Exclusive License Agreements (Schering-plough)

EXCLUSIVE LICENSE AGREEMENT





BY AND BETWEEN





ATHEROGENICS, INC.





SCHERING-PLOUGH LTD.















[*] Certain confidential information contained in this document, marked by an

asterisk within brackets, has been omitted and filed separately with the

Securities and Exchange Commission pursuant to a request for confidential

treatment under Rule 406 of the Securities Act of 1933, as amended.











TABLE OF CONTENTS

EXCLUSIVE LICENSE AGREEMENT



PAGE

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ARTICLE I - DEFINITIONS..................................................................................1



1.1 AFFILIATE.....................................................................................1

1.2 CALENDAR QUARTER..............................................................................1

1.3 CALENDAR YEAR.................................................................................2

1.4 COMBINATION PRODUCT...........................................................................2

1.5 COMPOUND LIBRARY..............................................................................2

1.6 COST OF GOODS.................................................................................2

1.7 EFFECTIVE DATE................................................................................2

1.9 FIRST COMMERCIAL SALE.........................................................................2

1.9 HRD...........................................................................................2

1.10 HSR ACT.......................................................................................2

1.11 "IMPROVEMENT".................................................................................2

1.13 LICENSED COMPOUND.............................................................................3

1.14 LICENSED PRODUCT(S)...........................................................................3

1.15 LICENSOR KNOW-HOW.............................................................................3

1.16 NDA...........................................................................................4

1.17 NET SALES.....................................................................................4

1.18 PATENT RIGHTS.................................................................................5

1.19 PRIMARY INDICATION............................................................................5

1.20 PROPRIETARY INFORMATION.......................................................................5

1.21 REGULATORY APPROVAL...........................................................................5

1.22 "SECONDARY INDICATION"........................................................................5

1.23 "SUBLICENSEE".................................................................................5

1.24 "TERRITORY"...................................................................................6

1.25 "TERM"........................................................................................6

1.26 US AGREEMENT..................................................................................6

1.27 VALID CLAIM...................................................................................6



ARTICLE II - LICENSE; DISCLOSURE OF INFORMATION; DEVELOPMENT AND COMMERCIALIZATION.......................6



2.1 EXCLUSIVE LICENSE GRANT.......................................................................6

(a) License.......................................................................................6

(a) Co-Exclusive License to Other Indications.....................................................6

(c) Right to Sublicense...........................................................................7

(d) Retained Rights...............................................................................7

(e) Third Party Agreements........................................................................7

2.2 NON-EXCLUSIVE LICENSE GRANT...................................................................7

2.3 DISCLOSURE OF INFORMATION.....................................................................8







2.4 HSR FILING AND APPROVALS......................................................................8

(a) HSR Filing....................................................................................8

(b) Licensor's Obligations........................................................................8

(c) Additional Approvals..........................................................................9

2.5 JOINT MANAGEMENT COMMITTEE....................................................................9

(a) Composition of the JMC........................................................................9

(b) JMC Meetings..................................................................................9

(c) JMC Responsibilities.........................................................................10

(d) Deadlock.....................................................................................10

2.6 SPL'S DEVELOPMENT OBLIGATIONS................................................................10

(a) SPL Diligence................................................................................10

(b) Opportunity to Cure..........................................................................10

(c) Research and Development Activities..........................................................11

(d) Licensed Product Registrations; Pricing Reimbursement Approvals..............................11

(e) Data.........................................................................................11

(f) Assistance by Licensor.......................................................................11

(g) Reimbursement of Costs by SPL................................................................12

(h) Licensor's Additional Development Obligations................................................12

(i) Adverse Event Reporting......................................................................13

2.7 INDEPENDENT DISCOVERIES BY SPL...............................................................13

2.8 EXCUSED PERFORMANCE..........................................................................13

2.9 SUPPLY OF LICENSED COMPOUND/LICENSED PRODUCT.................................................14

2.10 REPORTS......................................................................................14

2.11 NON-COMPETE PROVISION........................................................................14



ARTICLE III - PAYMENTS; ROYALTIES AND REPORTS...........................................................15



3.0 COORDINATION OF PAYMENTS UNDER THE US AGREEMENT..............................................15

3.1 LICENSE FEE..................................................................................15

(a) Development Milestones.......................................................................15

(b) Sales Milestones.............................................................................16

(c) Limitations..................................................................................16

3.3 ROYALTIES....................................................................................17

(a) Cap on Royalties Plus Cost of Goods..........................................................17

(b) Licensor's Option to Manufacture.............................................................18

(c) Royalty Reduction............................................................................18

3.4 THIRD PARTY LICENSES.........................................................................18

3.5 COMPULSORY LICENSES..........................................................................19

3.6 REPORTS AND PAYMENT OF ROYALTY; PAYMENT

EXCHANGE RATE AND CURRENCY CONVERSIONS.......................................................19

(a) Royalties Paid Quarterly.....................................................................19

(b) Method of Payment............................................................................19

3.7 MAINTENANCE OF RECORDS; AUDITS...............................................................20

(a) Record Keeping by SPL........................................................................20







(b) Underpayments/Overpayments...................................................................20

(c) Record Keeping by Sublicensee................................................................20

(d) Confidentiality..............................................................................20

(e) Binding Records..............................................................................21

3.8 INCOME TAX WITHHOLDING.......................................................................21

3.9 DIRECT AFFILIATE LICENSES....................................................................21



ARTICLE IV - PATENTS....................................................................................21



4.1 FILING, PROSECUTION AND MAINTENANCE OF PATENTS...............................................21

4.2 OPTION OF SPL TO PROSECUTE AND MAINTAIN PATENTS..............................................22

4.3 ENFORCEMENT..................................................................................22

(a) Notice and Discontinuance of Infringement....................................................22

(b) Continuance of Infringement..................................................................23

4.4 THIRD PARTY INFRINGEMENT SUIT................................................................23

(a) Defense......................................................................................23

(b) Licensing....................................................................................23

4.5 CERTIFICATION UNDER DRUG PRICE COMPETITION

AND PATENT RESTORATION ACT...................................................................24

4.6 ABANDONMENT..................................................................................24

4.7 PATENT TERM RESTORATION......................................................................24

4.8 NOTICES REGARDING PATENTS....................................................................24



ARTICLE V - CONFIDENTIALITY AND PUBLICATION.............................................................25



5.1 CONFIDENTIALITY..............................................................................25

(a) Nondisclosure Obligation.....................................................................25

(b) Disclosure to Agents.........................................................................26

(c) Disclosure to a Third Party..................................................................26

5.2 PUBLICITY....................................................................................26

5.3 PUBLICATION..................................................................................27



ARTICLE VI - REPRESENTATIONS AND WARRANTIES.............................................................27



6.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY.................................................27

6.2 LICENSOR'S REPRESENTATIONS...................................................................28

6.3 CONTINUING REPRESENTATIONS...................................................................30

6.4 NO INCONSISTENT AGREEMENTS...................................................................30

6.5 REPRESENTATION BY LEGAL COUNSEL..............................................................30

6.6 ADDITIONAL OBLIGATIONS OF LICENSOR...........................................................30





ARTICLE VII - INDEMNIFICATION AND LIMITATION ON LIABILITY...............................................31



7.1 INDEMNIFICATION BY SPL.......................................................................32

7.2 INDEMNIFICATION BY LICENSOR..................................................................32

7.3 CONDITIONS TO INDEMNIFICATION................................................................32

7.4 SETTLEMENTS..................................................................................33

7.5 LIMITATION OF LIABILITY......................................................................33







7.6 INSURANCE....................................................................................33



ARTICLE VIII - TERM AND TERMINATION.....................................................................33



8.1 TERM AND EXPIRATION..........................................................................33

8.2 TERMINATION BY SPL WITHOUT CAUSE.............................................................33

8.3 TERMINATION UPON CESSATION OF DEVELOPMENT....................................................33

(a) Termination by Either Party..................................................................34

(b) Termination by Licensor......................................................................34

8.4 TERMINATION..................................................................................34

(a) Termination for Cause........................................................................34

(b) Effect of Termination for Cause on License...................................................35

(i) Termination by SPL.......................................................................35

(ii)Termination by Licensor..................................................................35

(iii)Effect of Bankruptcy....................................................................35

8.5 EFFECT OF TERMINATION........................................................................35

8.6 REMEDIES FOR BREACH..........................................................................36

8.7 LICENSOR'S RIGHTS ON TERMINATION.............................................................36

8.8 CONCURRENT TERMINATION WITH THE US AGREEMENT.................................................37



ARTICLE IX - MISCELLANEOUS..............................................................................37



9.1 ASSIGNMENT/CHANGE OF CONTROL.................................................................37

(a) Assignment...................................................................................37

(a) Change of Control............................................................................37

9.2 GOVERNING LAW................................................................................38

9.3 WAIVER.......................................................................................38

9.4 INDEPENDENT RELATIONSHIP.....................................................................38

9.5 EXPORT CONTROL...............................................................................38

9.6 COMPLETE AGREEMENT...........................................................................38

(a) Entire Agreement; Amendment..................................................................39

(b) Relationship to US Agreement; Controlling Provisions.........................................39

9.7 NOTICES......................................................................................39

9.8 PROVISIONS FOR INSOLVENCY....................................................................40

(a) Effect on Licenses...........................................................................40

(b) Rights to Intellectual Property..............................................................41

(c) SPL's Rights.................................................................................41

(d) Deemed Grant of Rights.......................................................................41

(e) Security Interests...........................................................................42

9.9 FORCE MAJEURE................................................................................42

9.10 SEVERABILITY.................................................................................42

9.11 COUNTERPARTS.................................................................................42

9.12 CAPTIONS.....................................................................................43

9.13 RECORDING....................................................................................43

9.14 FURTHER ACTIONS..............................................................................43







SCHEDULES



SCHEDULE 1.6 COST OF GOODS SCHEDULE 1.18 PATENT RIGHTS SCHEDULE 2.1(E) THIRD PARTY AGREEMENTS SCHEDULE 2.6(H) DEVELOPMENT WORK TO BE PERFORMED BY LICENSOR SCHEDULE 2.6(I) ADVERSE EVENT REPORTING PROCEDURES SCHEDULE 3.2 DEFINITION OF SUCCESSFUL COMPLETION SCHEDULE 6.2(D) GOVERNMENT RIGHTS SCHEDULE 6.2(K) OTHER VCAM-1 INHIBITORS SCHEDULE 9.2 ARBITRATION PROVISIONS

















EXCLUSIVE LICENSE AGREEMENT



THIS EXCLUSIVE LICENSE AGREEMENT (the "Agreement") is made as of October 22, 1999 by and between ATHEROGENICS, INC., a Georgia corporation having its principal place of business at 8995 Westside Parkway, Alpharetta, Georgia 30004 (hereinafter referred to as "Licensor") and SCHERING-PLOUGH LTD., a corporation organized and existing under the laws of Switzerland and having its principal place of business at Toepferstrasse 5, CH 6004 Lucerne Switzerland (hereinafter referred to as "SPL"). Licensor and SPL are sometimes referred to herein individually as a Party and collectively as the Parties. References to "SPL" and "Licensor" shall include their respective Affiliates (as hereinafter defined).



WHEREAS, Licensor has developed certain Licensor Know-How and has rights to Patent Rights relating to soluble analogs of probucol, including without limitation the Licensed Compound (each as hereinafter defined); and



WHEREAS, SPL, together with its Affiliates (as hereinafter defined) possesses extensive capabilities in the development and commercialization of pharmaceutical products on a worldwide basis; and



WHEREAS, SPL desires to obtain and Licensor is willing to grant to SPL, an exclusive license under the Patent Rights and to use the Licensor Know-How, upon the terms and conditions set forth herein.



NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants herein contained, SPL and Licensor hereby agree as follows:



ARTICLE I



As used in this Agreement, the following initially capitalized terms, whether used in the singular or plural, shall have the respective meanings set forth below:



1.1 "Affiliate" shall mean any individual or entity directly or indirectly controlling, controlled by or under common control with, a Party to this Agreement. For purposes of this Agreement, the direct or indirect ownership of [*] or more of the outstanding voting securities of an entity, or the right to receive [*] or more of the profits or earnings of an entity shall be deemed to constitute control. Such other relationship as in fact results in actual control over the management, business and affairs of an entity shall also be deemed to constitute control.



1.2 "Calendar Quarter" shall mean the respective periods of three (3) consecutive calendar months ending on March 31, June 30, September 30 or December 31, for so long as this Agreement is in effect.











1.3 "Calendar Year" shall mean each successive period of twelve (12) months commencing on January 1 and ending on December 31, for so long as this Agreement is in effect.



1.4 "Combination Product" shall mean any form or dosage of pharmaceutical composition or preparation in final form for sale by prescription, over-the-counter or any other method and which comprises two (2) or more active ingredients within the same pharmaceutical formulation, at least one (1) of which is Licensed Compound and/or any other compound from the Compound Library.



1.5 "Compound Library" shall mean the collection of compounds (including, without limitation, the Licensed Compound) which as of the Execution Date is specifically and/or generically covered by one or more claims in U.S. Patent No. 5,262,439, entitled "Soluble Monoesters of Probucol", or any corresponding foreign patents or patent applications. The Compound Library shall include such compounds in any form, including any salt, hydrate or crystalline structure thereof.



1.6 "Cost of Goods" shall mean SPL's fully allocated manufacturing cost of goods as determined in accordance with Schedule 1.6.



1.7 "Effective Date" shall mean the next business day following the last to occur of (i) expiration or earlier termination of any notice and waiting period under the HSR Act; or (ii) the date of delivery of fully executed counterparts of this Agreement (the "Execution Date").



1.8 "First Commercial Sale" shall mean, with respect to any Licensed Product, the first sale by SPL to any third party, not an Affiliate or Sublicensee, of such Licensed Product for an indication for which SPL has obtained Regulatory Approval.



1.9 "HRD" shall mean a health registration dossier or its equivalent, submitted to a national government or a supranational governmental authority, consisting of the chemical, pharmaceutical and biological documentation; the toxicological and pharmacological documentation; and the clinical documentation respectively, and covering a Licensed Product which is filed in any country outside the United States and which is analogous to a new drug application, product license application or its equivalent filed with the United States Food and Drug Administration seeking approval to market and sell a Licensed Product in the Territory and including, where applicable, applications for pricing, pricing reimbursement approval, labeling and Regulatory Approval.



1.10 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.



1.11 "Improvement" shall mean any enhancement in the formulation, preparation, presentation, means of delivery, dosage, packaging of, manufacture, or any new or expanded







therapeutic indications(s) for, Licensed Product or Licensed Compound, in each case which is developed prior to or during the Term of this Agreement by or on behalf of Licensor.



1.12 [Section Reserved]



1.13 "Licensed Compound" shall mean the soluble analog of probucol AGI-1067, having the chemical name butanedioic acid, mono[4-[[1-[3,5-bis(1,1- dimethyethyl)-4-hydroxyphenyl]thio]-1-[methylethylthio]-2,6-bis(1,1- dimethylethyl)-phenyl]ester, and any stereoisomers, salts, hydrates and/or crystalline forms thereof.



1.14 "Licensed Product(s)" shall mean any form or dosage of pharmaceutical composition or preparation in final form for sale by prescription, over-the-counter or any other method, which contains as an active ingredient the Licensed Compound and/or any other compound from the Compound Library, including, without limitation, Combination Products; provided, however, that Licensed Product shall not include topical dermatological products as described in Section 2.11(c).



1.15 "Licensor Know-How" shall mean any of Licensor's information and materials specifically relating to the research, development, registration, manufacture, marketing, use or sale of Licensed Compound and/or Licensed Product and/or the Compound Library, and which prior to or during the Term of this Agreement are developed by or at the request of Licensor, or those of its Affiliates involved in the performance of development of Licensed Product under Article 2, or are in Licensor's or such Affiliates' possession or control through license or otherwise (provided that Licensor is permitted to make disclosure thereof to SPL without violating the terms of any third party agreement), and which are not generally known. Licensor Know-How shall include, without limitation, discoveries, practices, methods, knowledge, Improvements, processes, formulas, data, ideas, skill, experience, inventions, know-how, technology, trade secrets, manufacturing procedures, purification and isolation techniques, instructions, test data and other intellectual property, patentable or otherwise, relating to Licensed Compound, Licensed Product or any Improvements. Licensor Know-How shall also include, without limitation:



(i) all biological, chemical, pharmacological, toxicological,

pharmaceutical, physical and analytical, clinical, safety,

manufacturing and quality control data and information related

thereto;



(ii) compositions of matter, assays and biological materials

specifically relating to development, manufacture, use or sale

of any Licensed Compound, Licensed Product or Improvement; and



(iii) all applications, registrations, licenses, authorizations,

approvals and correspondence submitted to or received from any

regulatory authorities with jurisdiction in the Territory over

an investigational drug containing Licensed







Compound and/or Licensed Product (including, without

limitation, minutes and meeting notes relating to any

communications with any regulatory authority with jurisdiction
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