confidential." 9.1.2. LIMITATIONS. For purposes of this Article 9, information and data described in paragraph (a) or (b) shall be referred to as "Information." To the extent it is reasonably necessary or appropriate to fulfil its obligations or exercise -31- 37 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. its rights under this Agreement, a party may disclose Information it is otherwise obligated under this Section not to disclose to its Affiliates, sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis on condition that such entities or persons agree to keep the Information confidential for the same time periods and to the same extent as such party is required to keep the Information confidential; and a party or its sublicensees may disclose such Information to government or other regulatory authorities to the extent that such disclosure is reasonably necessary to obtain patents or authorizations to conduct clinical trials of, and to commercially market, GA-EPO. The obligation not to disclose Information shall not apply to any part of such Information that (i) is or becomes part of the public domain other than by unauthorized acts of the party obligated not to disclose such Information or its Affiliates or sublicensees; (ii) can be shown by written documents to have been disclosed to the receiving party or its Affiliates or sublicensees by a Third Party, provided such Information was not obtained by such Third Party directly or indirectly from the other party under this Agreement pursuant to a confidentiality agreement; (iii) prior to disclosure under this Agreement, was already in the possession of the receiving party or its Affiliates or sublicensees, provided such Information was not obtained directly or indirectly from the other party under this Agreement pursuant to a confidentiality agreement; (iv) can be shown by written documents to have been independently developed by the receiving party or its Affiliates without breach of any of the provisions of this Agreement; or (v) is disclosed by the receiving party pursuant to oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand issued by a court or governmental agency; provided that the receiving party notifies the other party immediately upon receipt thereof (and provided that the disclosing party furnishes only that portion of the Information which it is advised by counsel is legally required). 9.2. MATERIALS. 9.2.1. ******************************. *********** ***************************************************************** **************************************************************** ******************************************************* *************************************************************** ********************************************************** *********************************************************** ************************************************************** **************************************************************** ***************************************************************** **************************************************************** ********************************************************* *******************************************. 9.2.2. SAMPLES. Samples of compounds synthesized, purified or developed in the course of the Research and -32- 38 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Development Program shall not be supplied or sent by either party to any Third Party, other than to regulatory agencies or for use in clinical trials, unless protected by an appropriate materials transfer agreement. Samples of compounds other than those described above provided by one party (the "supplying party") to the other party (the "receiving party") in the course of the Research Program shall not be supplied or sent by the receiving party to any Third Party, other than to regulatory agencies or for use in clinical trials, without the written consent of the supplying party. 9.3. TERMS OF THIS AGREEMENT. TKT and MMD each agree not to disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other party, except as required by applicable law. If TKT determines that it is required to file with the Securities and Exchange Commission or other governmental agency this Agreement as an exhibit to the registration statement relating to the IPO or otherwise, TKT shall request confidential treatment of such portions of this Agreement as it and MMD shall together determine. Notwithstanding the foregoing, within 15 days after the execution of this Agreement, MMD and TKT shall agree upon the substance of information that can be used as a routine reference in the usual course of business to describe the terms of this transaction, and MMD and TKT may disclose such information, as modified by mutual agreement from time to time, without the other party's consent; provided, however, that if either party determines that excessive use of such statement is made by the other party, then the party determined to be using such statement excessively shall, upon notice by the other party, cease making such statement. 9.4. PUBLICATIONS. 9.4.1. PROCEDURE. Each party recognizes the mutual interest in obtaining valid patent protection. Consequently, either party and its employees or consultants or any other Third Party wishing to make a publication (including any oral disclosure made without obligation of confidentiality) relating to work performed by such party as part of the Program (the "Publishing Party") shall transmit to the other party (the "Reviewing Party") a copy of the proposed written publication at least ******************** prior to submission for publication, or an abstract of such oral disclosure at least ***************** prior to submission of the abstract or the oral disclosure, whichever is earlier. The Reviewing Party shall have the right (a) to propose modifications to the publication for patent reasons, (b) to request a delay in publication or presentation in order to protect patentable information, or (c) to request that the information be maintained as a trade secret and, in such case, the Publishing Party shall not make such publication. 9.4.2. DELAY. If the Reviewing Party requests a delay as described in subsection 9.4.1. (b) the Publishing Party shall delay submission or presentation of the publication for a -33- 39 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. period of **************** to enable patent applications protecting each party's rights in such information to be filed. 9.4.3. RESOLUTION. Upon the receipt of written approval of the Reviewing Party, the Publishing Party may proceed with the written publication or the oral presentation. 9.5. INJUNCTIVE RELIEF. The parties hereto understand and agree that remedies at law may be inadequate to protect against any breach of any of the provisions of this Article 9 by either party or their employees, agents, officers or directors or any other person acting in concert with it or on its behalf. Accordingly, each party shall be entitled to the granting of injunctive relief by a court of competent jurisdiction against any action that constitutes any such breach of this Article 9. It is understood that such injunctive relief is intended solely as provisional relief pending the dispute resolution procedures described in Section 13.6 hereof. ARTICLE 10. REPRESENTATIONS AND WARRANTIES 10.1. GENERAL. 10.1.1. AUTHORIZATION. Each party represents and warrants to the other that it has the legal right and power to enter into this Agreement, to extend the rights and licenses granted to the other in this Agreement, and to fully perform its obligations hereunder, and that the performance of such obligations will not conflict with its charter documents or any agreements, contracts or other arrangements to which it is a party. 10.1.2. NO INCONSISTENT TKT ARRANGEMENTS. TKT represents and warrants that it has full power and authority to grant the license set forth in Article 3 hereof and that there are no agreements, assignments, encumbrances or other arrangements inconsistent with this Agreement including, without limitation, any obligations to governmental agencies, private foundations or corporate entities resulting from acceptance of research grant monies, equity investments, corporate sponsorships or otherwise. 10.1.3. EXCLUSIVITY. TKT represents and warrants that MMD is the exclusive licensee of the TKT Technology owned by TKT and the TKT Patent Rights with respect to the manufacture, use or sale of GA-EPO in the MMD Territory. 10.1.4. LICENSED TECHNOLOGY. TKT represents and warrants that, as of the Effective Date, the TKT Patent Rights and TKT Technology do not include any intellectual property licensed to TKT from a Third Party other than those included in a License Agreement ****************************** ************************************************************************** ***. -34- 40 10.2. PATENT VALIDITY. 10.2.1. TITLE. TKT represents and warrants that as of the Effective Date, it possesses the exclusive right, title and interest in and to the TKT Technology owned by TKT and the TKT Patent Rights and that it has the full legal right and power to: (i) enter into the obligations set forth in this Agreement; and (ii) grant the rights and licenses set forth in Article 3. 10.2.2. NO ENCUMBRANCES. TKT represents and warrants as of the Effective Date, to the best of its actual knowledge and based upon the advice of its counsel, to the best of such counsel's actual knowledge without undertaking any independent investigation, (i) that there were no encumbrances, liens or other claims affecting the TKT Technology owned by TKT or the TKT Patent Rights and (ii) that such TKT Technology and TKT Patent Rights were valid, enforceable and free from infringement, and that there were no pending or threatened actions, suits or proceedings relating thereto or to GA-EPO. 10.2.3. NON-INFRINGEMENT. TKT represents and warrants that as of the Effective Date, to the best of its actual knowledge and based upon the advice of its counsel, to the best of such counsel's actual knowledge without undertaking any independent investigation, there were no legal obstacles, including no patent rights or other proprietary rights of others, which will prevent it from carrying out its obligations under this Agreement or prevent MMD from carrying out its obligations under this Agreement or which will be infringed by the performance of either party's obligations under this Agreement. 10.3. FINANCIAL STATEMENTS. TKT represents and warrants that Schedule 10.3 hereto sets forth TKT's most recent regularly prepared balance sheet, that such balance sheet is true and correct and fairly presents the financial condition of TKT as of its date, and that the total assets set forth thereon are less than $10,000,000. ARTICLE 11. INDEMNITY 11.1. MMD INDEMNITY OBLIGATIONS. In the absence of TKT's negligence or a breach of representation, warranty, covenant or agreement by TKT, MMD agrees to defend, indemnify and hold TKT, its Affiliates and their respective employees and agents harmless from all claims, losses, damages or expenses arising as a result of (a) actual or asserted violations of any applicable law or regulation by MMD or its Affiliates or sublicensees by virtue of which GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology manufactured, distributed or sold shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any applicable law or regulation or (b) claims for bodily injury, death or property damage attributable to MMD's performance of its obligations under this Agreement or the manufacture, -35- 41 distribution, sale or use of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology by MMD or its Affiliates or sublicensees. 11.2. TKT INDEMNITY OBLIGATIONS. In the absence of MMD's negligence or a breach of representation, warranty, covenant or agreement by MMD, TKT agrees to defend, indemnify and hold MMD, its Affiliates and sublicensees and their respective employees and agents harmless from all claims, losses, damages and expenses arising as a result of (a) actual or asserted violations of any applicable law or regulation by TKT or its Affiliates or licensees by virtue of which GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology manufactured, distributed or sold shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any applicable law or regulation or (b) claims for bodily injury, death or property damage attributable to TKT's performance of its obligations under this Agreement. 11.3. PROCEDURE. A party or any of its Affiliates or their respective employees or agents (the "Indemnitee") that intends to claim indemnification under this Article 11 shall promptly notify the other party (the "Indemnitor") of any claim, loss, damage, or expenses in respect of which the Indemnitee intends to claim such indemnification reasonably promptly after the Indemnitee is aware thereof, and the Indemnitor shall assume the defense of any related third party action, suit or proceeding with counsel mutually satisfactory to the parties; PROVIDED, HOWEVER, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceedings. The indemnity agreement in this Article 11 shall not apply to amounts paid in settlement of any claim, loss, damage or expense if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld unreasonably. The failure of an Indemnitee to deliver notice to the Indemnitor within a reasonable time after becoming aware of any such matter, if prejudicial to the Indemnitor's ability to defend such action, shall relieve the Indemnitor of any liability to the Indemnitee under this Article 11. The Indemnitor shall not have any liability to any Indemnitee otherwise than under this Article 11. The Indemnitee under this Article 11 and its employees and agents shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any matter covered by this indemnification. The Indemnitor shall additionally be liable to pay the reasonable legal costs and attorneys' fees incurred by the Indemnitee in establishing a successful claim for indemnity hereunder. 11.4. INSURANCE. For the period starting with the First Commercial Sale of GA-EPO MMD and TKT shall each maintain product -36- 42 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. liability insurance with respect to development, manufacture and sale of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in reasonable amounts determined after consultation with each other, for the term of this Agreement (if such insurance is an occurrence-basis policy) or for an additional ********* after the expiration or termination of this Agreement (if such insurance is a claims-made basis policy). ARTICLE 12. TERM AND TERMINATION 12.1. EXPIRATION. Unless terminated earlier pursuant to Section 12.2, this Agreement shall expire and the licenses granted by TKT to MMD hereunder shall become fully paid, with respect to each country in the MMD Territory, upon the later of (i) ********* after the First Commercial Sale of GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology by MMD or its Affiliates or sublicensees in such country and (ii) the last to expire of any of the then existing patents included in the TKT Patent Rights in such country. 12.2. TERMINATION. This Agreement may be terminated in the following circumstances: 12.2.1. By either party by reason of a material breach not described in subsection 12.2.5 that the breaching party fails to remedy within ******* after written notice thereof by the non-breaching party; 12.2.2. By MMD upon ******** prior written notice with respect to all or a portion of the MMD Territory, if, in its reasonable judgment, MMD determines that toxicities or side effects directly attributable to GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology have rendered it such a safety risk to the patient population that GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology is commercially nonviable; 12.2.3. By MMD, upon ******** prior written notice, with respect to any portion of the MMD Territory if, after consultation with TKT, MMD determines that GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology is commercially nonviable; 12.2.4. By TKT, with respect to the country or relevant portion of the MMD Territory, in the event that TKT elects to respond to or defend against a legal proceeding by a Third Party alleging infringement of a patent or other intellectual property right as a result of the manufacture, production, use, distribution for sale or sale of GA-EPO in any country in the MMD Territory pursuant to subsection 8.6.5 provided that the failure to so respond or defend against such action would have had a material adverse impact on MMD's ability to market GA-EPO, either directly or indirectly through sublicensees, in such country or relevant portion of the MMD Territory; -37- 43 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 12.2.5. By TKT, with respect to the relevant portion of the MMD Territory, in the event that either (i) MMD fails to use its best efforts to meet the milestones described in APPENDIX A applicable to such portion of the MMD Territory or (ii) MMD fails to use its best efforts to commercialize GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in such portion of the MMD Territory using commercially reasonable means consistent with those used for MMD products with similar commercial potential, and, in either or both events, MMD fails to remedy or take reasonable action to initiate a remedy of such default within ******* after notice thereof by TKT; provided that termination by TKT pursuant to this subsection 12.2.5 shall be TKT's sole remedy for any such failure by MMD to meet such milestones or commercialize GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology; 12.2.6. If a competing GA-EPO product is introduced into any country in the MMD Territory, and TKT does not have issued patents or pending claims under the patents included in the TKT Patent Rights which (if issued, in the case of pending claims) will enable a patent infringement action to be initiated, then MMD has the right to terminate as to any such country or the Territory Block in which it is included on ******** notice; or 12.2.7. By either party upon bankruptcy, insolvency, dissolution or winding up of the other. 12.3. EFFECT OF TERMINATION. Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination. The provisions of Section 3.2 (with respect only to licenses granted prior to the time of expiration or termination and subject to the terms described below) and Article 7 (with respect only to milestone payments and royalties accrued at the time of expiration or termination but not yet paid), Article 8, Article 9 and Article 11 shall survive the expiration or termination of this Agreement. In the event of a termination of this Agreement pursuant to subsections 12.2.1 to 12.2.7, then all TKT Patent Rights licensed hereunder with respect to the portion of the MMD Territory terminated will be returned to TKT and, except in the event that this Agreement is terminated by TKT pursuant to subsection 12.2.1, copies of all regulatory filings and related supporting and other materials prepared in connection with such terminated portion of the MMD Territory shall also be delivered to and available for use by TKT, and in any event MMD will immediately cease to sell GA-EPO covered by the TKT Patent Rights or which uses the TKT Technology in the relevant portion of the MMD Territory with respect to which this Agreement is terminated. In the event of termination of this Agreement in all countries within the MMD Territory, MMD will ****************************************************** ************************************************************************** ************************************************************************** ************************************************************************** ****************. Except in the event that this Agreement is -38- 44 terminated by TKT pursuant to subsection 12.2.1, MMD shall, to the extent legally permissible, take all additional action reasonably necessary to assign all of its right, title and interest in and transfer possession and control to TKT of the regulatory filings prepared by MMD to the extent that such filings relate to GA-EPO covered by the TKT Patent Rights or which use the TKT Technology and any regulatory approvals received by MMD to the extent that such approvals relate to GA-EPO covered by the TKT Patent Rights or which use the TKT Technology; provided, however, that MMD may retain a joint ownership interest in such filings and approvals to the extent that such filings or approvals are necessary under this Agreement for portions of the MMD Territory with respect to which this Agreement has not been terminated or for the development or commercialization by MMD of products other than GA-EPO covered by the TKT Patent Rights or which use the TKT Technology. In the event of a termination of this Agreement other than by TKT pursuant to subsections 12.2.1 or 12.2.5, TKT shall be obligated to pay to MMD compensation on such commercially reasonable terms as shall be determined by mutual agreement of TKT and MMD for the use of all licenses granted by MMD under Section 3.2. ARTICLE 13. MISCELLANEOUS 13.1. FORCE MAJEURE. Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party, including but not limited to fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any governmental authority or the other party. 13.2. ASSIGNMENT. This Agreement may not be assigned or otherwise transferred by either party without the consent of the other party; provided, however, that either TKT or MMD may, without such consent, assign its rights and obligations under this Agreement (i) in connection with a corporate reorganization, to any Affiliate, all or substantially all of the equity interest of which is owned and controlled by such party or its direct or indirect parent corporation, or (ii) in connection with a merger, consolidation or sale of substantially all of such party's assets to an unrelated third party; provided, however, that such party's rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction and shall not be transferred separate from all or substantially all of its other business assets, including those business assets that are the subject of this Agreement. Any purported assignment in violation of the preceding sentence shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement. -39- 45 13.3. SEVERABILITY. Each party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this Agreement be or become invalid, the parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the parties would not have entered into this Agreement without the invalid provisions. 13.4. NOTICES. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the parties hereto to the other shall be in writing, delivered personally or by facsimile (and promptly confirmed by telephone, personal delivery or courier) or courier, postage prepaid (where applicable), addressed to such other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and shall be effective upon receipt by the addressee. If to TKT: Transkaryotic Therapies, Inc. 195 Albany Street Cambridge, Massachusetts 02139 Attention: President Telephone: (617) 349-0200 Telecopy: (617) 491-7903 with a copy to: Palmer & Dodge One Beacon Street Boston, Massachusetts 02108 Attention: Peter Wirth, Esq. Telephone: (617) 573-0100 Telecopy: (617) 227-4420 If to MMD: Marion Merrell Dow Inc. 9300 Ward Parkway Kansas City, Missouri 64114-0480 Attention: General Counsel Telephone: (816) 966-4000 Telecopy: (816) 966-3805 -40- 46 with copies to: Marion Merrell Dow Inc. 2110 E. Galbraith Rd. Cincinnati, OH 45215 Attention: General Patent Counsel Telephone: (513) 948-7960 Telecopy: (513) 948-7961 and Shook, Hardy & Bacon, P.C. One Kansas City Place 1200 Main Street, Suite 3100 Kansas City, Missouri 64105 Attention: Randall B. Sunberg, Esq. Telephone: (816) 474-6550 Telecopy: (816) 421-5547 13.5. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the choice of law provisions thereof. 13.6. DISPUTE RESOLUTION. Any disputes arising between the parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either party of its obligations hereunder, whether before or after termination of this Agreement, shall be promptly presented to the Chief Executive Officers of TKT and MMD for resolution and if the Chief Executive Officers or their designees cannot promptly resolve such disputes, then such dispute shall be finally resolved by binding arbitration, except that disputes arising within the Development Committee shall be ultimately resolved, without the use of arbitration, by the Chief Executive Officer of MMD. Whenever a party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other party. The party giving such notice shall refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. Any arbitration hereunder shall be conducted under the commercial rules of the American Arbitration Association. Each such arbitration shall be conducted in the English language by a panel of three arbitrators appointed in accordance with such rules; provided, however, that both parties hereto shall be entitled to representation by counsel, to appear and present written and oral evidence and argument and to cross-examine witnesses presented by the other party. The arbitral panel (i) shall have the authority to grant specific performance, (ii) may allocate between the parties the costs of arbitration in such equitable manner as they may determine, but (iii) shall not render an arbitral award contrary to the provisions of this Agreement. The arbitral award shall be in writing and the arbitral panel shall provide written reasons for its award. The award of the arbitral panel shall be final and binding upon the parties hereto. Any such arbitration shall be held in Chicago, Illinois, or any other mutually agreed -41- 47 location. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. Notwithstanding the provisions of this Section 13.7, in the event of a material breach of this Agreement by TKT that TKT fails to remedy within 90 days after written notice thereof by MMD, MMD shall have the right to bring an action for specific performance by TKT or its Affiliates of TKT's obligations hereunder, to seek an injunction with respect to any action by TKT or its Affiliates inconsistent with any of TKT's obligations hereunder or to bring an action against TKT or its Affiliates at law or in equity in any court or other tribunal in which such action may properly be brought. 13.7. ENTIRE AGREEMENT. This Agreement, together with the Class D Stock Purchase Agreement, contains the entire understanding of the parties with respect to the subject matter hereof and supersedes ********** ******************************************************* the Original License Agreement. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both parties hereto. 13.8. HEADINGS. The captions to the several Articles and Sections hereof are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof. 13.9. INDEPENDENT CONTRACTORS. It is expressly agreed that TKT and MMD shall be independent contractors and that the relationship between the two parties shall not constitute a partnership, joint venture or agency. Neither TKT nor MMD shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other party to do so. 13.10. AGREEMENT NOT TO SOLICIT EMPLOYEES. During the term of this Agreement and for a period of two (2) years following the termination of this Agreement, TKT and MMD agree not to seek to persuade or induce any employee of the other company to discontinue his or her employment with that company in order to become employed by or associated with any business, enterprise or effort that is associated with its own business. 13.11. EXPORTS. The parties acknowledge that the export of technical data, materials or products is subject to the exporting party receiving any necessary export licenses and that the parties cannot be responsible for any delays attributable to export controls which are beyond the reasonable control of either party. TKT and MMD agree not to export or re-export, directly or indirectly, any information, technical data, the direct product of such data, samples or equipment received or generated under -42- 48 this Agreement in violation of any governmental regulations which may be applicable, including, but not limited to, the Export Administration Act of 1979, as amended, its rules and regulations, including, but not limited to, Part 779 of the United States Export Control Regulations, published by the United States Department of Commerce, and other applicable export control laws. TKT and MMD agree to obtain similar covenants from their licensees, sublicensees and contractors with respect to the subject matter of this Section 13.12. 13.12. WAIVER. The waiver by either party hereto of any right hereunder or the failure to perform or of a breach by the other party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise. 13.13. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -43- 49 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. TRANSKARYOTIC THERAPIES, INC. By:/s/ Richard F. Selden ------------------------------------ Title: President and Chief Executive Officer MARION MERRELL DOW INC. By: /s/ Terry J. Shelton ------------------------------------ Title: V.P., Licensing and Business -------------------------------- Development -------------------------------- -44- 50 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. APPENDIX A Milestones ***** ****** ***************************************** ************************************ ****************************************************** *********** ****** ********* *************************** ********* ******** ********* *************** *********** ********* ************** ********* ************ ********* -45- 51 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. SCHEDULE 1.23 TKT PATENT RIGHTS ************** **** *************** ****** *************************************** ******************* ********** ************** ********* *********** ********* ******** ************************* ******* ******* *************** ************************************ ************************************ ************************************ ****** ****** **************************************** ******************* ********** ************** ******* *********** *********** ******* ******* *************** ***** ****** ********************************* **************************************** **************** ******************* ********** ************** ********** *********** ********* ******** ************************* *************** ************************************ *************************************** *************************************** ********** -46- 52 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Schedule 1.24 TKT TECHNOLOGY WITHOUT SUBLICENSE RIGHTS *************************************************** *********************************************** ******************************************************* ***************************************** -47- 53 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Schedule 7.1 ******* ******* ****** ******* ***** ********** ***** *********** ************** -48- EX-10.34 5 LICENSE AGREEMENT DATED 3/1/95 1 EXHIBIT 10.34 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. LICENSE AGREEMENT between TRANSKARYOTIC THERAPIES, INC. and MARION MERRELL DOW INC. dated as of March 1, 1995 2 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. TABLE OF CONTENTS ARTICLE 1. DEFINITIONS.................................................. 1 1.1. "Affiliate".......................................... 1 1.2. "Customer"........................................... 1 1.3. "Development Committee".............................. 1 1.4. "Development Phase" ................................. 2 1.5. "Effective Date"..................................... 2 1.6. "ELA"................................................ 2 1.7. "First Commercial Sale".............................. 2 1.8. "FDA"................................................ 2 1.9. "Fully Absorbed Costs"............................... 2 1.10. " * "........................................ 2 1.11. "Gross Margin"....................................... 2 1.12. "IND"................................................ 3 1.13. "MMD Territory"...................................... 3 1.14. "Manufacturing Know-How"............................. 3 1.15. "Net Revenues"....................................... 3 1.16. "Net Sales".......................................... 3 1.17. "PLA"................................................ 4 1.18. "Program"............................................ 5 1.19. "Research Committee"................................. 5 1.20. "Research Phase"..................................... 5 1.21. "Research Program"................................... 5 1.22. "Third Party"........................................ 5 1.23. "TKT Patent Rights".................................. 5 1.24. "TKT Technology"..................................... 5 ARTICLE 2. SCOPE AND STRUCTURE.......................................... 5 2.1. General.............................................. 6 2.2. Relationship of TKT and MMD.......................... 6 2.3. Commercialization of *******************............. 6 2.3.1. **************************************** ******************************** *********.................................. 6 2.3.2. ********************************** *************************************** *********.................................. 7 2.4. Development and Commercialization of an Additional Gene Activated Protein.................... 7 ARTICLE 3. LICENSE GRANTS; MANUFACTURING AND MARKETING RIGHTS.......................................................... 7 3.1. Grant of License Rights by TKT to MMD................ 7 3.1.1. *****************************.............. 7 3.1.2. ***************************................ 7 3.1.3. Exclusive Manufacturing Know-How License.................................... 7 3.1.4. Sublicenses of Manufacturing Know-How...... 8 3.2. Grant of License Rights by MMD to TKT................ 8 3.3. Reservation of Rights................................ 8 (i) 3 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 3.3.1. TKT Reservation............................ 8 3.3.2. MMD Reservation............................ 9 3.3.3. ***************************................ 9 ARTICLE 4. THE RESEARCH PHASE........................................... 9 4.1. Conduct of the Research Program...................... 9 4.1.1. General.................................... 9 4.1.2. Research Plan.............................. 9 4.1.3. Subcontracts............................... 9 4.1.4. Data....................................... 9 4.1.5. Reports by TKT............................. 10 4.1.6. Assistance by MMD.......................... 10 4.1.7. ***************************................ 10 4.2. Funding of the Research Program...................... 10 4.3. Term of the Research Phase........................... 11 4.3.1. Completion of the Research Phase........... 11 4.3.2. Term of the Research Phase................. 11 ARTICLE 5. THE DEVELOPMENT PHASE........................................ 11 5.1. Conduct of the Development Phase..................... 11 5.1.1. Commencement of the Development Phase...... 11 5.1.2. Development Phase.......................... 11 5.1.3. Annual Development Plan.................... 12 5.1.4. Adjustment of Development Phase Milestones................................. 12 5.1.5. Attendance at Regulatory Meetings.......... 13 5.2. Funding of the Development Phase..................... 13 5.3. Development Information.............................. 13 5.3.1. Information for Regulatory Submissions..... 13 5.3.2. Reports to Development Committee........... 13 5.3.3. Regulatory Submissions..................... 13 5.3.4. Adverse Event Information.................. 13 5.4. Certain Prohibited Actions........................... 13 5.5. Development Phase Manufacturing...................... 14 5.6. Manufacturing Costs.................................. 14 5.7. Assistance by TKT.................................... 14 5.8. Regulatory Matters and Commercialization............. 14 5.8.1. Commercialization.......................... 14 5.8.2. Marketing Plans............................ 14 5.8.3. Co-Development, Co-Promotion and Co- Marketing.................................. 14 ARTICLE 6. RESEARCH, DEVELOPMENT AND REGULATORY COORDINATION.................................................... 16 6.1. Research Committee................................... 16 6.1.1. General.................................... 16 6.1.2. Minutes.................................... 16 6.2. Development Committee................................ 16 6.2.1. General.................................... 16 6.2.2. Minutes.................................... 17 6.3. General Disagreements................................ 17 6.4. Visit of Facilities.................................. 17 (ii) 4 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 6.5. Annual Review and Planning Meeting................... 17 ARTICLE 7. MILESTONES AND ROYALTIES 17 7.1. Milestone Payments................................... 17 7.2. Royalties............................................ 18 7.2.1. Royalties Based on Net Sales of * ................................ 18 7.2.2. Alternative Royalty Based on Gross Margin..................................... 19 7.2.3. Sharing of Revenues From Sublicensees...... 19 7.2.4. Adjustment of Royalty Rates................ 19 7.3. Royalty Reports, Exchange Rates...................... 20 7.4. Audits............................................... 21 7.4.1. Procedure.................................. 21 7.4.2. Expenses................................... 21 7.4.3. Sublicenses................................ 21 7.4.4. Confidential Treatment..................... 21 7.5. Royalty Payment Terms................................ 21 7.6. Form of Payment...................................... 21 7.7. Withholding Taxes.................................... 22 7.8. Interest on Late Payments............................ 22 ARTICLE 8. INTELLECTUAL PROPERTY RIGHTS................................. 22 8.1. Ownership............................................ 22 8.1.1. Ownership of Discoveries and Improvements............................... 22 8.1.2. Cooperation of Employees................... 23 8.2. Filing, Prosecution and Maintenance of TKT Patent Rights and TKT Technology............................ 23 8.2.1. ***********************************........ 23 8.2.2. Patent Filing Costs........................ 24 8.3. Cooperation.......................................... 24 8.4. Notification of Patent Term Restoration.............. 24 8.5. No Other Technology Rights........................... 25 8.6. Enforcement of TKT Patent Rights and TKT Technology; Defense of Infringement Actions.......... 25 8.6.1. ****************************............... 25 8.6.2. ********************************* *******.................................... 25 8.6.3. ************************************ ********................................... 25 8.6.4. *****************************.............. 26 8.6.5. **************************** ******************************** ****************........................... 26 8.7. ********************************************** ***************************.......................... 26 ARTICLE 9. CONFIDENTIALITY.............................................. 27 9.1. Nondisclosure Obligations............................ 27 9.1.1. General.................................... 27 9.1.2. Limitations................................ 27 (iii) 5 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 9.2. Materials............................................ 27 9.2.1. ******************************............. 28 9.2.2. Samples.................................... 28 9.3. Terms of this Agreement.............................. 28 9.4. Publications......................................... 28 9.4.1. Procedure.................................. 28 9.4.2. Delay...................................... 29 9.4.3. Resolution................................. 29 9.5. Injunctive Relief.................................... 29 ARTICLE 10. REPRESENTATIONS AND WARRANTIES.............................. 29 10.1. General.............................................. 29 10.1.1. Authorization.............................. 29 10.1.2. No Inconsistent TKT Arrangements........... 29 10.1.3. Exclusivity................................ 29 10.1.4. Licensed Technology........................ 29 10.2. Patent Validity...................................... 30 10.2.1. Title. .................................... 30 10.2.2. No Encumbrances............................ 30 10.2.3. Non-Infringement........................... 30 10.3. Financial Statements................................. 30 ARTICLE 11. INDEMNITY................................................... 30 11.1. MMD Indemnity Obligations............................ 30 11.2. TKT Indemnity Obligations............................ 30 11.3. Procedure............................................ 31 11.4. Insurance............................................ 31 ARTICLE 12. TERM AND TERMINATION........................................ 31 12.1. Expiration........................................... 31 12.2. Termination.......................................... 32 12.3. Effect of Termination................................ 33 ARTICLE 13. MISCELLANEOUS............................................... 33 13.1. Force Majeure........................................ 33 13.2. Assignment........................................... 34 13.3. Severability......................................... 34 13.4. Notices.............................................. 34 13.5. Applicable Law....................................... 35 13.6. Dispute Resolution................................... 35 13.7. Entire Agreement..................................... 37 13.8. Headings............................................. 37 13.9. Independent Contractors.............................. 37 13.10. Agreement Not to Solicit Employees................... 37 13.11. Exports.............................................. 37 13.12. Waiver............................................... 37 13.13. Counterparts......................................... 37 (iv) 6 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. LICENSE AGREEMENT THIS LICENSE AGREEMENT dated as of March 1, 1995 (the "Agreement") is made between TRANSKARYOTIC THERAPIES, INC., a Delaware corporation having its principal place of business at 195 Albany Street, Cambridge, Massachusetts 02139 ("TKT"), and MARION MERRELL DOW INC., a Delaware corporation having its principal place of business at 9300 Ward Parkway, Kansas City, Missouri 64114-0480 ("MMD"). R E C I T A L S WHEREAS, TKT has filed patent applications necessary to exploit discoveries relating to the expression of ************** ***************************************************************** ***************************************************************** * and possesses certain related know-how and expertise. WHEREAS, MMD desires to license TKT's patent rights and certain related know-how and expertise relating to ************** ***************************************************************** ********************************************* and obtain TKT's assistance for development of such discoveries. NOW THEREFORE, in consideration of the premises and of the covenants herein contained, the parties hereto mutually agree as follows: ARTICLE 1. DEFINITIONS For purposes of this Agreement, the terms defined in this Article shall have the meanings specified below: 1.1. "AFFILIATE" shall mean any corporation or other entity which controls, is controlled by, or is under common control with a party to this Agreement. A corporation or other entity shall be regarded as in control of another corporation or entity if it owns or directly or indirectly controls more than fifty percent (50%) of the voting stock or other ownership interest of the other corporation or entity, or if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or other entity or the power to elect or appoint fifty percent (50%) or more of the members of the governing body of the corporation or other entity. Notwithstanding the foregoing, the Dow Chemical Company shall not be considered an Affiliate of MMD for purposes of this Agreement. 1.2. "CUSTOMER" shall have the meaning set forth in Section 1.15. -1- 7 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 1.3. "DEVELOPMENT COMMITTEE" shall mean the joint committee composed of representatives of TKT and MMD described in Section 6.2 of this Agreement. 1.4. "DEVELOPMENT PHASE" shall mean the second phase of the Program, which shall commence ********************************** *********************************************************** ********************************************************* *********************** * covered by the TKT Patent Rights or which uses the TKT Technology and the preparation and filing of supporting regulatory submissions until, with respect to each country in the MMD Territory, final marketing approval for * covered by the TKT Patent Rights or which uses the TKT Technology is obtained in such country. 1.5. "Effective Date" shall mean the date hereof. -------------- 1.6. "ELA" shall mean the Establishment License Application filed with the FDA to obtain approval of the facility to be used to manufacture * covered by the TKT Patent Rights or which uses the TKT Technology for sale in the United States or any comparable application filed with the regulatory authorities of a country other than the United States to obtain approval of production facilities to be used to manufacture * covered by the TKT Patent Rights or which uses the TKT Technology for sale in such country. 1.7. "FIRST COMMERCIAL SALE" of * covered by the TKT Patent Rights or which uses the TKT Technology shall mean the first sale for use or consumption by the general public of * covered by the TKT Patent Rights or which uses the TKT Technology in a country in the MMD Territory after required marketing and pricing approval has been granted by the governing health authority of such country. 1.8. "FDA" shall mean the United States Food and Drug Administration. ----- 1.9. "FULLY ABSORBED COSTS" shall mean the direct variable and direct fixed costs associated with the conduct of the Research Phase or the Development Phase. Direct variable costs shall be deemed to be the cost of labor, raw materials, supplies and other resources directly consumed in the conduct of the Research Phase or the Development Phase. Direct fixed costs shall be deemed to be the cost of utilities, insurance, equipment depreciation and other fixed costs directly related to the conduct of the Research Phase or the Development Phase. Fixed costs shall be allocated based upon the proportion of such costs directly attributable to support of the Research Phase or the Development Phase. All cost determinations made hereunder shall be made in accordance with generally accepted accounting principles consistently applied. 1.10. " * " shall mean all pharmaceutical and other formulations of ********************************************** -2- 8 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ***************************************************************** ******************, including all injectable and orally available formulations, line extensions, combination products, delivery systems, and dosage forms related thereto************************ *****************************. 1.11. "GROSS MARGIN" with respect to * covered by the TKT Patent Rights or which uses the TKT Technology shall mean Net Revenues from sales of such * less the cost of goods sold of MMD or its Affiliates for such * , determined in accordance with generally accepted accounting principles consistently applied for all products manufactured by MMD. 1.12. "IND" shall mean an investigational new drug application filed with the FDA prior to beginning clinical trials in humans, or any comparable application filed with the regulatory authorities of a country other than the United States prior to beginning clinical trials in humans in that country, with respect to * covered by the TKT Patent Rights or which uses the TKT Technology. 1.13. "MMD TERRITORY" shall mean all of the countries in the world, which shall be divided into the following groupings of countries:*************************************************** ******************************************************* ************************************************************* ************************************************************ ***************************************************************** ******************************************************** ************************************************************** ************************************************************** **************************************************************** *********************************************************** *****. Each of the foregoing groupings of countries is referred to as a "Territory Block." 1.14. "MANUFACTURING KNOW-HOW" shall mean all inventions, discoveries, improvements and other technology, whether or not patentable or copyrightable, and any patent applications, patents or copyrights based thereon, relating to or necessary or useful for the production and packaging of * covered by the TKT Patent Rights or which uses the TKT Technology. 1.15. "NET REVENUES" with respect to * covered by the TKT Patent Rights or which uses the TKT Technology shall mean the invoiced amount billed by MMD or its Affiliates for * finished product in final packing form (whether or not with final labels) to any MMD distributors or sublicensees which are not Affiliates, including any royalties due to MMD or its Affiliates with respect to such sales, less, whether or not such costs are invoiced separately to such person or entity, the costs identified in clauses (a) through (d) of subsection 1.16. The definitions of Bundled Product and Combination Product set forth in subsection 1.16 shall also apply to such sales mutatis mutandis. -3- 9 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 1.16. "NET SALES" with respect to * covered by the TKT Patent Rights or which uses the TKT Technology shall mean the invoiced amount billed for * finished product in final packing form to the first Third Party trade purchaser (a "Trade Customer") by MMD or its Affiliates or any MMD distributors which are not Affiliates, or, to the extent permitted in subsection 3.1.2, by permitted sublicensees of MMD (it being understood that wholesalers which are not Affiliates of MMD shall be considered Third Party trade purchasers), less, whether or not such costs are invoiced separately to such Trade Customer, (a) amounts refunded or credited for * which was rejected, spoiled, damaged, out-dated or returned, (b) freight, shipment and insurance costs incurred in transporting * to such customers, (c) quantity, trade, cash, and other discounts, rebates (including, without limitation, pursuant to governmental regulation), chargebacks, retroactive price reductions, credits or allowances allowed or taken (subject to post-period adjustment if allowed but not taken within three months of the end of the calendar year in which such credit or allowance is allowed), and (d) taxes, tariffs, customs duties and surcharges and other governmental charges incurred in connection with the sale, exportation or importation of * . The transfer of * by MMD or one of its Affiliates to another Affiliate of MMD shall not be considered a sale; in such cases, Net Sales shall be determined based on the invoiced sales price by the Affiliate to the Trade Customer, less the deductions allowed under this Section. MMD shall be deemed to have sold a "Bundled Product" if * finished product is sold by MMD pursuant to an agreement with a Trade Customer specifying, for a combination of products or services, (i) a single price, (ii) other terms of purchase not separately identifying either a price per product or the effective deductions referred to above per product or (iii) a price for units of * which is discounted below MMD's standard invoice price per unit of * by at least five percentage points more than the amount that any other product or service in the Bundled Product is discounted below such other product's or service's standard invoice price. In order to calculate the Net Sales of * included in a Bundled Product (a) in the case of the foregoing clauses (i) and (ii), the total Net Sales of the Bundled Product shall be multiplied by a fraction, the numerator of which shall be ************************************************************** ***************************************************************** and the denominator of which shall be ************************* ************************************************************** *********************************************************** ************************************************************* ************************************* and (b) in the case of the foregoing clause (iii), the parties will determine whether an adjustment to Net Sales is appropriate and, if so, a mutually agreeable method of calculation. If * is formulated by MMD with one or more different active biological or chemical ingredients and such formulation is sold in finished product form, then MMD shall be deemed to have sold a "Combination Product." In order to calculate the Net Sales of * included in a Combination Product, the total invoice -4- 10 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. price for the Combination Product shall be multiplied by a fraction, the numerator of which shall be ****************** **************************************************************** ********************************************************, and the denominator of which shall be ********************************** *************************************************************** ********************************************************** *************************************************************** ********************. If it is not possible to determine the standard invoice price for an active ingredient of the Combination Product, then the standard invoice price for such individual active ingredient shall be the fully allocated cost of manufacture therefor determined in accordance with standard cost accounting principles, as adjusted to reflect MMD's standard profit margin for like products. The amount of Net Sales for any period shall be determined on the basis of sales recorded in the ordinary course on the books and records of MMD (or any Affiliate of MMD) during such period in accordance with generally accepted accounting principles and with past practice, without reference to the effects of any subsequent audit adjustments which result in any of such sales being recognized by MMD in another period. 1.17. "PLA" shall mean a product license application filed with the FDA after completion of human clinical trials to obtain marketing approval for * covered by the TKT Patent Rights or which uses the TKT Technology in the United States or any comparable application filed with the regulatory authorities of a country other than the United States to obtain marketing approval for * covered by the TKT Patent Rights or which uses the TKT Technology in that country. 1.18. "PROGRAM" shall mean the collaboration by TKT and MMD described in this Agreement. 1.19. "RESEARCH COMMITTEE" shall mean the joint committee composed of representatives of TKT and MMD described in Section 6.1 of this Agreement. 1.20. "RESEARCH PHASE" shall mean the first stage of the Program commencing on the Effective Date, ************************ ***************************************************************** * ************************************************************ **************. The Research Phase is more fully described in Article 4. 1.21. "RESEARCH PROGRAM" shall mean the * research program described in Section 4.1 of this Agreement. 1.22. "THIRD PARTY" shall mean any entity other than TKT or MMD and their respective Affiliates. 1.23. "TKT PATENT RIGHTS" shall mean all present and, at MMD's election, future patents, patent applications, patent extensions, certificates of invention, or applications for certificates of invention, together with any divisions, -5- 11 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. continuations or continuations-in-part thereof, which are owned or controlled by TKT relating to or necessary or useful for the manufacture, use, distribution or sale of * , including without limitation those specified on Schedule 1.23 hereto. 1.24. "TKT TECHNOLOGY" shall mean all present and future inventions, trade secrets, copyrights, know-how, data, regulatory submissions and other intellectual property of any kind (including any proprietary biological materials, compounds or reagents but not including TKT Patent Rights) which are owned or controlled by, or licensed (with the right to sublicense) to, TKT relating to or necessary or useful for the manufacture, use, distribution or sale of * , including but not limited to any patents or patent applications licensed from Third Parties. With respect to TKT Technology which has been licensed to TKT by a Third Party, (i) MMD agrees to assume and pay for its portion of any costs, expenses, fees or royalties associated with its use of sublicense rights relating to such licensed TKT Technology to the extent described in Section 8.7, and (ii) if TKT does not currently have the right to sublicense such intellectual property to MMD hereunder, such license is listed on Schedule 1.24 hereto and TKT shall use commercially reasonable efforts to obtain the right to sublicense such intellectual property (as well as any intellectual property licensed to TKT hereafter which is included in the TKT Technology) to MMD hereunder. ARTICLE 2. SCOPE AND STRUCTURE 2.1. GENERAL. TKT and MMD wish to establish an agreement with respect to * . During the course of the Program, TKT and MMD shall communicate regularly and shall assume different rights and responsibilities, all as more specifically described herein. 2.2. RELATIONSHIP OF TKT AND MMD. During the term of this Agreement, neither TKT or MMD, nor any of their Affiliates shall independently, or with a Third Party, conduct research regarding, or engage in the development, manufacture, marketing or sale of, pharmaceutical formulations of ****************************** ***************************************************************** **************, other than as part of the Program, except that either TKT or MMD may develop, manufacture, market, distribute or sell "generic" or "non-branded" pharmaceutical formulations of ***************************************************************** ****************************************** in any country if (i) there are imminent Third Party sales of "generic" ***************************************************************** *************************************************** in such country and (ii) * covered by the TKT Patent Rights or which uses the TKT Technology may not lawfully be substituted in such country as a "generic" equivalent product for any prescription for a branded or "generic" form of ************************************* ***************************************************************** ********** with respect to which sales by such Third Party are imminent. -6- 12 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 2.3. COMMERCIALIZATION OF *******************. TKT agrees that it shall not develop, manufacture, promote or market **** ************************************************************ ***************************************************************** ** ************************************************************** ***************************************************************** * ************************************************************* *************************************. 2.3.1. *********************************************** ***************** *****************. ****************** *********************************************************** *************************************************************** ******************************************************. 2.3.1.1. NOTICE OF NEGOTIATION. TKT shall promptly notify MMD if it enters into a negotiation regarding a *********************************. 2.3.1.2. ********************************* Notice. Prior to entering into any agreement regarding a **** ***************************** TKT shall deliver a written notice (the "********************") to MMD disclosing in reasonable detail the terms and conditions of the proposed *************************. 2.3.1.3. RIGHT OF FIRST REFUSAL. MMD shall have the right (the "FIRST REFUSAL RIGHT") at any time ****** **************** after receipt of the ******************** to accept the terms thereof, in which event the parties shall use their best efforts to enter into an agreement, within ******* after such acceptance regarding a ********************************* upon the terms specified in the ********************. The parties acknowledge that the terms specified in such ******************** shall be different from the terms of this * ******** ********. If MMD does not exercise the First Refusal Right, then TKT shall be free, for a period of ******** from the expiration of such *************, to enter into an agreement with a Third Party regarding a ********************************* upon the terms and with the Third Party specified in the ********************. Following the ************** specified in the preceding sentence, TKT shall not enter into an agreement regarding a ************* ******************** without complying with the terms of this subsection 2.3.1.2. 2.3.2. ******************************************** ***************************************. ********* the ****************************** of this Agreement, TKT shall be under no obligation to enter into a************************** ****** with MMD but shall promptly notify MMD if it enters into a negotiation for a *********************************. 2.4. DEVELOPMENT AND COMMERCIALIZATION OF AN ADDITIONAL GENE ACTIVATED PROTEIN. TKT commits that it is its intention to negotiate with MMD for the joint development and -7- 13 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. commercialization of an additional gene activated protein at such time as such development and commercialization appears desirable to both parties. Such additional gene activated protein may be any protein of commercial interest to TKT and MMD; provided, however, that such intention shall not apply to any gene activated protein that TKT is developing internally or with a Third Party as of the date such negotiations commence between TKT and MMD. Notwithstanding the foregoing, TKT shall be under no obligation to develop or commercialize any particular gene activated protein with MMD. However, TKT shall promptly notify MMD if it enters into negotiations with any Third Party for the development or commercialization of *****************************. ARTICLE 3. LICENSE GRANTS; MANUFACTURING AND MARKETING RIGHTS 3.1. GRANT OF LICENSE RIGHTS BY TKT TO MMD. 3.1.1. EXCLUSIVE * License. TKT hereby grants to MMD the worldwide, perpetual, and exclusive right and license under the TKT Patent Rights and the TKT Technology to develop, make, have made, use, distribute for sale and sell * . 3.1.2. SUBLICENSES OF * . MMD shall have the right to grant sublicenses under the TKT Patent Rights and the TKT Technology license granted by TKT to MMD under subsection 3.1.1 to Affiliates of MMD and, with the written consent of TKT, which shall not be unreasonably withheld, to entities which are not Affiliates of MMD. In connection with such sublicense, MMD may provide that the sublicensee shall pay directly to TKT any amounts which may become due in accordance with Section 7.2, PROVIDED, HOWEVER, that MMD shall in any event remain liable for the payment of all such amounts notwithstanding any such provision between MMD and its sublicensee. Upon TKT's request, and to the extent that MMD is not contractually prohibited from doing so, MMD will provide a copy of such sublicenses to TKT. 3.1.3. EXCLUSIVE MANUFACTURING KNOW-HOW LICENSE. TKT hereby grants to MMD a worldwide, perpetual, and exclusive and, except as provided below, fully paid-up and royalty-free right and license under Manufacturing Know-How owned or controlled by, or licensed (subject to the provisions of this subsection 3.1.3, with the right to sublicense) to, TKT to make or have made * covered by the TKT Patent Rights or which uses the TKT Technology. With respect to Manufacturing Know-How which has been licensed to TKT by a Third Party, (i) MMD agrees to assume and pay for any costs, expenses, fees or royalties associated with its sublicense of such Manufacturing Know-How, and (ii) if TKT does not currently have the right to sublicense such intellectual property to MMD hereunder, such license is listed on Schedule 3.1.3 hereto and TKT shall use commercially reasonable efforts to obtain the right to sublicense such intellectual property (as well as any intellectual property -8- 14 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. licensed to TKT hereafter which is included in the Manufacturing Know-How) to MMD hereunder for such limited purposes. 3.1.4. SUBLICENSES OF MANUFACTURING KNOW-HOW. MMD shall have the right to grant sublicenses under the Manufacturing Know-How license granted by TKT to MMD under subsection 3.1.3 to Affiliates of MMD and, with the written consent of TKT, which shall not be unreasonably withheld, to entities which are not Affiliates of MMD. MMD will provide a copy of such sublicenses to TKT. 3.2. GRANT OF LICENSE RIGHTS BY MMD TO TKT. Subject to the last sentence of this Section 3.2, upon the request of TKT, (i) MMD shall grant to TKT a worldwide, perpetual, non-exclusive and fully paid-up and royalty-free right and license, with the right to sublicense, under Manufacturing Know-How owned or controlled by, or licensed (subject to the provisions of this Section 3.2, with the right to sublicense) to MMD which is developed by a Third Party contract manufacturer engaged by MMD and working with or receiving assistance from TKT, to make or have made products (other than pharmaceutical formulations of ********************************* ***************************************************************** *******) worldwide which are not competitive with * , and (ii) MMD shall negotiate in good faith with TKT the terms of a license, with the right to sublicense, which shall be on reasonable commercial terms, under Manufacturing Know-How owned or controlled by, or licensed (subject to the provisions of this Section 3.2, with the right to sublicense) to MMD to make or have made products (other than pharmaceutical formulations of ************************ ***************************************************************** **********************) worldwide which are not competitive with * . With respect to Manufacturing Know-How described above which has been licensed to MMD by a Third Party, (i) TKT agrees to assume and pay for any costs, expenses, fees or royalties associated with its sublicense of such Manufacturing Know-How, and (ii) if MMD does not have the right to sublicense such intellectual property to TKT hereunder, MMD shall use commercially reasonable efforts, as determined in good faith by MMD, to obtain the right to sublicense such intellectual property to TKT hereunder for such limited purposes. 3.3. Reservation of Rights. ---------------------- 3.3.1. TKT RESERVATION. Notwithstanding the license grants set forth above, and subject to the provisions of Section 5.4 hereof, TKT at all times reserves the right under the TKT Patent Rights, TKT Technology, and Manufacturing Know-How owned either exclusively by TKT or jointly with MMD (i) to make, have made and use * for research and development uses as part of the Program and (ii) subject, with respect to Manufacturing Know-How owned jointly by TKT and MMD, to the consent of MMD, which consent shall not be unreasonably withheld, to make, have made, use, sublicense, distribute for sale and sell products other than * . -9- 15 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 3.3.2. MMD RESERVATION. Notwithstanding the license grants set forth above, MMD at all times reserves the right under Manufacturing Know- How owned either exclusively by MMD or jointly with TKT (i) to make, have made and use * for research and development uses as part of the Program, (ii) to make, have made, use, sublicense, distribute for sale and sell * and (iii) subject, with respect to Manufacturing Know-How owned jointly by TKT and MMD, to the consent of TKT, which consent shall not be unreasonably withheld, to make, have made, use, sublicense, distribute for sale and sell products other than * . 3.3.3. MANUFACTURE OF * . Notwithstanding anything else contained in this Agreement, MMD shall have the right to make or have made * in any country in the world for use, distribution for sale or sale by itself, its Affiliates or its permitted licensees or sublicensees in the territories allocated to it under this Agreement. ARTICLE 4. THE RESEARCH PHASE 4.1. Conduct of the Research Program. -------------------------------- 4.1.1. GENERAL. The conduct of the Research Program shall be the primary responsibility of TKT and shall take place primarily at TKT's facilities in Cambridge, Massachusetts. The Research Program shall be conducted in good scientific manner, and in compliance with all applicable good laboratory practices and applicable legal requirements to achieve efficiently and expeditiously its objectives. TKT shall proceed diligently with the work set out in the Research Program using its best efforts using commercially reasonable means consistent with those used by TKT for other projects with a similar commercial potential. Each party shall regularly communicate with the other regarding planned and actual activities and resources utilized. 4.1.2. RESEARCH PLAN. The Research Program shall be conducted under a research plan prepared by TKT which describes the work to be pursued by TKT during the Research Phase, including (i) identifying the technical problems involved and the general projects to be carried out regarding * , (ii) estimating the personnel to be committed for each project, and (iii) setting forth a projected timetable for the work to be performed. TKT will submit the research plan to the Research Committee for its approval within ninety (90) days of the Effective Date. An outline of the research plan is attached hereto as Schedule 4.1.2. If at any time during the Research Phase, TKT or MMD determine that a significant change to the research plan is necessary or desirable, it shall prepare a written description detailing the change to the research plan and shall submit such description to the Research Committee for its approval. -10- 16 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 4.1.3. SUBCONTRACTS. Subject to the approval of the Research Committee and the provisions of Article 9, TKT may subcontract portions of the Research Program to be performed by it in the normal course of its business to a Third Party. 4.1.4. DATA. TKT shall maintain records in sufficient detail and in good scientific manner appropriate for regulatory filings and patent purposes and as will properly reflect all work done and results achieved in the performance of the Research Program (including all data in the form required to be maintained under any applicable governmental regulations). Such records shall include books, records, reports, research notes, charts, graphs, comments, computations, analyses, recordings, photographs, computer programs and documentation thereof, computer information storage means, samples of materials and other graphic or written data generated in connection with the Research Program. TKT shall provide MMD the right to inspect such records, and shall provide copies of all requested records, to the extent reasonably required for the performance of MMD's obligations under this Agreement; provided, however, that MMD shall maintain such records and the information of TKT contained therein in confidence in accordance with Article 9 hereof and shall not use such records or information except to the extent otherwise permitted by this Agreement. 4.1.5. REPORTS BY TKT. Except as set forth below, within fourteen (14) days following the end of each calendar quarter, or at the reasonable request (with mutually agreed advance notice) of the Research Committee, TKT shall provide to the members of the Research Committee a written report which shall summarize in reasonable detail the work TKT has performed under the Research Program during the preceding calendar quarter. For the first year of the Research Program, TKT shall only be required to provide such reports for the first and second six-month periods following the Effective Date. TKT shall provide to MMD all reports necessary under Section 5.3.1. 4.1.6. ASSISTANCE BY MMD. MMD shall provide such assistance to TKT in conducting the Research Program as TKT may reasonably request, and TKT will reimburse MMD for its documented Fully Absorbed Costs incurred in providing such assistance; provided, however, that prior to providing such assistance MMD shall have provided to TKT an estimate of such Fully Absorbed Costs and TKT shall have approved such estimate; PROVIDED, further, that no failure of MMD to undertake or successfully complete such assistance shall relieve TKT from its obligations hereunder or affect MMD's right to terminate this Agreement pursuant to Section 12.2. 4.1.7. ***************************. ***************** ************************************************************** ***************************************************************** ********************************************************** **************************************************************** ******. -11- 17 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 4.2. FUNDING OF THE RESEARCH PROGRAM. As funding for the Research Program, MMD shall pay to TKT $************ upon the execution of this Agreement and **************** payments of $*************, each on the dates occurring ************** ***************** following the execution of this Agreement. Such funds shall be used by TKT for costs and expenses in connection with the Research Program; provided, that, any excess of such funds that have not been so used at the time that the Research Committee ****************************** described in subsection 4.3.1 may be used by TKT for any purpose. All payments made by MMD pursuant to this subsection shall be in United States dollars and shall be made by check or other means acceptable to TKT. 4.3. Term of the Research Phase. -------------------------- 4.3.1. COMPLETION OF THE RESEARCH PHASE. The term of the Research Phase shall commence as of the Effective Date. ***************************************************************** ***************************************************************** ***************************************************************** ***************************************************************** ***************************************************************** ************************************************************ ************************************************************* ***************************************************************** ***************. The Research Committee shall promptly evaluate the data submitted by TKT and determine, in its reasonable discretion, ***************************************************** ***************************************************************** ***************************************************************** ***************************************************************** **************************************************************** ********************************************************* ***************************************************************** ***************************************************************** ************************************************************* ************************************************************** ***************************************************************** *********************************************************** ***************************************************************** **************************************************************** ***************************************************************** *********. 4.3.2. TERM OF THE RESEARCH PHASE. The term of the Research Phase ************************************************ *************************************************************** **************************************************************** ************************************************************* ****************** shall jointly determine on what terms the Research Phase shall be extended and what additional terms, if any, in this Agreement shall be modified as a result of such extension. If such a determination cannot be reached within *************** **** after the expiration of the initial term of the Research Phase, then such determination shall be made by -12- 18 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. arbitration in accordance with the procedures for arbitration described in Section 13.6, unless the parties mutually agree to terminate this Agreement. ARTICLE 5. THE DEVELOPMENT PHASE 5.1. Conduct of the Development Phase. -------------------------------- 5.1.1. COMMENCEMENT OF THE DEVELOPMENT PHASE. The Development Phase will commence ******************************** ********************************************************* ************************************************************* *************************************************************** ******. 5.1.2. DEVELOPMENT PHASE. The conduct of the Development Phase shall be the primary responsibility of MMD. MMD may subcontract with Third Parties for portions of the Development Phase and for all or a portion of the manufacture of * . The Development Phase shall consist of the preparation and filing of regulatory submissions and the preclinical and clinical development of * until, with respect to each country in the MMD Territory, final marketing approval for * is obtained in such country. MMD and TKT will cooperate to achieve the milestones described in APPENDIX A using their respective best efforts using commercially reasonable means consistent with those used by them for other projects with a similar commercial potential. If MMD has been unable to achieve any of the milestones described in APPENDIX A within the time period indicated in APPENDIX A for reasons other than those described in subsection 5.1.4, then the Chief Executive Officer of each of TKT and MMD or their respective designees shall jointly determine on what terms the time period for achieving such milestones should be extended and what additional terms, if any, in this Agreement shall be modified as a result of such extension. If such a determination cannot be reached within ******************** after the time period for any such milestone has expired, then such determination shall be made by arbitration in accordance with the procedures for arbitration described in Section 13.6, unless the parties mutually agree to terminate this Agreement. MMD shall have primary responsibility for supervision of the scale-up and the further characterization of the master cell bank, the characterization of clinical trial material, and the supervision of the assembly of all characterization data and other information required for regulatory submissions. At MMD's request, TKT will perform, or assist MMD in performing, the work described in the preceding sentence and provide such other assistance to MMD as may be reasonably necessary to enable MMD to achieve the milestones described in APPENDIX A, and TKT shall be compensated for such assistance in accordance with Section 5.7. MMD will determine, in its sole discretion after consultation with TKT, the appropriate entity to file and hold the PLA and the ELA. MMD will coordinate preclinical and clinical testing of * and work with designated individuals at MMD and TKT in the -13- 19 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. preparation of regulatory filings for * within the MMD Territory. 5.1.3. ANNUAL DEVELOPMENT PLAN. The Development Phase shall be conducted under an annual development plan which shall describe the work to be pursued by MMD and TKT under the supervision of the Development Committee with respect to the development of * . The first Development Plan will be prepared by MMD for submission to the Development Committee ******************************* ************************************************************************ *********************. Thereafter, the annual development plan will be prepared by MMD for submission to the Development Committee no later than sixty (60) days prior to the beginning of each calendar year. 5.1.4. ADJUSTMENT OF DEVELOPMENT PHASE MILESTONES. If at any time during the Development Phase MMD determines and is able to demonstrate to TKT's reasonable satisfaction that ************************************************** **************************************************************************** ***************************************************************** ************************************************************* ************************************************************ ***************************************************************** ******************************************************** *************************************************************** *****************************************************, then the Chief Executive Officer of each of MMD and TKT, or their respective designees, shall determine on what terms the Research Phase shall be reinitiated and how the milestones described in Appendix A are to be adjusted. 5.1.5. ATTENDANCE AT REGULATORY MEETINGS. MMD will provide TKT with prior notice of all meetings between its representatives and drug regulatory authorities regarding marketing approval of * . TKT shall have the right to have a representative present at all important meetings in the United States, and upon request at all important meetings in other countries; provided, however, that MMD may revoke this right with respect to any particular meeting if, in its good faith reasonable judgment, the presence of any other party will be a detriment to the success of the meeting. TKT will furnish, at MMD's request, a representative to attend drug regulatory meetings regarding marketing approval of * . 5.2. FUNDING OF THE DEVELOPMENT PHASE. MMD shall bear all costs and expenses in connection with the Development Phase. The assistance by TKT to MMD and reimbursement to be provided by MMD to TKT during the Development Phase is set forth in Section 5.7 hereof. -14- 20 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 5.3. Development Information. ----------------------- 5.3.1. INFORMATION FOR REGULATORY SUBMISSIONS. TKT will provide MMD with all documentation available to TKT reasonably required for regulatory submissions by MMD, based on work performed during the Research Phase, including ********************************************************************** *************************************************************** *********************************************************** ******************************************************** ************************************************************* ***************************************************************** **************** 5.3.2. REPORTS TO DEVELOPMENT COMMITTEE. MMD shall keep the Development Committee informed as to its progress in the Development Phase of * . Within thirty (30) days following the end of each six month period during the Development Phase, MMD shall provide a reasonably detailed report to the Development Committee which shall describe the progress of the Development Phase of * . 5.3.3. REGULATORY SUBMISSIONS. MMD shall provide TKT with copies of all submissions to United States drug regulatory authorities. Upon the reasonable request of TKT, MMD shall also provide TKT with copies of all submissions to drug regulatory authorities of other countries and the results of all clinical trials conducted by, or under the supervision of, MMD with respect to * ; provided, however, that MMD reserves the right to assess reasonable copying charges for any such materials requested by TKT which exceed approximately two cartons of material. 5.3.4. ADVERSE EVENT INFORMATION. Within six months after the commencement of the Development Phase, MMD will establish a protocol for the timely handling and transmission of adverse event information. MMD and TKT shall promptly notify each other of any adverse event information relating to * in accordance with such protocol. 5.4. CERTAIN PROHIBITED ACTIONS. Notwithstanding the provisions of Section 2.2, TKT and its Affiliates shall not, directly or indirectly, market, distribute or sell * covered by the TKT Patent Rights or which uses the TKT Technology in the MMD Territory. 5.5. DEVELOPMENT PHASE MANUFACTURING. Provided that TKT has successfully met its obligations under the Research Program in the Research Phase, MMD shall be primarily responsible for the production of * during the Development Phase. MMD will consult with TKT to determine the appropriate manufacturing process for * necessary for the Development Phase and for commercial production, including selecting a suitable production process. -15- 21 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 5.6. MANUFACTURING COSTS. MMD shall bear all costs associated with the manufacture of * during the Development Phase, in accordance with the provisions of this Article 5, and for commercial production for sale by MMD or its sublicensees in the MMD Territory. 5.7. ASSISTANCE BY TKT. At MMD's request, TKT will cooperate with MMD to provide such technical assistance and characterization work as may be necessary in connection with the manufacture and production of * during the Development Phase and subsequently in commercial production, and MMD will reimburse TKT for its documented Fully Absorbed Costs incurred in connection with providing such assistance; provided, however, that prior to providing such assistance, TKT shall have provided to MMD an estimate of such Fully Absorbed Costs and MMD shall have approved such estimate and, provided further, that no failure of TKT to undertake or successfully complete such assistance shall relieve MMD from its obligation to achieve the milestones described in APPENDIX A or affect TKT's right to terminate this Agreement pursuant to subsection 12.2.5. TKT will provide such assistance to MMD as is consistent with the capacity and capabilities of TKT. 5.8. Regulatory Matters and Commercialization. ---------------------------------------- 5.8.1. COMMERCIALIZATION. Upon the successful completion of the Research Phase and Development Phase, MMD agrees to use its best efforts to commercialize * covered by the TKT Patent Rights or which uses the TKT Technology throughout the MMD Territory using commercially reasonable means consistent with those used for MMD products with similar commercial potential. 5.8.2. MARKETING PLANS. MMD shall promptly provide TKT with copies of its United States marketing plans for * covered by the TKT Patent Rights or which uses the TKT Technology, and shall provided TKT with copies of its marketing plans for other countries upon the reasonable request of TKT. Such marketing plans shall not be disclosed to any Third Party without the prior written consent of MMD. 5.8.3. CO-DEVELOPMENT, CO-PROMOTION AND CO-MARKETING. In the event that MMD determines, in its sole discretion, that co-development, co-promotion or co-marketing of * covered by the TKT Patent Rights or which uses the TKT Technology is appropriate in any of the countries in the **** ******************************************************, then TKT shall have the right of first negotiation (the "First Negotiation Right") to become MMD's co-development, co-promotion or co-marketing partner, as the case may be, in any such country on terms no less favorable to TKT than those which MMD proposes to offer to any other co-development, co-promotion or co-marketing partner for such country. MMD shall notify TKT in writing of its determination to pursue co-development, co-promotion or co-marketing of * covered by the TKT Patent -16- 22 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Rights or which uses the TKT Technology in a country in the ***** *********************************************************** ****** (the "Negotiation Notice"); provided, however, that, in the case of co-promotion or co-marketing only and in the absence of co-development, MMD shall not be entitled without TKT's consent, which shall not be unreasonably withheld, to give TKT a Negotiation Notice with respect to any country in the MMD Territory until all clinical trials necessary for the submission for regulatory approval to market * in that country are substantially complete. Unless TKT shall have waived the First Negotiation Right in writing within 30 days following receipt by TKT of the Negotiation Notice, MMD and TKT shall negotiate in good faith a termsheet for such co-development, co-promotion or co-marketing arrangement for a period of up to 60 days commencing on the date of the Negotiation Notice and a definitive agreement for such co-development, co-promotion or co-marketing for an additional period of up to 60 days commencing on the date of such termsheet. If, at the end of either of such periods, MMD and TKT are unable to agree on terms for the co-development, co-promotion or co-marketing of * in such country, then, unless the parties agree to extend the negotiation period, MMD shall promptly deliver to TKT a final proposal detailing the terms on which it would enter into such a co-development, co-promotion or co-marketing arrangement (the "Final Proposal"). TKT shall have thirty (30) days from receipt of the Final Proposal to notify MMD of its desire to enter into an arrangement on such terms. If TKT does not so notify MMD, then MMD shall be free, for a period of one year (which shall be extended for an additional four-month period if MMD has certified to TKT that it is then in active negotiations with a single Third Party with respect thereto) from the expiration of such 30 days, to enter into a co-development, co-promotion or co-marketing arrangement for * in the country identified in the Negotiation Notice with a Third Party on terms no more favorable to the Third Party than the terms contained in the Final Proposal. Following such negotiation period, MMD shall not enter into a co-development, co-promotion or co-marketing arrangement for * in any country in the MMD Territory with a Third Party without first complying with the provisions of this subsection. Except as otherwise provided in this subsection 5.8.3, it is understood and agreed to by the parties hereto that MMD shall have no obligation to enter into a co-development, co-promotion, or co-marketing arrangement with respect to any country in the MMD Territory with TKT. In the event that MMD enters into a co-development arrangement for * in a country with a Third Party after complying with the provisions of this subsection, then TKT shall cooperate with such Third Party in such country during the Development Phase to the same extent that TKT would cooperate with MMD. -17- 23 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ARTICLE 6. RESEARCH, DEVELOPMENT AND REGULATORY COORDINATION 6.1. Research Committee. ------------------ 6.1.1. GENERAL. Promptly after the Effective Date, a joint committee comprised of up to three named representatives of MMD and up to three named representatives of TKT (the "Research Committee") shall be appointed. One of the representatives of TKT shall act as Chairman of the Research Committee. The Research Committee shall be responsible for the supervision of the Research Program. Such meetings shall be held at TKT's facilities located in Cambridge, Massachusetts, and at such times as are agreed to by TKT and MMD, or at such other locations or in such other form (e.g., telephone or video conference) as the members of the Research Committee shall agree. At such meetings, the principal function of the Research Committee will be to plan and evaluate the progress of the Research Program *********************************************** *********************************************. A party may change one or more of its representatives to the Research Committee at any time. Members of the Research Committee may be represented at any meeting by another member of the Research Committee so designated by the absent member, or by a deputy. Any approval, determination or other action shall require the affirmative vote of both TKT and MMD ******************************* as determined by each party's representatives who are members of the Research Committee. Employees, subcontractors or consultants of either TKT and MMD who are involved with the Program and who are not members of the Research Committee may attend meetings of the Committee as guests of either party. 6.1.2. MINUTES. The Research Committee shall keep accurate minutes of its deliberations. The Chairman shall be responsible for the preparation of draft minutes. Draft minutes shall be sent to all members of the Research Committee within ten (10) business days after each meeting. All records of the Research Committee shall be available to both parties. 6.2. Development Committee. --------------------- 6.2.1. GENERAL. Promptly after the Effective Date, a joint committee comprised of up to four named representatives of MMD and up to four named representatives of TKT (the "Development Committee") shall be appointed. One of the representatives of MMD shall act as Chairman of the Development Committee. Such meetings shall be held at TKT's facilities in Cambridge, Massachusetts during the Research Phase, and thereafter in Kansas City, Missouri, and, in any event, at times and places or in such form (e.g., telephone or video conference) as the members of the Development Committee shall agree. At such meetings, the Development Committee will discuss the Development Phase of * , including but not limited to, preclinical and clinical testing and the preparation of regulatory submissions for approval of * in the MMD Territory. To the extent -18- 24 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. reasonable or appropriate, meetings of the Development Committee will be coordinated and held jointly with the Research Committee. A party may change one or more of its representatives to the Development Committee at any time. Members of the Development Committee may be represented at any meeting by another member of the Development Committee so designated by the absent member, or by a deputy. Any approval, determination or other action shall require the affirmative vote of a majority of the votes entitled to be cast, *************************************************, and with such votes being cast as determined by each party's representatives who are members of the Development Committee. Employees, subcontractors or consultants of either TKT and MMD who are not involved with the Program and who are not members of the Development Committee may attend meetings of the Committee as guests of either party. 6.2.2. MINUTES. The Development Committee shall keep accurate minutes of its deliberations. The Chairman shall be responsible for the preparation of draft minutes. Draft minutes shall be sent to all members of the Development Committee within ten (10) business days after each meeting. All records of the Development Committee shall at all times be available to both parties. 6.3. GENERAL DISAGREEMENTS. All disagreements within the Research Committee and the Development Committee shall be resolved in accordance with the provisions of Section 13.6. 6.4. VISIT OF FACILITIES. Representatives of MMD may, upon reasonable notice and at times reasonably acceptable to TKT, visit TKT's facilities where the Research Program is being conducted and consult with personnel of TKT performing work on the Research Program, and those of any permitted subcontractors of TKT. Representatives of TKT and MMD may, with the other party's prior approval, which approval shall not be unreasonably withheld, visit manufacturing sites and the sites of any clinical trials or other experiments being conducted by such other party in connection with the Development Phase. If requested by the other party, TKT and MMD shall cause appropriate individuals working on the Development Phase to be available for meetings at the location of the facilities where such individuals are employed at times reasonably convenient to the party responding to such request. 6.5. ANNUAL REVIEW AND PLANNING MEETING. No less frequently than annually, representatives of TKT and MMD shall meet at a place mutually agreed to by the parties (which, prior to the First Commercial Sale, will be one of the Research Committee or Development Committee Meetings)(the "Annual Meeting"), at which meeting MMD shall review the clinical, regulatory and marketing activities undertaken by MMD or its Affiliates since the previous Annual Meeting and shall present its clinical, regulatory and marketing plans for * for the ensuing year. Within 30 days following each Annual Meeting, MMD shall submit to TKT a written -19- 25 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. report detailing the information reviewed and presented at such Annual Meeting. ARTICLE 7. MILESTONES AND ROYALTIES 7.1. MILESTONE PAYMENTS. In consideration of TKT's work on the Research Program and the licenses granted to MMD hereunder, MMD shall pay the following amounts to TKT upon the achievement of each of the following milestones, prior to any expiration or termination of this Agreement under Article 12 with respect to the country to which such milestone relates, it being understood and agreed to that TKT shall use a portion of such payments as necessary to fund the performance of its obligations under the Program:
- ------------------------------------------------------------------------ Milestone Payment --------- ------- - ------------------------------------------------------------------------ Execution of this Agreement $10,000,000 $10,000,000 Preferred Stock Investment(1) - ------------------------------------------------------------------------ *********************************** $************** ********* - ------------------------------------------------------------------------ ************************** $************** - ------------------------------------------------------------------------ ********************************* $************** - ------------------------------------------------------------------------ ************************** $************** - ------------------------------------------------------------------------ ******************* $************** - ------------------------------------------------------------------------ ************************************ $************** ************************************ *************** - ------------------------------------------------------------------------ ****************************** $************** - ------------------------------------------------------------------------ (1) On the terms and subject to the conditions of the Class E Preferred Stock Purchase Agreement dated as of March 1, 1995, by and between MMD and TKT (the "Class E Stock Purchase Agreement").
Either TKT or MMD shall notify the other in writing within ten (10) business days following the occurrence of each of the milestones set forth above. Within ten (10) business days after receipt of such notice, MMD shall pay to TKT in United States dollars by check or other means acceptable to TKT, the milestone payments set forth above. Milestone payments made to TKT pursuant to this Section 7.1 are not refundable under any circumstances and will not be credited against royalty payments due TKT under Section 7.2. -20- 26 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 7.2. ROYALTIES. In consideration of the licenses granted to MMD hereunder, MMD shall pay to TKT royalties as follows: 7.2.1. ROYALTIES BASED ON NET SALES OF * . Except as otherwise provided in this Section 7.2, MMD shall pay to TKT a royalty based on the Net Sales of * covered by the TKT Patent Rights or which uses the TKT Technology in each Territory Block, from the launch of such sales in such Territory Block until, with respect to any country, the expiration or termination of this Agreement, at the rates set forth below: ************************************** *************** ******************************************* ************** ************************** ***** ********* ***** *********************************************************** ************************. For the purpose of calculating ******************** in a Territory Block: (i) Net Sales for the *********************** ******* Territory Blocks *****************, and such ************ ***** shall be deemed to be the ******************** for each of the ******************************* Territory Blocks; (ii) Net Sales for the ***************** Territory Blocks ********* ************************************ shall be deemed to be the ******************** for each of the ***** and ******* Territory Blocks; and (iii) with respect to sales in the *************, ************************** Territory Blocks by a Third Party sublicensee or a distributor which is not an Affiliate of MMD, the Net Revenues shall be used in lieu of the Net Sales in the foregoing calculation of ********************. 7.2.2. ALTERNATIVE ROYALTY BASED ON GROSS MARGIN. Notwithstanding the provisions of subsection 7.2.1., in ***** *******, ***** and **********************************, the royalty payable by MMD to TKT shall be as follows: (i) if MMD sells * finished product in final packing form (whether or not with final labels) covered by the TKT Patent Rights or which uses the TKT Technology to a Third Party sublicensee or distributor which is not an Affiliate of MMD, MMD shall pay to TKT ********************************* ****************************************; or (ii) if MMD does not sell such * finished product in final packing form (whether or not with final labels) to such Third Party sublicensee or distributor, then TKT and MMD shall negotiate in good faith to share on ************ ***** all other monetary consideration received by MMD from such Third Party sublicensee or distributor. -21- 27 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 7.2.3. SHARING OF REVENUES FROM SUBLICENSEES. If MMD grants a sublicense hereunder to any Third Party to make, have made, use, distribute for sale or sell * covered by the TKT Patent Rights or which uses the TKT Technology in any country in the MMD Territory, MMD shall share with TKT *********, all up front monetary consideration received by MMD from such Third Party in connection therewith which are not based upon Net Sales or Net Revenues, as applicable, of * sold by such Third Party sublicensee in such country. 7.2.4. ADJUSTMENT OF ROYALTY RATES. At the request of MMD, the royalty rates set forth in subsection 7.2.1. shall be appropriately adjusted by TKT and MMD (i) with respect to sales of "generic" or "non-branded" * covered by the TKT Patent Rights or which uses the TKT Technology by MMD in any country within a Territory Block in which MMD elects to make such sales to compete with sales by any Third Party of a "generic" or "non-branded" pharmaceutical formulation of **************************************************************** ******* or (ii) with respect to sales of "branded" * covered by the TKT Patent Rights or which uses the TKT Technology by MMD in any country within the MMD Territory in which MMD experiences competition in the market for * which was not in existence on the Effective Date and the TKT Patent Rights have been judged to be invalid or unenforceable. In addition, TKT agrees to meet with MMD at its request and negotiate in good faith concerning whether other adjustments to the royalty rates set forth in subsection 7.2.1. should be made in the event that MMD demonstrates to TKT's reasonable satisfaction that there have been structural changes in the market for * in any country which have rendered the royalty rates set forth in subsection 7.2.1 commercially unreasonable. At the request of MMD, the royalty rates set forth in subsection 7.2.2. shall be appropriately adjusted by TKT and MMD (i) with respect to sales of "branded", "non-branded" or "generic" * covered by the TKT Patent Rights or which uses the TKT Technology in any country within a Territory Block in which competitive conditions make it not feasible for MMD to maintain the level of its Gross Margin or (ii) as may otherwise be necessary to maintain the commercial viability of the product as contemplated by this Agreement. 7.3. ROYALTY REPORTS, EXCHANGE RATES. During the term of this Agreement, following the First Commercial Sale of * covered by the TKT Patent Rights or which uses the TKT Technology in any country in the MMD Territory, MMD shall furnish to TKT a written quarterly report showing with respect to * , on a country by country basis (except as provided below): (i) the gross sales (except for sales to which subsection 7.2.2 applies) of all * covered by the TKT Patent Rights or which uses the TKT Technology sold by MMD and its Affiliates, its distributors and its permitted sublicensees in the MMD Territory during the reporting period; (ii) the calculation of Net Sales (except for sales to which subsection 7.2.2 applies) from such gross sales; (iii) the Gross Margin related sales to which subsection 7.2.2 -22- 28 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. applies and the calculation of such Gross Margin; (iv) any revenues from sublicensees received by MMD during the reporting period; (v) the royalties and other payments payable in United States dollars which shall have accrued hereunder in respect of such Net Sales, Gross Margin and sublicensee payments; (vi) withholding taxes, if any, required by law to be deducted as a payment by TKT in respect of such Net Sales, Gross Margin and sublicensee payments; (vii) the dates of the First Commercial Sales of * covered by the TKT Patent Rights or which uses the TKT Technology in any country in the MMD Territory during the reporting period; and (viii) the exchange rates used in determining the amount of United States dollars. All amounts payable will first be calculated in the currency of sale and then converted into United States dollars on a quarterly basis using as a rate of exchange the actual foreign currency exchange rate on the last day of the month preceding the end of the quarter or such other method as is consistent with MMD's internal foreign currency translation procedures. MMD shall use best efforts to provide reports due on the sixtieth (60th) day following the close of each quarter. If no royalty is due for any royalty period hereunder, MMD shall so report. MMD shall keep complete and accurate records in sufficient detail to properly reflect all gross sales, Net Sales and Gross Margin and to enable the royalties payable hereunder to be determined. 7.4. Audits. ------ 7.4.1. PROCEDURE. Upon the written request of TKT or MMD, the other party shall permit an internal auditor or independent public accountant selected by TKT or MMD, as the case may be, and acceptable to the other party, which acceptance shall not be unreasonably withheld, to have access during normal business hours to such of the records of MMD or TKT, as the case may be, as may be reasonably necessary to verify the accuracy of the royalty reports, cost computations and final cost amounts described hereunder, in respect of any fiscal year ending not more than *********************** prior to the date of such request. All such verifications shall be conducted at TKT's or MMD's, as the case may be, expense and not more than ******** in each calendar year. 7.4.2. EXPENSES. In the event such accountant concludes that additional royalties or lower expense reimbursement were required during such period, and the party receiving such audit request agrees with such conclusion, the additional royalty shall be paid in accordance with Section 7.5 or the excess expense reimbursement shall be promptly repaid. The fees charged by such accountant shall be paid by the party requesting such audit, unless the audit discloses and the party receiving such audit request agrees (i) in the case of an audit by TKT, that the royalties payable by MMD, or, (ii) in the case of an audit by MMD, that the cost computation estimates and final amounts hereunder, for the audited period are incorrect by more than ****************** in which case the audited party shall pay the reasonable fees and expenses charged by the accountant. -23- 29 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 7.4.3. SUBLICENSES. MMD shall use reasonable efforts to include in each Third Party sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee to make reports to MMD, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by TKT's independent accountant to the same extent required of MMD under this Agreement. Upon the expiration of *********************** following the end of any fiscal year, the calculation of royalties payable with respect to such year shall be binding and conclusive upon TKT; and MMD and its sublicensees shall be released from any liability or accountability with respect to royalties for such year. 7.4.4. CONFIDENTIAL TREATMENT. Each party agrees that all information subject to review under this Section 7.4 or under any sublicense agreement is confidential and that such party shall cause its accountant to retain all such information in confidence. 7.5. ROYALTY PAYMENT TERMS. Royalties shown to have accrued by each royalty report provided for under this Agreement shall be due and payable on the date such royalty report is due. Payment of royalties in whole or in part may be made in advance of such due date. Royalties determined to be owing, and any overpayments to be credited, with respect to any prior quarter shall be added or credited, as the case may be, to the next quarterly payment hereunder. 7.6. FORM OF PAYMENT. All research payments, milestone payments, royalties and other payments due hereunder shall be paid in United States dollars. If at any time legal restrictions prevent the prompt remittance of part or all royalties with respect to any country of the MMD Territory where * covered by the TKT Patent Rights or which uses the TKT Technology is sold, payment shall be made through such lawful means or methods as MMD may determine. 7.7. WITHHOLDING TAXES. All royalties payable to TKT hereunder shall be paid without deductions of any withholding taxes, value-added taxes or other taxes, levies or charges applicable to such payments, other than (i) United States taxes payable by TKT and (ii) foreign taxes payable by TKT to the extent that such taxes are imposed by reason of TKT's having a permanent establishment in any country within the MMD Territory or otherwise being subject to taxation by such country (except foreign taxes imposed solely by reason of the license granted to MMD hereunder). MMD shall be credited for the net benefit realized by TKT for any foreign tax deductions or credits taken by TKT with respect to such amounts paid by MMD. In addition, any reorganization of TKT or an Affiliate of TKT with or into an entity organized outside the United States shall not result in any increased costs to MMD under this Agreement. Each party will assist the other party in claiming tax refunds, deductions or credits at the other party's request and will cooperate to -24- 30 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. minimize the withholding tax, if available, under various treaties applicable to any payment made hereunder. 7.8. INTEREST ON LATE PAYMENTS. Any payments by either party that are not paid on or before the date such payments are due under this Agreement shall bear interest, to the extent permitted by law, at the London Interbank Offering Rate as set by Citibank, N.A. from time to time, plus 50 basis points, calculated on the number of days payment is delinquent. ARTICLE 8. INTELLECTUAL PROPERTY RIGHTS 8.1. Ownership. 8.1.1. OWNERSHIP OF DISCOVERIES AND IMPROVEMENTS. All right, title and interest in all writings, inventions, discoveries, improvements and other technology, whether or not patentable or copyrightable, and any patent applications, patents or copyrights based thereon (collectively, the "Inventions") that are discovered, made or conceived during and as a result of the Research Phase or the Development Phase solely by employees of TKT or others acting on behalf of TKT ("TKT Inventions") shall be owned by TKT. ******************************************************************************* ****************************************************************************** ************************************************************************* ***************************************************************** *************************************************************** *************************************************************** ****************. All right, title and interest in all Inventions that are discovered, made or conceived during and as a result of the Research Phase or the Development Phase or thereafter solely by employees of MMD or others acting on behalf of MMD ("MMD Inventions") shall be owned by MMD. All right, title and interest in all Inventions that are discovered, made or conceived during and as a result of the Research Phase or the Development Phase or thereafter jointly by employees of TKT and MMD or others acting on their behalf (the "Joint Inventions") shall be jointly owned by MMD and TKT. Each party shall promptly disclose to the other party the making, conception or reduction to practice of Inventions by employees or others acting on behalf of such party. The parties acknowledge that the ownership rights set forth above are subject to the license grants set forth in Article 3. 8.1.2. COOPERATION OF EMPLOYEES. Each party represents and agrees that its employees and consultants shall be obligated under a binding written agreement to assign to such party, or as such party shall direct, all Inventions made or conceived during and as a result of the Research Phase or the Development Phase by such employee or consultant. In the case of non-employees working for other companies or institutions on behalf of TKT or MMD, TKT or MMD, as applicable, shall use reasonable efforts to obtain the right to license all Inventions -25- 31 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. made by such non-employees on behalf of TKT or MMD, as applicable, in accordance with the policies of the company or institution employing such non-employee. TKT and MMD agree to undertake to enforce such agreements with employees or others or such rights pertaining to non-employees (including, where appropriate, by legal action) considering, among other things, the commercial value of such Inventions. 8.2. Filing, Prosecution and Maintenance of TKT Patent Rights and TKT Technology. 8.2.1. ***********************************. **** ********************************************************** ************************************************************ ***************************************************************** **************************************************************** *********************************************************** ***************************************************************** ********************************************************* *************************************************************** ************************************************************** ***************************************************************** ********************************************************** ***************************************************************** ******************************************************** *********************************************************** ************************************************************** ********************************************************* ************************************************************ ******************************************************* **************************************************************** ***************************************************************** ************************************************************* ***************************************************************** **************************************************************** ************************************************************* *************************************************************** ************************************************************* *********************************************************** **************************************************************** ************************************************************* ************************************************************* ***************************************************************** ***************************************************************** **************************************************************** ***************************************************************** *********************************************************** ********************************************************* ***************************************************************** ********************************************************* ************************************************************ *************************************************************** *************************************************************** ************************************************************** ************************* -26- 32 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. **************************************************************** *********************************** ******************************************************** ***************************************************************** ***************************************************************** ************************************************************** *************************************************************** ***************************************************************** ********************************************************** *************************************************************** ***************************************************************** *************************************************************** ********************************************************** **************************************************************** *********************************** 8.2.2. PATENT FILING COSTS. *** shall bear all costs associated with filing, prosecuting and maintaining patent applications and patents covering the TKT Patent Rights in all countries in the MMD Territory. 8.3. COOPERATION. Each party shall make available to the other party (or to the other party's authorized attorneys, agents or representatives), its employees, agents, subcontractors or consultants to the extent reasonably necessary or appropriate to enable the appropriate party to file, prosecute and maintain patent applications and resulting patents with respect to Inventions owned by a party and for periods of time reasonably sufficient for such party to obtain the assistance it needs from such personnel. Where appropriate, each party shall sign or cause to have signed all documents relating to said patent applications or patents at no charge to the other party. Notwithstanding the foregoing, MMD shall not be precluded from contesting the validity or enforceability of the TKT Patent Rights or TKT Technology. 8.4. NOTIFICATION OF PATENT TERM RESTORATION. *** shall notify *** of (i) the issuance of each patent included within the TKT Patent Rights, giving the date of issue and patent number for each such patent, and (ii) each notice pertaining to any patent included within the TKT Patent Rights which it receives as patent owner pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984 (hereinafter called the "Act"), or other similar laws now or hereafter in effect, or pursuant to comparable laws or regulations in other countries in the MMD Territory. The parties shall cooperate with each other in applying for patent term extensions (including Supplementary Protection Certificates in European Community Countries) where applicable in any country of the MMD Territory. *** shall also notify *** of each application filed for patent term extension, any allegations of failure to show due diligence and all awards of patent term extensions with respect to the TKT Patent Rights. Such notices shall be given promptly, but in any event within ten (10) business days after receipt of each such notice pursuant to -27- 33 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. the Act (or comparable laws or regulations in other countries in the MMD Territory). *** shall notify *** of each filing for patent term restoration under the Act (or comparable laws or regulations in other countries in the MMD Territory), any allegations of failure to show due diligence and all awards of patent term restoration (extensions) with respect to the TKT Patent Rights. 8.5. NO OTHER TECHNOLOGY RIGHTS. Except as otherwise expressly provided in this Agreement, under no circumstances shall a party hereto, as a result of this Agreement, obtain any ownership interest in or other right to any technology, know-how, patents, pending patent applications, products, or biological materials of the other party, including items owned, controlled or developed by the other party, or transferred by the other party to said party, at any time pursuant to this Agreement. It is understood and agreed that this Agreement does not grant MMD any license or other right in the TKT Patent Rights for uses other than the production, manufacture, use, distribution for sale and sale of * covered by the TKT Patent Rights or which uses the TKT Technology. 8.6. ENFORCEMENT OF TKT PATENT RIGHTS AND TKT TECHNOLOGY; DEFENSE OF INFRINGEMENT ACTIONS. TKT and MMD shall each promptly, but in any event no later than ten (10) business days after receipt of notice of such action, notify the other in writing of any patent nullity actions, any declaratory judgment actions or any alleged or threatened infringement of patents or patent applications or misappropriation of intellectual property comprising the TKT Patent Rights or the TKT Technology or if either party, or any of their respective Affiliates, shall be individually named as a defendant in a legal proceeding by a Third Party alleging infringement of a patent or other intellectual property right as a result of the manufacture, production, use, distribution for sale or sale of * , or of any other information or notification regarding the TKT Patent Rights or TKT Technology. 8.6.1. ****************************. ************** *************************************************************** *************************************************************** *************************************************************** ************************************************************** *************************************************************** ************************************************************ ************************************************************* ************************************************************* ************************************************************ *************************. 8.6.2. *****************************************. *************************************************************** ************************************************************** ******************************************************. -28- 34 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 8.6.3. ************************************ ********. ***************************************************** ************************************************* ********************************************************* *************************************************************** ********************************************************* **************************************************************** ***************************************************************** ************************************************************ ************************************************************** ***************************************************************** **************************************************************** ************************************************************* ************************************************************* ***************************************************************** ***************************************************************** ************************************************************* ***************************************************************** ************************************************************** ***************************************************************** ********************************************************* *************************************************************** *********************************************************** ************************************************************* ********************************************************* ***************************************************************** ***************************************************************** ************************************************************ *************************************************************** ***************************************************************. 8.6.4. *****************************. ************ ********************************************************** ******************************************************** ************************************************************** **************************************************************** **************************************************** **************************************************************** *********************************************************** ************************************************************** ***************************************************************** **********************************. 8.6.5. ***************************************** ************************************. ************************ ***************************************************************** ****************************************************** *********************************************************** ******************************************************************* ***************************************************************** **************************************************************** *********************************************************** ************************************************************* ****************************************************************** **************************************************************** -29- 35 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. ************************************************************** ********************************************************* *************************************************************** *************************************************************** *************************************************************** **************************************************************** ************************************************************** ***************************************************************** ************************************************************* *********************************************************** ***************************************************************** *************************************************************** **************************************************************** *********************************************************** ************************************************************** ****************************************************** ***************************************************************** ************************************************************** ***************************************************************** ************************************************************* ******************************************************** ******************************************************** ************************************************************* **************. 8.7. *************************************************** **********************. ************************************* ************************************************************ **************************************************************** *************************************************************** ************************************************************** ********************************************************** *************************************************************** ************************************************************** *************************************************************** ************************************************************ ********************************************************** ************************************************ ARTICLE 9. CONFIDENTIALITY 9.1. Nondisclosure Obligations. ------------------------- 9.1.1. GENERAL. Except as otherwise provided in this Article 9, during the term of this Agreement and for a period of ten (10) years thereafter, both parties shall maintain in confidence and use only for purposes specifically authorized under this Agreement (i) confidential information and data received from the other party resulting from or related to the development of * and (ii) all information and data not described in clause (i) above but supplied by the other party under this Agreement marked "Confidential." 9.1.2. LIMITATIONS. For purposes of this Article 9, information and data described in subsection 9.1.1 shall be -30- 36 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. referred to as "Information." To the extent it is reasonably necessary or appropriate to fulfil its obligations or exercise its rights under this Agreement, a party may disclose Information it is otherwise obligated under this Section not to disclose to its Affiliates, sublicensees, consultants, outside contractors and clinical investigators, on a need-to-know basis on condition that such entities or persons agree to keep the Information confidential for the same time periods and to the same extent as such party is required to keep the Information confidential; and a party or its sublicensees may disclose such Information to government or other regulatory authorities to the extent that such disclosure is reasonably necessary to obtain patents or authorizations to conduct clinical trials of, and to commercially market, * . The obligation not to disclose Information shall not apply to any part of such Information that (i) is or becomes part of the public domain other than by unauthorized acts of the party obligated not to disclose such Information or its Affiliates or sublicensees; (ii) can be shown by written documents to have been disclosed to the receiving party or its Affiliates or sublicensees by a Third Party, provided such Information was not obtained by such Third Party directly or indirectly from the other party under this Agreement pursuant to a confidentiality agreement; (iii) prior to disclosure under this Agreement, was already in the possession of the receiving party or its Affiliates or sublicensees, provided such Information was not obtained directly or indirectly from the other party under this Agreement pursuant to a confidentiality agreement; (iv) can be shown by written documents to have been independently developed by the receiving party or its Affiliates without breach of any of the provisions of this Agreement; or (v) is disclosed by the receiving party pursuant to oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand issued by a court or governmental agency; provided that the receiving party notifies the other party immediately upon receipt thereof (and provided that the disclosing party furnishes only that portion of the Information which it is advised by counsel is legally required). 9.2. Materials. --------- 9.2.1. ******************************. *********** ***************************************************************** ************************************************************* ***************************************************************** *************************************************************** ***************************************************************** ************************************************************ ************************************************************** **************************************************************** ***************************************************************** ***************************************************************** ********************************************************* *******************************************. -31- 37 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 9.2.2. SAMPLES. Samples of compounds synthesized, purified or developed in the course of the Research and Development Program shall not be supplied or sent by either party to any Third Party, other than to regulatory agencies or for use in clinical trials, unless protected by an appropriate materials transfer agreement. Samples of compounds other than those described above provided by one party (the "supplying party") to the other party (the "receiving party") in the course of the Research Program shall not be supplied or sent by the receiving party to any Third Party, other than to regulatory agencies or for use in clinical trials, without the written consent of the supplying party. 9.3. TERMS OF THIS AGREEMENT. TKT and MMD each agree not to disclose any terms or conditions of this Agreement to any Third Party without the prior consent of the other party, except as required by applicable law. If TKT determines that it is required to file with the Securities and Exchange Commission or other governmental agency this Agreement as an exhibit to the registration statement relating to a public offering of its securities or otherwise, TKT shall request confidential treatment of such portions of this Agreement as it and MMD shall together determine. Notwithstanding the foregoing, within 15 days after the execution of this Agreement, MMD and TKT shall agree upon the substance of information that can be used as a routine reference in the usual course of business to describe the terms of this transaction, and MMD and TKT may disclose such information, as modified by mutual agreement from time to time, without the other party's consent; provided, however, that if either party determines that excessive use of such statement is made by the other party, then the party determined to be using such statement excessively shall, upon notice by the other party, cease making such statement. 9.4. Publications. ------------ 9.4.1. PROCEDURE. Each party recognizes the mutual interest in obtaining valid patent protection. Consequently, either party and its employees or consultants or any other Third Party wishing to make a publication (including any oral disclosure made without obligation of confidentiality) relating to work performed by such party as part of the Program (the "Publishing Party") shall transmit to the other party (the "Reviewing Party") a copy of the proposed written publication at least ******************** prior to submission for publication, or an abstract of such oral disclosure at least ***************** prior to submission of the abstract or the oral disclosure, whichever is earlier. The Reviewing Party shall have the right (a) to propose modifications to the publication for patent reasons, (b) to request a delay in publication or presentation in order to protect patentable information, or (c) to request that the information be maintained as a trade secret and, in such case, the Publishing Party shall not make such publication. -32- 38 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 9.4.2. DELAY. If the Reviewing Party requests a delay as described in subsection 9.4.1. (b) the Publishing Party shall delay submission or presentation of the publication for a period of **************** to enable patent applications protecting each party's rights in such information to be filed. 9.4.3. RESOLUTION. Upon the receipt of written approval of the Reviewing Party, the Publishing Party may proceed with the written publication or the oral presentation. 9.5. INJUNCTIVE RELIEF. The parties hereto understand and agree that remedies at law may be inadequate to protect against any breach of any of the provisions of this Article 9 by either party or their employees, agents, officers or directors or any other person acting in concert with it or on its behalf. Accordingly, each party shall be entitled to the granting of injunctive relief by a court of competent jurisdiction against any action that constitutes any such breach of this Article 9. It is understood that such injunctive relief is intended solely as provisional relief pending the dispute resolution procedures described in Section 13.6 hereof. ARTICLE 10. REPRESENTATIONS AND WARRANTIES 10.1. General. ------- 10.1.1. AUTHORIZATION. Each party represents and warrants to the other that it has the legal right and power to enter into this Agreement, to extend the rights and licenses granted to the other in this Agreement, and to fully perform its obligations hereunder, and that the performance of such obligations will not conflict with its charter documents or any agreements, contracts or other arrangements to which it is a party. 10.1.2. NO INCONSISTENT TKT ARRANGEMENTS. TKT represents and warrants that it has full power and authority to grant the license set forth in Article 3 hereof and that there are no agreements, assignments, encumbrances or other arrangements inconsistent with this Agreement including, without limitation, any obligations to governmental agencies, private foundations or corporate entities resulting from acceptance of research grant monies, equity investments, corporate sponsorships or otherwise. 10.1.3. EXCLUSIVITY. TKT represents and warrants that MMD is the exclusive licensee of the TKT Technology owned by TKT and the TKT Patent Rights with respect to the manufacture, use or sale of * in the MMD Territory. 10.1.4. LICENSED TECHNOLOGY. TKT represents and warrants that, as of the date hereof, the TKT Patent Rights and TKT Technology do not include any intellectual property licensed to TKT from a Third Party other than those included in a License -33- 39 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Agreement ************************************************** ************************************************** 10.2. Patent Validity. --------------- 10.2.1. TITLE. TKT represents and warrants that as of the Effective Date, it possesses the exclusive right, title and interest in and to the TKT Technology owned by TKT and the TKT Patent Rights and that it has the full legal right and power to: (i) enter into the obligations set forth in this Agreement; and (ii) grant the rights and licenses set forth in Article 3. 10.2.2. NO ENCUMBRANCES. TKT represents and warrants, to the best of its actual knowledge and based upon the advice of its counsel, to the best of such counsel's actual knowledge without undertaking any independent investigation, (i) that there are no encumbrances, liens or other claims affecting the TKT Technology owned by TKT or the TKT Patent Rights and (ii) that such TKT Technology and TKT Patent Rights are valid, enforceable and free from infringement, and that there are no pending or threatened actions, suits or proceedings relating thereto or to * . 10.2.3. NON-INFRINGEMENT. TKT represents and warrants that, to the best of its actual knowledge and based upon the advice of its counsel, to the best of such counsel's actual knowledge without undertaking any independent investigation, there are no legal obstacles, including no patent rights or other proprietary rights of others, which will prevent it from carrying out its obligations under this Agreement or prevent MMD from carrying out its obligations under this Agreement or which will be infringed by the performance of either party's obligations under this Agreement. 10.3. FINANCIAL STATEMENTS. TKT represents and warrants that Schedule 10.3 hereto sets forth TKT's most recent regularly prepared balance sheet, that such balance sheet is true and correct and fairly presents the financial condition of TKT as of its date, and that the total assets set forth thereon are less than $10,000,000. ARTICLE 11. INDEMNITY 11.1. MMD INDEMNITY OBLIGATIONS. In the absence of TKT's negligence or a breach of representation, warranty, covenant or agreement by TKT, MMD agrees to defend, indemnify and hold TKT, its Affiliates and their respective employees and agents harmless from all claims, losses, damages or expenses arising as a result of (a) actual or asserted violations of any applicable law or regulation by MMD or its Affiliates or sublicensees by virtue of which * covered by the TKT Patent Rights or which uses the TKT Technology manufactured, distributed or sold shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any -34- 40 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. applicable law or regulation or (b) claims for bodily injury, death or property damage attributable to MMD's performance of its obligations under this Agreement or the manufacture, distribution, sale or use of * covered by the TKT Patent Rights or which uses the TKT Technology by MMD or its Affiliates or sublicensees. 11.2. TKT INDEMNITY OBLIGATIONS. In the absence of MMD's negligence or a breach of representation, warranty, covenant or agreement by MMD, TKT agrees to defend, indemnify and hold MMD, its Affiliates and sublicensees and their respective employees and agents harmless from all claims, losses, damages and expenses arising as a result of (a) actual or asserted violations of any applicable law or regulation by TKT or its Affiliates or licensees by virtue of which * covered by the TKT Patent Rights or which uses the TKT Technology manufactured, distributed or sold shall be alleged or determined to be adulterated, misbranded, mislabeled or otherwise not in compliance with any applicable law or regulation or (b) claims for bodily injury, death or property damage attributable to TKT's performance of its obligations under this Agreement. 11.3. PROCEDURE. A party or any of its Affiliates or their respective employees or agents (the "Indemnitee") that intends to claim indemnification under this Article 11 shall promptly notify the other party (the "Indemnitor") of any claim, loss, damage, or expenses in respect of which the Indemnitee intends to claim such indemnification reasonably promptly after the Indemnitee is aware thereof, and the Indemnitor shall assume the defense of any related third party action, suit or proceeding with counsel mutually satisfactory to the parties; PROVIDED, HOWEVER, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor, if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other party represented by such counsel in such proceedings. The indemnity agreement in this Article 11 shall not apply to amounts paid in settlement of any claim, loss, damage or expense if such settlement is effected without the consent of the Indemnitor, which consent shall not be withheld unreasonably. The failure of an Indemnitee to deliver notice to the Indemnitor within a reasonable time after becoming aware of any such matter, if prejudicial to the Indemnitor's ability to defend such action, shall relieve the Indemnitor of any liability to the Indemnitee under this Article 11. The Indemnitor shall not have any liability to any Indemnitee otherwise than under this Article 11. The Indemnitee under this Article 11 and its employees and agents shall cooperate fully with the Indemnitor and its legal representatives in the investigation of any matter covered by this indemnification. The Indemnitor shall additionally be liable to pay the reasonable legal costs and attorneys' fees incurred by the Indemnitee in establishing a successful claim for indemnity hereunder. -35- 41 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. 11.4. INSURANCE. For the period starting with the First Commercial Sale of * MMD and TKT shall each maintain product liability insurance with respect to development, manufacture and sale of * covered by the TKT Patent Rights or which uses the TKT Technology in reasonable amounts determined after consultation with each other, for the term of this Agreement (if such insurance is an occurrence-basis policy) or for an additional ********* after the expiration or termination of this Agreement (if such insurance is a claims-made basis policy). ARTICLE 12. TERM AND TERMINATION 12.1. EXPIRATION. Unless terminated earlier pursuant to Section 12.2, this Agreement shall expire and the licenses granted by TKT to MMD hereunder shall become fully paid, with respect to each country in the MMD Territory, upon the later of (i) ********* after the First Commercial Sale of * covered by the TKT Patent Rights or which uses the TKT Technology by MMD or its Affiliates or sublicensees in such country and (ii) the last to expire of any of the then existing patents included in the TKT Patent Rights in such country. 12.2. TERMINATION. This Agreement may be terminated in the following circumstances: 12.2.1. By either party by reason of a material breach not described in subsection 12.2.5 that the breaching party fails to remedy within ******* after written notice thereof by the non-breaching party; 12.2.2. By MMD upon ******** prior written notice with respect to all or a portion of the MMD Territory, if, in its reasonable judgment, MMD determines that toxicities or side effects directly attributable to * covered by the TKT Patent Rights or which uses the TKT Technology have rendered it such a safety risk to the patient population that * covered by the TKT Patent Rights or which uses the TKT Technology is commercially nonviable; 12.2.3. By MMD, upon ******** prior written notice, with respect to any portion of the MMD Territory if, after consultation with TKT, MMD determines that * covered by the TKT Patent Rights or which uses the TKT Technology is commercially nonviable; 12.2.4. By TKT, with respect to the country or relevant portion of the MMD Territory, in the event that TKT elects to respond to or defend against a legal proceeding by a Third Party alleging infringement of a patent or other intellectual property right as a result of the manufacture, production, use, distribution for sale or sale of * in any country in the MMD Territory pursuant to subsection 8.6.5 provided that the failure to so respond or defend against such -36- 42 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. action would have had a material adverse impact on MMD's ability to market * , either directly or indirectly through sublicensees, in such country or relevant portion of the MMD Territory; 12.2.5. By TKT, with respect to the relevant portion of the MMD Territory, in the event that either (i) MMD fails to use its best efforts to meet the milestones described in APPENDIX A applicable to such portion of the MMD Territory or (ii) MMD fails to use its best efforts to commercialize * covered by the TKT Patent Rights or which uses the TKT Technology in such portion of the MMD Territory using commercially reasonable means consistent with those used for MMD products with similar commercial potential, and, in either or both events, MMD fails to remedy or take reasonable action to initiate a remedy of such default within ******* after notice thereof by TKT; provided that termination by TKT pursuant to this subsection 12.2.5 shall be TKT's sole remedy for any such failure by MMD to meet such milestones or commercialize * covered by the TKT Patent Rights or which uses the TKT Technology; 12.2.6. If a competing * product is introduced into any country in the MMD Territory, and TKT does not have issued patents or pending claims under the patents included in the TKT Patent Rights which (if issued, in the case of pending claims) will enable a patent infringement action to be initiated, then MMD has the right to terminate as to any such country or the Territory Block in which it is included on *** **** notice; or 12.2.7. By either party upon bankruptcy, insolvency, dissolution or winding up of the other. 12.3. EFFECT OF TERMINATION. Expiration or termination of this Agreement shall not relieve the parties of any obligation accruing prior to such expiration or termination. The provisions of Section 3.2 (with respect only to licenses granted prior to the time of expiration or termination and subject to the terms described below) and Article 7 (with respect only to milestone payments and royalties accrued at the time of expiration or termination but not yet paid), Article 8, Article 9 and Article 11 shall survive the expiration or termination of this Agreement. In the event of a termination of this Agreement pursuant to subsections 12.2.1 to 12.2.7, then all TKT Patent Rights licensed hereunder with respect to the portion of the MMD Territory terminated will be returned to TKT and, except in the event that this Agreement is terminated by TKT pursuant to subsection 12.2.1, copies of all regulatory filings and related supporting and other materials prepared in connection with such terminated portion of the MMD Territory shall also be delivered to and available for use by TKT, and in any event MMD will immediately cease to sell * covered by the TKT Patent Rights or which uses the TKT Technology in the relevant portion of the MMD Territory with respect to which this Agreement is terminated. In the event of termination of this Agreement in all countries -37- 43 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. within the MMD Territory, MMD will ****************************** *************************************************************** ************************************************************ ************************************************************ **************************************************************** ************************. Except in the event that this Agreement is terminated by TKT pursuant to subsection 12.2.1, MMD shall, to the extent legally permissible, take all additional action reasonably necessary to assign all of its right, title and interest in and transfer possession and control to TKT of the regulatory filings prepared by MMD to the extent that such filings relate to * covered by the TKT Patent Rights or which use the TKT Technology and any regulatory approvals received by MMD to the extent that such approvals relate to * covered by the TKT Patent Rights or which use the TKT Technology; provided, however, that MMD may retain a joint ownership interest in such filings and approvals to the extent that such filings or approvals are necessary under this Agreement for portions of the MMD Territory with respect to which this Agreement has not been terminated or for the development or commercialization by MMD of products other than * covered by the TKT Patent Rights or which use the TKT Technology. In the event of a termination of this Agreement other than by TKT pursuant to subsections 12.2.1 or 12.2.5, TKT shall be obligated to pay to MMD compensation on such commercially reasonable terms as shall be determined by mutual agreement of TKT and MMD for the use of all licenses granted by MMD under Section 3.2. ARTICLE 13. MISCELLANEOUS 13.1. FORCE MAJEURE. Neither party shall be held liable or responsible to the other party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected party, including but not limited to fire, floods, embargoes, war, acts of war (whether war is declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, acts of God or acts, omissions or delays in acting by any govern mental authority or the other party. 13.2. ASSIGNMENT. This Agreement may not be assigned or otherwise transferred by either party without the consent of the other party; provided, however, that either TKT or MMD may, without such consent, assign its rights and obligations under this Agreement (i) in connection with a corporate reorganization, to any Affiliate, all or substantially all of the equity interest of which is owned and controlled by such party or its direct or indirect parent corporation, or (ii) in connection with a merger, consolidation or sale of substantially all of such party's assets to an unrelated third party; provided, however, that such party's rights and obligations under this Agreement shall be assumed by its successor in interest in any such transaction and shall not -38- 44 be transferred separate from all or substantially all of its other business assets, including those business assets that are the subject of this Agreement. Any purported assignment in violation of the preceding sentence shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement. 13.3. SEVERABILITY. Each party hereby agrees that it does not intend to violate any public policy, statutory or common laws, rules, regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries. Should one or more provisions of this Agreement be or become invalid, the parties hereto shall substitute, by mutual consent, valid provisions for such invalid provisions which valid provisions in their economic effect are sufficiently similar to the invalid provisions that it can be reasonably assumed that the parties would have entered into this Agreement with such valid provisions. In case such valid provisions cannot be agreed upon, the invalidity of one or several provisions of this Agreement shall not affect the validity of this Agreement as a whole, unless the invalid provisions are of such essential importance to this Agreement that it is to be reasonably assumed that the parties would not have entered into this Agreement without the invalid provisions. 13.4. NOTICES. Any consent, notice or report required or permitted to be given or made under this Agreement by one of the parties hereto to the other shall be in writing, delivered personally or by facsimile (and promptly confirmed by telephone, personal delivery or courier) or courier, postage prepaid (where applicable), addressed to such other party at its address indicated below, or to such other address as the addressee shall have last furnished in writing to the addressor and shall be effective upon receipt by the addressee. If to TKT: Transkaryotic Therapies, Inc. 195 Albany Street Cambridge, Massachusetts 02139 Attention: President Telephone: (617) 349-0200 Telecopy: (617) 491-7903 with a copy to: Palmer & Dodge One Beacon Street Boston, Massachusetts 02108 Attention: Peter Wirth, Esq. Telephone: (617) 573-0100 Telecopy: (617) 227-4420 -39- 45 If to MMD: Marion Merrell Dow Inc. 9300 Ward Parkway Kansas City, Missouri 64114-0480 Attention: General Counsel Telephone: (816) 966-4000 Telecopy: (816) 966-3805 with copies to: Marion Merrell Dow Inc. 2110 E. Galbraith Rd. Cincinnati, OH 45215 Attention: General Patent Counsel Telephone: (513) 948-7960 Telecopy: (513) 948-7961 and Shook, Hardy & Bacon, P.C. One Kansas City Place 1200 Main Street, Suite 3100 Kansas City, Missouri 64105 Attention: Randall B. Sunberg, Esq. Telephone: (816) 474-6550 Telecopy: (816) 421-5547 13.5. APPLICABLE LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to the choice of law provisions thereof. 13.6. DISPUTE RESOLUTION. Any disputes arising between the parties relating to, arising out of or in any way connected with this Agreement or any term or condition hereof, or the performance by either party of its obligations hereunder, whether before or after termination of this Agreement, shall be promptly presented to the Chief Executive Officers of TKT and MMD for resolution and if the Chief Executive Officers or their designees cannot promptly resolve such disputes, then such dispute shall be finally resolved by binding arbitration, except that disputes arising within the Development Committee shall be ultimately resolved, without the use of arbitration, by the Chief Executive Officer of MMD. Whenever a party shall decide to institute arbitration proceedings, it shall give written notice to that effect to the other party. The party giving such notice shall refrain from instituting the arbitration proceedings for a period of sixty (60) days following such notice. Any arbitration hereunder shall be conducted under the commercial rules of the American Arbitration Association. Each such arbitration shall be conducted in the English language by a panel of three arbitrators appointed in accordance with such rules; provided, however, that both parties hereto shall be entitled to representation by counsel, to appear and present written and oral evidence and argument and to cross-examine witnesses presented by the other party. The arbitral panel (i) shall have the authority to grant specific performance, (ii) may allocate between the parties the costs of arbitration in such equitable manner as they may -40- 46 determine, but (iii) shall not render an arbitral award contrary to the provisions of this Agreement. The arbitral award shall be in writing and the arbitral panel shall provide written reasons for its award. The award of the arbitral panel shall be final and binding upon the parties hereto. Any such arbitration shall be held in Chicago, Illinois, or any other mutually agreed location. Judgment upon the award so rendered may be entered in any court having jurisdiction or application may be made to such court for judicial acceptance of any award and an order of enforcement, as the case may be. Notwithstanding the provisions of this Section 13.6, in the event of a material breach of this Agreement by TKT that TKT fails to remedy within 90 days after written notice thereof by MMD, MMD shall have the right to bring an action for specific performance by TKT or its Affiliates of TKT's obligations hereunder, to seek an injunction with respect to any action by TKT or its Affiliates inconsistent with any of TKT's obligations hereunder or to bring an action against TKT or its Affiliates at law or in equity in any court or other tribunal in which such action may properly be brought. 13.7. ENTIRE AGREEMENT. This Agreement, together with the Class E Stock Purchase Agreement, contains the entire understanding of the parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made are expressly merged in and made a part of this Agreement. This Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by both parties hereto. 13.8. HEADINGS. The captions to the several Articles and Sections hereof are not a part of this Agreement, but are merely guides or labels to assist in locating and reading the several Articles and Sections hereof. 13.9. INDEPENDENT CONTRACTORS. It is expressly agreed that TKT and MMD shall be independent contractors and that the relationship between the two parties shall not constitute a partnership, joint venture or agency. Neither TKT nor MMD shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other, without the prior consent of the other party to do so. 13.10. AGREEMENT NOT TO SOLICIT EMPLOYEES. During the term of this Agreement and for a period of two (2) years following the termination of this Agreement, TKT and MMD agree not to seek to persuade or induce any employee of the other company to discontinue his or her employment with that company in order to become employed by or associated with any business, enterprise or effort that is associated with its own business. 13.11. EXPORTS. The parties acknowledge that the export of technical data, materials or products is subject to the exporting party receiving any necessary export licenses and that the parties cannot be responsible for any delays attributable to -41- 47 export controls which are beyond the reasonable control of either party. TKT and MMD agree not to export or re-export, directly or indirectly, any information, technical data, the direct product of such data, samples or equipment received or generated under this Agreement in violation of any governmental regulations which may be applicable, including, but not limited to, the Export Administration Act of 1979, as amended, its rules and regulations, including, but not limited to, Part 779 of the United States Export Control Regulations, published by the United States Department of Commerce, and other applicable export control laws. TKT and MMD agree to obtain similar covenants from their licensees, sublicensees and contractors with respect to the subject matter of this Section 13.11. 13.12. WAIVER. The waiver by either party hereto of any right hereunder or the failure to perform or of a breach by the other party shall not be deemed a waiver of any other right hereunder or of any other breach or failure by said other party whether of a similar nature or otherwise. 13.13. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -42- 48 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. TRANSKARYOTIC THERAPIES, INC. By:/s/ Richard F. Selden -------------------------------- Title: President and Chief Executive Officer MARION MERRELL DOW INC. By: /s/ Terry J. Shelton -------------------------------- Title: V.P., Licensing and Business Development -43- 49 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. APPENDIX A Milestones ***** ****** ******************************* *********************************** ********** *************************************************************** ****** ********* *************************** ********* ******** ********* ************ ********** ********* ************** ********* ************ ********* 50 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. SCHEDULE 1.23 TKT PATENT RIGHTS ************** ***** *************** ************************************************** *********************************** ********************************* *********** ********** *********************************** ******* ******* *************** ************************************ ************************************ ************************************ ****** ************************************************* ************************************ ************** ******* *********** *********** ***************** *************** ***** *********************** ********************************* **************************************** ***************** ******************* *********** ************** ********* *********** ********* *********************************** *************** ************************************ *************************************** *************************************** ********** 51 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Schedule 1.24 ------------- TKT TECHNOLOGY WITHOUT SUBLICENSE RIGHTS *********************************************************** **************************************************************** ************************************************************ *********** 52 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Schedule 4.1.2 -------------- I. **************** A. ************************************************** 1. ************************************************** *************** 2. ************************************************ 3. ***************************************** B. **************************************************** ****************************************** C. ************************************ 1. *************************************************** ********************************************* 2. ************************************************* *********** 3. ****************************************** ********************************************** **************** D. ************************** 1. ************************************* 2. ********************************************** E. *************************************** 1. ********************************************** ************************************************ ********************************************* 2. ******************************************** ************************************************ ************************************************ ***************** F. ********************************** 1. ************************************************ ************************************************ ************************************************* ******************************************* ************************************************** ************ 2. ************************************************ *********************************************** ********************************************* ****************** 3. ************************************************** ************************************************* ***** 53 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. G. ************************** 1. ************************************************ ************************************************** *************************** II. *********************************************************** *********************************************************** ************************************************************ ****************************************************** ************************************************** ******************************************************* ************************************************************ ************************************************** A. ************ B. ************ C. ************ D. ************ E. ************ F. ************* G. ************* III. ************************************** A. ***************** 1. ***************************************** 2. *************************** 3. ****************** B. ****************** 1. ******************* 2. ***************************************** C. ******************* 1. *************************** 2. ******************************** 3. ****************** D. ******************* 1. *************************** 2. ************************************************ 54 CONFIDENTIAL MATERIAL OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE SUCH OMISSIONS. Schedule 7.1 ------------ ******* ******* ****** ******* ***** *********** ***** *********** ************** -----END PRIVACY-ENHANCED MESSAGE-----