Document:

Exhibit 4.4

 

Strictly private and confidential

 

 

Mr M Dunoyer

12 November 2013

 

Dear Marc

 

I have great pleasure in confirming your new role of Chief Financial Officer and Executive Director of AstraZeneca PLC, effective 1 November 2013.  In your role you will continue to report directly to the Chief Executive Officer of AstraZeneca.

The terms and conditions that will apply to your employment with AstraZeneca  UK Limited (“the Company”) and your appointment to this role are set out in this letter and the service agreement dated 15 March 2013.  Upon commencement of your role, you will be eligible to receive the payments and benefits set out in this letter, on and subject to its terms.  This letter should be read in conjunction with the terms of the service agreement between you and the Company.  In the event of any conflict between the terms of this offer letter and the service agreement, this offer letter will prevail.

 

	
1.

	
Salary

 

Your annual Salary will be £680,000.

 

	
2.

	
Annual Short Term Incentive (STI)

 

You will be eligible to participate in the Global Executive Bonus Plan (GEBP).  The rules of the GEBP are determined by the Remuneration Committee on an annual basis at its absolute discretion.  In the performance year 2013, this plan is based on the following measures:

 

	
Measure

	  	
Contribution

to outcome

	 	 	 
	
Achieve Scientific Leadership

	
30%

	  
	
Return to Growth

	
30%

	
100%

	
Achieve Group Financial Targets

	
40%

	  
	 	 	 

 

This plan will provide you with an opportunity to be awarded an annual bonus in the range of 0%-150% of your Salary (with 90% of your Salary representing on target performance in respect of your employment as Chief Financial Officer) based on the achievement of personal objectives linked to performance across all functional areas.  In the first year of your employment any award under the GEBP will be pro-rated to reflect your start date part way through the performance year and your change of role on 1 November 2013 from Executive Vice President,

 

  

1

  

 

Global Portfolio and Product Strategy to Chief Financial Officer.  A third of any actual bonus awarded will be invested in AstraZeneca shares and deferred for three years under the Deferred Bonus Plan.

 

The GEBP is discretionary and any bonuses are awarded at the absolute discretion of the Remuneration Committee and are not pensionable.

 

	
3.

	
Sign on arrangements

 

For the avoidance of doubt, the terms of the letter from the Company to you dated 8 March 2013 in relation to sign on arrangements are unaffected by this letter and will continue to apply.

 

	
4.

	
Long term incentives (LTIs)

 

You will be eligible for consideration annually for an award of LTIs with an expected value target of 200% of your Salary using metrics that will measure and reward outstanding company performance.  Typically awards are granted in March.

 

LTI awards are subject to satisfaction of appropriately stretching performance targets determined by the Remuneration Committee at its absolute discretion.  The applicable performance targets may change and are always subject to the absolute discretion of the Remuneration Committee and are not pensionable.

 

	
4. 

	
Share Ownership Expectation

 

It is the expectation of the Remuneration Committee that you will build up your own holding of shares in AstraZeneca PLC with a value equivalent to 200% of your Salary.  This shareholding target can be reached in part through shares delivered from the various LTI arrangements, as well as the deferred part of any short-term incentive.  The expectation is that your shareholding should reach the target level within five years of the commencement of your employment and that you would not dispose of any new net shares acquired (after payment of the acquisition cost and any tax due) at least until such time as the target holding has been reached.

 

	
5. 

	
Benefits

As you know, the Company operates a flexible benefits arrangement (AZ Advantage) which is designed to give participants flexibility over their selection of benefits.  The Advantage Fund is calculated by reference to Salary and on appointment your annual Advantage Fund will be £219,958.  Your Advantage Fund contains an element to reflect part of the Company’s cost of funding your Pension (24% of your annual Salary).  All contributions, which you elect to make to Pension, will be deducted from your Advantage Fund.  The Company’s contribution to pension is 24% of annual base salary. The balance of your Advantage Fund will be used to purchase benefits from a range including private medical insurance, life assurance, Permanent Health Insurance and holidays, including benefits of your choice.  Your Advantage Fund is flexible, so should you 

 

  

2

  

 

choose not to purchase from the range of benefits, you can take the funding as cash.

 

	
6. 

	
Financial Planning and Tax Advice

 

You will be eligible for Financial Advice, available from a range of Independent Financial Advisers who have been appointed by the Company.  The facility is for an initial assessment to the value of £5,000 and annual reviews thereafter to the value of £5,000 (the cost of advice beyond these limits will be a matter for you).  This level of support will continue for 3 years following the commencement of your employment and be reviewed thereafter.

 

In recognition of your change in tax status following your relocation to the UK, we will provide you with additional tax preparation and planning support. PricewaterhouseCoopers LLP (PWC) in London is our preferred vendor in this regard.

 

	
7. 

	
Housing and Schooling

You were paid a lump-sum housing and schooling allowance in June 2013 for a 12 month period.  Under your new arrangements you are no longer eligible for this allowance, and as such no further payments of this nature will be made.

I look forward to working with you in your new role.

Kind regards

/s/ Pascal Soriot

Pascal Soriot

Chief Executive Officer

AstraZeneca PLC

 

  

3

  

 

 

Dated 19 March 2014

 

 

 

 

 

 

ASTRAZENECA UK LIMITED (1)

 

MARC DUNOYER (2)

 

 

 

 

 

 

 

 

 

SERVICE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

Contents

 

	  	
Clause

	
Page

	
1

	
Definitions and interpretation

	
2

	
2

	
Appointment

	
3

	
3

	
Duration of the Employment

	
3

	
4

	
Scope of the Employment

	
4

	
5

	
Hours of work

	
5

	
6

	
Place of work

	
5

	
7

	
Remuneration

	
5

	
8

	
Expenses

	
6

	
9

	
Holidays

	
6

	
10

	
Sickness benefits

	
7

	
11

	
Pension and benefits

	
7

	
12

	
Restrictions during the Employment

	
8

	
13

	
Confidential information and company documents

	
8

	
14

	
Inventions and other intellectual property

	
9

	
15

	
Termination

	
11

	
16

	
Restrictive covenants

	
13

	
17

	
Disciplinary and grievance procedures

	
14

	
18

	
Notices

	
14

	
19

	
Former contracts of employment

	
14

	
20

	
Choice of law and submission to jurisdiction

	
15

	
21

	
General

	
15

  

  

  

 

	
This Agreement is made on 19 March 2014

 

Between

 

	
(1) 

	
ASTRAZENECA UK LIMITED (registered in England and Wales under number 3674842) whose registered office is at 2 Kingdom Street, London W2 6BD (Company); and

 

	
(2) 

	
MARC DUNOYER (Executive)

 

It is agreed

 

	
1  

	
Definitions and interpretation

 

	
1.1  

	
In this Agreement unless the context otherwise requires the following expressions have the following meanings:

 

AstraZeneca means AstraZeneca Plc, a company registered in England and Wales under number 2723534.

 

AstraZeneca Board means the Board of Directors of AstraZeneca as the same may be constituted from time to time or such other person or persons as the Board of Directors of AstraZeneca may nominate as the representative of the Board of Directors for this purpose.

 

Board means Board of Directors of the Company as the same may be constituted from time to time or such other person or persons as the Board of Directors of the Company may nominate as the representative of the Board of Directors for this purpose.

 

Confidential Information means information relating to the business, products, affairs and finances of the Company or of any Group Company for the time being confidential to it or to them and trade secrets (including, without limitation, technical data and know-how) relating to the business of the Company or of any Group Company, details of any of its or their suppliers, clients or customers including in particular (by way of example only and without limitation) customer requirements, prices charged to and terms of business with customers, terms of business with suppliers, marketing plans and sales forecasts, financial information, results and other forecasts (save to the extent that these are included in published audited accounts), any of the Company’s or a Group Company’s proposals relating to the acquisition or disposal of a company, or a business or any part thereof or to any proposed expansion or contraction of activities, details of employees, officers, consultants and/or contractors and of the remuneration and other benefits paid to them, information relating to research activities, inventions, secret processes, designs, formulae and product lines, any information which is treated as confidential or which the Executive is told or ought reasonably to know is confidential and any information which has been given to the Company or any Group Company in confidence by customers, suppliers and others.

 

Employment means the Executive's employment under this Agreement.

 

ERA means the Employment Rights Act 1996 as amended.

 

Group means the Company and the Group Companies.

 

Group Company means any company which is for the time being a subsidiary or holding company of the Company and any subsidiary of any such holding company and for the purposes of this Agreement the terms subsidiary and holding company shall have the meanings ascribed to them by section 1159 Companies Act 2006 (and Group Companies shall be interpreted accordingly)

 

  

2

  

 

	 	
Intellectual Property means all patents, registered designs, trade marks and service marks (whether registered or not and including any applications for the foregoing), copyrights, design rights, semiconductor topography rights, database rights and all other intellectual property and similar proprietary rights subsisting in any part of the world (whether or not capable of registration) and including (without limitation) all such rights in materials, works, prototypes, inventions, discoveries, techniques, computer programs, source codes, data, technical, commercial or confidential information, trading, business or brand names, goodwill or the style of presentation of the goods or services or any improvement of any of the foregoing and the right to apply for registration or protection of any of them and in existing applications for the protection of any of the above.

 

Salary means the salary referred to in clause 7.1.

 

Sensitive Data means personal data consisting of information as to racial or ethnic origin; political opinions; religious beliefs or other beliefs of a similar nature; membership of a trade union (within the meaning of the Trade Union and Labour Relations (Consolidation) Act 1992); physical or mental health or condition; sexual life; the commission or alleged commission of any offence or any proceedings for any offence committed or alleged to have been committed, including the disposal of such proceedings or the sentence of any court in such proceedings.

 

Termination Date means for the purposes of clause 16  the date of the termination of the Employment or, where the Company exercises its rights under clause 3.2 to require the Executive to remain at home, the last day on which the Executive was required to work.

 

	
1.2  

	
References to clauses and schedules are unless otherwise stated to clauses of and schedules to this Agreement.

 

	
1.3  

	
The headings to the clauses are for convenience only and shall not affect the construction or interpretation of this Agreement.

 

	
2  

	
Appointment

 

	
2.1  

	
The Company agrees to employ the Executive and the Executive agrees to act in a senior executive capacity in the Company and as Chief Financial Officer on the terms of this Agreement.

 

	
3  

	
Duration of the Employment

 

	
3.1  

	
The Employment commenced on 1 November 2013 and, subject to the provisions of this Agreement, shall continue unless and until terminated by either party giving to the other not less than 12 months' prior notice in writing, but any such notice from the Company not to expire prior to 15 June 2015.  Provided always, however, that in respect of the part of any period of notice which exceeds 12 months, the Executive shall be entitled to his Base Salary together with funding for any flexible benefit arrangement operated by the Company from time to time but any other remuneration (as described in clause 7.2) shall be determined at the sole discretion of the Remuneration Committee taking account of the reason for such notice being given and in particular the Executive’s actual performance assessed against his duties as set out or contemplated by this Agreement

 

	
3.2  

	
At any time during any period of notice of termination served in accordance with clause 3.1 (whether given by the Company or the Executive), the Executive may be placed on “garden leave” in which case neither the Company nor any Group Company shall be under any obligation to provide work for or assign any duties to the Executive for the whole or any part of

 

  

3

  

 

	 	the relevant notice period and the Company shall have the right at its absolute discretion to assign no, reduced or alternative duties to the Executive and shall be entitled to require the Executive to act at the direction of the Company including the right to:

 

	 	
(a)  

	
exclude him from any premises of the Company and any other Group Company, and/or

 

	 	
(b)  

	
remove him from any or all directorships and offices held by him in the Company or in any other company in the Group (including if appropriate the office of trustee of any of the pension schemes of the Company or the Group); and/or

 

	 	
(c)  

	
prevent the Executive from discussing its affairs with the Company's or any other company in the Group's employees, agents, clients, customers; and/or

 

	 	
(d)  

	
require the Executive to refrain from business contact with any customers, clients or employees of the Company or any Group Company; and/or

 

	 	
(e)  

	
to take any holiday which has accrued under clause 9 during any period of suspension under this clause 3.2.

 

	 	
If the Company shall exercise its right under this clause, the Executive's entitlement to Salary and other contractual benefits shall continue as an employee for the period of garden leave, subject always to the rules of any relevant scheme or policy relating to such benefits.  For the avoidance of doubt, at all times during any period of notice of termination served in accordance with clause 3.1 (whether given by the Company or the Executive), the Executive shall continue to be bound by the same obligations as were owed to the Company prior to the commencement of the notice period including for the avoidance of doubt the duties of good faith and fidelity.

  

	
3.3  

	
For the purposes of the ERA the Executive’s period of continuous employment commenced on 15 June 2013.

 

	
3.4  

	
For the avoidance of doubt, in the event that the Company terminates the Employment without notice or on notice less than required by clause 3.1, the Executive’s entitlement to any damages or compensation arising from the termination will be subject to the Executive’s duty to mitigate his losses.

 

	
4  

	
Scope of the Employment

 

	
4.1  

	
During the Employment the Executive shall:

 

	 	
(a)  

	
devote the whole of his time, attention and skill to the business and affairs of the Group during the hours of work described in clause 5 except during holidays and periods of absence due to ill health;

 

	 	
(b)  

	
faithfully, competently and diligently perform such duties and exercise such powers consistent with his position as may from time to time be assigned to or vested in him by the Board or the AstraZeneca Board;

 

	 	
(c)  

	
obey the reasonable and lawful directions of the Board and the AstraZeneca Board;

 

	 	
(d)  

	
comply with all the Company's and AstraZeneca’s rules, regulations, policies and procedures from time to time in force; and

 

 

4

 

 

	 	
(e)  

	
keep the Board and the AstraZeneca Board at all times promptly and fully informed (in writing if so requested) of his conduct of the business of the Company and any Group Company and provide such explanations in connection with it as the Board and the AstraZeneca Board may require.

 

	
4.2  

	
The Executive shall if and so long as the Company requires and without any further remuneration carry out his duties on behalf of any Group Company and act as a director or officer of any Group Company.

 

	
4.3  

	
The Company may at its sole discretion transfer this Agreement to any Group Company at any time.

 

	
4.4  

	
If at any time the Executive is unable to perform his duties properly because of ill health, accident or otherwise, or becomes incapable by reason of mental disorder of administering his property or managing his affairs, then the Company may appoint any other person or persons to act jointly with the Executive in any position to which he may be assigned from time to time.

 

	
4.5  

	
For the purposes of the Data Protection Act 1998, the Executive consents to the Company's processing of personal data, including Sensitive Data, of which the Executive is the subject, details of which processing are specified in the Company's Data Protection Policy.

 

	
5  

	
Hours of work

 

	
5.1  

	
The Executive shall be required to work a minimum of 40 hours per week at such times to be agreed between the Executive and the Company which may involve working during normal business hours and during such additional hours as are necessary for the proper performance of his duties or as the Board or the AstraZeneca Board may reasonably require from time to time.

 

	
5.2  

	
As a senior executive the Executive’s working time is not measured or pre-determined.  The Executive is responsible for determining his own hours of work, providing that such hours are consistent with the proper performance of his duties.

 

	
6  

	
Place of work

 

	
6.1  

	
The Executive's place of work will be the Company’s corporate headquarters in the UK from time to time which will initially be the Company's offices at Kingdom Street, Paddington but the Company may require the Executive to travel and work at any place (whether inside or outside the United Kingdom) for such periods as the Company may from time to time require on either a temporary or an indefinite basis.

 

	
6.2  

	
The Board shall have the right to require the Executive to move house to an appropriate location for the better performance of his duties.  The Executive will be given reasonable notice of any such requirement and the Company will reimburse to him all expenses incurred by him in such a move as it may consider reasonable in all the circumstances in accordance with the relevant Relocation Policy from time to time in force for senior executives.

 

	
7  

	
Remuneration

 

	
7.1  

	
The Company shall pay to the Executive the Salary at the rate of £680,000 per annum (or such other sum as may from time to time be agreed) by equal monthly instalments in arrears by credit transfer to his bank account.  The rate of Salary will be reviewed annually in December, the next such review to take place in December 2014.  No salary review will be

 

  

5

  

 

	 	undertaken after notice has been given by either party to terminate the Employment.  The Company is under no obligation to increase the Executive’s Salary following a salary review but will not decrease it.

 

	
7.2  

	
The Executive shall also be entitled to participate during the Employment in such discretionary performance related bonus schemes and such share incentive or option schemes as the AstraZeneca Board may in its discretion determine in accordance with the rules of any such schemes from time to time in force.  If the Company shall pay the Executive a bonus in any one year, this shall not give rise to a contractual entitlement to a bonus in future years.

 

	
7.3  

	
In the year in which the Employment terminates, any discretionary performance related bonus shall be determined at the sole discretion of AstraZeneca’s Remuneration Committee, taking account of factors including (but not limited to):

 

	 	
(a)  

	
the length of time during which the Executive has given service during the bonus year in which the Employment terminates; and

 

	 	
(b)  

	
the reason(s) for termination and in particular, the Executive’s actual performance assessed against his duties as set out in or contemplated by this Agreement.

 

	
7.4  

	
The Salary and any bonus/share incentives/share options shall be inclusive of any fees to which the Executive may be entitled as a director of the Company or any Group Company.

 

	
7.5  

	
Payment of the Salary and any bonus/share incentives/share options to the Executive shall be made either by the Company or by a Group Company and, if by more than one company, in such proportions as the Board or the AstraZeneca Board may from time to time think fit.

 

	
7.6  

	
The Executive agrees that, pursuant to Part II of the ERA, the Company shall be entitled to deduct from any sum due to the Executive under the terms of this Agreement any monies which are owed by the Executive to the Company or any Group Company.

 

	
8  

	
Expenses

 

	
8.1  

	
The Company shall reimburse the Executive in respect of all expenses reasonably incurred by him in the proper performance of his duties, subject to him providing such receipts or other appropriate evidence as the Company may require.

 

	
9  

	
Holidays

 

	
9.1  

	
The Executive shall be entitled, in addition to all Bank and Public holidays normally observed in England and any additional holidays purchased by the Executive under the Company’s flexible benefits arrangement (AstraZeneca Advantage), to 22 working days' paid holiday in each holiday year (being the period from 1 July to 30 June).  The Executive may take holiday only at such times as are agreed with the Board.

 

	
9.2  

	
In the respective holiday years in which the Employment commences or terminates, the Executive's entitlement to holiday shall accrue on a pro rata basis for each completed calendar month of service during the relevant year.

 

	
9.3  

	
If, on the termination of the Employment, the Executive has exceeded his accrued holiday entitlement, the value of such excess, calculated on the basis that each day of paid holiday is equivalent to 1/260th of the Executive’s Salary, may be deducted by the Company from any sums due to him.  If the Executive has any unused holiday entitlement, the Company shall at 

 

  

6

  

 

	 	its discretion either require the Executive to take such unused holiday during any notice period or make a payment to him in lieu of it, calculated in accordance with this clause.

 

	
9.4  

	
Holiday entitlement for one holiday year cannot be taken in subsequent holiday years unless otherwise agreed by the Board.  Failure to take holiday entitlement in the appropriate holiday year will lead to forfeiture of any accrued holiday not taken without any right to payment in lieu of it.

 

	
10  

	
Sickness benefits

 

	
10.1  

	
Subject to clause 15 the Company shall continue to pay the Salary for:

 

	 	
(a)  

	
up to a maximum of 130 working days' absence on medical grounds in any period of 12 calendar months; or

 

	 	
(b)  

	
for the first 130 working days' absence on medical grounds in any one continuous period of absence (or two or more linked periods as determined by the Social Security Contributions and Benefits Act 1992, as amended from time to time)

 

	 	
whichever is the lesser, provided that the Executive shall from time to time if required supply the Company with medical certificates covering any period of sickness or incapacity exceeding seven days (including weekends).

	 	 
	
10.2  

	
Payment in respect of any other or further period of absence shall be at the Company's discretion.  For the avoidance of doubt, the Executive will not be paid during any period of absence from work (other than due to holiday, sickness, injury or other incapacity) without the prior permission of the Board.

 

	
10.3  

	
Any payment to the Executive pursuant to clause 10.1 shall be subject to set off by the Company in respect of any Statutory Sick Pay and any Social Security Sickness Benefit or other benefits to which the Executive may be entitled.

 

	
10.4  

	
Subject to clause 10.2, when all sick pay entitlement pursuant to clause 10.1 has been exhausted, no further salary will be payable by the Company to the Executive until the Executive has returned to active service of the Company.

 

	
10.5  

	
If the Executive's absence shall be occasioned by the actionable negligence of a third party in respect of which damages are recoverable, then the Executive shall:

 

	 	
(a)  

	
notify the Company immediately of all the relevant circumstances and of any claim, compromise, settlement or judgment made or awarded in connection with it;

 

	 	
(b)  

	
give to the Company such information concerning the above matters as the Company may reasonably require; and

 

	 	
(c)  

	
if the Company so requires, refund to the Company any amount received by him from any such third party provided that the refund shall be no more than the amount which he has recovered in respect of remuneration.

 

	
11  

	
Pension and benefits

 

	
11.1  

	
During the Employment the Executive shall be entitled to participate in the AstraZeneca Group Self Invested Personal Pension Plan (GSIPP) as it exists on the effective date of this Agreement and any successor plans, subject to the applicable rules from time to time in force

 

  

7

  

 

	 	provided that the GSIPP may be terminated or amended at any time in accordance with the relevant trust deed or rules that governs it.

 

	
11.2  

	
The Company shall, from time to time, be entitled to require the Executive to undertake a medical examination with a doctor of the Company's choice.  The Company will be entitled to receive a copy of any report produced in connection with all such examinations and to discuss the contents of the report with the doctor who produced it.

 

	
11.3  

	
The Executive shall be entitled during the Employment to such other benefits, including participation in AZ Advantage, not inconsistent with the foregoing and as may be appropriate for a person of the status of the Executive as are provided to other UK based employees in the Group.

 

	
12  

	
Restrictions during the Employment

 

	
12.1  

	
During the Employment the Executive shall not directly or indirectly be employed, engaged, concerned or interested:

 

	 	
(a)  

	
in any other business or undertaking; or

 

	 	
(b)  

	
in any activity which the Board reasonably considers may be, or become, harmful to the interests of AstraZeneca, the Company or of any Group Company or which might reasonably be considered to interfere with the performance of the Executive's duties under this Agreement.

 

	
12.2  

	
Clause 12.1 shall not apply:

 

	 	
(a)  

	
so as to prevent the Executive from holding (directly or through nominees) investments listed on the Official List of London Stock Exchange plc or in respect of which dealing takes place in the Alternative Investment Market or any recognised stock exchange as long as he does not hold more than 3  per cent. of the issued shares or other securities of any class of any one company and provided always that the Executive takes reasonable care to ensure that the holding of such investments does not give rise to any actual or potential conflict of interest between the holding of such investments and the duties of the Executive as contemplated by this Service Agreement and/or which may otherwise arise as a result of any law or regulation to which any of the Executive, the Company or AstraZeneca may from time to time be subject; or

 

	 	
(b)  

	
to any act undertaken by the Executive with the prior written consent of the AstraZeneca Board.

 

	
12.3  

	
The Executive shall comply with every rule of law, the UK Listing Authority's listing rules' Model Code for transactions in securities by directors of listed companies, certain employees and persons connected with them and every regulation of AstraZeneca and the Company for the time being in force in relation to dealings in shares or other securities of AstraZeneca, the Company or any Group Company.

 

	
13  

	
Confidential information and company documents

 

	
13.1  

	
The Executive shall keep secret and will not, whether during the Employment or after its termination:

 

	 	
(a)  

	
divulge or communicate to any person, company, business entity or other organisation;

 

  

8

  

 

	 	
(b)  

	
use for his own purposes or for any purposes other than those of the Company or any Group Company; or

 

	 	
(c)  

	
through any failure to exercise due care and diligence, permit or cause any unauthorised disclosure of,

 

	 	any Confidential Information.
	 	 
	
13.2  

	
The restrictions in clause 13.1 shall not apply:

 

	 	
(a)  

	
to any disclosure of information which is already in the public domain otherwise than by breach of this Agreement;

 

	 	
(b)  

	
to any disclosure or use authorised by the Board or required in the proper performance by the Executive of his duties under this Agreement or by any applicable laws or regulations, including, without limitation, to any disclosure required for patent purposes provided that the Executive promptly notifies the Company when any such disclosure requirement arises to enable the Company to take such action as it deems necessary, including, without limitation, to seek an appropriate protective order and/or make known to the appropriate government or regulatory authority or court the proprietary nature of the Confidential Information and make any applicable claim of confidentiality with respect hereto;

 

	 	
(c)  

	
so as to prevent the Executive from using his own personal skill, experience and knowledge in any business in which he may be lawfully engaged after the Employment is ended; or

 

	 	
(d)  

	
to prevent the Executive making a protected disclosure within the meaning of s43A of the Employment Rights Act 1996.

 

	
13.3  

	
The Executive acknowledges and agrees that all books, notes, memoranda, records, lists of customers and suppliers and employees, correspondence, documents, computer and other discs and tapes, data listings, codes, designs and drawings and other documents and material whatsoever (whether made or created by the Executive or otherwise) relating to the business of AstraZeneca, the Company or any Group Company (and any copies of the same):

 

	 	
(a)  

	
shall be and remain the property of AstraZeneca, the Company or the relevant Group Company; and

 

	 	
(b)  

	
shall be handed over by the Executive to AstraZeneca, the Company or to the relevant Group Company on demand and in any event on the termination of the Employment and the Executive shall certify that all such property has been handed over on request by the Board.

 

	
14  

	
Inventions and other intellectual property

 

	
14.1  

	
The parties foresee that the Executive may make inventions or create other Intellectual Property in the course of his duties and agree that in this respect the Executive has and shall have at all times a special responsibility to further the interests of AstraZeneca, the Company and any Group Company.

 

	
14.2  

	
Any invention, discovery, improvement, prototype, technique, design, process, information, copyright work, computer program, trade mark, trade name or get-up, work or other output (Work) made, created or discovered wholly or partially by the Executive during the

 

  

9

  

 

	 	Employment (whether capable of being patented or registered or not and whether or not made, created, developed or discovered in the course of the Employment and whether or not recorded in material form) in conjunction with or in any way affecting or relating to the business of AstraZeneca, the Company or of any Group Company or capable of being used or adapted for use in or in connection with such business, together with all Intellectual Property subsisting therein, (collectively Intellectual Property Rights) shall be disclosed by the Executive immediately to the Company and shall (subject to sections 39 to 43 Patents Act 1977) belong to and be the absolute property of the Company or such Group Company as the Company may direct.  To the extent that any Intellectual Property Rights do not vest automatically in the Company, the Executive holds them on trust for the Company and the Executive hereby assigns to the Company with full title guarantee and by way of present assignment of future rights, all such copyright, database rights, design rights (and any other Intellectual Property capable of assignment by way of present assignment of future rights) which may fall within the definition of the Intellectual Property Rights absolutely for the full term of those rights.

 

	
14.3  

	
If and whenever required so to do by the Company, both during and after the Employment, the Executive shall, at the expense of the Company or such Group Company as the Company may direct:

 

	 	
(a)  

	
apply or join with the Company or such Group Company in applying for patent or other protection or registration in the United Kingdom and in any other part of the world for any Intellectual Property Rights; and

 

	 	
(b)  

	
promptly execute all instruments and do all things necessary for vesting all Intellectual Property Rights (including such patent or other protection or registration when so obtained) and all right, title and interest to and in them absolutely, with full title guarantee and as sole beneficial owner, in the Company or such Group Company or in such other person as the Company may specify.

 

	
14.4  

	
The Executive irrevocably and unconditionally waives all rights under Chapter IV of Part I Copyright Designs and Patents Act 1988 and all similar rights in other jurisdictions in connection with his authorship of any existing or future copyright work which forms part of the Intellectual Property Rights, in whatever part of the world such rights may be enforceable, including, without limitation:

 

	 	
(a)  

	
the right conferred by section 77 of that Act to be identified as the author of any such work; and

 

	 	
(b)  

	
the right conferred by section 80 of that Act not to have any such work subjected to derogatory treatment.

 

	
14.5  

	
The Executive irrevocably appoints the Company to be his Attorney in his name and on his behalf to execute any such instrument or do any such thing and generally to use his name for the purpose of giving to the Company or such Group Company as the Company may nominate the full benefits of this clause  A certificate in writing in favour of any third party signed by any director or by the secretary of the Company that any instrument or act falls within the authority conferred by this Agreement shall be conclusive evidence that such is the case.

 

	
14.6  

	
The Executive acknowledges that, except as provided by law, no further remuneration or compensation other than that provided for in this Agreement is or may become due to the Executive in respect of his compliance with this clause 14.  Nothing in this clause 14 shall be

 

  

10

  

 

	 	
construed as restricting the rights of the Executive or the Company under sections 39 to 43 Patents Act 1977.

 

	
15  

	
Termination

 

	
15.1  

	
Either party may terminate the Employment in accordance with clause 3.1.

 

	
15.2  

	
The Company may, in its sole discretion, terminate the Employment at any time with immediate effect and pay a sum in lieu of notice (the Payment in Lieu) equal to:

 

	 	
(a)  

	
the basic salary which the Executive would have been entitled to receive under this Agreement during the notice period referred to at clause 3.1 if notice had been given (or, if notice has already been given, during the remainder of the notice period) (the Relevant Period);

 

	 	
(b)  

	
the balance of the cost to the Company of funding any flexible benefit arrangement operated by the Company from time to time in respect of the Executive’s employment during the Relevant Period.

 

	
15.3  

	
For the avoidance of doubt:

 

	 	
(a)  

	
the Payment in Lieu shall not include any sum in lieu of bonus;

 

	 	
(b)  

	
the Executive will not be entitled to receive any payment in addition to the Payment in Lieu in respect of any holiday entitlement that would have accrued during the period for which the Payment in Lieu is made.

 

	
15.4  

	
The Payment in Lieu shall be made in full and final settlement of any claims (other than statutory claims) the Executive may have against the Company or any Group Company (whether known or unknown) arising from the Employment or the termination thereof or the Executive’s directorship or resignation from any directorship of the Company or any Group Company.

 

	
15.5  

	
The Payment in Lieu shall be subject to any deductions the Company may be required to make and may at the Company’s discretion be paid as a lump sum within 30 days of the date of the termination of the Employment or (subject to this clause 15.5) in equal monthly instalments payable on the normal payroll dates from the date of termination of the Employment.  If the Company pays the Payment in Lieu in instalments, the instalments will continue until the date on which the relevant notice period would have expired, however, if the Employee commences alternative employment or the provision of services pursuant to a consultancy arrangement at a basic annual salary or fee of at least £30,000 whilst such payments are being made, each instalment that falls due after the commencement of the alternative employment or the provision of services under the consultancy arrangement will be reduced by such sum as is equal to 50% of 1/12th of the basic annual salary or fee the Executive is entitled to receive from the alternative employment or consultancy arrangement. In the event that the Company exercises its discretion to terminate the Executive’s employment under this clause, the Executive will use his best efforts to secure alternative employment as soon as reasonably practicable and the payment of the instalments shall be conditional on the Executive providing the Company with reasonable evidence of such best efforts.

 

	
15.6  

	
Notwithstanding any other provisions of this Agreement, the Company may also terminate the Employment summarily (by serving written notice on the Executive to that effect) and with no 

 

  

11

  

 

	 	liability to make any further payment to the Executive (other than in respect of amounts accrued due at the date of termination) if the Executive:

 

	 	
(a)  

	
commits any serious breach of this Agreement or is guilty of any gross misconduct, gross incompetence, or any wilful neglect in the discharge of his duties;

 

	 	
(b)  

	
repeats or continues (after warning) any breach of this Agreement;

 

	 	
(c)  

	
is guilty of any fraud, dishonesty or conduct tending to bring himself, the Company or any Group Company into disrepute;

 

	 	
(d)  

	
commits any act of bankruptcy or takes advantage of any statute for the time being in force offering relief for insolvent debtors;

 

	 	
(e)  

	
is convicted of any criminal offence (other than minor offences under the Road Traffic Acts or the Road Safety Acts for which a fine or non-custodial penalty is imposed) which might reasonably be thought to affect adversely the performance of his duties;

 

	 	
(f)  

	
is disqualified from holding office in the Company or in any other company by reason of any order made under the Company Directors Disqualification Act 1986 or any other enactment;

 

	 	
(g)  

	
resigns as or otherwise ceases to be or becomes prohibited by law from being a director of the Company or any Group Company, otherwise than at the Company's or AstraZeneca’s request.

 

	 	
This clause shall not restrict any other right the Company may have (whether at common law or otherwise) to terminate the Employment summarily.

 

Any delay by the Company in exercising such right of termination shall not constitute a waiver of it.

	 	 
	
15.7  

	
If at any time the Executive is unable to perform his duties properly because of ill health accident or otherwise for a period or periods totalling at least 130 working days in any period of 12 calendar months, or becomes incapable by reason of mental disorder of managing and administering his property and affairs, then the Company may, notwithstanding the existence of any permanent health insurance cover provided for the Executive in its absolute discretion terminate the Employment by giving him not less than three months' written notice to that effect.

 

	
15.8  

	
If the Company believes that it may be entitled to terminate the Employment, whether pursuant to clause 15.1 or otherwise, it shall be entitled (but without prejudice to its right subsequently to terminate the Employment on the same or any other ground) to suspend the Executive on full pay for so long as it may think fit.

 

	
15.9  

	
On the termination of the Employment or upon the Company having exercised its rights under clause 3.2, the Executive shall:

 

	 	
(a)  

	
at the request of the Board resign from office as a director of the Company and all offices held by him in any Group Company and shall transfer to the Company without payment or as the Company may direct any qualifying shares held by him as nominee for the Company or any Group Company provided however that such resignation shall be without prejudice to any claims which the Executive may have against the Company or any Group Company arising out of the termination of the Employment; and

 

  

12

  

 

	 	
(b)  

	
immediately deliver to the Company all materials within the scope of clause 13.3, any Company car, mobile telephone or other Company equipment in his possession and all keys, credit cards, and other property of or relating to the business of the Company or of any Group Company which may be in his possession or under his power or control

	 	 	 
	 	and the Executive irrevocably authorises the Company to appoint any person in his name and on his behalf to sign any documents and do any things necessary or requisite to give effect to his obligations under this clause 15.9.

 

	
16  

	
Restrictive covenants

 

	
16.1  

	
The Executive will not (without the previous consent in writing of the Board) for the period of 12 months immediately after the Termination Date whether as principal or agent, and whether alone or jointly with, or as a director, manager, partner, shareholder, employee or consultant of any other person, directly or indirectly:

 

	 	
(a)  

	
carry on, or be engaged, concerned or interested in any business which is similar to and/ or competes with any business being carried on by the Company or by any Group Company at the Termination Date and with which the Executive was involved in the course of the Employment at any time during the period of 12 months immediately preceding the Termination Date;

 

	 	
(b)  

	
negotiate with, solicit business from or endeavour to entice away from AstraZeneca, the Company or any Group Company the business of any person, firm, company or organisation who or which to his knowledge is and has been a customer, client or agent of or supplier to, or who had regular business dealings with, AstraZeneca, the Company or with any Group Company during the period of 12 months immediately preceding the Termination Date and with whom he had direct or indirect dealings or personal contact in the course of the Employment during that period provided that this restriction will be limited to activities by the Executive which will involve offering or providing services similar to those which he will have provided during the Employment;

 

	 	
(c)  

	
undertake to provide in competition with AstraZeneca, the Company or any Group Company any service or to manufacture or supply any product similar to those with which he was concerned in the course of the Employment during the period of 12 months immediately preceding the Termination Date to or for any person who is or was a customer, client or agent of or supplier to (or who had regular business dealings with) AstraZeneca, the Company or any other Group Company during the period of 12 months immediately preceding the Termination Date and with whom he had direct or indirect dealings in the course of the Employment during that period;

 

	 	
(d)  

	
interfere with, solicit or endeavour to entice away from AstraZeneca, the Company or any Group Company any person who to his knowledge is, and within the period of  12 months immediately preceding the Termination Date had been, part of the senior management of AstraZeneca, the Company or any other Group Company and with whom he had personal dealings in the course of the Employment during that period.

 

	
16.2  

	
For the avoidance of doubt, none of the restrictions contained in clause 16.1 shall prohibit any activities by the Executive which are not in direct or indirect competition with any business being carried on by AstraZeneca, the Company or any Group Company at the Termination Date.

 

  

13

  

 

	
16.3  

	
Nothing in clause 16.1 shall preclude the Executive from holding (directly or through nominees) investments listed on the Official List of London Stock Exchange plc or in respect of which dealing takes place in the Alternative Investment Market or any recognised stock exchange as long as he does not hold more than 3 per cent of the issued shares or other securities of any class of any one company.

 

	
16.4  

	
At no time after the Termination Date shall the Executive directly or indirectly represent himself as being interested in or employed by or in any way connected with the Company or any Group Company, other than as a shareholder of AstraZeneca and former employee of the Company.

 

	
16.5  

	
The Executive agrees that, having regard to all the circumstances, the restrictions contained in this clause are reasonable and necessary for the protection of AstraZeneca, the Company or of any Group Company and that they do not bear harshly upon him and the parties agree that:

 

	 	
(a)  

	
each restriction shall be read and construed independently of the other restrictions so that if one or more are found to be void or unenforceable as an unreasonable restraint of trade or for any other reason the remaining restrictions shall not be affected; and

 

	 	
(b)  

	
if any restriction is found to be void but would be valid and enforceable if some part of it were deleted, that restriction shall apply with such deletion as may be necessary to make it valid and enforceable.

 

	
17  

	
Disciplinary and grievance procedures

 

	
17.1  

	
There are no special disciplinary or grievance rules which apply to the Executive and any such matters affecting him will be dealt with by the Board.

 

	
18  

	
Notices

 

	
18.1  

	
Any notice or other document to be given under this Agreement shall be in writing and may be given personally to the Executive or to the secretary of the Company or may be sent by first class post or other fast postal service or by facsimile transmission to, in the case of the Company, its registered office for the time being and in the case of the Executive either to his address shown on the face of this Agreement or to his last known place of residence.

 

	
18.2  

	
Any such notice shall (unless the contrary is proved) be deemed served when in the ordinary course of the means of transmission it would first be received by the addressee in normal business hours.  In the case of first class post, this shall be deemed to be no later than two working days after posting. In proving such service it shall be sufficient to prove, where appropriate, that the notice was addressed properly and posted, or that the facsimile transmission was despatched.

 

	
19  

	
Former contracts of employment

	 	 
	 	This Agreement shall be in substitution for any previous contracts, whether by way of letters of appointment, agreements or arrangements, whether written, oral or implied, relating to the employment of the Executive, all of which shall be deemed to have been terminated by mutual consent as from the date of this Agreement and the Executive acknowledges that he has no outstanding claims of any kind against AstraZeneca, the Company or any Group Company in respect of any such contract.

 

  

14

  

 

	
20  

	
Choice of law and submission to jurisdiction

 

	
20.1  

	
This Agreement shall be governed by and interpreted in accordance with English law.

 

	
20.2  

	
The parties submit to the exclusive jurisdiction of the English courts.

 

	
21  

	
General

 

	
21.1  

	
The expiration or termination of this Agreement shall not prejudice any claim which either party may have against the other in respect of any pre-existing breach of or contravention of or non-compliance with any provision of this Agreement nor shall it prejudice the coming into force or the continuance in force of any provision of this Agreement which is expressly or by implication intended to or has the effect of coming into or continuing in force on or after such expiration or termination.

 

	
21.2  

	
This Agreement constitutes the written statement of the terms of employment of the Executive provided in compliance with Part I of the ERA.

 

	
21.3  

	
A person who is not a party to this Agreement has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Agreement but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

 

  

15

  

 

	
Executed as a deed by the Company

	
)

	/s/ Ian Brimicombe
	
acting by two directors or by a director and its secretary

	
)

	
Director

	  	
)

	  
	  	
)

	/s/ Adrian Kemp
	  	
)

	
Secretary

	  	  	  

 

 

	
Executed as a deed by the Executive

	
)

	  
	in the presence of	
)

	  
	  	
)

	/s/ Marc Dunoyer
	  	  	  
	/s/ Rachel Pfisterer	  	  
	
Signature of witness

	  	  
	  	  	  

 

	
Name 

	Rachel Pfisterer	  	  
	  	 	  	  
	
Address 

	 	  	  
	  	 	  	  
	  	 	  	  

 

16Exhibit 4.12

 

 

	Execution Copy	Page 1 of 23

 

 

AMENDMENT No. 6

 

 

This Amendment No. 6 (the “Amendment”) to the License Agreement dated 20 April 1998 by and between

 

	
(1)

	
Shionogi & Co., Ltd., a company incorporated in Japan, whose registered office is at 1-8 Doshomachi 3-chome, Chuo-ku, Osaka, Japan (“Shionogi”); and

 

	
(2)

	
AstraZeneca UK Limited (formerly Zeneca Limited), a company incorporated in England under no. 3674842 whose current registered office is at 2 Kingdom Street, London, W2 6BD, England (“AstraZeneca”)

 

	  	
(together, the “PARTIES”)

 

as amended (the “License Agreement”) is made effective as of the 1 January 2014 (the “Amendment Effective Date”).

 

Recitals

 

WHEREAS, there existed differences between Shionogi and AstraZeneca on the interpretation of the definition of NET SALES under the License Agreement, and on 20 July 2012, Shionogi started ICC arbitration proceedings against AstraZeneca relating to such differences (the “Arbitration Proceedings”);

 

WHEREAS, on 10 October 2013, AstraZeneca proposed to change the royalty payment structure and extend the royalty payment term under the License Agreement;

 

WHEREAS, following discussions, the PARTIES reached an agreement (i) on certain changes to the royalty payment structure as well as an extension of the royalty period and (ii) on terms to settle the Arbitration Proceedings; and

 

WHEREAS, the PARTIES desire to (i) amend the License Agreement by executing this Amendment and (ii) settle the Arbitration Proceedings by executing a settlement agreement simultaneously with this Amendment;

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 2 of 23

 

 

NOW, THEREFORE, in consideration of the mutual covenants contained in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the PARTIES, intending to be legally bound, agree as follows:

 

	
1

	
Definitions

 

Any capitalised term not separately defined in this Amendment shall have the meaning ascribed to it in the License Agreement.

 

	
2

	
Modifications

	 	 
	2.1	
The following definitions shall be added to Article 1 of the License Agreement:

 

	
“1.1.1

	
“ADDITIONAL ITEMS” shall mean the items set out in Appendix III to this Agreement, as amended from time to time by the legislation, regulations or other source for such items insofar as such amendments do not materially alter the nature or characterisation of such charges.

 

	
1.1.2

	
“INITIAL PERIOD” shall mean the first seven (7) years from (and including) 1 January 2014.

 

	
1.1.3

	
“PUERTO RICO EXCISE TAX” shall mean the excise tax as introduced by Act 154 of the Government of Puerto Rico on 25 October, 2010, as amended from time to time.

 

	
1.1.4

	
“REVISED STRUCTURE” shall mean the revised royalty payment structure as set forth in Appendix IV to this Agreement.”

 

	
2.2

	
Article 1.15 of the License Agreement shall be replaced in its entirety with the following:

 

	“1.15.1 	
“PRODUCT NET SALES” shall mean the gross sales of the PRODUCTS by ZENECA, its AFFILIATES or SUBLICENSEES to THIRD PARTIES after deduction of:

	 	 
	 	
(i) normal and customary cash, trade and/or quantity discounts actually allowed,

 

(ii) amounts repaid or credited by reason of rejection or returns of goods, rebates or bona fide retroactive price reductions determined by ZENECA in good faith,

 

  

  

  

	Execution Copy	Page 3 of 23

 

 

	 	(iii) three percent (3%) of the gross amount for the cost of transporting, insurance and special packaging which ZENECA incurs on such sales, 

 

(iv) excise taxes, other consumption taxes and customs duty imposed on the sale, use or distribution of the PRODUCTS, and

 

(v) governmental or managed care rebates, fees or charges (including but not limited to Medicaid and Medicare rebates in the United States, and other applicable voluntary and chargeback managed market discounts in the United States) that are treated as a deduction from the amount of sales that results in the adjustment of the top line sales figure of profit and loss statements under (i) for the United States, the United States’ generally accepted accounting principles, as applicable from time to time (“US GAAP”); and (ii) for the rest of the world under the generally accepted accounting principles in the country where such sales are made (“Applicable GAAP”) or under the  International Financial Reporting Standards (the “IFRS”), both as applicable from time to time; to the extent such rebates, fees or charges can be logically and reasonably linked with, and apportioned to, the sale of the PRODUCTS.

	 	 
	1.15.2 	
“COMBINATION PRODUCT NET SALES” shall mean the gross sales of the COMBINATION PRODUCTS by ZENECA, its AFFILIATES or SUBLICENSEES to THIRD PARTIES after deduction of:

 

(i) normal and customary cash, trade and/or quantity discounts actually allowed,

 

(ii) amounts repaid or credited by reason of rejection or returns of goods, rebates or bona fide retroactive price reductions determined by ZENECA in good faith,

 

(iii) three percent (3%) of the gross amount for the cost of transporting, insurance and special packaging which ZENECA incurs on such sales.,

 

(iv) excise taxes, other consumption taxes and customs duty imposed on the sale, use or distribution of the COMBINATION PRODUCTS, and

 

(v) governmental or managed care rebates, fees or charges (including but not limited to Medicaid and Medicare rebates in the United States, and other applicable voluntary and chargeback managed market discounts in the United States) that are treated as a

 

  

  

  

	Execution Copy	Page 4 of 23

 

 

	 	
deduction from the amount of sales that results in the adjustment of the top line sales figure of profit and loss statements under (i) for the United States, US GAAP; and (ii) for the rest of the world under Applicable GAAP or under the IFRS, both as applicable from time to time; to the extent such rebates, fees or charges can be logically and reasonably linked with, and apportioned to, the sale of the COMBINATION PRODUCTS.

	 	 
	1.15.3	
PRODUCT NET SALES and COMBINATION PRODUCT NET SALES shall be calculated using ZENECA’s internal audited systems used to report such sales as adjusted for any of the items under Article 1.15.1 (i) to (v) and Article 1.15.2 (i) to (v) above (“ITEMS (i) to (v)”) not taken into account in such systems.

	 	 
	1.15.4	
ITEMS (i) to (v) will exclude charges incurred on intra-group transactions between ZENECA, its AFFILIATES or SUBLICENSEES unless such charges are directly passed-on and specified in the invoice to THIRD PARTIES.  For the avoidance of doubt, the PUERTO RICO EXCISE TAX shall not be deductible.

	 	 
	1.15.5	
Notwithstanding whether or not they fall within ITEMS (i) to (v), the ADDITIONAL ITEMS will be deductible with effect from (and including) 1 January 2014 (i.e., from the royalties accruing for the year 2014 onwards).  The ADDITIONAL ITEMS are limited to those specifically named with respect to the specific countries in Appendix III.  For the avoidance of doubt, new charges arising after 1 January 2014 will only be deductible if they fall within ITEMS (i) to (v), and it will be irrelevant in assessing whether such new charges are deductible whether they have the same or a similar nature, characteristic or purpose to the ADDITIONAL ITEMS.

	 	 
	1.15.6 	
From (and including) 1 January 2014, ZENECA confirms that it will calculate the “gross sales” and “gross amount” for the purpose of royalties calculations under Articles 1.15.1 and 1.15.2 above in a manner consistent with its past practice before 1 January 2014.”

	 	 
	2.3 	
The reference in Article 2.1 of the License Agreement to Article 4.5 shall be replaced by a reference to Article 4.5.1 as set out further below in this Amendment.

 

  

	
2.4

	
Article 4.2 of the License Agreement shall be replaced in its entirety with the following:

 

  

  

  

	Execution Copy	Page 5 of 23

 

 

	“4.2	
As from 1 January 2014, in addition to the foregoing non-refundable payments and to any royalties payable pursuant to Article 4.3, ZENECA shall pay SHIONOGI running royalties on PRODUCT NET SALES according to the terms of the REVISED STRUCTURE.

 

During the INITIAL PERIOD, (i) royalty payments in respect of PRODUCTS will be made according to the column headed “First 7 Years” in the REVISED STRUCTURE; (ii) if PRODUCT NET SALES exceed US$ [***] for 2014 and 2015, additional royalties milestone triggers will be added for each further (US$ [***])  (e.g. at US$ [***], US$ [***] etc.), with the payment due for each such milestone being [***]% of the relevant royalties milestone trigger (e.g. US$ [***] payment at the US$ [***] royalties milestone trigger in respect of sales exceeding US$ [***] and equal to or below US$ [***], US$ [***] at the US$ [***] royalties milestone trigger, etc.); (iii) ZENECA will make minimum royalty payments in respect of PRODUCTS of US$ [***] for each of 2014 and 2015, US$ [***] for 2016, and US$ [***] for each of 2017, 2018, 2019 and 2020; and (iv) ZENECA’s maximum royalty payments in respect of PRODUCTS will be US$[***] for 2016, and US$[***] for each of 2017, 2018, 2019 and 2020. By way of example of how the PARTIES intend the maximum royalty payments in paragraph (iv) will operate: if in 2016 PRODUCT NET SALES are over US$[***], this would trigger a royalty payment of US$[***] under Appendix IV; however, because this payment exceeds the maximum amount set out in paragraph (iv) above, the actual payment to be made by ZENECA will be US$[***].

 

Upon the expiry of the INITIAL PERIOD, (i) royalty payments in respect of PRODUCTS will be made according to the column headed “Year 8 (2021) to year 10 (2023), where yearly sales exceed $[***]” in the REVISED STRUCTURE, and (ii) (subject to the following paragraph) the maximum royalty payments in respect of PRODUCTS to be made by ZENECA in each year after the expiry of the INITIAL PERIOD shall be US$ [***].

 

Further and in any event, after the expiry of the INITIAL PERIOD the REVISED STRUCTURE shall cease to apply at the end of the last day of the year preceding any

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 6 of 23

 

 

	 	
year in which PRODUCT NET SALES fall below US$ [***] or on 31 December 2023, whichever is first, and no further royalties shall thereafter be payable in respect of PRODUCTS.  Moreover, any royalties payments provisionally made in relation to the year where PRODUCT NET SALES fall below US$ [***] will be reimbursed by SHIONOGI to ZENECA, without interest.”

	 	 
	
2.5

	
Article 4.3 of the License Agreement shall be replaced in its entirety with the following:

 

	“4.3.1	
In addition to the foregoing payments, ZENECA shall pay SHIONOGI, on a country by country basis in the TERRITORY, running royalties on COMBINATION PRODUCT NET SALES based on the following formula:

	 	 
	 	[***]
	 	 
	 	The applicable royalty rate shall be equal to the following:

 

	  	
(i)

	
For the first two (2) years after the first launch of the LICENSED PRODUCTS in each country of the TERRITORY:

 

[***] percent ([***]%) of the COMBINATION PRODUCT NET SALES in such country

 

  

	  	
(ii)

	
For the third (3rd) year after the first launch of the LICENSED PRODUCTS in each country of the TERRITORY:

 

[***] percent ([***]%) of the COMBINATION PRODUCT NET SALES in such country

 

  

	  	
(iii)

	
For the fourth (4th) and fifth (5th) year after the first launch of the LICENSED PRODUCTS in each country of the TERRITORY:

 

[***] percent ([***]%) of the COMBINATION PRODUCT NET SALES in such country

 

  

	  	
(iv)

	
For the sixth (6th) year after the first launch of the LICENSED PRODUCTS in each country of the TERRITORY:

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 7 of 23

 

 

	 	 	[***] percent ([***]%) of the COMBINATION PRODUCT NET SALES in such country
	 	 	 
	 	(v)	
For the seventh (7th) year, and for any subsequent year, after the first launch of the LICENSED PRODUCTS in each country of the TERRITORY:

 

[***] percent ([***]%) of the COMBINATION PRODUCT NET SALES in such country

	 	 	 
	 	ZENECA’s obligation to pay running royalties on COMBINATION PRODUCT NET SALES shall continue on a country by country basis until the expiration of the last to expire of the PATENTS listed in Appendix II in the country where the LICENSED PRODUCTS are sold or until the expiration of a ten (10) year period from the first launch of the LICENSED PRODUCTS in such country, whichever comes later.
	 	 
	4.3.2	
In the event that, in a country in the TERRITORY, as reported by an internationally recognized independent supplier of sales data acceptable to ZENECA and SHIONOGI, the volume share of non-ZENECA derived LICENSED PRODUCTS that is commercialized exceeds [***] percent ([***]%) of the total sales of all LICENSED PRODUCTS in that country, ZENECA shall have the right to [***] in the given country.  For the avoidance of doubt, such [***] shall not affect ZENECA’s obligation to make minimum royalty payments set forth in subsection (iii) of the second paragraph of Article 4.2.

 

In the event that, in a country in the TERRITORY, as reported by an internationally recognised independent supplier of sales data acceptable to ZENECA and SHIONOGI, the volume share of non-ZENECA derived LICENSED PRODUCTS that is commercialised represents [***] ([***]%) or more of the total sales of all LICENSED PRODUCTS in that country (hereinafter referred to as the “RELEVANT SHARE”), then the royalty rate in respect of the COMBINATION PRODUCTS in that country will be [***] to [***] percent ([***]%), or [***] percent ([***]%) in the first three (3) years, as the case may be, provided that such change in the royalty rate shall not affect the obligations of ZENECA to pay the running royalties in respect of PRODUCT NET SALES under Article 4.2.

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 8 of 23

 

 

	 	
The PARTIES acknowledge and agree that the foregoing Articles 4.2 and 4.3 may apply to situations in which, by reason of invalidity or absence of any PATENTS, ZENECA may be paying royalties based solely on its license to the KNOW-HOW and that the adjustments provided for in these Articles have been established by the PARTIES as the means whereby in such a case the value of such license can be determined independently of the PATENTS during the remainder of the royalty period.

 

The PARTIES further acknowledge and agree that, as recited above, further to an initial proposal by ZENECA, SHIONOGI agreed to consider a revised royalty structure as an accommodation to ZENECA, following which the PARTIES negotiated and agreed upon the mutually acceptable REVISED STRUCTURE set forth in this Amendment, including Articles 4.2 and 4.3 hereto.  Furthermore, the PARTIES acknowledge and agree that such terms provide payments to SHIONOGI in accordance with applicable law, and that such terms are not in any way subject to, or the result of, patent leverage or misuse.  ZENECA hereby waives its rights to claim or assert patent misuse against SHIONOGI with respect to the royalty payments being made pursuant to the REVISED STRUCTURE.”

	 	 
	2.6	
For the avoidance of doubt, the PARTIES hereby agree that the entry into this Amendment Agreement shall not be interpreted under applicable law as reflecting an acceptance by either PARTY of any particular interpretation of the formula used to calculate COMBINATION PRODUCTS NET SALES set forth in the original License Agreement.

	 	 
	2.7	
Article 4.5 shall be replaced in its entirety with the following:

	 	 
	“4.5.1.	
The running royalties for COMBINATION PRODUCTS shall be calculated quarterly as of the first day of January, April, July and October, respectively, for the preceding quarter.    ZENECA shall pay the running royalties in conjunction with the delivery of a written report to SHIONOGI within sixty (60) days after the end of each calendar quarter which shows, with respect to each country and each COMBINATION PRODUCT, the volume and COMBINATION PRODUCT NET SALES.

 

 

 

  

  

  

	Execution Copy	Page 9 of 23

 

 

	  	
Upon the beginning of the second full calendar year after the first launch of the LICENSED PRODUCTS in U.K., Germany, Italy, France, the U.S.A or Japan, (hereinafter referred to as the "FIRST LAUNCH"), ZENECA shall be obligated to pay an annual minimum royalty to SHIONOGI.

 

If the sum of running royalties already paid or payable in accordance with Article 4.3.1 above for a calendar year, when an annual minimum royalty is applicable, is less than the annual minimum royalty for such a calendar year, ZENECA shall pay the difference between the annual minimum royalty and the sum of running royalties already paid or payable in accordance with Article 4.3.1. Payment of this remaining amount, if any, shall accompany the calendar year-end report and any running royalty payment due at that time under Article 4.3.1.

 

The annual minimum royalty shall be as follows:

 

	 	
The first year:

	
[***] Japanese Yen (JP¥ [***].-)

	 	
The second year:

	
[***] Japanese Yen (JP¥ [***].-)

	 	
The third year:

	
[***] Japanese Yen (JP¥ [***].-)

	 	
The fourth year:

	
[***] Japanese Yen (JP¥ [***].-)

	 	
The fifth year:

	
[***] Japanese Yen (JP¥ [***].-)

	 	
The sixth year:

	
[***] Japanese Yen (JP¥ [***],-)

 

	 	
In the event that (i) ZENECA has not launched the LICENSED PRODUCTS in the U.S.A. by the beginning of the second full calendar year after the FIRST LAUNCH due to reasons beyond the reasonable control of ZENECA, or (ii) ZENECA withdraws the LICENSED PRODUCTS from sale in the U.S.A. in accordance with Article 4.3.1 or Article 13.3, then the PARTIES will meet to negotiate in good faith a reduction in the annual minimum royalties set out in this Article 4.5.1, to reflect the reduced commercial viability of the LICENSED PRODUCTS.”

	 	 
	2.8 	A new Article 4.5.2 shall be added to the License Agreement immediately following Article 4.5.1, as follows.
	 	 
	“4.5.2	Each year, by 30 May, 29 August and 29 November, ZENECA shall make a provisional payment of the running royalties for PRODUCT NET SALES, in conjunction with the delivery of a quarterly report in the format set out in Appendix VI to this Agreement,  

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

 

 

 

	Execution Copy	Page 10 of 23

 

 

	 	based on the following formula, intended to ensure that accurate projected royalties are updated on a quarterly basis, based on sales to date during the relevant year, and with true-up adjustments being effected at the end of the second, third and fourth quarters of each year:
	 	 
	 	
Quarterly payment = ((A / 4) X N) - Y

Whereby the Applicable yearly milestone is derived by calculating estimated full year sales.

Estimated full year sales = (S / N) X 4

Where:

Applicable yearly milestone = A

Number of quarters to date = N

YTD payments made to date = Y (US$ before conversion)

YTD sales = S

 

By 28 February each year (starting February 2015), ZENECA shall calculate the amount of the annual running royalties for the prior year in accordance with the following procedure and, in conjunction with the delivery of an annual report in the format set out in Appendix VI to this Agreement, pay the difference between such amount and the amount paid during the last three quarters (in US$ before conversion).  If the amount paid by ZENECA cumulatively (in US$) in the prior three quarters exceeds the amount payable by ZENECA as the annual running royalties for the prior year, SHIONOGI shall refund such difference without any interest by the end of March.  The amount of the running royalties shall be calculated annually as of the last date of each year in accordance with Appendix IV and the above procedure.

 

Where calculations of deductions from the gross sales under Article 1.15 are based on accruals, ZENECA shall calculate the actual amounts to be deducted as soon as reasonably possible following the end of the year.  Where any adjustments required by the calculation of the actual amounts lead to a change in the royalties payable, a true-up adjustment will be made.  By exception to this mechanism, the PARTIES agree that for the last year where royalties will be payable in relation to PRODUCTS, the final payment due by 28 February of the following year will be calculated on the basis of accruals alone and any subsequent calculation of the actuals will not lead to a true-up adjustment.

 

 

 

 

	Execution Copy	Page 11 of 23

 

 

	 	An example of this calculation is provided in Appendix V.”
	 	 
	2.9	
A new Article 4.5.3 shall be added to  the License Agreement immediately following Article 4.5.2, as follows.

	 	 
	“4.5.3 	
In calculating the running royalties: (I) All sales of the LICENSED PRODUCTS that are treated as a sale within a given year under Applicable GAAP shall be taken into account for the purpose of the calculation of the PRODUCT NET SALES and COMBINATION PRODUCT NET SALES of that year;  (II) Only deductions of the items specified in Article 1.15.1 (i), (ii), (iv) and (v) and in Article 1.15.2 (i), (ii), (iv) and (v) that are reflected in the profit and loss statement for any particular year under Applicable GAAP shall be taken into account in the calculation of the PRODUCT NET SALES and COMBINATION PRODUCT NET SALES in that year; (III) As to the ADDITIONAL ITEMS, ZENECA shall apply the deductions against sales during the year when the payment is made or on an accruals basis, as may be required or allowed under US GAAP for the United States, or under Applicable GAAP or IFRS for the rest of the world; (IV) Any conversion into US dollars of the amount that was paid or payable by ZENECA, its AFFILIATES or SUBLICENSEES in another currency shall be determined using the rates of exchange consistently used by ZENECA’s internal accounting systems, which rates of exchange are approved by ZENECA’s independent auditors for use in ZENECA’s financial statements.”

	 	 
	2.10	Article 4.6 of the License Agreement shall be replaced in its entirety with the following:
	 	 
	“4.6.1	
ZENECA agrees to keep or cause to be kept accurate records or books of account in accordance with U.K. generally accepted accounting principles and, in the case of its AFFILIATES and SUBLICENSEES who made sales to THIRD PARTIES, Applicable GAAP, showing the information which is necessary for the accurate determination of the running royalties due hereunder. ZENECA further agrees to permit a certified public accountant or a person possessing similar professional status and associated with an independent accounting firm acceptable to the PARTIES (a “Royalties Auditor”) to inspect during regular business hours and no more than once a year, and going back no more than three (3) years preceding the current year, all or any part of ZENECA’s records and books necessary to check the accuracy of the running royalties paid. The

 

 

 

 

	Execution Copy	Page 12 of 23

 

 

	 	charges of the independent accounting firm shall be paid by SHIONOGI; except if the royalties have been understated by more than four percent (4%), then the charges shall be paid by ZENECA.
	 	 
	4.6.2 	
SHIONOGI shall be granted special information request and/or audit rights in relation to the  REVISED STRUCTURE in the following circumstances:

 

(a)  Where ZENECA’s reported PRODUCT NET SALES to SHIONOGI fall within US$ [***] of the next royalty milestone trigger, Shionogi shall be entitled to issue reasonable requests for information relating to any ADDITIONAL ITEMS the value of which would be material in assessing whether a royalties milestone trigger has been reached.  Insofar as the answer to these reasonable requests for information, in SHIONOGI’s reasonable opinion, shows that the PRODUCT NET SALES have been understated and SHIONOGI has a reasonable basis to believe that the PRODUCT NET SALES may fall within US$ [***] of the next royalties milestone trigger, ZENECA agrees to permit a Royalties Auditor to inspect during regular business hours and no more than once each year, and going back no more than the one (1) year preceding the current year, all or any part of ZENECA’s records and books necessary to check the accuracy of the ADDITIONAL ITEMS calculation in respect of PRODUCT NET SALES.  The charges of the Royalties Auditor shall be paid by SHIONOGI; except if the Royalties Auditor confirms that the PRODUCT NET SALES fall within US$ [***] of the next royalties milestone trigger, then the charges shall be shared equally between ZENECA and SHIONOGI; and except if the PRODUCT NET SALES have been understated by more than four percent (4%), then the charges shall be paid by ZENECA.

 

(b)  Where ZENECA’s reported PRODUCT NET SALES to SHIONOGI fall within US$ [***] of the next royalty milestone trigger, ZENECA agrees to permit a Royalties Auditor to inspect during regular business hours and no more than once each year, and going back no more than the one (1) year preceding the current year, all or any part of ZENECA’s records and books necessary to check the accuracy of the ADDITIONAL ITEMS calculation in respect of PRODUCT NET SALES.

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

 

 

 

	Execution Copy	Page 13 of 23

 

 

	 	
The charges of the Royalties Auditor shall be shared equally between ZENECA and SHIONOGI; except if PRODUCT NET SALES have been understated by more than four percent (4%), then the charges shall be paid by ZENECA

 

(c)  Where ZENECA’s net sales in relation to the PRODUCT, as publicly reported in ZENECA’s consolidated accounts, once the value of the ADDITIONAL ITEMS and of the 3% deduction pursuant to Article 1.15.1(iii) has been subtracted, would fall above a royalties milestone trigger, but where ZENECA’s reported PRODUCT NET SALES to SHIONOGI fall below the same royalties milestone trigger, ZENECA agrees to permit a Royalties Auditor to inspect during regular business hours and no more than once each year, and going back no more than the one (1) year preceding the current year, all or any part of ZENECA’s records and books necessary to understand the discrepancy between ZENECA’s net sales in relation to the PRODUCT, as publicly reported in ZENECA’s consolidated accounts and ZENECA’s PRODUCT NET SALES as reported to SHIONOGI.  The charges of the Royalties Auditor shall be shared equally between ZENECA and SHIONOGI; except if PRODUCT NET SALES have been understated by more than four percent (4%), then the charges shall be paid by ZENECA.

	 	 
	4.6.3 	SHIONOGI’s exercise of its special audit right under Article 4.6.2 above shall not preclude SHIONOGI from exercising its standard three (3) years audit right under Article 4.6.1 above if it deems so necessary, on the understanding that any items audited in the context of the special audit right will not be re-audited for the same year as part of SHIONOGI’s exercise of its standard three (3) years audit right. However, insofar as SHIONOGI has exercised its standard audit right in relation to a year, it may not also initiate a special audit right for that same year.
	 	 
	4.6.4 	
ZENECA and SHIONOGI may claim overpayments or underpayments of running royalties and request SHIONOGI and/or ZENECA, as applicable, to refund or credit the amount overpaid or underpaid only with respect to such amounts overpaid or underpaid for the immediately preceding three (3) years, but not relating to any period prior to 1 January 2014.”

	 	 
	2.11	
Article 4.8 of the License Agreement shall be replaced in its entirety with the following:

	 	 
	“4.8	
All payments required under this Article 4 shall be made in Japanese Yen.

 

 

 

 

	Execution Copy	Page 14 of 23

 

 

	 	
For the purpose of computing the COMBINATION PRODUCT NET SALES in a certain calendar month in a currency other than Japanese Yen, such currency will be converted into Japanese Yen in accordance with the rates of exchange for such calendar month used by ZENECA's internal accounting systems, which rates of exchange are approved by ZENECA's independent auditors for use in ZENECA's financial statements.

 

For the purpose of computing the PRODUCT NET SALES in a certain calendar month in a currency other than US$, such currency will be converted into US$ for the application of the REVISED STRUCTURE in accordance with the rates of exchange for such calendar month used by ZENECA's internal accounting systems, which rates of exchange are approved by ZENECA's independent auditors for use in ZENECA's financial statements.

 

For the purpose of the payments to SHIONOGI or to ZENECA pursuant to Article 4.5.2 above and the REVISED STRUCTURE, the US$ amounts payable to SHIONOGI or to ZENECA will be converted into Japanese Yen in accordance with the average of rates of exchange for three (3)  calendar months (i.e., a calendar quarter) immediately preceding the payment date used by ZENECA's internal accounting systems, which rates of exchange are approved by ZENECA's independent auditors for use in ZENECA's financial statements. ”

	 	 
	2.12	
References to “NET SALES” in Article 4.8 and 11.9 of the License Agreement shall be replaced with references to “PRODUCT NET SALES and COMBINATION PRODUCT NET SALES”.

	 	 
	2.13 	
Article 13.1 of the License Agreement shall be replaced in its entirety with the following:

	 	 
	“13.1 	
This Agreement shall become effective as of the EFFECTIVE DATE and expires when ZENECA’s obligations to pay running royalties according to Articles 4.2 and 4.3 are fully satisfied.”

	 	 
	2.14	
Article 13.2 of the License Agreement shall be replaced in its entirety with the following:

	 	 
	“13.2.1	
If ZENECA determines that it is not feasible for ZENECA to pursue the development, launch or sale of LICENSED PRODUCTS due to a scientific, technical, regulatory

 

 

 

 

	Execution Copy	Page 15 of 23

 

 

	 	
and/or commercial reason, including but not limited to (i) adverse events of the COMPOUNDS or LICENSED PRODUCTS or (ii) marketability of the LICENSED PRODUCTS or (iii) reasons related to patent coverage, ZENECA shall promptly notify SHIONOGI in writing of such determination and provide SHIONOGI with the pertinent information with respect thereto.  Promptly following the receipt of such notice from ZENECA, the PARTIES shall discuss the situation in good faith. Following such discussion, ZENECA may terminate this Agreement.

 

For the avoidance of doubt, and subject to Article 13.2.2 below, the minimum royalties payable pursuant to Article 4.2 shall survive the termination of this Agreement.

	 	 
	13.2.2	
If the FDA in the United States or the Regulatory Authority in France requires that the LICENSED PRODUCT known as Crestor is withdrawn from the US or France for safety reasons, and in such case ZENECA takes the decision that it is no longer feasible for ZENECA to pursue the sale of Crestor, ZENECA shall promptly notify SHIONOGI in writing of such decision and ZENECA may terminate this Agreement in its entirety upon 30 days prior written notice.  If ZENECA terminates this Agreement in accordance with this Article 13.2.2, then the minimum royalties payable pursuant to Article 4.2 above shall not survive such termination.”

	 	 
	2.15	
Article 13.9 of the License Agreement shall be replaced in its entirety with the following:

	 	 
	“13.9	
Articles 4.6, 5, 7, 8, 10, 13.4, 13.6, 13.7, 13.8 and 14 shall survive the termination or expiration of this Agreement.”

	 	 
	2.16	
Article 6.6 of the License Agreement shall be replaced in its entirety with the following:

	 	 
	“6.6	
ZENECA hereby confirms that it has no intention to market [***] (hereinafter referred to as the “COMPETITIVE PRODUCTS”) [***].  If ZENECA should decide to [***], ZENECA shall so inform SHIONOGI in writing and the PARTIES shall negotiate in good faith how to deal with the issue.  This clause shall remain in force until ZENECA’s obligations to pay running royalties according to Article 4.3.1 expire.”

	 	 
	2.17	
Appendixes III, IV, V and VI as attached to this Amendment shall be added to and constitute a part of the License Agreement.

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

 

 

 

	Execution Copy	Page 16 of 23

 

 

	2.18 	
For the purpose of this Amendment Agreement, any reference to a “year” in the Articles inserted or amended in the License Agreement shall be interpreted as a reference to a calendar year.

	 	 
	
3

	
Amendment Effective Date

	 	 
	 	
This Amendment shall become effective on the Amendment Effective Date.

	 	 
	
4

	
Entire Agreement

	 	 
	 	
This Amendment, together with the License Agreement, constitutes the entire agreement between the PARTIES with respect to the subject matter of the License Agreement.  The License Agreement together with this Amendment supersedes all prior agreements, whether written or oral, with respect to the subject matter of the License Agreement. Each PARTY confirms that it is not relying on any representations, warranties or covenants of the other PARTY except as specifically set out in the License Agreement. Nothing in this Amendment is intended to limit or exclude any liability for fraud. The PARTIES hereby agree that subject to the modifications specifically stated in this Amendment, all terms and conditions of the License Agreement shall remain in full force and effect.

	 	 

Execution

 

THIS AMENDMENT IS EXECUTED by the authorised representatives of the PARTIES as of 25 December 2013.

 

	
SIGNED for and on behalf of

AstraZeneca UK Limited

	  	
SIGNED for and on behalf of

Shionogi & Co., Ltd.

	 
	 	 	 	 
	
/s/ Liam McIlveen

	  	
/s/ Isao Teshirogi

	 
	 	 	 	 
	
Signature

	  	
Signature

	 
	 	 	 	 
	
Name:

	
William (Liam) McIlveen

	  	
Name:

	
Isao Teshirogi

	 
	
Title:

	
Authorised Signatory

	  	
Title:

	
President and Representative Director

	 

 

  

  

  

	Execution Copy	Page 17 of 23

 

Appendix III

 

(List of Additional Items)

 

	
Item

	
Country

	
[***]

	  	
[***]

 

	  	
[***]

 

	
[***]

	  	
[***]

 

	  	
[***]

 

	  	
[***]

 

	
[***]

	
[***]

	
[***]

 

	
[***]

 

 

 

 

 

	
[***]

	  	
[***]

	
[***]

 

	  	
[***]

	
[***]

 

	  	
[***]

	
[***]

 

	
[***]

	  	
[***]

 

	
[***]

	  	
[***]

 

	
[***]

	  	
[***]

 

	
[***]

	  	
[***]

 

	  	
[***]

 

	  	
[***]

 

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 18 of 23

 

 

	  	  	
[***]

 

	  	  	
[***]

 

	  	  	
[***]

 

	  	  	
[***]

 

	  	  	
[***]

 

	
[***]

	  	
[***]

 

	
[***]

	
[***]

	
[***]

 

	
[***]

	
[***]

 

	
[***]

	
[***]

 

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

 

 

 

	Execution Copy	Page 19 of 23

 

Appendix IV

 

(REVISED STRUCTURE)

 

	
INITIAL PERIOD: First 7 years

(up to and including 2020)

	  	
Year 8 (2021) to year 10 (2023),

where yearly sales exceed $[***] 

	
Trigger

(PRODUCT NET SALES: USDM)

	
Payment

(USDM)

	  	  	
Trigger

(PRODUCT NET SALES: USDM)

	
Payment

(USDM)

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Over [***]

	
[***]

	  	  	
Over [***]

	
[***]

	
Min. for 2017 to 2020:                                                                                         [***]

	  	
Over [***] 

	
[***]

	
Min. for 2014 : [***]

	  	
Over [***]

	
[***]

	
Min. for 2015 : [***]

	  	
Over [***]

	
[***]

	
Min. for 2016 : [***]

	  	
Over [***]

	
[***]

	
Max. for 2016 : [***]

	  	
Over [***]

	
[***]

	
Max. for 2017 : [***]

	  	
Over [***]

	
[***]

	
Max. for 2018 : [***]

	  	
Over or equal to [***]

	
[***]

	
Max. for 2019 : [***]

	  	  
	
Max. for 2020 : [***]

	  	  
	  	  	  

	
u  

	
The INITIAL PERIOD will be seven (7) years (2014-2020).

	
u  

	
During the INITIAL PERIOD, for sales above $[***], annual Net Sales will continue with $[***] increment trigger, with the payment at [***]% of the trigger amount.

	
u  

	
The minimum royalty for 2014 and 2015 will be $[***] each, for 2016 will be $[***], and $[***] for the other years of the INITIAL PERIOD.

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 20 of 23

 

 

	
u  

	
The maximum royalty for 2016 will be $[***], and $[***] for the years 2017, 2018, 2019 and 2020.

	
u  

	
The extended royalty period for PRODUCT will come to an end on the last day of the previous year of the year in which the annual PRODUCT NET SALES drop below $[***] or at the end of 2023, whichever takes place first. The REVISED STRUCTURE will not affect the Parties’ rights and obligations, or extend the royalty period in respect of COMBINATION PRODUCTS.

 

 

 

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 21 of 23

 

Appendix V

 

(Example of Quarterly Royalty Calculation in year 2016 (Minimum Royalty

$[***]; Maximum Royalty $[***]))

 

	  	
Quarter 1

 

	
Quarter 2

	
Quarter 3

	
Quarter 4

	
Quarterly Net Sales

	
$[***]

 

	
$[***]

	
$[***]

	
$[***]

	
Projected Product Net Sales for the year

	
$[***]

 

	
$[***]

	
$[***]

	
$[***]

	
Applicable yearly milestone payment

	
$[***]

 

	
$[***]

	
$[***]

	
$[***]

	
Quarterly Payment

	
$[***]

	
$[***]

	
$[***]

	
$[***]

 

 

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 22 of 23

 

Appendix VI

 

(Quarterly/Annual Royalty Report)

 

	
n

	
Net Sales – Quarterly and Annual report

                                                                                

	
Quarter

 

	 	 	Unit: USDM
	
Country

	
Net Sales before Additional Items

	
Deduction of Additional Items(*)

	
Net Sales

	  	  	  	  
	  	  	  	  
	  	  	  	  

 

	
n 

	
Deductions under Article 1.15.1(iii) – Quarterly and Annual report

 

3% deduction from gross amounts pursuant to Article 1.15.1(iii) for the previous quarter and year: [xxxxxx]

 

	
n  

	
Breakdown of Additional Items – Annual report (*)

 

	
Year

	
Unit: USD

	
Additional Items

	
Amount

	
[***]

	
[***]

 

	  
	  	
[***]

 

	  
	
[***]

	
[***]

 

	  
	  	
[***]

 

	  
	  	
[***]

 

	  
	
[***]

	
[***]

 

	  
	  	
[***]

 

	  
	  	
[***]

 

	  
	  	
[***]

 

	  

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

 

  

  

  

	Execution Copy	Page 23 of 23

 

 

	
[***]

 

	  	  
	
[***]

 

	  	  
	
[***]

 

	  	  
	
[***]

	
[***]

	  
	  	
[***]

	  
	  	
[***]

	  
	  	
[***]

	  
	  	
[***]

	  
	  	
[***]

	  
	  	
[***]

	  
	  	
[***]

	  
	
[***]

 

 

	  	  
	
[***]

	
[***]

 

	  
	  	
[***]

 

	  
	  	
[***]

 

	  
	
TOTAL VALUE

	  	  

 

*: In the event that there occurs significant change in the amount of any Additional Items, SHIONOGI shall have the right to request reasonable explanation concerning change factors and ZENECA shall use reasonable efforts to provide such explanation in a timely manner.

 

 

*** Certain information has been omitted pursuant to a request for confidential treatment and

filed separately with the U.S. Securities and Exchange Commission.

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