Document:

Exhibit 4.1

 

THE SYMBOL “[**]” DENOTES PLACES WHERE CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED

 

LICENSE AND COLLABORATION AGREEMENT

 

 

by and between

 

 

和记黄埔医药(上海)有限公司 HUTCHISON MEDIPHARMA LIMITED

 

 

and

 

 

ASTRAZENECA AB (PUBL)

 

 

December 21st, 2011

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
1.
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
2.
    	
SCOPE OF COLLABORATION   AND GRANT OF LICENSES
    	
15
    
	
 
    	
 
    	
 
    
	
 
    	
2.1.
    	
Scope of Collaboration
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.2.
    	
License to AstraZeneca
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.3.
    	
License to Hutchison
    	
15
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.4.
    	
Joint Technology
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.5.
    	
Sublicensing
    	
16
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.6.
    	
Right of Reference
    	
17
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.7.
    	
Delivery of Hutchison   Know-How
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.8.
    	
Delivery of AstraZeneca   Know-How
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
2.9.
    	
No Other Rights
    	
18
    
	
 
    	
 
    	
 
    
	
3.
    	
DECISION MAKING AND   DISPUTE RESOLUTION
    	
18
    
	
 
    	
 
    	
 
    
	
 
    	
3.1.
    	
Joint Steering   Committee
    	
18
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.2.
    	
Other Committees
    	
20
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
3.3.
    	
Elevation and Dispute   Resolution
    	
21
    
	
 
    	
 
    	
 
    
	
4.
    	
DEVELOPMENT,   REGULATORY, COMMERCIALIZATION
    	
22
    
	
 
    	
 
    	
 
    
	
 
    	
4.1.
    	
Development of   Collaboration Product and Diagnostic Product
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.2.
    	
Failure of   Collaboration Product
    	
23
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.3.
    	
Regulatory Matters
    	
24
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.4.
    	
Manufacture
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.5.
    	
Commercialization
    	
26
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
4.6.
    	
Phase IV and   Publication Strategy
    	
27
    
	
 
    	
 
    	
 
    
	
5.
    	
CONSIDERATION
    	
28
    
	
 
    	
 
    	
 
    
	
 
    	
5.1.
    	
Upfront Payments
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.2.
    	
Milestones
    	
28
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.3.
    	
Royalties
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.4.
    	
Sales Subject to   Royalties
    	
30
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.5.
    	
Fully Paid-Up, Royalty   Free License
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.6.
    	
Third Party Intellectual   Property
    	
31
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
5.7.
    	
Development Costs
    	
32
    

 

i

 

TABLE OF CONTENTS (CONTINUED)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
5.8.
    	
Reports and Payments
    	
34
    
	
 
    	
 
    	
 
    
	
6.
    	
COVENANTS
    	
38
    
	
 
    	
 
    	
 
    
	
 
    	
6.1.
    	
Confidentiality
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.2.
    	
Compliance with Law
    	
40
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.3.
    	
Exclusivity
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
6.4.
    	
Non-Solicitation
    	
46
    
	
 
    	
 
    	
 
    
	
7.
    	
REPRESENTATIONS AND WARRANTIES
    	
46
    
	
 
    	
 
    	
 
    
	
 
    	
7.1.
    	
Representations and   Warranties of Each Party
    	
46
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.2.
    	
Additional   Representations and Warranties of Hutchison
    	
46
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.3.
    	
Representation by Legal   Counsel
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.4.
    	
No Inconsistent   Agreements
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
7.5.
    	
Disclaimer
    	
48
    
	
 
    	
 
    	
 
    
	
8.
    	
INTELLECTUAL PROPERTY
    	
48
    
	
 
    	
 
    	
 
    
	
 
    	
8.1.
    	
Disclosure
    	
48
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.2.
    	
Ownership
    	
48
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.3.
    	
JIPC
    	
48
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.4.
    	
Filing, Prosecution and   Maintenance of Patent Rights
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.5.
    	
Trademarks
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.6.
    	
Enforcement of   Technology Rights
    	
50
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.7.
    	
Third Party Claims
    	
51
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.8.
    	
Patent Certifications
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.9.
    	
No Implied Licenses
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.10.
    	
Privileged   Communications
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
8.11.
    	
Create Act
    	
52
    
	
 
    	
 
    	
 
    
	
9.
    	
GOVERNMENT APPROVALS
    	
52
    
	
 
    	
 
    	
 
    
	
 
    	
9.1.
    	
AstraZeneca’s and   Hutchison’s Obligations
    	
52
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.2.
    	
Additional Approvals
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
9.3.
    	
Termination
    	
53
    
	
 
    	
 
    	
 
    
	
10.
    	
TERM AND TERMINATION
    	
53
    

 

ii

 

TABLE OF CONTENTS (CONTINUED)

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
 
    	
10.1.
    	
Term
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.2.
    	
Termination for   Convenience; Termination by Mutual Agreement
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.3.
    	
Termination for Cause
    	
53
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.4.
    	
Effect of Termination
    	
54
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.5.
    	
Rights in Bankruptcy
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
10.6.
    	
Survival of Certain   Obligations
    	
57
    
	
 
    	
 
    	
 
    
	
11.
    	
PRODUCT   LIABILITY, INDEMNIFICATION AND INSURANCE
    	
57
    
	
 
    	
 
    	
 
    
	
 
    	
11.1.
    	
Indemnification by   Hutchison
    	
57
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.2.
    	
Indemnification by AstraZeneca
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.3.
    	
Procedure
    	
58
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.4.
    	
Insurance
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
11.5.
    	
Liability Limitations
    	
60
    
	
 
    	
 
    	
 
    
	
12.
    	
MISCELLANEOUS
    	
60
    
	
 
    	
 
    	
 
    
	
 
    	
12.1.
    	
Governing Law,   Jurisdiction; Dispute Resolution
    	
60
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.2.
    	
Force Majeure
    	
62
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.3.
    	
Waiver and Non-Exclusion   of Remedies
    	
63
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.4.
    	
Notices
    	
63
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.5.
    	
Entire Agreement
    	
64
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.6.
    	
Amendment
    	
64
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.7.
    	
Assignment
    	
64
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.8.
    	
No Benefit to Others
    	
65
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.9.
    	
Counterparts
    	
65
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.10.
    	
Severability
    	
65
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.11.
    	
Further Assurance
    	
65
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.12.
    	
Publicity
    	
65
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.13.
    	
Relationship of the   Parties
    	
65
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.14.
    	
Subcontracting
    	
66
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
12.16.
    	
Construction
    	
66
    

 

iii

 

LICENSE AND COLLABORATION AGREEMENT

 

This LICENSE AND COLLABORATION AGREEMENT (the “Agreement”) is entered into on this 21st day of December, 2011 (the “Effective Date”), by and among 和记黄埔医药(上海)有限公司 Hutchison Medipharma Limited, a company organized under the laws of the People’s Republic of China, having its place of business at Building 4, 720 Cailun Road, Zhangjiang Hi-Tech Park, Shanghai 201203, P.R. China (“Hutchison”) and AstraZeneca AB(publ) , a company organized under the laws of Sweden, having its place of business at S-151 85 Södertälje, Sweden (“AstraZeneca”).  Hutchison and AstraZeneca may each be referred to herein individually as a “Party” and collectively as the “Parties.”

 

RECITALS

 

WHEREAS, Hutchison owns or otherwise controls certain patents, patent applications, technology, know-how, scientific and technical information and other proprietary rights and information relating to the research, development and manufacture of the c-Met inhibitor known as HMPL-504;

 

WHEREAS, AstraZeneca is engaged in the research, development and commercialization of pharmaceutical products;

 

WHEREAS, Hutchison and AstraZeneca desire to collaborate, on an exclusive basis, in the development and commercialization of pharmaceutical products targeting the Collaboration Target (as defined below) and to collaborate specifically on the development and commercialization of the Collaboration Compound and Collaboration Product (as defined below); and

 

WHEREAS, subject to the terms of this Agreement, Hutchison wishes to grant to AstraZeneca, and AstraZeneca wishes to receive from Hutchison, an exclusive license to develop, manufacture and commercialize the Collaboration Compound and Collaboration Product in the Field (as defined below).

 

AGREEMENT

 

NOW THEREFORE, in consideration of the mutual promises and covenants set forth below and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows:

 

1.                                      DEFINITIONS.

 

1.1.                                        “Abbreviated New Drug Application” or “ANDA” means an Abbreviated New Drug Application as defined in the FD&C Act and the regulations promulgated thereunder which references an NDA.

 

1.2.                                        “Adverse Event” means any adverse medical occurrence in a patient or clinical investigation subject that is administered a pharmaceutical product, as designated in the United States of America under 21 CFR § 312.32 and any

 

1

 

other Applicable Law.

 

1.3.                                        “Affiliate(s)” means, with respect to a Person, any Person that controls, is controlled by, or is under common control with such first Person.  For purposes of this definition only, “control” means (a) to possess, directly or indirectly, the power to direct the management or policies of a Person, whether through ownership of voting securities or by contract relating to voting rights or corporate governance, or (b) to own, directly or indirectly, more than fifty percent (50%) of the outstanding voting securities or other ownership interests of such Person.

 

1.4.                                        “API Manufacturing” means the Manufacture and supply of Collaboration Compound for inclusion in a Collaboration Product Developed and Commercialized in accordance with this Agreement.

 

1.5.                                        “AstraZeneca Indemnified Party” has the meaning set forth in Section 11.1.

 

1.6.                                        “AstraZeneca Know-How” means Collaboration Know-How (other than Joint Know-How) that is conceived or developed or, in the case of patentable Know-How, Invented solely by employees of AstraZeneca or its Affiliates, or Third Parties acting on behalf of AstraZeneca or its Affiliates.

 

1.7.                                        “AstraZeneca Patent Rights” means any Patent Right that AstraZeneca Controls as of the Effective Date or that come into the Control of AstraZeneca during the Term (other than Joint Patent Rights or Patent Rights which are Hutchison Patent Rights licensed to AstraZeneca pursuant to this Agreement) to the extent such rights (a) claim a Collaboration Compound or Collaboration Products, any method of making a Collaboration Compound or Collaboration Products, any composition or formulations of a Collaboration Compound or Collaboration Products or any method of using or administering a Collaboration Compound or Collaboration Products and (b) are actually used by AstraZeneca to Manufacture, Develop or Commercialize a Collaboration Compound or Collaboration Products.

 

1.8.                                        “AstraZeneca Technology” means AstraZeneca’s interest in (i) the AstraZeneca Know-How, and (ii) the AstraZeneca Patent Rights, and all other intellectual property rights in any of the foregoing.

 

1.9.                                        “Agreement Compound” means any compound with a molecular weight less than 1000 Da, other than a Collaboration Compound, that specifically targets the Collaboration Target and lacks material activity against other pharmaceutical targets (i.e. the IC50 value of such compound or product against another pharmaceutical target is more than thirty (30) times greater than the IC50 value of such compound or product against the Collaboration Target).

 

1.10.                                 “Applicable Laws” means all applicable statutes, ordinances, regulations, rules, or orders of any kind whatsoever of any Regulatory Authority, including the FD&C Act, Prescription Drug Marketing Act, Generic Drug Enforcement

 

2

 

Act of 1992 (21 U.S.C. § 335a et seq.), and Anti-Kickback Statute (42 U.S.C. § 1320a-7b et seq.) and all counterparts thereto in other jurisdictions, all as amended from time to time.

 

1.11.                                 “Back-Up Compound” means any Agreement Compound Controlled by a Party, which Agreement Compound exists on the Effective Date or is discovered or invented during the Term.  Back-Up Compounds in existence on the Effective Date are set forth in Schedule 1.11

 

1.12.                                 “Calendar Quarter” means each of the three (3) consecutive month periods ending on March 31, June 30, September 30, and December 31.

 

1.13.                                 “Calendar Year” means each twelve (12) month period ending December 31st.

 

1.14.                                 “China” means the People’s Republic of China, including Hong Kong and Macau.

 

1.15.                                 “China Development Activities” has the meaning set forth in Section 5.7.1(a).

 

1.16.                                 “Change of Control” means, with respect to Hutchison, the occurrence of (a) any one of the following events: (i) a Third Party acquires, directly or indirectly, shares of Hutchison representing fifty percent (50%) or more of the voting shares (where voting refers to being entitled to vote for the election of directors) then outstanding of Hutchison; (ii) Hutchison consolidates with or merges into another corporation or entity, or any corporation or entity consolidates with or merges into Hutchison, in either event pursuant to a transaction in which more than fifty percent (50%) of the voting shares of the acquiring or resulting entity outstanding immediately after such consolidation or merger are not held by the holders of the outstanding voting shares of Hutchison preceding such consolidation or merger; or (iii) Hutchison conveys, transfers or leases all or substantially all of its assets to a Third Party and (b) such acquiring or merging Third Party has an Agreement Compound which is in clinical development at the time of closing of such Change of Control (a “Competing Product”), and such Competing Product is not the subject of a divestiture committed to under Section 6.4.2.

 

1.17.                                 “Clinical Trial” means a human clinical study conducted on sufficient numbers of human subjects that is designed to (a) establish that a pharmaceutical product is reasonably safe for continued testing, (b) investigate the safety and efficacy of the pharmaceutical product for its intended use, and to define warnings, precautions and adverse reactions that may be associated with the pharmaceutical product in the dosage range to be prescribed or (c) support Regulatory Approval of such pharmaceutical product or label expansion of such pharmaceutical product.

 

1.18.                                 “Collaboration Target” means [**].

 

3

 

1.19.                                 “Collaboration Compound” means Hutchison’s proprietary compound designated by Hutchison on the Effective Date as “HMPL-504,” as more fully described in Schedule 1.19 and as improved or modified in connection with this Agreement, [**].

 

1.20.                                 “Collaboration Know-How” means Know-How that is conceived or developed or, in the case of patentable Know-How, Invented, by or on behalf of either or both Parties’ (or their Affiliates’) employees or Third Parties acting on such Parties’ behalf, in each case in the course of such Party’s performance under or in connection with this Agreement.  For avoidance of doubt, Collaboration Know-How excludes any Know-How Controlled by a Party as of the Effective Date.

 

1.21.                                 “Collaboration Patent Rights” means Patent Rights claiming Collaboration Know-How.  For avoidance of doubt, Collaboration Patent Rights excludes any Patent Rights Controlled by a Party as of the Effective Date.

 

1.22.                                 “Collaboration Product” means any pharmaceutical product in finished form that contains a Collaboration Compound, either as the sole active ingredient or in combination with one or more other active ingredients, and all present and future formulations, dosages and dosage forms thereof.

 

1.23.                                 “Collaboration Technology” means Collaboration Know-How and Collaboration Patent Rights, and all other intellectual property rights in any of the foregoing.

 

1.24.                                 “Combination Collaboration Product” means a pharmaceutical product containing as its active ingredients both a Collaboration Compound and one or more other therapeutically or prophylactically active ingredients combined in a single product.

 

1.25.                                 “Commercialization” means any and all activities of using, importing, marketing, promoting, distributing, offering for sale or selling a Collaboration

 

4

 

Product including pre-commercial launch market development activities conducted in anticipation of Regulatory Approval of a Collaboration Product, seeking pricing and reimbursement approvals for a Collaboration Product, if applicable, preparing advertising and promotional materials, sales force training, all interactions and correspondence with a Regulatory Authority regarding Post-Approval Clinical Trials and all activities required to fulfill ongoing regulatory obligations, including Adverse Event reporting.  When used as a verb, “Commercialize” means to engage in Commercialization.

 

1.26.                                 “Commercially Reasonable Efforts” means, with respect to a Party, those efforts and resources that such Party would reasonably devote to a product or compound owned by it or to which it has rights of the type it has hereunder, which is of similar market potential at a similar stage in its development or product life, taking into account the competitiveness of the global and local marketplace, the nature and extent of market exclusivity (including patent coverage and regulatory exclusivity), the pricing and launching strategy for the respective product, the proprietary position of the product, the profitability and the relative potential safety and efficacy of the product and other relevant factors, including technical, legal, scientific, regulatory or medical factors, all as measured by the facts and circumstances at the time such efforts are due.  “Commercially Reasonable” as used herein shall be interpreted in a corresponding manner.

 

1.27.                                 “Confidential Information” means, with respect to a Party, all information (and all tangible and intangible embodiments thereof), which is Controlled by such Party, is disclosed by such Party to the other Party pursuant to this Agreement, and is designated as confidential in writing by the disclosing Party whether by letter or by use of an appropriate stamp or legend, prior to or at the time any such information is disclosed by the disclosing Party to the other Party.  In addition, any information which is orally, electronically or visually disclosed by a Party, or is disclosed in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information if the disclosing Party, within thirty (30) days after such disclosure, delivers to the receiving Party a written document or documents describing the information disclosed and referencing the place and date of such oral, visual, electronic or written disclosure and the names of the person(s) to whom such disclosure was made; provided, however, that any technical information disclosed at a meeting of the JSC or any other committee established pursuant to this Agreement shall constitute Confidential Information unless otherwise specified.

 

1.28.                                 “Control” or “Controlled” means, with respect to any intellectual property right, information, documents or materials of a Party, that the Party or its Affiliate owns or has a license to such intellectual property right, information, documents or materials (other than pursuant to this Agreement) and has the ability to grant access, a license, or a Sublicense to such intellectual property right, information, documents or materials to the other Party as provided in this Agreement without violating an agreement with or other rights of any Third

 

5

 

Party; it being understood and agreed that the term “Control” shall not apply to any intellectual property right for which the licensing Party shall be required to make any payments to any Third Party in connection with the licenses granted under this Agreement unless, but only if and for such time that, the other Party agrees and does promptly pay to the licensing Party all such payments arising out of the grant of the license to the other Party (as so mutually agreed between the Parties in good faith).

 

1.29.                                 “Country-Specific Termination” has the meaning set forth in Section 10.3.1.

 

1.30.                                 “Designated Manufacturer” has the meaning set forth in Section 4.4.1.

 

1.31.                                 “Development” means all activities performed by or on behalf of either Party in the performance of any Development Plan for Collaboration Compounds, Collaboration Products and Diagnostic Products in the Fields.  Development shall include, without limitation, Translational Research Activities and all activities related to research, preclinical testing, test method development and stability testing, toxicology, formulation, Clinical Trials, seeking Regulatory Approval and otherwise handling regulatory affairs, statistical analysis, report writing performed pursuant to the Development Plan with respect to Collaboration Products.  Development shall not include Manufacturing or Commercialization.  When used as a verb, “Develop” means to engage in Development.

 

1.32.                                 “Development Budget” means the written budget that sets forth, for the time period covered by the Development Plan, the total budget for the Parties to perform activities pursuant to the Development Plan.  The initial Development Budget is attached hereto as Schedule 1.32 and may be amended from time to time by the Parties in accordance with Section 4.1.1 .

 

1.33.                                 “Development Plan” means the comprehensive plan for the Development of Collaboration Products for Regulatory Approval in the Field in the Territory, prepared and approved by the JSC (subject to Section 3.3) and as amended or updated from time to time as set forth in Section 4.1.1.  The Development Plan shall include, without limitation, (a) an allocation of responsibilities for Development activities to be undertaken by each Party, consistent with the terms of this Agreement; (b) the Development Budget; (c) the indications in the Field for which the Collaboration Product is to be Developed; and (d) other critical activities to be undertaken, timelines, key decision points and relevant decision criteria.

 

1.34.                                 “Diagnostic Product” means a diagnostic tool intended for use in connection with a Collaboration Product.

 

1.35.                                 “Disclosing Party” has the meaning set forth in Section 6.1.1.

 

1.36.                                 “Effective Date” means the date of this Agreement first set forth above.

 

6

 

1.37.                                 “Exclusivity Period” has the meaning set forth in Section 6.4.1.

 

1.38.                                 “FD&C Act” means the United States of America Federal Food, Drug, and Cosmetic Act, as amended, and the regulations promulgated thereunder.

 

1.39.                                 “FDA” means the United States of America Food and Drug Administration or any successor agency thereto.

 

1.40.                                 “Field” means all diagnostic, prophylactic and therapeutic uses of a Collaboration Product, in any formulation or dosage form, for any and all indications in humans.

 

1.41.                                 “Financial Records” has the meaning set forth in Section 5.8.6.

 

1.42.                                 “First Commercial Sale” means, with respect to a Collaboration Product and any country of the Territory, the first sale of such Collaboration Product under this Agreement for use in the Field to a Third Party in such country, after such Collaboration Product has been granted Regulatory Approval by the competent Regulatory Authorities in such country.

 

1.43.                                 “Force Majeure” has the meaning set forth in Section 12.2.

 

1.44.                                 “GAAP” means United States of America generally accepted accounting principles, as in effect from time to time.

 

1.45.                                 “Generic Product” means, on a country-by-country basis and Collaboration Product-by-Collaboration Product basis, a drug product independently developed and commercialized by a Third Party that (a) contains the same active pharmaceutical ingredient(s) as the Collaboration Product, (b) [**] and, (c) (i) for purposes of the United States, is approved in reliance on the prior Regulatory Approval of such Collaboration Product, as determined by the FDA, or, (ii) for purposes of a country outside the United States, is approved in reliance on the prior Regulatory Approval of such Collaboration Product, as determined by the applicable Regulatory Authority.

 

1.46.                                 “Government Authority” means any court, agency, department, authority or other instrumentality of any national, state, county, city or other political subdivision.

 

1.47.                                 “Hutchison Indemnified Party” has the meaning set forth in Section 11.2.

 

1.48.                                 “Hutchison Know-How” means (a) Know-How that is Controlled by Hutchison as of the Effective Date or that comes into the Control of Hutchison during the Term (other than Joint Know-How and Know-How which is AstraZeneca Know-How licensed to Hutchison pursuant to this Agreement) to the extent necessary or useful to Manufacture, Develop or Commercialize a

 

7

 

Collaboration Compound or Collaboration Product, including any method of making a Collaboration Compound or Collaboration Product, any composition or formulations of a Collaboration Compound or Collaboration Product or any method of using or administering a Collaboration Compound or Collaboration Product and (b) Collaboration Know-How (other than Joint Know-How) that is conceived or developed or, in the case of patentable Know-How, Invented, solely by employees of Hutchison or its Affiliates, or Third Parties acting on behalf of Hutchison or its Affiliates.

 

1.49.                                 “Hutchison Patent Rights” means any Patent Right that is Controlled by Hutchison as of the Effective Date or that comes into the Control of Hutchison during the Term (other than Joint Patent Rights and Patent Rights which are AstraZeneca Patent Rights licensed to Hutchison pursuant to this Agreement) to the extent such rights claim a Collaboration Compound or Collaboration Product, any method of making a Collaboration Compound or Collaboration Product, any composition or formulations of a Collaboration Compound or Collaboration Product or any method of using or administering a Collaboration Compound or Collaboration Product.  The Hutchison Patent Rights existing as of the Effective Date are set forth on Schedule 1.49.

 

1.50.                                 “Hutchison Technology” means Hutchison’s interest in (a) the Hutchison Know-How and (b) the Hutchison Patent Rights, and all other intellectual property rights in any of the foregoing.

 

1.51.                                 “IFRS” means International Financial Reporting Standards, as in effect from time to time.

 

1.52.                                 “Indemnification Claim Notice” has the meaning set forth in Section 11.3.

 

1.53.                                 “Indemnified Party” has the meaning set forth in Section 11.3.

 

1.54.                                 “Indemnifying Party” has the meaning set forth in Section 11.3.

 

1.55.                                 “Indirect Taxes” means value added taxes, sales taxes, consumption taxes and other similar taxes.

 

1.56.                                 “Initiation” means dosing of the first human subject of a Clinical Trial.

 

1.57.                                 “Infringement” has the meaning set forth in Section 8.6.1.

 

1.58.                                 “Invented” means the act of invention by inventors, as determined in accordance with the patent laws of the United States of America.

 

1.59.                                 “Joint Know-How” means any Collaboration Know-How that is conceived or developed or, in the case of patentable Know-How, Invented jointly by an employee of Hutchison or its Affiliates (or a Third Party acting on any of their behalf) and an employee of AstraZeneca or its Affiliates (or a Third Party acting on any of their behalf).

 

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1.60.                                 “Joint Patent Right” means any Patent Right that claims Joint Know-How and is Invented by one or more employees or agents of Hutchison or its Affiliates (or a Third Party acting on any of their behalf) together with one or more employees or agents of AstraZeneca or its Affiliates (or a Third Party acting on any of their behalf).

 

1.61.                                 “Joint Technology” means Joint Know-How, Joint Patent Rights, and all other intellectual property rights therein.

 

1.62.                                 “JSC” has the meaning set forth in Section 3.1.

 

1.63.                                 “Know-How” means all inventions, discoveries, data, information (including scientific, technical or regulatory information), processes, methods, techniques, materials, technology, results, analyses, laboratory data, data arising from Clinical Trials and Post-Approval Clinical Trials, and other know-how, whether or not patentable, including pharmacology, toxicology, drug stability, manufacturing and formulation data, methodologies and techniques, clinical and non-clinical safety and efficacy studies, marketing studies, absorption, distribution, metabolism and excretion studies.

 

1.64.                                 “Liability” has the meaning set forth in Section 11.1.

 

1.65.                                 “Litigation Conditions” has the meaning set forth in Section 11.3.

 

1.66.                                 “Major Market Country” means each of [**].

 

1.67.                                 “Manufacture,” “Manufactured” or “Manufacturing” means all activities associated with the production, manufacture, processing, filling, finishing, packaging, labeling, shipping and storage of Collaboration Products to be Developed or Commercialized under this Agreement, including API Manufacturing, whether such activities are conducted by a Party, its Affiliates or a Third Party contractor of such Party.  When used as a verb, “Manufacture” means to engage in Manufacturing.

 

1.68.                                 “Net Sales” means, on a country-by-country and Collaboration Product-by-Collaboration Product basis, with respect to any period for each country, the gross amounts (the “Gross Sales”) invoiced by a Party, its Sublicensees or its Affiliates, as applicable, to unrelated Third Parties for sales of a Collaboration Product in the Field in such country, less the following deductions to the extent included in the gross invoiced sales price for such Collaboration Product or otherwise directly paid or incurred by a Party, its Sublicensees or its Affiliates with respect to the sale of such Collaboration Product in such country:  [**].

 

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Net Sales will be determined in accordance with GAAP or IFRS, as applicable.  For purposes of determining Net Sales, the Collaboration Products shall be deemed to be sold when invoiced and a “sale” shall not include, and no royalties shall be payable on, transfers by AstraZeneca, its Affiliates or Sublicencees of free samples of Collaboration Products or clinical trial materials containing a Collaboration Compound or Collaboration Product, or transfers of Collaboration Product to patients under AstraZeneca’s Patient Assistance Program in the United States or any similar programs in other countries, or other transfers or dispositions for charitable, promotional, pre-clinical, clinical, manufacturing, testing or qualification, regulatory or governmental purposes.

 

In the event a Collaboration Product is sold as a Combination Collaboration Product, Net Sales of the Collaboration Product will be calculated, for each applicable Calendar Quarter, as follows:

 

(i)                                     If the Combination Collaboration Product, the Single Active Collaboration Product and a product containing solely the other therapeutically or prophylactically active ingredient(s) are sold separately, Net Sales of the Single Active Collaboration Product portion of Combination Collaboration Products will be calculated by multiplying the total Net Sales of the Combination Collaboration Product by the fraction A/(A+B), where A is the average gross selling price in the applicable country of the Single Active Collaboration Product sold separately in the same formulation and dosage, and B is the sum of the average gross selling prices in the applicable country of all products containing solely such other therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product sold separately in the same formulation and dosage.

 

(ii)                                  If the Combination Collaboration Product and the Single Active Collaboration Product are sold separately, but the average gross selling price of a product containing solely the other therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product cannot be determined, Net

 

10

 

Sales of the Combination Collaboration Product shall be equal to the Net Sales of the Combination Collaboration Product multiplied by the fraction A/C wherein A is the average gross selling price of the Single Active Collaboration Product, and C is the average gross selling price of the Combination Collaboration Product.

 

(iii)                               If the Combination Collaboration Product and the product containing solely other therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product are sold separately, but the average gross selling price of the Single Active Collaboration Product cannot be determined, Net Sales of the Combination Collaboration Product shall be equal to the Net Sales of the Combination Collaboration Product multiplied by the following formula: one (1) minus B/C wherein B is the average gross selling price of the product containing solely the other therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product, and C is the average gross selling price of the Combination Collaboration Product.

 

(iv)                              If the Combination Collaboration Product and the product containing solely other therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product are sold separately, but the average gross selling price of neither the Single Active Collaboration Product nor the product containing solely the other therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product can be determined, Net Sales of the Combination Collaboration Product shall be equal to Net Sales of the Combination Collaboration Product multiplied by a mutually agreed percentage that is reasonably reflective of the relative value of each active ingredient in the Combination Collaboration Product.

 

The average gross selling price for the Single Active Collaboration Product and such product containing solely other therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product shall be calculated for each Calendar Quarter by dividing the sales amount by the units sold of such Single Active Collaboration Product or such other product containing solely therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product, as published by IMS or another mutually agreed independent source.

 

In the absence of appropriate IMS or other mutually agreed upon data, in the initial Calendar Year during which a Combination Collaboration Product is sold, a forecasted average gross selling price shall be used for the Collaboration Compound, other product containing solely therapeutically or prophylactically active ingredient(s) in the Combination Collaboration Product,or Combination Collaboration Product, as applicable.  Any over- or under- payment due to a

 

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difference between forecasted and actual average gross selling prices shall be paid or credited in the second royalty payment of the following Calendar Year.  In the following Calendar Year the average gross selling price of the previous Calendar Year shall apply.

 

1.69.                                 “New Drug Application” or “NDA” means a New Drug Application filed with the FDA as described in 21 CFR § 314, or any corresponding application for Regulatory Approval (not including pricing and reimbursement approval) in any country or regulatory jurisdiction other than the U.S.

 

1.70.                                 “New Third Party License” has the meaning set forth in 5.6.1.

 

1.71.                                 “NSCLC” means non-small cell lung cancer.

 

1.72.                                 “Patent Right” means any and all (a) patent applications filed under Applicable Law in any jurisdiction, including all provisional applications, substitutions, continuations, continuations-in-part, divisions, renewals, and all patents granted thereon, (b) all patents, reissues, reexaminations and extensions or restorations by existing or future extension or restoration mechanisms, including supplementary protection certificates or the equivalent thereof and (c) any other form of government-issued right substantially similar to any of the foregoing.

 

1.73.                                 “Person” means an individual, sole proprietorship, partnership, limited partnership, limited liability partnership, corporation, limited liability company, business trust, joint stock company, trust, incorporated association, joint venture, or similar entity or organization, including a government or political subdivision or department or agency of a government.

 

1.74.                                 “Pharmacovigilance Agreement” has the meaning set forth in Section 4.3.5.

 

1.75.                                 “Phase I Clinical Trial” means a Clinical Trial defined in 21 C.F.R. 312.21(a), as may be amended from time to time, or any equivalent thereto in any other jurisdiction.

 

1.76.                                 “Phase II Clinical Trial” means a Clinical Trial defined in 21 C.F.R. 312.21(b), as may be amended from time to time, or any equivalent thereto in any other jurisdiction.

 

1.77.                                 “Phase III Clinical Trial” means a Clinical Trial defined in 21 C.F.R. 312.21(c), as may be amended from time to time, or any equivalent thereto in any jurisdiction.

 

1.78.                                 “Phase IV Clinical Trial” means a Clinical Trial conducted after a Collaboration Product achieves Regulatory Approval, carried out for purposes of conducting safety surveillance and ongoing technical support of the Collaboration Product.

 

1.79.                                 “Post-Approval Clinical Trial” means any Clinical Trial for use of a

 

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Collaboration Product in an indication, other than a Phase III Clinical Trial or Phase IV Clinical Trial, to be conducted after a Regulatory Approval for such indication.

 

1.80.                                 “Primary Indication” means [**], as more particularly defined in the Development Plan

 

1.81.                                 “Receiving Party” has the meaning set forth in Section 6.1.1.

 

1.82.                                 “Recipients” has the meaning set forth in Section 6.1.1.

 

1.83.                                 “Regulatory Approval” means, with respect to a product, the approval and authorization of a Regulatory Authority in a country necessary to manufacture, distribute, sell or market such product in such country.

 

1.84.                                 “Regulatory Authority” means any national, regional, state or local regulatory agency, department, bureau, commission, council or other governmental entity in each country of the Territory involved in the granting of Regulatory Approvals.

 

1.85.                                 “Regulatory Exclusivity” means any rights or protections which are recognized, afforded or granted by any Regulatory Authority in any country or region in association with the Regulatory Approval of a Collaboration Product, providing such Collaboration Product a period of marketing exclusivity during which a Regulatory Authority that recognizes, affords or grants such marketing exclusivity shall refrain from either reviewing or approving a marketing authorization application or similar Regulatory Submission submitted by a Third Party seeking to market a generic product.  Regulatory Exclusivity shall include rights conferred in the United States pursuant to the Hatch-Waxman Amendments to the FD&C Act, the Orphan Drug Act or the Best Pharmaceuticals for Children Act or in the European Union pursuant to Section 10.1(a)(iii) of Directive 2001/EC/83.

 

1.86.                                 “Regulatory Submissions” means applications for Regulatory Approval, notification and other submissions made to or with a Regulatory Authority that are necessary or reasonably desirable to Develop, Manufacture or Commercialize a Collaboration Product in the Field in a particular country, whether obtained before or after a Regulatory Approval in the country.  Regulatory Submissions include, without limitation, investigational new drug applications and NDAs, and amendments and supplements to any of the foregoing and their foreign counterparts, applications for pricing and reimbursement approvals, and all proposed labels, labeling, package inserts, monographs and packaging for a Collaboration Product in a particular country.

 

1.87.                                 “Regulatory Submission Party” means, with respect to a country or territory, the Party responsible for regulatory matters in such country or territory pursuant to Section 4.5.1.

 

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1.88.                                 “Right of Reference” means a “Right of Reference,” as that term is defined in 21 C.F.R. § 314.3(b) or any analogous Applicable Law recognized outside of the United States.

 

1.89.                                 “Royalty Period” means, on a country-by-country and Collaboration Product-by-Collaboration Product basis, the period of time [**].

 

1.90.                                 “ROW Territory” means all countries of the world other than China.

 

1.91.                                 “Sales Milestone” has the meaning set forth in Section 5.2.2.

 

1.92.                                 “Secondary Indication” means [**], as more particularly defined in the Development Plan.

 

1.93.                                 “Single Active Collaboration Product” means a Collaboration Product that contains a Collaboration Compound as the sole active ingredient.

 

1.94.                                 “Sublicensee” means an Affiliate or Third Party that is granted a license, sublicense, covenant not to sue or other grant of rights under the licenses granted pursuant to Section 2 of this Agreement.  “Sublicense” means an agreement or arrangement pursuant to which such a sublicense has been granted to a Sublicensee.

 

1.95.                                 “Sublicensee Material Breach” has the meaning set forth in Section 2.5.3.

 

1.96.                                 “Sublicensor” means a Party that has granted a Sublicense under rights granted to such Party under this Agreement.

 

1.97.                                 “Sued Party” has the meaning set forth in Section 8.7.2.

 

1.98.                                 “Technology” means Know-How and Patent Rights.

 

1.99.                                 “Term” has the meaning set forth in Section 10.1.

 

1.100.                          “Territory” means China and the ROW Territory.

 

1.101.                          “Third Party” means any Person other than Hutchison and its Affiliates and AstraZeneca and its Affiliates.

 

1.102.                          “Trademark” means any trademark used by the Parties in connection with a Collaboration Product, other than the Parties’ trade names and trademarks used by the Parties to identify their companies generally.

 

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1.103.                          “Translational Research Activities” means activities relating to the Development of Diagnostic Products.

 

1.104.                          “Valid Claim” means any claim of (a) any issued and unexpired Patent Right that claims a Collaboration Compound that has not been (i) revoked or held unenforceable, unpatentable or invalid by a Government Authority of competent jurisdiction in a decision that is not appealable or that has not been appealed within the time allowed for appeal or (ii) abandoned, disclaimed, denied or admitted to be invalid or unenforceable through reissue, re-examination or disclaimer or otherwise, or (b) any patent application that claims a Collaboration Compound that has not been (i) cancelled, withdrawn or abandoned without being refiled in another application in the applicable jurisdiction or (ii) finally rejected by an administrative agency or Government Authority of competent jurisdiction in a decision that is not appealable or that has not been appealed within the time allowed for appeal, provided that, on a country-by-country basis, a patent application pending for more than [**] from the priority date of such application shall not be considered to have any Valid Claim for purposes of this Agreement from and after such [**] date unless and until a patent with respect to such application issues.

 

1.105.                          “Withholding Taxes” has the meaning set forth in Section 5.8.2.

 

2.                                      SCOPE OF COLLABORATION AND GRANT OF LICENSES.

 

2.1.          Scope of Collaboration. The Parties wish to enter into this Agreement (a) to co-Develop, Manufacture and Commercialize the Collaboration Compound and Collaboration Products in the Field in the Territory and (b) to develop, manufacture and commercialize Agreement Compounds, on an exclusive basis, in accordance with Section 6.3 , in each case ((a) and (b)), in accordance with the terms and conditions of this Agreement.

 

2.2.          License to AstraZeneca. Subject to the terms and conditions of this Agreement, Hutchison hereby grants to AstraZeneca, effective on the Effective Date, (a) a royalty-bearing, co-exclusive license, with the right to sublicense as set forth in Section 2.5, under the Hutchison Technology and Hutchison’s interest in the Joint Technology, to Develop the Collaboration Compound and Collaboration Products in the Field in the Territory in accordance with the terms of this Agreement and (b) a royalty-bearing, exclusive (even as to Hutchison) license, with the right to sublicense as set forth in Section 2.5, under the Hutchison Technology and Hutchison’s interest in the Joint Technology, to Manufacture and Commercialize the Collaboration Products in the Field in the Territory.

 

2.3.          License to Hutchison. Subject to the terms and conditions of this Agreement, AstraZeneca hereby grants to Hutchison a royalty-free, co-exclusive license, with the right to sublicense as set forth in Section 2.5, under the AstraZeneca Technology and AstraZeneca’s interest in the Joint Technology (a) to the extent necessary for Hutchison to exercise its rights and perform its obligations under this Agreement and (b) to Develop the Collaboration Compound and Collaboration Products in the Field in the Territory in accordance with the terms of this Agreement.

 

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2.4.          Joint Technology. Subject to the terms and conditions of this Agreement (including Sections 2.2 and 2.3), each Party hereby grants the other Party a worldwide, irrevocable, non-exclusive, perpetual, royalty-free, fully paid up, freely sublicensable right and license to exploit the Joint Technology in any manner without compensating or accounting to the other Party.

 

2.5.          Sublicensing.

 

2.5.1.                                     AstraZeneca Right to Sublicense.

 

(a)                                   AstraZeneca shall have the right to grant Sublicenses under the rights granted to AstraZeneca in Section 2.2 to its Affiliates and to Third Parties for the Development, Manufacture and Commercialization of Collaboration Compounds and Collaboration Products in the Field, provided that AstraZeneca shall (i) remain responsible for the performance of its Sublicensees under this Agreement, including for all payments due hereunder; and (b) cause its Sublicensees to comply with the terms of this Agreement.

 

(b)                                   Each Sublicense (i) shall be subject and subordinate to, and consistent with, the terms and conditions of this Agreement; (ii) shall not diminish, reduce or eliminate any of AstraZeneca’s obligations under this Agreement; (iii) shall require the Sublicensee(s) to comply with all applicable terms of this Agreement (except for the payment obligations, for which AstraZeneca shall remain financially responsible); (iv) shall require that any Sublicensee grant to AstraZeneca a Right of Reference to the same extent of the Right of Reference granted to AstraZeneca pursuant to Section 2.6.1; and (v) shall prohibit further sublicensing except on terms consistent with this Section 2.5.1.  AstraZeneca shall provide Hutchison with a complete copy of each Sublicense granted to a Third Party within thirty (30) days after execution thereof; provided, however, that AstraZeneca may redact any Confidential Information from such Sublicense to the extent that such redactions do not reasonably impair Hutchison’s ability to ensure compliance with this Agreement.

 

2.5.2.                                     Hutchison Right to Sublicense.

 

(a)                                   Hutchison shall have the right to grant Sublicenses under the rights granted to Hutchison in Section 2.3 to its Affiliates and to Third Parties for the Development of the Collaboration Compound and Collaboration Products in the Field in any country; provided that Hutchison shall (i) shall remain responsible for the performance of its Sublicensees under this Agreement, including for all payments due hereunder; and (ii) cause its Sublicensees to comply with the terms of this Agreement.

 

(b)                                   Each Sublicense (i) shall be subject and subordinate to, and consistent with, the terms and conditions of this Agreement; (ii) shall not diminish, reduce or eliminate any of Hutchison’s obligations under this Agreement; (iii) shall require the Sublicensee(s) to comply with all applicable terms of this Agreement;

 

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(iv) shall require that any Sublicensee grant to Hutchison a Right of Reference to the same extent of the Right of Reference granted to Hutchison pursuant to Section 2.6.2; and (v) shall prohibit further sublicensing except on terms consistent with this Section 2.5.2.  Hutchison shall provide AstraZeneca with a complete copy of each Sublicense within thirty (30) days after execution thereof; provided, however, that Hutchison may redact any Confidential Information from such Sublicense to the extent that such redactions do not reasonably impair AstraZeneca’s ability to ensure compliance with this Agreement.

 

2.5.3.                                     Breach of Sublicense.  In the event of an uncured material breach by any Sublicensee under a Sublicense that would constitute a material breach of the Sublicensor’s obligations under this Agreement (a “Sublicensee Material Breach”), the Sublicensor shall provide prompt written notice of such Sublicensee Material Breach to the other Party and shall use Commercially Reasonable Efforts to remedy such Sublicensee Material Breach; provided, however, that if the Sublicensor is unable to cure such Sublicensee Material Breach in accordance with Section 10.3.1 of this Agreement, such Sublicensee Material Breach shall be deemed to be an uncured material breach by the Sublicensor under this Agreement.

 

2.5.4.                                     Effect of Termination on Sublicenses.  In the event of a termination of this Agreement pursuant to Section 10 while a Sublicense granted under Section 2.5 is in effect, the terms of this Section 2.5.4 shall apply, provided that the Sublicensee is not in default under the applicable Sublicense and such Sublicensee certifies in writing to the non-terminating Party that (x) it is not in default under the applicable Sublicense, (y) such Sublicensee agrees to be bound by the terms of this Agreement applicable to the Sublicensor and (y) such Sublicensee agrees to the following additional terms:

 

(a)                                   All of the Sublicensee’s obligations under the Sublicense shall remain in effect as obligations to the non-terminating Party and shall be enforceable solely by such Party as a third party beneficiary.  The Sublicensee’s rights under the Sublicense that do not exceed, and are not inconsistent with, the Sublicensor’s rights under this Agreement, whether in scope, duration, nature or otherwise, shall survive termination of the Sublicense.

 

(b)                                   All of the Sublicensor’s rights under the Sublicense shall remain in effect, may be exercised solely by the non-terminating Party as a third party beneficiary and shall inure to the exclusive benefit of the non-terminating Party.  All obligations of the Sublicensor under the Sublicense that exceed or are not consistent with the Sublicensor’s obligations under this Agreement, whether in scope, duration, or otherwise, shall terminate.

 

2.6.          Right of Reference.

 

2.6.1.                                     AstraZeneca Right of Reference.  Hutchison hereby grants to AstraZeneca and its Sublicensees a Right of Reference to all data included in the Regulatory Submissions and Regulatory Approvals Controlled by Hutchison and its Affiliates relating to a Collaboration Compound or Collaboration Products to the extent necessary to obtain Regulatory Approval of any Collaboration Product in the Field in any country of the ROW Territory, and

 

17

 

Hutchison shall provide a signed statement to this effect, if requested by AstraZeneca, in accordance with 21 C.F.R. § 314.50(g)(3) (or any analogous Applicable Law recognized outside of the United States).

 

2.6.2.                                     Hutchison Right of Reference.  AstraZeneca hereby grants to Hutchison and its Sublicensees a Right of Reference to all data included in the Regulatory Submissions and Regulatory Approvals Controlled by AstraZeneca and its Affiliates relating to Collaboration Products to the extent necessary or useful to Develop or Manufacture Collaboration Compounds or Collaboration Products in the Field in China, and AstraZeneca shall provide a signed statement to this effect, if requested by Hutchison, in accordance with 21 C.F.R. § 314.50(g)(3) (or any analogous Applicable Law recognized outside of the United States).

 

2.7.          Delivery of Hutchison Know-How. At no cost to AstraZeneca, within [**] days after the Effective Date, Hutchison shall transfer to AstraZeneca true and complete copies of all Hutchison Know-How (in electronic or hard copy format) with, where applicable (and within reason), a translation into English.  Thereafter during the Term, from time to time and otherwise upon AstraZeneca’s request, Hutchison shall provide AstraZeneca with true and complete copies of updates to the Hutchison Know-How (in electronic or hard copy format), together with all information or assistance reasonably requested by AstraZeneca with respect to understanding and using such Hutchison Know-How.

 

2.8.          Delivery of AstraZeneca Know-How. At no cost to Hutchison, for so long as the Development Plan remains in effect, from time to time and otherwise upon Hutchison’s request, AstraZeneca shall transfer to Hutchison true and complete copies of all AstraZeneca Know-How (in electronic or hard copy format), together with all information or assistance reasonably requested by Hutchison with respect to understanding and using such AstraZeneca Know-How.

 

2.9.          No Other Rights. No rights, other than those expressly set forth in this Agreement are granted to either Party hereunder, and no additional rights shall be deemed granted to either Party by implication, estoppel or otherwise, with respect to any intellectual property rights.  All rights not expressly granted by either Party to the other hereunder are reserved.

 

3.                                      DECISION MAKING AND DISPUTE RESOLUTION.

 

3.1.          Joint Steering Committee. Within thirty (30) days of the Effective Date, the Parties shall establish a joint steering committee (the “JSC”) that will be responsible for overseeing the Development and Commercialization of Collaboration Products in the Field, and will serve as a forum for (a) exchanging data, information and Development strategy regarding the Collaboration Products and (b) keeping Hutchison apprised of all Commercialization activities with respect to the Collaboration Products.

 

3.1.1.                                     Membership.  The JSC will consist of three (3) senior representatives from each Party.  AstraZeneca will designate the chairperson of the JSC.  The chairperson will be responsible for calling meetings and setting the agenda (which shall include a list of all participants expected at a meeting) and circulating such agenda at least five (5) days prior to each meeting and

 

18

 

distributing minutes of the meetings within thirty (30) days following such meeting, but will not otherwise have any greater power or authority than any other member of the JSC.  JSC members may be replaced by the Party with authority to designate such member but shall at all times have such expertise as appropriate to the activities of the JSC from time to time, and the JSC shall invite personnel of the Parties having non-clinical safety and animal pharmacology, pharmaceutical development, clinical, biostatistical, regulatory affairs, pharmacovigilance, formulation, manufacturing, commercial, marketing and other expertise to participate in discussions of the JSC from time to time as appropriate to assist in the activities of the JSC.  The JSC may appoint subcommittees as desired.

 

3.1.2.                                     Responsibilities.  The JSC may discharge its responsibilities through one or more subcommittees.  The JSC’s responsibilities will include, without limitation, the following:

 

(a)                                 overseeing implementation of the Development Plan;

 

(b)                                 reviewing and evaluating progress under the Development Plan (including compliance with the Development Budget contained therein and payment arrangements) on a quarterly basis and advising the Parties as to any necessary amendments thereto;

 

(c)                                  allocating and assigning Development activities in the Development Plan between the Parties, consistent with the terms of this Agreement;

 

(d)                                 approving (or establishing procedures to approve) protocols for pre-clinical studies and Clinical Trials for Development of Collaboration Products;

 

(e)                                  making modifications to and performing quarterly monitoring of progress of pre-clinical studies and Clinical Trials and proposing additional studies for Collaboration Products;

 

(f)                                   reviewing and approving any proposed modifications to the Development Plan, including advising the Parties as to whether a Back-Up Compound should be developed in lieu of a Collaboration Compound;

 

(g)                                  coordinating the Manufacture of global supplies of a Collaboration Compound and Collaboration Product for (i) Clinical Trials and (ii) Commercialization;

 

(h)                                 reviewing and commenting on Regulatory Submissions relating to Collaboration Products;

 

(i)                                     facilitating the exchange of all data, information, material or results relating to Development of Collaboration Products;

 

(j)                                    establishing procedures regarding the collection, sharing and reporting of Adverse Event information related to Collaboration Products consistent with the Pharmacovigilance Agreement to be entered into in accordance

 

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with Section 4.3.5;

 

(k)                                 facilitating the transfer of Know-How pursuant to this Agreement;

 

(l)                                     developing a strategy for performing Translational Research Activities and Developing a Diagnostic Product, as necessary, under the Development Plan and overseeing implementation of any such strategy;

 

(m)                             establishing and overseeing implementation of the Commercialization Plan;

 

(n)                                 performing such other activities as are contemplated under this Agreement and that the Parties mutually agree shall be the responsibility of the Joint Steering Committee.

 

Notwithstanding the foregoing, in no event shall the JSC or any subcommittee of the JSC have the authority to (i) reduce or expand the obligations of the Parties under this Agreement; (ii) determine that a breach has occurred under this Agreement; (iii) waive a Party’s rights or obligations under this Agreement; or (iv) make any decision that is specified elsewhere in this Agreement as being made by one or both Parties.

 

3.1.3.                                     Meetings.  During the period before First Commercial Sale, the JSC will meet at such frequency as shall be established by the Parties (but, unless otherwise agreed, not less frequently than four (4) times per year).  Meetings of the JSC shall alternate between the offices of the Parties, unless otherwise agreed upon by the members of the JSC, or may be held telephonically or by video conference.  Meetings of the JSC shall be effective only if at least one representative of each Party is in attendance or participating in the meeting.  Members of the JSC shall have the right to participate in and vote at meetings by telephone.  Each Party shall be responsible for expenses incurred by its employees and its members of the JSC in attending or otherwise participating in JSC meetings.  Each Party shall use reasonable efforts to cause its representatives to attend the meetings of the JSC.  If a representative of a Party is unable to attend a meeting, such Party may designate an alternate to attend such meeting in place of the absent representative.

 

3.1.4.                                     Minutes and Agendas.  The minutes of each JSC meeting shall provide a description in reasonable detail of the discussions held at the meeting and a list of any actions, decisions or determinations approved by the JSC.  Minutes of each JSC meeting shall be prepared in English, approved or disapproved, and revised as necessary, at the next meeting.

 

3.2.          Other Committees. The JSC may establish subcommittees as the Parties mutually deem appropriate.

 

3.2.1.                                     Joint Development Committee.  Promptly after the Effective Date, the JSC shall establish a joint development committee (“JDC”).  The JDC shall have primary responsibility for the matters set forth in Section 3.1.2(a) - 3.1.2(f) and 3.1.2(h) - 3.1.2(j), together with such other matters as are delegated to the JDC by the JSC.

 

3.2.2.                                     Joint Commercial Committee Prior to Commercialization of any

 

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Collaboration Product, the JSC shall establish a joint commercial committee (“JCC”).  The JCC shall have primary responsibility for the matters set forth in Section 3.1.2(m), together with such other matters as are delegated to the JCC by the JSC.

 

3.2.3.                                              Joint Diagnostic Development Committee. Promptly after the Effective Date, the JSC shall establish a joint diagnostic development committee (“JDDC”).  The JDDC shall have primary responsibility for the matters set forth in Section 3.1.2(l).

 

3.2.4.                                              Joint Manufacturing Committee.  Promptly after the Effective Date, the JSC shall establish a joint manufacturing committee (“JMC”).  The JMC shall have the primary responsibility for the matters set forth in 3.1.2(g).

 

3.2.5.                                              Joint Intellectual Property Committee.  Promptly after the Effective Date, the JSC shall establish a Joint IP Committee (“JIPC”).  The JIPC shall have primary responsibility for establishing a strategy for the prosecution, maintenance and enforcement of intellectual property rights relating to the Collaboration Product, together with such other matters as are delegated to the JIPC by the JSC.  The JIPC shall have primary responsibility for the matters set forth in Section 3.1.2(k), together with such other matters as are delegated to the JIPC by the JSC.

 

3.3.          Elevation and Dispute Resolution. [**].

 

3.3.1.                                              [**].

 

3.3.2.                                              [**]

 

(a)                                         [**]

 

(b)                                         [**]

 

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(c)                                          [**]

 

(d)                                         [**]

 

(e)                                          [**]

 

3.3.3.                                              [**].

 

4.                                      DEVELOPMENT, REGULATORY, COMMERCIALIZATION.

 

4.1.          Development of Collaboration Product and Diagnostic Product.

 

4.1.1.                                              Development Plan.  The initial Development Plan for the Collaboration Product in the Field is set forth in Schedule 1.32.  The JDC will direct, coordinate and manage the Development of Collaboration Products in the Field in accordance with the Development Plan.  During the Term, the JDC will review the Development Plan (including the Development Budget) on an ongoing basis, but no less frequently than once per year during the period preceding First Commercial Sale and will amend as necessary, provided that the JDC will not assign any Development activities to a Party, or allocate any Development Costs to a Party beyond those set forth in the initial Development Plan attached hereto without the other Party’s prior written consent.

 

4.1.2.                                  Development Activities.  Each Party shall use Commercially Reasonable Efforts to implement and conduct the Development activities assigned to it under the Development Plan, in accordance with the Development Budget and the timelines set forth in the Development Plan, and to cooperate with and provide reasonable support to the other Party in such other Party’s conduct of activities under the Development Plan.  Each Party will undertake its respective Development activities in accordance with GLP, GCP, GMP, as appropriate, and with all Applicable Laws.  Except for the specific responsibilities allocated to Hutchison as set forth in the Development Plan with respect to Development activities intended to support obtaining Regulatory Approval for Collaboration Products or Diagnostic Products in China, AstraZeneca will be responsible for performing all Development activities for the purpose of obtaining Regulatory Approval for Collaboration Product and Diagnostic Products in the ROW Territory.  The Parties shall share costs and expenses under this Section 4.1.2 in accordance with the allocations set forth in Section 5.7.  All Clinical Trials initiated

 

22

 

after the Effective Date and performed by a Third Party will be conducted by agents both Parties agree have sufficient capability to ensure all Clinical Trials performed by such Third Party are conducted and reported, and can be audited to show they have been conducted and reported, to comply with standards of GCP acceptable to Regulatory Authorities globally.

 

4.1.3.                                              Reports of Development Activities.  Each Party shall report on Development activities undertaken by such Party in accordance with Development Plan by providing a reasonably detailed summary of all results, data and material inventions, if any, obtained from such activities, together with a summary of the Development activities that such Party intends to undertake during the next twelve (12) months with respect to Development of a Collaboration Compound and Collaboration Product.  Such reports shall be provided in English by each Party to the other at least [**] days prior to each meeting of the JDC, [**].  In addition, each Party shall, at its own expense, make appropriate scientific and regulatory personnel available to the other Party, either by telephone or in person as the Parties may mutually agree, as reasonably required to keep the other Party informed of Development activities.

 

4.1.4.                                              Development Diligence Obligations.  AstraZeneca shall use Commercially Reasonable Efforts to apply for and obtain Regulatory Approval of the Collaboration Product in the ROW Territory, and Hutchison shall use Commercially Reasonable Efforts to apply for and obtain Regulatory Approval of the Collaboration Product in China, in each case, as soon as reasonably practicable.  AstraZeneca shall use Commercially Reasonable Efforts to Develop or procure the Development of any Diagnostic Products reasonably necessary to Commercialize the Collaboration Products and to apply for and obtain Regulatory Approval of such Diagnostic Products in the Territory as soon as reasonably practicable.

 

4.2.          Failure of Collaboration Product. In the event [**], such Party shall have the right to request a meeting of the JSC, which shall discuss in good faith the Back-Up Compounds then available.  In such case, the following provisions shall apply.

 

4.2.1.                                              Nomination of New Collaboration Compound.  In the event [**], the JSC (advised by the JDC, as appropriate) shall promptly nominate a Back-Up Compound to replace the Collaboration Compounds (such Back-Up Compound, a “New Collaboration Compound”), and the Parties shall promptly meet to negotiate in good faith a definitive agreement (or amendment to this Agreement, if appropriate) that sets forth each Party’s rights and obligations with respect to such New Collaboration Compound.  Until execution of any such definitive agreement (or amendment), the terms and conditions of this Agreement applicable to the Collaboration Compound shall continue in full force and effect.

 

4.2.2.                                              Failure to Agree on New Collaboration Compound.  In the event the Parties do not mutually agree as to whether the Parties should continue activities under the Development Plan with respect to the Collaboration Compound, either Party shall have the right to terminate this Agreement under Section 10.2, and the effects of termination set forth in Section

 

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10.4.1 shall apply.

 

4.3.          Regulatory Matters.

 

4.3.1.                                              Responsibility for Regulatory Interactions.

 

(a)                                         Subject to the terms and conditions of this Agreement, AstraZeneca shall be responsible for all regulatory matters relating to Collaboration Products and Diagnostic Products in all countries and territories other than China, and Hutchison shall be responsible for all regulatory matters relating to Collaboration Products and Diagnostic Products in China.  Hutchison shall be the Regulatory Submission Party for China, and AstraZeneca shall be the Regulatory Submission Party for the ROW Territory.  The costs and expenses associated with the Parties’ activities under this Section 4.3.1 shall be allocated as set forth in Section 5.7.  With regard to the Development of a Diagnostic Product, it is the Parties’ current intention that such Development will be undertaken by a Third Party under contract to the Parties and such Third Party will be responsible for the regulatory matters relating to the Diagnostic Products.

 

(b)                                         Without limiting the foregoing, subject to the terms and conditions of this Agreement, the Regulatory Submission Party shall have sole authority in the applicable country or territory with respect to (i) obtaining Regulatory Approvals for Collaboration Products and subsequently maintaining such Regulatory Approvals, (ii) communicating with Regulatory Authorities about Collaboration Products and (iii) preparing and submitting supplements, communications, annual reports, Adverse Event reports, manufacturing changes, supplier designations and other related regulatory filings and Regulatory Submissions.

 

(c)                                          Each Party shall keep the JSC reasonably informed regarding the status and progress of its activities conducted pursuant to this Section 4.3.1, including providing the JSC with advance notice of all meetings scheduled with a Regulatory Authority (including notice promptly after a request for a meeting received from a Regulatory Authority) involving a Regulatory Submission, providing the JSC with a copy of all substantive written correspondence from a Regulatory Authority involving a Regulatory Submission, notifying the JSC of all oral substantive correspondence from a Regulatory Authority involving a Regulatory Submission, and promptly providing the JSC with each Regulatory Submission submitted to a Regulatory Authority.

 

4.3.2.                                              Regulatory Cooperation.  At no cost to the other Party, other than reimbursement of a Party’s reasonable out-of-pocket costs and expenses, the Regulatory Submission Party shall provide the other Party with reasonable access to and copies of any documents, correspondence or other materials Controlled by the Regulatory Submission Party that are useful for Regulatory Submissions for Collaboration Products to be made by the other Party pursuant to Section 4.3.1, and will otherwise cooperate with the other Party with respect to such Party’s efforts to obtain and maintain Regulatory Approvals for Collaboration Products in the Field

 

24

 

pursuant to Section 4.3.1.

 

4.3.3.                                              Regulatory Meetings.  The Regulatory Submission Party shall provide the other Party with notice of all meetings, conferences and discussions (including without limitation, advisory committee meetings or any other meeting of experts convened by any Regulatory Authority concerning any topic relevant to the Collaboration Product) promptly after the scheduling of such meeting, conference or discussion.  The Party that does not, at the time of such meeting, own the Regulatory Submission for the Collaboration Product that is the subject of such meeting shall be entitled to have one (1) or more representatives, as appropriate under the circumstance and at its sole cost, present at all such meetings.  Hutchison and AstraZeneca, through the JDC, shall use all reasonable efforts to agree in advance on the scheduling of such meetings, conferences and discussions and on the objectives to be accomplished at such meetings, conferences and discussions and the agenda for the meetings, conferences and discussions with the Regulatory Authority.  Each Party shall provide to the other Party, as soon as reasonably practicable but in no event more than two (2) Business Days after its receipt, copies of any material documents or other material correspondence received from a Regulatory Authority in China, United States, European Union or Japan pertaining to the Collaboration Compound or Collaboration Product.

 

4.3.4.                                              Regulatory Audits.  If a Regulatory Authority desires to conduct an inspection or audit of a Party’s facility, or a facility under contract with a Party, with regard to a Collaboration Product, then such Party shall promptly notify the other Party and permit and cooperate with such inspection and audit.  Following receipt of the inspection or audit observations of such Regulatory Authority (a copy of which the audited Party will immediately provide to the other Party), the audited Party shall prepare the response to any such observations and shall provide a copy of such response to the other Party.

 

4.3.5.                                              Adverse Events.  Within ninety (90) days after the Effective Date, the Parties will enter into a pharmacovigilance agreement, which upon such execution will be attached as an exhibit hereto and hereby incorporated into this Agreement by reference (the “Pharmacovigilance Agreement”).  The Parties shall comply with the provisions of such agreement.  AstraZeneca shall maintain and will be the recognized holder of a global safety database for Adverse Event reports related to the Collaboration Product.  Unless otherwise agreed to by the Parties, AstraZeneca will respond to all safety inquiries regarding Collaboration Products in the Field in the Territory.

 

4.4.          Manufacture.

 

4.4.1.                                              Selection of a Manufacturer for Clinical Supply.  Promptly after the Effective Date, the JSC shall select one (1) or more manufacturers to Manufacture and supply Collaboration Compound and Collaboration Product for all Development activities under the Development Plan in the Territory (the “Designated Manufacturer”).  In the event that the JSC cannot unanimously agree on the selection of a single Designated Manufacturer for the Territory, AstraZeneca shall have the right to select a Designated Manufacturer to Manufacture the Collaboration Compound or Collaboration Product for use in the Territory, recognizing the needs for selecting a Designated Manufacturer to Manufacture in China for the China Development Activities in order to support the rapid Regulatory Approval of the Collaboration Product in China.

 

25

 

4.4.2.                                              Designated Manufacturer Agreements for Clinical Supply.  Subject to oversight by the JSC, the Parties shall be jointly responsible for procuring sufficient quantities of Collaboration Compound and Collaboration Product as are necessary for the Parties to perform their respective obligations under the Development Plan.  Unless the Parties agree to a single Designated Manufacturer under Section 4.4.1, Hutchison shall negotiate in good faith and enter into an agreement with a Designated Manufacturer for the Manufacture and supply of such quantities of Collaboration Compound and Collaboration Product as are necessary for Hutchison to perform its obligations under the Development Plan (i.e., with respect to China).  In the case where such agreement refers to the future commercial terms of supply of a Collaboration Compound or Collaboration Product then the prior approval of AstraZeneca to such terms shall be sought.  Unless the Parties agree to a single Designated Manufacturer under Section 4.4.1, AstraZeneca shall negotiate in good faith and enter into an agreement with a Designated Manufacturer for the Manufacture and supply of such quantities of Collaboration Compound and Collaboration Product as are necessary for AstraZeneca to perform its obligations under the Development Plan (i.e., with respect to the ROW Territory).  Each Party shall promptly provide to the other Party a copy of its agreement with the Designated Manufacturer promptly after execution thereof.  [**].  The Parties shall share costs and expenses of procuring supply from a Designated Manufacturer under this Section 4.4.2 in accordance with the allocations set forth in Section 5.7.

 

4.4.3.                                              Commercial Supply of Collaboration Compound and Collaboration Product.  AstraZeneca shall be solely responsible, at its sole expense, for Manufacturing or having Manufactured commercial quantities of Collaboration Compound and Collaboration Product for sale throughout the Territory.

 

4.5.          Commercialization.

 

4.5.1.                                              Commercialization Activities.  As of the Effective Date, the Parties contemplate that (i) AstraZeneca shall be responsible for the Commercialization of the Collaboration Product in the Territory and (ii) the Parties may negotiate in good faith to co-Commercialize (but not co-promote) the Collaboration Product in China.  Any such co-Commercialization shall be subject to a separate written agreement of the Parties.

 

4.5.2.                                              Reports of Commercialization Activities.  AstraZeneca shall provide Hutchison with quarterly reports of the activities it has undertaken with regard to Commercializing Collaboration Products in the Field in all countries and territories, including AstraZeneca’s efforts to achieve the diligence obligations set forth in Section 4.6.4.  In addition, AstraZeneca shall meet with Hutchison, at Hutchison’s request, no more than two (2) times per year to report on the activities it has undertaken with regard to Commercializing Collaboration Products in the Field and to provide a forum for Hutchison to provide feedback regarding such Commercialization activities, which feedback shall be reasonably considered by AstraZeneca in developing its future Commercialization strategy for a Collaboration Compound and Collaboration Products.

 

4.5.3.                                              Commercialization Diligence Obligations.  AstraZeneca shall use

 

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Commercially Reasonable Efforts to Commercialize Collaboration Products in the Field in the Territory.  AstraZeneca shall use Commercially Reasonable Efforts to identify and procure the Commercialization of any Diagnostic Product reasonably necessary to Commercialize the Collaboration Products in the Territory.  Upon the grant of a Regulatory Approval for a Collaboration Product in a country, AstraZeneca shall use Commercially Reasonable Efforts to market Collaboration Products in such country.  AstraZeneca shall not, and shall ensure that its Affiliates and Sublicensees do not, seek Regulatory Approval for or Commercialize a Combination Collaboration Product in any country or territory prior to obtaining Regulatory Approval for and Commercializing in such country a Collaboration Product that is not a Combination Collaboration Product.

 

4.6.          Phase IV and Publication Strategy.

 

4.6.1.                                              Conduct of Phase IV Clinical Trials.  Neither Party shall undertake, or permit its Affiliates or Sublicensees to undertake, any pre-clinical study or Clinical Trial of any Collaboration Product, including Phase IV Clinical Trials, but excluding any studies required for Regulatory Approval or otherwise imposed by a Regulatory Authority and authorized under the Development Plan, without approval of such studies by the JSC.

 

4.6.2.                                              Publication Strategy.  The Parties shall coordinate worldwide publication strategy involving Collaboration Products and activities involving Collaboration Products related to scientific conferences through the JSC.  Review and approval of individual manuscripts shall be delegated to appropriate working groups of the Parties.  Each Party shall be afforded the opportunity to review and approve any scientific paper or presentation with respect to any Collaboration Product proposed for publication, presentation or distribution by the other Party or its Affiliates or Sublicensees and shall have no more than [**] to complete such review and approval (or such shorter period as may reasonably be required by applicable publication deadlines promptly communicated to such Party).  The Party proposing a publication or presentation shall (a) not unreasonably reject comments furnished by the other Party, (b) comply with the other Party’s request to delete references to its Confidential Information in any such publication or presentation and (c) delay publication for such reasonable period requested by the other Party to permit the filing of patent applications concerning any AstraZeneca Technology, Hutchison Technology or Joint Technology disclosed in material proposed for such publication or presentation.  In no event will Confidential Information of a Party be published without the consent of such Party.

 

4.6.3.                                              Permitted Publications.  Notwithstanding anything to the contrary in this Agreement, both Parties and their respective Affiliates shall be entitled to publicly disclose significant Collaboration Product achievements of the type and by the means customary for similarly situated companies, including commencement of Clinical Trials, significant factual information with respect to Clinical Trials (including numbers of patients, centers, investigators, descriptions of protocols, completion of enrollment and of treatment under Clinical Trials, safety and efficacy data and other results of Clinical Trials) and filings with and actions by Regulatory Authorities.  Prior to publicly disclosing any such Collaboration Product achievement, including any results of Clinical Trials, the disclosing Party will provide the other Party with a copy of such disclosure no later than [**] business days in advance, or if such advance notice is not practicable under the circumstances, as much advance notice as the disclosing Party can reasonably provide (if any) and shall take into account the good faith and reasonable comments made by the other Party

 

27

 

within such period.

 

5.                                      CONSIDERATION.

 

5.1.          Upfront Payments. In consideration of the rights granted to AstraZeneca under this Agreement and the investment incurred for HMPL-504 by Hutchison prior to the date of this Agreement, AstraZeneca shall, upon receipt of an invoice, make a payment of Twenty Million Dollars ($20,000,000) on the Effective Date as an upfront, non-creditable, non-refundable fee to Hutchison, and such fee will not be reduced by the amount of any Indirect Taxes or Withholding Taxes required to be paid by AstraZeneca under any Applicable Law, subject, however, to Section 5.8.2 and 5.8.3.

 

5.2.          Milestones.

 

5.2.1.                                              Development Milestones.  As additional consideration for the rights granted to AstraZeneca under this Agreement, except as otherwise set forth below, AstraZeneca will pay Hutchison, upon receipt of an invoice, the following non-creditable, non-refundable (except as set forth in Section 9.3) amounts, within [**] after the first occurrence of each of the following events (each, a “Development Milestone”).  For the avoidance of doubt, each Development Milestone shall be paid only once during the Term, regardless of the number of Collaboration Compounds or Collaboration Products that achieve the corresponding Milestone Event:

 

	
EVENT
    	
 
    	
MILESTONE PAYMENT
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Initiation of the first Phase I Clinical Trial in   China
    	
 
    	
$
    	
5,000,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
Initiation of the first Phase IIb Clinical Trial in   the Secondary Indication (or an indication having equal or greater market   potential as Secondary Indication)
    	
 
    	
$
    	
5,000,000
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    	
 
    

 

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EVENT
    	
 
    	
MILESTONE PAYMENT
    
	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    

 

In determining whether, for the purposes of this Section 5.2.1, an indication has equal or greater market potential as the Primary Indication or the Secondary Indication as the case may be, the JSC shall meet to discuss in good faith whether such indication does, in fact, have equal or greater market potential.  [**].

 

Any Development Milestone payable under this Section 5.2.1 will not be reduced by the amount of any Indirect Taxes or Withholding Taxes required to be paid by AstraZeneca under any Applicable Law, subject, however, to Section 5.8.2 and 5.8.3.

 

5.2.2.                                Sales Milestones.  As further consideration for the rights granted to AstraZeneca under this Agreement, AstraZeneca will pay Hutchison upon receipt of an invoice the following non-creditable, non-refundable amounts within [**] days after the first occurrence of the following events (each, a “Sales Milestone”):

 

	
EVENT
    	
 
    	
MILESTONE PAYMENT
    
	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
 
    
	
[**]
    	
 
    	
[**]
    

 

29

 

5.2.3.                                              Notice of Milestone Event.  AstraZeneca shall notify Hutchison as promptly as reasonably practicable after the occurrence of each Development Milestone and each Sales Milestone, but in no event later than ten (10) days after the occurrence thereof.

 

5.3.          Royalties. In addition to the payments under Sections 5.1 and 5.2, in consideration for the rights granted to AstraZeneca under this Agreement, AstraZeneca shall pay to Hutchison the royalty payments set forth in this Section 5.3, as such may be adjusted pursuant to the terms hereof.

 

5.3.1.                                              China Royalty.  During the Royalty Period, subject to Section 5.3.3, AstraZeneca shall pay to Hutchison, on a Collaboration Product-by- Collaboration Product basis, an amount equal to [**] of annual aggregate Net Sales of each such Collaboration Product in the Field in China in such Calendar Year (or portion thereof).

 

5.3.2.                                              Rest of World Royalty.  During the applicable Royalty Period, subject to Section 5.3.3, AstraZeneca shall pay to Hutchison, on a country-by-country and Collaboration Product-by- Collaboration Product basis, the following amounts:.

 

(a)                                         [**] of Net Sales in each Calendar Year (or portion thereof) for the portion of annual aggregate Net Sales of such Collaboration Product in the Field in the ROW Territory below or equal to [**]; plus

 

(b)                                         [**] of Net Sales in each Calendar Year (or portion thereof) for the portion of annual aggregate Net Sales of such Collaboration Product in the Field in the ROW Territory greater than [**] and less than or equal to [**]; plus

 

(c)                                          [**] of Net Sales in each Calendar Year (or portion thereof) for the portion of annual aggregate Net Sales of such Collaboration Product in the Field in the ROW Territory greater than [**].

 

5.3.3.                                              Adjustments in Royalty Rates.  On a country-by-country basis [**] AstraZeneca shall owe royalties under Section 5.3 (as applicable to such country) on the amount of the Net Sales of such Collaboration Product in such country at rates that are [**] of the rates otherwise payable under such Section 5.3 for the remainder of the Royalty Period.

 

5.4.                            Sales Subject to Royalties.  Sales of Collaboration Product between AstraZeneca, its Affiliates and Sublicencees that are purchased for re-sale shall not be subject to royalties hereunder.  Royalties shall be calculated on AstraZeneca’s and its Affiliates’ sale of the

 

30

 

Collaboration Products to Third Parties (including distributors).  Royalties shall be payable only once per unit of Collaboration Product.

 

5.5.                            Fully Paid-Up, Royalty Free License. Following the expiration of the Royalty Period for any Collaboration Product in a given country of the Territory, no further royalties shall be payable in respect of Net Sales of such Collaboration Product in such country and, thereafter, the license granted to AstraZeneca under Section 2.2 with respect to such Collaboration Product in such country shall automatically become a fully paid-up, perpetual, irrevocable, non-terminable, royalty-free, non-exclusive license.

 

5.6.                            Third Party Intellectual Property. Neither Party shall negotiate or enter into any New Third Party License without first discussing such new Third Party License at the Joint Steering Committee and complying with the provisions of this Section 5.6.

 

5.6.1.            Terms of New Third Party Licenses.   If, during the Term and after consultation with Hutchison, AstraZeneca enters into an agreement with a Third Party in order to obtain a royalty bearing license under any Patent Right of a Third Party that, in AstraZeneca’s reasonable judgment, would be necessary for the Development, Manufacture or Commercialization of the Collaboration Compound or Collaboration Product in the Field in the Territory (a “New Third Party License”), then AstraZeneca shall be entitled, on a Collaboration Product-by-Collaboration Product and country-by-country basis, to credit against any royalty payable to Hutchison under Section 5.3.1 or 5.3.2 [**] of any royalty (but no other payments) (the “Hutchison Portion”) actually paid by or on behalf of AstraZeneca to such Third Party as a result of such sale; provided, however, that in no event shall any royalty payable to Hutchison be reduced as a result of this Section 5.6.1 by more than [**] of the amount otherwise due to Hutchison with respect to such sale.  In addition, any such Hutchison Portion shall not reduce the amounts due to Hutchison under Section 5.3 in any Calendar Quarter by more than [**] of the amounts otherwise due.  Any deductions of a Hutchison Portion to which AstraZeneca is entitled under this Section 5.6.1 may be carried forward to the next Calendar Quarter until fully exhausted.

 

5.6.2.            Sublicensing of New Third Party Licenses.  Such New Third Party License shall be (a) sublicensable to the Hutchison for purposes of Hutchison conducting activities or potential activities permitted under this Agreement and for performing obligations under this Agreement and (b) assignable to Hutchison in the event of a termination of this Agreement.  In the event AstraZeneca is unable to negotiate a New Third Party License that is sublicensable and assignable to Hutchison to the extent set forth above, then the Parties will meet and discuss how to proceed.

 

5.6.3.            New Third Party Licenses Applicable only to Hutchison.  If any intellectual property rights Controlled by a Third Party are necessary or useful only for Hutchison to conduct activities or to perform obligations under this Agreement, then Hutchison shall be free to enter into a New Third Party License for such intellectual property to Develop the applicable Collaboration Product anywhere in the world, solely for purposes of obtaining Regulatory Approval for such Collaboration Product.

 

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5.7.      Development Costs.

 

5.7.1.            Definitions.  As used in this Section 5.7, the following terms shall have the following meanings.

 

(a)          “China Development Activities” means (a) all Development activities relating to chemistry, manufacturing and control of the Collaboration Product  and (b) all Development activities (other than Translational Research Activities) that (i) are conducted outside of China but are intended to directly support obtaining Regulatory Approval for a Collaboration Product in China, including the Phase I Clinical Trial for the Collaboration Product contemplated by the Parties on the Effective Date to be conducted in Australia, or (ii) are conducted inside of China.

 

(b)          “China Translational Costs” means all Translational Costs associated with Translational Research Activities that (i) are conducted outside of China but are principally related to obtaining Regulatory Approval for a Diagnostic Product in China or (ii) are conducted inside of China.

 

(c)          “Development Costs” means all direct costs specifically identifiable or allocable to Development of a Collaboration Product and actually incurred by a Party or its Affiliates (it being understood that “direct costs” excludes overhead), including (a) reasonable costs of supplies and materials related to the foregoing and (b) reasonable amounts paid to Third Parties performing activities on behalf of such Party or its Affiliates, in all cases, to the extent such Development activities are specified in the Development Plan.

 

(d)          “Global Translational Costs” means Translational Costs, other than China Translational Costs, associated with Translational Research Activities that are performed in support Regulatory Approval for a Diagnostic Product in the entire Territory.

 

(e)          “Manufacturing Costs” means all direct costs specifically identifiable or allocable to Manufacture of Collaboration Compound and Collaboration Product for use in China and actually incurred by a Party or its Affiliates (it being understood that “direct costs” excludes overhead), including (a) reasonable costs of supplies and materials related to the foregoing and (b) reasonable amounts paid to Third Parties performing activities on behalf of such Party or its Affiliates.

 

(f)           “Shared Development Costs” means (i) all Development Costs associated with China Development Activities and (ii) all Manufacturing Costs associated with the Manufacture of Collaboration Compound and Collaboration Product for use in China.

 

(g)          “Translational Costs” means all direct costs specifically identifiable or allocable to performance of the Translational Research Activities and actually incurred by a Party or its Affiliates (it being understood that “direct costs” excludes overhead), including (a) reasonable costs of supplies and materials

 

32

 

related to the foregoing and (b) reasonable amounts paid to Third Parties performing activities on behalf of such Party or its Affiliates, in all cases, to the extent such Translational Research Activities are specified in the Development Plan.

 

(h)          “Translational Cost Cap” means, with respect to amounts owed by Hutchison in respect of Global Translational Costs and China Translational Costs pursuant to Section 5.7.3, an aggregate amount equal to [**].

 

5.7.2.            Allocation of Development Costs.

 

(a)          Hutchison shall be responsible for paying [**] of the Shared Development Costs, and AstraZeneca shall be responsible for paying [**] of the Shared Development Costs.

 

(b)          [**].

 

5.7.3.            Allocation of Translational Costs.

 

(a)          Subject to Section 5.7.3(c), Hutchison shall be responsible for paying [**] of Global Translational Costs, and AstraZeneca shall be responsible for paying [**] of Global Translational Costs.

 

(b)          Subject to Section 5.7.3(c), Hutchison shall be responsible for paying [**] of China Translational Costs, and AstraZeneca shall be responsible for paying [**] of China Translational Costs.

 

(c)          Notwithstanding anything to the contrary contained herein, in no event shall Hutchison be obligated to make any out-of-pocket payments under Section 5.7.3(a) or 5.7.3(b) for the performance of Translational Research Activities that exceed, in the aggregate, the Translational Cost Cap.  Any amounts owed by Hutchison under such provisions that exceed the Translational Cost Cap may be deducted from the next applicable payment owed by AstraZeneca to Hutchison under Section 5.2.1 or 5.2.2; provided, however, that any such deduction shall not reduce the amounts due to Hutchison under Section 5.2.1 or 5.2.2 in any Calendar Quarter by more than [**] of the amounts otherwise due.  Any deductions to which AstraZeneca is entitled under this Section 5.7.3(c) may be carried forward until fully exhausted.

 

5.7.4.            Costs outside the Development Plan.  [**].

 

33

 

5.8.  Reports and Payments.

 

5.8.1.            Royalty Reports.  Within [**] days after the end of each Calendar Quarter beginning with the Calendar Quarter in which the First Commercial Sale is made in a country following receipt of Regulatory Approval in such country, AstraZeneca shall deliver to Hutchison a report setting forth for the previous Calendar Quarter the following information on a Collaboration Product-by-Collaboration Product basis:  (a) the Net Sales of each Collaboration Product in each country, (b) the number of units sold by Hutchison, its Affiliates or Sublicensees, (c) the basis for any adjustments to the royalty payable for the sale of each Collaboration Product, (d) the royalty due hereunder for the sales of each Collaboration Product, and (e) the applicable exchange rate as determined in accordance with this Agreement.  The total royalty due for the sale of Collaboration Products during such Calendar Quarter shall be remitted at [**].  No such reports shall be due for any Collaboration Product after the relevant Royalty Period for such Collaboration Product has expired.

 

5.8.2.            Withholding Tax.

 

(a)           [**].

 

(b)           [**].

 

34

 

(c)           [**].

 

(d)           [**].

 

(e)           [**].

 

(f)           [**].

 

35

 

(g)           [**].

 

5.8.3.            Indirect Taxes.  Notwithstanding anything contained in Section 5.8.2, this Section 5.8.3 shall apply with respect to Indirect Taxes.  All payments under this Agreement are stated exclusive of Indirect Taxes.  If any Indirect Taxes are chargeable in respect of any Payments, the remitting Party shall pay Indirect Taxes at the applicable rate in respect of any such Payments following the receipt of an Indirect Taxes invoice in the appropriate form issued by receiving Party in respect of those payments, such Indirect Taxes to be payable on the later of the due date of the payment to which such Indirect Taxes relates and sixty (60) days after the receipt by the remitting Party of the applicable invoice relating to that Indirect Taxes payment. The Parties shall issue invoices for all goods and services supplied under this Agreement consistent with Indirect Taxes requirements and irrespective of whether the sums may be netted for settlement purposes.

 

5.8.4.            Currency.  All amounts payable and calculations hereunder shall be in United States dollars.  As applicable, Net Sales and any royalty deductions shall be translated into United States dollars in accordance with the paying Party’s customary and usual currency conversion procedures, consistently applied.  If, due to restrictions or prohibitions imposed by national or international authority, payments cannot be made as provided in this Section 5, the Parties shall consult with a view to finding a prompt and acceptable solution, and the paying Party shall deal with such monies as the other Party may lawfully direct at no additional out-of-pocket expense to the paying Party.

 

5.8.5.            Method of Payment.  Except as permitted pursuant to Section 5.8.4, each payment hereunder shall be made by electronic transfer in immediately available funds via a bank wire transfer, an automated clearing house (ACH) mechanism or any other means of electronic funds transfer, at the paying Party’s election, to the bank account designed by the Party receiving payments under this Section 5 in writing to the paying Party at least thirty (30) days before the payment is due.

 

5.8.6.            Record Keeping.  AstraZeneca shall keep, and shall causes its Affiliates and Sublicensees to keep, books and accounts of record in connection with the sale of Collaboration Products, including records of gross invoiced sales, Net Sales, exchange rates and royalty payments (collectively, the “Financial Records”), in accordance with IFRS or GAAP (as appropriate) and in sufficient detail to permit accurate determination of all figures necessary for verification of royalties and Sales Milestone payments to be made by AstraZeneca under this Section 5.  AstraZeneca and its Affiliates and Sublicensees shall maintain such records for a period

 

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of at least three (3) years after the end of the Calendar Quarter in which they are generated.

 

5.8.7.            Audits.  Upon thirty (30) days prior written notice from Hutchison, AstraZeneca shall permit an independent certified public accounting firm of nationally recognized standing selected by Hutchison and reasonably acceptable to AstraZeneca, to examine, at Hutchison’s sole expense, the relevant Financial Records of AstraZeneca and its Affiliates and Sublicensees as may be reasonably necessary to verify the amounts reported by AstraZeneca in accordance with Section 5.8.1 and the royalties and Sales Milestone payments made by AstraZeneca in accordance with this Section 5.  Hutchison shall be entitled to conduct an audit in accordance with this Section 5.8.7 not more than once in any Calendar Year and such audit shall be limited to the pertinent Financial Records from any Calendar Year ending not more than three (3) years prior to the date of the request.  The accounting firm shall be provided access to such Financial Records at AstraZeneca’s facility(ies) where such Financial Records are normally kept and such audit shall be conducted during Astra Zeneca’s normal business hours.  Upon completion of the audit, the accounting firm shall provide both Parties with a written report disclosing any discrepancies in the reports submitted by AstraZeneca or payments made by AstraZeneca, if any, and in each case, the specific details concerning any discrepancies.  Any information provided by AstraZeneca to the accounting firm and the written report of the accounting firm shall be the Confidential Information of AstraZeneca.

 

5.8.8.            Underpayments/Overpayments.  If a report of an independent public accounting firm submitted to the Parties in accordance with Section 5.8.7 shows any underpayment of royalties and Sales Milestone payments due under this Section 5, AstraZeneca shall remit to Hutchison within [**] days after receipt of such report by AstraZeneca, (a) the amount of such underpayment and (b) if such underpayment exceeds [**] of the total amount owed to Hutchison for the Calendar Year then being audited, the reasonable fees and expenses of such independent public accounting firm performing the audit, subject to reasonable substantiation thereof.  If such independent public accounting firm’s written report shows any overpayment of royalties and Sales Milestone payments due under this Section 5, AstraZeneca shall receive a credit equal to such overpayment against the royalties and Sales Milestone payments due under this Section 5 otherwise payable to Hutchison.

 

5.8.9.            Interest.  Any payment under this Section 5 that is more than [**] days past due shall be subject to interest at an annual percentage rate of the Prime Rate (as published in the “Money Rates” table of the Eastern Edition of The Wall Street Journal during period such amount is overdue) plus [**] if Hutchison does not make payment within [**] days of its receipt of notice that such amount is past due.  Likewise, any overpayment that is not refunded within [**] days after the date such overpayment was made shall thereafter be subject to interest at an annual percentage rate of the Prime Rate (as published in the “Money Rates” table of the Eastern Edition of The Wall Street Journal during the period such amount is overdue) plus [**]; provided, however, that if the overpayment is due to errors in reports provided by AstraZeneca, such interest shall accrue from the date the overpayment was made.  Notwithstanding the preceding, if a Party contests any amounts due hereunder in good faith and promptly notifies the other Party of such dispute, interest shall not accrue as to amounts being so contested until [**] days following the presentation of such notice to the other Party.

 

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6.                                      COVENANTS.

 

6.1.   Confidentiality.

 

6.1.1.            Confidential Information.  Except to the extent expressly permitted by this Agreement and subject to the provisions of Sections 6.1.2 and 6.1.3, at all times during the Term and for five (5) years following the expiration or termination hereof, each Party (the “Receiving Party”) receiving any Confidential Information of the other Party (the “Disclosing Party”) in connection with this Agreement shall: (a) keep completely confidential and shall not publish or otherwise disclose any Confidential Information furnished to it by the Disclosing Party, except to those of the Receiving Party’s employees, Affiliates, consultants or representatives who have a need to know such information (collectively, “Recipients”) to perform such Party’s obligations or exercising its rights hereunder and (b) shall not use Confidential Information of the Disclosing Party directly or indirectly for any purpose other than performing its obligations or exercising its rights hereunder.  The Receiving Party shall be liable for any breach by any of its Recipients of the restrictions set forth in this Agreement.  Notwithstanding the foregoing, in no event, except as permitted under Section 6.1.3, shall Hutchison disclose any Confidential Information relating to the Collaboration Compound or Collaboration Product to any party that becomes an Affiliate of Hutchison as a result of a Change of Control without the prior written consent of AstraZeneca.

 

6.1.2.            Exceptions to Confidentiality.  The Receiving Party’s obligations set forth in this Section shall not extend to any Confidential Information of the Disclosing Party:

 

(a)           that is or hereafter becomes part of the public domain through no wrongful act, fault or negligence on the part of a Receiving Party or its Recipients;

 

(b)           that is received from a Third Party without restriction and without breach of any agreement or fiduciary duty between such Third Party and the Disclosing Party;

 

(c)           that the Receiving Party can demonstrate by competent evidence was already in its possession without any limitation or restriction on use or disclosure prior to its receipt from the Disclosing Party;

 

(d)           that is generally made available to Third Parties by the Disclosing Party without any restriction imposed by the Disclosing Party on disclosure, whether such restriction is by contract, fiduciary duty or by operation of law; or

 

(e)           that the Receiving Party can demonstrate by competent evidence was independently developed by the Receiving Party without any reference to Confidential Information.

 

6.1.3.            Authorized Disclosure.  Notwithstanding the provisions of Section 6.1.1, the Receiving Party and its Recipients may disclose Confidential Information belonging to the Disclosing Party to the extent that such disclosure is reasonably necessary to:

 

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(a)           Prosecute or defend litigation;

 

(b)           Comply with applicable governmental laws and regulations (including applicable law, rule or regulation or the requirements of a national securities exchange or another similar regulatory body);

 

(c)           Make filings and submissions to, or correspond or communicate with, any Government Authority.

 

In the event that the Receiving Party or its Recipients, as applicable, deem it reasonably necessary to disclose Confidential Information belonging to the Disclosing Party pursuant to this Section 6.1.3, the Receiving Party shall, to the extent possible, provide the Disclosing Party with reasonable advance notice of such disclosure and take reasonable measures (including for example, where appropriate, the filing of a redacted copy of this Agreement approved by both Parties) to ensure confidential treatment of such information.  In addition, the Receiving Party may disclose Confidential Information belonging to the Disclosing Party to any Third Party who is performing diligence in connection with a transaction with the Receiving Party (including potential Sublicensees and licensees) and to any Third Party performing work contemplated by this Agreement; provided that, each such Third Party has signed a written confidentiality agreement with the Receiving Party that is no less restrictive than the terms hereof.

 

6.1.4.            Notification.  The Receiving Party shall notify the Disclosing Party immediately, and cooperate with the Disclosing Party as the Disclosing Party may reasonably request, upon the Receiving Party’s discovery of any loss or compromise of the Disclosing Party’s Confidential Information.

 

6.1.5.            Destruction of Confidential Information.  Upon the expiration or earlier termination of this Agreement, except with respect to Confidential Information necessary or useful for a Receiving Party to exercise any rights or perform any obligations under this Agreement surviving such expiration or termination, the Receiving Party shall (a) destroy all tangible embodiments of Confidential Information of the Disclosing Party, including any and all copies thereof, and those portions of any documents, memoranda, notes, studies and analyses prepared by the Receiving Party or its Recipients that contain, incorporate or are derived from such Confidential Information and provide written certification of such destruction to the Disclosing Party in a form reasonably acceptable to the Disclosing Party, provided that the legal department of the Receiving Party shall have the right to retain one (1) copy of any such tangible embodiments for archival purposes, provided such copy shall continue to be maintained on a confidential basis subject to the terms of this Agreement, and (b) immediately cease, and shall cause its Recipients to cease, use of such Confidential Information as well as any information or materials that contain, incorporate or are derived from such Confidential Information.

 

6.1.6.            Use of Name and Disclosure of Terms.  Each Party shall keep the existence of, the terms of and the transactions covered by this Agreement confidential and shall not disclose such information to any Third Party through a press release or otherwise, or mention or otherwise use the name, insignia, symbol, trademark, trade name or logotype of the other Party or its Affiliates in any manner without the prior written consent of the other Party in each instance (which shall not be unreasonably withheld); provided, however, that a Receiving Party may

 

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disclose such information without the prior consent of the Disclosing Party to any Third Party who is performing diligence in connection with a transaction with such Receiving Party (including potential Sublicensees and licensees) so long as each such Third Party has signed a written confidentiality agreement with such Receiving Party no less restrictive than the terms hereof.  The restrictions imposed by this Section 6.1.6 shall not prohibit either Party from making any disclosure that is required by applicable law, rule or regulation or the requirements of a national securities exchange or another similar regulatory body, including disclosing such information in any clinical trial database maintained by or on behalf of a Party, or that is expressly permitted under this Agreement.  Further, the restrictions imposed on each Party under this Section 6.1.6 are not intended, and shall not be construed, to prohibit a Party from identifying the other Party in its internal business communications, provided that any Confidential Information in such communications remains subject to this Section 6.1.6.

 

6.1.7.            Remedies.  The Parties acknowledge and agree that the restrictions set forth in Section 6.1 are reasonable and necessary to protect the legitimate interests of the Parties and that neither Party would have entered into this Agreement in the absence of such restrictions, and that any breach or threatened breach of any provision of Section 6.1 will result in irreparable injury to the other Party for which there will be no adequate remedy at law.  In the event of a breach or threatened breach of any provision of Section 6.1 by a Party, the other Party shall be authorized and entitled to obtain from any court of competent jurisdiction injunctive relief, whether preliminary or permanent, specific performance and an equitable accounting of all earnings, profits and other benefits arising from such breach, which rights shall be cumulative and in addition to any other rights or remedies to which such Party may be entitled in law or equity.  The breaching Party agrees to waive any requirement that the non-breaching Party (a) post a bond or other security as a condition for obtaining any such relief and (b) show irreparable harm, balancing of harms, consideration of the public interest or inadequacy of monetary damages as a remedy.  Nothing in this Section 6.1.7 is intended, or shall be construed, to limit the Parties’ rights to equitable relief or any other remedy for a breach of any provision of this Agreement.

 

6.2.   Compliance with Law. Each Party hereby covenants and agrees to comply with all laws applicable to its activities connected with the Development, Manufacture and Commercialization (as applicable) of Collaboration Products.  Without limiting the generality of the foregoing:

 

6.2.1.            Patient Information.  Each Party agrees to abide by all laws, rules, regulations, and orders of all applicable supranational, national, federal, state, provincial, and local governmental entities concerning the confidentiality or protection of patient identifiable information or patients’ protected health information in the course of their performance under this Agreement.

 

6.2.2.            Export Controls.  This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States or other countries which may be imposed upon or related to Hutchison or AstraZeneca from time to time.  Each Party agrees that it shall not export, directly or indirectly, any technical information acquired from the other Party pursuant to this Agreement or any Collaboration Products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate

 

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agency or other governmental entity.

 

6.2.3.               Debarment.  Each Party agrees that it shall not knowingly use, in any capacity, in connection with any of its obligations to be performed under this Agreement any individual who has been disqualified or debarred by the United States Food and Drug Administration, pursuant to 21 U.S.C. §§ 335(a) or (b), or been charged with or convicted under United States law for conduct relating to the development or approval, or otherwise relating to the regulation of Collaboration Product under the Generic Drug Enforcement Act of 1992, or any other relevant law, rule, or regulation or been disbarred, disqualified, or convicted under or for any equivalent or similar applicable foreign law, rule, or regulation.

 

6.3.                            Anti-Corruption Laws.

 

6.3.1.         Compliance with Anti-Corruption Law.  In carrying out their responsibilities under this Agreement, the Parties shall comply with all applicable anti-corruption laws in the countries where the Parties have their principal or other places of business and where they conduct activities under this Agreement. Additionally, the Parties understand and agree to comply with the U.S. Foreign Corrupt Practices Act of 1977 (“US Act”) and the UK Bribery Act of 2010 (“UK Act”), in each case as revised, which in the case of the US Act generally prohibits the promise, payment or giving of anything of value either directly or indirectly to any government official for the purpose of obtaining or retaining business or any improper advantage, and in the case of the UK Act includes the prohibition on the making of any bribe to a foreign public official with the intention of influencing such person in order to obtain or retain business or an advantage in the conduct of business. For purposes of this section, (a) “government official” means any official, officer, representative, or employee of, including any doctor employed by, any non-U.S. government department, agency or instrumentality (including any government-owned or controlled commercial enterprise), or any official of a public international organization or political party or candidate for political office; and (b) “foreign public official” means an individual who holds a legislative, administrative or judicial position of any kind, whether appointed or elected, of a country or territory outside the United Kingdom (or any subdivision of such a country or territory); exercises a public function (i) for or on behalf of a country or territory outside the United Kingdom (or any subdivision of such a country or territory), or (ii) for any public agency or public enterprise of that country or territory (or subdivision); or is an official or agent of a public international organization.

 

6.3.2.         Certain Covenants regarding Anti-Corruption. Additionally, each Party represents and warrants to the other Party that neither it nor any of its, directors, employees, agents, consultants (or any other person who may be associated with a Party for the purposes of the UK Act) will directly or indirectly pay or give or promise to pay or give anything of value to any government official or a foreign public official for purposes of (a) influencing any act or decision of any such person in his official capacity; (b) inducing such person to do or omit to do any act in violation of the lawful duty of such official; (c) securing any improper advantage; or (d) inducing such person to use his position to affect or influence any act or decision of government or any legislative, administrative, public agency or other public body with respect to any activities undertaken relating to this Agreement. Additionally, the Parties will make reasonable efforts to comply with requests for information, including answering questionnaires

 

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and narrowly tailored audit inquiries, to enable the other Party to ensure compliance with any applicable anti-corruption laws.

 

6.3.3.               Breach of Anti-Corruption Covenants.  The Parties agree that a breach of the anti-corruption commitments in Section 6.3 shall be considered a material breach of this Agreement and that either Party may immediately seek all remedies available under law and equity including termination of this Agreement pursuant to Section 10.3.1 if it believes, in good faith, that the covenants under the anti-corruption commitments in this Section 6.3 have been breached by the other Party, without owing to the other any damages or indemnification resulting solely from such termination.

 

6.4.   Exclusivity.

 

6.4.1.               Scope of Exclusivity.  Each Party agrees that, from the Effective Date until the earlier of (x) [**] and (y) the date that is [**] years after the Effective Date (the “Exclusivity Period”), the following restrictions shall apply:

 

(a)             Neither Party nor its Affiliates or Sublicensees shall, directly or indirectly, Develop, Manufacture or Commercialize any Collaboration Compound, except as set forth in the Development Plan or as otherwise set forth herein.

 

(b)             Except as expressly permitted under this Section 6.4, neither Party shall develop, manufacture or commercialize any Agreement Compound, independently or for or with any of its Affiliates or any Third Party (including through the grant of any license to any Third Party); provided, however, [**].  For the avoidance of doubt, in no event shall either Party conduct any Clinical Trial of any Agreement Compound, including any Back-Up Compound, without the prior written consent of the other Party.

 

6.4.2.               Acquisition of Agreement Compound.  A Party will not be deemed to be in breach of the restrictions set forth in Section 6.4.1(b) if such Party or any of its Affiliates acquires, through an acquisition of or a merger with the whole or substantially the whole of the business or assets of another Person, an Agreement Compound that such Person is developing in the clinic, manufacturing or commercializing, independently or for or with any of its Affiliates or any Third Party (including though the grant of a license to any Third Party) (such activities, the “Restricted Activities”), so long as such Party (or its Affiliate) [**].  As used in this Section 6.4.2, the following terms shall have the following meanings.

 

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(a)             “Hold Separate Transaction” means any “hold separate” transaction (whether through the establishment of a trust or otherwise) involving the proposed sale of an Agreement Compound pursuant to an agreement with any Government Authority responsible for antitrust laws.

 

(b)             “Divest” or “Divestiture” means, with respect to any Agreement Compound, (i) the sale, exclusive license or other transfer of all of the right, title and interest in and to such Agreement Compound, including all technology, intellectual property and other assets relating solely thereto, to an independent Third Party, without the retention or reservation of any rights, license or interest (other than customary residual rights in the event of a termination) in such Agreement Compound and (ii) the complete shutdown of the Agreement Compound such that no technology, intellectual property or other asset relating thereto is used by the applicable Party or its Affiliates and delivery of written confirmation from such Party to the other Party that such Party and its Affiliates covenant not to use any technology, intellectual property and assets solely relating to such Agreement Compound during the Exclusivity Period.

 

6.4.3.               Breach of Exclusivity.  If, at any time during the Exclusivity Period, a Party is in breach of the restrictions set forth in Section 6.4.1(b), then the other Party shall have the right to terminate this Agreement immediately upon providing written notice of such termination, in which case the effects of termination set forth in Section 10.4.2 shall apply.

 

6.5.   Change of Control.

 

6.5.1.               Notice.  In the event of any Change of Control that occurs during the Term, Hutchison shall notify AstraZeneca promptly thereof, but in no event later than [**] Business Days following execution of the definitive agreement contemplating the transaction that would constitute such Change of Control.  Upon receipt of such notice, AstraZeneca shall have the right, by submitting written notice to Hutchison no later than [**] days after the closing of such Change of Control (such notice, the “COC Amendment Notice”), to amend this Agreement in accordance with the terms and conditions set forth in Sections 6.5.2 and 6.5.3 (such amendment, a “COC Amendment”).  In the event that AstraZeneca submits a COC Amendment Notice, the Parties will enter into an appropriate and customary written amendment reflecting the terms and conditions set forth in Sections 6.5.2 and 6.5.3.

 

6.5.2.               Change of Control before [**].  Where a Change of Control occurs at any time prior [**], any COC Amendment shall contain the following terms:

 

[**]

 

[**]

 

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[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

6.5.3.               Change of Control after [**].  Where a Change of Control occurs at any time after the [**], any COC Amendment shall contain the following terms:

 

(a)             Hutchison shall, and hereby does, assign to AstraZeneca all right, title and interest in and to: (i) Hutchison Patent Rights and Joint Patent Rights, all Regulatory Submissions and Regulatory Approvals Controlled by Hutchison or any Affiliate pertaining to Collaboration Compound, Collaboration Product and Diagnostic Products in the Field in the Territory and (ii) all of [**];

 

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[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

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6.6.   Non-Solicitation. During the Term, neither Party nor any of its Affiliates shall, directly or indirectly, anywhere in the Territory solicit for employment, any person engaged in the Development, Manufacture or Commercialization of any Collaboration Compound or Collaboration Product employed by either Party or their Affiliates, during the period such person is so employed or for [**] after termination of such person’s employment provided that such restriction shall not apply in the case where such employee responds to an advertisement of employment made by either Party in the normal course of their business.

 

7.                                      REPRESENTATIONS AND WARRANTIES.

 

7.1.   Representations and Warranties of Each Party. As of the Effective Date, each of AstraZeneca and Hutchison hereby represents and warrants to the other Party hereto as follows:

 

7.1.1.               it is a corporation or entity duly organized and validly existing under the laws of the state or other jurisdiction of its incorporation or formation;

 

7.1.2.               the execution, delivery and performance of this Agreement by such Party has been duly authorized by all requisite corporate action and does not require any shareholder action or approval;

 

7.1.3.               it has the power and authority to execute and deliver this Agreement and to perform its obligations hereunder;

 

7.1.4.               the execution, delivery and performance by such Party of this Agreement and its compliance with the terms and provisions does not and shall not conflict with or result in a breach of any of the terms and provisions of or constitute a default under (i) a loan agreement, guaranty, financing agreement, agreement affecting a product or other agreement or instrument binding or affecting it or its property; (ii) the provisions of its charter or operative documents or bylaws; or (iii) any order, writ, injunction or decree of any court or governmental authority entered against it or by which any of its property is bound; and

 

7.1.5.               it has the full right, power and authority to grant all of the right, title and interest in the licenses granted to the other Party under this Agreement.

 

7.2.   Additional Representations and Warranties of Hutchison. Hutchison hereby represents and warrants to AstraZeneca that as of the Effective Date:

 

7.2.1.               Hutchison, together with its Affiliates, is the sole and exclusive owner of, and has the sole right, title and interest in and to, the Hutchison Patent Rights and the Hutchison Know-How, in each case free and clear of any mortgage, pledge, claim, security interest, covenant, easement, encumbrance, lien, lease, sublease, option, or charge of any kind, limitations on transfer or any subordination arrangement in favor of a Third Party;

 

7.2.2.               All of the Hutchison Patent Rights listed on Schedule 1.49 are in force or pending and have not been abandoned as of the Effective Date, and to Hutchison’s knowledge, all such Hutchison Patent Rights are valid and enforceable;

 

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7.2.3.               No Third Party has challenged or has threatened in writing to challenge the extent, validity or enforceability of the patents encompassed within the Hutchison Technology relating to the Collaboration Compound (including, by way of example, through the institution or written threat of institution of interference, nullity or similar invalidity proceedings before the US Patent and Trademark Office or any analogous foreign entity), and to the knowledge of Hutchison, all application, registration, maintenance and renewal fees in respect of Hutchison Patent Rights have been paid and all documents and certificates required to be filed with the relevant agencies for the purpose of maintaining such Hutchison Patent Rights have been filed;

 

7.2.4.               Neither Hutchison nor any of its Affiliates has granted any license, option or other rights of any kind to or in favor of a Third Party under the Hutchison Technology;

 

7.2.5.               There is no intellectual property right, and in particular no Patent Right, owned or Controlled by Hutchison or its Affiliates other than the Hutchison Technology, that is necessary for AstraZeneca or its Affiliates and subcontractors to Develop a Collaboration Compound as set forth herein;

 

7.2.6.               To Hutchison’s knowledge, the manufacture, use, sale, offer for sale and importation of the Collaboration Compound in the Field in the Territory, in the form in which it is being Developed by Hutchison as of the Effective Date, does not infringe any Patent Rights of a Third Party;

 

7.2.7.               There are no claims, judgments or settlements pending against Hutchison or its Affiliates with respect to any Hutchison Technology, and Hutchison has not received notice that any such claims, judgments or settlements are threatened; and

 

7.2.8.               All employee inventions relevant to the rights granted to AstraZeneca under this Agreement have been duly transferred to Hutchison or its Affiliates in accordance with Applicable Law or Hutchison has entered into binding agreements permitting such a transfer; and

 

7.2.9.               Hutchison has heretofore disclosed or made available to AstraZeneca all material scientific and technical information and all material information relating to safety and efficacy known to it or its Affiliates with respect to the Collaboration Compound and has made available to AstraZeneca complete and accurate copies of all material documentation and correspondence submitted to or received from any Regulatory Authority with respect to the Collaboration Compound.

 

7.3.   Representation by Legal Counsel. Each Party hereto represents that it has been represented by legal counsel in connection with this Agreement and acknowledges that it has participated in the drafting.  In interpreting and applying the terms and provisions of this Agreement, the Parties agree that no presumption shall exist or be implied against the Party which drafted such terms and provisions.

 

7.4.   No Inconsistent Agreements. Neither Party has in effect and after the Effective Date neither Party shall enter into any oral or written agreement or arrangement that would be inconsistent with its obligations under this Agreement or limit the ability of either Party to grant the licenses set forth in Section 2 of this Agreement.

 

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7.5.   Disclaimer. THE FOREGOING WARRANTIES OF EACH PARTY ARE IN LIEU OF ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY IMPLIED WARRANTIES OF NONINFRINGEMENT, ANY IMPLIED WARRANTIES OF MERCHANTABILITY OR ANY IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE ALL OF WHICH ARE HEREBY SPECIFICALLY EXCLUDED AND DISCLAIMED.  EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE OR COMMERCIALIZATION OF ANY PRODUCT UNDER THIS AGREEMENT WILL BE SUCCESSFUL.

 

8.                                      INTELLECTUAL PROPERTY.

 

8.1.   Disclosure. During the Term, the Parties shall promptly disclose to one another all Collaboration Know-How (whether patentable or not).

 

8.2.   Ownership.

 

8.2.1.               Ownership of Technology.  Determinations as to which Party has Invented any Patent Right or Know-How shall be made in accordance with the standards of inventorship under the patent laws of the United States.  Subject to the license grants under Section 2 of this Agreement, as between the Parties, [**].  Neither Party shall take any action that would limit the other Party’s right to exercise its rights under Section 2.4.  In the event inventorship and ownership of any Collaboration Technology cannot be resolved by the Parties with advice of their respective intellectual property counsel, such dispute shall be resolved through the dispute resolution mechanism set forth in Section 12.1.

 

8.2.2.               Employee Assignment.  To the extent permissible under Applicable Laws, each Party will cause each employee and contractor conducting work on such Party’s behalf under this Agreement to sign a contract that (a) compels prompt disclosure to the Party of all Hutchison Technology, AstraZeneca Technology, and Joint Technology, as applicable, conceived or reduced to practice by such employee or contractor during any performance under this Agreement, (b) automatically assigns to the Party all right, title and interest in and to all such Technology and all Patent Rights disclosing or claiming such Technology and (c) obligates such persons to similar obligations of confidentiality as set forth in this Agreement.  Each Party will require each employee and contractor conducting work on such Party’s behalf under this Agreement to maintain records in sufficient detail and in a good scientific manner appropriate for patent purposes to properly reflect all work done.  Each Party shall be responsible for the payment of any remuneration due to employees under any Applicable Law which provides compensation to such employee inventors.

 

8.3.   JIPC. The JIPC shall, from time to time, review and discuss the patent strategy for inventions made in the course of the Development and to coordinate patent strategy relating to the Collaboration Patent Rights, to the extent such Collaboration Patent rights are necessary or useful to Manufacture, Develop or Commercialize a Collaboration Compound or Collaboration Product.

 

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8.4.   Filing, Prosecution and Maintenance of Patent Rights.

 

8.4.1.               Hutchison Patent Rights.  AstraZeneca shall be responsible, at its sole cost and expense, for the preparation, filing and prosecution and maintenance of the Hutchison Patent Rights in the Territory.  If AstraZeneca or its Affiliates use any of its employees to conduct any preparation, prosecution or maintenance activity under this Agreement, then neither AstraZeneca nor any Affiliate shall be liable to Hutchison in respect of any act or omission in undertaking such activity.  In the event external counsel are used then no such exclusion of liability shall apply.   AstraZeneca shall keep Hutchison advised on the status of preparation, filing, prosecution and maintenance of all patent applications included within the Hutchison Patent Rights and the maintenance of any issued patents within the Hutchison Patent Rights.  Further, AstraZeneca shall consult and reasonably cooperate with Hutchison with respect to the preparation, filing, prosecution and maintenance of all Hutchison Patent Rights, including: (a) allowing Hutchison a reasonable opportunity and reasonable time to review and comment regarding relevant material communications and drafts of any material responses or proposed filings by AstraZeneca before any applicable filings are submitted to any relevant patent office or Government Authority and (b) reflecting any reasonable comments offered by Hutchison in any final filings submitted by AstraZeneca to any relevant patent office or Governmental Authority.

 

8.4.2.               AstraZeneca Patent Rights.  AstraZeneca shall have the sole and exclusive right to prepare, file, prosecute and maintain the AstraZeneca Patent Rights in the Territory, in its sole discretion.

 

8.4.3.               Joint Patent Rights.  AstraZeneca shall be responsible, at its sole cost and expense, for the preparation, filing and prosecution and maintenance of the Joint Patent Rights in the Territory.  If AstraZeneca or its Affiliates use any of its employees to conduct any preparation, prosecution or maintenance activity under this Agreement, then neither AstraZeneca nor any Affiliate shall be liable to Hutchison in respect of any act or omission in undertaking such activity.  In the event external counsel are used no such exclusion of liability shall apply.    AstraZeneca shall keep Hutchison advised on the status of preparation, filing, prosecution and maintenance of all patent applications included within the Joint Patent Rights and the maintenance of any issued patents within the Joint Patent Rights.  Further, AstraZeneca shall consult and reasonably cooperate with Hutchison with respect to the preparation, filing, prosecution and maintenance of all Joint Patent Rights, including: (a) allowing Hutchison a reasonable opportunity and reasonable time to review and comment regarding relevant material communications and drafts of any material responses or proposed filings by AstraZeneca before any applicable filings are submitted to any relevant patent office or Government Authority and (b) reflecting any reasonable comments offered by Hutchison in any final filings submitted by AstraZeneca to any relevant patent office or Governmental Authority.

 

8.4.4.               Reversion Rights.  If AstraZeneca decides not to file, prosecute or maintain any Patent Right under Section 8.4.1 or 8.4.3, it shall give Hutchison reasonable notice to that effect sufficiently in advance of any deadline for any filing with respect to such Patent Right so as to permit Hutchison to carry out such activity.  Upon delivery of such notice, Hutchison shall have the right to file, prosecute and maintain such Patent Right, and AstraZeneca shall perform such acts as may be reasonably necessary for Hutchison to file, prosecute or maintain such Patent Right, at Hutchison’s sole cost and expense.  If Hutchison does so elect, then AstraZeneca shall

 

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provide such cooperation to Hutchison, including the execution and filing of appropriate instruments, as may reasonably be requested to facilitate the transition of such patent activities, and shall assign all of its right, title and interest to such Patent Right to Hutchison.  Any such Patent Right abandoned by AstraZeneca under Section 8.4.1 or 8.4.3 shall be deemed to be excluded from the Hutchison Patent Rights or Joint Patent Rights, as applicable, and shall thereafter cease to be included within the scope of the licenses granted to AstraZeneca under Section 2.

 

8.4.5.               Patent Term Extensions.  The Parties shall cooperate, if necessary and appropriate, with each other in gaining patent term extensions, including supplementary protection certificates and any other extensions that are now or become available in the future wherever applicable to Patent Rights that are applicable to the Collaboration Products.  The Parties shall, if necessary and appropriate, use reasonable efforts to agree upon a joint strategy relating to patent term extensions, but, in the absence of mutual agreement with respect to any extension issue, a Patent Right shall be extended only as and if AstraZeneca elects to extend such Patent Right.  All filings for such extension shall be made by AstraZeneca.

 

8.4.6.               Orange Book Listing.  Hutchison shall, at AstraZeneca’s expense and upon AstraZeneca’s reasonable request, (a) provide all necessary or reasonably useful information to enable AstraZeneca to make filings with Regulatory Authorities with respect to Hutchison Patent Rights or Joint Patent Rights as required (i) in the United States for the FDA’s Orange Book and (ii) outside the United States under other international equivalents and (b) shall cooperate with AstraZeneca in connection therewith, including meeting any submission deadlines.

 

8.4.7.               Costs and Expenses.  [**].

 

8.5.   Trademarks.

 

8.5.1.               Collaboration Product Trademarks.  AstraZeneca shall select and own the Trademarks for the Collaboration Products and shall be solely responsible for applying for and maintaining the registrations for the Trademarks throughout the Territory, and all goodwill associated therewith will inure to the benefit of AstraZeneca.  AstraZeneca shall bear all costs of applying for and maintaining registrations for the Trademarks.   AstraZeneca shall assume full responsibility, at its sole costs and expense, for prosecuting any infringement of a Trademark by a Third Party, and shall be entitled to retain all recoveries in connection therewith.  AstraZeneca shall own the Trademarks, and all applications and registrations therefor.

 

8.6.   Enforcement of Technology Rights.

 

8.6.1.               Notice.  Each Party will promptly notify the other in the event of any actual, potential or suspected infringement of a patent under the Hutchison Patent Rights or the Joint Patent Rights by any Third Party (an “Infringement”).

 

8.6.2.               Enforcement.  As between AstraZeneca and Hutchison, AstraZeneca shall have the first right, except as otherwise provided in this Section 8.6.2, but not the obligation, to institute litigation or take other steps to remedy an Infringement, and any such litigation or steps shall be at AstraZeneca’s expense subject to Hutchison’s obligation to indemnify AstraZeneca for

 

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such expenses pursuant to Section 11.1, provided that, any recoveries resulting from such litigation or steps relating to a claim of Infringement, after deducting AstraZeneca’s out of pocket expenses (including counsel fees and expenses) in pursuing such claim, will be deemed Net Sales of AstraZeneca.  AstraZeneca shall have full control of such litigation or steps but shall not, without the prior written consent of Hutchison, enter into any compromise or settlement relating to such litigation that (a) admits the invalidity or unenforceability of any Hutchison Patent Right or Joint Patent Right or (b) requires AstraZeneca to abandon any Hutchison Patent Right or Joint Patent Right.  In order to establish standing, Hutchison, upon request of AstraZeneca, agrees to timely commence or to join in any such litigation, at AstraZeneca’s expense, and in any event to cooperate with AstraZeneca in such litigation or steps at AstraZeneca’s expense. Hutchison shall have the right to consult with AstraZeneca about such litigation and to participate in and be represented by independent counsel in such litigation at Hutchison’s own expense.  If AstraZeneca fails to institute such litigation or otherwise take steps to remedy an Infringement of any Hutchison Patent Right or Joint Patent Right within [**] days of its receipt of notice thereof, then Hutchison shall have the right, but not the obligation, upon [**] days’ prior notice to AstraZeneca, at Hutchison’s expense, to institute any such litigation and any proceeds from such litigation shall be retained by Hutchison.  AstraZeneca shall, at Hutchison’s expense, cooperate with Hutchison in any such litigation.  Neither Party shall incur any liability to the other Party as a consequence of any litigation initiated or pursued pursuant to this Section 8.6.2 or any unfavorable decision resulting therefrom, including any decision holding any Hutchison Patent Right or Joint Patent Right invalid or unenforceable.

 

8.7.   Third Party Claims.

 

8.7.1.            Third Party Claims — Course of Action.  If the Development, Commercialization or Manufacture of a Collaboration Product under this Agreement is alleged by a Third Party to infringe a Third Party’s Patent Right(s) or misappropriate a Third Party’s trade secret, the Party becoming aware of such allegation shall promptly notify the other Party thereof, in writing, reasonably detailing the claim.

 

8.7.2.            Third Party Suit.  If a Third Party sues a Party (the “Sued Party”) alleging that the Sued Party’s or the Sued Party’s Sublicensees’ Development, Manufacture or Commercialization of the Collaboration Compound or Collaboration Product infringes or shall infringe said Third Party’s Patent Right(s) or misappropriates said Third Party’s trade secret, [**] to defend or settle such claim in its own name after consultation with Hutchison and in connection with its   defense of any such Third Party suit,  Hutchison shall provide reasonable assistance to  AstraZeneca  for such defense and shall join such suit if deemed a necessary party.  AstraZeneca shall keep Hutchison, if Hutchison has not joined in such suit, reasonably informed on a quarterly basis, in person or by telephone, prior to and during the pendency of any such suit.  AstraZeneca shall not admit the invalidity of any patent within the Hutchison Patent Rights, the AstraZeneca Patent Rights or the Joint Patent Rights, nor settle any such suit, without written consent of the other Party, such consent not to be unreasonably withheld or delayed.  Subject to Hutchison’s indemnity obligations pursuant to Section 11.1, all litigation expenses, including settlement costs, royalties paid in settlement of any such suit, and the payment of any damages to the Third Party will be paid by AstraZeneca.

 

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8.8.   Patent Certifications. Each Party shall immediately give written notice to the other of any certification of which it becomes aware has been filed pursuant to 21 U.S.C. § 355(b)(2)(A), or § 355(j)(2)(A)(vii) or any amendment or successor statute thereto or any analog in any other jurisdiction claiming that the Hutchison Patent Rights or  Joint Patent Rights covering a Collaboration Product are invalid or that infringement shall not arise from the manufacture, use, import  sale or offer for sale of such Third Party product by a Third Party.  AstraZeneca shall have the right, in the first instance, to commence an ANDA Proceeding in connection with any such certification.  If AstraZeneca decides not to bring infringement proceedings against the Third Party making such a certification with respect to any Collaboration Product, AstraZeneca will give notice to Hutchison of its decision not to bring suit within [**] business days after receipt of notice of such certification (or, if the time period permitted by law is less than [**] business days, within half of the time period permitted by law for AstraZeneca to commence such action) and Hutchison may then, but shall not be obligated to, bring suit against the Third Party that filed the certification.  Any suit by either Party may be in the name of either or both Parties, as may be required by law.  For this purpose, the Party not bringing suit will execute such legal papers necessary for the prosecution of such suit as may be reasonably requested by the Party bringing suit.

 

8.9.   No Implied Licenses. Except as expressly set forth in this Agreement, no right or license under any Hutchison Technology or AstraZeneca Technology is granted or shall be granted by implication as a result of the respective rights of the Parties under this Agreement.  All such rights or licenses are or shall be granted only as expressly provided in this Agreement.

 

8.10.                 Privileged Communications. In furtherance of this Agreement, it is expected that AstraZeneca and Hutchison will, from time to time, disclose to one another privileged communications with counsel, including opinions, memoranda, letters and other written, electronic and verbal communications.  Such disclosures are made with the understanding that they shall remain confidential, they will not be deemed to waive any applicable attorney-client privilege and that they are made in connection with the shared community of legal interests existing between Hutchison and AstraZeneca, including the community of legal interests in avoiding infringement of any valid, enforceable patents of Third Parties and maintaining the validity of Hutchison Patent Rights, AstraZeneca Patent Rights and Joint Patent Rights.

 

8.11.                 Create Act. This Agreement includes a joint research agreement as defined in 35 U.S.C. § 103(c)(3).  Notwithstanding anything to the contrary in this Article 8, neither Party shall have the right to make an election under the Cooperative Research and  Technology Enhancement Act of 2004, 35 U.S.C. 103(c)(2)-(c)(3) when exercising its rights under this Article 8 without the prior written consent of the other Party.  With respect to any such permitted election, the Parties shall use reasonable efforts to cooperate and coordinate their activities with respect to any submissions, filings or other activities in support thereof.

 

9.                                      GOVERNMENT APPROVALS.

 

9.1.   AstraZeneca’s and Hutchison’s Obligations.  Each of AstraZeneca and Hutchison shall use its good faith efforts to eliminate any concern on the part of any court or

 

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Government Authority regarding the legality of the proposed transaction, including, if required by federal or state antitrust authorities, promptly taking all steps to secure government antitrust clearance, including cooperating in good faith with any government investigation including the prompt production of documents and information demanded by a second request for documents and of witnesses if requested.

 

9.2.   Additional Approvals. AstraZeneca and Hutchison shall cooperate and use respectively all reasonable efforts to make all other registrations, filings and applications, to give all notices and to obtain as soon as practicable all governmental or other consents, transfers, approvals, orders, qualifications authorizations, permits and waivers, if any, and to do all other things necessary or desirable for the consummation of the transactions as contemplated hereby.  Neither Party shall be required, however, to divest or out-license products or assets or materially change its business if doing so is a condition of obtaining approval of the transactions contemplated by this Agreement.

 

9.3.   Termination. If a report is required to be filed under any antitrust statute, either Party may, before the Effective Date, terminate this Agreement by written notice to the other Party, if, within [**] after the report is filed, approval of the transactions contemplated by this Agreement under such antitrust statute has not been obtained or the notice and waiting period, as may be extended, under such antitrust statute has not expired without adverse action regarding this Agreement or the transactions contemplated hereby.  If this Agreement is terminated pursuant to this Section 9.3, then, notwithstanding any provision in this Agreement to the contrary, neither Party shall have any further obligation to the other Party with respect to the subject matter of this Agreement except for the obligations set forth in Section 6.1, which obligations shall survive any termination of this Agreement; provided that each Party shall within ten (10) days of such termination promptly refund to the other Party in full all amounts paid by such Party to the other Party in connection with this Agreement.

 

10.                               TERM AND TERMINATION.

 

10.1.                 Term. The term of this Agreement shall commence on the Effective Date and, unless earlier terminated as provided in this Section 10 shall continue in full force and effect on a country-by-country basis as long as any Collaboration Product is being Developed or Commercialized for use in the Field in the Territory (the “Term”)

 

10.2.                 Termination for Convenience; Termination by Mutual Agreement.  AstraZeneca may terminate this Agreement in its entirety for any reason or no reason upon providing one hundred eighty (180) days’ prior written notice to Hutchison.  Additionally, the Parties may terminate this Agreement by mutual written agreement.

 

10.3.                 Termination for Cause.

 

10.3.1.          Termination for Material Breach.  In the event that a Party commits a material breach of its obligations under this Agreement that is not cured within sixty (60) days (or such other time period as mutually agreed by the Parties) after such Party receives written notice from the non-breaching Party, which notice shall specify the nature of the breach and demand its

 

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cure, the non-breaching Party may terminate this Agreement upon written notice to the breaching Party; provided, however, that a breach of this Agreement by AstraZeneca that relates solely to a country that is not a Major Market Country shall give Hutchison a termination right only as to such country (any such termination, a “Country-Specific Termination”).  Notwithstanding the foregoing, if either Party is alleged to be in material breach and disputes such termination through the dispute resolution procedures set forth in this Agreement, then the other Party’s right to terminate this Agreement shall be suspended for so long as such dispute resolution procedures are being pursued by the allegedly breaching Party in good faith and, if it is finally and conclusively determined that the allegedly breaching Party is in material breach, then the breaching Party shall have the right to cure such material breach after such determination within the cure period provided above in this Section 10.3.1.

 

10.3.2.          Termination for Bankruptcy.  This Agreement may be terminated by written notice by either Party at any time during the term of this Agreement if the other Party shall file in any court or Agency, pursuant to any statute or regulation of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of that Party or of its assets, or if the other Party proposes a written agreement of composition or extension of its debts, or if the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty (60) days after the filing thereof, or if the other Party shall propose or be a Party to any dissolution or liquidation, or if the other Party shall make an assignment for the benefit of its creditors.

 

10.4.                 Effect of Termination.

 

10.4.1.          Effects of Termination for Convenience.  If this Agreement is terminated for convenience pursuant to Section 10.2, the following provisions shall apply:

 

(a)         Nothing in this Agreement shall be construed as prohibiting the Hutchison from Developing, Manufacturing and Commercializing a Collaboration Compound and the Collaboration Product in the Field in the Territory;

 

(b)         All licenses granted by Hutchison to AstraZeneca hereunder shall automatically terminate;

 

(c)          AstraZeneca shall, and hereby does, assign to Hutchison all right, title and interest in and to: (i) all Regulatory Submissions and Regulatory Approvals Controlled by AstraZeneca or any Affiliate pertaining to Collaboration Compounds, Collaboration Products and Diagnostic Products in the Field in the Territory and (ii) all of AstraZeneca’s interest in any copyrights to the extent necessary or useful for Commercializing the Collaboration Product;

 

(d)         If, at the time AstraZeneca terminates the Agreement, a Collaboration Product is then being sold using an AstraZeneca-owned Trademark, AstraZeneca shall, assign all of AstraZeneca’s interest in any Trademark (including the goodwill symbolized by such Trademark), on  commercially reasonable terms to be mutually agreed upon by the Parties;

 

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(e)          AstraZeneca shall grant, and shall be deemed to grant, to Hutchison  and its Sublicensees a Right of Reference to all data generated in any Clinical Trials undertaken by AstraZeneca , its Affiliates or Sublicensees in accordance with this Agreement (including all such Regulatory Submissions, Regulatory Approvals and Clinical Trial data related to any Diagnostic Product and any Combination Collaboration Products in which the other active ingredients are non-proprietary), and AstraZeneca  shall provide a signed statement to this effect, if requested by Hutchison , in accordance with 21 C.F.R. § 314.50(g)(3) (or any analogous Applicable Law recognized outside of the United States);

 

(f)          AstraZeneca  shall, and hereby does, grant to Hutchison  a perpetual, royalty-free, irrevocable, non-exclusive license in the Territory to use the data generated in Clinical Trials undertaken by AstraZeneca , its Affiliates or Sublicensees hereunder (including all such Regulatory Submissions, Regulatory Approvals and Clinical Trial data related to any Combination Collaboration Products  ) for the Development and Commercialization of Collaboration Compounds, Collaboration Products and Diagnostic Products in the Field in the Territory;

 

(g)          All licenses granted to Hutchison hereunder shall continue, and AstraZeneca shall, and hereby does, grant to Hutchison an exclusive (even as to AstraZeneca) license in the Territory (with the right to sublicense on terms consistent with Section 2.5) (i) to practice any invention claimed in the AstraZeneca Patent Rights or Joint Patent Rights, (ii) to practice the AstraZeneca Know-How and Joint Know-How and (iii) to practice any other Patent Right or Know Controlled by AstraZeneca on the effective date of termination that arose before the effective date of termination and was either in use by AstraZeneca or was actively being considered for use in connection with the Development, Manufacture or Commercialization of any Collaboration Compound, Collaboration Product or Diagnostic Product, in each case ((i) – (iii)), solely to the extent necessary to Develop, Manufacture and Commercialize a Collaboration Compound, Collaboration Product or Diagnostic Product, as applicable, in the Field in the Territory;

 

(h)         AstraZeneca shall reasonably cooperate with Hutchison to assure a smooth transition, at Hutchison’s expense, of any Clinical Trials in progress related to a Collaboration Compound or Collaboration Product in the Field, which  Hutchison determines to continue in compliance with Applicable Laws and ethical guidelines applicable to the transfer or termination of any such Clinical Trials.  In the event that Hutchison   informs AstraZeneca that it does not intend to continue specific Development activities then in progress, costs incurred in closing out such activities shall be borne by AstraZeneca ;

 

(i)           Until termination is effective, each Party shall continue to perform its obligations under the Development Plan (if still in effect) and shall pay all costs allocated to it in accordance with this Agreement, including the Development Budget (if still in effect), except with respect to activities that the

 

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Hutchison elects to discontinue;

 

(j)          At Hutchison’s request, Hutchison may purchase, [**], all of the inventory of bulk or finished Collaboration Products held by AstraZeneca as of the date of termination (including raw materials, intermediates and finished, unfinished, or partially finished goods).  Hutchison shall notify AstraZeneca within ten (10) days after the date of termination whether Hutchison wishes to purchase such inventory.  In the event Hutchison does not purchase such inventory, then AstraZeneca and its Affiliates shall be permitted to sell such inventory, provided that such sales occur within six (6) months after termination, and provided further that AstraZeneca shall remain obligated to pay, and report to Hutchison on, Net Sales of such inventory; and

 

(k)         At Hutchison’s request, AstraZeneca shall use Commercially Reasonable Efforts to assign to Hutchison to the extent assignment is permitted by such agreements and provided that AstraZeneca is not required to pay any consideration or commence litigation in order to effect an assignment of any such agreement any Third Party agreements then in effect for the Manufacture of Collaboration Compound or Collaboration Product.

 

10.4.2.          Effects of Termination for Material Breach.

 

(a)         If this Agreement is terminated by Hutchison pursuant to Section 6.4.3 or 10.3, all licenses granted by Hutchison to AstraZeneca shall automatically terminate.  Without limiting the foregoing, in the event this Agreement is terminated by Hutchison for a material breach of AstraZeneca pursuant to Section 6.4.3 or 10.3.1 , the effects of termination set forth in Section 10.4.1 shall apply; provided, however, that in the event of a Country-Specific Termination pursuant to Section 10.3.1, such effects of termination shall apply only with respect to the applicable country.

 

(b)         In the event that AstraZeneca has the right to terminate this Agreement pursuant to Section 10.3.1, AstraZeneca may elect to either (x) terminate this Agreement in its entirety pursuant to Section 10.3.1 or (y) elect, as its sole and exclusive remedy with respect to such breach, to forego its right to terminate this Agreement pursuant to Section 10.3.1, in which case the provisions of clauses (i) – (iii) below shall apply.

 

(i)                   AstraZeneca’s sole and exclusive remedy with respect to such breach shall be to offset from amounts due under Sections 5.2 and 5.3 the amount of any agreed-upon or proven damages (“Damages”).

 

(ii)                Pending any agreement between the Parties on the amount of the Damages or a final, non-appealable judgment in a court of competent jurisdiction as to the amount of the Damages (“Final Resolution”), AstraZeneca shall set up

 

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an escrow account into which it shall pay, as they become due, all milestones and royalty payments owed to Hutchison under Section 5.2 or 5.3.

 

(iii)             Upon Final Resolution, any Damages owed to AstraZeneca in respect of the applicable breach shall be deducted by AstraZeneca from amounts paid into such escrow account.  In the event the amounts contained in such escrow account exceed the Damages, the amounts remaining in such escrow account shall be released to Hutchison no later than five (5) Business Days after Final Resolution.  In the event the amounts contained in such escrow account are insufficient to cover the Damages, the balance of any such amounts may be deducted from the next applicable payment owed by AstraZeneca to Hutchison under Section 5.2 or 5.3 and may be carried forward until fully exhausted.

 

10.5.                 Rights in Bankruptcy. All rights and licenses granted under or pursuant to this Agreement by Hutchison and AstraZeneca are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code, licenses of rights to “intellectual property” as defined under Section 101 of the United States Bankruptcy Code.  The Parties agree that each Party, as licensee of certain rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the United States Bankruptcy Code.  The Parties further agree that, in the event of the commencement of a bankruptcy proceeding by or against a Party under the United States Bankruptcy Code, the other Party shall be entitled to a complete duplicate of (or complete access to, as appropriate) any intellectual property licensed to such other Party and all embodiments of such intellectual property, which, if not already in such other Party’s possession, shall be promptly delivered to it (a) upon any such commencement of a bankruptcy proceeding upon such other Party’s written request therefor, unless the bankrupt Party elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under clause (a), following the rejection of this Agreement by the bankrupt Party upon written request therefor by the other Party.

 

10.6.                 Survival of Certain Obligations. Expiration or termination of this Agreement shall not relieve the Parties of any obligation accruing before such expiration or termination.  The provisions of this Agreement that must, by their nature, survive expiration or termination of this Agreement to give effect to their intent, shall so survive, including Sections 2.4,  2.6,  6,  9 and 11     Any expiration or early termination of this Agreement shall be without prejudice to the rights of either Party against the other accrued or accruing under this Agreement before termination.

 

11.                               PRODUCT LIABILITY, INDEMNIFICATION AND INSURANCE.

 

11.1.                 Indemnification by Hutchison. Hutchison shall indemnify, defend and hold harmless AstraZeneca, its Affiliates, and each of its and their respective employees, officers, directors, agents and Sublicensees (each, a “AstraZeneca Indemnified Party”)

 

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from and against any and all losses, damages, liabilities, settlements, penalties, fines and expenses (including reasonable attorneys’ fees and expenses) (collectively, “Liability”) that the AstraZeneca Indemnified Party may be required to pay to one or more Third Parties to the extent resulting from or arising out of:

 

(a)         any Hutchison representation or warranty set forth herein being untrue in any material respect when made or any material breach by Hutchison of any of its covenants or obligations hereunder; or

 

(b)         the gross negligence or willful misconduct by or of Hutchison, its Affiliates and their respective officers, directors, agents and Sublicensees in performing any of their obligations under this Agreement; or

 

(c)          Hutchison’s or its Affiliates’ Development of a Collaboration Compound; or

 

except in each case, to the extent caused by the gross negligence or willful misconduct of AstraZeneca or any AstraZeneca Indemnified Party, or by breach of this Agreement by AstraZeneca.

 

11.2.                 Indemnification by AstraZeneca. AstraZeneca shall indemnify, defend and hold harmless Hutchison, its Affiliates, and each of its and their respective employees, officers, directors, agents and Sublicensees (each, a “Hutchison Indemnified Party”) from and against any and all Liabilities that the Hutchison Indemnified Party may be required to pay to one or more Third Parties to the extent resulting from or arising out of:

 

(a)         any AstraZeneca representation or warranty set forth herein being untrue in any material respect when made or a material breach by AstraZeneca of any of its covenants or obligations hereunder; or

 

(b)         the gross negligence or willful misconduct by or of AstraZeneca, its Affiliates and their respective officers, directors, agents and Sublicensees in performing any of their obligations under this Agreement; or

 

(c)          AstraZeneca’s Development, Manufacture or Commercialization of a Collaboration Compound or Collaboration Product;

 

except in each case, to the extent caused by the gross negligence or willful misconduct of Hutchison or any Hutchison Indemnified Party, or by breach of this Agreement by Hutchison.

 

11.3.                 Procedure. Each Party shall notify the other in the event it becomes aware of a claim for which indemnification may be sought hereunder or for which Liability is shared pursuant to this Section 11.  In case any proceeding (including any governmental investigation) shall be instituted involving any Party in respect of which indemnity may be sought pursuant to this Section 11, such Party (the “Indemnified Party”) shall provide the other Party (the “Indemnifying Party”) with prompt written notice of such proceeding (the “Indemnification Claim Notice”).  Promptly after the Indemnifying Party receives the Indemnification Claim Notice, the Indemnifying Party and Indemnified Party shall meet to

 

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discuss how to respond to any claims that are the subject matter of such proceeding.  At its option, the Indemnifying Party may assume the defense of any Third Party claim subject to indemnification as provided for in this Section 11.3 by giving written notice to the Indemnified Party within thirty (30) days (or until such time provided in any applicable extension to appropriately answer any complaint, if any, but no longer than seventy (70) days, provided that the Indemnified Party makes all reasonable efforts to obtain any such extension) after the Indemnifying Party’s receipt of an Indemnification Claim Notice, provided that (a) the claim solely seeks monetary damages and (b) the Indemnifying Party expressly agrees in writing that as between the Indemnifying Party and the Indemnified Party, the Indemnifying Party shall be solely obligated to satisfy and discharge the claim in full (the matters described in (a) and (b), the “Litigation Conditions”). The Indemnifying Party may, at any time, assume all such defense if the Litigation Conditions are not satisfied at any time.  Upon assuming the defense of a Third Party claim in accordance with this Section 11.3, the Indemnifying Party shall be entitled to appoint lead counsel in the defense of the Third Party claim.  Should the Indemnifying Party assume and continue the defense of a Third Party claim, except as otherwise set forth in this Section 11.3, the Indemnifying Party will not be liable to the Indemnified Party for any legal expenses subsequently incurred by such Indemnified Party in connection with the analysis, defense or settlement of the Third Party claim.  Without limiting this Section 11.3, any Indemnified Party will be entitled to participate in, but not control, the defense of a Third Party claim for which it has sought indemnification hereunder and to employ counsel of its choice for such purpose; provided, however, that such employment will be at the Indemnified Party’s own expense unless (i) the employment thereof has been specifically authorized by the Indemnifying Party in writing, (ii) the Indemnifying Party has failed to assume and actively further the defense and employ counsel in accordance with this Section 11.3 (in which case the Indemnified Party will control the defense) or (iii) the Indemnifying Party no longer satisfies the Litigation Conditions.  With respect to any Liability relating solely to the payment of money damages in connection with a Third Party claim that will not result in the Indemnified Party’s becoming subject to injunctive or other relief or otherwise adversely affect the business of the Indemnified Party in any manner, and as to which the Indemnifying Party will have acknowledged in writing the obligation to indemnify the Indemnified Party hereunder, and subject to the Litigation Conditions being satisfied, the Indemnifying Party will have the sole right to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Liability, on such terms as the Indemnifying Party, in its reasonable discretion, will deem appropriate (provided that such terms shall include a complete and unconditional release of the Indemnified Party from all liability with respect thereto), and will transfer to the Indemnified Party all amounts which said Indemnified Party will be liable to pay prior to the time of the entry of judgment.  With respect to all other Liabilities in connection with Third Party claims, where the Indemnifying Party has assumed the defense of the Third Party claim in accordance with this Section 11.3, the Indemnifying Party will have authority to consent to the entry of any judgment, enter into any settlement or otherwise dispose of such Liability provided that it obtains the prior written consent of the Indemnified Party (which consent will be at the Indemnified Party’s reasonable discretion).  The Indemnifying Party that has assumed the defense of the Third Party claim in accordance with this Section 11.3 will not be liable for any settlement or other disposition of a Liability by an Indemnified Party (but in no event to include any court judgment or judicial or administrative order or

 

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disposition) that is reached without the written consent of such Indemnifying Party.  No Indemnified Party will admit any liability with respect to, or settle, compromise or discharge, any Third Party claim without first offering to the Indemnifying Party the opportunity to assume the defense of the Third Party claim in accordance with this Section 11.3.  If the Indemnifying Party chooses to defend or prosecute any Third Party claim, the Indemnified Party will cooperate in the defense or prosecution thereof and will furnish such records, information and testimony, provide such witnesses and attend such conferences, discovery proceedings, hearings, trials and appeals as may be reasonably requested in connection with such Third Party claim.  Such cooperation will include access during normal business hours afforded to the Indemnifying Party to, and reasonable retention by the Indemnified Party of, records and information that are reasonably relevant to such Third Party claim, and making employees and agents available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder, and the Indemnifying Party will reimburse the Indemnified Party for all its reasonable out-of-pocket expenses incurred in connection with such cooperation.

 

11.4.                 Insurance. The Parties shall maintain insurance with creditworthy insurance companies or self insure in accordance with Applicable Law against such risks and in such amounts as are usually maintained or insured against by other companies of established repute engaged in the same or a similar business.

 

11.5.                 Liability Limitations.

 

11.5.1.          No Consequential Damages.  EXCEPT WITH RESPECT TO ANY BREACH OF SECTION 6.1 (CONFIDENTIALITY), IN NO EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES UNDER THIS AGREEMENT, EXCEPT TO THE EXTENT THE DAMAGES RESULT FROM A PARTY’S FRAUD OR WILLFUL MISCONDUCT OR ARE PAYABLE IN CONNECTION WITH A PARTY’S INDEMNIFICATION OBLIGATIONS UNDER THIS SECTION 11 FOR LIABILITY OWED TO THIRD PARTIES.

 

11.5.2.          Scope of Hutchison’s Liability.  In no event shall Hutchison’s Liability under this Agreement exceed, [**] (the “Liability Cap”); provided, however, that such Liability Cap shall not apply to any Liability based on or arising out of any death or personal injury to a Third Party resulting from any negligence of Hutchison, its Affiliates or Sublicensees.

 

12.                               MISCELLANEOUS.

 

12.1.                 Governing Law, Jurisdiction; Dispute Resolution.

 

12.1.1.          Governing Law.  The interpretation and construction of this Agreement shall be governed by the laws of England, and the Parties hereby submit to the non-exclusive jurisdiction of the English courts.

 

12.1.2.          Dispute Resolution.  In the event of a dispute arising out of or relating to

 

60

 

this Agreement either Party shall provide written notice of the dispute to the other, in which event the dispute shall be referred to the executive officers designated below or their successors, for attempted resolution by good faith negotiations within [**] after such notice is received.  Said designated officers are initially as follows:

 

For Hutchison:                                      Chief Executive Officer, Hutchison MediPharma Limited

For AstraZeneca:                          its Executive Vice President, Innovative Medicines or his designee

 

In the event the designated executive officers do not resolve such dispute within the allotted [**], either Party may, after the expiration of the [**] period, seek to resolve the dispute through reference to the courts in accordance with Section 12.1.1.  Notwithstanding the preceding, the Parties acknowledge that the failure of the Parties to reach consensus as to any matter, which failure does not involve a breach by a Party of its obligations hereunder, shall not be deemed a dispute which may be referred for resolution by the Parties under this Section 12.1.2.

 

12.1.3.                         Agent for Service.

 

(a)                                         To the extent that any injunctive or other Proceedings (as defined below) are sought in the court of England, the Parties hereby irrevocably agrees that any Service Document (as defined below) may be sufficiently and effectively served on it in connection with Proceedings by service on its agent, provided that if a replacement agent has been appointed and notified to the other party pursuant to Section 12.1.3(d), then by service on such replacement agent.

 

(b)                                         Any Service Document served pursuant to Section 12.1.3(a) shall be marked for the attention of:

 

If to Hutchison:

 

Address:                                                 c/o Hutchison Whampoa Agents (UK) Limited

Hutchison House

5 Hester Road

Battersea

London SW11 4AN

United Kingdom

Fax no:                                                      +44 20 7350 5791

Attention:                                         The Company Secretary

 

If to AstraZeneca:

 

Address:                                                 AstraZeneca UK Limited

2 Kingdom Street

London W2 6BD

Fax no:                                                      +44 20 7604 8060

 

61

 

Attention:                                         The Company Secretary

 

(c)                                          Any Service Document addressed in accordance with Section 12.1.3(b) shall be deemed to have been duly served if: (i) left at the specified address at the time it is left; (ii) sent by first class post, two working days after the day of posting; or (iii) sent by facsimile transmission, when the electronic acknowledgment is received by the sender.

 

(d)                                         If either the agent of the Parties referred to in Section 12.1.3(b) (or any replacement agent appointed pursuant to this sub-section) at any time ceases for any reason to act as such, the Parties (as the case may be) shall appoint a replacement agent to accept service having an address for service in the United Kingdom and shall notify the other party of the name and address of the replacement agent.

 

(e)                                          In this Section 12.1.3: (i) “Proceedings” means any proceeding, action arising out of or in connection with this Agreement, as contemplated by Clause 12.1.3(a); and (ii) “Service Document” means a writ, summons, order, judgment or other process issued out of the courts of England in connection with any Proceedings.

 

(f)                                           A person who is not a party to this Agreement shall have no rights under the Contracts (Rights of Third Parties) Act 1999 to enforce any of its terms.

 

12.2.                                Force Majeure. No liability shall result from, and no right to terminate shall arise, in whole or in part, based upon any delay in performance or non-performance, in whole or in part, by either of the Parties to this Agreement to the extent that such delay or non-performance is caused by an event of Force Majeure.  “Force Majeure” means an event that is beyond a non-performing Party’s reasonable control, including an act of God, act of the other Party, strike, lock-out or other industrial/labor dispute not involving the non-performing Party’s own employees, war, riot, civil commotion, terrorist act, malicious damage, epidemic, quarantine, fire, flood, storm, natural disaster or compliance with any law or governmental order, rule, regulation or direction, whether or not it is later held to be invalid or inapplicable.  The Force Majeure Party shall within ten (10) days of the occurrence of the Force Majeure event, give written notice to the other Party stating the nature of the Force Majeure event, its anticipated duration and any action being taken to avoid or minimize its effect.  Any suspension of performance shall be of no greater scope and of no longer duration than is reasonably required and the Force Majeure Party shall use reasonable effort to remedy its inability to perform; provided, however, if the suspension of performance continues or is anticipated to continue for thirty (30) days after the date of the occurrence, the unaffected Party shall have the right but not the obligation to perform on behalf of the Force Majeure Party for a period of such Force Majeure and such additional period as may be reasonably required to assure a smooth and uninterrupted transition of such activities.  If such failure to perform would constitute a material breach of this Agreement in the absence of such event of Force Majeure, and continues for six (6) months from the date of the occurrence and the Parties are not able to agree on appropriate amendments within such

 

62

 

period, such other Party shall have the right, notwithstanding the first sentence of this Section 12.3, to terminate this Agreement immediately by written notice to the Force Majeure Party, in which case neither Party shall have any liability to the other except for those rights and liabilities that accrued prior to the date of termination.

 

12.3.                                Waiver and Non-Exclusion of Remedies. A Party’s failure to enforce, at any time or for any period of time, any provision of this Agreement, or to exercise any right or remedy shall not constitute a waiver of that provision, right or remedy or prevent such Party from enforcing any or all provisions of this Agreement and exercising any rights or remedies.  To be effective any waiver must be in writing.  The rights and remedies provided herein are cumulative and do not exclude any other right or remedy provided by law or otherwise available except as expressly set forth herein.

 

12.4.                                Notices.

 

12.4.1.                         Notice Requirements.  Any notice, request, demand, waiver, consent, approval or other communication permitted or required under this Agreement shall be in writing, shall refer specifically to this Agreement and shall be deemed given only if delivered by hand or sent by facsimile transmission (with transmission confirmed) or by internationally recognized overnight delivery service that maintains records of delivery, addressed to the Parties at their respective addresses specified in Section 12.4.2 or to such other address as the Party to whom notice is to be given may have provided to the other Party in accordance with this Section 12.4.1.  Such Notice shall be deemed to have been given as of the date delivered by hand or transmitted by facsimile (with transmission confirmed) or on the second business day (at the place of delivery) after deposit with an internationally recognized overnight delivery service.  This Section is not intended to govern the day-to-day business communications necessary between the Parties in performing their obligations under the terms of this Agreement.

 

12.4.2.                         Address for Notice.

 

Hutchison:

 

Hutchison MediPharma Limited

Building 4, 720 Cailun Road

Zhangjiang High Tech Park

Shanghai, China 201203

Attn: Chief Executive Officer, Hutchison MediPharma Limited

Fax: 86-21-50793900

 

With a copy to:

 

Hutchison Whampoa Limited

22/F Hutchison House

10 Harcourt Road

Central

Hong Kong

Attn: Head Group General Counsel & Company Secretary

Fax: +852 2128 1778

 

63

 

AstraZeneca:

 

AstraZeneca AB

S-151 85 Södertälje

Sweden

Attn:  The Company Secretary

Fax:  +46 8 553 288 12

 

With a copy to:

 

AstraZeneca UK Limited

Mereside

Alderley Park

Macclesfield

Cheshire SK10 4TF

United Kingdom

Attn: Vice President, Oncology, SPBD

 

12.5.                                Entire Agreement. This Agreement, constitutes the entire agreement between the Parties with respect to the subject matter of the Agreement.  This Agreement supersedes all prior agreements, whether written or oral, with respect to the subject matter hereof.  Each Party confirms that it is not relying on any representations, warranties or covenants of the other Party except as specifically set out in this Agreement.  Nothing in this Agreement is intended to limit or exclude any liability for fraud.  All Schedules or Exhibits referred to in this Agreement are intended to be and are hereby specifically incorporated into and made a part of this Agreement.  In the event of any inconsistency between any such Schedules or Exhibits and this Agreement, the terms of this Agreement shall govern.

 

12.6.                                Amendment. Any amendment or modification of this Agreement must be in writing and signed by authorized representatives of both Parties.

 

12.7.                                Assignment. Neither Party may assign its rights or delegate its obligations under this Agreement, in whole or in part without the prior written consent of the other Party, except that each Party shall always have the right, without such consent, (a) to perform any or all of its obligations and exercise any or all of its rights under this Agreement through any of its Affiliates and, (b) on written notice to the other Party, assign any or all of its rights and delegate or subcontract any or all of its obligations hereunder to (i) any of its Affiliates, (ii) a successor of all or substantially all of the business of such Party, whether by way of merger, sale of stock, sale of assets or other transaction (or series of transactions) or (iii) a successor of that portion of a Party’s business to which this Agreement pertains.  Any permitted successor or assignee of rights or obligations hereunder shall, in a writing to the other Party, expressly assume performance of such rights or obligations.  Notwithstanding the foregoing, each Party shall remain responsible for any failure to perform on the part of any such Affiliates.  Any attempted assignment or delegation in violation of this Section shall be void.

 

64

 

12.8.                                No Benefit to Others. The provisions of this Agreement are for the sole benefit of the Parties and their successors and permitted assigns, and they shall not be construed as conferring any rights in any other persons except as otherwise expressly provided in this Agreement.

 

12.9.                                Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which taken together shall be deemed to constitute one and the same instrument.  An executed signature page of this Agreement delivered by facsimile transmission shall be as effective as an original executed signature page.

 

12.10.                         Severability. To the fullest extent permitted by applicable law, the Parties waive any provision of law that would render any provision in this Agreement invalid, illegal or unenforceable in any respect.  If any provision of this Agreement is held to be invalid, illegal or unenforceable, in any respect, then such provision will be given no effect by the Parties and shall not form part of this Agreement.  To the fullest extent permitted by applicable law and if the rights or obligations of any Party will not be materially and adversely affected, all other provisions of this Agreement shall remain in full force and effect and the Parties will use their best efforts to negotiate a provision in replacement of the provision held invalid, illegal or unenforceable that is consistent with applicable law and achieves, as nearly as possible, the original intention of the Parties.

 

12.11.                         Further Assurance. Each Party shall perform all further acts and things and execute and deliver such further documents as may be reasonably necessary or as the other Party may reasonably require to implement or give effect to this Agreement.

 

12.12.                         Publicity. Notwithstanding Section 6 1.6., it is understood that the Parties will issue a press release announcing the execution of this Agreement in substantially the form attached hereto Schedule 12.12.  The Parties agree to consult with each other reasonably and in good faith with respect to the text and timing of any subsequent press releases relating to the Agreement or the activity hereunder prior to the issuance thereof, provided that a Party may not unreasonably withhold consent to such releases, and that either Party may issue such press releases as it determines, based on advice of counsel, are reasonably necessary to comply with laws or regulations or for appropriate market disclosure or which are consistent with information disclosed in prior releases properly made hereunder.

 

12.13.                         Relationship of the Parties. The status of a Party under this Agreement shall be that of an independent contractor. Nothing contained in this Agreement shall be construed as creating a partnership, joint venture, or agency relationship between the Parties or, except as otherwise expressly provided in this Agreement, as granting either Party the authority to bind or contract any obligation in the name of or on the account of the other Party or to make any statements, representations, warranties, or commitments on behalf of the other Party.  All Persons employed by a Party or any of its Affiliates shall be employees of such Party or its Affiliates and not of the other Party or such other Party’s Affiliates and all costs and obligations incurred by reason of any such employment shall be for the account and expense of such Party or its Affiliates, as applicable.

 

65

 

12.14.                         Subcontracting. Hutchison may, in its sole discretion, use one or more Affiliates or Third Party contractors to perform any or all of its obligations under this Agreement, provided that Hutchison shall remain responsible for its obligations under the Agreement and shall be responsible for the performance of each such Affiliate and Third Party subcontractor.

 

12.15.                         English Language.  This Agreement is written and executed in the English language.  Any translation into any other language shall not be an official version of this Agreement and in the event of any conflict in interpretation between the English version and such translation, the English version shall prevail. English shall be the official language of this Agreement and all communications between the Parties shall be conducted in that language.

 

12.16.                         Construction. Except where the context requires otherwise, whenever used the singular includes the plural, the plural includes the singular, the use of any gender is applicable to all genders and the word “or” has the inclusive meaning represented by the phrase “and/or”.  Whenever this Agreement refers to a number of days, unless otherwise specified, such number refers to calendar days.  The headings of this Agreement and any descriptions of Schedules and Exhibits or descriptions of cross references are for convenience of reference only and do not define, describe, extend or limit the scope or intent of this Agreement or the scope or intent of any provision contained in this Agreement.  The terms “including,” “include(s),” “such as,” and “for example” as used in this Agreement mean including the generality of any description preceding such term and shall be deemed to be followed by “without limitation.”

 

66

 

IN WITNESS WHEREOF, duly authorized representatives of the Parties have duly executed this Agreement to be effective as of the Effective Date.

 

 

	
ASTRAZENECA   AB (publ)
    	
 
    	
和记黄埔医药(上海)有限公司
 HUTCHISON MEDIPHARMA Limited
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By
    	
/s/   [**]
    	
 
    	
By
    	
/s/   [**]
    
	
Name:   [**]
    	
 
    	
Name:   [**]
    
	
Title:   Authorised Signatory
    	
 
    	
Title:   Director
    
					

 

[SIGNATURE PAGE TO LICENSE AND COLLABORATION AGREEMENT]

 

 

Schedule 1.11

 

Back-Up Compounds

 

	
HUTCHISON
   COMPOUND
   CODE
    	
 
    	
EXAMPLE
   NUMBER*
    	
 
    	
CHEMICAL NAME
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

[**].

 

 

Schedule 1.19

 

Collaboration Compound

 

	
HUTCHISON   COMPOUND CODE
    	
HMPL-504
    
	
 
    	
 
    
	
GENERIC   NAME
    	
Volitinib
    
	
 
    	
 
    
	
CHEMICAL   NAME
    	
[**]
    
	
 
    	
 
    
	
EXAMPLE   NUMBER*
    	
[**]
    

 

[**].

 

 

Schedule 1.32

 

Development Plan and Development Budget

 

[**]

 

 

Schedule 1.49

 

Hutchison Patent Rights

 

The following are the pending patent applications related to the Collaboration Compound and the Back-Up Compounds.

 

	
 
    	
 
    	
 
    	
 
    	
APPLICATION /
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
COUNTRY
    	
 
    	
PUBLICATION
   NO.
    	
 
    	
FILING
   DATE
    	
 
    	
STATUS
    	
 
    	
TITLE
    
	
1
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
2
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    
	
 
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    	
 
    	
[**]
    

 

 

Schedule 12.12

 

Joint Regulatory News Service Press Release

 

	

    	

    
	
 
    	
 
    
	
 
    	
HUTCHISON CHINA MEDITECH LTD
    

 

	
AstraZeneca PLC (“AstraZeneca”)
    	
Hutchison China Medi Tech Limited
    
	
(LSE: AZN)
    	
(“Chi-Med”) (AIM: HCM)
    

 

ASTRAZENECA AND CHI-MED ENTER INTO GLOBAL
 COLLABORATION TO CO-DEVELOP AND COMMERCIALISE
 NOVEL CANCER THERAPY

 

London, Wednesday, 21 December 2011: AstraZeneca and Hutchison MediPharma Limited (“HMP”), an R&D company majority owned by Chi-Med, today announce that they have entered into a global licensing, co-development, and commercialisation agreement for Volitinib (HMPL-504), a novel targeted therapy and a highly selective inhibitor of the c-Met receptor tyrosine kinase for the treatment of cancer. Volitinib, which will imminently enter Phase I testing, has been discovered and developed in China by HMP.

 

Under the terms of the agreement, development costs for Volitinib in China will be shared between HMP and AstraZeneca, with HMP continuing to lead the development in China. AstraZeneca will lead and pay for the development of Volitinib for the rest of the world. An initial cash payment of US$20 million is payable by AstraZeneca to HMP upon the signing of the agreement. In addition, HMP will receive up to US$120 million contingent upon the successful achievement of clinical development and first sale milestones. The agreement also contains possible significant future commercial sale milestones and up to double-digit percentage royalties on net sales. This collaboration further underscores AstraZeneca’s goal to provide innovative medicines for unmet medical needs for patients in China.

 

Susan Galbraith, Head of Oncology Innovative Medicines, AstraZeneca said: “Volitinib represents a highly attractive global opportunity for AstraZeneca as we seek to develop and commercialise novel, targeted cancer therapies. This collaboration with HMP represents our commitment to China and brings together two groups with highly complementary capabilities.”

 

Christian Hogg, Chief Executive Officer of Chi-Med said: “We are very much looking forward to collaborating with AstraZeneca around Volitinib. Our collaboration will support the development and commercialisation of this novel oncology innovation, discovered in China, to the global market on an accelerated basis, something we could not have done alone.”

 

Ends

 

 

·                  Enquiries

 

	
Chi-Med
    	
Telephone:
    	
+852   2121 8200
    
	
Christian Hogg, CEO
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Citigate Dewe Rogerson
    	
Telephone:
    	
+44 20 7638 9571
    
	
Anthony Carlisle
    	
Mobile:
    	
+44 7973 611 888
    
	
David Dible
    	
Mobile:
    	
+44 7967 566 919
    
	
 
    	
 
    	
 
    
	
Lazard & Co., Limited
    	
Telephone:
    	
+44   20 7187 2000
    
	
Paul Gismondi
    	
 
    	
 
    
	
Nick Fowler
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
AstraZeneca Media
    	
 
    	
 
    
	
Esra Erkal-Paler
    	
Telephone:
    	
+44 20 7604 8030
    
	
Katja Toon
    	
Telephone:
    	
+44 20 7604 8268
    
	
Andrea Conners
    	
Telephone:
    	
+ 1 302 885 7652
    

 

·                  Notes to Editors

 

·                  About HMP

 

HMP is a novel drug R&D company focusing on discovering, developing and commercialising innovative therapeutics in oncology and autoimmune diseases. With a team of around 200 scientists and staff, its pipeline is comprised of novel oral compounds for cancer and inflammation in development in North America, Europe, Australia and Greater China.

 

HMP is majority owned by Chi-Med. For more information please visit: www.hmplglobal.com

 

·                  About Chi-Med

 

Chi-Med is the holding company of a healthcare group based primarily in China and was listed on the Alternative Investment Market of the London Stock Exchange in May 2006. It is focused on researching, developing, manufacturing and selling pharmaceuticals and health oriented consumer products.

 

Chi-Med is majority owned by Hutchison Whampoa Limited, an international company listed on the Main Board of The Stock Exchange of Hong Kong Limited. For more information please visit: www.chi-med.com

 

·                  About the c-Met Signal pathway

 

The c-Met (also known as HGFR) signalling pathway has specific roles particularly in normal mammalian growth and development, however this pathway has been shown to function abnormally in a range of different cancers. Volitinib is a potent and highly selective c-Met

 

 

inhibitor, which has been demonstrated to inhibit the growth of tumours in a series of pre-clinical disease models, especially for those tumours with aberrant c-Met signalling such as gene amplification or c-Met over-expression. In addition these biomarkers provide the potential to explore patient selection strategies in later stage clinical trials.

 

·                  About AstraZeneca

 

AstraZeneca is a global, innovation-driven biopharmaceutical business with a primary focus on the discovery, development and commercialisation of prescription medicines for gastrointestinal, cardiovascular, neuroscience, respiratory and inflammation, oncology and infectious disease. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. For more information please visit: www.astrazeneca.com

 

·                  About AstraZeneca in China

 

AstraZeneca is one the leading biopharmaceutical companies in China providing innovative, high quality medicines for some of the most serious disease areas and therapies, including cardiovascular, gastrointestinal, respiratory, neurological, cancer, inflammation and anesthesia.

 

AstraZeneca’s turnover in China was over $1 billion in 2010. The company employs approximately 5,000 staff working in manufacturing, sales and marketing, clinical research and new product development at the company’s headquarters in Shanghai and across sites in mainland China and Hong Kong.

 

The company’s research and development facilities include the AstraZeneca Innovation Centre China (ICC), which started operations in 2007. Today, ICC is a full-fledged discovery centre focused on delivering candidate drugs and ultimately Proof of Concepts (POCs) and medicines, with a focus on diseases that are more prevalent in Asian patients. In January 2011, the company also opened a global Clinical Operational Hub in Shanghai - one of five such hubs globally.Exhibit 4.2

 

THE SYMBOL “[**]” DENOTES PLACES WHERE CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THE EXHIBIT BECAUSE IT IS BOTH (i) NOT MATERIAL AND (ii) WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED

 

AMENDED AND RESTATED

 

EXCLUSIVE LICENSE AND COLLABORATION AGREEMENT

 

between

 

HUTCHISON MEDIPHARMA LIMITED

 

and

 

ELI LILLY TRADING (SHANGHAI) COMPANY LIMITED

 

and

 

HUTCHISON CHINA MEDITECH LIMITED

 

 

AMENDED AND RESTATED

 

EXCLUSIVE LICENSE AND COLLABORATION AGREEMENT

 

between

 

HUTCHISON MEDIPHARMA LIMITED

 

and

 

HUTCHISON CHINA MEDITECH LIMITED

 

EXCLUSIVE LICENSE AND COLLABORATION AGREEMENT

 

This Agreement (the “Agreement”), effective as of 8th October 2013 (the “Effective Date”), is entered into by and among (i) Hutchison MediPharma Limited, a Chinese company, organized and existing under the laws of the People’s Republic of China, having a place of business at Building 4, 720 Cai Lun Road, ZJ Hi-Tech Park, Shanghai, PRC (“Hutchison”) and (ii) Eli Lilly and Company, an U.S.A. company, organized and existing under the laws of the State of Indiana, having a place of business at Lilly Corporate Center, Indianapolis, Indiana 46285  U.S.A. (“Lilly”), and (iii) solely for the purposes of Articles 7.11(a), 7.11(b) and 7.11(c), Hutchison China MediTech Limited, a company organized and existing under the laws of the Cayman Islands with its principal offices at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the “Hutchison Guarantor”).  Hutchison and Lilly may be referred to herein individually as a “Party” or collectively as the “Parties.”  Reference to a Party shall be deemed to include that Party’s Affiliates.

 

Recitals:

 

A.                                    Hutchison is the owner of a molecule HMPL-013 and is developing it for the Chinese market as a pharmaceutical product useful in the treatment of cancer.

 

B.                                    Lilly is a U.S.A. pharmaceutical company having expertise in the discovery, development, manufacturing and commercialization of innovative human pharmaceutical products, including cancer products.

 

C.                                    Lilly and Hutchison desire to enter into a collaboration under which Lilly would obtain exclusive rights in the Field in the Territory to Hutchison’s developmental stage pharmaceutical product, the cancer compound known as HMPL-013, including any back-up compounds that Hutchison and/or Lilly may develop under the terms and conditions set forth in this Agreement.

 

1

 

D.                                    Hutchison, Hutchison Guarantor and Eli Lilly and Company entered into a license and collaboration agreement effective from 8 October 2013 (the “Original Agreement”) which was assigned to Lilly with effect from the same date. The parties now hereby agree with the signing of this Agreement to terminate the Original Agreement and replace it in its entirety with this Agreement.

 

In consideration of the foregoing premises and the mutual covenants herein contained, the Parties hereby agree as follows:

 

Agreement:

 

1.                                      DEFINITIONS.

 

Unless specifically set forth to the contrary herein, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below:

 

1.1                               “Adverse Event” means any untoward medical occurrence in a patient or clinical investigation subject administered a pharmaceutical product and which does not necessarily have to have a causal relationship with this treatment. Also, known as an “adverse experience”.

 

1.2                               “Affiliate” means with respect to any Party, any person or entity controlling, controlled by or under common control with such Party.  For purposes of this Article 1.2, “control” shall mean (a) in the case of a corporate entity, direct or indirect ownership of fifty percent (50%) or more of the stock or shares having the right to vote for the election of directors of such corporate entity and (b) in the case of an entity that is not a corporate entity, the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such entity, whether through the ownership of voting securities, by contract or otherwise.

 

1.3                               “Agreement” shall have the meaning set forth in the introduction to this agreement.

 

1.4                               “Applicable Laws”  means all statutes, ordinances, regulations, rules or orders of any kind whatsoever of any Governmental Authority that may be in effect from time to time and applicable to the activities contemplated by this Agreement.

 

1.5                               “Audit” shall have the meaning set forth in Article 5.2(d).

 

1.6                               “Business Day” means a day other than a Saturday, Sunday, or a bank or other public holiday in Shanghai, China, or in Indianapolis, Indiana.

 

1.7                               “Calendar Quarter” means the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 and December 31.

 

1.8                               “Calendar Year” means the respective periods of twelve (12) months commencing on January 1 and ending on December 31.

 

1.9                               “Cause” shall have the meaning set forth in Article 5.2(d).

 

2

 

1.10                        “cGMP” means current good manufacturing practices as promulgated for example under the United States Federal Food, Drug, and Cosmetic Act and similar requirements of jurisdictions outside the United States applicable to Manufacture of Clinical Materials or a Product.

 

1.11                        “Change of Control” shall have the meaning set forth in Article 15.2.

 

1.12                        “Clinical Material(s)” means Product formulated in accordance with the Specifications and Applicable Laws (a) for preclinical activities, and (b) for administration to subjects in clinical trials, as applicable.

 

1.13                        “Combination Product(s)” means any combination of Product and one or more additional active pharmaceutical ingredients, for example in a single delivery device such as a pre-filled pen, dual chamber needle or in a fixed dose combination.

 

1.14                        “Commercialization” or “Commercialize” means activities relating specifically to the pre-launch, launch, promotion, marketing, sales force recruitment, pricing determination, sale and distribution of a pharmaceutical product and post-launch medical activities, including: (a) manufacturing and distribution for commercial sale, (b) strategic marketing, sales force detailing, advertising, and market and product support; (c) medical education and liaison and any phase IV clinical trials; (d) all customer support and product distribution, invoicing and sales activities; (e) all post-approval regulatory activities, including those necessary to maintain Regulatory Approvals; and (f) target product profile, pricing, formulary and reimbursement related activities including pricing and reimbursement approvals.

 

1.15                        “Commercially Reasonable Efforts” means with respect to the efforts to be expended by a Party with respect to any objective under this Agreement, the efforts to accomplish such objective as a similarly situated party would normally use to accomplish a similar objective of a similarly situated party under similar circumstances, it being understood and agreed that with respect to the Development or Commercialization of a Product such efforts shall be similar to those efforts and resources commonly used by a similarly situated party for a similar biological or pharmaceutical product owned by it or to which it has rights, which product is at a similar stage in its development or product life and is of similar market potential taking into account efficacy, safety, approved labeling, profitability, the competitiveness of alternative products in the marketplace, the exclusivity of the product in view of its patent protection, patent life and other proprietary position of the product, and the likelihood of Regulatory Approval given the regulatory structure involved, provided such efforts are substantially and materially consistent with industry practices and standards.

 

1.16                        “Compliance” shall mean the adherence by the Parties in all material respects to all Applicable Laws and Party Specific Regulations, in each case with respect to the activities to be conducted under this Agreement.

 

1.17                        “Confidential Information” means all confidential information of the Disclosing Party or its Affiliates, regardless of its form or medium as provided to the Receiving Party or its Affiliates in connection with this Agreement; provided that, Confidential Information shall not include any information that the Receiving Party can show by competent evidence: (i) is already

 

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known to the Receiving Party at the time it is disclosed to the Receiving Party by the Disclosing Party; (ii) is or becomes generally known to the public through no act or omission of the Receiving Party in violation of the terms of this Agreement; (iii) has been lawfully received by the Receiving Party from a Third Party without restriction on its disclosure and without, to the knowledge of the Receiving Party, a breach by such Third Party of an obligation of confidentiality to the Disclosing Party; or (iv) has been independently developed by the Receiving Party without use of or reference to the Confidential Information of the Disclosing Party.

 

1.18                        “Control,” “Controls” or “Controlled by” means (except as used in Article 1.1, above), with respect to any item of or right under Patents or Know-How, the ability of a Party (whether through ownership or license or other right), other than pursuant to this Agreement, to grant access to, license or sublicense such item or right without violating the terms of any agreement or other arrangement with any Third Party existing at the time such Party would be required hereunder to grant the other Party such access or license or sublicense.

 

1.19                        “Conversion Rate” shall mean the conversion rate of United States dollars (US$) to Renminbi (RMB) of US$1 to RMB6.15.

 

1.20                        “Cost of Goods Sold” or “COGS” means all those costs incurred by the supplier of Product for the acquisition of materials from vendors and Third Party suppliers and conversion of such materials into a final, packaged Product.  Such costs include: The landed cost of purchased materials; and conversion costs associated with the Manufacture and testing of such Product, including direct labor and an appropriate allocation of indirect costs (proportional to the actual manufacturing time for any given Product).  Examples of indirect costs include maintenance of equipment and facilities, line supervision, and technical support. All the costs and methodologies to be used in allocating indirect costs or support services (including depreciation) shall be determined in a manner consistent with GAAP or IFRS as applicable to a Party.  Remediation costs outside of capital depreciation and reasonable and customary sample cost shall not be included in Cost of Goods Sold.  If Hutchison uses its site for Manufacturing, such costs shall be consistent with and limited to those commonly incurred by Third Party contract manufacturers.

 

1.21                        “Data Exclusivity Period” means, with respect to a Product in a country, the period during which the Regulatory Authority responsible for approval or authorization of the sale of drugs confers exclusive marketing rights or data exclusivity rights to the owner of the regulatory submission materials for such Product in such country, including the prohibition of reference, without the consent of the owner, to the clinical and other data that is contained in such regulatory submission materials.

 

1.22                        “Develop” or “Development” or “Developing” means research, discovery, process development, preparation for drug reimbursement, organizing formulary access and drug distribution, preparation and initiation of medical education and liaison activities and preclinical and clinical drug or biological development activities, including test method development and stability testing, toxicology, formulation, quality assurance/quality control development, statistical analysis, preclinical and clinical studies and regulatory affairs, approval and registration, in each case, of a Product for use in the Field, and to the extent normally undertaken

 

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during the development (as opposed to Commercialization) phase of such Product’s life cycle.  Development shall exclude all Phase IV clinical trials.

 

1.23                        “Development Costs” means (a) FTE Costs and other costs actually incurred by Hutchison or its Affiliates or Lilly or its Affiliates, as applicable (such Party or Affiliate, the “Incurring Party” for the purposes of this Article 1.22), that are (i) specifically identifiable or allocable to Development of a Product, (ii) reasonably incurred by the Incurring Party and (iii) that result from activities specifically assigned to the Incurring Party in accordance with this Agreement or the applicable Development Plan; provided that no costs incurred by Lilly or its Affiliates shall be deemed Development Costs unless such costs are incurred in Subsequent Development and are approved in advance by the JSC and (b) the COGS of the clinical supply of Product for Phase II/III clinical trials and Phase III clinical trials, such COGS to be Subsequent Development Costs.  Development Costs shall, subject to the preceding sentence, include: (x) amounts paid to Third Parties by the Incurring Party in connection with the conduct of Development and (y) any costs specifically referred to as “Development Costs” in this Agreement.

 

1.24                        “Development Plan” shall have the meaning set forth in Article 3.1(a).

 

1.25                        “Disclosing Party” shall have the meaning set forth in Article 9.1.

 

1.26                        “Effective Date” shall have the meaning set forth in the introduction in this agreement.

 

1.27                        “Electing Party” shall have the meaning set forth in Article 0.

 

1.28                        “Field” means all uses.

 

1.29                        “First Commercial Sale” means, with respect to any Product, the first sale to a Third Party for end use or consumption of such Product in a country after Regulatory Approval has been granted by the Regulatory Authority of such country.

 

1.30                        “Forecast” shall have the meaning set forth in Article 5.4.

 

1.31                        “FTE Costs” means, with respect to any period of time, the FTE Rate multiplied by the number of full-time equivalent employees of Lilly or Hutchison, or their respective Affiliates, working directly on the Development of a Product during such period of time.

 

1.32                        “FTE Rate” shall mean the “FTE Rate” set forth in Exhibit B, as amended from time to time by the JSC as a Mutual JSC Matter.

 

1.33                        “FTO Submission” shall have the meaning set forth in Article 7.1(b).

 

1.34                        “Full Data Set” shall have the meaning set forth in Article.

 

1.35                        “GAAP” means U.S. Generally Accepted Accounting Principles as the same may be in effect from time to time, as generally and consistently applied.

 

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1.36                        “Generic Competition” means, with respect to a Product in any country in the Territory, one (1) or more Third Parties have received Regulatory Approval to sell a Generic Product to such Product in such country and such Generic Product(s) is commercially available in such country.

 

1.37                        “Generic Product” means, on a country-by-country basis, a product (a) independently developed and commercialized by a Third Party and (b) that is approved by the applicable Regulatory Authority for sale in the relevant country for use for the same indication or indications for which a Product has received Regulatory Approval in such country and in reliance on such prior Regulatory Approval of such Product in such country.

 

1.38                        “Governmental Authority” shall mean any court, commission, authority, department, ministry, official or other instrumentality of, or being vested with public authority under any law of, any country, state or local authority or any political subdivision thereof, or any association of countries.

 

1.39                        “Guarantor” means the Hutchison Guarantor.

 

1.40                        “Hutchison” shall have the meaning set forth in the introduction to this Agreement.

 

1.41                        “Hutchison Guarantor” shall have the meaning set forth in the introduction to this Agreement.

 

1.42                        “Hutchison Know-How” means any and all Know-How, to the extent Controlled by Hutchison as of the Effective Date or during the Term, that is necessary or reasonably useful in connection with the Development, Commercialization or other use of a Product in the Field in the Territory.

 

1.43                        “Hutchison Patents” means Patents in the Territory Controlled by Hutchison on the Effective Date or during the Term that contain one or more claims to Products.  Hutchison Patents as of the Effective Date are listed on Exhibit A attached hereto.

 

1.44                        “IFRS” means International Financial Reporting Standards as the same may be in effect from time to time, as generally and consistently applied.

 

1.45                        “Initial Development” shall have the meaning set forth in Article 3.1(c).

 

1.46                        “Initial Indications” means (a) 3rd line colorectal cancer, (b) 3rd line non-small cell lung cancer and (c) 2nd line advanced gastric cancer.  Each of the Initial Indications shall be an “Initial Indication” hereunder.

 

1.47                        “Initial Product” shall have the meaning set forth in Article 1.66(a).

 

1.48                        “Internal Compliance Codes” means a Party’s internal policies and procedures intended to ensure that a Party complies with Applicable Laws, Party Specific Regulations, and such Party’s internal ethical, medical and similar standards.

 

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1.49                        “JSC Co-Chairs” shall have the meaning set forth in Article 2.2(a).

 

1.50                        “Jointly Owned Patents” shall have the meaning set forth in Article 12.2.

 

1.51                        “Know-How” means (a) any proprietary scientific or technical information, results and data of any type whatsoever, in any tangible or intangible form whatsoever, including databases, safety information, practices, methods, techniques, specifications, formulations, formulae, knowledge, know-how, skill, experience, test data including pharmacological, medicinal chemistry, biological, chemical, biochemical, toxicological and clinical test data, analytical and quality control data, stability data, studies and procedures, and manufacturing process and development information, results and data and (b) any proprietary biological, chemical or physical materials.

 

1.52                        “Latent Defects” means a defect: (a) which could not reasonably have been discovered upon receipt and inspection of the Product and (b) for which the cause is attributed to the actions or omissions of Hutchison or its Third Party Manufacturer prior to delivery of the Product to Lilly.

 

1.53                        “Life Cycle Planning Indications” means any indication that is not an Initial Indication for which one or more Parties elect to Develop a Product pursuant to this Agreement

 

1.54                        “Lilly” shall have the meaning set forth in the introduction in this Agreement.

 

1.55                        “Lilly Patent” shall have the meaning set forth in Article 12.2.

 

1.56                        “Major Unexpected Safety Issue” means in Lilly’s reasonable opinion a material, unexpected and Development-ending failure of a Product in an Initial Indication to meet the safety criteria for such Product in such Initial Indication in Exhibit C.

 

1.57                        “Manufacture” or “Manufacturing” or “Manufactured” means all operations involved in the manufacturing, quality control testing (including in-process, release and stability testing, if applicable), storage, releasing and packaging the Product.

 

1.58                        “Manufacturing Authorization” means any and all consents or other authorizations or approvals from the China Food and Drug Administration (“CFDA”) that is necessary for the manufacture of the Product in the Territory, (including the Manufacturing License Approvals), and any supplement, amendment or variation thereof.

 

1.59                        “Mutual JSC Matters” shall have the meaning set forth in Article 2.2(d).

 

1.60                        “Net Sales” shall mean, with respect to a Product, the gross amount invoiced by Lilly (including a Lilly Affiliate) or any Sublicensee thereof to unrelated Third Parties (excluding any non-end user Sublicensee), for the Product in the Territory, less:

 

[**]

[**]

[**]

[**]

 

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[**]

 

provided that, the deductions taken pursuant to clauses (a) through (e) in this Article 1.55 shall be consistent with the deductions taken by Lilly, its Affiliates or Sublicensees with respect to other similar products to the Product.

 

Such amounts shall be determined from the books and records of Lilly, its Affiliate or Sublicensee, maintained in accordance with GAAP or, in the case of Sublicensees, such similar accounting principles, consistently applied.  Lilly further agrees in determining such amounts, it will use Lilly’s then current standard procedures and methodology, including Lilly’s then current standard exchange rate methodology for the translation of foreign currency sales into U.S. Dollars or, in the case of Sublicensees, such similar methodology, consistently applied.

 

In the event that the Product is sold as part of a Combination Product, the Net Sales of the Product, for the purposes of determining royalty payments, shall be determined by multiplying the Net Sales of the Combination Product (as defined in the standard Net Sales definition) by the fraction, A / (A+B) where A is the weighted average sale price of the Product when sold separately in finished form, and B is the weighted average sale price of the other product(s) sold separately in finished form.

 

In the event that the weighted average sale price of the Product can be determined but the weighted average sale price of the other product(s) cannot be determined, Net Sales for purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the fraction A / C where A is the weighted average sale price of the Product when sold separately in finished form and C is the weighted average sale price of the Combination Product.

 

In the event that the weighted average sale price of the other product(s) can be determined but the weighted average sale price of the Product cannot be determined, Net Sales for purposes of determining royalty payments shall be calculated by multiplying the Net Sales of the Combination Product by the following formula:  one (1) minus B / C where B is the weighted average sale price of the other product(s) when sold separately in finished form and C is the weighted average sale price of the Combination Product.

 

In the event that the weighted average sale price of both the Product and the other product(s) in the Combination Product cannot be determined, the Net Sales of the Product shall be a percentage of the Net Sales of the Combination Product mutually agreed upon by the Parties in good faith.

 

1.61                        “Non-Conformity” shall have the meaning set forth in Article 5.6(a).

 

1.62                        “Party Specific Regulations” means all judgments, decrees, orders or similar decisions issued by any Governmental Authority specific to a Party, and all consent decrees, corporate integrity agreements, or other agreements or undertakings of any kind by a Party with

 

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any Governmental Authority, in each case as the same may be in effect from time to time and applicable to a Party’s activities contemplated by this Agreement.

 

1.63                        “Patent(s)” means (a) all patents and patent applications in any country or supranational jurisdiction and (b) any provisionals, substitutions, divisions, continuations, continuations in part, reissues, renewals, registrations, confirmations, reexaminations, extensions, supplementary protection certificates and the like, of any such patents or patent applications.

 

1.64                        “Patent Prosecution” means the responsibility and authority for (a) preparing, filing and prosecuting applications (of all types) for any Patent, (b) paying, filing and maintenance fees relating to any Patent, (c) managing any interference, opposition, re-issue, reexamination, revocation, nullification, or cancellation proceeding relating to the foregoing, (d) deciding to abandon Patent(s) and (e) settling any interference, opposition, revocation, nullification or cancellation proceeding.

 

1.65                        “Positive POC” means the successful achievement by a Product for an Initial Indication of all the criteria for “completion of a proof of concept study or trial” as set forth for such Product and indication in Exhibit C; provided that, with respect to a Product Developed for the Initial Indication of 3rd line non-small cell lung cancer, “Positive POC” shall mean the determination of Lilly pursuant to Article 3.4(a)(ii) to proceed with Development of such Product for such indication following the proof of concept study or trial for such indication.

 

1.66                        “Product” means any form or dosage of (a) the HMPL-013 molecule (the structure of which is set forth in Exhibit E) or (b) any analogues or derivatives of the HMPL-013 molecule that are claimed by those Hutchison Patents that also claim HMPL-013, in each case that exist as of the Effective Date or are discovered or developed by Hutchison during the Term of this Agreement.

 

1.67                        “Quality Agreement” shall have the meaning set forth in Article 5.2(c).

 

1.68                        “Receiving Party” shall have the meaning set forth in Article 9.1(a).

 

1.69                        “Regulatory Approval” means, with respect to a Product in a country, all approvals from the relevant Regulatory Authority to market and sell such Product in such country (including all applicable pricing and reimbursement approvals required to market and sell such Product in such country, if any).

 

1.70                        “Regulatory Authority” means the CFDA (China Food and Drug Administration) or any applicable government regulatory authority involved in granting approvals for the conduct of clinical trials or the manufacturing, marketing, reimbursement or pricing of a Product in the Territory.

 

1.71                        “Related Party” means, with respect to a Party, its Affiliates and Sublicensees.

 

1.72                        “Royalty Term” shall have the meaning set forth in Article 7.3(b).

 

1.73                        “Safety Agreement” shall have the meaning set forth in Article 6.3.

 

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1.74                        “Secretary” shall have the meaning set forth in Article 2.3.

 

1.75                        “Short Order” shall have the meaning set forth in Article 5.4(c).

 

1.76                        “Specifications” means the specifications for the Product as agreed upon by the Joint Steering Committee.

 

1.77                        “Subcontractor” shall have the meaning set forth in Article 3.6.

 

1.78                        “Sublicensee” means a Third Party that is granted a sublicense under the licenses granted to a Party in accordance with this Agreement.

 

1.79                        “Subsequent Development” means (a) any Development of a Product for an Initial Indication after such Product has achieved Positive POC for such Initial Indication or Lilly has elected to conduct Subsequent Development of a Product for such Initial Indication pursuant to Article 3.4(a)(iii), including the conduct of post-proof of concept studies for such Product for such Initial Indication and (b) all Development of any Product for a Life Cycle Planning Indication that the Parties may approve for Development pursuant to this Agreement.

 

1.80                        “Subsequent Development Costs” means any Development Costs specifically identifiable or allocable to the Subsequent Development of a Product.

 

1.81                        “Term” shall have the meaning set forth in Article 13.1.

 

1.82                        “Territory” means mainland People’s Republic of China and Hong Kong, each of which shall be treated as a “country” for purposes of this Agreement.

 

1.83                        “Third Party” means an entity other than (a) Lilly and its Affiliates and (b) Hutchison and its Affiliates.

 

1.84                        “Third Party Manufacturer” is a Third Party that Manufactures on behalf of Hutchison.

 

1.85                        “Valid Claim” means (a) a claim of an issued and unexpired Patent included within the Hutchison Patents in a country which has not been permanently revoked or held unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction, which decision is not appealable or is not appealed within the time allowed for appeal, and has not been abandoned, disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise in such country or (b) a bona fide claim of a pending patent application included within the Hutchison Patents in a country that has not been (i) cancelled, withdrawn or abandoned without being refiled in another application in the applicable jurisdiction or (ii) finally rejected by an administrative agency action from which no appeal can be taken or that has not been appealed within the time allowed for appeal; provided that any claim in any patent application pending for more than [**] years from the earliest date on which such patent application claims priority shall not be considered a Valid Claim for purposes of the Agreement from and after such [**] year date unless and until a patent containing such claim issues from such patent application.

 

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2.                                      SCOPE AND GOVERNANCE OF THE COLLABORATION.

 

2.1                               General.

 

(a)                           Scope.

 

Pursuant to and subject to the terms of this Agreement, the Parties agree to collaborate with respect to the Development of the Product in the Field with the goal of obtaining Regulatory Approval for Product(s) in the Field in the Territory for Manufacturing and Commercialization.  Lilly will have exclusive rights to Commercialize the Products in the Field in the Territory pursuant to this Agreement and as further set forth in Article 4 in exchange for royalty and milestone payments to be made to Hutchison as described in Article 7.  Responsibility for Manufacture of Clinical Materials and commercial quantities of Product shall be as detailed in Article 5.

 

(b)                           Guiding Principles.

 

The Joint Steering Committee and any appointed sub-committees as set forth in this Article 2 shall perform its responsibilities under this Agreement based on the principles of good faith, prudence and good scientific and business judgment.  None of such committees shall have any power to amend, modify or waive compliance under this Agreement.  Notwithstanding anything to the contrary in this Agreement, no decision by either Party, or any committee set forth in this Article 2, will be effective if such decision requires the other Party to breach any obligation under this Agreement and all determinations made by any committee shall be subject to and shall comply with the terms of this Agreement.

 

2.2                               Joint Steering Committee.

 

(a)                           Membership.

 

The Parties shall establish a Joint Steering Committee, “JSC”, to coordinate and oversee activities on which the Parties collaborate under this Agreement.  The JSC will be comprised of a senior executive of each Party or their designee from such Party (the “JSC Co-Chairs”) in addition to an equal number of representatives from each Party provided there are at least three (3) total representatives from each Party on the JSC, including the JSC Co-Chairs.  Within thirty (30) days of the Effective Date, each Party shall notify the other of its representatives to the JSC and the JSC shall hold its first organizational meeting.  Each Party may replace any of its appointed JSC representatives or its co-chair at any time upon five (5) days prior written notice to the other Party.  The role of the JSC Co-Chairs shall be to convene and preside at meetings of the JSC, but the JSC Co-Chairs shall not be entitled to prevent items from being discussed or to exercise a casting vote in the event there is a tie.  Each Party shall have the right, upon written notice to the other Party, to have present at the JSC meetings a reasonable number of additional, non-voting participants as observers at such meetings (provided such non-voting observers have confidentiality obligations to such Party that are at least as stringent as those set forth in this Agreement). Such additional participants shall not be deemed to be, or have any rights or responsibilities of, a member of the JSC.  Each Party will designate a member of management who will be the primary contact for that Party.  The primary contacts of the Parties shall be responsible for scheduling the meeting, circulate meeting agendas, draft

 

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minutes for each JSC meeting and circulate such minutes either in writing or electronically for both Parties’ approval of the JSC for that purpose.

 

(b)                           Responsibilities.

 

The responsibilities of the JSC and, as delegated by the JSC to its subcommittees, shall be:

 

(i)                               to provide a vehicle by which the Parties may share information regarding the overall strategy for the Development of Product(s);

 

(ii)                            to generate, approve and implement the Initial Development Plans and budgets and Development Plans and budgets for Subsequent Development of Products, including any clinical trials, and any subsequent amendments to the Development Plan;

 

(iii)                         to review and advise on any Third Parties used or to be involved in Development (CRO, CMO, etc.);

 

(iv)                        to facilitate the exchange of Information between the Parties with respect to the Development activities hereunder and to establish procedures for the efficient sharing of Information necessary for the Parties to fulfill their respective responsibilities with respect to Development of Products hereunder;

 

(v)                           to review and support an overall regulatory strategy established for the Product in the Field in the Territory, and to allocate the responsibility for regulatory activities between the Parties as contemplated by Article 6, below;

 

(vi)                        to review and support the Manufacturing Strategy; and to allocate responsibility for manufacturing activities between the Parties as contemplated by Article 5.1;

 

(vii)                     to discuss and give input regarding the information set forth in Commercialization reports submitted by Lilly to the JSC pursuant to Article 4.1, including the Commercialization strategy with respect to Products in the Field in the Territory;

 

(viii)                  to create such subcommittees as the JSC may find necessary or desirable from time to time, including a Development subcommittee, a Manufacturing subcommittee, a Commercialization subcommittee, a regulatory subcommittee and an intellectual property subcommittee (all such subcommittees, as practicable, to be formed at the JSC’s first organizational meeting with the exception of the Commercialization subcommittee);

 

(ix)                        to oversee the activities of subcommittees created under this

 

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Agreement, and to resolve any issues that such subcommittees cannot resolve; and

 

(x)                           to perform such other functions as appropriate to further the purposes of this Agreement, as determined by the Parties.

 

(c)                            Decision Making.

 

The JSC and its subcommittees shall make decisions unanimously, with each Party’s representatives collectively having one (1) vote, which vote is to be cast by such Party’s co-chair, or, in the absence of the co-chair, another of such Party’s representatives on the JSC or subcommittee designated by any such Party’s co-chair. At least one (1) representative from each Party shall be present at all meetings of the JSC or subcommittee, provided, however, that no Party shall have the right to boycott meetings as a means to avoid action by the JSC or subcommittee.

 

(d)                           Dispute Resolution.

 

Subject to the terms and conditions of this Agreement, If the JSC is unable to decide or resolve unanimously any matter properly presented to it for action within ten (10) Business Days, including as referred to the JSC by a subcommittee, at the written request of either Party, the issue shall be referred to senior management of each Party for resolution, who shall promptly meet and attempt in good faith to resolve such issue within thirty (30) days. If senior management cannot resolve such matter within the above-mentioned thirty (30) day period, then except for those matters set forth below, the matter shall be decided by mutual agreement of the then co-chairs of the JSC (such matters within the JSC’s jurisdiction and not subject to clause (i) or (ii) of this Article 2.2(d), “Mutual JSC Matters”).  For clarity, any decision to develop a product that is not an Initial Product or to develop a Product for an indication that is not an Initial Indication shall not be a decision subject to one Party’s final decision-making authority pursuant to clause (i) or (ii) of this Article 2.2(d) and shall require the mutual consent of the Parties.

 

(i)                                     Hutchison shall have final decision-making authority for [**]

 

(ii)                                  Except as expressly set forth in this Agreement, Lilly will have the final decision-making authority for all other material Development

 

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decisions with respect to a Product if Lilly [**]

 

(e)                            Limitations.

 

The JSC shall have no authority (a) to amend or interpret this Agreement, or (b) to determine whether or not a breach of this Agreement has occurred.

 

2.3                               JSC Meetings.

 

Within thirty (30) days of the Effective Date, the JSC will hold an in-person organizational meeting at a mutually agreed upon location to establish the JSC’s operating procedures. Following such initial meeting, JSC meetings shall be held at least four times per year or as often as mutually agreed by the Parties.  A JSC meeting may be held by audio, video or other electronic means but at least one meeting per year shall be held in person.  After the initial meeting above, the location of in-person JSC meetings will alternate between the Parties, unless otherwise agreed by the members of the JSC. Each Party will bear the expense of its respective JSC members’ participation in JSC meetings. At least five (5) Business Days prior to each JSC meeting, each Party shall provide written notice to the other Party of agenda items proposed by such Party for discussion or decision at such meeting, together with adequate and appropriate information related thereto. The JSC Chairman shall appoint a secretary for the purpose of taking the minutes of Committee meetings, and for such other administrative functions as may be assigned mutually by the Parties (the “Secretary”). Within ten (10) days after each meeting, the Secretary shall prepare and distribute to all members of the JSC draft minutes of the meeting. Such minutes shall provide a description, in reasonable detail, of the discussions at the meeting and a list of any actions, decisions or determinations approved by the JSC and a list of any issues to be resolved by the executives. Minutes will be deemed approved unless a member of the JSC objects to the accuracy of such minutes within ten (10) Business Days of receipt of such minutes.

 

2.4                               Committee Structure following First Commercial Sale.

 

From time to time and, in any event, as soon as practicable following the first anniversary of the First Commercial Sale of a Product, the Parties shall review the committee structure provided for in this Article 2 and eliminate committees or adjust their responsibilities so as to reflect the then current status of collaborative Development efforts, if any, and the commencement of Commercialization by Lilly.

 

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3.                                      PRODUCT DEVELOPMENT

 

3.1                               Development Plan.

 

(a)                           The initial Development plan for the Development of Product for the Initial Indications is attached hereto as Exhibit B (as amended from time to time pursuant to this Agreement, the “Development Plan”).  The Development Plan shall include: (a) all indications of Products then being pursued; (b) a description of the Development activities to be conducted by each Party and the relevant deliverables; (c) all relevant decision points to continue Development of a Product in an indication; (d) a budget for the Development activities to be conducted in the Territory with respect to Products in the Territory until Regulatory Approval of such Product for such indication; (e) an estimated timeline for the performance of activities; and (f) FTE estimates.

 

(b)                           On no less than an annual basis, the JSC shall review the Development Plan and recommend any amendments or changes to the Development Plan and approve any such amendments or changes.

 

(c)                            The Development of Products shall be conducted by Parties pursuant to good clinical practices (“GCP”) and good laboratory practices (“GLP”). GLP means all applicable Good Laboratory Practice standards, including, as applicable, as set forth in the then current good laboratory practice standards promulgated or endorsed by the FDA as defined in 21 C.F.R. Part 58, or the equivalent Applicable Laws in the Territory, each as may be amended and applicable from time to time. GCP means all applicable Good Clinical Practice standards for the design, conduct, performance, monitoring, auditing, recording, analyses and reporting of clinical trials, including, as applicable (a) as set forth in the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (“ICH”) Harmonised Tripartite Guideline for Good Clinical Practice (CPMP/ICH/135/95) and any other guidelines for good clinical practice for trials on medicinal products in the Territory, (b) the Declaration of Helsinki (2004) as last amended at the 52nd World Medical Association in October 2000 and any further amendments or clarifications thereto, (c) U.S. Code of Federal Regulations Title 21, Parts 50 (Protection of Human Subjects), 56 (Institutional Review Boards) and 312 (Investigational New Drug Application), as may be amended from time to time, and (d) the equivalent Applicable Laws the Territory, each as may be amended and applicable from time to time and in each case, that provide for, among other things, assurance that the clinical data and reported results are credible and accurate and protect the rights, integrity, and confidentiality of trial subjects.

 

3.2                               Conduct of Initial Development: Proof of Concept.

 

(a)                           The JSC will outline the data analysis criteria for all POC studies for each indication. The POC data for all indications will be reviewed by an independent data review committee or process and all POC studies will be conducted and managed by global or equivalently qualified CROs.

 

(b)                           Hutchison shall conduct Development of Product for an Initial Indication until (a) (i) with respect to a Product for the 3rd line colorectal cancer or 2nd line advanced gastric cancer Initial Indication, such Product for such Initial Indication has achieved Positive POC or (ii)  with respect to a Product for the 3rd line non-small cell lung cancer Initial Indication, the proof of concept (Phase IIa) study for such Product for such Initial Indication has been completed or (b) with respect to any Product for an Initial Indication, Hutchison deems, in good

 

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faith, that Positive POC cannot be achieved in a commercially reasonable fashion by such Product for such Initial Indication (such Development, the “Initial Development”). The JSC will ensure that the design and execution of each Phase II trial of Initial Development meets cGMP and is designed to achieve Positive POC.

 

3.3                               Initial Development Funding.                           [**]

 

3.4                               Subsequent Development and Costs.

 

(a)                           Following the Initial Development of a Product for an Initial Indication, the JSC will have a thirty (30) day review period, such review period to commence after receipt from Hutchison of a full data set, including but not limited to, all relevant source data, quality assessment, efficacy, safety, statistical analysis, records, final analysis and raw data as would be expected to be ready three to four weeks following the final data base lock associated with the achievement of Positive POC (“Full Data Set”).  In order to maximise efficiency and speed of development, Lilly will work with Hutchison via the JSC to conduct diligence in parallel with the POC studies to ensure the quality of the POC studies.  In order to facilitate Lilly’s final diligence review of the Full Data Set, Hutchison will provide Lilly with at least four weeks advance notice of the anticipated commencement of the review period and will make arrangements and where needed, will accompany Lilly, in order to allow Lilly personnel to visit relevant Third Party sites during the first two weeks of the review period. Any delays in conducting such visits which were not in the reasonable control of Lilly shall be considered in adding proportionate time to the review period.  Except in the case of a Product for 3rd line non-small cell lung cancer Initial Indication for which such invoicing shall be dealt with under Article 3.4(a)(ii) below, Hutchison will issue an invoice for payment of the relevant milestone payment under Article 7.2 immediately following such review period unless Hutchison receives a notice of termination for a Major Unexpected Safety Issue in accordance with Article 13.4.

 

(i)                                           If a Product has achieved Positive POC for the 3rd line colorectal cancer or 2nd line advanced gastric cancer Initial Indication, then (A) the POC milestone under Article 7.2 (i.e., #1) will have been met and the corresponding milestone payment will be payable to Hutchison and (B) the development of such Product for such Initial Indication into Phase III clinical trials (which shall be Subsequent Development under this Agreement) will be continued in accordance with the terms of this Agreement.  For the avoidance of doubt, once a Product for the 3rd line colorectal cancer or 2nd line advanced gastric cancer Initial Indication has achieved Positive POC, the Parties shall be deemed to have agreed that such Product shall proceed into Subsequent Development (i.e., Phase III registration studies or trials pursuant to this Agreement).  [**]

 

(ii)                                        [**]

 

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[**]

 

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(c)                                        [**]

 

(d)                                       If a Product has achieved Positive POC for an Initial Indication or Lilly, pursuant to Article 3.4(a)(iii), elects to conduct Subsequent Development of a Product for an Initial Indication, then (i) Hutchison shall continue to be responsible for all future Subsequent Development activities, (ii) all Development Costs incurred for a Product for an Initial Indication after such achievement or election shall be deemed Subsequent Development Costs, (iii) Lilly shall be responsible for the payment of the “proof of concept” milestone for such Product in such Initial Indication under Article 7.2 and (iv) Lilly shall reimburse Hutchison for [**] of Development Costs incurred by Hutchison (see Appendix B, page 7; Development Costs will be the “Total Costs” as set forth in the table) and its Affiliates for Phase III development of such Product for such Initial Indication whether or not such Development Costs are incurred by Hutchison before or after Positive POC achievement.

 

(e)                                        Hutchison will be responsible for [**] of all Subsequent Development Costs and Lilly shall be responsible for [**] of all Subsequent Development Costs.  If any Subsequent Development Costs incurred by Hutchison for an activity exceed the amounts budgeted in the applicable budget in the Development Plan for such activity, such excess costs shall be deemed Subsequent Development Costs for the purposes of this Agreement; provided that, to the extent such excess costs are more than [**] of the amounts budgeted in the applicable budget in the Development Plan for such activity, then such excess costs above such [**] threshold shall only be deemed Subsequent Development Costs for the purposes of this Agreement to the extent such excess costs are not due to Hutchison’s failure to conduct activities in a manner consistent with the Development Plan or have been approved by the JSC.  All amounts paid to Third Parties by Hutchison for Development activities shall be reimbursed as Development Costs at cost without any mark-up.  Following receipt of Regulatory Approval, [**].

 

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(f)                                         In addition to Hutchison’s right to pursue Development of a Product that has not achieved Positive POC pursuant to Article 3.4(b), in the event a Party wishes to pursue a Life Cycle Planning Indication for a Product, it shall notify the other Party and submit to such Party an outline for a development plan (including a high-level budget) for such Life Cycle Planning Indication and all relevant information it believes, in good faith, to be reasonably necessary for the other Party to elect whether or not to pursue such Life Cycle Planning Indication for such Product under this Agreement.  The other Party (the “Electing Party”) must elect, in writing to the other Party, within sixty (60) days of receiving this information, whether or not to proceed with such development under this Agreement.

 

(g)                                        If the Electing Party decides to pursue a Life Cycle Planning Indication for a Product, (A) milestones will be paid pursuant to this Agreement for such Product for such Life Cycle Planning Indication pursuant to Article 7.2 (as described in Milestone Event #4), (B) all Development Costs for a Product for a Life Cycle Planning Indication shall be deemed Subsequent Development Costs, (C) the JSC shall, as a Mutual JSC Matter, generate and approve an amended Development Plan to include such Life Cycle Planning Indication and (D) Hutchison shall be responsible for all Development activities for such Product for such Life Cycle Planning Indication.

 

3.5                               Development Records and Reimbursement of Hutchison Costs.

 

Hutchison shall track and calculate all Development Costs incurred by it.  All Development Costs shall be determined in accordance with IFRS.  Hutchison shall keep a complete and accurate record of all such costs.  Within [**] days after the end of each Calendar Quarter, Hutchison shall submit to Lilly a report setting forth in reasonable detail the Development Costs incurred by it during such Calendar Quarter, with an allocation of such costs between the Parties consistent with Articles 3.3 and 3.4, along with such supporting documentation as Lilly may reasonably request, and provide Lilly an invoice for any amounts due from Lilly. Lilly shall pay the amount due within [**] days after receipt of the invoice and appropriate documentation.

 

3.6                               Rights to Engage Development Subcontractors.

 

Each Party shall have the right to engage Third Party contractors to perform any portion of its Development obligations hereunder; except that no Third Party contractor can be debarred or disqualified by the Regulatory Authority. Each Party shall be responsible for ensuring that, prior to any such engagement, any Third Party contractors are subject to written agreements containing terms and conditions: (i) consistent with the relevant terms and conditions of the Agreement protecting the rights of the Parties under the Agreement including imposing obligations of confidentiality on each such subcontractor; (ii) that vests ownership of any and all inventions developed by such subcontractor relating solely to Products in the course of

 

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performing such subcontracted work in the contracting Party; (iii) that does not impose any payment obligations or liability on the other Party without the prior written consent of the other Party and (iv) that is otherwise consistent with the terms of the Development Plan to the extent applicable (such contractors, “Subcontractors”).  Each Party shall advise the other Party in writing at least fifteen (15) days in advance of any engagement of a Subcontractor.  Further, to the extent practicable, Hutchison shall use Commercially Reasonable Efforts to cause their existing contractors, including their existing contract Manufacturers of Clinical Materials, to cooperate with Lilly as reasonably necessary for Lilly to fulfill its Development and Commercialization obligations under this Agreement.

 

4.                                      COMMERCIALIZATION AND COMPLIANCE.

 

4.1                                                 Overview.

 

Lilly shall have full responsibility and authority for all aspects of the Commercialization of Products in the Field in the Territory at its sole expense.  Lilly shall use Commercially Reasonable Efforts to Commercialize Products, in compliance with the terms and conditions of the Agreement with a goal to maximize profits from Net Sales of Products. Lilly shall book all Third Party end user sales of the Products, and shall have the sole right and obligation to determine all pricing of the Products.  Lilly shall bear all of the costs and expenses incurred in connection with all such Commercialization activities.  Through the JSC, Lilly shall provide Hutchison with quarterly reports of the activities it has undertaken with regard to Commercializing Products in the Territory.  In addition, Lilly shall meet with Hutchison, at Hutchison’s request and no more than two (2) times per year, to report on the activities it has undertaken with regard to Commercializing Products in the Territory and to provide a forum for Hutchison to provide feedback regarding such Commercialization activities, which feedback shall be reasonably considered by Lilly in developing its future Commercialization strategy for Products.

 

4.2                                                 Product Trademark, Labeling; Promotional Materials.

 

Lilly shall own and be responsible for obtaining and maintaining trademarks for the Products. Lilly shall be responsible for designing and supplying the product labeling and promotional materials for the Products.  Lilly shall be responsible as to the manner in which Products shall be presented and described to the medical community in any promotional materials and the placement of the names and logos of the Parties therein, in each case as permitted by Applicable Law and consistent with the labeling for the Products approved by the applicable Regulatory Authority. To the extent permitted by Applicable Law, in Commercialization under this Agreement, product labeling shall identify the Products as Manufactured by Hutchison or its approved Third Party Manufacturer.

 

4.3                                                 Compliance Obligations.

 

Each of the Parties shall, and shall cause their respective Affiliates to, comply in all material respects with the terms of this Agreement as follows:

 

(a)                           Compliance with Applicable Laws. Each of the Parties shall, and shall cause their respective Affiliates to, conduct all activities under this Agreement in such a manner

 

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as to comply in all material respects with all Applicable Laws.

 

(b)                           Compliance with Party Specific Regulations. The Parties agree to cooperate with each other as may reasonably be required to ensure that each is able to fully meet its obligations with respect to the Party Specific Regulations applicable to it. Neither Party shall be obligated to pursue any course of conduct that would result in such Party being in material breach of any Party Specific Regulation applicable to it.  All Party Specific Regulations are binding only in accordance with their terms and only upon the Party to which they relate.

 

(c)                            Compliance with Internal Compliance Codes.  All Internal Compliance Codes shall apply only to the Party to which they relate.  The Parties agree to cooperate with each other to ensure that each Party is able to comply with the substance of its respective Internal Compliance Codes and, to the extent practicable, to operate in a manner consist with its usual Compliance related processes.

 

(d)                           Compliance Agreement. From time to time, the Parties shall discuss activities necessary to ensure Compliance.  If either Party requests, the Parties will negotiate in good faith and execute a written Compliance Agreement that will set forth and define the compliance policies, standards, and procedures the Parties will adhere to when conducting activities under this Agreement.  The Compliance Agreement may also include provisions relating to interactions between the respective compliance organizations of the Parties, sharing of Compliance related information, execution of training, implementation and monitoring activities, and resolution of Compliance issues that may arise in accordance with the rule established in Article 1.6.

 

(e)                            Responsibility for Compliance; Disputes Regarding Compliance Matters. Each Party is solely responsible to ensure Compliance by it and its Affiliates.

 

(f)                             Review Procedure for Marketing Materials and Activities.  All detailing, promoting, communication, marketing and selling activities, including promotional and educational materials and messages, used in connection with the activities contemplated by this Agreement shall comply in all material respects with Applicable Laws and Party Specific Regulations, and be consistent with the substance of the Internal Compliance Codes of Lilly.

 

(g)                            Anti-Bribery Commitments.  Without limiting the other obligations of the Parties set forth in this Article, in connection with any activities of the Parties under this Agreement, the Parties confirm that they have not given, offered, promised, or authorized, and will not give, offer, promise, or authorize, any payment, benefit, or gift of money or anything else of value, directly or through a Third Party, to (i) any Government or Public Official, as defined below; (ii) any political party, party official or candidate for public or political office; (iii) any person while knowing or having reason to know that all or a portion of the value will be given, offered or promised, directly or indirectly, to anyone describe in terms (i) or (ii) above; or (iv) any owner, director, employee, representative or agent of any actual or potential customer of the parties, for purposes of influencing any act or decision of such individual in his official capacity, inducing such individual to do or omit to do any act in violation of the individual’s duty, inducing the individual to use the individual’s official influence with a government to affect or influence an act or decision of the government, or to secure any improper advantage in order

 

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to assist in obtaining or retaining business. The parties shall comply with all applicable anti-bribery laws of any jurisdiction, including any record keeping requirements of such laws, in the Countries where the Parties have their principal places of business and where they conduct any activities under this Agreement or any related agreements. For the purposes of this Article, “Government or Public Official” means any officer or employee or anyone acting in an official capacity on behalf of:  a government or any department or agency thereof; a public international organization (such as the United Nations, the International Monetary Fund, the International Red Cross, and the World Health Organization), or any department, agency or institution thereof; or a government-owned or controlled company, institution, or other entity, including a government-owned hospital or university.

 

5.                                      MANUFACTURE AND SUPPLY.

 

5.1                                                 General Overview.

 

(a)                           The JSC, as a Mutual JSC Matter, shall establish an overall strategy for supply of Clinical Materials and Products for Development and Commercialization purposes (the “Manufacturing Strategy”), to the extent consistent with Hutchison’s and Lilly’s obligations and rights under this Agreement.  The Manufacturing Strategy shall address manufacturing quality standards and the Parties and/or, as applicable, the Third Party Manufacturer shall enter into a separate Quality Agreement for the Product.  Subject to this Article 5.1, Hutchison shall be responsible in consultation with Lilly for the supply of, and shall have the right to supply, all clinical and commercial supplies of the Product for use under this Agreement.  To the extent and on the timeline contemplated by the Manufacturing Strategy, Hutchison shall (i) retain a Third Party Manufacturer for the supply of drug substance, (ii) take all necessary actions, with consultation from Lilly, to establish a drug product site for the clinical and commercial supply of finished Product and (iii) retain a back-up manufacturer, a Third Party Manufacturer, selected in consultation with Lilly, for the clinical and commercial supply of finished Product, such Manufacturer to be approved by Lilly, such approval not to be unreasonably withheld or delayed.

 

(b)                           Notwithstanding anything to the contrary in this Agreement, Lilly may require Hutchison to use a Third Party Manufacturer for all or some of the clinical supply of Products if (A) Lilly believes, reasonably and in good faith, that Hutchison has not shown the capability to satisfactorily deliver sufficient quantity of Products in acceptable quality to the clinic for the Development activities contemplated under this Agreement and the Development Plan, (B) Hutchison has not received necessary approval from the applicable Regulatory Authority to Manufacture clinical supplies of Products or (C) Lilly believes, reasonably and in good faith, that Hutchison does not have systems in place with respect to the Manufacture of clinical supply of Products that comply with applicable quality and pharmcovigilance agreements (such as those prepared under this Agreement) and Applicable Law.

 

(c)                            The Parties shall enter into a series of agreements detailing the obligations and responsibilities of each Party as it pertains to the supply of Product in the Territory. The agreements shall include supply agreements, Quality Agreements and Manufacturing Responsibilities Document (“MRD”) appropriate for the Manufacture of the Product(s).

 

(d)                           Lilly will purchase all of its requirements of Products for the Territory from

 

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Hutchison and Hutchison agrees to supply Lilly’s forecast for Products for the Territory. Hutchison agrees to supply the Product to Lilly at a transfer price that accounts for Hutchison’s COGS.  Product costing must be consistent with GAAP or IFRS and as mutually agreed upon by both Parties.

 

(e)                                  Following the Term of the Agreement but not after an early termination, if Lilly so chooses, the Parties will enter into a continuing supply agreement for the supply of Product for the Territory or part thereof wherein the Product will be supplied at arms-length market terms.

 

5.2                                                 General Product, Manufacturing and Supply Responsibilities.

 

(a)                           General Product Responsibilities of Lilly.  Lilly shall be responsible for the following activities regarding a Product: (i) facilitating all sales of Product in the Territory, (ii) all government price reporting, calculations, and payment processing obligations, (iii) keeping the Product (following receipt by Lilly) in good condition and with due care and in compliance with all Applicable Laws, (iv) handling all commercial contracting obligations, including managed care, hospitals,  government programs and all other commercial agreements, and (v) booking all sales of Products, and collection of outstanding receivables for any Product.

 

(b)                           General Product Responsibilities of Hutchison.  Hutchison shall be responsible for the following regarding a Product: (i) holding itself or through its Third Party Manufacturer the Manufacturing Authorizations and accordingly being responsible for all government reporting obligations in connection therewith, (ii) making the Product available at suitable warehouses for Lilly to pick up such Product, and (iii) providing Lilly with any information Controlled by Hutchison that Lilly may reasonably request to meet all government reporting obligations for the Product.

 

(c)                            Supply Agreement, Quality Agreement and Manufacturing Responsibility Document.  The Parties shall negotiate in good faith and enter into and adopt a quality agreement (the “Quality Agreement”) within ninety (90) days of the Effective Date, a supply agreement and a Manufacturing Responsibility Document or MRD prior to one (1) year of the anticipated approval of a Product by CFDA, each of which shall be within the purview of the applicable portion of the cGMP. The supply agreement shall include but not be limited to, traditional supply terms, product costing, forecast obligations and access to Manufacturing records and facilities including the right for Lilly at its discretion to have a person in the plant at any Manufacturing site used by Hutchison or its Third Party Manufacturer during Manufacturing activities related to the Product.  The MRD will contain, among other provisions, certain procedures and personnel contacts relating to the supply of Products for the Territory that will be developed, approved and updated by the Parties, and the shelf-life of the Product and Samples. The supply agreement and the MRD will be subject to and not be inconsistent with the terms of this Agreement and in the event of conflict between the terms of the MRD and this Agreement, the terms of this Agreement will control.  Articles of the supply agreement and MRD may be modified from time to time by mutual written agreement of the Parties.  The Quality Agreement shall include, but not be limited to, the Specifications for a Product, Product audit rights, including specifications and audit rights for the Samples, which shall contain customary terms as per the cGMP as mandated by the CFDA.  Besides the authorized representatives of the Parties, representatives of each Party’s

 

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quality units and safety units shall sign the Quality Agreement and Safety Agreement, respectively. Representatives of each Party’s quality unit and supply chain unit shall sign MRD.  In the event the information in, or the terms of, the Quality Agreement, Safety Agreement or the MRD conflicts with this Agreement, the terms of this Agreement will control, provided that with respect to specific technical matters that directly impact the quality of a Product, the terms of the Quality Agreement will control.

 

(d)                           Inspection by Lilly.  Upon fifteen (15) Business Days’ prior written notice to Hutchison or, as applicable, Third Party Manufacturers, and during normal working hours, shall allow Lilly and/or its authorized representative or agents, to inspect the premises where the Product manufacturing and operations are conducted for purposes of overseeing and auditing the Product Manufacture and operations (the “Audit”), provided that such Audit does not (i) unduly disrupt the normal operation of the business or (ii) require Hutchison or as applicable the Third Party Manufacturer to provide Lilly or its authorized representatives or agents any trade secret or confidential information that is not related to the Manufacture of the Product(s). In addition, the Parties agree that any such Audit shall not be conducted more than once every calendar year.  Notwithstanding the foregoing sentence, Lilly shall have the right to conduct an additional Audit prior to each Launch of a new Product related to such Product. Notwithstanding the above, for sufficient Cause (as defined below), which shall be communicated in writing to Hutchison, Lilly may have immediate access during normal working hours limited to the extent of inspection directly related to such Cause, with appropriate protections to preserve the confidentiality of Third Party information at the applicable facility. “Cause” shall mean a Product safety or quality issue that has been specifically identified, or as mandated by Regulatory Authorities and where time is of the essence. Any such audit conducted for “Cause” shall not supplant or negate the right for the annual Audit.

 

(e)                            Notice of Inspections.  During the Term of this Agreement, each Party or, as applicable, the Third Party Manufacturer shall provide the other Party with prompt notice of any governmental or regulatory review, audit or inspection of its facility, processes, or products that relate to the subject matter of this Agreement.  The audited party shall provide the non-audited party with the results of any such review, audit or inspection to the extent it relates to the subject matter of this Agreement.  To the extent practicable, the non-audited party shall provide assistance to the audited party in responding to any such review, audit or inspection to the extent it relates to the subject matter of this Agreement.

 

5.3                                                                               Product Manufacture and Distribution.

 

(a)                                 Hutchison, in consultation with Lilly, shall be responsible for obtaining the active pharmaceutical ingredients required to Manufacture each Product from a supplier acceptable to and approved by Lilly (such approval not to be unreasonably withheld or delayed), and the Manufacture of each finished Product according to Specifications approved in the relevant Manufacturing Authorization, in each case during the Product’s life.  Lilly shall have the right to audit all Product manufacturing sites, including Hutchison and Third Party Manufacturers, who are Manufacturing the active pharmaceutical ingredients. In particular, based upon an ordering process established within the MRD, Hutchison will make such finished Products available for pick up by Lilly, its authorized agent, or a common carrier engaged by Lilly.  Lilly will, or will cause its Affiliates to:  (i) to cause its freight carrier to pick up the

 

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Products promptly (and in any event, not later than ten (10) Business Days) following receipt of notice from Hutchison that such Products are available for pick-up; (ii) to cooperate with the applicable Regulatory Authorities in the Territory required for clearance of the Products, provided that Hutchison will provide the necessary information reasonably requested by Lilly in order for Lilly or its Affiliate to provide such cooperation; and (iii) to have the Products delivered to warehouses designated by Lilly or an Affiliate of Lilly in the Territory as promptly as practicable.

 

(b)                                       [**]

 

[**]

 

[**]

 

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[**]

 

(f)                                         Lilly will store the Product in Lilly designated warehouses in good condition and with due care, and in compliance with all Applicable Laws for the Territory, including the applicable cGMP regulations for storage facilities.

 

(g)                                        Hutchison or as applicable the Third Party Manufacturer (hereinafter, jointly referred to as Hutchison in this Article 0) will ensure that Product at its warehouses made available to Lilly for pick-up will have a minimum of [**] of its approved shelf life remaining from the date Hutchison notifies Lilly that the Products are available for pick up in accordance with an accepted purchase order.

 

5.4                                                 Forecasts, Raw Materials and Allocation of Product.

 

(a)                                 After the Product obtains Regulatory Approval, Lilly will provide Hutchison with a quarterly non-binding rolling forecast of its anticipated requirements for that Product for the next twelve months.

 

(b)                                 At least [**] days prior to the expected launch of the Product, and thereafter commencing with the launch of the Product, Lilly will provide to Hutchison (i) [**] thereafter, Lilly’s good faith estimate of the total quantity of the Product expected to be ordered for the following [**] calendar months, broken down into calendar months (each month’s amount, the “Forecast”), and (ii) on or before the [**] for each year, Lilly’s good faith estimate of the total quantity of the Product expected to be ordered [**]. The Parties agree that such Forecasts and such estimates will be for general planning purposes only, and will not be binding on Hutchison or Lilly except for the [**] of these forecasts which will be binding for both Parties. This forecasting process may be modified from time to time by the mutual consent of the Parties. Hutchison agrees to make available Manufacturing facilities and equipment that is necessary in order to Manufacture the quantity of Products set forth in Lilly’s Forecast.

 

(c)                            Reasonable quantities of unique components or raw materials, used in the Manufacture of the Product, shall be purchased or Manufactured by Hutchison, at its own cost and expense, for use in supplying Lilly’s requirements for the Product under this Agreement based on Lilly’s Forecast.

 

(d)                           If the available supply of raw materials or other inputs to the Product, including production time, for purposes of Manufacturing the Product is in short supply such that Hutchison is unable to fulfill completely outstanding Product orders hereunder, Hutchison shall allocate such available supply of Product between Lilly’s Product and Product that Hutchison may be supplying to itself or other Third Parties (either via itself or a Third Party Manufacturer) based on the then current year’s sales forecast.  Hutchison undertakes that it or, as applicable, its Third Party Manufacturer, shall carry in “safety stock” inventory a minimum [**] supply of the raw materials and a [**] supply of the Product to accommodate Lilly’s orders of the Product for use consistent with the Forecast.

 

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5.5                                                 Shipments, Title and Returns.

 

(a)                           All Products will be shipped to Lilly Ex Works (Incoterms 2010) Hutchison’s shipping point.

 

(b)                           Hutchison, concurrently with each shipment of Product to a Lilly designated warehouse, shall provide to Lilly for the Product included in such shipment: (i) normal and customary documentation, including bill of lading; (ii) a certificate of compliance that such lot meets the Specifications of the Product; (iii) a certificate of analysis and any other documentation as outlined within the Quality Agreement; and (iv) any other documentation required by regulatory authorities to transport the Product.

 

(c)                            Lilly shall be responsible for all return processing by customers of the Product in the Territory in accordance with its own guidelines and in compliance with its own trade account policy, and shall notify Hutchison regularly about any returns.

 

5.6                                                 Non-Conformity Product.

 

(a)                           Upon receipt of a shipment of a Product, Lilly shall inspect such shipment for physical damage and compliance with the shipping documentation and carry out any reasonable inspection procedures that Lilly considers appropriate in line with industry standards.  Any patent defects, quantitative defects, damage or noncompliance (excluding Latent Defects) shall be reported to Hutchison within [**] Business Days. In addition, Lilly shall be entitled but not obligated, at its own cost and expense and using the test methods registered in the regulatory documents to test any and all Products, as applicable, delivered to it hereunder to determine whether such Product complies with the requirements of the Quality Agreement and the registered Specifications. If Lilly reasonably determines that such Product, as applicable, fails to conform to the Quality Agreement or registered Specifications or is otherwise inappropriate for use (a “Non-Conformity”), Lilly shall notify Hutchison in writing within [**] Business Days of the discovery of the claimed Non-Conformity such as and including Latent Defects and reason(s) that Lilly has reasonably determined that a Non-Conformity exists, and provide Hutchison as soon as practicable with material, data or information supporting the reason(s) along with a sample of the non-conforming Product.  Lilly, at Hutchison’s request, shall provide Hutchison with the opportunity to conduct its own tests on such Product as soon as reasonably practicable but not to exceed [**] days from receipt of notice from Lilly regarding such Non-Conformity.  If Hutchison concurs with the Non-Conformity, then Hutchison will replace all Products with the Non-Conformity, at their expense, as soon as practicable and shall reimburse Lilly for any expenses related to transporting the non-conforming Product back to Hutchison. If Hutchison has delivered a quantity of Product that is less than the quantity stated in any invoice or bill of lading, Hutchison shall, at its own cost and expense, supply Lilly with any missing quantities of Product as soon as reasonably practicable after receipt of such notice.

 

(b)                           Notwithstanding the foregoing, Lilly shall have the right to reject any batch of Product having Latent Defects prior to the expiry of such batch of Product. If Hutchison agrees that such Product contains a Non-Conformity, Hutchison shall, at its option, replace the non-conforming Product or repay the full amount of any payments, including shipping and recall

 

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costs for such Product. If Hutchison does not agree with Lilly’s determination that such Product contains a Non-Conformity, then after reasonable efforts to resolve any disagreement between the Parties, either Party may submit a sample of such Product to a mutually agreed upon independent Third Party who is an expert or is familiar with the industry to determine whether the Product meets the Specifications. The independent party’s results shall be final and binding and if such results indicate that the Product contained a Non-Conformity, Hutchison shall, at its option, replace the non-conforming Product or repay the full amount of any payments for such Product. Unless otherwise agreed to by the Parties in writing, the costs associated with such testing and review shall be borne by the non-prevailing Party.

 

(c)                            If Lilly has not notified Hutchison within [**] Business Days of receipt of the Products that the Products received by Lilly contains a Non-Conformity, such Product shall be deemed accepted by Lilly, shall constitute a waiver of any claims Lilly may have against Hutchison with respect to payment for such shipment and shall constitute agreement by Lilly to pay Hutchison for such Product in accordance with the payment obligations under this Agreement.  Notwithstanding the foregoing, acceptance of Product by Lilly (whether expressly accepted or deemed accepted) will not constitute a waiver of any rights of Lilly with regard to such Product, including the right to revoke its acceptance of such Product and to withhold acceptance for any Latent Defects discovered by Lilly and reported to Hutchison within [**] Business Days of discovery of such Latent Defects.

 

5.7                                                 Hutchison’s Supply Covenants.

 

(a)                           Hutchison covenants to Lilly that Hutchison shall ensure that the Products on the date of their respective shipment to, or pick up by Lilly (as applicable) pursuant to this Agreement:

 

i.                       will conform to the applicable Product Specifications (as agreed between the Parties);

 

ii.                    would have been produced, stored and tested in accordance with cGMP requirements;

 

iii.                 will be adequately contained, packaged and labeled and materially conform to the affirmations of fact on the container of the Product; and

 

iv.                the Product shall have an approved shelf-life that will conform to Article 5.3(f) as of the date the Product is available for pick up in accordance with an accepted purchase order by Lilly.

 

(b)                           Hutchison covenants and undertakes to convey to Lilly good title in the Territory to the Products free of any security interest, other lien, or encumbrance.

 

(c)                            Hutchison further warrants that it will act with due care, diligence and skill in its dealings with the Product and will act with promptness, diligence and professionalism in its dealings with Lilly.

 

5.8                                                 Lilly’s Pick-Up Covenants.

 

Lilly covenants to Hutchison that Lilly shall ensure that the Products are duly and promptly picked up by Lilly pursuant to Article 5.2(a), and that Lilly will act with due care,

 

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diligence and skill in its dealings with the Product and will act with promptness, diligence and professionalism in its dealings with Hutchison.

 

5.9                                                 Limited Warranty; Disclaimer and Scope of Liability.  Hutchison warrants to Lilly that Clinical Materials and Products delivered hereunder will (i) if Manufactured by Third Parties, the Third Parties shall be under an obligation to comply with cGMP and other Applicable Laws of the Territory, and be in accordance with the Specifications, (ii) if Manufactured by Hutchison, be Manufactured in accordance with cGMP and other Applicable Laws and other rules and regulations of the Territory and be in accordance with the Specifications, (iii) conform to the Specifications at the time of delivery, and (iv) not be adulterated or misbranded.  Except as expressly set forth in this Article 5.9, Hutchison does not make, and specifically disclaims, any express or implied representation or warranty as to the Manufacture or composition of the Products or the components thereof.

 

5.10                        Third Party Manufacturing Arrangements.  Notwithstanding anything to the contrary in this Agreement, to the extent Hutchison has any obligation under this Agreement to require a Third Party Manufacturer to abide by any terms of this Agreement, Hutchison shall solely be obligated to use, in good faith, Commercially Reasonable Efforts to include such terms in its agreement with such Third Party Manufacturer; provided, however that, to the extent that the terms of any such agreement with a Third Party Manufacturer differ from the terms of this Agreement, the applicable terms of this Agreement shall be modified to conform to the terms of such agreement with such Third Party Manufacturer.

 

6.                                      REGULATORY.

 

6.1                               Hutchison Responsibilities.

 

Hutchison will be responsible for all regulatory activities [**]

 

6.2                               Lilly Responsibilities.

 

Lilly will be responsible for all Commercialization activities for the Products [**]

 

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6.3                               Creation of Safety and Regulatory Agreement.

 

Representatives of each Party will meet when appropriate depending upon a Product’s likelihood of obtaining Regulatory Approval to work in good faith to create and develop a safety and regulatory agreement (the “Safety Agreement”) to be completed no later than one hundred and twenty days after the “proof of concept” milestone is paid for such Product under Article 7.2.. Such safety and regulatory agreement will include, but not be limited to, roles and responsibilities related to safety management of the Products for Product Development and Commercialization phases, safety data exchange between the Parties, safety surveillance and signal detection, risk management, the management and handling of Product complaints, timely reporting to Lilly of Adverse Events related to a Product and Adverse Event handling and reporting procedures to Regulatory Authorities.

 

6.4                               Safety Audit.

 

Upon reasonable notification each Party is entitled to conduct an audit of safety and regulatory procedures and practices of the other Party that require evaluation, including on-site evaluations to the extent permitting such evaluations is in control of the audited Party.

 

6.5                               Recalls.

 

After Lilly begins Commercialization of a Product, Lilly shall be responsible for any recall decision, which shall be made only after consultation with Hutchison. If Lilly, in its discretion, recalls, detains or retains the Product (voluntarily or by order of a Regulatory Authority, which shall be promptly notified to Lilly by the Manufacturing Authorization holder), Hutchison agrees to reasonably cooperate in such actions, at Lilly’s sole expense.  For the sake of clarity, under no circumstances may Lilly initiate a recall of a Product during Development in which Hutchison is the sponsor of the Product, without prior agreement of Hutchison. In the event of a recall after Lilly begins Commercialization of a Product and the recall is a consequence of a manufacturing issue then Hutchison shall be responsible for costs and damages related to the recall.

 

6.6                               Regulatory Obligations.

 

Except as otherwise provided in Article 2.2, above, and this Article 6, Hutchison shall be responsible for the regulatory strategy, including strategy for filings and label content, in consultation with Lilly, including commercial input.  Hutchison shall be solely responsible for all regulatory activities in connection with seeking Regulatory Approvals in the Territory, including communicating and preparing and filing all reports with the Regulatory Authorities.  [**]

 

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7.                                      PAYMENTS AND MILESTONES; GUARANTEE.

 

7.1                               Upfront Payment and Condition Subsequent.

 

(a)                           Within five (5) days after the Effective Date, Lilly shall pay to Hutchison an up-front payment of Two Million U.S. Dollars ($2,000,000), in consideration for the Development Costs incurred up to the Effective Date of this Agreement and license grant under this Agreement.

 

(b)                           In the event that Hutchison provides evidence in the twelve-month period following the Effective Date of this Agreement that establishes, in a manner acceptable to Lilly (such acceptance not to be unreasonably withheld or delayed), that Hutchison either (i) does not reasonably need to obtain a Third Party license (such as, but not limited to, a competent legal opinion that it is not necessary to obtain a Third Party license to give the Parties to the freedom to Develop, Manufacture and Commercialize the Product in the Field in the Territory pursuant to this Agreement, including the right to sublicense, without infringing a valid patent of such Third Party) or (ii) has obtained the necessary Third Party license, at Hutchison’s cost, in each case to give the Parties the freedom to Develop, Manufacture and Commercialize the Product in the Field in the Territory pursuant to this Agreement, including the right to sublicense, without infringing a valid patent of such Third Party (such submission of acceptable evidence, the “FTO Submission”), Lilly shall pay Hutchison Four Million and Five Hundred Thousand U.S. Dollars ($4,500,000) within thirty (30) days of the FTO Submission.

 

(c)                  If Hutchison has not provided the FTO Submission to Lilly pursuant to Article 7.1(b) within the twelve-month period following the Effective Date, Lilly will have the option to, within thirty (30) days following the end of such twelve-month period, to deliver written notice to Hutchison that it desires to terminate the Agreement immediately and at no further expense to Lilly. Upon the delivery of such termination notice, all licenses granted to Lilly hereunder shall expire.  If such termination by Lilly is solely due to Hutchison’s inability to obtain a required Third Party license, and if Lilly has not yet viewed the proof of concept study data for any of the Initial Indications, then within thirty (30) days of the effective date of termination, Hutchison will pay Lilly Two Million U.S. Dollars ($2,000,000) in consideration for Lilly’s collaborative efforts.  If Lilly elects not to terminate the Agreement, then the Agreement shall continue with Lilly paying all financial obligations as they accrue, except for the four and one half million U.S. dollar ($4,500,000) payment in Article 7.1(b) which shall only be payable by Lilly within thirty (30) days of the FTO Submission pursuant to Article 7.1(b).

 

7.2                               Development Milestone Payments.

 

Lilly shall pay to Hutchison the Development milestone payments listed below as follows: (i)

 

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within thirty (30) days of the earlier of the date of FTO Submission and Lilly’s election not to terminate this Agreement pursuant to Article 7.1(c) if the relevant milestone event occurs before such earliest date; or (ii) within thirty (30) days of the milestone event if the relevant milestone event occurs after the date of FTO Submission or Lilly’s election not to terminate this Agreement pursuant to Article 7.1(c).  Each milestone shall be payable only once upon the first occurrence of the described event for any Product.

 

	
Milestone Event
    	
 
    	
Milestone Payment
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

7.3                               Product Earned Royalties.

 

(a)                           Tiered Royalties.  Lilly shall pay to Hutchison royalties on the annual Net Sales of all Products in the Territory in the amounts set forth below (all amounts are in U.S. Dollars).

 

	
Annual Product Net
   Sales (for all Products
   in the aggregate in the
   Territory)
    	
 
    	
Royalty Rate
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

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The above tiered royalties are calculated such that the higher tiered royalties are only paid after the annual Net Sales exceed the top threshold of the previous tier. Attached as Exhibit F is an example of an annual Product royalty payment calculation.

 

(b)                 Royalty Term. The above earned royalty (the “Royalty Term”) shall be payable on a Product-by-Product and country-by-country basis for the longer of: [**]

 

7.4                               Hutchison’s Third Party Obligations and Agreement Payments.

 

Hutchison shall be responsible for and pay when due all payments, royalties or milestones owed by Hutchison under any agreements entered into by Hutchison and any Third Party relating to the Hutchison Patents or Product required for the Development, manufacturing, importation, or Commercialization of a Product in the Territory.  If Hutchison should fail to pay any such amount, Lilly may at its sole option decide to pay any such amount on Hutchison’s behalf and to deduct such amount from any milestones or royalties owed to Hutchison hereunder without restriction.

 

7.5                               Reports; Payment of Royalty

 

During the Term, following the First Commercial Sale of a Product, Lilly shall furnish to Hutchison a quarterly written report for the Calendar Quarter showing the number and description of Products sold, Net Sales of Products sold subject to royalty payments sold by Lilly and its Related Parties on a country-by-country basis, if applicable, during the reporting period and the royalties payable under this Agreement.  Reports shall be due on the [**] day following the close of each Calendar Quarter.  Royalties shown to have accrued by each royalty report shall be due and payable on the date such royalty report is due.  Lilly shall keep complete and accurate records in sufficient detail to enable the royalties payable hereunder to be determined.

 

7.6                                                 Audits.

 

(a)                           Lilly will keep and maintain (and to the extent applicable, will cause its Affiliates, and their respective Sublicensees, distributors, assignees and transferees to keep and maintain) proper and complete records and books of account in such form and detail as is necessary for the determination of the amounts payable by Lilly (on behalf of itself and its Affiliates and their respective Sublicensees, distributors, assignees and transferees) to Hutchison under this Agreement and for the purposes of this Agreement.

 

(b)                           Upon the written request of Hutchison and not more than once in each Calendar Year, Lilly shall permit an independent certified public accounting firm of nationally

 

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recognized standing selected by Hutchison and reasonably acceptable to Lilly, at Hutchison’s expense, to have access during normal business hours to such of the records of Lilly as may be reasonably necessary to verify the accuracy of the royalty reports hereunder for any Calendar Year ending not more than thirty-six (36) months prior to the date of such request.  Any given period may not be audited more than once.  Hutchison may consider in good faith, at its sole discretion and choice, the use of Lilly’s then current external auditor to perform such audit.  The accounting firm shall disclose to Hutchison and Lilly only whether the royalty reports are correct or incorrect and the specific details concerning any discrepancies. No other information shall be provided to Hutchison. This right to audit shall remain in effect throughout the life of this Agreement and for a period of three (3) years after the termination of this Agreement.

 

(c)                            If such accounting firm identifies a discrepancy made during such period, the appropriate Party shall pay the other Party the amount of the discrepancy within thirty (30) days of the date Hutchison delivers to Lilly such accounting firm’s written report so concluding, or as otherwise agreed upon by the Parties.  The fees charged by such accounting firm shall be paid by Hutchison unless the underpayment exceeded the greater of [**] of the amount owed by Lilly to Hutchison for such Calendar Year or ii) [**], in which case, the expense of the audit shall be borne by Lilly. Lilly shall pay interest on the amounts owed to Hutchison, said interest shall be calculated as being [**] greater than the U.S. commercial prime rate as published by the Wall Street Journal on the date of the first discrepancy identified in the audit, and shall accrue from the date payments should have been made.  In addition, Lilly shall pay to Hutchison any monetary penalties and/or interest incurred by Hutchison pursuant to Third Party Agreements, wherein said monetary penalties and/or interest are incurred due to underpayments by Lilly.

 

(d)                           Lilly shall include in each sublicense granted by it pursuant to this Agreement a provision requiring the Sublicensee to make reports to Lilly, to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by Hutchison’ independent accountant to the same extent required of Lilly under this Agreement.

 

(e)                            Hutchison shall treat all financial information subject to review in accordance with the Article 10 of this Agreement, and shall cause its accounting firm to enter into an acceptable confidentiality agreement with Lilly or its Related Parties obligating it to retain all such information in confidence pursuant to such confidentiality agreement.

 

7.7                                                                               Currency.

 

All payments to be made by one Party to the other under this Agreement shall be made in Renminbi (RMB”, ¥)) using the Conversion Rate from US$ to RMB by bank wire transfer from such Party’s bank account in immediately available funds to the receiving Party’s bank account designated in wiring by the Party receiving payment.

 

(i) to the extent costs, including Development Costs, are incurred in a currency other than RMB or a Product is sold in a currency other than RMB, the applicable expense or amount received shall be converted into RMB on a monthly basis using the Conversion Rate; and (ii) to the extent payments or Royalty Tiers are set forth in this Agreement in a currency

 

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other than RMB, the applicable payment/Royalty Tier shall be converted into RMB using the Conversion Rate

 

7.8                                                 Tax Withholding.

 

[**]

 

7.9                                                 VAT.

 

It is understood and agreed between the Parties that any payments made under this Agreement are exclusive of any value added tax or similar sales tax (“VAT”), which shall be added thereon as applicable.  Where VAT is properly added to a payment made under this Agreement, the Party making the payment will pay the amount of VAT only on receipt of a valid tax invoice issued in accordance with the laws and regulations of the country in which the VAT is chargeable.

 

7.10                                          Records.

 

Each Party shall maintain appropriate records in either tangible or electronic form of (a) all significant Development, Manufacturing and Commercialization (each as applicable) events and activities conducted by it or on its behalf related to a Product; and (b) all significant Information generated by it or on its behalf in connection with Development of Products under this Agreement, in each case in accordance with such Party’s usual documentation and cGMP record retention practices.  Such records shall be in sufficient detail to properly reflect, in good scientific manner, all significant work done and results of studies and trials undertaken and further shall be at a level of detail appropriate for patent and regulatory purposes.  If reasonably necessary for a Party to perform its work under this Agreement or to exercise its rights under this Agreement, such Party may request that, and the other Party shall provide within a reasonable timeframe, such information and data regarding its activities hereunder as is reasonably available and reasonably related its activities under this Agreement; provided that neither Party shall be required to generate additional data or prepare additional reports to comply with the foregoing obligation.  All such reports, Information and data provided shall be subject to the provisions of Article 10.

 

7.11                        Guarantees

 

(a)                           In consideration for Lilly entering into this Agreement, the Hutchison Guarantor irrevocably and unconditionally guarantees to Lilly the punctual performance of all obligations of Hutchison related to the payment of monies under this Agreement and undertakes to Lilly that whenever Hutchison does not pay any amount when due under or in connection with this Agreement, the Hutchison Guarantor shall immediately on demand pay that amount as if it was the principal obligor, so that the same benefits are conferred on Lilly as they would have received if such obligation had been performed and satisfied by Hutchison.

 

(b)                           The Hutchison Guarantor, as principal obligor and as a separate and

 

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independent obligation and liability from its obligations and liabilities in Article 7.11(a) undertakes to indemnify and hold Lilly harmless from and against any loss or costs suffered or incurred by it as a result of the non-performance by Hutchison of any of its obligations under this Agreement. This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by Hutchison under this Agreement, regardless of any intermediate payment or discharge in whole or in part.

 

(c)                            The obligations of a Guarantor will not be affected by any act, omission, matter or thing which, but for this Article 7.11, would reduce, release or prejudice any of its obligations under this Agreement including (i) any time, waiver or consent granted to a Party or any other person, (ii) the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against a Party under this Agreement, (iii) the insolvency (or similar proceedings) of a Party, any incapacity or lack of power, authority or legal personality of a Party or change in control, ownership or status of a Party, (iv) any amendment to this Agreement (subject to such amendment not increasing the extent of the Guarantor’s liability under this Article 7.11 without the Guarantor’s consent), (v) any illegality, invalidity or unenforceability of any obligation of any person under this Agreement, or (vi) any other act, event or omission which might operate to discharge, impair or otherwise affect any of the obligations of the Guarantor or any of the rights, powers and remedies conferred on a Party under this Agreement. Each Guarantor waives any right which it may have to first require the a Party to proceed against the other Party before claiming from such Guarantor under this Article 7.11.

 

8.                                      LICENSES; EXCLUSIVITY.

 

8.1                                                 License to Lilly.

 

(a)                           Exclusive License and Right to Sublicense.

 

During the Term, Hutchison hereby grants Lilly an exclusive license (except as provided under Article 8.1(b)), royalty-bearing license, including the right to grant sublicenses, under Hutchison’s Patents, Hutchison Know-How and Regulatory Approvals to Develop, use, import and Commercialize (but, for clarity, not to make or have made) Product(s) in the Field in the Territory.

 

(b)                           Hutchison Retained Rights.

 

Notwithstanding the rights granted to Lilly in Article 9.1(a), Hutchison retains the following the right to conduct Development activities assigned to Hutchison under the Development Plan.

 

8.2                               No Implied Licenses.

 

Except as explicitly set forth in this Agreement, neither Party grants any license, express or implied, under its intellectual property rights to the other Party.

 

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9.                                      CONFIDENTIALITY; PUBLICATION.

 

9.1                               Nondisclosure Obligation.

 

(a)                           For the Term of this Agreement and three years thereafter, the Party receiving the Confidential Information of the other Party (such receiving Party, the “Receiving Party”) shall keep confidential and not publish, make available or otherwise disclose any Confidential Information to any Third Party, without the express prior written consent of the Party that disclosed such Confidential Information (the “Disclosing Party”); provided however, the Receiving Party may disclose the Confidential Information to those of its Affiliates, officers, directors, employees, agents, consultants and/or independent contractors (including subcontractors and Third Party Manufacturers) of such Receiving Party who need to know the Confidential Information in connection with this Agreement and are bound by confidentiality obligations with respect to such Confidential Information.  The Receiving Party shall exercise at a minimum the same degree of care it would exercise to protect its own confidential information (and in no event less than a reasonable standard of care) to keep confidential the Confidential Information. The Receiving Party shall use the Confidential Information solely in connection with the purposes of this Agreement.

 

(b)                           It shall not be considered a breach of this Agreement if the Receiving Party discloses Confidential Information in order to comply with a lawfully issued court or governmental order or with a requirement of Applicable Law or the rules of any internationally recognized stock exchange; provided that:  (i) the Receiving Party gives prompt written notice of such disclosure requirement to the Disclosing Party and cooperates with Disclosing Party’s efforts to oppose such disclosure or obtain a protective order for such Confidential Information, and (ii) if such disclosure requirement is not quashed or a protective order is not obtained, the Receiving Party shall only disclose those portions of the Confidential Information that it is legally required to disclose and shall make a reasonable effort to obtain confidential treatment for the disclosed Confidential Information.

 

9.2                               Publications.

 

The JSC shall establish procedures for determining when publications, scientific presentations and the like relating to the Development of Products are appropriate and providing for review by the Parties of any publications to protect Confidential Information.  The appropriateness of all publications relating to the Development or Commercialization of Products shall be determined by the JSC as a Mutual JSC Matter.

 

9.3                             Publicity; Use of Names.

 

The Parties agree that the public announcements by the Parties of the execution of this Agreement shall be substantially in the form of the press release or releases attached as Exhibit D and shall the Parties cooperate in the issuance thereof as soon as practicable after the Effective Date unless otherwise agreed by the Parties.  In addition, the Parties recognize that each Party may from time to time desire to issue additional press releases and make other public statements or disclosures regarding this Agreement or activities conducted hereunder and that such press releases, statements or disclosures may be issued upon prior written approval of the other Party, such approval not to be unreasonably withheld or delayed.  The disclosing Party shall provide the other Party a copy of any such proposed disclosures at least

 

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ten (10) Business Days prior to the proposed release and consider in good faith any comments the other Party may make, where practicable, and in light of any reporting obligations of such disclosing Party under Applicable Law or the rules of any internationally recognized stock exchange.  Neither Party shall use the name, trademark, trade name or logo of the other Party or its employees in any publicity or news release relating to this Agreement or its subject matter, without the prior express written permission of the other Party; provided however, that nothing herein shall prohibit the use of the trademark or trade name of a Product.

 

10.                               REPRESENTATIONS AND WARRANTIES.

 

10.1                        Representations and Warranties of Hutchison.

 

Hutchison represents and warrants to Lilly that as of the Effective Date:

 

(a)                                           it has the full right, power and authority to enter into this Agreement, to perform the Development, and to grant the licenses granted under Article 8, and the fulfillment of its obligations and performance of its activities hereunder do not materially conflict with, violate, or breach or constitute a default under any material contractual obligation or court or administrative order by which Hutchison is bound;

 

(b)                                           to the actual knowledge of Hutchison, there are no legal claims, judgments or settlements against or owed by Hutchison or pending legal claims or litigation, in each case relating to the Product;

 

(c)                                            to the actual knowledge of Hutchison, there are no legal claims, judgments or settlements against or owed by Hutchison or pending legal claims or litigation, in each case relating to the Hutchison Patents;

 

(d)                                           all necessary consents, approvals and authorizations of all government authorities and other persons required to be obtained by Hutchison as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been obtained;

 

(e)                                            it Controls the right, title and interest in and to the Hutchison Patents and Hutchison Know-How, and has the right to grant to Lilly the licenses that it purports to grant hereunder and has not granted any Third Party rights that would interfere or be inconsistent with Lilly’s rights hereunder;

 

(f)                                             to the best knowledge of Hutchison, the Hutchison Patents and Hutchison Know-How are not subject to any existing royalty or other payment obligations to any Third Party;

 

(g)                                            it is not aware of any other Patents, Know How, or other intellectual property right Controlled by Hutchison or its Affiliates, other than that which is licensed hereunder to Lilly, which the Development, Manufacture, use and/or Commercialization of Products as contemplated hereunder would infringe;

 

(h)                                 as of the Effective Date, to the actual knowledge of Hutchison, any issued Hutchison Patents are valid and enforceable and it is not aware of any action, suit, inquiry,

 

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investigation or other proceeding threatened, pending, or ongoing brought by any Third Party that challenges or threatens the validity or enforceability of any of the Hutchison Patents; or except as already disclosed to Lilly, any Third Party that alleges the use of the Hutchison Patents or Hutchison Know-How or the Development, Manufacture Commercialization and use of the Products would infringe or misappropriate the intellectual property or intellectual property rights of any Third Party (and it has not received any notice alleging such an infringement or misappropriation).  In the event that Hutchison becomes aware of any such action or proceeding, it shall immediately notify Lilly in writing;

 

(i)                                    it has disclosed to Lilly a complete and accurate record of all material information and data relating to the results of all pre-clinical and clinical studies on Product conducted by or on behalf of Hutchison including the status and interim results of all ongoing clinical and preclinical studies, and the clinical development and Regulatory Approval activities undertaken to date, and all such information and data is complete and accurate in all material respects.

 

10.2                        Representations and Warranties of Lilly.

 

Lilly represents and warrants to Hutchison that as of the Effective Date:

 

(a)                           it has the full right, power and authority to enter into this Agreement, to perform the Commercialization of the Product and the fulfillment of its obligations and performance of its activities hereunder do not materially conflict with, violate, or breach or constitute a default under any material contractual obligation or court or administrative order by which Lilly is bound;

 

(b)                                           all necessary consents, approvals and authorizations of all government authorities and other persons required to be obtained by Lilly as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been obtained.

 

(c)                                            Lilly does not have any current knowledge that would cause any of its representations or warranties to Hutchison to be incorrect or untrue.

 

10.3                        No Other Representations or Warranties.

 

EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NO REPRESENTATIONS OR WARRANTIES WHATSOEVER, WHETHER EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT, OR NON-MISAPPROPRIATION OF THIRD PARTY INTELLECTUAL PROPERTY RIGHTS, ARE MADE OR GIVEN BY OR ON BEHALF OF A PARTY.  ALL REPRESENTATIONS AND WARRANTIES, WHETHER ARISING BY OPERATION OF LAW OR OTHERWISE, ARE HEREBY EXPRESSLY EXCLUDED.

 

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11.                               INDEMNIFICATION.

 

11.1                        By Lilly.

 

Lilly agrees to indemnify and hold harmless Hutchison, its Affiliates, and their directors, officers, employees and agents (individually and collectively, the “Hutchison Indemnitee(s)”) from and against all losses, liabilities, damages and expenses (including reasonable attorneys’ fees and costs) incurred in connection with any claims, demands, actions or other proceedings by any Third Party (individually and collectively, “Losses”) first arising after the Effective Date to the extent arising from (a) the promotion, sale or other entry into the stream of commerce of defective Product due to the activities of Lilly, any of its Related Parties or Subcontractors, (b) the use by Lilly or any of its Related Parties or Subcontractors of Patents or Know-How Controlled by Lilly, (c) the negligence, illegal conduct or willful misconduct of Lilly, (d) Lilly’s breach of any of its representations or warranties made in or pursuant to this Agreement or any covenants or obligations set forth in or entered into pursuant to this Agreement, or (e) Development activities if under Lilly’s sole control pursuant to this Agreement, in each case of clauses (a) through (e) except to the extent such Losses arise out of a Hutchison Indemnitee’s negligence, illegal conduct or willful misconduct, or breach of this Agreement.

 

11.2                        By Hutchison.

 

Hutchison agrees to indemnify and hold harmless Lilly, its Affiliates, and their directors, officers, employees and agents (individually and collectively, the “Lilly Indemnitee(s)”) from and against all Losses to the extent arising from (a) the Manufacture or supply of defective Product due to the activities of Hutchison, any of its Related Parties or Subcontractors, (b) the use by Hutchison or any of its Related Parties or Subcontractors of the Hutchison Patents or Hutchison Know-How, (c) the negligence, illegal conduct or willful misconduct of Hutchison, (d) Hutchison’s breach of this Agreement, or (e) Development activities if under Hutchison’s sole control pursuant to this Agreement, in each case of clauses (a)- (e), except to the extent such Losses arise out of any of a Lilly Indemnitee’s negligence, illegal conduct or willful misconduct, or breach of this Agreement.

 

11.3                        Defined Indemnification Terms.

 

Either of the Lilly Indemnitee or the Hutchison Indemnitee shall be an “Indemnitee” for the purpose of this Article 11, and the Party that is obligated to indemnify the Indemnitee under Article 11.1 or Article 11.2 shall be the “Indemnifying Party.”

 

11.4                        Defense.

 

If any such claims or actions are made, the Indemnitee shall be defended at the Indemnifying Party’s sole expense by counsel selected by Indemnifying Party and reasonably acceptable to the Indemnitee, provided that the Indemnitee may, at its own expense, also be represented by counsel of its own choosing.  The Indemnifying Party shall have the sole right to control the defense of any such claim or action, subject to the terms of this Article 11.

 

11.5                        Settlement.

 

The Indemnifying Party may settle any such claim, demand, action or other proceeding or otherwise consent to an adverse judgment (a) with prior written notice to the Indemnitee but without the consent of the Indemnitee where the only liability to the Indemnitee

 

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is the payment of money and the Indemnifying Party makes such payment, or (b) in all other cases, only with the prior written consent of the Indemnitee, such consent not to be unreasonably withheld or delayed.

 

11.6                        Notice.

 

The Indemnitee shall notify the Indemnifying Party promptly of any claim, demand, action or other proceeding under Article 11.1 or Article 11.2 and shall reasonably cooperate with all reasonable requests of the Indemnifying Party with respect thereto.

 

11.7                        Permission by Indemnifying Party.

 

The Indemnitee may not settle any such claim, demand, action or other proceeding or otherwise consent to an adverse judgment in any such action or other proceeding or make any admission as to liability or fault without the express written permission of the Indemnifying Party.

 

11.8                        Limitation of Liability.

 

NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, OR INDIRECT DAMAGES ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF SUCH DAMAGES.  NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS ARTICLE 11.8 IS INTENDED TO OR SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF ANY PARTY UNDER ARTICLE 11, OR DAMAGES AVAILABLE FOR A PARTY’S BREACH OF CONFIDENTIALITY OBLIGATIONS IN ARTICLE 9.

 

12.                               INVENTIONS; PATENT PROVISIONS.

 

12.1                          Ownership of Intellectual Property.

 

(a)                                                           Hutchison shall remain the sole and exclusive owner of all Hutchison Patents and Hutchison Know-How. Lilly shall remain the sole and exclusive owner of any Lilly Know-How that Lilly Controlled as of the Effective Date or Controls during the Term (with the exception of Know-How owned jointly by Hutchison and Lilly as described in Article 12.1(b)).

 

(b)                                                           Hutchison shall own all data, results and inventions, whether patentable or not, conceived or reduced to practice in the course of conducting the Development of the Product or otherwise under this Agreement solely by Hutchison or its consultant or subcontractors, together with all intellectual property rights therein.  Lilly shall own all data, results and inventions, whether patentable or not, conceived or reduced to practice in the course of conducting the Development of the Product or otherwise under this Agreement solely by Lilly or its consultant or subcontractor, together with all intellectual property rights therein.  Hutchison and Lilly shall jointly own all data, results and inventions, whether patentable or not, conceived or reduced to practice by Hutchison and Lilly jointly, together with all intellectual property rights therein, with each Party owning an undivided half interest and the right to exploit without the consent of the other Party.

 

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12.2                        Patent Filing, Prosecution and Maintenance. Hutchison shall have sole decision-making authority for all actions relating to Hutchison Patents and Patents invented pursuant to activities conducted under this Agreement; provided that Lilly shall have sole decision-making authority for all actions relating to Patents invented pursuant to activities conducted under this Agreement invented solely by Lilly inventors or agents of Lilly (such Patents, the “Lilly Patents”). The intellectual property subcommittee of the JSC shall have sole decision-making authority for all actions relating to Patents jointly owned by Hutchison and Lilly pursuant to activities conducted under this Agreement (such Patents, the “Jointly Owned Patents”). Such actions include Patent Prosecution, defense, listing in regulatory publications (as applicable), patent term extension, abandonment, maintenance and enforcement, all of which will be conducted at Hutchison’s sole expense.  Hutchison shall establish an overall strategy for the filing, prosecution and maintenance of Hutchison Patents. Lilly shall establish an overall strategy for the filing, prosecution and maintenance of Lilly Patents. The intellectual property subcommittee shall establish an overall strategy for the filing, prosecution and maintenance of Jointly Owned Patents.  The primary objective of such strategy shall be to provide patent exclusivity for the Products and uses thereof in the Territory.  Hutchison shall keep the JSC and Lilly informed of the status of all actions taken in the Territory with respect to Hutchison Patents.  Lilly shall keep the JSC and Hutchison informed of the status of all actions taken in the Territory with respect to Lilly Patents. The intellectual property subcommittee of the JSC shall keep Hutchison and Lilly informed of the status of all actions taken in the Territory with respect to Jointly Owned Patents. In particular, the informing entity shall (a) regularly and promptly provide the informed entities with copies of all prospective patent applications and patent applications filed hereunder and other material submissions and correspondence with government agencies concerning Hutchison Patents, Lilly Patents and any Jointly Owned Patents as applicable, in sufficient time to allow for review and comment by the informed entities; and (b) provide the informed entities and their patent counsels with an opportunity to consult with the informing entity and its patent counsel regarding the filing and contents of any such application, amendment, submission or response, and the advice and suggestions of the informed entity and its patent counsel shall be taken into consideration in good faith by the informing entity and its patent counsel.

 

12.3                        Patent Oppositions.

 

The intellectual property subcommittee, in consultation with the Parties’ patent departments, will decide whether and how to participate in Patent oppositions and undertake activities intended to invalidate Third Party Patents when necessary; provided that in the event the intellectual property subcommittee is unable to make such decision due to a deadlock, each Party shall have final decision-making authority for decisions exclusively related to its solely owned Patents. The intellectual property subcommittee will keep the Parties informed and apprised of any such decisions and activities.

 

12.4                        Costs of Patent Prosecution.

 

All costs for Patent Prosecution of Hutchison Patents shall be borne by Hutchison.  All costs for Patent Prosecution of Lilly Patents shall be borne by Lilly.  All costs of Patent Prosecution for Jointly Owned Patents shall be equally shared by the Parties.  However, each of Hutchison and Lilly may in its sole discretion following consultation with the intellectual

 

42

 

property subcommittee elect to discontinue Patent Prosecution (and therefore, no longer pay the costs of such Patent Prosecution) in any country on a Patent-by-Patent basis as provided for under Article 12.2 above.  Each Party shall give prompt notice to the other Party if it declines to pay costs for the filing, prosecution or maintenance of a Hutchison Patent, Jointly Owned Patent or Lilly Patent, as applicable, in any country of the Territory, and in such case, the other Party after consultation with notifying Party and with notifying Party’s approval (which approval shall not be unreasonably withheld), shall have the right to file, prosecute or maintain such Patent at its own expense. If the Parties agree to allow the notified Party to file, prosecute or maintain a Patent pursuant to this Article 12.4, the notifying Party shall promptly deliver to the notified Party copies of all necessary files related to the Patent with respect to which responsibility has been transferred and shall take all actions and execute all documents reasonably necessary for the notified Party to assume such responsibility and to assign any Patents to the notified Party as necessary.  As of the date of the notifying Party’s assignment to the notified Party, such Patent shall not be included in the notifying Party’s Patents, as applicable, under this Agreement.

 

12.5                        Patent and Trademark Prosecution Cooperation.

 

With respect to all Patent Prosecution or Trademark prosecution each Party shall:

 

(a)                           execute any instruments to document their respective ownership consistent with this Agreement as reasonably requested by the other Party;

 

(b)                           make its employees, agents and consultants reasonably available to the other Party (or to the other Party’s authorized attorneys, agents or representatives), to the extent reasonably necessary to enable the appropriate Party hereunder to undertake its Patent Prosecution responsibilities;

 

(c)                            cooperate, if necessary, with the other Party in gaining Patent term extensions; and

 

(d)                           act in good faith to coordinate its efforts under this Agreement with the other Party to minimize or avoid interference with the Patent Prosecution of the other Party’s Patents to Products or Trademarks.

 

12.6                        Enforcement.

 

(a)                           Notice.

 

Each Party shall promptly provide, but in no event later than thirty (30) days, to the other with written notice reasonably detailing any known or alleged infringement of any Patent owned or Controlled by either Party and subject to a license under this Agreement.

 

(b)                           Enforcement of Intellectual Property Rights.

 

The sole owner or Party Controlling a Patent, Know-How or Confidential Information shall have the right to institute and direct legal proceedings against any Third Party believed to be infringing such Patent or misappropriating or otherwise violating such Know-How or Confidential Information in the Territory; provided, however, that with respect to any such

 

43

 

infringement or violation of any Patent included in the Hutchison Patents or Jointly Owned Patents, Hutchison shall have the obligation, at its cost, to enforce such Patent and direct such legal proceedings.  If Hutchison does not abate such violation of intellectual property rights of Hutchison Patents or Jointly Owned Patents, including by commencement of a lawsuit against the accused person if necessary, then Lilly shall be entitled (but shall not be obligated) to take all actions reasonably necessary to abate such violation, including commencement of a lawsuit against the accused person if necessary; provided, however, that Lilly shall consult in advance with Hutchison regarding such action and may not undertake any enforcement action without the prior approval of the JSC, such approval not to be unreasonably withheld. The primary objective of any patent enforcement action shall be to preserve exclusivity for the Product and uses thereof in the Territory.  All amounts recovered from enforcement of any such rights by either Party relating to the intellectual property licensed under this Agreement shall be first used to reimburse each Party’s costs and expenses incurred in connection with such action, and any remainder of such recovery shall be split in a manner consistent with the economic interests and lost profits of the Parties under the Agreement as agreed to by the Parties.

 

(c)                            Cooperation in Enforcement Proceedings.

 

For any action by a Party pursuant to subarticle (b) above, in the event that such Party is unable to initiate or prosecute such action solely in its own name, the other Party will join such action voluntarily and will execute all documents necessary for such Party to initiate, prosecute and maintain such action. If either Lilly or Hutchison initiates an enforcement action pursuant to Article 12.6(b), then the other Party shall cooperate to the extent reasonably necessary and at the first Parties’ sole expense (except for the expenses of the non-controlling Party’s counsel, if any). Upon the reasonable request of the Party instituting any such action, such other Party shall join the suit and can be represented in any such legal proceedings using counsel of its own choice.  Each Party shall assert and not waive the joint defense privilege with respect to all communications between the Parties reasonably the subject thereof.

 

12.7                        Defense.

 

(a)                           Each Party shall notify the other in writing of any allegations it receives from a Third Party that the Manufacture, production, use, Development, Commercialization or distribution of any Product or any technology or intellectual property licensed by a Party under this Agreement infringes the intellectual property rights of such Third Party.  Such notice shall be provided promptly, but in no event after more than ten (10) Business Days, following receipt of such allegations.

 

(b)                           In the event that a Party receives notice that it or any of its Affiliates have been individually named as a defendant in a legal proceeding by a Third Party alleging infringement of a Third Party’s Patents or other intellectual property right as a result of the Manufacture, production, use, Development, Commercialization or distribution of Products or any technology or intellectual property licensed by a Party under this Agreement, such Party shall immediately notify the other Party in writing and in no event notify such other Party later than ten (10) Business Days after the receipt of such notice.  Such written notice shall include a copy of any summons or complaint (or the equivalent thereof) received regarding the foregoing.  Each Party shall assert and not waive the joint defense privilege with respect to all

 

44

 

communications between the Parties. In such event, the Parties shall agree how best to mitigate or control the defense of any such legal proceeding; and determine which Party it best suited to assume the primary responsibility for the conduct of the defense of any such claim at their expense.  The other Party shall have the right, but not the obligation, to participate and be separately represented in any such suit at its sole option and at its own expense.  Each Party shall reasonably cooperate with the Party conducting the defense of the claim. If a Party or any of its Affiliates have been individually named as a defendant in a legal proceeding relating to the alleged infringement of a Third Party’s Patents or other intellectual property right as a result of the Manufacture, production, use, Development, Commercialization or distribution of Products, then that Party shall conduct the defense and the other Party shall be allowed to join in such action, at its own expense.

 

(c)                                                            Status; Settlement. The Parties shall keep each other informed of the status of and of their respective activities regarding any infringement litigation initiated by a Third Party concerning a Party’s Manufacture, production, use, Development, Commercialization or distribution of Products or settlement thereof; provided, however, that no settlement or consent judgment or other voluntary final disposition of a suit under this Article 12.7(c) may be undertaken by a Party without the consent of the other Party which consent shall not be unreasonably withheld or delayed.

 

(d)                                                           Notwithstanding anything to the contrary in this Article 12.7, if a Party is an Indemnifying Party with respect to any Losses stemming from a claim or action by a Third Party alleging infringement of a Third Party’s Patents or other intellectual property right as a result of the Manufacture, production, use, Development, Commercialization or distribution of Products or any technology or intellectual property licensed by a Party under this 3, Article 11 shall supersede this Article 12.7 with respect to the defense and settlement of such action or claim to the extent there are conflicts.

 

13.                               TERMS AND TERMINATION.

 

13.1                        Term and Expiration.

 

This Agreement shall be effective as of the Effective Date and unless terminated earlier pursuant to Articles 3.4(b), 7.1(c), 13.2 or 13.3, shall continue in effect until the earlier of (i) the expiration of all earned royalty payment obligations as defined under Article 7.3(b) or (ii) when Generic Competition for all Products grows to the point where the total market sales of Generic Product exceeds [**] in the Territory (the “Term”). Upon the natural expiration of this Agreement as contemplated in this Article 13.1, Lilly’s licenses granted under this Agreement shall become fully paid-up, non-exclusive perpetual licenses.

 

13.2                        Unilateral Termination by Lilly.

 

Lilly shall have the right to terminate this Agreement in its entirety on a worldwide basis or, if applicable, on a country-by-country basis, in its sole discretion by giving one hundred and twenty (120) days advance written notice to Hutchison.

 

45

 

13.3                        Termination for Cause.

 

This Agreement may be terminated at any time during the Term upon written notice by (i) either Party if the other Party is in breach of its payment obligations under this Agreement that has not been cured within fifteen (15) Business Days after notice requesting cure of such breach, (ii) either Party if the other Party is in material breach of any of its non-payment obligations under this Agreement that has not been cured within ninety (90) days after notice requesting cure of such breach; provided, however, that if such breach is not reasonably subject to cure within ninety (90) days, subject to Commercially Reasonable Efforts (which in no event shall be less than reasonably diligent efforts) being undertaken by the breaching Party throughout such 90-day period and thereafter to cure such breach as promptly as possible, the Agreement may not be terminated pursuant to this Article 13.3 unless such breach is not cured within nine (9) months following notice requesting cure of such breach.

 

13.4                        Termination for Major Unexpected Safety Issue.

 

This Agreement may be terminated in its entirety upon one hundred and twenty (120) days’ written notice by Lilly to Hutchison if Lilly determines reasonably and in good faith that there is a Major Unexpected Safety Issue with respect to a Product in an Initial Indication; provided that such notice must be delivered by Lilly to Hutchison within the thirty (30) day JSC review period referenced in Article 3.4(a) in order for such notice to be effective. Following the issue of such notice of termination in accordance with this Article 13.4, no further milestone payments shall be due and payable by Lilly and Lilly shall not be obligated to fund or pay any Subsequent Development Costs.

 

13.5                        Effect of Termination.

 

(a)                           If Lilly terminates this Agreement pursuant to Article 13.2 or Article 13.4 or if Hutchison terminates the Agreement pursuant to Article 13.3 or Article 15.2(a), then:

 

(i)                               Lilly shall transfer to Hutchison as soon as practicable, and in accordance with Subparagraph (iv) below, all regulatory materials and other information necessary to the Product as promptly as practicable so as to permit Hutchison to continue Development efforts with respect to Product should Hutchison elect to do so. In addition, for a period of ninety (90) days from the effective date of termination, Lilly will without charge provide such consultation or other assistance, not to exceed sixty (60) hours annually, as Hutchison may reasonably request to assist Hutchison in becoming familiar with such regulatory materials and the like in order that Hutchison may prepare to undertake further Development and Commercialization of the Product.

 

(ii)                            The right to Develop and Commercialize Products shall be reverted to Hutchison and the license granted to Lilly under Article 9.1 shall terminate.  Lilly shall grant and hereby grants Hutchison, effective as of the date of termination, a perpetual, worldwide, fully paid,

 

46

 

royalty-free, sublicenseable, non-exclusive license under any Patents or Know-How Controlled by Lilly (including the Lilly Patents) and Jointly Owned Patents as they same exist as of the effective date of termination, that are necessary to make, have made, use, sell, offer for sale and import Products.

 

(iii)                         Unless Lilly and Hutchison agree otherwise, all activities underway at the time of termination shall be transferred to Hutchison or terminated as soon as possible except that Lilly will continue to be responsible for any pre-clinical or clinical studies to the extent that Lilly’s then current ethical guidelines would require Lilly to complete such studies. All costs of continuing trials for ethical reasons or winding down activities shall continue to be borne by the Parties as provided in this Agreement until completion of such activities. For the sake of clarity, the costs of winding down activities shall include any incurred costs or otherwise unavoidable wind down costs that would otherwise have been payable by Lilly and the costs of continuing trials for ethical reasons shall be the costs, if any, to continue treatment of current patients under treatment in the trial in accordance with Lilly’s ethical guidelines.

 

(iv)                        In the event of termination of this Agreement, the intent and primary goal of the Parties shall be the efficient and effective transfer of all necessary information, legal rights, knowledge, and materials so as to minimize delay in execution of the Development Plan and Commercialization efforts as it existed prior to notice of termination.

 

(b)                           If either Party has the right to terminate this Agreement under Article 13.3, it may at its sole option, elect either to (i) terminate this Agreement and pursue any legal or equitable remedy available to it or (ii) maintain the Agreement in effect and pursue any legal or equitable remedy available to it.

 

13.6                        Survival.

 

The following provisions shall survive the termination or expiration of this Agreement for any reason: Articles 1, 3.5 (with respect to Development Costs incurred prior to the effective date of termination), 7 (to the extent payments have accrued, and with respect to payments that have accrued, prior to the effective date of termination), 9 (except that all activities or decisions for which the JSC is responsible pursuant to Article 9.2 shall be conducted or made by the mutual agreement of the Parties), 10, 11, 13.1, 13.5, 13.6, 14 and 15.

 

47

 

14.                               DISPUTE RESOLUTION

 

14.1                        Disputes.

 

The Parties recognize that disputes as to certain matters may from time to time arise which relate to either Party’s rights or obligations hereunder.  It is the objective of the Parties to establish procedures to facilitate the resolution of such disputes in an expedient manner by mutual cooperation; however, should a dispute arise, except for a dispute regarding the payment or non-payment of a payment, milestone or royalty under Articles 7 or 14, the Parties agree to follow the arbitration procedures set forth in Article 14.2. For disputes relating to the payment or non-payment of a payment, milestone or royalty under Articles 7 or 14, after the Parties fail to resolve the dispute through good faith negotiations then each Party shall be free to choose an alternative course of resolution including litigation.

 

14.2                                          Arbitration Procedures.

 

In the event of a dispute, that cannot be resolved through good faith negotiations as set forth above, the dispute shall be referred to and finally resolved by arbitration in the following manner:

 

(i)                                     The dispute shall be settled by arbitration in Hong Kong by the Hong Kong International Arbitration Centre (the “HKIAC”) in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the “HKIAC Rules”) in force when the Arbitration Notice is submitted in accordance with the HKIAC Rules.  There shall be three (3) arbitrators.

 

(ii)                                  The arbitral proceedings shall be conducted in English.  To the extent that the HKIAC Rules are in conflict with the provisions of this Article 15.2, including the provisions concerning the appointment of the arbitrator, the provisions of this Article 15.2 shall prevail.

 

(iii)                               Each Party to the arbitration shall cooperate with each other Party to the arbitration in making full disclosure of and providing complete access to all information and documents requested by such other Party in connection with such arbitral proceedings, subject only to any confidentiality obligations binding on such Party.

 

(iv)                              The award of the arbitral tribunal shall be final and binding upon the Parties a party thereto, and the prevailing Party may apply to a court of competent jurisdiction for enforcement of such award.

 

(v)                                 Any Party that is a party to the dispute shall be entitled to seek preliminary injunctive relief, if possible, from any court of competent jurisdiction pending the constitution of the arbitral tribunal.

 

14.3                        Consent to Jurisdiction.  Subject to Articles 14.1 and 14.2, each Party to this Agreement, by its execution hereof, (a) hereby irrevocably submits to the exclusive jurisdiction of the Supreme Court of the State of New York, New York County and the United States District Court for the Southern District of New York (collectively, the “Courts”) for the purpose of any and all actions, suits or proceedings arising in whole or in part out of,

 

48

 

related to, based upon or in connection with this Agreement or the subject matter hereof, (b) hereby waives to the extent not prohibited by Applicable Law, and agrees not to assert, by way of motion, as a defense or otherwise, in any such action, any claim that it is not subject personally to the jurisdiction of the Courts, that its property is exempt or immune from attachment or execution, that any such action brought in one of the Courts should be dismissed on grounds of forum non conveniens, should be transferred to any court other than one of the Courts, or should be stayed by reason of the pendency of some other proceeding in any other court other than one of the Courts, or that this Agreement or the subject matter hereof may not be enforced in or by such Court, and (c) hereby agrees not to commence any such action other than before one of the Courts nor to make any motion or take any other action seeking or intending to cause the transfer or removal of any such action to any court other than one of the Courts whether on the grounds of inconvenient forum or otherwise. Each Party further agrees that service or any process, summons, notice or document by U.S. registered mail to such Party’s notice address provided for in this Agreement shall be effective service of process for any action, suit or proceeding in New York with respect to any matters to which it has submitted to jurisdiction in this Article 14.3.

 

15.                               MISCELLANEOUS.

 

15.1                        Force Majeure.

 

Neither Party shall be held liable to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in performing any obligation under this Agreement to the extent such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party including, but not limited to, embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, fire, floods, or other acts of God, or acts, omissions or delays in acting by any Governmental Authority.  The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practical, and shall promptly undertake all Commercially Reasonable Efforts necessary to cure such force majeure circumstances.

 

15.2                        Assignment or Change of Control.

 

(a)                           Except as otherwise set forth in this Agreement, this Agreement and its rights, privileges, and obligations may not be assigned or otherwise transferred by either Party without the prior written consent of the other Party; provided that either Party may assign, without consent but with prior written notice, such Party’s rights and obligations under this Agreement (i) in connection with a merger, consolidation, or sale of substantially all of the assigning Party’s assets to an unrelated Third Party, (ii) in connection with a Change of Control, or (iii) to an Affiliate of such Party provided that in the case of an assignment by Lilly to a Lilly Affiliate, if such Lilly Affiliate fails to perform its responsibilities under the Agreement, then Lilly shall remain liable in all respects under this Agreement notwithstanding any assignment of the Agreement to such Affiliate; provided that, in the event of an assignment described in clause (i) or (ii), the non-assigning Party may at its sole discretion terminate this Agreement if such Change of Control reasonably presents a conflict of interest to continue with the successor entity.  For the purposes of this Agreement, a “Change of Control” of a Party occurs upon (i) the

 

49

 

closing of a sale of all or substantially all of the assets of such Party to a Third Party in one transaction or series of transactions,  (ii) the closing of a merger or other business combination or transaction that results in a Third Party owning, directly or indirectly, of more than 50% of the voting securities of such Party, or (iii) the closing of a transaction, following which a Third Party acquires direct or indirect ability or power to direct or cause the direction of the management and policies of such Party or otherwise direct the affairs of such Party, whether through ownership of equity, voting securities, beneficial interest, by contract, or otherwise, provided that for the purposes of this Agreement, a Change in Control shall not be deemed to have taken place if such Change of Control transaction involves a reorganization or similar transaction amongst the direct or indirect shareholders or Affiliates of such Party, following which a shareholder or Affiliate of such Party emerges as the direct or indirect owner of more than 50% of the voting securities, or owning all or substantially all the assets of the Party, or acquiring the direct or indirect ability or power to direct or cause the direction of the management and policies of such Party. Any assignee must assume in writing the obligations of the assigning Party to which it is the assignee or successor.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.

 

(b)                 A Party terminating pursuant to Article 15.2(a) must deliver three (3) months’ prior written notice within nine (9) months of the delivery of notice by the assigning Party of the effectiveness of such assignment.

 

15.3                        Severability.

 

If any one or more of the provisions contained in this Agreement is held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby, unless the absence of the invalidated provision(s) adversely affects the substantive rights of the Parties.  The Parties shall in such an instance use their best efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) which, insofar as practical, implement the purposes of this Agreement.

 

15.4                        Notices.

 

All notices which are required or permitted hereunder shall be in writing and sufficient if delivered personally, sent by facsimile (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by nationally-recognized overnight courier or sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

	
if to Hutchison, to:
    	
 
    	
 
    
	
 
    	
 
    	
Hutchison MediPharma   Limited

Building 4, 720 Cailun   Road

Zhangjiang High Tech Park

Shanghai, China 201203

Attn: Chief  Executive Officer,

Hutchison MediPharma   Limited

Fax: +86-21-50793900
    

 

50

 

	
With a copy to:
    	
 
    	
 
    
	
 
    	
 
    	
Hutchison Whampoa Limited

22/F Hutchison House

10 Harcourt Road

Central

Hong Kong

Attn: Head Group General   Counsel &

Company Secretary

Fax: +852 2128 1778
    
	
 
    	
 
    	
 
    
	
if to Hutchison Guarantor:
    	
 
    	
 
    
	
 
    	
 
    	
Hutchison China MediTech Limited

PO Box 309, Ugland House, Grand   Cayman, KY1-
   1104, Cayman Islands
   Attn: Chief Executive Officer

Fax: +852 2128 1778
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
Hutchison Whampoa Limited
   22/F Hutchison House
   10 Harcourt Road
   Central
   Hong Kong
   Attn: Head Group General Counsel & Company
   Secretary

Fax: +852 2128 1778
    
	
 
    	
 
    	
 
    
	
if to Lilly, to:
    	
 
    	
Eli Lilly Trading (Shanghai) Company Limited
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Lilly Trading Company Limited

307, 1 Century Financial Tower

1 Su Hua Road

Suzhou Industrial Park

215021, PRC

Attn: President
    

 

or to such other address as the Party to whom notice is to be given may have furnished to the other Party in writing in accordance herewith.  Any such notice shall be deemed to have been given: (a) when delivered if personally delivered or sent by facsimile on a Business Day; (b) on the Business Day after dispatch if sent by nationally-recognized overnight courier; or (c) on the fifth Business Day following the date of mailing if sent by mail.

 

51

 

15.5                        Applicable Law and Litigation.

 

All questions of inventorship will be determined in accordance with U.S. patent laws.  In respect to all other Patent issues, the rights of the Parties will be governed by the laws of the jurisdiction in which the applicable Patent is filed or granted.  In all other respects, this Agreement shall be governed by and construed in accordance with the laws of New York without reference to any rules of conflict of laws.

 

15.6                        Entire Agreement; Amendments.

 

The Agreement contains the entire understanding of the Parties with respect to the subject matter hereof.  All express or implied agreements and understandings, either oral or written, with regard to the subject matter hereof (including the licenses granted hereunder) are superseded by the terms of this Agreement.  The Agreement may be amended, or any term hereof modified, only by a written instrument duly executed by authorized representatives of both Parties hereto.

 

15.7                        Headings.

 

The captions to the several Articles hereof are not a part of the Agreement, but are merely for convenience to assist in locating and reading the Articles and Articles of this Agreement.

 

15.8                        Independent Contractors.

 

It is expressly agreed that Hutchison and Lilly shall be independent contractors and that the relationship between the two Parties shall not constitute a partnership, joint venture or agency.  Neither Hutchison nor Lilly shall have the authority to make any statements, representations or commitments of any kind, or to take any action, which shall be binding on the other Party, without the prior written consent of the other Party.

 

15.9                        Waiver.

 

The waiver by either Party of any right hereunder, or the failure of the other Party to perform, or a breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise.

 

15.10                 Waiver of Rule of Construction.

 

Each Party has had the opportunity to consult with counsel in connection with the review, drafting and negotiation of this Agreement.  Accordingly, the rule of construction that any ambiguity in this Agreement shall be construed against the drafting Party shall not apply.

 

15.11                 Construction.

 

Except where the context expressly requires otherwise, (a) the use of any gender herein shall be deemed to encompass references to either or both genders, and the use of the

 

52

 

singular shall be deemed to include the plural (and vice versa), (b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (c) the word “will” shall be construed to have the same meaning and effect as the word “shall”, (d) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (e) any reference herein to any person shall be construed to include the person’s successors and assigns, (f) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (g) all references herein to Articles or Exhibits shall be construed to refer to Articles or Exhibits of this Agreement, and references to this Agreement include all Exhibits hereto, (h) the word “notice” means notice in writing (whether or not specifically stated) and shall include notices, consents, approvals and other written communications contemplated under this Agreement, (i) provisions that require that a Party, the Parties or any committee hereunder “agree”, “consent” or “approve” or the like shall require that such agreement, consent or approval be specific and in writing, whether by written agreement, letter, approved minutes or otherwise (but excluding e-mail and instant messaging), (j) references to any specific law, rule or regulation, or article, section or other division thereof, shall be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof, and (k) the term “or” shall be interpreted in the inclusive sense commonly associated with the term “and/or.”

 

15.12                 Counterparts.

 

The Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Each Party shall be entitled to rely on the delivery of executed facsimile copies of counterpart execution pages of this Agreement and such facsimile copies shall be legally effective to create a valid and binding agreement among the parties.

 

[signature pages follow]

 

53

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their duly authorized representatives as of the Effective Date.

 

 

	
 
    	
HUTCHISON MEDIPHARMA LIMITED
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Christian Hogg
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Christian   Hogg
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
13   December 2013
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ELI LILLY and COMPANY
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ Richard Parsons
    	
16/12/13
    	
/s/ Kerry L. Blanchard
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Richard   Parsons
    	
Kerry L. Blanchard
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Finance   Director
    	
Senior V.P. China Drug Development
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Solely   for the purposes of Articles 7.11(a), 7.11(b) and 7.11(c):
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
HUTCHISON   CHINA MEDITECH LIMITED
    
	
 
    	
 
    	
 
    
	
 
    	
By
    	
/s/ Christian Hogg
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Christian   Hogg
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
Date:
    	
13   December 2013
    
							

 

54

 

Exhibit A, Hutchison Patents

 

HMPL-013 Fruquintinib Intellectual Property Summary

 

Intellectual properties regarding Hutchison’s Fruquintinib product include patents/applications and secret know-how. Below is a brief summary of Hutchison’s position in one area.

 

Granted or Pending Patent Applications

 

Patent and patent applications in the Territory relating to the Fruquintinib product are summarized in the following Table:

 

[**]

 

	
[**]
    	
[**]
    	
[**]
    	
[**]
    
	
[**]
    	
[**]
    	
[**]
    	
[**]
    

 

[**]

 

Secret know-how

 

Trade secrets exist and continue to be developed regarding Fruquintinib.

 

55

 

 

Exhibit B, Initial Development Plan and Costs (Page 1 of 8)

 

[**]

 

56

 

Exhibit B, Initial Development Plan and Costs (Page 2 of 8)

 

[**]

 

57

 

Exhibit B, Initial Development Plan and Costs (Page 3 of 8)

 

[**]

 

58

 

Exhibit B, Initial Development Plan and Costs (Page 4 of 8)

 

[**]

 

59

 

Exhibit B, Initial Development Plan and Costs (Page 5 of 8)

 

Lilly Full Time Equivalent (FTE) Costs: (FTE) Costs:(Global FTE rate — [**]/yr, China FTE rate — [**]/yr, CRP FTE rate — [**]/yr)

 

60

 

[**]

 

61

 

Exhibit B, Initial Development Plan and Costs (Page 6 of 8)

 

Hutchison Full Time Equivalent (FTE) Costs: (FTE) Costs:(Global FTE rate — [**]/yr, China FTE rate — [**]/yr, CRP FTE rate — [**]/yr)

 

62

 

[**]

 

63

 

Exhibit B, Initial Development Plan and Costs (Page 7 of 8)

 

Grand Total Initial Development Plan Costs: (FTE) Costs:(Global FTE rate — [**]/yr, China FTE rate — [**]/yr, CRP FTE rate — [**]/yr)

 

[**]

 

64

 

Exhibit B, Initial Development Plan and Costs (Page 8 of 8)

 

Development Costs for 3rd Line NSCLC Initial Indication as referenced in Article 3.4(c)(aa): (FTE) Costs:(Global FTE rate — [**]/yr, China FTE rate — [**]/yr, CRP FTE rate — [**]/yr)

 

[**]

 

65

 

Exhibit C, Positive POC Thresholds for Initial Indications

 

3rd Line Colorectal Cancer:

 

a)             Study Design

 

i.                  [**].

 

ii.               [**].

 

b)             Positive POC Thresholds:

 

i.                  [**]; or

 

ii.               [**]; and

 

iii.            [**].

 

2rd Line Advanced Gastric Cancer:

 

a)             Study Design

 

i.                  [**].

 

ii.               [**].

 

b)             Positive POC Thresholds:

 

i.                  [**]; or

 

ii.               [**]; and

 

iii.            [**].

 

66

 

Exhibit C, Positive POC Thresholds for Initial Indications (Page 2 of 2)

 

3rd Line Non Small Cell Lung Cancer:

 

a)             Study Design

 

[**]

 

ii.               [**]

 

b)             Positive POC Thresholds:

 

i.                  [**]; or

 

ii.               [**]; and

 

[**]

 

67

 

 

Hutchison China MediTech Limited

 

(“Chi-Med”) (AIM: HCM)

 

Exhibit D, Press Release

 

Chi-Med Announces Cancer Therapy Collaboration with Lilly

 

London: [      ], [  ] [            ] 2013:  — Hutchison MediPharma Limited (“HMP”), an R&D company majority owned by Chi-Med, today announced that it has entered into a licensing, co-development, and commercialization agreement in China with Eli Lilly and Company (“Lilly”) for Fruquintinib (HMPL-013), a targeted oncology therapy for the potential treatment of various types of solid tumors.  Fruquintinib, a selective inhibitor of the Vascular Endothelial Growth Factor (“VEGF”) receptor tyrosine kinases, was discovered by HMP and is currently in Phase II testing in China.

 

Under the terms of the agreement, the costs of future development of Fruquintinib in China, to be carried out by HMP, will be shared between HMP and Lilly. HMP will potentially receive a series of payments of up to US$86.5 million, including upfront payments, and development and regulatory approval milestones. Should Fruquintinib be successfully commercialized in China, HMP would receive tiered royalties starting in the mid-teens percentage of net sales. Additional terms of the agreement were not disclosed.

 

Christian Hogg, Chief Executive Officer of Chi-Med said: “Our belief is that Fruquintinib has potential activity against multiple tumor types with high incidence rates and may benefit patients with significant unmet medical needs in China.  The collaboration with Lilly will allow for Fruquintinib to be developed across various tumor types in China and at a far greater speed than if we went alone.”

 

68

 

“We are excited to collaborate with Hutchison MediPharma in the development of this potential new cancer therapy,” said Jacques Tapiero, Lilly Senior Vice President and President of Emerging Markets. “In Lilly’s emerging markets business, we are focused on providing patients with innovative medicines from our own pipeline and through collaborations with respected science-based companies such as HMP. Together, we are committed to help meet the medical needs of oncology patients in China.”

 

About Fruquintinib

 

Fruquintinib (HMPL-013) is a novel and potent small molecule agent that selectively inhibits VEGFR 1, 2 and 3. In preclinical studies, Fruquintinib has shown potent inhibitory effects on multiple human tumor xenografts. In the initial single arm Phase I study in advanced refractory solid tumors, Fruquintinib has demonstrated excellent pharmacokinetic properties and was well tolerated.  In addition, it demonstrated clinical activity in patients with various heavily pre-treated advanced cancers. Currently, a single arm Phase II study for Fruquintinib is on-going in China with results expected to be released in early 2014. In July 2013, HMP received Phase II/III Clinical Trial Application approval from the China Food and Drug Administration which granted the further development of fruquintinib. In the planned Phase II/III clinical trials, Fruquintinib will be studied in patients with a variety of solid tumors.

 

About Hutchison MediPharma

 

Hutchison MediPharma is a novel drug R&D company focusing on discovering, developing and commercializing innovative therapeutics in oncology and autoimmune diseases.  With a team of around 200 scientists and staff, its pipeline is comprised of novel oral compounds for cancer and inflammation in development in North America,

 

69

 

Europe, Australia and Greater China.

Hutchison MediPharma is majority owned by Chi-Med.  For more information please

visit:  www.hmplglobal.com

 

About Chi-Med

 

Chi-Med is the holding company of a healthcare group based primarily in China and was listed on the Alternative Investment Market of the London Stock Exchange in May 2006.  It is focused on researching, developing, manufacturing and selling pharmaceuticals and health oriented consumer products. Chi-Med is majority owned by Hutchison Whampoa Limited, an international company listed on the Main Board of the Stock Exchange of Hong Kong Limited.  For more information please visit: www.chi-med.com

 

Enquiries

	
Chi-Med
    	
Telephone:
    	
+852 2121 8200
    
	
Christian   Hogg, CEO
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Citigate   Dewe Rogerson
    	
Telephone:
    	
+44 20 7638   9571
    
	
Anthony   Carlisle
    	
Mobile:
    	
+44 7973 611   888
    
	
David Dible
    	
Mobile:
    	
+44 7967 566   919
    
	
 
    	
 
    	
 
    
	
Panmure   Gordon (UK) Limited
    	
Telephone:
    	
+44 20 7886   2500
    
	
Richard Gray
    	
 
    	
 
    
	
Andrew Potts
    	
 
    	
 
    

 

70

 

Exhibit E, Chemical formula/structure of 013

 

HMPL-013 (Fruquintinib)

 

[**]

 

71

 

Exhibit F

Product Royalty Payment Example

 

[**]

 

[**]

 

[**]

 

	
Incremental Sales Tiers
    	
 
    	
Royalty Rate
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    
	
[**]
    	
 
    	
[**]
    

 

[**]

 

[**]

 

[**]

 

[**]

 

72

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