Document:

STOCK PURCHASE AGREEMENT

 

Exhibit 10.27

STOCK PURCHASE AGREEMENT

By and Between

AVENTIS PHARMACEUTICALS INC.

AND

REGENERON PHARMACEUTICALS, INC.

Dated as of September 5, 2003

 

 

STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE AGREEMENT (“Agreement”), dated as of September 5,
2003, by and between AVENTIS PHARMACEUTICALS INC. (the “Investor”), a
corporation organized under the laws of Delaware, with its principal place of
business in the United States at 200 Crossing Boulevard, Bridgewater, New
Jersey 08807, and REGENERON PHARMACEUTICALS, INC. (the “Company”), a
corporation organized under the laws of New York with its principal place of
business at 777 Old Saw Mill Road, Tarrytown, New York.

     WHEREAS, concurrently with the execution of this Agreement, the Investor
and the Company have entered into a Collaboration Agreement (the “Collaboration
Agreement” and together with this Agreement, the “Transaction Agreements”); and

     WHEREAS, it is contemplated by the Collaboration Agreement that the
Investor purchase, and the Company issue and sell to the Investor, shares of
common stock of the Company pursuant to the terms and conditions of this
Agreement.

     NOW, THEREFORE, in consideration of the following mutual promises and
obligations, and for good and valuable consideration, the adequacy and
sufficiency of which are hereby acknowledged, the Investor and the Company
agree as follows:

ARTICLE 1

DEFINITIONS

     1.1 Defined Terms. When used in this Agreement, the following terms shall
have the respective meanings specified therefor below:

     “Affiliate” shall mean, with respect to any Person, any other Person which
controls, is controlled by or is under common control with such Person. A
Person shall be deemed to control another Person if such Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities, by contract or otherwise.

     “Business Day” shall mean any day other than a Saturday or Sunday or a day
on which banks located in New York, New York are authorized or required by law
to close.

     “Common Stock” shall mean the Company’s Common Stock, par value $0.001 per
share. Common Stock shall not include shares of the Company’s class A shares.

     “Company Intellectual Property” shall mean the Intellectual Property that
is owned by Company and the Intellectual Property subject to an Intellectual
Property License pursuant to which its use by the Company is permitted by any
third party.

     “Disposition” or “Dispose of” shall mean any (i) offer, pledge, sale,
contract to sell, sale of any option or contract to purchase, purchase of any
option or contract to sell, grant of any option, right or warrant for the sale
of, or other disposition of or transfer of any shares of the

 

 

     Company’s common stock, par value $.001 per share, or any securities
convertible into or exchangeable or exercisable for such common stock or (ii)
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Company’s common stock, whether any such swap or transaction is to be settled
by delivery of securities, in cash or otherwise.

     “Governmental Authority” shall mean any federal, state, municipal, local,
provincial or regional governmental authority in the United States or other
political subdivision thereof and any Person exercising executive, legislative,
judicial regulatory or administrative functions of or pertaining to government.

     “Intellectual Property” shall mean trademarks, trade names, trade dress,
service marks, copyrights, and similar rights (including registrations and
applications to register or renew the registration of any of the foregoing),
patents and patent applications, trade secrets, and any other similar
intellectual property rights.

     “Intellectual Property License” shall mean any license, permit,
authorization, approval, contract or consent granted, issued by or with any
Person relating to the use of Intellectual Property.

     “Material Adverse Effect” shall mean any events, occurrences or
circumstances which give rise to or would reasonably be expected to give rise
to, individually or in the aggregate, a material adverse effect on the
business, business prospects, properties, condition (financial or otherwise) or
results of operations of the Company.

     “Organizational Documents” shall mean the Company’s Certificate of
Incorporation as in effect on the date hereof and the Company’s Bylaws as in
effect on the date hereof.

     “Person” shall mean and include an individual, a partnership, a joint
venture, a corporation, a limited liability company, a limited liability
partnership, a trust, an incorporated organization and a Governmental
Authority.

     1.2 Additional Defined Terms. In addition to the terms defined in Section
1.1, the following terms shall have the respective meanings assigned thereto in
the sections indicated below:

	 	 	 
	Defined Term	 	Section
	
	 	

	Agreement	 	
Preamble
	Closing	 	
2.2
	Closing Date	 	
2.2
	Collaboration Agreement	 	
Preamble
	Company	 	
Preamble
	Company SEC Documents	 	
3.10(a)
	Exchange Act	 	
3.10(a)
	Investor	 	
Preamble
	Purchase Price	 	
2.1
	Purchased Stock	 	
2.1

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	Defined Term	 	Section
	
	 	

	Rule 144	 	
5.2
	SEC	 	
3.6
	Securities Act	 	
3.10(a)
	Severed Clause	 	
6.10
	Transaction Agreements	 	
Preamble

     1.3 Construction. In this Agreement, unless the context otherwise requires:

          (a) any reference in this Agreement to “writing” or comparable expressions
includes a reference to facsimile transmission or comparable means of
communication;

          (b) words expressed in the singular number shall include the plural and
vice versa, words expressed in the masculine shall include the feminine and
neuter gender and vice versa;

          (c) references to Articles and Sections are references to articles and
sections of this Agreement;

          (d) reference to “day” or “days” are to calendar days; and

          (e) “include,” “includes,” and “including” are deemed to be followed by
“without limitation” whether or not they are in fact followed by such words or
words of similar import.

     1.4 Knowledge. Where any representation or warranty contained in this
Agreement is expressly qualified by reference to the knowledge of the Company,
the Company confirms that it has made reasonable inquiry or investigation as to
the matters that are the subject of such representations and warranty.

ARTICLE 2

PURCHASE AND SALE OF COMMON STOCK

     2.1 Issuance of Common Stock. Subject to the terms and conditions hereof,
on the Closing Date, the Company agrees to issue and sell to the Investor, and
the Investor agrees to purchase, 2,799,552 shares of Common Stock (the
“Purchased Stock”) for an aggregate purchase price of $45,000,000 (the
“Purchase Price”). The price per share of the Purchased Stock shall be
$16.074, which amount represents the average daily closing price per share on
the Nasdaq Stock Market during the five (5) trading days immediately preceding,
but not including, the date of this Agreement.

     2.2 Closing. The purchase and sale of the Purchased Stock (the “Closing”)
shall occur on the date hereof at the offices of Skadden, Arps, Slate, Meagher
& Flom LLP, at Four Times Square, New York, New York. The date on which the
Closing occurs is referred to herein as the “Closing Date”.

     2.3 Delivery. Within three (3) Business Days of the Closing Date, the
Company shall deliver to the Investor a stock certificate, registered in the
Investor’s name, representing the Purchased Stock. Within one (1) Business Day
following the Closing Date, Investor shall

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deliver to the Company the Purchase Price by wire transfer of same day
funds to the Company’s bank account as follows:

	 	 	 
	Beneficiary Name:	 	
Regeneron Pharmaceuticals, Inc.
	Beneficiary Address:	 	
777 Old Saw Mill River Road
	 	 	
Tarrytown, New York 10591
	Account Number:	 	
[********************]
	Bank Name:	 	
[********************]
	Bank Address:	 	
[********************]
	 	 	
[********************]
	Bank Clearing Number:	 	
[********************]

ARTICLE 3

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to the Investor as of the date
hereof as follows:

     3.1 Organization, Good Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of New York. The Company has all requisite corporate power
and corporate authority to own and operate its properties and assets, to carry
on its business as now conducted and as proposed to be conducted in the Company
SEC Documents, to enter into the Transaction Agreements, to issue and sell the
Purchased Stock and to carry out the other transactions contemplated under the
Transaction Agreements. The Company is qualified to transact business and is
in good standing in each jurisdiction in which the character of the properties
owned, leased or operated by the Company or the nature of the business
conducted by the Company makes such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect.

     3.2 Capitalization and Voting Rights.

          (a) The authorized capital of the Company as of September 4, 2003
consisted of: (i) 160,000,000 shares of Common Stock, par value $0.001 per
share, of which (w) 49,829,556 shares were issued and outstanding, (x)
2,403,848 shares were reserved for issuance upon conversion of the Company’s
class A stock, each share of class A stock being convertible into one share of
Common Stock, (y) 15,265,493 shares were reserved for issuance pursuant to the
Company’s 1990 Long-Term Incentive Plan and 2000 Long-Term Incentive Plan and
(z) 6,611,300 shares were reserved for issuance upon conversion of the
Company’s 51⁄2% Convertible Senior Subordinated Notes due 2008, (ii)
40,000,000 shares of class A stock, par value $0.001 per share, of which
2,403,848 shares were issued and outstanding, and (iii) 30,000,000 shares of
preferred stock, par value $0.01 per share, of which no shares were issued and
outstanding. All of the issued and outstanding shares of Common Stock and
class A stock have been duly authorized, and all of the issued and outstanding
shares of Common Stock and class A stock have been validly issued, are fully
paid and non-assessable, and were issued in compliance with all applicable
federal and state securities laws.

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          (b) All of the authorized shares of Common Stock are entitled to one (1)
vote per share. All of the authorized shares of class A stock are entitled to
ten (10) votes per share.

          (c) Except as set forth in the Company SEC Documents filed at least
seventy-two (72) hours prior to the date of this Agreement, or as provided in
the Transaction Agreements, there are not, nor upon the consummation of the
transactions contemplated hereby shall there be: (i) any outstanding options,
warrants, rights (including conversion or preemptive rights) or agreements
pursuant to which the Company is or may become obligated to issue, sell or
repurchase any shares of its capital stock or any other securities of the
Company and (ii) any restrictions on the transfer of capital stock of the
Company other than pursuant to state and federal securities laws.

          (d) Except as set forth in the Company SEC Documents filed prior to the
date of this Agreement or as provided in the Transaction Agreements, the
Company is not a party to or subject to any agreement or understanding relating
to the voting of shares of capital stock of the Company or the giving of
written consents by a shareholder or director of the Company.

     3.3 Subsidiaries. The Company does not have any subsidiaries required to
be disclosed in Exhibit 21 to its annual report on Form 10-K.

     3.4 Authorization. All corporate action on the part of the Company, its
directors and stockholders necessary for the authorization, execution and
delivery of the Transaction Agreements and the performance of all obligations
of the Company thereunder, including the authorization, issuance and delivery
of the Purchased Stock, has been taken. This Agreement has been duly executed
and delivered by the Company and, upon due execution and delivery by Investor,
constitutes a valid and legally binding obligation of the Company, enforceable
against the Company in accordance with its terms (except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to or affecting
enforcement of creditors’ rights and (ii) rules of law governing specific
performance, injunctive relief or other equitable remedies and limitations of
public policy).

     3.5 No Conflicts. The execution and performance of the Transaction
Agreements and compliance with the provisions thereof by the Company, do not
and shall not: (a) violate any provision of law, statute, ordinance, rule or
regulation or any ruling, writ, injunction, order, permit, judgment or decree
of any Governmental Authority, (b) constitute a breach of, or default (or an
event which, with notice or lapse of time or both, would become a default) or
conflict with, or give rise to any right of termination, cancellation or
acceleration of, any agreement, arrangement or instrument, whether written or
oral, by which the Company or any of its assets are bound, or (c) violate or
conflict with any of the provisions of the Company’s Organizational Documents;
except, in the case of subsections (a) and (b) as would not have a Material
Adverse Effect.

     3.6 No Governmental Authority or Third Party Consents. No consent,
approval, authorization or other order of any Governmental Authority or other
third party is required to be obtained by the Company in connection with the
authorization, execution and delivery of this Agreement or with the
authorization, issue and sale of the Purchased Stock, except such filings

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as may be required to be made with the Securities and Exchange Commission
(the “SEC”) and with any state blue sky or securities regulatory authority,
which filings shall be made in a timely manner in accordance with all
applicable laws, rules, regulations, statutes, ordinances and orders.

     3.7 Valid Issuance of Purchased Stock. When issued, sold and delivered in
accordance with the terms hereof for the consideration expressed herein, the
Purchased Stock shall be duly authorized, validly issued, fully paid and
nonassessable, free from any encumbrances or restrictions on transfer,
including preemptive rights, rights of first refusal or other similar rights,
other than restrictions on transfer under the Transaction Agreements and under
federal and state securities laws.

     3.8 Litigation. There is no action, suit, proceeding or investigation
pending or threatened against the Company or which the Company intends to
initiate which (a) questions the validity of the Transaction Agreements or the
right of the Company to enter into them, or to consummate the transactions
contemplated thereby, or (b) except as set forth in the Company SEC Documents
filed prior to the date of this Agreement, if determined adversely would have a
Material Adverse Effect.

     3.9 Licenses and Other Rights; Compliance with Laws. The Company has all
franchises, permits, licenses and other rights and privileges necessary to
permit it to own its properties and to conduct its business as presently
conducted and is in compliance thereunder, except where the failure to be in
compliance does not and would not have a Material Adverse Effect. The Company
is and has been in compliance with all laws and governmental rules and
regulations applicable to its business, properties and assets, and to the
products and services sold by it, including, without limitation, all such
rules, laws and regulations relating to fair employment practices, occupational
safety and health and public safety, except where the failure to be in
compliance does not and would not have a Material Adverse Effect.

     3.10 Company SEC Documents; Financial Statements; Nasdaq Stock Market.

          (a) Since December 31, 2002, the Company has filed all required reports,
schedules, forms, statements and other documents (including exhibits and all
other information incorporated therein) with the SEC (“Company SEC Documents”).
As of their respective filing dates, each of the Company SEC Documents
complied in all material respects with the requirements of the Securities Act
of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of
1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC
promulgated thereunder applicable to such Company SEC Documents, and no Company
SEC Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.

          (b) The financial statements of the Company included in its annual report
on Form 10-K for the fiscal year ended December 31, 2002 and in its quarterly
report on Form 10-Q for the quarterly period ended June 30, 2003 comply as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with United States generally accepted accounting
principles applied on a consistent basis during the periods involved (except as
may be

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indicated in the notes thereto) and fairly present the financial position
of the Company as of the dates thereof and the results of its operations and
cash flows for the periods then ended. Except as set forth in the Company SEC
Documents, the Company has no liabilities, whether absolute or accrued,
contingent or otherwise, other than liabilities incurred in the ordinary course
of business subsequent to the date of the most recent balance sheet contained
in the Company SEC Documents.

          (c) The Common Stock is listed on the Nasdaq Stock Market and the Company
has taken no action designed to, or which to its knowledge is likely to have
the effect of, terminating the registration of the Common Stock under the
Exchange Act or delisting the Common Stock from the Nasdaq Stock Market. The
Company has not received any notification that, and has no knowledge that, the
SEC or the National Association of Securities Dealers Inc. is contemplating
terminating such listing or registration. The issuance of the shares of
Purchased Stock pursuant to this Agreement does not require shareholder
approval, including, without limitation, pursuant to the rules of the National
Association of Securities Dealers Inc.

     3.11 Absence of Changes. Since December 31, 2002, there has been no
change or development which, individually or in the aggregate, has had or would
have a Material Adverse Effect.

     3.12 Disclosure Controls and Procedures. The Company has implemented the
“disclosure controls and procedures” (as defined in Rules 13a-15(e) and
15d-15(e) of the Exchange Act) required in order for the Chief Executive
Officer and Chief Financial Officer of the Company to engage in the review and
evaluation process mandated by the Exchange Act, and is in compliance with such
disclosure controls and procedures in all material respects.

     3.13 Intellectual Property. The Intellectual Property that is owned by
the Company is owned free from any liens or restrictions, and all of the
Company’s material Intellectual Property Licenses are in full force and effect
in accordance with their terms, and are free of any liens or restrictions,
except (a) where the failure to be free from such liens or restrictions would
not have a Material Adverse Effect or (b) as set forth in any such Intellectual
Property License. Except as set forth in the Company SEC Documents, there is
no legal claim or demand of any Person pertaining to, or any proceeding which
is pending or, to the knowledge of Company threatened, (i) challenging the
right of the Company in respect of any Company Intellectual Property, or (ii)
that claims that any default exists under any Intellectual Property License,
except, in the case of (i) and (ii) above, where such legal claims would not
have a Material Adverse Effect.

     3.14 Offering. Subject to the accuracy of the Investor’s representations
set forth in Section 4.3 and 4.4, the offer, sale and issuance of the Purchased
Stock to be issued in conformity with the terms of this Agreement constitute
transactions which are exempt from the registration requirements of the
Securities Act and from all applicable state registration or qualification
requirements.

     3.15 No Integration. The Company has not, directly or through any agent,
sold, offered for sale, solicited offers to buy or otherwise negotiated in
respect of, any security (as defined in the Securities Act) which is or will be
integrated with the Purchased Stock sold

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pursuant to this Agreement in a manner that would require the registration
of the Purchased Stock under the Securities Act.

     3.16 Brokers’ or Finders’ Fees. No broker, finder, investment banker or
other Person is entitled to any brokerage, finder’s or other fee or commission
in connection with the transactions contemplated by this Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

     The Investor hereby represents and warrants as of the date hereof as
follows:

     4.1 Organization; Good Standing. The Investor is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
The Investor has all requisite corporate power and corporate authority to enter
into the Transaction Agreements, to purchase the Purchased Stock and to carry
out the other transactions contemplated under the Transaction Agreements.

     4.2 Authorization. All corporate action on the part of the Investor, and
its directors and stockholders necessary for the authorization, execution and
delivery of the Transaction Agreements, the performance of all obligations of
the Investor thereunder, including the subscription and purchase of the
Purchased Stock, has been taken. This Agreement has been duly executed and
delivered by the Investor and, upon due execution and delivery by the Company,
constitutes a valid and legally binding obligation of the Investor, enforceable
against the Investor in accordance with its terms (except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application relating to or
affecting enforcement of creditors’ rights and (ii) rules of law governing
specific performance, injunctive relief or other equitable remedies and
limitations of public policy).

     4.3 Purchase Entirely for Own Account. The Purchased Stock shall be
acquired for investment for the Investor’s own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and the Investor has no present intention of selling, granting any
participation, or otherwise Distributing the Purchased Stock. The Investor
does not have any contract, undertaking, agreement or arrangement with any
Person to sell, transfer or grant participation to a Person any of the
Purchased Stock.

     4.4 Investment Experience and Accredited Investor Status. The Investor is
an “accredited investor” (as defined in Regulation D under the Securities Act).
The Investor has such knowledge and experience in financial or business
matters that it is capable of evaluating the merits and risks of the investment
in the Purchased Stock to be purchased hereunder.

ARTICLE 5

FURTHER ASSURANCES; SECURITIES LAW MATTERS

     5.1 Further Assurances. The parties agree to take such reasonable steps
and execute such other and further documents as may be necessary or appropriate
to cause the terms and conditions contained herein to be carried into effect.

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     5.2 Restricted Securities. The Investor understands that the Purchased
Stock, when issued, shall be “restricted securities” under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act only in certain limited circumstances. In this connection,
the Investor represents that it is familiar with Rule 144 of the Securities
Act, as presently in effect (“Rule 144”).

     5.3 Limitations on Dispositions.

          (a) For a period of two (2) years from the Closing Date, neither the
Investor nor any of its Affiliates shall make any Disposition, except, upon
prior written notice to the Company, to an Affiliate of the Investor, which
Affiliate shall then be subject to the same restrictions on Disposition as set
forth in this Section 5.3. The Investor or its Affiliate, as the case may be,
(i) during the period from the day after the second anniversary of the Closing
Date until the third anniversary of the Closing Date, may Dispose of no more
than 250,000 shares (subject to stock splits, reverse stock splits,
combinations, recapitalizations and similar events) of the Purchased Stock in
the aggregate per calendar quarter, and (ii) after the third anniversary of the
Closing Date, may Dispose of no more than 500,000 shares (subject to stock
splits, reverse stock splits, combinations, recapitalizations and similar
events) of the Purchased Stock in the aggregate per calendar quarter.

          (b) With respect to any sale or transfer of the Purchased Stock, the
Investor or its Affiliate, as the case may be, shall not make any such sale or
transfer unless the sale or transfer is made pursuant to Rule 144 or similar
provisions of federal securities laws as in effect from time to time.

          (c) In the event the Company proposes to sell securities in an
underwritten offering, the Investor shall, if requested by the Company and an
underwriter of Common Stock of the Company, agree not to sell or otherwise
transfer or dispose of any Common Stock of the Company held by the Investor for
a specified period of time, such period of time not to exceed ninety (90) days.
Such agreement shall be in writing in a form satisfactory to the Company and
underwriter in such offering. The Company may impose stop transfer
instructions with respect to the Common Stock subject to the foregoing
restrictions until the end of the lock-up period. The Company may request no
more than one (1) lock-up period per calendar year.

     5.4 Legends. It is understood that the certificates representing the
Purchased Stock shall bear the following legends:

          (a) “These securities have not been registered under the Securities Act of
1933. They may not be sold, offered for sale, pledged or hypothecated in the
absence of a registration statement in effect with respect to the securities
under the Securities Act or an opinion of counsel (which counsel shall be
reasonably satisfactory to the Company) that such registration is not required
or unless sold pursuant to Rule 144 of the Securities Act.”; and

          (b) any legend required by applicable state securities laws.

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     5.5 Current Public Information. For so long as the Company remains a
public company or, if earlier, until such time as the Investor no longer holds
any shares of Purchased Stock, the Company shall:

          (a) make and keep available, at all times, adequate public information as
required under paragraph (c) of Rule 144 under the Securities Act; and

          (b) file with the SEC in a timely manner all reports and other documents
required of the Company under Sections 13, 14, and 15(d) of the Exchange Act.

     5.6 Form D; Blue Sky Laws. The Company agrees to timely file a Form D
with respect to the Purchased Stock as required under Regulation D after the
Closing and to provide a copy thereof to the Investor promptly after such
filing. The Company shall, on or before the Closing Date, take such action as
the Company shall reasonably determine is necessary to qualify the Purchased
Stock for sale pursuant to this Agreement under applicable securities or “blue
sky” laws of the states of the United States or obtain exemption therefrom, and
shall provide evidence of any such action so taken to the Purchaser on or prior
to the Closing Date.

     5.7 Listing. Prior to any sale of the Purchased Stock by the Investor,
the Company will take all action necessary to enable the Purchased Stock to
trade on the Nasdaq Stock Market.

ARTICLE 6

MISCELLANEOUS

     6.1 Remedies. In case any one or more of the representations, warranties,
covenants or agreements set forth in this Agreement shall have been breached by
any party hereto, the party or parties entitled to the benefit of such
covenants or agreements may proceed to protect and enforce their rights either
by suit in equity or action at law, including, but not limited to, an action
for damages as a result of any such breach or an action for specific
performance of any such covenant or agreement contained in this Agreement. The
rights, powers and remedies of the parties under this Agreement are cumulative
and not exclusive of any other right, power or remedy which such parties may
have under any other agreement or law. No single or partial assertion or
exercise of any right, power or remedy of a party hereunder shall preclude any
other or further assertion or exercise thereof.

     6.2 Successors and Assigns. Except as otherwise expressly provided
herein, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective successors and assigns of the parties.
Except as otherwise expressly provided herein, neither this Agreement nor any
of the rights or obligations hereunder may be assigned by either party without
(a) the prior written consent of the Company in the case of any assignment by
the Investor, or (b) the prior written consent of the Investor in the case of
any assignment by the Company, except in each case to any third party who
acquires all or substantially all of the business of the assigning party by
merger, sale of assets or otherwise. Notwithstanding the foregoing, upon prior
written notice to the Company, the Investor may assign the right and obligation
to purchase the Purchased Stock for the Purchase Price, and all of its other
rights and obligations hereunder, to any of its Affiliates; provided that the
Investor shall remain liable for the performance of the obligations such
Affiliate.

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     6.3 Entire Agreement. This Agreement contains the complete understanding
of the parties to this Agreement with respect to the subject matter hereof and
supersedes all prior understandings and writings relating to the subject matter
hereof.

     6.4 Governing Law; Submission to Jurisdiction. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to conflict of laws principles. Each of the parties irrevocably
and unconditionally consents to the exclusive jurisdiction of the courts of the
State of New York, and the United States District Court for the Southern
District of New York for any action, suit, or proceeding arising out of or
relating to this Agreement, waives any objections to such jurisdiction and
venue and agrees not to commence any action, suit or proceeding relating to
this Agreement except in such courts.

     6.5 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but which together shall constitute one and
the same instrument.

     6.6 Titles and Subtitles. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.

     6.7 Notices. All notices, instructions and other communications hereunder
or in connection herewith shall be in writing, shall be sent to the address of
the relevant party set forth below and shall be (a) delivered personally, (b)
sent by registered or certified mail, return receipt requested, postage
prepaid, (c) sent via a reputable nationwide overnight courier service, or (d)
sent by facsimile transmission, with a confirmation copy to be sent by
registered or certified mail, return receipt requested, postage prepaid. Any
such notice, instruction or communication shall be deemed to have been
delivered upon receipt if delivered by hand, three (3) Business Days after it
is sent by registered or certified mail, return receipt requested, postage
prepaid, one (1) Business Day after it is sent via a reputable nationwide
overnight courier service, or when transmitted with electronic confirmation of
receipt, if transmitted by facsimile (if such transmission is made during
regular business hours of the recipient on a Business Day; or otherwise, on the
next Business Day following such transmission). Either party may change its
address by giving notice to the other party in the manner provided above.

	 	 	 
	To the Company:	 	
Regeneron Pharmaceuticals, Inc.
	 	 	
777 Old Saw Mill Road
	 	 	
Tarrytown, NY 10591
	 	 	
Attention: General Counsel
	 	 	 
	With a copy (which shall not constitute notice) to:	 	
Skadden, Arps, Slate, Meagher & Flom LLP
4 Times Square
New York, NY 10036
Attention: David J. Goldschmidt, Esq.

- 11 -

 

	 	 	 
	To the Investor:	 	
Aventis Inc.
	 	 	
Somerset Corporate Center
	 	 	
300 Somerset Corporate Boulevard
	 	 	
Bridgewater, NJ 08807
	 	 	
Attention: Owen Ball,
	 	 	
                 Senior Corporate Counsel
	 	 	 
	 	 	
and:
	 	 	 
	 	 	
Aventis Pharmaceuticals Inc.
	 	 	
200 Crossing Boulevard
	 	 	
Bridgewater, New Jersey 08807
	 	 	
Attention: Vice President,
	 	 	
                  Legal Corporate Development
	 	 	 
	With a copy (which shall	 	
Morgan, Lewis & Bockius, LLP
	not constitute notice) to:	 	
502 Carnegie Center
	 	 	
Princeton, New Jersey 08540
	 	 	
Attention: Randall B. Sunberg, Esq.

     6.8 Expenses. Each party shall pay its own fees and expenses with respect
to this Agreement and the transactions contemplated hereby.

     6.9 Amendments and Waivers. Any term of this Agreement may be amended and
the observance of any term of this Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and the Investor.

     6.10 Severability. If, under applicable laws, any provision hereof is
invalid or unenforceable, or otherwise directly or indirectly affects the
validity of any other material provision(s) of this Agreement (“Severed
Clause”), then, it is mutually agreed that this Agreement shall endure except
for the Severed Clause. The parties to this Agreement shall consult and use
their reasonable best efforts to agree upon a valid and enforceable provision
which shall be a reasonable substitute for such Severed Clause in light of the
intent of this Agreement.

[Signature Page Follows]

- 12 -

 

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first above written.

	 	 	 	 	 
	 	 	AVENTIS PHARMACEUTICALS INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Gerald P. Belle
	 	 	 	 	

	 	 	 	 	      Name: Gerald P. Belle
	 	 	 	 	      Title:   Authorized Signatory
	 	 	 	 	 
	 	 	REGENERON PHARMACEUTICALS, INC.
	 	 	 	 	 
	 	 	
By:
	 	/s/ Stuart Kolinski
	 	 	 	 	
      Name:
Stuart Kolinski
	 	 	 	 	      Title:   General CounselNON-EXCLUSIVE PATENT LICENSE AGREEMENT

 

Exhibit 10.28

NON-EXCLUSIVE PATENT LICENSE AGREEMENT

between

MERCK & CO., INC.

and

REGENERON PHARMACEUTICALS, INC.

 

 

NON-EXCLUSIVE PATENT LICENSE AGREEMENT

     THIS AGREEMENT effective as of 18 August, 2003, (the “Effective Date”)
between Merck & Co., Inc., a New Jersey corporation (“Merck”) and Regeneron
Pharmaceuticals, Inc., a New York corporation (“Regeneron”).

Background:

Regeneron desires to obtain a non-exclusive license under the Patent Rights,
upon the terms set out in this Agreement, and Merck desires to grant such a
license.

Merck and Regeneron (each, a “Party”, and collectively, the Parties) agree as
follows:

	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	 	“Affiliate” means (i) any corporation or business entity of which fifty
percent (50%) (or the maximum ownership interest permitted by law) or more
of the securities or other ownership interests representing the equity,
the voting stock or general partnership interest are owned, controlled or
held, directly or indirectly, by a Party; or (ii) any corporation or
business entity which, directly or indirectly, owns, controls or holds
fifty percent (50%) (or the maximum ownership interest permitted by law)
or more of the securities or other ownership interests representing the
equity, the voting stock or, if applicable, the general partnership
interest, of a Party; or (iii) any corporation or business entity of which
fifty percent (50%) (or the maximum ownership interest permitted by law)
or more of the securities or other ownership interests representing the
equity, the voting stock or general partnership interest are owned,
controlled or held, directly or indirectly, by a corporation or business
entity described in (i) or (ii).
	 
	1.2	 	“Common Stock” is defined in Section 4.1.
	 
	1.3	 	“Field” means all uses of Products.
	 
	1.4	 	“Information” means any and all information and data, including without
limitation all scientific, pre-clinical, clinical, regulatory,
manufacturing, marketing, financial and commercial information or data,
whether communicated in writing or orally or by any other method, which is
provided by or one behalf of one Party to the other Party in connection
with this Agreement.
	 
	1.5	 	“Market Price” means (a) if the Common Stock is listed on a national
securities exchange, the average of the high and low of the price per
share of such security quoted by The Nasdaq Stock Market, Inc. (“NASDAQ”)
or, if no such high and low prices are quoted by NASDAQ, the average of
the closing bid and asked prices as officially

1

 

	 	 	reported on the principal national securities exchange on which such
security is then listed or admitted to trading; or (b) if the Common
Stock is not then listed or admitted to trading on any national
securities exchange but is designated as a national market system
security by the National Association of Securities Dealers, Inc., the
average of the high and low trading price of the Common Stock.
	 
	1.6	 	“Net Sales” means the gross invoice price of Product sold by Regeneron
and its Sublicensees to the first third party (other than any Sublicensee)
in an arm’s length transaction after deducting, if not previously
deducted, from the amount invoiced or received:

	 	 	(a)   trade, cash and quantity discounts;
	 
	 	 	(b)   returns, credits, rebates, chargebacks and other allowances;
	 
	 	 	(c)   retroactive price reductions that are actually allowed or granted;
	 
	 	 	(d)   sales commissions paid to independent third party distributors and/or
selling agents;
	 
	 	 	(e)   sales taxes, excise taxes, tariffs, duties and other
governmental charges;
	 
	 	 	(f)   freight and other transportation costs itemized in the invoice to the
third party customer; and
	 
	 	 	(g)   bad debt.

	1.7	 	“Product” means any preparation for sale by prescription,
over-the-counter, or any other method, containing one or more compounds
that [************].
	 
	1.8	 	“Patent Rights” means those patents and patent applications listed on
Schedule 1.8 and all Patents claiming priority thereto or arising
therefrom. The term “Patent” includes patents and patent applications,
whether domestic or foreign, including all provisionals, and all
divisions, continuations, continuations-in-part, reissues, renewals,
extensions, supplementary protection certificates of any such patents and
patent applications.
	 
	1.9	 	“Rule 144” means Rule 144 under the Securities Act of 1933.
	 
	1.10	 	“Sales Date” means the date that Merck is first permitted to sell the
shares under Rule 144 (or if such date is not a business day, the next
succeeding business day).
	 
	1.11	 	“Shares” is defined in Section 4.1.
	 
	1.12	 	“Territory” means all of the countries in the world, and their
territories and possessions.
	 
	1.13	 	“Valid Patent Claim” means a claim of an issued, or granted, and
unexpired patent included within the Patent Rights, which has not been
held revoked or unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction,

2

 

	 	 	and which decision is not appealable or has not been appealed within the
time allowed for appeal; and which has not been admitted to be invalid or
unenforceable through reissue, re-examination or disclaimer or other
proceeding.
	 
	2.	 	LICENSE

2.1 Non-exclusive License Grant

     Merck hereby grants to Regeneron a non-exclusive license in the Territory
to practice under the Patent Rights to make, have made, use, import, sell and
offer to sell Products in the Field. This license shall be non-transferable
and non-sublicensable, except that Regeneron is entitled to grant sublicenses
to practice under the Patent Rights (i) to its Affiliates, and (ii) to third
parties, but solely to the extent necessary to enable such Affiliates and third
parties to make, have made, use, import, sell and offer to sell Products in the
Field together with Regeneron or on Regeneron’s behalf (entities in (i) and
(ii) referred to as “Sublicensees”). Sublicensees include, as an example,
third parties or Affiliates that license intellectual property rights to
Products from Regeneron in addition to any sublicense under the Patents.

     If the making, having made, use, offer for sale, sale or import by
Regeneron or its Sublicensees of Axokine® or an Axokine derivative for treating
obesity or obesity related disorder would infringe during the term of this
Agreement a method or use claim which Merck (or any of its Affiliates) owns on
the Effective Date and which claim is not covered by the grant in Section 2.1,
Merck hereby grants to Regeneron to the extent Merck (or its Affiliate) is
legally able to do so, a non-exclusive license in the Territory under such
claim solely for Regeneron and its Sublicensees to develop, make, have made,
use, sell, offer to sell or import Axokine or Axokine derivatives for such
disorders, and in such case, such claim shall be treated as part of the Patent
Rights licensed under this Agreement for all purposes, including royalty
obligations. Merck agrees that neither it nor any of its Affiliates shall take
any action that would restrict Merck’s ability to grant Regeneron the
non-exclusive license referred to in this Section 2.1. For the purpose of
this Section, the term “Axokine” shall have the meaning set out in Schedule
2.1.

2.2 Sublicensees

     If a Sublicensee sells Product, such sales by those Sublicensees shall be
treated as Net Sales, and are subject to royalties under Article 4. Regeneron
shall remain responsible for the performance of its Sublicensees. In the event
of a material default by any Sublicensee under a sublicense, Regeneron will
promptly notify Merck and take such action to remedy such default. In
addition, all sublicenses must comply with the following requirements:

	 	(a)	 	the sublicense is wholly consistent with the terms of this
Agreement and in particular, such sublicense does not purport to
extend or continue in any circumstances rights under the Patent
Rights after this Agreement is effectively terminated;
	 
	 	(b)	 	the sublicense is in the English language, executed by the
Sublicensee and giving its place of business;

3

 

	 	(c)	 	the sublicense precludes the Sublicensee granting further
sublicenses and the sublicense to the Patent Rights terminates
automatically upon the termination of this Agreement;
	 
	 	(d)	 	the sublicense obliges the Sublicensee to maintain insurance
in respect to its activities pursuant to their respective
subicensees in a manner consistent with Regeneron’s obligations
under Section 7.5; and
	 
	 	(e)	 	the sublicense provides an indemnity from the Sublicensee in
favor of Merck and Merck Indemnitees to the same extent as the
indemnity contained in Section 7.3, and the sublicense specifically
agrees that it will not challenge the standing of Merck if its seek
to rely on such indemnification.

A breach of any sublicense agreement by a third party Sublicensee shall not be
deemed a breach by Regeneron under this Agreement that could give rise to
termination under Section 6.4.

3.     CONFIDENTIALITY AND PUBLICATION

3.1 Nondisclosure Obligation

     All Information disclosed by or on behalf of one Party to the other Party
under this Agreement shall be maintained in confidence by the receiving Party
and shall not be disclosed to non-Party or used for any purpose except as set
forth herein without the prior written consent of the disclosing Party, except
to the extent that such Information:

	 	(a)	 	is known by receiving Party at the time of its receipt, and
not through a prior disclosure by the disclosing Party, as
documented by the receiving Party’s business records;
	 
	 	(b)	 	is properly in the public domain;
	 
	 	(c)	 	is subsequently disclosed to the receiving Party by a third
party who may lawfully do so and is not under an obligation of
confidentiality to the disclosing Party;
	 
	 	(d)	 	is developed by the receiving Party independently of
Information received from the disclosing Party, as documented by the
receiving Party’s business records;

     Any combination of features or disclosures shall not be deemed to fall
within the foregoing exclusions merely because individual features are
published or available to the general public or in the rightful possession of
the receiving Party unless the combination itself and principle of operation
are published or available to the general public or in the rightful possession
of the receiving Party.

     If a Party is required by judicial or administrative process to disclose
Information that is subject to the non-disclosure provisions of this Section
3.1, such Party shall promptly inform the other Party of the disclosure that is
being sought in order to provide the other Party an opportunity to challenge or
limit the disclosure obligations. Information that is disclosed by judicial or
administrative process shall remain otherwise subject to the confidentiality
and non-

4

 

use provisions of this Section 3.1, and the Party disclosing Information
pursuant to law or court order shall take all steps reasonably necessary,
including without limitation obtaining an order of confidentiality, to ensure
the continued confidential treatment of such Information.

3.2 Publicity/Use of Names

     No disclosure of the existence of, or the terms of, this Agreement may be
made by either Party, and no Party shall use the name, trademark, trade name or
logo of the other Party or its employees in any publicity, news release or
disclosure relating to this Agreement or its subject matter, without the prior
express written permission of the other Party, such permission not to be
unreasonably withheld or delayed, and except as may be required by law.
Notwithstanding the foregoing, Regeneron shall be permitted to disclose in its
filings with the Securities and Exchange Commission (“SEC”) those terms of this
Agreement which it reasonably determines are required to be disclosed by law
and file a redacted version this Agreement with the SEC as an exhibit to such a
filing. Merck shall have an opportunity to review and comment on such redacted
version of this Agreement before it is filed with the SEC.

4.     PAYMENTS; ROYALTIES AND REPORTS

4.1 Consideration for License

     In consideration for the licenses granted in Section 2.1, upon the terms
contained herein, Regeneron shall pay Merck the following compensation:

	 	(a)	 	Within five business days of the Effective Date,
Regeneron shall issue to Merck or its designee one hundred nine
thousand four hundred fifty (109,450) authorized shares (the
“Shares”) of Regeneron Common Stock, par value $0.001 per share
(the “Common Stock”). The number of Shares determined by
dividing one million five hundred thousand (1,500,000.00) by the
Market Price of each Share of Common Stock on August 18, 2003,
with the number of shares being rounded up the nearest whole
number.
	 
	 	(b)	 	No later than ten business days after the Effective
Date, Regeneron will deliver a certificate or certificates for
the Shares issued to Merck (or its designee) pursuant to Section
4.1(a) of this Agreement. The Shares shall be registered in the
name of Merck (or its designee).
	 
	 	(c)	 	[***********] upon approval from the relevant
regulatory authority to market and sell a Product in the United
States, France, Germany, Italy, Spain, or the United Kingdom
(whichever approval is the first to occur). Regeneron shall
promptly notify Merck of such approval, and deliver payment
within thirty (30) days of such approval. This payment will be
made only once, upon the first such approval, regardless of the
number of times such regulatory approval is achieved.

5

 

4.2 Shares

     The certificate representing the Shares shall bear a legend substantially
in the following form:

	 	 	THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SHARES UNDER SUCH ACT OR AN
OPINION OF COUNSEL (WHICH COUNSEL SHALL BE REASONABLY SATISFACTORY TO THE
COMPANY) THAT SUCH REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT
TO RULE 144 OF SUCH ACT.

     In the event that the aggregate Market Price of the Shares on the Sales
Date is less than one million five hundred thousand dollars ($1,500,000.00),
and Regeneron did not previously exercise the Regeneron Buy Back Right, Merck
shall notify Regeneron of the amount of such shortfall and within thirty (30)
days of receipt of such notice, Regeneron shall make a cash payment to Merck
(or its designee) for the difference between: (x) the aggregate Market Price of
the Shares on the Sales Date; and (y) one million five hundred thousand dollars
($1,500,000.00). Merck and its Affiliates shall not be permitted to engage in
any short sale or other hedging transaction (or similar purchase of derivative
securities with respect to the Common Stock) without Regeneron’s prior consent,
and any gain on such hedging transactions shall reduce the “shortfall” payment
referred to above.

     In the event that the aggregate Market Price of the Shares on the Sales
Date is greater than one million six hundred and fifty thousand dollars
($1,650,000.00) and Regeneron did not previously exercise the Regeneron Buy
Back Right, within thirty (30) days of the Sales Date Merck shall, at its
option and in its sole discretion, either: (a) make a cash payment to Regeneron
in an amount equal to the difference between (x) one million six hundred and
fifty thousand dollars ($1,650,000.00) and (y) the aggregate Market Price of
the Shares on the Sales Date (such amount the “Excess Amount”); or (b) return
to Regeneron a number of Shares equal to the Excess Amount divided by the
Market Price of one share of Common Stock on the Sales Date; provided, that if
this formula results in a fractional amount of shares, Merck shall round up to
the nearest whole number of shares.

     Regeneron represents and warrants that the Shares issued to Merck shall be
validly issued and fully paid and non-assessable, issued in compliance with all
applicable federal and state securities laws and free from all liens. At
Merck’s request, on or after the Sales Date, Regeneron will use all reasonable
efforts to cause its transfer agent to comply with Merck’s(or its designee’s)
request to transfer the Shares in accordance with Rule 144. Regeneron shall
have the right at any time prior to the Sales Date to provide notice to Merck
requiring Merck to sell the Shares to Regeneron for a purchase price equal to
the greater of (a) one million five hundred thousand dollars ($1,500,000.00)
and (b) the lesser of (x) the Market Price of the Shares on the date of such
notice and (y) one million six hundred fifty thousand dollars ($1,650,000.00)
(the “Regeneron Buy Back Right”). The settlement of the Share repurchase
shall occur not later than ten (10) business days after the delivery of the
Regeneron Buy Back Right notice to Merck.

6

 

4.3 Royalties

     Regeneron shall pay Merck royalties for the sale of Product whose
production, use, sale, offer to sell, or import, would, but for the license
granted in Section 2.1, infringe (either by direct, contributory, or
inducement) a Valid Patent Claim. Solely for the purposes of this Agreement,
there is a rebuttable presumption that the sale of a Product in the Territory
is for the treatment of obesity. Without limitation, Regeneron shall be able
to rely on a nationally recognized pharmaceutical sales data service, such as
IMS Health, to rebut this presumption. Royalties shall be in an amount equal
to:

	 	(a)	 	[**********] of that portion of total annual Net Sales of
Products by Regeneron or its Sublicensees that is less than or equal
to [**********];
	 
	 	(b)	 	[**********] of that portion of total annual Net Sales of
Products by Regeneron or its Sublicensees that is greater than
[**********];
	 
	 	(c)	 	[**********] of that portion of total annual Net Sales of
Products by Regeneron or its Sublicensees that is greater than
[**********]; and
	 
	 	(d)	 	[**********] of that portion of total annual Net Sales of
Products by Regeneron or its Sublicensees that is greater than
[**********].

	 	 	Annual Net Sales shall be determined on a calendar year basis (i.e.,
January 1 through December 31). By way of example, [****************.]
	 
	 	 	Royalties on each Product at the rate set forth above shall be effective
as of the date of first commercial sale of Product and shall continue on
a country-by-country basis until the expiration of the last Valid Patent
Claim.

4.4 Payment Exchange Rate

     All payments to be made by Regeneron to Merck under this Agreement shall
be made in United States dollars by bank wire transfer in immediately available
funds to such bank account in the United States designated in writing by Merck
from time to time. In the case of sales outside the United States, the rate of
exchange to be used in computing the quarterly amount of currency equivalent in
United States dollars due Merck shall be made at the rate of exchange published
in The Wall Street Journal (National Edition) on the last business day of the
calendar quarter in which Net Sales are calculated.

4.5 Reports, Payment of Royalty

     During the term of the Agreement following the first commercial sale of
Product, Regeneron shall furnish to Merck a quarterly written report for each
calendar quarter showing all Product Net Sales in the Territory for which a
royalty is payable under Section 4.3 during the reporting period and the
royalties payable under this Agreement. Reports shall be due on the sixtieth
(60) day following the close of each calendar quarter following the first
commercial sale

7

 

of Product. Royalties shown to have accrued by each royalty report shall
be due and payable on the date such royalty report is due. Regeneron shall keep
complete and accurate records in sufficient detail to enable the royalties
payable hereunder to be determined. Merck and its agents shall treat all
information provided to it under this Article IV as Regeneron’s Information.

Any income or other tax that Regeneron or its Sublicensees is required to
withhold and pay with respect to royalties or other amounts payable under this
Agreement shall be deducted from and offset against said payments prior to
remittance to Merck; provided, however, that in regard to any tax so deducted,
Regeneron or its Sublicensee shall give or cause to be given to Merck such
assistance as may reasonably be necessary to enable Merck to claim exemption
therefrom or credit therefore, and in each case shall furnish Merck proper
evidence of the taxes paid on its behalf.

4.6 Audits

	 	a)	 	Upon the written request of Merck, Regeneron shall permit an
independent certified public accounting firm of nationally recognized
standing selected by Merck and reasonably acceptable to Regeneron, at
Merck’s expense, to have access (upon at least thirty (30) days prior
written notice) during normal business hours to such of the records of
Regeneron as may be reasonably necessary to verify the accuracy of the
royalty reports for any year ending not more than thirty-six (36)
months prior to the date of such request. No more than one such audit
may occur during any twelve (12) month period. The accounting firm
shall enter into a separate confidentiality agreement with Regeneron
and shall disclose to Merck only whether the royalty reports are
correct or incorrect and the specific details concerning any
discrepancies.
	 
	 	b)	 	If such accounting firm correctly 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 Merck
delivers to Regeneron such accounting firm’s written report. The fees
charged by such accounting firm shall be paid by Merck, provided,
however, that if audit uncovers an underpayment of royalties by
Regeneron that exceeds the greater of [***********].
	 
	 	c)	 	Regeneron shall include in each sublicense granted by it pursuant
to this Agreement a provision requiring the Sublicensee to make reports
to Regeneron, to keep and maintain records of sales made pursuant to
such sublicense and to grant access to such records by Merck’s
independent accountant under the same conditions and to the same extent
required of Regeneron under this Agreement.

5.     REPRESENTATIONS AND WARRANTIES; DISCLAIMER OF WARRANTIES

	 	a)	 	Regeneron represents that it has the requisite corporate power and
authority to execute and deliver this Agreement, and issue the Shares,
and perform the transactions contemplated by this Agreement. The
execution, delivery and performance by Regeneron of this Agreement and
the issuance by Regeneron of the Shares each have been duly authorized
by all necessary corporate, stockholder and other required action, as

8

 

	 	 	 	the case may be.
	 
	 	b)	 	Regeneron warrants that neither the execution, delivery or
performance by Regeneron of this Agreement nor the consummation of the
transactions contemplated hereby (A) will result in any breach of any
provision of the charter or by-laws of the Regeneron; or (B) will
result in any violation or breach of any law, regulation, order,
judgment, writ, injunction, license, permit, agreement or instrument to
which Regeneron (or any of its Affiliates) is subject.
	 
	 	c)	 	Merck represents that it has the requisite corporate power and
authority to execute and deliver this Agreement, and grant the license
described in Section 2.1. The execution, delivery and performance by
Merck of this Agreement have been duly authorized by all necessary
corporate action.
	 
	 	d)	 	Merck warrants that neither the execution, delivery or performance
by Merck of this Agreement nor the consummation of the transactions
contemplated hereby (A) will result in any breach of any provision of
the charter or by-laws of Merck; or (B) will result in any violation or
breach of any law, regulation, order, judgment, writ, injunction,
license, permit, agreement or instrument to which Merck (or any of its
Affiliates) is subject.
	 
	 	e)	 	Merck warrants to the best of its knowledge it is the owner of the
Patent Rights licensed in this Agreement and that it has the authority
to grant such license.
	 
	 	f)	 	DISCLAIMER: THE PATENTS RIGHTS ARE PROVIDED “AS IS” AND NEITHER
PARTY NOR ITS AFFILIATES MAKE ANY WARRANTIES, EXPRESS OR IMPLIED, AS TO
ANY MATTER WHATSOEVERY OTHER THAN THOSE EXPRESSLY SET OUT IN THIS
AGREEMENT. NOTHING IN THIS AGREEMENT SHALL BE CONSTRUCTED AS A
WARRANTY OR REPRESENTATION CONCERNING THE MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE OF ANY PRODUCT DEVELOPED BY REGENERON AS A
RESULT OF REGENERON’S USE OF THE PATENT RIGHTS, OR THE COMMERCIAL VALUE
OR VALIDITY OF THE PATENT RIGHTS. EXCEPT ARISING FROM A BREACH OF ITS
REPRESENTATIONS OR WARRANTIES CONTAINED HEREIN, MERCK AND ITS
AFFILIATES WILL NOT BE LIABLE TO REGNERON FOR ANY DIRECT, CONSEQUENTIAL
OR OTHER DAMAGES OR LOST PROFITS OR LOST BUSINESS OPPORTUNITY ALLEGEDLY
SUFFERED BY REGENERON OR ANY OTHER RESULTING FROM ANY PRODUCT DEVELOPED
BY REGENERON. MERCK EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY
THAT THE ACTIVITIES OF REGENERON PURSUANT TO THE LICENSE GRANTED HEREIN
WILL NOT INFRINGE ANY PATENT OWNED BY A THIRD PARTY. THIS AGREEMENT
SHALL NOT BE CONSTRUED AS AN ADMISSION OF ANY PARTY THAT ANY PATENT
RIGHT IS OR IS NOT VALID, INFRINGED, OR ENFORCEABLE.

9

 

6.     TERM AND TERMINATION

6.1 Term and Expiration

     This Agreement shall be effective as of the Effective Date and unless
terminated earlier pursuant to Sections 6.2, 6.3 or 6.4, this Agreement shall
continue in effect until expiration of the last Valid Patent Claims.

6.2 Termination by Regeneron

     Notwithstanding anything contained herein to the contrary, Regeneron shall
have the right to terminate this Agreement at any time in its sole discretion
by giving ninety (90) days’ advance written notice to Merck. In the event of
termination under this Section 6.2: (i) Regeneron shall pay all amounts then
due and owing as of the termination date; and (ii) except for the surviving
provisions set forth in Section 6.5, the rights and obligations of the Parties
shall terminate as of the date of such termination.

6.3 Termination by Merck

     Notwithstanding anything contained herein to the contrary, if Regeneron or
its Affiliates directly or indirectly challenges or assist any third party to
challenge the validity of the Patent Rights, Merck is entitled to immediately
terminate this Agreement under this Section 6.3; and (i) Regeneron shall pay
all amounts then due and owing as of the termination date; and (ii) except for
the surviving provisions set forth in Section 6.5, the rights and obligations
of the Parties shall terminate as of the date of such termination. Regeneron
shall include substantially similar restrictions in its sublicense agreements
with Sublicensees. Notwithstanding the foregoing, nothing herein shall
prohibit Regeneron or any of its Sublicensees from either (i) asserting any and
all defenses available to it, including without limitation, assertions relating
to the validity or enforceability of any Patent Right, in any suit or
proceeding brought against it or its suppliers, distributors, Sublicensees,
vendors or customers alleging the infringement of any Patent Right, or (ii)
asserting any and all defenses, evidence and arguments, including without
limitation, lack of patent ability of the subject matter of a count or claim
and lack of support for a count or claim in an interference involving a Patent
Right where the U.S. Patent Office on its own suggested a claim for the
purposes of provoking an interference, and the actions described in this
sentence shall not give Merck the right to terminate this Agreement.

6.4 Termination for Cause

	 	 	 	This Agreement may be terminated at any time during the term of this
Agreement:

	 	a)	 	upon written notice by either Party if the other Party is in breach
of its material obligations hereunder by causes and reasons within its
control and has not cured such breach within ninety (90) days after
notice requesting cure of the breach; provided, however, in the event
of a good faith dispute with respect to the existence of a material

10

 

	 	 	 	breach, the ninety (90) day cure period shall be tolled until such time
as the dispute is resolved pursuant to Section 7.10;
	 
	 	b)	 	by Merck upon the filing or institution of bankruptcy,
reorganization, liquidation or receivership proceedings, or upon an
assignment of a substantial portion of the assets for the benefit of
creditors by Regeneron; provided, however, in the case of any
involuntary bankruptcy proceeding such right to terminate shall only
become effective if Regeneron consents to the involuntary bankruptcy or
such proceeding is not dismissed within ninety (90) days after the
filing thereof.

	 	 	All rights and licenses granted under or pursuant to this Agreement to
Regeneron are, and shall otherwise be deemed to be, for purposes of Section
365(n) of the United States Bankruptcy Code (or any similar foreign
legislation), licenses to “intellectual property” as defined under Section
101 of the United States Bankruptcy Code (or any similar foreign
legislation). The Parties agree that, to the extent permitted by law,
Regeneron shall retain all licenses granted to it hereunder and may fully
exercise all of its rights and elections under the applicable bankruptcy
code, subject to the terms of this Agreement.

6.5 Effect of Expiration or Termination; Survival

     Upon termination of this Agreement under Section 6.2, 6.3 or 6.4,
Regeneron’s license pursuant to Section 2.1 shall terminate. Expiration or
termination of the Agreement shall not relieve the Parties of any obligation
accruing prior to such expiration or termination. No termination of this
Agreement shall relieve Regeneron of liability for any payment (including
royalties for Products) accruing prior to the effective date of such
termination. Any expiration or termination of this Agreement shall be without
prejudice to the rights of either Party against the other accrued or accruing
under this Agreement prior to expiration or termination. The provisions of
Article 3 shall survive the expiration or termination of the Agreement and
shall continue in effect for ten (10) years. In addition, the provisions of
Articles 1, 4 (including, for the avoidance of doubt, the obligations of the
Parties under Section 4.2) 5, 6, and 7 shall survive any expiration or
termination of this Agreement.

7.     MISCELLANEOUS

7.1 Force Majeure

     Neither Party shall be held liable to the other Party nor be deemed to
have defaulted under or breached the Agreement for failure or delay in
performing any obligation under the Agreement when such failure or delay is
caused by or results from causes beyond the reasonable control of the affected
Party including, but not limited to, 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 or the other Party.
The affected Party shall notify the other Party of such force majeure
circumstances as soon as reasonably practical, and shall promptly undertake all
reasonable efforts necessary to cure such force majeure circumstances.

11

 

7.2 Assignment/ Change of Control

     Merck is entitled to assign this Agreement, and shall provide Regeneron
with written notice of any such assignment.. Regeneron is not entitled to
assign or otherwise transfer this Agreement, or assign or transfer any right or
obligation hereunder without the consent of Merck; provided, however, that
Regeneron may, without such consent, assign the Agreement and its rights and
obligations hereunder (i) to any Affiliate (provided that Regeneron shall
remain responsible for the performance of such Affiliate), (ii) in connection
with the transfer or sale of all or substantially all of its assets covered by
or related to the license granted hereunder (which, as of the Effective Date,
shall be deemed to include all of Regeneron’s intellectual property related to
AXOKINE), or (iii) in the event of a “Change of Control”. Any attempted
assignment not in accordance with this Section shall be void. Any permitted
assignee shall assume all assigned obligations of its assignor under the
Agreement. For purposes of this Section, a “Change of Control” shall be deemed
to occur if Regeneron is involved in a merger, reorganization or consolidation,
or if there is a sale of all or substantially all of Regeneron assets or
business relating to this Agreement or if a person or group other than the
current controlling person or group shall effectively acquire control of the
management and policies of such Party. This Agreement shall be binding upon
the successors and permitted assigns of a Party.

7.3 Indemnification

     Regeneron shall indemnify Merck and its Affiliates, and its and their
employees, officers and directors (“Merck Indemnitees”) against, and hold Merck
and such Merck Indemnitees harmless from, any and all losses from third party
claims to the extent arising from:

	 	(a)	 	a breach by Regeneron of any of its warranties or
obligations under this Agreement;
	 
	 	(b)	 	the testing, development, commercialization and
manufacture of Products by Regeneron or its agents,
collaborators or Sublicensees;
	 
	 	(c)	 	the storage, use, sale, shipping and marketing of
Products by Regeneron and its agents and collaborators; and
	 
	 	(d)	 	any representations, express, implied or
statutory made by Regeneron or its agents as to the efficacy
or safety of Products, or use to be made by any purchaser or
consumer of Products including, without limitation,
representations made by reference to the labeling or packaging
of the Product.

Notwithstanding the foregoing, no Merck Indemnitee shall be entitled to
indemnification under this Section 7.3 against any losses arising out of (i) a
Merck Indemnitee’s negligence or willful misconduct, or (ii) a breach by Merck
of any of its representations, warranties or obligations under this Agreement.

An Merck Indemnitee shall give prompt notice to Regeneron of any claim for
which it may seek indemnification under this Section 7.3 and, provided that
Regeneron is not contesting the

12

 

indemnity obligation, shall permit Regeneron to control any litigation relating
to such claim and disposition of any claim; provided, however, that Regeneron
shall not settle or otherwise resolve any claim that would materially adversely
affect the Merck Indemnitee, without prior approval of the Merck Indemnitee.
The Merck Indemnitees shall cooperate with Regeneron in defense of any claim
for which indemnification is sought under this Agreement and shall not settle
or offer to settle any such claim without Regeneron’s prior written consent.
If Regeneron elects to defend the claim, it shall not be responsible for
attorneys’ fees incurred by the Merck Indemnitees, provided that the Merck
Indemnitees shall have the right to retain their own counsel, at their own
expense. The failure by the Merck Indemnitee to deliver notice to Regeneron
within a reasonable time after it becomes aware of any claim for which it seeks
indemnification, if prejudicial to the ability to defend such claim, shall
relieve Regeneron of any liability to the Merck Indemnitees under this Section
7.3.

7.4 Liability

Merck Not Liable. Merck and its Affiliates are not liable (in contract or tort
or otherwise) to compensate Regeneron for any loss howsoever suffered by
Regeneron arising directly or indirectly from the use of the Patent Rights,
except for losses arising from (i) any breach of this Agreement by Merck
(including a breach of any Merck representation or warranty), or (ii) Merck’s
(or its Affiliate’s) negligence or willful misconduct.

7.5 [*********]

7.6 Miscellaneous

Nothing in this Agreement shall be construed as: (a) an obligation to bring or
prosecute actions or suits against third parties infringement; of (b)
conferring by implications, estoppel or otherwise, any license or rights under
any patents or intellectual property of Merck or its Affiliates other than the
Patent Rights. Merck shall have the exclusive right to take action against any
infringement of any of the Patent Rights, in its sole discretion. Regeneron
shall cooperate reasonably in any action Merck (or its Affiliates) take against
any infringement by a third party upon Merck’s request and at Merck’s expense;
provided that nothing shall require Regeneron to authorize the disclosure of
Information if it reasonably determines that such disclosure will harm its
business.

7.7 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.

13

 

7.8 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 Regeneron, to:	 	
Regeneron Pharmaceuticals, Inc.
	 	 	
777 Old Saw Mill River Road
	 	 	
Tarrytown, NY 10591-6707
	 	 	
Attention: President
	 	 	
Facsimile No.: [**********]
	 	 	 
	and:	 	
Attention: Vice President and General Counsel
	 	 	
Facsimile No.: [**********]
	 	 	 
	if to Merck, to:	 	
Merck & Co., Inc.
	 	 	
One Merck Drive
	 	 	
P.O. Box 100, WS3A-65
	 	 	
Whitehouse Station, NJ 08889-0100
	 	 	
Attention: Office of Secretary
	 	 	
Facsimile No.: [***********]
	 	 	 
	And	 	
Merck & Co., Inc.
	 	 	
One Merck Drive
	 	 	
Attention: Vice President and Chief Licensing Officer
	 	 	
P.O. Box 100, WS2A-30
	 	 	
Whitehouse Station, NJ 08889-0100
	 	 	
Facsimile: [***********]

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; and/or (c) on the
fifth business day following the date of mailing if sent by mail.

7.9 Applicable Law

     The Agreement shall be governed by and construed in accordance with the
laws of the State of New Jersey and the patent laws of the United States
without reference to any rules of conflict of laws or renvoi. The United
Nations Convention on the Sale of Goods shall not apply.

7.10 Dispute Resolution

	 	 	 
	7.10.1	 	
The Parties shall negotiate in good faith and use reasonable efforts to
settle any dispute, controversy or claim arising from or related to this
Agreement or the breach thereof. If

14

 

	 	 	 
	 	 	
the Parties do not fully settle, and a Party wishes to pursue the matter,
each such dispute, controversy or claim that is not an “Excluded Claim”
shall be finally resolved by binding arbitration in accordance with the
Commercial Arbitration Rules and Supplementary Procedures for Large
Complex Disputes of the American Arbitration Association (“AAA”), and
judgment on the arbitration award may be entered in any court having
jurisdiction thereof.
	 	 	 
	7.10.2	 	
The arbitration shall be conducted by a panel of three persons
experienced in the pharmaceutical business: within 30 days after
initiation of arbitration, each Party shall select one person to act as
arbitrator and the two Party-selected arbitrators shall select a third
arbitrator within 30 days of their appointment. If the arbitrators
selected by the Parties are unable or fail to agree upon the third
arbitrator, the third arbitrator shall be appointed by the AAA. The place
of arbitration shall be New York, New York, and all proceedings and
communications shall be in English.
	 	 	 
	7.10.3	 	
Either Party may apply to the arbitrators for interim injunctive relief
until the arbitration award is rendered or the controversy is otherwise
resolved. Either Party also may, without waiving any remedy under this
Agreement, seek from any court having jurisdiction any injunctive or
provisional relief necessary to protect the rights or property of that
Party pending the arbitration award. The arbitrators shall have no
authority to award punitive or any other type of damages not measured by a
Party’s compensatory damages. Each Party shall bear its own costs and
expenses and attorneys’ fees and an equal share of the arbitrators’ and
any administrative fees of arbitration.
	 	 	 
	7.10.4	 	
Except to the extent necessary to confirm an award or as may be required
by law, neither a Party nor an arbitrator may disclose the existence,
content, or results of an arbitration without the prior written consent of
both Parties. In no event shall an arbitration be initiated after the
date when commencement of a legal or equitable proceeding based on the
dispute, controversy or claim would be barred by the applicable New York
statute of limitations.
	 	 	 
	7.10.5	 	
The parties agree that, in the event of a dispute over the nature or
quality of performance under this Agreement, neither party may terminate
the Agreement until final resolution of the dispute through arbitration or
other judicial determination. The parties further agree that any payments
made pursuant to this Agreement pending resolution of the dispute shall be
refunded if an arbitrator or court determines that such payments are not
due.
	 	 	 
	7.10.6	 	
As used in this Section, the term “Excluded Claim” shall mean a dispute,
controversy or claim that concerns (a) the validity or infringement of a
patent; or (b) any antitrust, anti-monopoly or competition law or
regulation, whether or not statutory.

7.11 Entire Agreement; Amendments

     The Agreement contains the entire understanding of the Parties with
respect to the licenses granted hereunder. All express or implied agreements
and understandings, either oral or written, with regard to the Patent Rights
and 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

 

7.12 Headings

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

7.13 Independent Contractors

     It is expressly agreed that Regeneron and Merck shall be independent
contractors and that the relationship between the two Parties shall not
constitute a partnership, joint venture or agency. Neither Regeneron nor Merck
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.

7.14 Waiver

     The waiver by either Party hereto 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.

7.15 Cumulative Remedies

     No remedy referred to in this Agreement is intended to be exclusive, but
each shall be cumulative and in addition to any other remedy referred to in
this Agreement or otherwise available under law.

7.16 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.

7.17 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.

16

 

     IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
Effective Date.

	 	 	 	 	 	 	 
	 	 	
MERCK & CO., INC.
	 	 	 	REGENERON
	 	 	 	 	 	 	PHARMACEUTICALS,
INC.
	 	 	 	 	 	 	 
	By:	 	
/s/ Richard N. Kender
	 	By:
	 	/s/ Murray A. Goldberg
	 	 	

	 	 	 	

	 	 	
Richard N. Kender
	 	 	 	Name:   Murray A. Goldberg
	 	 	
Vice President Business Development
	 	 	 	Title:   Senior Vice President,
	 	 	
& Corporate Licensing
	 	 	 	            Finance & Administration
	 	 	 	 	 	 	 
	 	 	
August 18, 2003
	 	 	 	August 18, 2003
	 	 	

	 	 	 	

	 	 	
Date
	 	 	 	Date

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SCHEDULES

SCHEDULE 1.8 PATENT RIGHTS

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

18

 

SCHEDULE 2.1

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