Exhibit 10.1
AMENDMENT AGREEMENT
to the
DISTRIBUTION AGREEMENT
dated April 3, 1998
by and between
CENTOCOR, INC.,
CNA DEVELOPMENT, LLC
(as licensee to Centocor, Inc.’s worldwide rights to Golimumab Product),
and
SCHERING-PLOUGH (IRELAND) COMPANY
(as successor in interest to Schering-Plough Ltd.)
DECEMBER 20, 2007

     Portions of this exhibit have been omitted and filed separately pursuant to
an application for confidential treatment filed with the Securities and Exchange
Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as
amended. Omissions are designated as [* *].

 

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AMENDMENT AGREEMENT
     This Amendment Agreement (hereinafter the “Amendment Agreement”), dated as
of December 20, 2007 (the “Amendment Date”), is made by and between Centocor,
Inc. a corporation organized under the laws of Pennsylvania with its principal
office at 800 Ridgeview Drive, Horsham, Pennsylvania (“Centocor”), CNA
Development, LLC, a limited liability company organized under the laws of
Delaware (“CNA Development”, and collectively with Centocor, the “Centocor
Parties”); and Schering-Plough (Ireland) Company, a corporation organized under
the laws of Ireland, with offices at Rathdrum, County Wicklow, Ireland
(“Schering-Plough”) (Schering-Plough and the Centocor Parties, each referred to
from time to time herein as a “Party” and collectively as the “Parties”). To the
extent set forth herein, this Amendment Agreement modifies and amends the
Distribution Agreement referenced below.
RECITALS
     WHEREAS, on April, 3, 1998, Centocor and Schering-Plough Ltd., a
corporation organized under the laws Switzerland with its principal offices at
Weystrasse 20, CH 6000 Lucerne, Switzerland (“SPL”) entered into a Distribution
Agreement, as previously amended (the “Distribution Agreement”) and SPL
subsequently assigned the Distribution Agreement to its Affiliate,
Schering-Plough, under the terms of that certain Assignment and Assumption
Agreement, dated August 25, 2005; and
     WHEREAS, pursuant to the terms of the Distribution Agreement the Parties
and their respective Affiliates have been developing and commercializing the
chimeric anti-TNF monoclonal antibody Product (known as cA2 or infliximab) in
the Territory under the Trademark REMICADE (the “Remicade Product”); and
     WHEREAS Centocor has developed a fully human anti-TNF monoclonal antibody
product known as golimumab (the “Golimumab Product”) through Phase IIb clinical
trials and, prior to the exercise by Schering-Plough of its rights under
Section 12.1 of the Distribution Agreement to participate in the continued
development and commercialization of the Golimumab Product as a Product under
the Distribution Agreement (the “Golimumab Option”), Centocor licensed the
worldwide rights to Golimumab Product, subject to the Golimumab Option, to its
Affiliate, CNA Development; and
     WHEREAS Schering-Plough has exercised its Golimumab Option rights and
Schering-Plough and Centocor subsequently arbitrated a disagreement over the
duration of Schering-Plough’s rights to the Golimumab Product under the
Distribution Agreement resulting in a final decision by the arbitrator that the
term of Schering-Plough’s rights to the Golimumab Product under the Distribution
Agreement will continue for a period of fifteen years from the date of first
Commercial Sale of Golimumab Product in the Territory; and

 

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     WHEREAS Centocor has appealed the decision of the arbitrator and Centocor
and Schering-Plough have recently engaged in good faith discussions in an
attempt to settle and finally resolve their dispute over the term of
Schering-Plough’s rights to Golimumab Product as well as to resolve certain
additional outstanding issues related to the development and commercialization
of Remicade Product and/or Golimumab Product under the terms of the Distribution
Agreement, and now desire to document their mutual agreement on all such
matters, as set forth in detail herein; and
     WHEREAS Centocor has therefore agreed to terminate and permanently withdraw
its appeal of the aforementioned arbitrator’s decision in conjunction herewith
and as provided herein; and
     WHEREAS CNA Development is also in agreement with all of the amendments and
modifications to the Distribution Agreement set forth herein pertaining to the
Golimumab Product;
     NOW THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained, the Parties hereby agree as follows:
     Except as otherwise expressly set forth in this Amendment Agreement, the
capitalized terms used herein (whether in the singular or plural) shall have the
respective meanings set forth in the Distribution Agreement.
ARTICLE 1
DISTRIBUTION AGREEMENT AMENDMENTS, CLARIFICATIONS AND MODIFICATIONS
     The following amendments, clarifications and modifications to the
Distribution Agreement shall become effective immediately upon execution of this
Amendment Agreement:
     1.1 Clarification of Product Definition. The definition of Product shall
include, without limitation, the Remicade Product and the Golimumab Product, as
well as any Improvements to either such Product. However, for clarity, the
occurrence of the term “Product” in the first sentence of the second whereas
clause of the Distribution Agreement and in the proviso to the “Cost of Goods
Sold” definition shall be deemed to refer to Remicade Product only, and all
references in the Distribution Agreement to the “Product” as being “described”
or “set forth” in Appendix A to that agreement shall be deemed to be references
to the relevant Product as described in the revised Appendix A attached hereto.
In addition, the various references to “Trademark” in Section 4.3(b) of the
Distribution Agreement, when used in connection with the term “Product”, shall
be deemed to refer to the relevant Trademark for each of Remicade Product and
Golimumab Product, respectively, it being understood that the Product Committee
shall be responsible for agreeing upon the Trademark(s) to be used for Golimumab
Product in the Territory. The Parties also agree that the references to
“Product” appearing in third paragraph of Section 5.1 of the Distribution
Agreement shall be deemed to only refer to Remicade Product and that the
“Manufacture and Supply

 

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Agreement” referred to in that paragraph is the Remicade Supply Agreement (as
defined below).
     1.2 Affiliate Definition; Delegation and Assignment. The last sentence of
the definition of “Affiliate” (i.e., the sentence: “Any reference in this
Agreement to Centocor or Schering-Plough includes the Affiliates of that Party
unless the context clearly indicates to the contrary.”) is hereby deleted.
Notwithstanding such deletion, and consistent with Section 12.8 of the
Distribution Agreement, it is understood and agreed that each Party may license
and/or delegate or assign any rights and the performance of any of its
obligations under the Distribution Agreement to an Affiliate without the prior
consent of the other Party.
     1.3 Affiliate-Controlled IP. The Parties acknowledge that either Party may
from time to time during the Term propose that proprietary technology,
materials, processes, know-how, data, information, patent rights and/or other
intellectual property rights that are owned or controlled by an Affiliate of
such Party (“Affiliate-Controlled IP”) be utilized by the Parties in the
development, manufacture and/or commercialization of one or more Products in the
Territory. Centocor is under no obligation to agree to any such proposal by
Schering-Plough. It is further understood that any use of Affiliate-Controlled
IP (i) shall be subject to the prior approval requirement in Section 6.2(a)(i)
of the Distribution Agreement if it would result in obligations to directly or
indirectly pay license fees, milestones, royalties or other payments to one or
more unaffiliated third parties in the case of any Centocor
Affliliate-Controlled IP and (ii) shall be subject to a comparable prior consent
requirement in the case of any Schering-Plough Affiliate-Controlled IP. The
Parties further agree that the Party making available such Affiliate-Controlled
IP to the other Party shall not charge or require reimbursement from the other
Party (or the other Party’s Affiliates) for, or include in the calculation of
Contribution Income, any licensee fees, milestones, royalties or other payments
due or payable to its Affiliates as a result of the use of such
Affiliate-Controlled IP in connection with development, manufacture and/or
commercialization of the Products in the Territory, with the exception of such
amounts that are pass through amounts payable by such Affiliate(s) to
unaffiliated third party licensors as a result of such use of such
Affiliate-Controlled IP. In addition, any costs and expenses previously incurred
by or on behalf of such Affiliates in the development of such
Affiliate-Controlled IP shall not be included in Product Development Costs
unless expressly agreed by the Parties in writing. Nothing in this Section 1.3
shall be construed as (i) granting (whether expressly or by implication) to
either Party any licenses or other rights to any Affiliate-Controlled IP that
has not, as of the Amendment Date, already been utilized by written agreement of
the Parties for the development, manufacture or commercialization of the
Products in the Territory, or (ii) obligating either Party to make available any
new or additional Affiliate-Controlled IP for such use. For the avoidance of
doubt, it is understood that Centocor may (without Schering-Plough’s prior
consent) utilize, and grant Schering-Plough the right to utilize, any new or
additional Centocor proprietary technology, materials, processes, know-how,
data, information, patent rights and/or other intellectual property rights or
any Centocor Affiliate-Controlled IP in connection with the development,
manufacture and commercialization of Products in the Territory; provided that
such utilization does not

 

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result in (x) any requirement for additional consideration or compensation to be
paid by Schering-Plough or its Affiliates in connection with such
Affiliate-Controlled IP, (y) any development costs associated with such
Affiliated-Controlled IP being included as Product Development Costs, or (z) any
additional Affiliate or unrelated third party pass-through costs being included
in the calculation of Contribution Income.
     1.4 Term of the Distribution Agreement. Section 8.1 of the Distribution
Agreement is hereby deleted and replaced in its entirety with the following:
“8.1 Term. The term of this Agreement (the “Term”) shall commence on the
Effective Date and continue for a period ending on the later to occur of the
last day of the Remicade Term or the Golimumab Term, unless this Agreement is
earlier terminated pursuant to the provisions of this Agreement. The foregoing
notwithstanding, in the event that prior to the expiration of the Term (as
defined above) Schering-Plough acquires rights, pursuant to Section 12.1 of this
Agreement, to any additional fully human anti-TNF monoclonal antibodies
developed by Centocor through transgenic animals or plants or other technology
(an “Additional Section 12.1 Product”), then the term of this Agreement shall be
extended, solely with respect to such Additional Section 12.1 Product, to expire
on the fifteenth anniversary of the date of the first Commercial Sale of such
Additional Section 12.1 Product in the European Union after the grant of the
first Marketing Approval of such Additional Section 12.1 Product in the European
Union.”
     The following new definitions are hereby added to Article 1 of the
Distribution Agreement:
“Remicade Term” shall mean the period beginning on the Effective Date and ending
on September 1, 2014.
“Golimumab Term” shall mean the period beginning on the date of the first
Commercial Sale of Golimumab Product to occur in the European Union after the
grant of the first Marketing Approval of Golimumab Product in the European Union
(the “First Golimumab Commercial Sale”), and ending upon the fifteenth (15th)
anniversary of such date.
     For clarity, in the event that the Term of the Distribution Agreement is
extended due to the acquisition by Schering-Plough of rights to any Additional
Section 12.1 Products, any such extension of the Term shall have no effect on
the expiration of Schering-Plough’s rights to the Remicade Product or the
Golimumab Product, each of which shall still expire and revert to Centocor,
respectively, on expiration of the Remicade Term (in the case of Remicade
Product) or on expiration of the Golimumab Term (in the case of Golimumab
Product).

 

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     1.5 Milestone Payments. The Parties acknowledge and agree that the various
payments provided for in Sections 3.1, 3.2 and 3.3 of the Distribution Agreement
have been paid with respect to Remicade Product, and that the development and
commercialization of Golimumab Product does not and will not give rise to any
additional payment obligations under those Sections of the Distribution
Agreement.
     1.6 Separate Contribution Income Calculations for Golimumab Product and
Remicade Product. For convenience and transparency to product line information,
the Parties agree that Contribution Income will be calculated separately for
Remicade Product and Golimumab Product based upon the Net Sales of each such
Product in the Territory. Nonetheless, for the purpose of clarity, the manner
and elements of calculating Contribution Income will be the same for Remicade
Product and Golimumab Product, and shall continue to be as set forth in
Section 6.2 of the Distribution Agreement and Section 7.1 of the Supply
Agreement, dated September 15, 1999, between Centocor and Schering-Plough, as
amended (the “Remicade Supply Agreement”). For further clarity, the Parties
agree that the $150,000,000 Net Sales threshold in Section 6.2(c) shall apply
separately to Golimumab Product and to Remicade Product, rather than to the
aggregated Product sales, for all periods prior to the Trigger Date (as defined
below).
     1.7 Golimumab Costs Prior to the First Golimumab Product Marketing
Approval. The Parties acknowledge and agree that, subject to the terms and
conditions set forth in this Section 1.7, the Parties shall have the right to
include in the Contribution Income calculation any Marketing Expenses and/or
sales costs related to the commercialization of Golimumab Product in the
Territory that are incurred prior to the first Marketing Approval of Golimumab
Product in the Territory (collectively, the “Pre-Approval Marketing and Sales
Costs”). The total of all Pre-Approval Marketing and Sales Costs incurred for
the 2006 and 2007 Agreement Years that are to be included in the Contribution
Income calculation for the Products shall be subject to the caps on such amounts
set forth in Schedule 1.7 (attached hereto). With respect to the 2008 Agreement
Year and any subsequent Agreement Years (or partial Agreement Year) occurring
prior to the Trigger Date, the Parties shall be permitted to include in the
Contribution Income calculation for the Products in the relevant Agreement Year
those Pre-Approval Marketing and Sales Costs that are incurred in such Agreement
Year in connection with the performance of the Country Marketing Plans
established for Golimumab Product in the Territory. For clarity, the Parties
agree that notwithstanding the date on which the first Commercial Sale of
Golimumab Product in the Territory occurs, the inclusion of Pre-Approval
Marketing and Sales Costs in the calculation of Contribution Income shall become
effective on the Amendment Date. The foregoing notwithstanding, to the extent
that the aggregate total of all Pre-Approval Marketing and Sales Costs incurred
by Schering-Plough over the entire period extending from January 1, 2006 to the
Trigger Date exceeds [**] dollars ($[**]) (the “Pre-Approval Cost-Sharing Cap”),
Schering-Plough shall be solely responsible for all such Pre-Approval Marketing
and Sales Costs in excess of the Pre-Approval Cost-Sharing Cap, shall not be
entitled to any reimbursement from or cost sharing by Centocor for such excess
amounts, and shall not include such excess amounts in the Contribution Income
calculation. For clarity, the

 

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costs of any ongoing or future Phase III or Phase IIIb studies for the Golimumab
Product shall not be included in determining Pre-Approval Marketing and Sales
Costs.
     1.8 Tanabe Rights. Without modifying the provisions of Section 2.3(a) of
the Distribution Agreement, the Parties agree that Schering-Plough’s rights in
that section will not be triggered in the event that Tanabe Seiyaku Co. Ltd.
(“Tanabe”), or any of Tanabe’s Affiliates or successors in interest, grants to
Centocor or a Centocor Affiliate co-promotion rights, co-marketing rights or
other semi-exclusive commercialization rights (e.g., where Tanabe, its
Affiliates or successors in interest, and/or its or their third party
sublicensees or distributors, still hold non-exclusive or co-exclusive rights to
distribute, market, promote and/or sell Product in the relevant country(ies)) to
one or more Products in any one or more of the following countries: Japan,
Taiwan or Indonesia. It is acknowledged and agreed that Schering-Plough’s rights
under Section 2.3(a) no longer apply to the Peoples Republic of China.
     1.9 Rights to Cilag Autoinjector; Reimbursement of Development Costs. The
Parties have agreed to develop and commercialize the Golimumab Product utilizing
the autoinjector device developed by Cilag GmbH International (“Cilag”), an
Affiliate of Centocor (the “Cilag Autoinjector”). Centocor shall be responsible
for procuring the grant of any licenses, sublicenses or other rights from Cilag
that are necessary to develop, manufacture and/or commercialize the Golimumab
Product with the Cilag Autoinjector in the Territory; provided that any
financial obligations to Cilag arising in connection with such license shall be
subject to the provisions of Section 1.3 and Section 1.11 of this Amendment
Agreement. In consideration for such rights and the Autoinjector Development
Costs (as defined below) incurred by Cilag, Schering-Plough shall make a one
time payment of twenty million five hundred thousand dollars ($20,500,000)
within ten (10) business days after the Amendment Date. In addition, within
thirty (30) days after the date of submission of the first application for
Regulatory Approval of Golimumab Product in the EMEA, Schering-Plough shall pay
to Centocor a milestone payment in the amount equal to the lesser of four
million two hundred and fifty thousand dollars ($4,250,000) or the amount
determined as follows:

  (i)   [**] percent [**] of the total of all Autoinjector Development Costs
incurred as of the date of such EMEA submission,

      minus

  (ii)   twenty million five hundred thousand dollars ($20,500,000).

Such milestone payment shall be made pursuant to an invoice (with supporting
documentation in reasonable detail) to be provided to Schering-Plough by
Centocor. Thereafter, to the extent that Schering-Plough’s total payments made
pursuant to this Section 1.9 are less than twenty-four million, seven hundred
and fifty thousand dollars ($24,750,000) and at all times subject to the
Autoinjector Reimbursement Cap (as defined below), Centocor shall include
[**] percent [**] of the ongoing Autoinjector Development Costs incurred in a
given calendar quarter in the quarterly Product

 

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Development Cost billings for such calendar quarter under the Distribution
Agreement. As used in this Section 1.9, the term “Autoinjector Development
Costs” means the development costs incurred by Cilag in connection with the
development of the Cilag Autoinjector (including Cilag’s or its Affiliates’ FTE
costs, but excluding any Centocor FTE costs incurred on or after the Amendment
Date); provided, however, that any costs and expenses incurred in connection
with activities specifically directed to the use of the Cilag Autoinjector for
any products other than Golimumab Product shall be excluded. The term
“Autoinjector Reimbursement Cap” means an aggregate total of [**] dollars
($[**]) of Autoinjector Development Costs which is the maximum amount that will
be subject to sharing and/or reimbursement by Schering-Plough under the terms of
this Section 1.9. The Parties acknowledge and agree that the aggregate total of
all of Schering-Plough’s payments pursuant to this Section 1.9 shall not exceed
an amount equal to [**] percent ([**]%) of the Autoinjector Reimbursement Cap
(i.e., twenty-four million, seven hundred and fifty thousand dollars
($24,750,000)), and that Schering-Plough shall have no obligation to reimburse
or share in any portion of Autoinjector Development Costs that exceed the
Autoinjector Reimbursement Cap. The Parties agree that any payments due under
this Section 1.9 shall be paid by Schering-Plough directly to Cilag on
Centocor’s behalf.
     1.10 Supplies of Cilag Autoinjector. (a) Schering-Plough hereby agrees to
exclusively source all of its requirements for supplies of autoinjector devices
for use in connection with the development and commercialization of Golimumab
Product in the Territory from Centocor or its Affiliates and Centocor or its
Affiliates shall be responsible for supplying to Schering-Plough such quantities
of Cilag Autoinjector as it may order in accordance with the Autoinjector Supply
Agreement (as defined below) for development and commercialization of the
Golimumab Product in the Territory. As soon as practicable after the Amendment
Date, the Parties will in good faith negotiate and enter into a supply agreement
with respect to the Cilag Autoinjector (the “Autoinjector Supply Agreement”)
which shall be consistent with the terms of the Distribution Agreement, as
amended hereby, and the non-product and/or price specific terms of the Remicade
Supply Agreement. The Autoinjector Supply Agreement shall, in any event, include
provisions to provide that:

  (i)   in the event of an actual or projected shortfall in supplies of Cilag
Autoinjector, (x) Centocor shall ensure (A) that the available inventory and
production capacity for that device is appropriately allocated based upon the
collective firm orders and forecast requirements of the Parties for supplies of
Cilag Autoinjector for use in connection with Golimumab Product (whether inside
or outside the Territory) and any other firm orders and forecast requirements of
Centocor or its Affiliates for supplies of the Cilag Autoinjector for the
development and commercialization of Centocor’s or its Affiliates’ other
products, and (B) that such supply quantity allocated to Golimumab Product
requirements would be split between Schering-Plough (and its Affiliates), on the
one hand, and Centocor (and its Affiliates) on the other hand, in

 

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      the same proportion as their respective firm orders and forecast
requirements for supplies of Cilag Autoinjector for use in connection with
Golimumab Products such that the shortfall in such supplies would be shared
between them and (y) to the extent any such actual or projected shortfall
results in forecasted market shortages for the Cilag Autoinjector,
Schering-Plough and Centocor will jointly pursue alternative sourcing to ensure
continued supply of autoinjector devices to both Parties; and

  (ii)   in the event that Centocor develops a new autoinjector device for use
with Golimumab Product and does not permit Schering-Plough to commercialize
Golimumab Product utilizing such new device, Schering-Plough will be relieved of
its obligations to source autoinjector devices for the Golimumab Product
exclusively from Centocor.

The Parties will agree upon an initial price per unit to be paid by
Schering-Plough for supplies of the Cilag Autoinjector under the Autoinjector
Supply Agreement, which determination shall be made in connection with the
determination of the initial supply price for Golimumab Product pursuant to
Section 1.16. The supply price for the Cilag Autoinjector shall also be subject
to periodic review and adjustment, as necessary, by the Product Committee in
connection with any review and adjustment of the supply price for Golimumab
Product pursuant to Section 6.1 of the Distribution Agreement. The foregoing
notwithstanding, for purposes of Contribution Income calculations, the actual
cost per unit of Cilag Autoinjector, without mark-up and subject to the
application of the cap as set forth under Section 1.11, shall be used.
     (b) Alternative Devices. In the event that the Parties agree to develop
and/or commercialize Golimumab Product in the Territory using an alternative
autoinjector device, the Parties shall also agree upon mutually acceptable
arrangements for the manufacture and supply of supplies of the alternative
device, it being understood that if a Party (or one of its Affiliates) has
either internally developed such alternative device or licensed or acquired
rights to such alternative device, that Party shall be primarily responsible for
procuring the manufacture and supply of all requirements for supplies of the
alternative device for use in connection with the Golimumab Product in the
Territory. To the extent that Schering-Plough is the Party responsible for
procuring supplies of such alternative autoinjector device, the Parties shall,
upon request by Centocor, also negotiate in good faith and enter into a supply
agreement for the manufacture and supply on commercially reasonable terms of
Centocor’s requirements of such device for use in connection with Golimumab
Product in countries outside the Territory. Any such supply agreement shall be
consistent with the terms of the non-product and/or price specific terms of the
Remicade Supply Agreement, including without limitation clauses to provide that
in the event of an actual or projected shortfall in supplies of such device,
(i) Schering-Plough shall ensure that the available inventory and production
capacity for that device is appropriately allocated based upon the Parties’ firm
orders and forecast requirements for the device for use in connection with
Golimumab Products both within and outside the Territory and (ii) to the extent
any such actual or projected shortfall results in forecasted market shortages
for the device, Schering-Plough and Centocor will jointly pursue alternative
sourcing to ensure continued supply of autoinjector devices to both Parties.
     1.11 Cost of Cilag Autoinjector for Contribution Income Purposes. The
actual cost per unit for autoinjector devices for Golimumab Product will be
included in the calculation of Contribution Income; provided that such cost will
be subject to a cap of [**] dollars ($[**]) per unit throughout the Term of the
Distribution Agreement. The same principles for determining actual cost used in
Appendix B to the Distribution Agreement with respect to Remicade Product shall
be used in determining the actual cost per unit of the Cilag Autoinjector.

 

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To the extent Cilag’s actual per unit cost for the Cilag Autoinjector device
exceeds [**] dollars ($[**]) per unit, such excess costs shall not be included
in the calculation of Contribution Income and Centocor shall be solely
responsible for such excess costs and shall not be entitled to any reimbursement
from Schering-Plough for such excess costs. The costs of all third party
royalties, license fees and milestones under third party licenses existing as of
the Amendment Date are included in the capped $[**] price. Any additional
royalties due under future third-party licences shall be included in the
Contribution Income calculation and shall not be included in the cap
calculation; provided that Centocor shall not enter into any additional
agreements with third parties that include provisions requiring the payment of
license fees, milestones, royalties or other payments relating to the sale of
the Autoinjector in the Territory without the prior consent of Schering-Plough.
     1.12 Golimumab Crohn’s Disease Indication. The Parties agree to allow the
Product Committee a period of six (6) months from the Amendment Date (the “CD
Decision Period”) to reach a final decision on whether or not to develop
Golimumab Product for a Crohn’s Disease indication (the “CD Development
Program”). In the event that at the end of the CD Decision Period, the Product
Committee still cannot agree on whether to develop Golimumab Product for a
Crohn’s Disease indication, then Schering-Plough shall be permitted to pursue
the independent development and commercialization of Golimumab Product for
Crohn’s Disease in accordance with the provisions set forth in
Sections 1.12(a)-(n) of this Amendment Agreement, as well as such other
supplemental terms and conditions as the Parties may agree upon in writing
during the CD Decision Period (collectively, the “Crohn’s Terms”). The
development plan and budget for the CD Development Program will be finalized and
a copy provided to Centocor at least six (6) weeks prior to the end of the CD
Decision Period (the “CD Development Plan and Budget”).
     (a) Conduct of the CD Development Program. In the event that
Schering-Plough decides to proceed with independent development of Golimumab
Product for Crohn’s Disease pursuant to this Section 1.12, Schering-Plough will
be responsible for the conduct of the CD Development Program in accordance with
the CD Development Plan and Budget (including as it may be amended) and shall
have the right to select and utilize third party contractors in connection with
the performance of the CD Development Program. Schering-Plough will be
responsible for, but shall consult with Centocor with regard to the design of
the overall CD Development Program, and shall provide Centocor a reasonable
opportunity to review and comment on the protocols proposed for each clinical
trial to be conducted as part of the CD Development Program. Schering-Plough
shall in good faith reasonably consider any comments timely provided by Centocor
with regard to the CD Development Program and/or such protocols. For clarity and
without limiting the scope of the Centocor MAH Matters described in
Section 1.12(e), below, it is understood and agreed that Schering-Plough shall
have final decision making authority over the scope of the CD Development Plan
and Budget and any amendments thereto.
     (b) Centocor Contract Assistance. Schering-Plough may desire to contract
with Centocor for the performance by Centocor of certain activities within the
scope of the CD Development Program on Schering-Plough’s behalf and at
Schering-Plough’s

 

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cost. In such event, Schering-Plough shall so notify Centocor and the Parties
shall discuss in good faith the scope and terms governing any such contracted
activities; provided that it is understood that Centocor shall not be under any
obligation to perform any such activities on Schering-Plough’s behalf unless
such scope and terms have been agreed in writing. The Parties acknowledge and
agree, however, that whether or not they enter into any such contract for the
performance by Centocor of activities within the scope of the CD Development
Program, Centocor is obligated under this Amendment Agreement to perform the
activities described in Sections 1.12(d), (e), (j), (k), (l) and (m) in support
of the CD Development Program. Any Centocor internal FTE costs incurred in the
performance of any such contracted activities or any of the obligations
described in Sections 1.12(d), (e), (j), (k), (l) and (m), shall be charged at
the rate of $250,000 per FTE. Any and all amounts paid by Schering-Plough to
Centocor under such contract shall be included in Schering-Plough’s
out-of-pocket development costs for the purposes of determining the amount to be
paid by Centocor if it exercises its option under Section 2.1(c)(ii) of the
Distribution Agreement, as amended hereby, to share in the Contribution Income
derived from the Crohn’s Disease indication (the “CD Option Right”).
     (c) Pre-Exercise Product Development Costs. Unless and until such time as
Centocor exercises its CD Option Right, Schering-Plough will be solely
responsible for all costs and expenses incurred in connection with the
performance of the CD Development Program. To the extent that Centocor performs
any activities requested by Schering-Plough in support of the CD Development
Program, Schering-Plough shall reimburse Centocor’s costs and expenses incurred
in the performance of such activities (with any Centocor internal FTEs being
reimbursed at the rate set forth in Section 1.12(b) of this Amendment
Agreement). Any such reimbursements shall be paid quarterly within thirty
(30) days after receipt of invoices (together with supporting documentation in
reasonable detail) by Schering-Plough from Centocor. Notwithstanding the
foregoing and except as otherwise agreed in any contract for services as
contemplated under Section 1.12(b) with respect to such services,
Schering-Plough shall not be obligated to reimburse Centocor for any such costs
and expenses in excess of one hundred and five percent (105%) of the amount
budgeted for the relevant Agreement Year for the activities being performed by
Centocor in connection with the CD Development Program unless such excess costs
and expenses are approved by Schering-Plough in writing in advance.
     (d) Golimumab Product Supply During CD Development Program. Centocor shall
be responsible for manufacturing and supplying all clinical supplies of bulk
unlabeled Golimumab Product and placebo needed for the conduct of the CD
Development Program. Consistent with the provisions of Section 2.1(c)(ii) of the
Distribution Agreement, as amended hereby, and the terms of the Golimumab Supply
Agreement (as defined in Section 1.16 below), Centocor shall provide such
supplies of Golimumab Product and placebo pursuant to written forecasts and
orders to be provided by Schering-Plough. In addition, effective upon
Schering-Plough’s written notice to Centocor no later than the end of the CD
Decision Period (a “Packaging & Labeling Notice”), Centocor shall be responsible
for performing the clinical packaging and labeling of all clinical supplies of
Golimumab Product and placebo needed for conduct of the CD Development Program,

 

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in accordance with, and as more fully set forth in, the Golimumab Supply
Agreement. If Schering-Plough fails to provide a Packaging & Labeling Notice
prior to the expiration of the CD Decision Period, then Schering-Plough shall be
solely responsible for the clinical packaging and labeling of all clinical
supplies of Golimumab Product and placebo needed for conduct of the CD
Development Program. For clarity, Centocor shall also be responsible for
providing supplies of Cilag Autoinjector required by Schering-Plough for the
conduct of the CD Development Program in accordance with the terms of the
Autoinjector Supply Agreement.
     (e) MAH Responsibilities. Centocor will continue to hold the marketing
authorizations for Golimumab Product in accordance with the terms of the
Distribution Agreement and, accordingly, will therefore also have primary
responsibility for certain matters pertaining to the product safety and
regulatory compliance aspects of the development and commercialization of
Golimumab Product for the Crohn’s Disease indication in the Territory (the “MAH
Matters”), specifically including those matters listed on Exhibit A attached
hereto. During the Term, Centocor shall promptly execute any delegation
agreements or other documentation that the Parties mutually agree are necessary
or appropriate, consistent with the terms of this Section 1.12, in order for
Schering-Plough to conduct the CD Development Program and/or commercialize
Golimumab Product in the Territory for the Crohn’s Disease indication.
     (f) CD Development Program Updates. Schering-Plough shall provide quarterly
updates to the Product Committee on the status of the CD Development Program,
including activities engaged in and the budget expenditures against such
activities, and shall otherwise keep Centocor informed of significant
developments or changes to the CD Development Plan and Budget.
     (g) Centocor Opt-In Following Successful Completion of Phase III.
Schering-Plough shall notify Centocor in writing (as provided in Section 2.1(c)
of the Distribution Agreement) upon Successful Completion (to be defined) of the
Phase III studies to be conducted under the CD Development Program (the
“Successful Completion Notice”). The Parties will use good faith efforts to
discuss and agree upon a definition of Successful Completion during the CD
Decision Period; it being understood that a decision by Schering-Plough’s
executive management following completion of such Phase III studies that the
data and results of the CD Development Program are adequate to proceed with
preparation and submission of an application for Regulatory Approval of
Golimumab Product for the Crohn’s Disease indication in the European Union shall
de facto mean that such studies have been Successfully Completed. The Successful
Completion Notice shall include (i) top line safety and efficacy results from
the studies along with associated tables and figures as well as (ii) the total
estimated amount (the “Preliminary CD Development Amount”) of Schering-Plough’s
out-of-pocket development costs from the CD Development Program through the Opt
In Date (as defined below) (together with supporting documentation in reasonable
detail). Schering-Plough will also promptly provide Centocor with any other
specific data available from the studies that is reasonably requested by
Centocor to aid in assessment of its CD Option Right. Upon receipt of a
Successful Completion Notice (and any additional data reasonably requested by
Centocor as provided above), Centocor shall have a period of

 

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sixty (60) days (the “Review Period”) to exercise the CD Option Right by
providing written notice to Schering-Plough (the date of such notice of
exercise, the “Opt In Date”) and within ten (10) Business Days after any such
Opt In Date Centocor shall reimburse Schering-Plough for seventy-five percent
(75%) of the Preliminary CD Development Amount. Within ninety (90) days after
the Opt In Date the Parties will complete a true-up of the total amount of
Schering-Plough’s out-of-pocket development costs from the CD Development
Program actually incurred through the Opt In Date (the “Final CD Development
Amount”) as compared to the Preliminary CD Development Amount. If requested by
Centocor, such true-up process will be subject to an audit to be conducted by
Centocor’s independent auditors (at Centocor’s expense) to confirm the Final CD
Development Amount, and (if necessary) the ninety (90) day true up period shall
be extended by the reasonable period of time necessary for Centocor to complete
such audit. The Final CD Development Amount shall include, without limitation,
(i) the Centocor internal FTE costs that are billed and paid by Schering-Plough
up through the Opt In Date, but shall not include any Schering-Plough internal
FTE costs, and (ii) any amounts paid by Schering-Plough to Centocor as
reimbursement for costs and expenses incurred by Centocor in performance of
activities requested by Schering-Plough in support of the CD Development Program
(including without limitation payments for supplies of Golimumab Product and/or
placebos). Within ten (10) Business Days after the Final CD Development Amount
is established (including as such amount may be confirmed or modified following
the exercise of Centocor’s audit right): (i) if the Final CD Development Amount
is greater than the Preliminary CD Amount, then Centocor shall pay to
Schering-Plough an amount equal to seventy-five percent (75%) of the difference
between such amounts; or (ii) if the Final CD Development Amount is less than
the Preliminary CD Amount, then Schering-Plough shall pay to Centocor an amount
equal to seventy-five percent (75%) of such difference. The CD Option Rights
shall expire if Centocor fails to exercise the CD Option Rights by the end of
the Review Period (the “Option Expiry Date”). Schering-Plough’s expenses in
procuring Golimumab Product for the CD Development Program shall be included in
the costs and expenses of the CD Development Program for which Schering-Plough
is responsible and will be included in the amount to be paid by Centocor if it
exercises the CD Option Right.
     (h) Centocor Opt In Prior to Successful Completion of Phase III. Centocor
may exercise its CD Option Right at any time prior to receipt of a Successful
Completion Notice by providing an early exercise notice to Schering-Plough (the
“Early Exercise Notice”); provided that Centocor shall only be permitted one
(1) opportunity to exercise its CD Option Right through an Early Exercise
Notice. Upon receipt of the Early Exercise Notice, Schering-Plough shall provide
(i) any specific data that is available from the CD Development Program studies
that may be reasonably requested by Centocor in the Early Exercise Notice and
(ii) the Preliminary CD Development Amount (together with supporting
documentation in reasonable detail). Centocor shall have a 60-day Review Period
upon receipt of such information to confirm the exercise of its CD Option Right.
If Centocor confirms its exercise in writing, such date shall constitute the Opt
In Date for purposes of Section 1.12(g), which section will then govern the
rights and obligations with respect to exercise of the CD Option Right. If
Centocor does not confirm its exercise in writing prior to the end of such
60-day Review Period, the Early

 

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Exercise Notice shall be deemed to have lapsed, Centocor’s rights under this
Section 1.12(h) will have been exhausted, and the CD Option Right shall remain
in effect in accordance with Section 1.12(g).
     (i) Opt-in Implications. In the event that Centocor exercises the CD Option
Right, the CD Terms related to responsibility for and conduct of the CD
Development Program shall cease to apply effective as of the Opt In Date and the
development of Golimumab Product for the Crohn’s Disease indication shall
thereafter be conducted jointly by the parties in accordance with the terms set
forth in the Distribution Agreement.
     (j) Opt-out Implications. In the event that Centocor does not exercise the
CD Option Right, then (i) Schering-Plough shall thereafter retain one hundred
percent (100%) of all Contribution Income resulting from the sale of Golimumab
Product in the Territory for the Crohn’s Disease indication (for clarity,
Centocor shall continue to share in Contribution Income resulting from the sale
of Golimumab Product in the Territory for Rheumatoid Arthritis and any other
indications that are developed by the Parties within the scope of the
Distribution Agreement); (ii) Centocor shall continue to manufacture and supply
and Schering-Plough shall continue to purchase its requirements of Golimumab
Product for the Crohn’s Disease indication from Centocor at Centocor’s actual
cost as set forth in Section 1.12(d) (above), and (iii) the restrictions set
forth in Section 2.1(c) of the Distribution Agreement on use of a different
dosage form, formulation and trademark shall not apply to sales of Golimumab
Product in the Territory for Crohn’s Disease, and Schering Plough shall have the
right to utilize the same formulations, dosage forms and trademarks as are used
for non-Crohn’s Disease indication Golimumab Product sales; provided that prior
to the first Commercial Sale of Golimumab Product after Regulatory Approval for
Crohn's Disease Schering-Plough and Centocor shall agree upon an appropriate
commercially reasonable means for determining sales of Golimumab Product in the
Territory for Crohn’s Disease as opposed to sales for other indications (an
example being the mechanism used by Centocor for determining royalty bearing
sales of Product in the Territory under the Kennedy Agreement.)
     (k) Restrictions on Use of Data. If Centocor does not exercise its CD
Option Right, Centocor and its Affiliates shall not have any rights to use (or
cross-reference), or to grant any third party any rights to use (or
cross-reference), any of the data and information generated by the CD
Development Program to prepare, file or otherwise support any application for
Regulatory Approval in any country outside the Territory of Golimumab Product
for use in the treatment of Crohn’s Disease (or any other inflammatory bowel
disease). Centocor will acquire such rights solely in the event that, and
effective upon the date that, it exercises the CD Option Right in accordance
with the provisions of this Section 1.12. However, Centocor shall at all times
have the right to use the data from the CD Development Program solely to meet
its legal obligations as the marketing authorization holder for Golimumab
Product, including, but not limited to adverse event reporting and, to the
extent requested by regulatory authorities, cross-indication analyses. Any other
use of such data by Centocor or its Affiliates prior to the exercise of the Opt
In Date shall be subject to Schering-Plough’s prior written approval, which
shall not be unreasonably withheld.

 

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     (l) Schering-Plough’s Access to Information. Centocor shall provide
Schering-Plough with rights to use and reasonable access to any data and
information in its or its Affiliates’ possession or control related to Golimumab
Product that is necessary to enable Schering-Plough to plan and conduct the CD
Development Program. In addition, Centocor shall upon request reasonably
cooperate with Schering-Plough to support the conduct of the CD Development
Program by (x) making available relevant Centocor personnel to provide technical
information and/or assist Schering-Plough in preparing submissions and/or
responses to inquiries from regulatory authorities related to Golimumab Product,
(y) providing appropriately trained and experienced personnel who, collectively,
are knowledgeable with respect to the Golimumab Product and Centocor’s internal
processes, to work with Schering-Plough personnel to coordinate activities being
performed by Centocor or its Affiliates with regard to the CD Development
Program persuant to this Section 1.12 or any separate contract entered into by
the Parties as contemplated in Section 1.12(b) and (z) being named as the
sponsor of clinical trials and/or holder of relevant applications (such as INDs
and Clinical Trial Applications under the Clinical Trial Directive) for Crohn’s
Disease if and to the extent that Schering-Plough and/or its Affiliates are not
able to perform such functions due to regulatory constraints.
     (m) Selection of Clinical Study Sites. Schering-Plough will be responsible
for the selection of clinical study sites for the CD Development Program, and
shall have the right to include study sites in any country, including the United
States, in any clinical studies conducted as part of the CD Development Program;
provided that prior to selecting any site in the United States, Schering-Plough
shall give Centocor prior written notice identifying such potential site. To the
extent that either (i) Centocor has clinical studies already underway at such
site for a product being studied in Crohn’s Disease patients, or (ii) Centocor
objects to such site based on reasonable quality or compliance concerns stemming
from Centocor’s legal obligations as marketing authorization holder for the
Golimumab Product, then Centocor shall so notify Schering-Plough to that effect
and Schering-Plough shall select a different clinical study site. If a United
States site is selected, Centocor shall be responsible for any corresponding FDA
submissions. For purposes of this Section 1.12(m), a Centocor clinical study
shall be considered “underway” at a given site only during the period of time
beginning on the effective date of the definitive contract with such study site
for the conduct of the study and ending on the date on which patient enrollment
for the study at such site has been completed.
     (n) Agreement limited to Crohn’s Indication. The terms set forth above in
Sections 1.12(a) through (m) shall apply only to Schering-Plough’s CD
Development Program and, if applicable, commercialization of Golimumab Product
for that indication in the Territory. Any efforts by the Parties to develop
other additional indications for any Product shall continue to be governed by
Section 2.1(c) of the Distribution Agreement with the specific terms for such
development to be agreed between the Parties as contemplated under
Section 2.1(c).
     1.13 Withdrawal of Arbitration Appeal. Centocor agrees that on or promptly
after the Amendment Date it will (i) execute a Dismissal Agreement (in the form
attached hereto as Exhibit B) pursuant to F.R.A.P. 42(b) withdrawing with
prejudice and without

 

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costs its appeal of the matter captioned, Centocor, Inc. v. Schering-Plough,
Ltd., No. 06-4995 (3d Cir.) (the “Appeal”) pending before the United States
Court of Appeals for the Third Circuit, (ii) pay any fees due to the court with
respect to the Appeal and execute any additional documents and/or perform or
cause to be performed any other reasonable actions that may be necessary to
accomplish withdrawal of the Appeal.
     1.14 Golimumab Product License Grant. In order to facilitate
Schering-Plough’s right to participate in the development and commercialization
of Golimumab Product on the terms set forth in the Distribution Agreement (as
amended hereby) and as contemplated under Section 12.1 of the Distribution
Agreement, Centocor and CNA Development agree to grant to Schering-Plough
certain license rights as set forth in a License Agreement to be executed by
Centocor, CNA and Schering-Plough on the date hereof, in the form of Exhibit B
(the “Golimumab License Agreement”).
     1.15 Failure to Achieve the Trigger Date. In the event that the Trigger
Date does not occur and Schering-Plough’s rights to Remicade Product expire on
September 1, 2014, then Centocor shall cause its Affiliate, Cilag, to repay to
Schering-Plough within thirty (30) days after such date an amount equal to the
lesser of (i) twenty-four million seven hundred and fifty thousand dollars
($24,750,000) or (ii) the aggregate total of all payments received by Cilag from
Schering-Plough pursuant to Section 1.9 of this Amendment Agreement.
     1.16 Golimumab Supply Agreement. As soon as practicable after the Amendment
Date (and in any event prior to expiration of the CD Decision Period), the
Parties will in good faith negotiate and enter into a supply agreement with
respect to bulk unlabeled Golimumab Product (the “Golimumab Supply Agreement”).
Such Golimumab Supply Agreement shall be consistent with the terms of the
Distribution Agreement, as amended hereby, and the Remicade Supply Agreement,
including for the avoidance of doubt, provisions to provide that: (i) Golimumab
Product will be supplied by Centocor or its designated Affiliate at an initial
supply price per unit to be determined by the Parties in a manner consistent
with Section 6.1 of the Distribution Agreement; (ii) the Product Committee will
periodically review and adjust the supply price for Golimumab Product as
necessary in accordance with Section 6.1 of the Distribution Agreement; and
(iii) in the event that Centocor receives a Packaging & Labeling Notice from
Schering-Plough during the CD Decision Period, the packaging and labeling of
clinical supplies of Golimumab Product and placebo for the CD Development
Program shall be performed by Centocor on terms to be agreed. For clarity, the
Parties agree that determination of the initial supply price for Golimumab
Product, and any subsequent adjustments to the supply price, shall take into
consideration the supply price (and any adjustments to such price) for the Cilag
Autoinjector. The foregoing notwithstanding, for purposes of Contribution Income
calculations, the actual Cost of Goods Sold for Golimumab Product, without
mark-up and subject to the application of any applicable Golimumab COGS Cap,
shall be used.
ARTICLE II
CONTINGENT AMENDMENTS, CLARIFICATIONS AND SUPPLEMENTAL AGREEMENTS
     The amendments, clarifications and modifications agreements set forth in
this Article II shall become effective upon, and only upon, the date of the
first Marketing Approval for Golimumab Product in the European Union (the
“Trigger Date”); provided,

 

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however, that if no such Marketing Approval has been obtained by September 1,
2014 (the “Cut-Off Date”) then the provisions of this Article II shall lapse and
have no further effect and the Trigger Date will be deemed not to have occurred
should such a Regulatory Approval for Golimumab Product be obtained in the
European Union after the Cut-Off Date:
     2.1 Term of the Distribution Agreement. The Remicade Term is hereby
extended to expire on the later of (i) September 1, 2014 or (ii) the last day of
the Golimumab Term.
     2.2 Division of Contribution Income. The division of Contribution Income
resulting from Net Sales of Products in the Territory shall be governed by the
terms set forth in Section 6.2 of the Distribution Agreement; provided that
starting with Net Sales of Products for the 2010 Agreement Year and for each
Agreement Year thereafter, the percentage of Contribution Income to be allocated
between Schering-Plough and Centocor shall be as set forth below and the
provisions of Section 6.2(c) (including the $150 million sales threshold
contained therein) shall no longer apply. For clarity, the applicable percentage
will be used to divide Contribution Income arising from all Net Sales of
Remicade Product and Net Sales of Golimumab Product in the Territory during the
applicable Agreement Year.
Contribution Income Split

                  Agreement Year   S-P   Centocor
2010
    60 %     40 %
2011
    58 %     42 %
2012
    55 %     45 %
2013
    52 %     48 %
2014
    50 %     50 %
All subsequent years
    50 %     50 %

In the event that the Trigger Date occurs after January 1, 2010, the provisions
of Section 6.2(c) shall apply to the portion of the Agreement Year prior to the
Trigger Date (with the $150 million sales threshold pro-rated to the portion of
the Agreement Year prior to the Trigger Date) and for the remainder of such
Agreement Year, the Contribution Income split specified above for such Agreement
Year shall apply.
     2.3 Additional Third Party Royalties included in calculation of
Contribution Income.
(a) Kennedy Royalty. Royalties actually paid by or on behalf of Centocor to the
Kennedy Institute (“Kennedy”) pursuant to the Agreement between Centocor and
Kennedy, dated January 1, 1992 (as amended on July 29, 2004, the “Kennedy
Agreement”), based upon sales of Products in the Territory occurring on or after
the Trigger Date will be included in the calculation of Contribution Income for
each of the relevant Products in accordance with and subject to the terms set
forth in Section 6.2(a)(i)

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of the Distribution Agreement. Centocor shall remain solely responsible for any
and all royalties paid or payable to Kennedy based upon sales of Products in the
Territory prior to the Trigger Date, and no such amounts shall be included in
the calculation of Contribution Income or otherwise subject to sharing or
reimbursement by Schering-Plough. In addition, in the event that Centocor at any
time during the remaining Term of the Distribution Agreement amends its
agreement with Kennedy in any way that results in an increase in the royalty
rate payable to Kennedy on sales of any Product, unless and until such amendment
is approved in writing by Schering-Plough, Centocor shall be solely responsible
for the incremental increase in royalties which shall not be included in the
calculation of Contribution Income. For clarity, the foregoing approval
requirement shall not be construed to apply to changes in royalty amounts or
calculations that result from labeling changes, additional indications or
royalty calculation methodology under Section 3.07 of the Kennedy Agreement, and
not from an amendment entered into by Centocor and Kennedy. The Parties agree
that to the extent royalties are payable under the Kennedy Agreement on sales of
more than one Product in the Territory, the same methodology shall be used to
determine eligible sales and to calculate royalties due and payable for each of
the relevant Products.
     (b) Third Party Royalties on Golimumab Product. All third-party royalties
due with respect to sales of Golimumab Product will be included in the
Contribution Income calculation and the provisions of Section 6.2(a)(i) shall
apply only to Remicade Product; provided that as of the Trigger Date, Centocor
shall not enter into any other additional agreements with third parties that
include provisions requiring the payment of license fees, milestones, royalties
or other payments relating to commercialization of Golimumab Product in the
Territory without the prior consent of Schering-Plough.
     2.4 Cost of Goods Sold Definition. Effective as of the Trigger Date, the
proviso in the definition of “Cost of Goods Sold” shall be deleted and replaced
with the following language: “provided, however, that (i) the Cost of Goods Sold
for finished Remicade Product will not exceed the Remicade COGS Cap, as adjusted
pursuant to Section 6.2(f) and (ii) commencing with the sixth (6th) full
Agreement Year after the First Golimumab Commercial Sale, the Cost of Goods Sold
for finished Golimumab Product will not exceed the Golimumab COGS Cap, as
adjusted pursuant to Section 6.2(g). For the avoidance of doubt, (i) the actual
COGS for Golimumab Product (without any cap) shall apply with respect to all
Golimumab Product sales prior to the beginning of the sixth full Agreement Year
after the First Golimumab Commercial Sale and (ii) the Remicade COGS Cap and any
Golimumab COGS Cap shall not supersede or otherwise alter the caps on fill and
finish and packaging costs that are established in accordance with the cost
neutrality (such cost neutrality being determined based solely upon any impact
on the Contribution Income calculation) obligations of Section 5.1 of this
Agreement. To the extent that Schering-Plough is or becomes responsible for
conducting fill and finish and/or packaging activities for a Product as a result
of the exercise of its rights under Section 5.1 of this Agreement it shall have
the right to select the country(ies) in which it conducts such activities in
order to minimize Schering-Plough’s costs related

 

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to such Product(s); provided that it continues to satisfy the aforementioned
cost neutrality obligation.
     2.5 Remicade COGS Adjustment. The following new Section 6.2(f) shall be
inserted in the Distribution Agreement:
     “(f) Remicade Product COGS Adjustment. The Cost of Goods Sold for
Contribution Income purposes for Remicade Product shall be capped (the “Remicade
COGS Cap”) at $[**] per gram, including also the respective per gram and per
vial caps for each manufacturing component in use as set forth on
Schedule 6.2(f) (the “Initial Cap”), until the Trigger Date. If the Trigger Date
occurs prior to January 1, 2010, then commencing with sales of Remicade Product
by Schering-Plough in the Territory after the Trigger Date, the Remicade COGS
Cap shall be $[**] per gram through December 31, 2009. From January 1, 2010,
until December 31, 2011, the Remicade COGS Cap shall be $[**] plus the lesser of
[**] percent ([**]%) of such amount or the adjustment in Centocor’s actual cost
of goods for the bulk portion during the 2009 Agreement Year. From January 1,
2012 and every two years thereafter, the Remicade COGS Cap shall be similarly
adjusted for the bulk portion by the lesser of [**]% or the documented change in
Centocor’s actual cost of goods for the bulk portion during the immediately
preceding Agreement Year. The Remicade COGS Cap so determined will be reviewed
by the parties in the 4th quarter of the year prior to the scheduled
commencement of each bi-annual revision. In the event that the Trigger Date does
not occur prior to January 1, 2010, the Initial Cap will continue to apply;
provided, however that the above reset calculation will continue to be made in
parallel and upon the occurrence of the Trigger Date, the then prevailing
numeric result of such parallel calculation shall become the new Remicade COGS
Cap and shall be reviewed and reset bi-annually thereafter as described above.
For clarity, the Parties intend that this parallel calculation of the cap shall
commence in 2008 and be updated every two years in this manner. The Parties
agree that Cost of Goods Sold for the Remicade Product bulk portion for
Contribution Income purposes shall at all times be equal to the lesser of actual
Cost of Goods Sold or the then current Remicade COGS Cap. In addition, the
Remicade COGS Cap parallel calculation shall not decline from any one year to
the next, but instead shall only either remain the same as the prior year or
increase pursuant to the calculations described above. An example demonstrating
the Remicade COGS Cap calculation is set forth in Schedule 6.2(f) hereto.”
     2.6 Golimumab COGS Adjustment. The following new Section 6.2(g) shall be
inserted in the Distribution Agreement:
     “(g) Golimumab Product COGS Adjustment. The Cost of Goods Sold for
Contribution Income purposes for Golimumab Product shall be uncapped and reflect
the actual Cost of Goods Sold for the first five full years after the Trigger
Date. Commencing with the sixth (6th) full Agreement Year after the Trigger
Date, the Cost of Goods Sold for Contribution Income purposes for finished
Golimumab Product shall be capped (the “Golimumab COGS Cap”) at the lesser of
(x) the actual Cost of Goods Sold for finished Golimumab Product during the
fifth (5th) full Agreement Year after the

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Trigger Date escalated by the CPI-U Index Average Change (as defined below)
since the beginning of such sixth (6th) Agreement Year after the Trigger Date
(i.e., Column B on Schedule 6.2(g) and (y) the actual Cost of Goods Sold for
finished Golimumab Product during the prior Agreement Year adjusted by the CPI-U
Index Average Change since the beginning of the prior Agreement Year (i.e.,
Column C on Schedule 6.2(g)). A sample calculation demonstrating the Golimumab
COGS Cap adjustment process is set forth in Schedule 6.2(g) hereto. The Parties
may in the future agree to utilize an alternative measure to the CPI-U Index
Average Change. The Parties agree that Cost of Goods Sold for Golimumab Product
for Contribution Income purposes shall at all times be the lesser of actual Cost
of Goods Sold or the then current Golimumab COGS Cap. For purposes of this
clause (g), “CPI-U Index Average Change” means the simple mathematical average
of the cumulative year-to-year changes in the following two indices published by
the U.S. Department of Labor, Bureau of Labor Statistics: (1) the CPI-U, US City
Average, All Items and (2) the CPI-U, US City Average, All Items Less Food and
Energy. In other words, the percentage change in the two indices will be added
together and then divided by two. ”
     2.7 No Product-Specific Termination. Without limitation to any other rights
or remedies available under the Distribution Agreement, the Parties confirm and
agree that in assessing whether a breach with respect to either Remicade Product
or Golimumab Product is “material” for purposes of the Distribution Agreement
termination rights under Section 8.2(a), the breach must be material to the
Remicade Product and Golimumab Product development and commercialization efforts
collectively and not individually. Other than as expressly provided in this
Amendment Agreement with respect to the failure to achieve the Trigger Date, the
development and commercialization rights with respect to Remicade Product and
Golimumab Product may not be separately terminated unless specifically agreed to
by Parties in writing.
ARTICLE III
MISCELLANEOUS
     3.1 Definitions. All capitalized terms used in this Amendment Agreement
that are not otherwise defined herein shall have the meanings set forth in the
Distribution Agreement.
     3.2 Access to Records. For clarity, the provisions of Section 6.4 of the
Distribution Agreement shall also apply to the books and records of the Parties
related to all matters provided for in this Amendment Agreement; provided that
the limitation therein restricting audits to the 24-month period prior to the
date of request for access shall not apply in connection with any audit under
Section 1.12(g) or Section 1.9 of this Amendment Agreement. An audit under
Section 1.12(g) or Section 1.9 shall also not count toward the single inspection
that each Party is permitted per calendar year under Section 6.4 of the
Distribution Agreement.

 

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     3.3 Effect of Amendment Agreement; Joinder. Except as expressly modified or
amended by or otherwise directly in conflict with this Amendment Agreement, the
Distribution Agreement and License Agreement all side letters and supplementary
agreements executed in connection therewith shall remain in full force and
effect in accordance with their stated terms. There are no agreements,
restrictions, promises, warranties, covenants or undertakings regarding the
matters addressed in this Amendment Agreement other than those expressly set
forth or referred to herein. The Distribution Agreement and License Agreement,
as modified, amended, clarified or modified by this Amendment Agreement,
supersede all prior agreements and undertakings between the parties with respect
to the subject matters addressed in this Amendment Agreement.
     3.4 Non-Waiver. By entering into this Amendment Agreement, neither
Schering-Plough nor Centocor waives or concedes any interpretation, position,
right, claim or defense that pertains to the Distribution Agreement, Remicade
Supply Agreement or any other related agreement including, but not limited to,
any interpretation, position, right, claim or defense with respect to matters
not specifically addressed herein.
     3.5 Expenses. Each party shall bear the expenses and costs, including
attorney fees, it incurs in connection with the preparation of this Amendment
Agreement.
     3.6 Counterparts. This Amendment Agreement may be executed by the parties
in separate counterparts, each of which when so executed and delivered is deemed
an original. All such counterparts together constitute but one and the same
instrument.
     IN WITNESS WHEREOF, the parties have caused this Amendment Agreement to be
signed by their duly authorized representatives as of the date and year first
written above.

                CENTOCOR, INC.   SCHERING-PLOUGH (IRELAND) COMPANY
 
           
By:
 
 
  By:  
 
 
  Name:       Name:
 
  Title:       Title: Date: December 20, 2007   Date: December 20, 2007
 
           
 
            CNA DEVELOPMENT, LLC        
 
           
By:
 
 
       
 
  Name:        
 
  Title:         Date: December 20, 2007