PERTAINING TO ANY JOINT PATENT RIGHTS AND ALL INFORMATION CONCERNING THE TERMS
OF THIS AGREEMENT AND (B) WITH RESPECT TO A PARTY (THE "RECEIVING PARTY"), ALL
INFORMATION, TECHNOLOGY AND PROPRIETARY MATERIALS WHICH IS DISCLOSED BY THE
OTHER PARTY (THE "DISCLOSING PARTY") TO THE RECEIVING PARTY HEREUNDER OR TO ANY
OF ITS EMPLOYEES, CONSULTANTS, AFFILIATES, LICENSEES OR SUBLICENSEES, EXCEPT TO
THE EXTENT THAT THE INFORMATION DESCRIBED IN THIS SECTION 1.3(B), (I) AS OF THE
DATE OF DISCLOSURE IS DEMONSTRABLY KNOWN TO THE RECEIVING PARTY OR ITS
AFFILIATES, AS SHOWN BY WRITTEN DOCUMENTATION, OTHER THAN BY VIRTUE OF A PRIOR
CONFIDENTIAL DISCLOSURE TO SUCH PARTY OR ITS AFFILIATES; (II) AS OF THE DATE OF
DISCLOSURE IS IN, OR SUBSEQUENTLY ENTERS, THE PUBLIC DOMAIN, THROUGH NO FAULT OR
OMISSION OF THE RECEIVING PARTY; (III) IS OBTAINED FROM A THIRD PARTY HAVING A
LAWFUL RIGHT TO MAKE SUCH DISCLOSURE FREE FROM ANY OBLIGATION OF CONFIDENTIALITY
TO THE DISCLOSING PARTY; OR (IV) IS INDEPENDENTLY DEVELOPED BY OR FOR THE
RECEIVING PARTY WITHOUT REFERENCE TO OR RELIANCE UPON ANY CONFIDENTIAL
INFORMATION OF THE DISCLOSING PARTY AS DEMONSTRATED BY COMPETENT WRITTEN
RECORDS.
1.4
"CONTROL" OR "CONTROLLED" MEANS (A) WITH
RESPECT TO KNOW-HOW (OTHER THAN PROPRIETARY MATERIALS) AND/OR PATENT RIGHTS, THE
POSSESSION BY A PARTY OF THE ABILITY TO GRANT A LICENSE OR SUBLICENSE OF SUCH
KNOW-HOW AND/OR PATENT RIGHTS AS PROVIDED HEREIN WITHOUT VIOLATING THE TERMS OF
ANY AGREEMENT OR ARRANGEMENT BETWEEN SUCH PARTY AND ANY THIRD PARTY AND (B) WITH
RESPECT TO PROPRIETARY MATERIALS, THE POSSESSION BY A PARTY OF THE ABILITY TO
SUPPLY SUCH PROPRIETARY MATERIALS TO THE OTHER PARTY AS PROVIDED HEREIN WITHOUT
VIOLATING THE TERMS OF ANY AGREEMENT OR ARRANGEMENT BETWEEN SUCH PARTY AND ANY
THIRD PARTY.
1.5
"COST" OR "COSTS" SHALL MEAN EXPENSES
INCURRED BY THE PARTIES, DETERMINED IN A REASONABLE MANNER IN ACCORDANCE WITH
GAAP IN CASE OF EPIX AND IAS IN CASE OF SCHERING, AND CONSISTENT WITH EACH
PARTY'S ACCOUNTING PRACTICE.
1.6
"COST OF GOODS SOLD" SHALL MEAN THE COST FOR
MANUFACTURING THE LICENSED PRODUCT, USING SCHERING'S STANDARD ACCOUNTING
PROCEDURES COMPUTED IN ACCORDANCE WITH IAS APPLIED ON A CONSISTENT BASIS. SUCH
COST SHALL INCLUDE, BUT NOT BE LIMITED TO, THE FULLY BURDENED COST OF ALL RAW
MATERIALS, AUXILIARIES AND OTHER INGREDIENTS, LABOR AND OVERHEAD, DEPRECIATION,
MAINTENANCE AND REPAIR, DESTROYED MATERIAL, PRODUCTION VARIANCE, IMPUTED
INTEREST ON SAFETY STOCKS AND CAPACITY COST FOR DEDICATED EQUIPMENT, FOR THE
SYNTHESIS, FORMULATION, FILLING, FINISHING, LABELING, PACKAGING, STORING,
TESTING AND QUALITY CONTROL, AND ASSURANCE ACTIVITIES, AND SHALL ALSO INCLUDE
REASONABLE EXPENSES FOR SERVICES AND TRANSPORTATION CHARGES AND ANY ROYALTIES
PAID TO THIRD PARTIES IN CONNECTION WITH THE MANUFACTURING PROCESS OR MATERIALS
USED. "COST OF GOODS" SHALL NOT INCLUDE GENERAL AND ADMINISTRATIVE EXPENSES,
SALES AND MARKETING COSTS OR COSTS ASSOCIATED WITH MEETING THE CHEMISTRY
MANUFACTURING AND CONTROL REQUIREMENTS OF THE FDA OR OTHER REGULATORY
AUTHORITIES.
1.7
"DESIGNATION NOTICE" HAS THE
MEANING SET
FORTH IN SECTION 2.4.
1.8
"DEVELOPMENT CANDIDATES" SHALL MEAN LEAD
COMPOUNDS IN THE FIELD THAT PROGRESS SUCCESSFULLY THROUGH THE LEAD OPTIMIZATION
PROCESS AND THAT ARE