<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 0-28494
MILLENNIUM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3177038
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
640 MEMORIAL DRIVE, CAMBRIDGE, MA 02139
(Address of principal executive offices, including zip code)
617-679-7000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
--- ---
Number of shares of Common Stock, $.001 par value per share, outstanding as of
August 6, 1997 was 28,884,309.
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MILLENNIUM PHARMACEUTICALS, INC.
REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
TABLE OF CONTENTS
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PAGE
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (unaudited)
Condensed Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations
for the three and six months ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows
for the six months ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9
PART II - OTHER INFORMATION 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
SIGNATURES 17
EXHIBIT INDEX 18
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Millennium Pharmaceuticals, Inc.
<TABLE>
Condensed Consolidated Balance Sheets
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
----------------------------------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 18,591,000 $ 10,088,000
Marketable securities 40,935,000 53,760,000
Due from strategic partners 22,294,000 5,710,000
Prepaid expenses and other current assets 3,769,000 2,512,000
----------------------------------
Total current assets 85,589,000 72,071,000
Property and equipment, net 24,731,000 15,191,000
Deposits and other assets 897,000 483,000
Intangible assets, net 9,764,000 -
----------------------------------
$ 120,981,000 $ 87,744,000
==================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,475,000 $ 2,262,000
Accrued expenses 2,670,000 1,284,000
Deferred revenue 3,396,000 3,543,000
Current portion of long-term debt 667,000 1,467,000
Current portion of capital lease obligations 4,948,000 3,241,000
----------------------------------
Total current liabilities 14,156,000 11,797,000
Capital lease obligations, net 13,185,000 9,308,000
Minority Interest 20,000,000 -
Stockholders' equity:
Common Stock, $0.001 par value: 100,000,000 shares authorized;
28,853,519 shares in 1997 and 23,914,151 shares in 1996 issued and
outstanding 29,000 24,000
Additional paid-in capital 191,459,000 87,790,000
Deferred compensation (2,580,000) (2,768,000)
Notes receivable from officers (206,000) (245,000)
Unrealized loss on securities (22,000) (18,000)
Accumulated deficit (115,040,000) (18,144,000)
----------------------------------
Total stockholders' equity 73,640,000 66,639,000
----------------------------------
Total liabilities and stockholders' equity $ 120,981,000 $ 87,744,000
==================================
</TABLE>
Note: The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to consolidated condensed financial statements.
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Millennium Pharmaceuticals, Inc.
<TABLE>
Condensed Consolidated Statements of Operations (Unaudited)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue under strategic
alliances $ 13,372,000 $ 5,101,000 $ 24,328,000 $12,659,000
Costs and expenses:
Research and development 18,333,000 8,080,000 29,932,000 14,714,000
General and administrative 4,514,000 1,786,000 7,863,000 3,051,000
Acquired in-process research
and development - - 83,800,000 -
Amortization of intangible
assets 675,000 - 1,046,000 -
----------------------------------------------------------------
23,522,000 9,866,000 122,641,000 17,765,000
----------------------------------------------------------------
Loss from operations (10,150,000) (4,765,000) (98,313,000) (5,106,000)
Interest income 976,000 830,000 2,053,000 1,250,000
Interest expense (303,000) (194,000) (636,000) (415,000)
----------------------------------------------------------------
Net loss $ (9,477,000) $(4,129,000) $(96,896,000) $(4,271,000)
================================================================
Net loss per share $ (0.33) $ (0.19) $ (3.50) $ (0.21)
================================================================
Shares used in computing net loss
per share 28,764,467 22,268,382 27,663,696 20,717,782
================================================================
</TABLE>
See notes to consolidated condensed financial statements.
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Millennium Pharmaceuticals, Inc.
<TABLE>
Condensed Consolidated Statements of Cash Flows (Unaudited)
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1997 1996
--------------------------------------
<S> <C> <C>
CASH USED IN OPERATIONS $ (5,874,000) $ (4,631,000)
INVESTING ACTIVITIES
Purchase of property and equipment (4,842,000) (4,476,000)
Sale of marketable securities 37,805,000 20,212,000
Purchase of marketable securities (23,487,000) (66,917,000)
--------------------------------------
Net cash provided by (used in) investing activities 9,476,000 (51,181,000)
FINANCING ACTIVITIES
Acquisition of ChemGenics, net of cash acquired 7,087,000 -
Proceeds from sale of Preferred Stock - 3,500,000
Proceeds from sale of Common Stock 910,000 58,268,000
Repurchase of Common Stock (86,000) (1,000)
Payments of long-term debt (800,000) (800,000)
Payments of capital lease obligations (2,210,000) (938,000)
--------------------------------------
Net cash provided by financing activities 4,901,000 60,029,000
--------------------------------------
Increase in cash and cash equivalents 8,503,000 4,217,000
Cash and cash equivalents at beginning of year 10,088,000 10,586,000
--------------------------------------
Cash and cash equivalents at end of period 18,591,000 14,803,000
======================================
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equipment acquired under capital leases $ 6,202,000 $ 1,548,000
======================================
Deferred compensation $ - $ 3,187,000
======================================
</TABLE>
See notes to consolidated condensed financial statements.
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MILLENNIUM PHARMACEUITCALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(unaudited)
1 - BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Interim results for the six-month period ended June 30, 1997 are
not indicative of the results that may be expected for the year ended December
31, 1997. For further information, refer to the financial statements and
footnotes thereto included in the Company's Annual Report on 10-K for the fiscal
year ended December 31, 1996 which was filed with the Securities Exchange
Commission on March 31, 1997.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share" (FAS 128) which simplifies the
calculation of earnings per share (EPS) and creates a standard of comparability
to the recently issued International Accounting Standard No. 33, "Earnings Per
Share". Since early application is not permitted, the Company will adopt this
standard in the fourth quarter of 1997. The pro form earnings per share
calculations required under FAS 128 are not materially different from the net
loss per share calculations presented herein.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures About Segments of an Enterprise and
Related Information." Both SFAS No. 130 and SFAS No. 131 are effective for
fiscal years beginning after December 15, 1997. The Company believes that the
adoption of these new accounting standards will not have a material impact on
the Company's financial statements.
2 - NET LOSS PER SHARE
Net loss per share is computed using the weighted-average number of
outstanding shares of Common Stock and Common Stock Equivalents, reflecting the
conversion of Series A, B, C and D Convertible Preferred Stock into Common Stock
(as of their original date of issuance), which occurred upon completion of the
Company's initial public offering on May 7, 1996 and the exercise of stock
options and warrants (using the treasury stock method). Common Stock equivalents
are excluded from the computation when their effect is anti-dilutive; however,
pursuant to the requirements of the Securities and Exchange Commission, Common
Stock equivalent shares relating to stock options and warrants (using the
treasury stock method and an initial public offering price of $12.00 per share)
and Convertible Preferred Stock issued during the twelve month period prior to
the initial public offering are included for all periods prior to and including
the date of the initial public offering whether or not anti-dilutive.
3 - SUBSIDIARY
In May 1997, the Company established Millennium BioTherapeutics, Inc.
("MBIO") as a subsidiary, and, pursuant to a Technology Transfer and License
Agreement, has transferred and/or licensed certain technology to MBIO in
exchange for 9,000,000 shares of Series A Convertible Preferred Stock of MBIO.
At that time, MBIO entered into a strategic alliance with Eli Lilly and Company
("Lilly") for the
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discovery and development of novel therapeutic proteins. The agreement covers a
three year program with Lilly providing $8 to $10 million in research funding
per year with a provision to extend up to an additional two years at the same
level of funding. Additional licensing fees, clinical development milestones and
royalties will be payable by Lilly in connection with specific therapeutic
protein product candidates identified in the collaboration and licensed by
Lilly. Under the terms of the agreement, MBIO and Lilly will equally fund the
collaborative program and each company will share the rights to use discoveries
made in the collaboration, as described in the agreement.
Under the terms of a related stock purchase agreement, Lilly agreed to
purchase $20 million of Series B Convertible Preferred Stock of MBIO. The
accompanying condensed consolidated financial statements include the accounts of
MBIO since inception. The minority interest reflects the approximate 18 percent
equity interest of Lilly in MBIO as of the balance sheet date.
The Company is not required to provide any funds for the operations of
MBIO, but has entered into certain agreements with MBIO to provide specific
services and facilities at negotiated fees. All such intercompany transactions
have been eliminated in consolidation.
4 - MERGER
On February 10, 1997, the Company acquired ChemGenics Pharmaceuticals,
Inc. ("ChemGenics") for 4,783,688 shares of Common Stock at $21.50 per share for
an aggregate of approximately $103,000,000 in exchange for all outstanding
shares of common stock of ChemGenics. In addition, a principal shareholder of
ChemGenics received approximately $4,000,000 in settlement of a promissory note
and repurchase of warrants previously issued by ChemGenics, and outstanding
warrants were purchased from another shareholder of ChemGenics for approximately
$500,000. The operating results of ChemGenics have been included in the
Company's financial statements from the date of acquisition. The transaction has
been recorded as a purchase for accounting purposes. The fair value of the
issued shares has been allocated to the assets purchased and liabilities assumed
based upon their respective fair values. In connection with the acquisition, the
Company incurred a non-recurring charge of $83,800,000 for acquired in-process
research and development which was charged to operations because in management's
opinion technological feasibility for the acquired research and development had
not been established.
The following unaudited pro forma consolidated results of operations
have been prepared as if the acquisition of ChemGenics had occurred at the
beginning of 1997 and 1996:
<TABLE>
<CAPTION>
Six months ended
June 30, 1997 June 30, 1996
<S> <C> <C>
Pro Forma:
Revenues under strategic
alliances $ 24,821,000 $ 14,137,000
Net loss $(98,060,000) $(98,135,000)
Net loss per share $ (3.41) $ (3.85)
Shares used in calculating net
loss per share 28,747,000 25,501,000
</TABLE>
The pro forma net loss and net loss per share amounts for each period above
include the acquired in-process research and development charge. The pro forma
consolidated results do not purport to be indicative of results that would have
occurred had the acquisition been in effect for the periods presented, nor do
they purport to be indicative of the results that will be obtained in the
future.
5. CONSORTIUM AGREEMENT
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In April 1997 the Company joined a corporate consortium to fund a
five-year research program in functional genomics at the Whitehead Institute/MIT
Center for Genome Research. The new program will advance the development of
gene-based technologies for research and health care.
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s
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This Report on Form 10-Q contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "intends,"
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-looking
statements. These factors are set forth under the caption "Risk Factors" in the
Company's Registration Statement on Form S-3 (333-28239), which "Risk Factor"
discussion is expressly incorporated by reference herein.
Overview
- --------
The Company was incorporated in January 1993 and has devoted
substantially all of its resources to the development and application of
genetics, genomics and bioinformatics technology used to identify the genes
responsible for major diseases, as well as comprehensive technologies to
elucidate the role of these genes in disease initiation and progression.
On February 10, 1997 (the "ChemGenics Acquisition Date"), the Company
acquired ChemGenics Pharmaceuticals Inc. ("ChemGenics") for approximately
4,800,000 shares of Common Stock. In connection with this acquisition, a
principal stockholder of ChemGenics received $4.0 million in settlement of a
promissory note and as the repurchase price of warrants previously issued by
ChemGenics and outstanding warrants were purchased from another stockholder of
ChemGenics for $500,000. Upon such acquisition, ChemGenics became a wholly-owned
subsidiary of the Company. In May 1997, ChemGenics was merged into Millennium
and ceased to be a separate company. At the time of the acquisition, ChemGenics
had approximately 70 employees and approximately 11,500 square feet of
laboratory and office space in Cambridge, Massachusetts.
In May 1997, the Company established Millennium BioTherapeutics, Inc.
("MBIO") as a subsidiary, and, pursuant to a Technology Transfer and License
Agreement, transferred and/or licensed certain technology to MBIO in exchange
for 9,000,000 shares of Series A Convertible Preferred Stock of MBIO. At that
time, MBIO entered into a strategic alliance with Eli Lilly and Company
("Lilly") for the discovery and development of novel therapeutic proteins. Under
the terms of a related stock purchase agreement, Lilly made an equity investment
of $20,000,000 in MBIO pursuant to which Lilly owns approximately 18% of the
outstanding capital stock of MBIO.
To date, all of the Company's revenue, including revenue of ChemGenics
from the ChemGenics Acquisition Date, has resulted from payments from strategic
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partners and United States government research grants. The Company has not
received any revenue from the sale of products.
The Company has entered into several strategic alliances: in March 1994
with Hoffmann La-Roche, Inc. ("Roche") with respect to obesity and type II
diabetes; in October 1995 and March 1996 with Lilly with respect to
atherosclerosis and select areas of oncology, respectively; in December 1995
with Astra AB ("Astra") with respect to inflammatory respiratory diseases; and
in July 1996 with American Home Products ("AHP") with respect to certain
disorders of the central nervous system. In addition, ChemGenics had entered
into several strategic alliances; in January 1995 with Pfizer Inc. ("Pfizer")
with respect to human fungal infections; in December 1996 with AHP with respect
to human bacterial infections; and in May, November and December 1996 with
PerSeptive Biosystems, Inc. ("PerSeptive") where a substantial equity interest
in ChemGenics was exchanged for certain present and future rights to patents,
technology and prototype equipment. Millennium has succeeded to ChemGenics in
connection with ChemGenics' strategic alliances with Pfizer, AHP and PerSeptive
as a result of Millennium's acquisition of ChemGenics.
These strategic alliance agreements have provided the combined Company
with various combinations of equity investments, up-front and follow-on fees and
research funding and may provide certain additional payments upon the attainment
of research and regulatory milestones and royalty and/or profit sharing payments
based on sales of any products resulting from the collaborations. Revenue
recognized under these collaborations through June 30, 1997 aggregated
approximately $86,935,000.
Although the Company intends to enter into additional strategic
alliances, it also expects to incur increasing expenses and additional losses
for at least the next several years, as it continues to build the infrastructure
to support its operations. Payments under strategic alliance and licensing
arrangements will be subject to significant fluctuation in both timing and
amounts and, therefore, the Company's results of operations for any period may
not be comparable to the results of operations for any other period.
Results of Operations
- ---------------------
Quarters Ended June 30, 1997 and June 30, 1996
----------------------------------------------
Revenue under strategic alliances increased to $13,372,000 for the
three months ended June 30, 1997 (the "1997 Quarterly Period") from $5,101,000
for the three months ended June 30, 1996 (the "1996 Quarterly Period"). The
increase for the 1997 Quarterly Period was primarily due to strategic alliance
revenue from AHP in connection with the central nervous systems alliance signed
in July 1996, strategic alliance revenue from both the ChemGenics/Pfizer (human
fungal infections) and
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ChemGenics/AHP (human bacterial infections) strategic alliances and revenue from
Lilly related to the collaboration between Lilly and MBIO.
Research and development expenses increased to $18,333,000 for the
three months ended June 30, 1997 from $8,080,000 for the three months ended June
30, 1996. The increase was attributable primarily to increased payroll and
personnel expenses as the Company hired additional research and development
personnel; increased purchase of laboratory supplies and increased equipment
depreciation and facilities efforts. In addition, the 1997 Quarterly Period
included research and development expenses related to the former ChemGenics
operations and MBIO. The Company's research and development expenses may
continue to increase as personnel and research and development facilities are
expanded to accommodate the Company's existing and any future strategic
alliances.
General and administrative expenses increased to $4,514,000 for the
three months ended June 30, 1997 from $1,786,000 for the three months ended June
30, 1996. The increase was attributable primarily to increased payroll and
personnel expenses as the Company hired additional management, business
development and administrative personnel, and to professional fees in connection
with the further expansion of the Company's operations, the acquisition of
ChemGenics and formation of MBIO. The 1997 Period also includes general and
administrative expenses related to the former ChemGenics operations. It is
anticipated that general and administrative expenses will continue to increase
as the Company continues to build the infrastructure to support its operations.
The Company's total operating expenses increased to $23,522,000 for the
three months ended June 30, 1997 from $9,866,000 for the three months ended June
30, 1996. In addition to the research and development and general and
administrative expenses discussed above, the 1997 Quarterly Period includes a
$675,000 charge for amortization of the intangible assets created by the
ChemGenics acquisition.
Interest income increased to $976,000 for the three months ended June
30, 1997 from $830,000 for the three months ended June 30, 1996. Although the
balance of cash, cash equivalents and marketable securities is lower at June 30,
1997 than at June 30, 1996, the average balance was lower during the 1996
Quarterly Period because the Company's inrest expense increased to $303,000
for the 1997 Quarterly Period from $194,000 for the 1996 Quarterly Period due
to increased capital lease obligations.
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Six Months Ended June 30, 1997 and June 30, 1996
- ------------------------------------------------
Revenue under strategic alliances increased to $24,328,000 for the six
months ended June 30, 1997 (the "1997 Six Month Period") from $12,659,000 for
the six months ended June 30, 1996 (the "1996 Six Month Period"). The increase
for the 1997 Six Month Period was primarily due to strategic alliance revenue
from AHP in connection with the central nervous systems alliance signed in July
1996, from Lilly in connection with the oncology alliance effective March 1996,
strategic alliance revenue from the ChemGenics Acquisition Date through June 30,
1997, from both the ChemGenics/Pfizer (human fungal infections) and
ChemGenics/AHP (human bacterial infections) strategic alliances and revenue from
Lilly pursuant to the collaboration between Lilly and MBIO.
Research and development expenses increased to $29,932,000 for the six
months ended June 30, 1997 from $14,714,000 for the six months ended June 30,
1996. The increase was primarily attributable to increased payroll and personnel
expenses as the Company hired additional research and development personnel,
increased purchase of laboratory supplies and increased equipment depreciation
and facilities expenses in connection with the expansion of the Company's
research efforts. In addition, the 1997 Six Month Period includes research and
development expenses related to the former ChemGenics operations as of the
ChemGenics Acquisition Date and to MBIO. The Company's research and development
expenses may continue to increase as personnel and research and development
facilities are expanded to accommodate the Company's existing and any future
strategic alliances.
General and administrative expenses increased to $7,863,000 for the six
months ended June 30, 1997 from $3,051,000 for the six months ended June 30,
1996. The increase was prim as the Company hired additional management, business
development and administrative personnel, and to professional fees in connection
with the further expansion of the Company's operations, the acquisition of
ChemGenics and formation of MBIO. The 1997 Six Month Period also includes
general and administrative expenses related to the former ChemGenics from the
ChemGenics Acquisition Date through the end of the period. It is anticipated
that general and administrative expenses will continue to increase as the
Company continues to build the infrastructure to support its operations.
The Company's total operating expenses increased to $122,641,000 for
the six months ended June 30, 1997 from $17,765,000 for the six months ended
June 30, 1996. In addition to the research and development and general and
administrative expenses discussed above, the 1997 Six Month Period includes a
$83,800,000 one-time charge for acquired in-process research and development
associated with the acquisition of
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ChemGenics as well as a $1,046,000 charge for amortization of the intangible
assets created by the acquisition.
Interest income increased to $2,053,000 for the six months ended June
30, 1997 from $1,250,000 for the six months ended June 30, 1996. Although the
balance of cash, cash equivalents and marketable securities is lower at June 30,
1997 than at June 30, 1996, the average balance was lower during the 1996 Six
Month Period because the Company's initial public offering occurred in May 1996.
Interest expense increased to $636,000 for the 1997 Six Month Period from
$415,000 for the 1996 Six Month Period due to increased capital lease
obligations.
Liquidity and Capital Resources
- -------------------------------
The Company has financed its operations since inception primarily
through strategic alliances, private placement of equity securities, issuance of
debt, and capital leases. In May 1996, the Company completed an initial public
offering of common stock resulting in proceeds, net of underwriting discounts,
of $57,753,000. Through June 30, 1997, the Company recognized approximately
$86,935,000 of revenue under strategic alliances. The private placement of
equity securities has provided the Company with aggregate gross proceeds of
approximately $25,590,000. The Company has obtained $4,000,000 in long-term
debt, approximately $22,000,000 in capital lease financings, and $1,100,000 to
finance the build-out of an 9,000 square foot in-house animal facility. As of
June 30, 1997, the Company had approximately $59,526,000 in cash, cash
equivalents and marketable securities. In July 1997, the Company received
proceeds of $20,000,000 from Lilly in connection with Lilly's equity investment
in MBIO.
During the first six months of 1997, the Company used $5,874,000 of
cash in its operations, purchased $4,842,000 of property and equipment, obtained
net cash of $7,087,000 in connection with the acquisition of ChemGenics and used
cash of $800,000 to pay long term debt and $2,210,000 to pay capital lease
obligations. In addition, during the first six months of 1997, the Company
acquired equipment under capital leases of $6,202,000.
The Company believes that existing cash and investment securities, and
anticipated cash flow from its current strategic alliances, will be sufficient
to support the Company's operations for at least the next 24 months. The
Company's actual future cash requirements, however, will depend on many factors,
including progress of its disease research programs, the number and breadth of
these programs, achievement of milestones under strategic alliance arrangements,
the ability of the Company to establish and maintain additional strategic
alliance and licensing arrangements, and the progress of the development efforts
of the Company's strategic partners. These factors also include the level of the
Company's activities relating to commercialization rights it has retained in its
strategic alliance arrangement,
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<PAGE> 14
competing technological and market developments, the costs associated with the
collection of patient information and DNA samples, the costs involved in
obtaining and enforcing patent claims and other intellectual property rights,
and the costs and timing of regulatory approvals. The Company expects that it
will require significant additional financing in the future, which it may seek
to raise through public or private equity offerings, debt financings, or
additional strategic alliance and lance can be given that additional financing
or strategic alliance and licensing arrangements will be available when needed
or that, if available, such financing will be obtained on terms favorable to the
Company or its stockholders. The Company's forecast of the period of time
through which its financial resources will be adequate to support its operations
is forward-looking information, and, as such, actual results may vary.
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PART II - OTHER INFORMATION
---------------------------
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company's 1997 Annual Meeting of Stockholders was held on May 21,
1997 (the "Annual Meeting"). At the Annual Meeting, William W. Helman was
elected as a Class I Director for a term of three years. The other directors
whose terms of office as a director continue after the meeting are as follows:
Eugene Cordes, Ph.D., Raju Kucherlapati, Ph.D., Eric S. Lander, Ph.D., Mark J.
Levin, Joshua Boger, Ph.D. and A. Grant Heidrich III.
The following is a summary of each matter voted upon at the meeting and
the number of votes cast for, against or withheld, and broker non-votes and
abstentions, as to each such matter:
1. To elect William W. Helman as a Class I Director.
For: 18,240,872 Withheld: 28,898
2. To approve (i) an amendment to the Company's 1996 Equity Incentive Plan
increasing from 2,100,000 to 4,100,000 the number of shares of Common
Stock reserved for issuance under the Plan, and (ii) the continuance of
the 1996 Equity Incentive Plan.
For: 13,657,159 Against: 2,264,144 Abstain: 17,577 Non-Votes: 2,330,890
3. To approve the Company's 1997 Equity Incentive Plan.
For: 13,465,964 Against: 2,342,020 Abstain: 47,102 Non-Votes: 2,414,684
4. To ratify the selection by the Board of Directors of Ernst & Young LLP as
the Company's independent auditors for 1997.
For: 18,249,002 Against: 13,331 Abstain: 7,437 Non-Votes: 0
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
The exhibits listed in the Exhibit Index are included in this report.
(b) Reports on Form 8-K
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<PAGE> 16
(i) On June 5, 1997, the Company filed with the Securities and
Exchange Commission a Current Report on Form 8-K reporting the issuance of a
press release on May 29, 1997 under Item 5 thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MILLENNIUM PHARMACEUTICALS, INC.
(Registrant)
Date: August 11, 1997 By: /s/ Steven H. Holtzman
----------------------------------------
Steven H. Holtzman
Chief Business Officer
(Principal Financial Officer)
Date: August 11, 1997 By: /s/ Peter J. Courossi
----------------------------------------
Peter J. Courossi
Director of Finance
(Principal Accounting Officer)
-17-
<PAGE> 18
EXHIBIT INDEX
-------------
The following exhibits are filed as part of this Quarterly Report on Form
10-Q:
Exhibit
No. Description
- ------- -----------
10.1 Lease dated May 15, 1997 by and between the Company
and Massachusetts Institute of Technology.
10.2 1997 Equity Incentive Plan.
10.3 1996 Equity Incentive Plan, as amended.
10.4+ Sponsored Research Agreement by and among Whitehead
Institute for Biomedical Research, Affymetrix, Inc.,
Bristol-Myers Squibb Company and the Company dated
April 28, 1997.
10.5+ Consortium Member Agreement by and among Affymetrix,
Inc., Bristol-Myers Squibb Company and the Company
dated April 28, 1997.
10.6+ Collaboration Agreement by and among the Company,
Millennium BioTherapeutics, Inc. ("MBIO") and Eli
Lilly and Company dated as of May 28, 1997.
10.7+ Technology Transfer and License Agreement by and
between the Company and MBIO dated as of May 28,
1997.
10.8+ Rights Exchange Agreement by and between the Company
and MBIO dated as of May 28, 1997.
10.9 Amendment to Master Equipment Lease Agreement dated
June 16, 1997 by and between the Company and GE
Capital Corporation.
11 Statement regarding Computation of Per Share
Earnings.
27.1 Financial Data Schedule.
-18
<PAGE> 19
99.1 Pages 5 through 15 of the Company's Registration
Statement on Form S-3 (333-28239), as filed with the
Securities Exchange Commission (which are deemed
filed except to the extent that portions are not
expressly incorporated by reference herein).
- ---------------
+ Confidential treatment requested as to certain portions.
-19-
<PAGE> 1
EXHIBIT 10.1
LEASE
Date: May 15, 1997
MAI238
I. MASSACHUSETTS INSTITUTE OF TECHNOLOGY, a Massachusetts Corporation,
successors and assigns, "Lessor", hereby LEASES unto MILLENNIUM PHARMACEUTICALS,
"Lessee", the following Premises: Suite #500 and 402, containing approximately
20,652 rentable square feet of space on the fourth and fifth floors, and known
as the "Premises", identified as the hatched areas on EXHIBIT A, located in the
"Building" identified as number 238 Main Street, Cambridge, Massachusetts, the
"Building", which Building contains 77,697 rentable square feet and is located
on the parcel of land (the "Land") identified as Assessors Plan #47, Lot #84 as
shown on the plan attached hereto as EXHIBIT B; subject to existing easements
and party wall agreements and to rights and encumbrances of record, and the
Lessor reserves the right to maintain, use, repair and replace pipes, ducts,
wires, meters and any other equipment, machinery, apparatus and fixtures serving
other parts thereof, provided that the Lessor shall minimize any interference to
Lessee with respect thereto.
II. TO HAVE AND TO HOLD for the term:
beginning with the Fifteenth day of May, 1997, and ending with the Thirty First
day of May, 1999, identified as the "Term", as herein under specified unless
sooner terminated as hereinafter provided, and to be used for the following
purpose:
Offices
III. YIELDING AND PAYING a rent of Five Hundred Ninety Eight Thousand Eight
Hundred Sixty and 00/100 Dollars ($598,860.00) yearly by equal monthly payments
of Forty Nine Thousand Nine Hundred Five and 00/100 Dollars ($49,905.00) Dollars
per month, known as "Base Rent", on the first day in each calendar month in
advance, the first monthly payment to be prorated and paid effective May 15,
1997, all payments to be made to the Lessor or such agent, and at such place, as
the Lessor shall from time to time in writing designate, the following being now
so designated:
Meredith & Grew, Inc.
160 Federal Street
Boston, MA 02110-1701
It is also understood and agreed as follows:
1. REAL ESTATE TAXES: Lessee shall pay, as additional rent, 26.58 percent
of the increase in real estate taxes assessed on the Land and Building
by the City of Cambridge during the
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Lease term and any extension thereof. If in any tax year commencing
with the Fiscal Year 1998 (July 1, 1997 - June 30, 1998), the real
estate taxes on the Land and Building of which the leased Premises are
a part are in excess of the amount of the real estate taxes thereon for
the Fiscal Year 1997 (July 1, 1996 - June 30, 1997), Lessee shall pay
to Lessor as additional rent 26.58 percent of such excess that may
occur in each year. Such payment shall be made by paying Lessor on each
day that payments of basic rent are due hereunder, an amount equal to
one-twelfth (1/12th) of the amount which Lessor reasonably estimates to
be the total amount of Lessee's obligation under this section for that
year, said estimate to be predicted on the previous year's taxes.
Payments made by Lessee under this section shall not bear interest and
may be commingled by Lessor with any other funds of Lessor. Taxes due
hereunder for the years in which each of the term commencement date and
the Lease termination date occurs shall be prorated. If the total
amount paid hereunder with respect to any year exceeds the amount due
under this section for such year, such excess shall be credited by
Lessor against the monthly installments on account of taxes next
falling due, if any, or if no further payments on account of taxes will
become due during the remainder of the term of this Lease, Lessor shall
promptly refund the amount of such excess to Lessee upon the expiration
or termination of this Lease (unless such termination is a result of a
default by Lessee, in which case such amount shall be set off against
amounts due to Lessor from Lessee). If the aggregate amount of
installments paid by Lessee on account of taxes with respect to any
year is less than Lessee's prorata share thereof for such year, Lessor
shall give written notice thereof to Lessee, and Lessee shall pay to
Lessor the amount of such deficiency, as additional rent, within ten
(10) days of receipt of notice. Upon request by Lessee, Lessor shall
promptly furnish to Lessee a copy of Real Estate Tax Bill of Building,
but Lessee's obligation to make payments on account of taxes shall not
be conditioned upon receipt by Lessee of this bill.
2. OPERATING EXPENSES: Lessee shall pay, as additional rent, 26.58 percent
of the increase in operating expenses for the Land and Building of
which the leased Premises are a part, above the base operating expenses
for the Fiscal Year 1996. At the end of the first fiscal year* and at
the end of each succeeding fiscal year during the Term, Lessor shall
render to Lessee a statement of operating expenses for the preceding
year.
* Currently July 1 - June 30. Lessor reserves the right to change the fiscal
year dates at any time in during the Lease Term.
Within thirty (30) days after the date of delivery of such statement,
Lessee shall pay to Lessor, as additional rent, any amount due. In
addition, Lessor shall deliver to Lessee a budget for the then current
fiscal year based on the statement of expenses for the prior year and
projected increases or decreases reasonably estimated by Lessor.
Commencing with the first day of the first month following the delivery
to the Lessee of such budget, the Lessee shall pay to the Lessor on
account toward Lessee's share of increases in operating expenses
anticipated for the then current year, 1/12 of the total annualized
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<PAGE> 3
amount by which the operating expenses exceed the base year expenses.
At the end of the fiscal year, Lessor shall provide to Lessee a
reconciliation of actual operating costs compared to budgeted costs and
adjust Lessee's account accordingly.
In the event that the average occupancy rate of the building shall be
less than ninety-five percent (95%) for any fiscal year, for purposes
of calculating operating expense increases, the operating expenses for
such fiscal year shall be increased by the additional costs and
expenses that Lessor reasonably estimates would have been incurred if
the average occupancy rate had been ninety-five percent (95%) for such
fiscal year. It is not the intent of this provision, commonly referred
to as a "gross up" clause, to permit Lessor to charge Lessee for any
operating expenses attributable to unoccupied space, or to seek
reimbursement form Lessee for costs never incurred. Rather, the intent
of this provision is to allow the Lessor to recover only those
increases in operating expenses properly attributable to the occupied
space in the building, and this provision is thus designed to calculate
the actual cost of providing a variable operating expense service to
the leased area of the Building receiving such service. The "gross up"
treatment shall be applied only with respect to variable operating
expenses arising from services provided to space in the Building
occupied by Lessees (which services are not provided to space or may be
provided only to some Lessees) in order to equitably allocate such
variable operating expenses tot he Lessees receiving benefits thereof.
Operating expenses shall include without limitation all utility,
mechanical system, general operating, payroll, and administrative
expenses including but not limited to:
a) All salaries, wages, fringe benefits, payroll taxes, and
workman's compensation insurance premiums related thereto of and
for employees engaged in the operation of the Building.
b) Cleaning; including window cleaning and the cost of cleaning
supplies.
c) Utilities; including all charges for electricity, water and
sewer, and gas which are not separately chargeable to Building
tenants.
d) Mechanical; including maintenance and repair for the heating
and cooling, electrical systems.
e) General; including trash removal, roof repairs, security, and
snow removal.
f) Administrative; including management fee.
3. LEASE TERMINATION: Lessee may terminate this Lease anytime after the
first anniversary of this Lease commencement, by providing written
notice to Lessor six months in advance of the Lease termination date.
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<PAGE> 4
4. LEASE OPTION: Lessee has the option to extend this Lease for an
additional two years at the then fair market value for office rents in
the Kendall Square market, provided Lessee requests the extended term
in writing, not less than six months prior to the end of the initial
Lease Term.
5. PARKING: Lessor agrees to provide nineteen parking spaces during
the Lease Term and any extension thereof. The monthly rate for such
parking will be $120.00 per space and is subject to change throughout
the Term of the Lease. The monthly "rent" is to be equal to the parking
rents effective for Building tenants at 238 Main Street.
6. CONDITION OF PREMISES: Lessee accepts the Premises in "as is"
condition, except Lessor agrees to paint the Premises by May 15, 1997
at no charge to Lessee.
7. LATE PAYMENT OF RENT: Lessee agrees that in the event that any payment
of annual fixed rent or additional rent shall remain unpaid at the
close of business on the tenth business day of each month there shall
become due to the Lessor from the Lessee, as additional rent and as
compensation for the Lessor's extra administrative costs in
investigating the circumstances of late rent, a late charge of two
percent (2%) of the amount overdue. The Lessor shall notify, in
writing, when said late fee is debited to Lessee's account.
8. ASSIGNMENT/SUBLET: Except with respect to an assignment or sublease to
a successor to Lessee by merger or acquisition or with respect to
assignment or sublease to a majority owned subsidiary of Lessee ;
Lessee shall not assign this Lease or sublet the Premises thereof, or
permit the occupancy of any portion of the Premises without obtaining,
on each occasion, the prior written consent of the Lessor, which
consent shall not be unreasonably withheld. At the time Lessee provides
written notice to Lessor of its proposal to assign this Lease or sublet
the Premises thereof, Lessee shall provide Lessor with a copy of the
proposed assignment or sublease document, and such information as
Lessor may reasonably request concerning the proposed sublessee or
assignee to assist Lessor in making an informed judgment regarding the
financial condition, reputation, operation and general desirability of
the proposed sublessee or assignee. Lessor shall not unreasonably
withhold its consent to an assignment by another entity acquiring
Lessee. Lessor shall then have a period of fifteen (15) days following
receipt of such notice within which to notify Lessee in writing of
Lessor's election to:
1. terminate this Lease as of the date specified by Lessee if
the space so affected comprises more than fifty percent
(50%) of the leased Premises, in which event Lessee shall be
relieved of all further obligations hereunder as to the
leased Premises or said portion thereof, after paying all
Rent due as of the Termination Date, or
2. permit Lessee to assign or sublet the leased Premises or
said portion thereof, or
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<PAGE> 5
3. refuse to consent to Lessee's assignment or subleasing of
the leased Premises or said portion thereof and to continue
this Lease in full force and effect as to the entire leased
Premises.
If Lessee does assign, sublet, or permit occupancy hereunder, and if
the aggregate rent and other amounts payable to Lessee under or in
connection with such assignment, sublease, or occupancy arrangement,
exceeds the rents and other charges said hereunder the Lessee shall pay
to the Lessor the amount of 50% of such excess, as additional rent,
less any out of pocket expenses that Lessee reasonably incurs.
9. INSURANCE:
9.1 PUBLIC LIABILITY INSURANCE: Lessee shall take out and maintain in force
throughout the term comprehensive public liability insurance naming
Lessor, Lessee, the holder of any mortgage, and persons claiming under
them, if any, as insureds against all claims and demands for any injury
to person or property which may be claimed to have occurred on the
Premises, the Building, the Land and ways adjoining the Building, in an
amount which at the beginning of the term shall not be less than
$1,000,000 for injury or death of one person, $3,000,000 for injury or
death of more than one person in a single accident and $1,000,000 for
property damage or such higher amounts as Lessor shall determine are
reasonably required by reason of Lessee's use of the Premises and which
thereafter, if Lessor requires, shall be in such higher amounts as are
then consistent with sound commercial practice in Cambridge,
Massachusetts. Lessee's insurer shall be authorized to do business in
Massachusetts and have a general policy holder's rating of not less
than A and financial ratings of not less than Class VIII as rated in
the most current "Best's Insurance Report".
9.2 CASUALTY INSURANCE: Lessee shall take out and maintain throughout the
term a policy of fire, vandalism, malicious mischief, extended coverage
and so-called all risk coverage insurance insuring Lessee's
improvements to the Premises and Lessee's fixtures, furnishing and
equipment to their full insurable value, except that any such insurance
may be written with an 80% co-insurance clause.
9.3 CERTIFICATES OF INSURANCE: Such insurance shall be placed with insurers
reasonably satisfactory to Lessor and authorized to do business in
Massachusetts. Such insurance shall provide that it shall not be
cancelled without at least ten (10) days prior written notice to each
insured named therein. Lessee shall furnish to Lessor certificates of
insurance for all insurance required to be maintained by Lessee under
this Lease. Lessee shall also deliver such certificates to the holder
of any mortgage affecting the Land and Building, said certificates
setting forth in full the provisions thereof together with evidence
satisfactory to Lessor of the payment of all premiums for such
policies.
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<PAGE> 6
9.4 LESSOR'S INSURANCE: Lessor shall take out and maintain in force
throughout the Lease Term, in a company or companies authorized to do
business in Massachusetts, casualty insurance on the Building
(excluding "Lessee's Property", "Lessee's Work" and "Alterations") (as
hereinafter defined), as to which Lessee is required to maintain
insurance pursuant to Section 9.2 above) in an amount equal to the full
replacement value of the Building (exclusive of foundations and those
items set forth in the preceding parenthetical in this sentence),
covering all risks of direct physical loss or damage and so-called
"extended coverage" risks. This insurance may be maintained in the form
of a blanket policy covering the Building as well as other properties
owned by Lessor. Notwithstanding the foregoing provisions of this
Section 9.4, Lessor shall have the right, at any time during the Lease
Term, to self-insure all or any portion of the coverages required by
this Section.
9.5 WAIVER OF SUBROGATION: To the extent to which a waiver of subrogation
clause is available, Lessor and Lessee shall obtain a provision in all
insurance policies carried by such party covering the Premises,
including but not limited to contents, fire and casualty insurance,
expressly waiving any right on the part of the insurer against the
other party. If extra cost is chargeable for such provision, then the
party benefitting from such waiver shall pay such extra charge.
Notwithstanding the foregoing, with respect to such portion of the
Lease Term during which Lessor elects to self-insure under Section 9.4
above, then for purposes of this Section 9.5, Lessor shall be deemed to
have maintained fire and all-risk coverage in an amount equal to one
hundred (100%) percent of the insurable value of the Building (subject
to the exceptions and exclusions set forth in Section 9.4 above) with a
waiver of subrogation clause contained therein.
10. REAL ESTATE BROKER: Lessor and Lessee each represent to the other that
they have dealt with no broker in connection with this Lease. Lessee
agrees to indemnify and hold Lessor harmless from and against any
claims for commissions or fees by any person by reason of any act of
Lessee or its representatives. Lessor agrees to indemnify and hold
Lessee harmless from and against any claims for commissions or fees by
any other person by reason of any act of Lessor or its representatives.
11. RIGHTS OF GROUND LESSORS AND MORTGAGEES: No act or failure to act on
the part of the Lessor which would entitle Lessee under the terms of
this Lease or by law, to be relieved of Lessee's obligations hereunder
or to terminate this Lease, shall result in a release or termination of
such obligations or a termination of this Lease unless (i) Lessee shall
have first given written notice to Lessor's ground lessors and
mortgagees of record whose address has been provided by Lessor, of the
act or failure to act on the part of Lessor which Lessee claims as the
basis of Lessee's rights; and (ii) such ground lessors and mortgagees
after receipt of such notice, have failed or refused to correct or cure
the condition within a reasonable time thereafter, but nothing in this
Lease shall be deeded to impose any obligation on any such ground
lessor or mortgagee to correct or cure any such condition. No ground
lessor shall be liable for the failure to perform any of the
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<PAGE> 7
obligations of Lessor hereunder unless and until such ground lessor
terminates its ground lease and takes possession of the Premises, nor
shall any mortgagee be liable for the failure to perform any of the
obligations of Lessor hereunder unless and until such mortgagee enters
upon and takes possession of the Premises for purposes of foreclosure.
12. LEASE SUBORDINATE: This Lease is and shall be subject and subordinate
to any ground lease or mortgage now or hereafter on the Premises, and
to all advances under any such mortgage and to all renewals,
amendments, extensions and consolidations thereof, provided that the
holder of such ground lessor's interest or mortgagee's interest enters
into a non-disturbance and attornment agreement with Lessee which
provides that in the event that such ground lessor or mortgagee
succeeds to Lessor's interest hereunder, then, provided that Lessee is
not in default hereunder beyond the cure period provided in this Lease,
such party shall recognize and be bound by the terms of this Lease. In
the event that any ground lessor or the holder of any mortgage succeeds
to Lessor's interest in the Premises or any portion thereof, Lessee
hereby agrees to attorn to such ground lessor or mortgagee. In
confirmation of such subordination, Lessee shall execute and deliver
promptly any certificate in recordable form that Lessor or any ground
lessor or any mortgagee may reasonably request. Notwithstanding the
foregoing provisions of this Section, the holder of any mortgage on the
Premises may at any time subordinate its mortgage to this Lease by
written notice to Lessee.
Lessor hereby represents to Lessee that as of the date of this Lease,
there are no mortgages or ground leases encumbering the Premises or any
portion thereof.
13. NOTICE OF LEASE; ESTOPPEL CERTIFICATES: Lessor and Lessee agree
that this Lease shall not be recorded. However, upon the request of
either party, Lessor and Lessee shall execute and acknowledge a Notice
of Lease in mutually acceptable and recordable form.
From time to time during the Lease Term, and without charge, either
party shall, within fifteen (15) business days of request by the other,
certify by written instrument duly executed and acknowledged, to the
requesting party or to any person reasonably specified by the
requesting party, regarding (a) the existence of any amendments or
supplements to this Lease; (b) the validity and force and effect of
this Lease; (c) the existence of any known default or Event of Default;
(d) the existence of any offsets, counterclaims or defenses; (e) the
Commencement Date, the Rent Commencement Date and the expiration date
of the Lease Term; (f) the amount of Rent due and payable and the date
to which the Rent has been paid; and (g) such other matters as may be
reasonably requested.
14. QUIET ENJOYMENT: Provided Lessee has performed all its obligations
under this Lease, including but not unlimited to the payment of Rent
and all other sums due hereunder, Lessee shall peaceably and quietly
hold and enjoy the leased Premises for the term, without hinderance by
Lessor or anyone claiming by, through or under Lessor, subject to
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the provisions and conditions set forth in this Lease.
15. HOLDING OVER: If Lessee occupies the Premises after the day on which
the Lease Term expires (or the effective date of any earlier
termination as herein provided) without having entered into a new lease
thereof with Lessor, Lessee shall be a tenant-at sufferance only,
subject to all of the terms and provisions of this Lease one and one
half (1 1/2) times the Basic Rent in effect on the day of such
expiration or termination for the first one and one half (1 1/2) months
of such holding over, even if with the consent of Lessor, shall not
constitute an extension or renewal of this Lease.
16. FORCE MAJEURE: Neither Lessor nor Lessee shall be deemed to be in
default hereunder (and the time for performance of any of their
respective obligations hereunder other than the payment of money shall
be postponed) for so long as the performance of such obligation is
prevented by strike, lockout, act of god, absence of materials or any
other matter not reasonably within the control of the party which must
perform the obligation (collectively, "Force Majeure").
17. ENTIRE AGREEMENT: No oral statement or prior written matter shall have
any force or effect. This Agreement shall not be modified or canceled
except by writing subscribed to by all parties.
18. EXHIBITS: Attached to and forming a part of this Lease are Exhibits
"A", "B", "C", "D".
IV. THE LESSEE acknowledges that said Premises are in good and satisfactory
order, repair and condition and that all glass is whole, and covenants during
said term and such further time as the Lessee holds any part of said Premises:
(a) to pay when due said rent and all charges for water, gas, and
electricity, if applicable and to comply with any rules,
reservations or conditions reasonably set forth by Lessor;
(b) damage by fire or unavoidable casualty excepted, to keep said
Premises in as good order, repair and condition as the same are
in at the commencement of said term, or may be put in thereafter
and at the termination of this Lease peaceably to yield up said
Premises and all additions thereto in such order, repair and
condition, first removing all goods and effects except those of
the Lessor and leaving the Premises clean and tenantable;
(c) damage by fire or casualty excepted, to keep all glass whole and
in good condition with glass of the same quality as that injured
or broken;
(d) not to injure, overload or deface said Premises or Building nor
to permit on said
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<PAGE> 9
Premises any auction sale or any inflammable fluids or chemicals
or any nuisance or the emission therefrom of any objectionable
noise or odor nor to permit the use thereof for any purpose
other than the purpose herein specified, nor any use thereof
which is improper, offensive, contrary to law or ordinance, or
liable to invalidate or increase the premiums for any insurance
on the Building or its contents or liable to render necessary
any alterations or additions to the Building;
(e) not to obstruct in any manner any portion of the Building not
hereby leased or the sidewalks or approaches to said Building
or any inside windows or doors, and to conform to all
reasonable rules now or hereafter made by the Lessor for the
care and use of the Building, its facilities and approaches;
(f) to keep the Premises equipped with all safety appliances and
to procure all licenses and permits required by law or
ordinance or any order or regulation of any public authority
because of the particular use made of said Premises by the
Lessee, and, if requested by the Lessor, to make all repairs,
alterations, replacements or additions so required in and to
the inside of said Premises;
(g) Lessee shall be permitted to make alterations within the
leased Premises in amounts not to exceed $5,000. Lessee shall
not make any alterations or additions or perform any
construction work including demolition, electrical, plumbing,
carpentry, HVAC or painting or to permit the making of any
holes in any part of said Building or the painting or placing
of any signs, awnings, aerials, or flagpoles or the like,
visible from outside of said Premises that exceed $5,000.00
without the express written consent of the Lessor, such
consent not to be unreasonably withheld.
(h) to save the Lessor harmless and indemnified from any injury,
loss, claim or damage to any person or property while on said
Premises, if not due to negligence or misconduct of the
Lessor, and to any person or property anywhere occasioned by
any negligent omission, neglect or default of the Lessee or of
employees of the Lessee;
(i) to permit the Lessor and the Lessor's agents to examine the
Premises at reasonable times, and if the Lessor shall so
elect, to make any repairs or additions the Lessor may deem
necessary, and at the Lessee's expense to remove any
alterations, additions, signs, awnings, aerials or flagpoles,
or the like, not consented to in writing, and to show the
Premises to prospective purchasers and tenants, during the
nine months preceding the expiration of said term or any
extension;
(j) in case the Lessee takes possession of said Premises prior to
the commencement of said term, to perform and observe all of
the Lessee's covenants from and after the date upon which the
Lessee takes possession except that no rent shall accrue
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prior to the beginning of said term;
(k) not to permit any employee or visitor of the Lessee to violate
any covenant or obligation of the Lessee hereunder;
(l) the Lessor shall not be held liable to anyone for cessation of
any service rendered customarily to said Premises or Building or
agreed to by the terms of this Lease, due to any accident, to
the making of repairs, alterations or improvements, to labor
difficulties, to trouble in obtaining fuel, electricity, service
or supplies from the sources from which they are usually
obtained for said Building, or to any cause beyond the Lessor's
control.
(m) that Lessee will not dump, flush, or in any way introduce any
hazardous materials or oil or any other toxic substances into
the septic, sewage or other waste disposal system serving the
Premises (the foregoing shall not prevent the introduction of
such substances into a waste disposal system specifically
designed to receive such substances so long as said system is
constructed and maintained in accordance with all applicable
governmental regulations); and in the event of any such
unpermitted introduction, will clean up promptly any damage
occasioned by such. The Lessee further agrees it will not
generate, store or use (except in accordance with all applicable
governmental regulations) or dispose of hazardous materials or
oil or toxic substances in or on the Premises, or dispose of
hazardous materials or oil or toxic substances from the Premises
to any other location, except a properly approved disposal
facility and then only in compliance with any and all federal,
state and local laws and ordinances regulating such activity.
"Hazardous materials", "oil" and "toxic substances", as used in
this Section, shall have the same meanings as defined and used
in the Massachusetts Oil and Hazardous Material Release
Prevention Act, as amended, M.G.L. ch. 21E, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as amended, 42 U.S.C. S9061 et seq.; in the Hazardous Materials
Transportation Act, 49 U.S.C. S180; in the Toxic Substances Act,
15 U.S.C. 8601 et seq.; and in the regulations adopted and
publications promulgated pursuant to said Acts.
V. PROVIDED ALWAYS that in case said Premises or Building or any substantial
part thereof shall be taken by any exercise of the right of eminent domain or
shall receive any direct or consequential or substantial damages for which the
Lessor or the Lessee or either of them shall be entitled to compensation by
reason of anything lawfully done in pursuance of any public or other authority
during this Lease or any extensions thereof, then this Lease shall terminate at
the election of the Lessor which election may be made notwithstanding the
Lessor's entire interest may have been divested; and if the Lessor shall not so
elect, then in case of such taking or damage rendering the Premises or any part
thereof unfit for use and occupation, a just proportion of said rent according
to the nature and extent of the injury shall be abated until the Premises or in
case of such taking what remains thereof shall be put in proper condition for
use and
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occupation. If such taking or damage substantially reduces the floor space of
the demised Premises the Lessee shall have the right, effective when its
possession is disturbed, to terminate the within Lease by notice in writing to
the Lessor delivered within 30 days of the first day on which the Lessee's
possession is so disturbed. The Lessor reserves and excepts all rights to damage
to said Premises and Building and the leasehold hereby created, now accrued or
hereafter accruing by reason of any exercise of eminent domain, or by reason of
anything lawfully done in pursuance of any public or other authority and by way
of confirmation, the Lessee grants to the Lessor all the Lessee's rights to such
damages and covenants to execute and deliver such further instruments of
assignment thereof as the Lessor may from time to time request. The Lessee shall
have the right to pursue claims for relocation expenses and personal property.
The Lessee shall have the right to pursue claims for relocation expenses and
personal property from the public authority stated above or Lessee's insurer. If
the demised Premises shall be substantially damaged by fire or unavoidable
casualty then either party may terminate this Lease as of the date of the
occurrence of such damage by written notice thereof to the other party given
within 10 days of the occurrence of such damage. In the event of any destruction
of or damage to the demised Premises by reason of fire or unavoidable casualty
rendering the same or any part thereof unfit for occupation and provided said
Lease has not been terminated as hereinbefore provided, a just proportion of the
rent hereinbefore reserved shall be suspended or abated, according to the nature
and extent of the injuries sustained by the demised Premises, until the demised
Premises shall be put in proper condition for use and occupation which the
Lessor covenants to commence without delay and to prosecute with all reasonable
despatch.
VI. PROVIDED ALSO, and this Lease is upon this condition, that if the Lessee
shall neglect or fail to perform or observe any of the Lessee's covenants for a
period of 30 days (except in the case of payment of money for a period of 10
days) after written notice thereof, or if the leasehold hereby created shall be
taken on execution, or by other process of law, or if any assignment shall be
made of the Lessee's property for the benefit of creditors, or if a receiver,
guardian, conservator, trustee in bankruptcy or similar officer shall be
appointed to take charge of all or any part of the Lessee's property by a court
of competent jurisdiction, or if the Lessee commits any act of bankruptcy, or if
a petition is filed by the Lessee under any bankruptcy law, or if a petition is
filed against the Lessee under any bankruptcy law and the same shall not be
dismissed within sixty (60) days from the date upon which it is filed, then, and
in any of said cases, the Lessor lawfully may immediately or at any time
thereafter and without demand or notice, enter upon the Premises or any part
thereof in the name of the whole and repossess the same as of the Lessor's
former estate and expel the Lessee and those claiming through or under the
Lessee and remove their effects, forcibly if necessary, without being deemed
guilty of any manner of trespass and without prejudice to any remedies which
might otherwise be used for arrears of rent or preceding
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<PAGE> 12
breach of covenant, and upon such entry this Lease shall terminate, and the
Lessee covenants that in case of such termination or in case of termination
under the provisions of statute by reason of the default of the Lessee, the
Lessee will forthwith pay to the Lessor as damages a sum equal to the amount by
which the rent and other payments called for hereunder for the remainder of the
original term and of any extension thereof exceed the fair rental value of said
Premises for the remainder of the original term and of any extension thereof and
in addition thereto will furthermore indemnify the Lessor during the remainder
of the original term and of any extension thereof against all loss and damage
suffered by reason of such termination however caused, first deducting any
damages paid as above provided, the loss and damage, if any, for each rent
payment period during the remainder of the original term and of any extension
thereof to be paid at the end of each such rent payment period.
VII. No consent or waiver, express or implied, by the Lessor, to or of any
breach of any covenant, condition or duty of the Lessee, shall be construed as a
consent or waiver to or of any other breach of the same or any other covenant,
condition or duty. Any notice from the Lessor to the Lessee or from the Lessee
to the Lessor shall be deemed duly served if mailed by registered mail addressed
if to the Lessee at MILLENNIUM PHARMACEUTICALS, INC., 640 MEMORIAL DRIVE,
CAMBRIDGE, MA 02139; ATTN: MR. MARK LEVIN and to the Lessor at MASSACHUSETTS
INSTITUTE OF TECHNOLOGY, OFFICE OF THE TREASURER, 238 MAIN STREET, SUITE 200,
CAMBRIDGE, MA 02142; ATTN: MR. PHILIP A. TRUSSELL, WITH A COPY TO MEREDITH &
GREW, INC., AGENT FOR MIT, 160 FEDERAL STREET, BOSTON, MA 02110; ATTN: KRISTIN
E. BLOUNT. The customary registered mail receipt shall be conclusive evidence of
such service. The covenants and agreements of the Lessor and Lessee shall run
with the Land and be binding upon and inure to the benefit of them and their
respective heirs, executors, administrators, successors and assigns, but no
covenant or agreement of the Lessor, express or implied, shall be binding upon
any person except for defaults occurring during such person's period of
ownership nor binding individually upon any fiduciary, any shareholder or any
beneficiary under any trust. If the Lessee is several persons or a partnership,
the Lessee's obligations are joint or partnership and also several. Unless
repugnant to the context, "Lessor" and "Lessee" mean the person or persons,
natural or corporate, named above as Lessor and as Lessee respectively, and
their respective heirs, executors, administrators, successors and assigns.
Witness the execution hereof in duplicate under seal the day and year first
above written.
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<PAGE> 13
MASSACHUSETTS INSTITUTE OF TECHNOLOGY
LESSOR
/s/ Philip A. Trussell
DATE:______________________ BY:__________________________________
Philip A. Trussell
Director of Real Estate
MILLENNIUM PHARMACEUTICALS, INC.
LESSEE
/s/ Mark A. Levin
DATE:______________________ BY:__________________________________
Mark A. Levin
President & Chief Executive Officer
EXHIBIT C
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The Lessor shall provide the following services to the leased Premises:
1. Heating and air conditioning equipment for the Premises, as demised,
for normal office hours of 9:00 a.m. to 5:00 p.m., Monday through
Friday, except on National or State Holidays. Excluded from such
services are air conditioning requirements for computers
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<PAGE> 14
or other special office machinery. After hours HVAC services will be made
available to the Lessee for an additional charge as specified in Exhibit
D. Such charges shall be paid to the Lessor as additional rent as
provided herein.
2. Maintenance and repair of all Building heating equipment, electrical
equipment, plumbing systems in public areas only; all Building air
conditioning equipment; all window frames and glass, unless the damage
to any of the above is caused by the willful neglect or misuse by the
Lessee.
3. Nightly (Monday - Friday) cleaning of the Premises and public corridors,
stairwells, lobbies, bathrooms, and cleaning of the windows, both inside
and out, two (2) times per year.
4. Extermination of all public and tenanted areas of the Building, as the
management of the Building deems necessary.
5. Structural maintenance of the leased Premises including repairs to the
roof, exterior walls of the Building, and structural damage to the
floors.
6. The removal of any normal amount of office trash, Monday through Friday,
in a "normal workday". Normal workday trash shall not include trash
generated when a tenant moves in or out of the Building, when equipment
is thrown away, when files are purged, or when construction is going on
within the leased Premises.
7. Lettering for one name in the Building directory located in the main
lobby.
8. One sign, similar to the Lessor's standard signage, which lists the
Lessee's company name and suite number and which shall be located
adjacent to the Lessee's main entrance to the Premises.
9. Snow removal and other services as deemed necessary by the Lessor for the
normal operating of the Building.
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<PAGE> 15
EXHIBIT D
The Lessee shall provide and pay for the following services at the Building:
1. All maintenance of and repairs to the leased Premises necessary to keep
the Premises in good condition or in as good a condition as the Premises
were at the beginning of the Lease term. Such repairs and maintenance
which shall be the Lessee's responsibility, and which shall be subject to
the Lessor's approval, shall include but not be limited to the following:
a. The maintenance and repair of all electrical wiring, the outlets,
switches and light fixtures within the leased Premises;
b. The maintenance and repair of all hardware within the leased
Premises;
c. The maintenance and repair of all walls, doors, ceilings, and
floors;
d. The replacement of fluorescent light tubes and ballasts. This
service is available through Building Management on a time and
material basis.
e. Lessee shall be obligated to pay a $15.00 per hour, per zone fee
for HVAC needs exceeding normal operating hours as defined herein
(Exhibit C).
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<PAGE> 1
EXHIBIT 10.2
MILLENNIUM PHARMACEUTICALS, INC.
1997 EQUITY INCENTIVE PLAN
1. Purpose.
The purpose of this plan (the "Plan") is to secure for Millennium
Pharmaceuticals, Inc. (the "Company") and its shareholders the benefits arising
from capital stock ownership by employees (excluding executive officers and
employees who serve as directors) of, and consultants or advisors to, the
Company and its parent and subsidiary corporations who are expected to
contribute to the Company's future growth and success. Except where the context
otherwise requires, the term "Company" shall include the parent and all present
and future subsidiaries of the Company as defined in Sections 424(e) and 424(f)
of the Internal Revenue Code of 1986, as amended or replaced from time to time
(the "Code").
2. Type of Options and Awards; Administration.
(a) Types of Options and Awards. Options granted pursuant to the Plan
shall be authorized by action of the Board of Directors of the Company (or a
Committee designated by the Board of Directors) and may be either incentive
stock options ("Incentive Stock Options") meeting the requirements of Section
422 of the Code or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code. Awards granted pursuant to the Plan
shall be authorized by action of the Board of Directors of the Company (or a
Committee designated by the Board of Directors) and shall meet the requirements
of Section 13 of the Plan.
(b) Administration. The Plan will be administered by the Board of
Directors of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board of Directors may
in its sole discretion (i) grant options to purchase shares of the Company's
Common Stock (as defined in Section 4 of the Plan), and issue shares upon
exercise of such options as provided in the Plan and (ii) make awards for the
purchase of shares of Common Stock pursuant to Section 13 of the Plan. The Board
shall have authority, subject to the express provisions of the Plan, to construe
the respective option agreements, awards and the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the terms and
provisions of the respective option agreements and awards, which need not be
identical, and to make all other determinations in the judgment of the Board of
Directors necessary or desirable for the administration of the Plan. The Board
of Directors may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement or award in the manner and
to the extent it shall deem expedient to carry the Plan into effect and it shall
be the sole and final judge of such expediency. No director or person acting
pursuant to authority delegated by the Board of Directors shall be liable for
any action or determination made in good faith.
<PAGE> 2
The Board of Directors may, to the full extent permitted by or consistent with
applicable laws or regulations (including, without limitation, applicable state
law), delegate any or all of its powers under the Plan to a committee (the
"Committee") appointed by the Board of Directors, and if the Committee is so
appointed all references to the Board of Directors in the Plan shall mean and
relate to such Committee to the extent authority is so delegated to such
Committee.
3. Eligibility. Options and awards may be granted or made to persons who are,
at the time of grant, employees (excluding executive officers and employees who
serve as directors) of, or consultants or advisors to, the Company; provided,
that the class of individuals to whom Incentive Stock Options may be granted
shall be limited to all employees (excluding executive officers and employees
who serve as directors) of the Company. A person who has been granted an option
or award may, if he or she is otherwise eligible, be granted additional options
or awards if the Board of Directors shall so determine. Subject to adjustment as
provided in Section 16 below, the maximum number of shares with respect to which
options or restricted stock awards may be granted to any person under the Plan
shall not exceed 300,000 shares of Common Stock during any calendar year during
the term of the Plan. For the purpose of calculating such maximum number, (a) an
option or award shall continue to be treated as outstanding notwithstanding its
repricing, cancellation or expiration and (b) the repricing of an outstanding
option or award or the issuance of a new option or award in substitution for a
cancelled option or award shall be deemed to constitute the grant of a new
additional option or award, as the case may be, separate from the original grant
that is repriced or cancelled.
4. Stock Subject to Plan.
Subject to adjustment as provided in Section 16 below, the total number of
shares which may be issued and sold under the Plan is 2,000,000 shares of Common
Stock, $.001 par value per share ("Common Stock"). If an option granted under
the Plan shall expire or terminate for any reason without having been exercised
in full, the unpurchased shares subject to such option shall again be available
for subsequent option grants or awards under the Plan.
5. Forms of Option Agreements.
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors. Such option agreements
may differ among recipients.
6. Purchase Price Upon Exercise of Options.
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<PAGE> 3
(a) General. The purchase price per share of Common Stock deliverable upon
the exercise of an option shall be determined by the Board of Directors,
provided, however, that in the case of an Incentive Stock Option, the exercise
price shall not be less than 100% of the fair market value of such stock, as
determined by the Board of Directors, at the time of grant of such option, or
less than 110% of such fair market value in the case of options described in
Section 11(b).
(b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the
order of the Company in an amount equal to the exercise price of such options,
or, to the extent provided in the applicable option agreement, (i) by delivery
to the Company of shares of Common Stock of the Company already owned by the
optionee having a fair market value equal in amount to the exercise price of the
options being exercised, (ii) by any other means (including without limitation
by delivery of a promissory note of the optionee payable on such terms as are
specified by the Board of Directors) which the Board of Directors determines are
consistent with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Regulation T promulgated by
the Federal Reserve Board) or (iii) by any combination of such methods of
payment. The fair market value of any shares of the Company's Common Stock or
other non-cash consideration which may be delivered upon exercise of an option
shall be determined in such manner as may be prescribed by the Board of
Directors.
7. Option Period.
Each option and all rights thereunder shall expire on such date as shall
be set forth in the applicable option agreement, except that such date, in the
case of an Incentive Stock Option, shall in no case be later than ten years
after the date on which the option is granted.
8. Exercise of Options.
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the agreement evidencing such option, subject to the provisions of the
Plan.
9. Nontransferability of Options.
Incentive Stock Options shall not be assignable or transferable by the
person to whom it is granted, either voluntarily or by operation of law, except
by will or the laws of descent and distribution, and, during the life of the
optionee, shall be exercisable only by the optionee.
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<PAGE> 4
10. Effect of Termination of Employment or Other Relationship.
The Board of Directors shall determine the period of time during which an
optionee may exercise an option following (i) the termination of the optionee's
employment or other relationship with the Company or (ii) the death or
disability of the optionee. Such periods shall be set forth in the agreement
evidencing such option.
11. Incentive Stock Options.
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual:
(i) The purchase price per share of the Common Stock subject to such
Incentive Stock Option shall not be less than 110% of the fair market
value of one share of Common Stock at the time of grant; and
(ii) The option exercise period shall not exceed five years from the
date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first time in any one calendar year
for shares of Common Stock with an aggregate fair market value (determined as of
the respective date or dates of grant) of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:
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<PAGE> 5
(i) an Incentive Stock Option may be exercised within the period of
three months after the date the optionee ceases to be an employee of the
Company (or within such lesser period as may be specified in the
applicable option agreement), provided, that the agreement with respect to
such option may designate a longer exercise period and that the exercise
after such three-month period shall be treated as the exercise of a
non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the Company, or
within three months after the optionee ceases to be such an employee, the
Incentive Stock Option may be exercised, by the person to whom it is
transferred by will or the laws of descent and distribution, within the
period of one year after the date of death (or within such lesser period
as may be specified in the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of
Section 22(e)(3) of the Code or any successor provision thereto) while in
the employ of the Company, the Incentive Stock Option may be exercised
within the period of one year after the date the optionee ceases to be
such an employee because of such disability (or within such lesser period
as may be specified in the applicable option agreement).
For all purposes of the Plan and any option or award granted hereunder,
"employment" shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax Regulations (or any successor regulations).
Notwithstanding the foregoing provisions, no stock option may be exercised after
its expiration date.
12. Additional Provisions.
(a) Additional Option Provisions. The Board of Directors may, in its sole
discretion, include additional provisions in any option granted under the Plan,
including without limitation restrictions on transfer, repurchase rights,
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options, or such other
provisions as shall be determined by the Board of Directors; provided that such
additional provisions shall not be inconsistent with any other term or condition
of the Plan.
(b) Acceleration, Extension, Etc. The Board of Directors may, in its sole
discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all or any particular option or options granted under the
Plan may be exercised; provided, however, that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code.
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<PAGE> 6
13. Awards.
A restricted stock award (an "award") shall consist of the sale and
issuance by the Company of shares of Common Stock, and the purchase by the
recipient of such shares, subject to the terms, conditions and restrictions
described in the document evidencing the award and in this Section 13 and
elsewhere in the Plan.
(a) Execution of Restricted Stock Award Agreement. As a condition to an
award under the Plan, each recipient of an award shall execute an agreement in
such form, which may differ among recipients, as shall be specified by the Board
of Directors at the time of such award.
(b) Price. The Board of Directors shall determine the price at which
shares of Common Stock shall be sold to recipients of awards under the Plan. The
Board of Directors may, in its discretion, issue shares pursuant to awards
without the payment of any cash purchase price by the recipients or issue shares
pursuant to awards at a purchase price below the then fair market value of the
Common Stock. If a purchase price is required to be paid, it shall be paid in
cash or by check payable to the order of the Company at the time that the award
is accepted by the recipient, or by such other means as may be approved by the
Board of Directors.
(c) Number of Shares. The award shall specify the number of shares of
Common Stock granted thereunder.
(d) Restrictions on Transfer. In addition to such other terms, conditions
and restrictions upon awards as shall be imposed by the Board of Directors, all
shares issued pursuant to an award shall be subject to the following
restrictions:
(1) All shares of Common Stock subject to an award (including any
shares issued pursuant to paragraph (e) of this Section) shall be subject
to certain restrictions on disposition and obligations of resale to the
Company as provided in subparagraph (2) below for the period specified in
the document evidencing the award, and shall not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of until such
restrictions lapse. The period during which such restrictions are
applicable is referred to as the "Restricted Period."
(2) In the event that a recipient's employment with the Company (or
consultancy or advisory relationship, as the case may be) is terminated
within the Restricted Period, whether such termination is voluntary or
involuntary, with or without cause, or because of the death or disability
of the recipient, the Company shall have the right and option for a period
of three months following such termination to buy for cash that number of
the shares of Common Stock purchased under the award as to which the
restrictions on
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<PAGE> 7
transfer and the forfeiture provisions contained in the award have not
then lapsed, at a price equal to the price per share originally paid by
the recipient. If such termination occurs within the last three months of
the applicable restrictions, the restrictions and repurchase rights of the
Company shall continue to apply until the expiration of the Company's
three month option period.
(3) Notwithstanding subparagraphs (1) and (2) above, the Board of
Directors may, in its discretion, either at the time that an award is made
or at any time thereafter, waive its right to repurchase shares of Common
Stock upon the occurrence of any of the events described in this paragraph
(d) or remove or modify any part or all of the restrictions. In addition,
the Board of Directors may, in its discretion, impose upon the recipient
of an award at the time of such award such other restrictions on any
shares of Common Stock issued pursuant to such award as the Board of
Directors may deem advisable.
(e) Additional Shares. Any shares received by a recipient of an award as a
stock dividend on, or as a result of stock splits, combinations, exchanges of
shares, reorganizations, mergers, consolidations or otherwise with respect to,
shares of Common Stock received pursuant to such award shall have the same
status and shall bear the same restrictions, all on a proportionate basis, as
the shares initially purchased pursuant to such award.
(f) Transfers in Breach of Award. If any transfer of shares purchased
pursuant to an award is made or attempted contrary to the terms of the Plan and
of such award, the Board of Directors shall have the right to purchase for the
account of the Company those shares from the owner thereof or his or her
transferee at any time before or after the transfer at the price paid for such
shares by the person to whom they were awarded under the Plan. In addition to
any other legal or equitable remedies which it may have, the Company may enforce
its rights by specific performance to the extent permitted by law. The Company
may refuse for any purpose to recognize as a shareholder of the Company any
transferee who receives any shares contrary to the provisions of the Plan and
the applicable award or any recipient of an award who breaches his or her
obligation to resell shares as required by the provisions of the Plan and the
applicable award, and the Company may retain and/or recover all dividends on
such shares which were paid or payable subsequent to the date on which the
prohibited transfer or breach was made or attempted.
(g) Additional Award Provisions. The Board of Directors may, in its sole
discretion, include additional provisions in any award granted under the Plan,
including without limitation commitments to pay cash bonuses, make, arrange for
or guarantee loans or transfer other property to recipients upon the grant of
awards, or such other provisions as shall be determined by the Board of
Directors.
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<PAGE> 8
14. General Restrictions.
(a) Investment Representations. The Company may require any person to whom
an option or award is granted, as a condition of exercising such option or
purchasing the shares subject to the award, to give written assurances in
substance and form satisfactory to the Company to the effect that such person is
acquiring the Common Stock subject to the option or award for his or her own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws.
(b) Compliance With Securities Laws. Each option and award shall be
subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such option or award upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental or regulatory body,
or that the disclosure of non-public information or the satisfaction of any
other condition is necessary as a condition of, or in connection with, the
issuance or purchase of shares thereunder, such option or award may not be
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition shall have
been effected or obtained on conditions acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification, or to satisfy such condition.
15. Rights as a Shareholder.
The holder of an option or recipient of an award shall have no rights as a
shareholder with respect to any shares covered by the option or award
(including, without limitation, any rights to receive dividends or non-cash
distributions with respect to such shares) until the date of issue of a stock
certificate to him or her for such shares. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
16. Adjustment Provisions for Recapitalizations and Related Transactions.
(a) General. If, through or as a result of any merger, consolidation, sale
of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased or decreased or are exchanged for a different number or kind of
shares or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment shall be made in (x) the maximum number
and kind of shares reserved for issuance under
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<PAGE> 9
the Plan, (y) the number and kind of shares or other securities subject to then
outstanding options under the Plan, and (z) the price for each share subject to
any then outstanding options under the Plan or repurchase rights of the Company,
without changing the aggregate purchase price as to which such options remain
exercisable, provided that no adjustment shall be made pursuant to this Section
16 if such adjustment would cause the Plan to fail to comply with Section 422 of
the Code.
(b) Board Authority to Make Adjustments. Any adjustments under this
Section 16 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.
17. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity or in the event of a
liquidation of the Company or sale of all or substantially all of the assets of
the Company, the Board of Directors of the Company, or the board of directors of
any corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to outstanding options and
awards: (i) provide that such options shall be assumed, or equivalent options
shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof), provided that any such options substituted for Incentive
Stock Options shall meet the requirements of Section 424(a) of the Code, (ii)
upon written notice to the optionees, provide that all unexercised options will
terminate immediately prior to the consummation of such transaction unless
exercised by the optionee within a specified period following the date of such
notice, (iii) in the event of a merger under the terms of which holders of the
Common Stock of the Company will receive upon consummation thereof a cash
payment for each share surrendered in the merger (the "Merger Price"), make or
provide for a cash payment to the optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such
outstanding options (to the extent then exercisable at prices not in excess of
the Merger Price) and (B) the aggregate exercise price of all such outstanding
options in exchange for the termination of such options, and (iv) provide that
all or any outstanding options shall become exercisable in full, any
restrictions on exercising outstanding options issued pursuant to the Plan prior
to any given date shall terminate and any restrictions on and rights of the
Company to repurchase shares covered by outstanding awards issued pursuant to
the Plan shall terminate.
(b) Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
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merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.
18. No Special Employment Rights.
Nothing contained in the Plan or in any option or award shall confer upon
any recipient of an award or optionee any right with respect to the continuation
of his or her employment by the Company or interfere in any way with the right
of the Company at any time to terminate such employment or to increase or
decrease the compensation of the optionee.
19. Other Employee Benefits.
Except as to plans which by their terms include such amounts as
compensation, neither the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise nor the value of an award granted to an employee will
constitute compensation with respect to which any other employee benefits of
such employee are determined, including, without limitation, benefits under any
bonus, pension, profit-sharing, life insurance or salary continuation plan,
except as otherwise specifically determined by the Board of Directors.
20. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect, except that if at any time the approval of the
shareholders of the Company is required as to such modification or amendment
under Section 422 of the Code or any successor provision with respect to
Incentive Stock Options, the Board of Directors may not effect such modification
or amendment without such approval.
(b) The termination or any modification or amendment of the Plan shall
not, without the consent of an optionee or recipient of an award, affect his or
her rights under an option or award previously granted to him or her. With the
consent of the optionee or recipient of the award affected, the Board of
Directors may amend outstanding option agreements or awards in a manner not
inconsistent with the Plan. The Board of Directors shall have the right to amend
or modify the terms and provisions of the Plan and of any outstanding Incentive
Stock Options granted under the Plan to the extent necessary to qualify any or
all such options for such favorable federal income tax treatment (including
deferral of taxation upon exercise) as may be afforded incentive stock options
under Section 422 of the Code.
-10-
<PAGE> 11
21. Withholding.
(a) The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee or recipient of an award any federal, state or
local taxes of any kind required by law to be withheld with respect to any
shares issued upon exercise of options under the Plan or the purchase of shares
subject to the award. Subject to the prior approval of the Company, which may be
withheld by the Company in its sole discretion, the optionee or recipient of an
award may elect to satisfy such obligations, in whole or in part, (i) by causing
the Company to withhold shares of Common Stock otherwise issuable pursuant to
the exercise of an option or the purchase of shares subject to an award or (ii)
by delivering to the Company shares of Common Stock already owned by the
optionee or award recipient. The shares so delivered or withheld shall have a
fair market value equal to such withholding obligation. The fair market value of
the shares used to satisfy such withholding obligation shall be determined by
the Company as of the date that the amount of tax to be withheld is to be
determined. An optionee or award recipient who has made an election pursuant to
this Section 21(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.
(b) If the recipient of an award under the Plan elects, in accordance with
Section 83(b) of the Code, to recognize ordinary income in the year of
acquisition of any shares awarded under the Plan, the Company will require at
the time of such election an additional payment for withholding tax purposes
based on the difference, if any, between the purchase price of such shares and
the fair market value of such shares as of the date immediately preceding the
date of the award.
22. Cancellation and New Grant of Options, Etc.
The Board of Directors shall have the authority to effect, at any time and
from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan covering the same or
different numbers of shares of Common Stock and having an option exercise price
per share which may be lower or higher than the exercise price per share of the
cancelled options or (ii) the amendment of the terms of any and all outstanding
options under the Plan to provide an option exercise price per share which is
higher or lower than the then-current exercise price per share of such
outstanding options.
23. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
-11-
<PAGE> 12
Company's shareholders. If such shareholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan, no options
previously granted under the Plan shall be deemed to be Incentive Stock Options
and no Incentive Stock Options shall be granted thereafter. Amendments to the
Plan not requiring shareholder approval shall become effective when adopted by
the Board of Directors; amendments requiring shareholder approval (as provided
in Section 20) shall become effective when adopted by the Board of Directors,
but no Incentive Stock Option issued after the date of such amendment shall
become exercisable (to the extent that such amendment to the Plan was required
to enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee. Subject to this limitation, options
and awards may be granted under the Plan at any time after the effective date
and before the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with Section 17,
the Plan shall terminate, with respect to Incentive Stock Options, upon the
earlier of (i) the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board of Directors, or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued pursuant to the exercise or cancellation of options or the final vesting
of awards granted under the Plan. Unless sooner terminated in accordance with
Section 17, the Plan shall terminate with respect to options which are not
Incentive Stock Options and awards on the date specified in (ii) above. If the
date of termination is determined under (i) above, then options outstanding on
such date shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such options.
24. Provision for Foreign Participants.
The Board of Directors may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside
the United States to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.
Adopted by the Board of Directors on
March 13, 1997
-12-
<PAGE> 1
EXHIBIT 10.3
AMENDMENT TO
1996 EQUITY INCENTIVE PLAN
OF
MILLENNIUM PHARMACEUTICALS, INC.
The 1996 Equity Incentive Plan (the "Plan") be and hereby is amended as
follows:
1. The number 2,100,000 in the second line of Section 4 of the Plan
shall be deleted and the number 4,100,000 shall be inserted in lieu
thereof.
Approved by the Board of Directors on March 13, 1997
Approved by the Stockholders on May 21, 1997
<PAGE> 2
MILLENNIUM PHARMACEUTICALS, INC.
1996 EQUITY INCENTIVE PLAN
1. Purpose.
The purpose of this plan (the "Plan") is to secure for Millennium
Pharmaceuticals, Inc. (the "Company") and its shareholders the benefits arising
from capital stock ownership by employees, officers and directors of, and
consultants or advisors to, the Company and its parent and subsidiary
corporations who are expected to contribute to the Company's future growth and
success. Except where the context otherwise requires, the term "Company" shall
include the parent and all present and future subsidiaries of the Company as
defined in Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as
amended or replaced from time to time (the "Code").
2. Type of Options and Awards; Administration.
(a) Types of Options and Awards. Options granted pursuant to the Plan
shall be authorized by action of the Board of Directors of the Company (or a
Committee designated by the Board of Directors) and may be either incentive
stock options ("Incentive Stock Options") meeting the requirements of Section
422 of the Code or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code. Awards granted pursuant to the Plan
shall be authorized by action of the Board of Directors of the Company (or a
Committee designated by the Board of Directors) and shall meet the requirements
of Section 13 of the Plan.
(b) Administration. The Plan will be administered by the Board of
Directors of the Company, whose construction and interpretation of the terms and
provisions of the Plan shall be final and conclusive. The Board of Directors may
in its sole discretion (i) grant options to purchase shares of the Company's
Common Stock (as defined in Section 4 of the Plan), and issue shares upon
exercise of such options as provided in the Plan and (ii) make awards for the
purchase of shares of Common Stock pursuant to Section 13 of the Plan. The Board
shall have authority, subject to the express provisions of the Plan, to construe
the respective option agreements, awards and the Plan, to prescribe, amend and
rescind rules and regulations relating to the Plan, to determine the terms and
provisions of the respective option agreements and awards, which need not be
identical, and to make all other determinations in the judgment of the Board of
Directors necessary or desirable for the administration of the Plan. The Board
of Directors may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement or award in the manner and
to the extent it shall deem expedient to carry the Plan into effect and it shall
be the sole and final judge of such expediency. No director or person acting
pursuant to authority delegated by the Board of Directors shall be liable for
any action or determination made in good faith.
<PAGE> 3
The Board of Directors may, to the full extent permitted by or consistent with
applicable laws or regulations (including, without limitation, applicable state
law and Rule 16b-3 promulgated under the Securities Exchange Act of 1934 (the
"Exchange Act"), or any successor rule ("Rule 16b-3")), delegate any or all of
its powers under the Plan to a committee (the "Committee") appointed by the
Board of Directors, and if the Committee is so appointed all references to the
Board of Directors in the Plan shall mean and relate to such Committee to the
extent authority is so delegated to such Committee.
(c) Applicability of Rule 16b-3. Those provisions of the Plan which
make express reference to Rule 16b-3 shall apply only to such persons as are
required to file reports under Section 16(a) of the Exchange Act (a "Reporting
Person").
3. Eligibility.
(a) General. Options and awards may be granted or made to persons who
are, at the time of grant, employees, officers or directors (so long as such
officers and directors are also employees) of, or consultants or advisors to,
the Company; provided, that the class of individuals to whom Incentive Stock
Options may be granted shall be limited to all employees of the Company; and
provided further that non-employee directors of the Company are not eligible to
receive options or awards of restricted stock under the Plan. A person who has
been granted an option or award may, if he or she is otherwise eligible, be
granted additional options or awards if the Board of Directors shall so
determine. Subject to adjustment as provided in Section 16 below, the maximum
number of shares with respect to which options or restricted stock awards may be
granted to any person under the Plan shall not exceed 300,000 shares of Common
Stock during any calendar year during the term of the Plan. For the purpose of
calculating such maximum number, (a) an option or award shall continue to be
treated as outstanding notwithstanding its repricing, cancellation or expiration
and (b) the repricing of an outstanding option or award or the issuance of a new
option or award in substitution for a cancelled option or award shall be deemed
to constitute the grant of a new additional option or award, as the case may be,
separate from the original grant that is repriced or cancelled.
(b) Grant of Options to Directors and Officers. The selection of a
director or an officer (as the terms "director" and "officer" are defined for
purposes of Rule 16b-3) as a participant, the timing of the option grant or
award, the exercise price of the option or the sale price of the award and the
number of shares for which an option or award may be granted to such director or
officer shall be determined either (i) by the Board of Directors, of which all
members shall be "disinterested persons" (as hereinafter defined), or (ii) by a
committee of two or more directors having full authority to act in the matter,
of which all members shall be "disinterested persons." For the purposes of the
Plan, a director shall be deemed to be "disinterested" only if such person
qualifies as a "disinterested person" within the meaning of Rule 16b-3, as such
term is interpreted from time to time.
<PAGE> 4
4. Stock Subject to Plan.
Subject to adjustment as provided in Section 16 below, the total number
of shares which may be issued and sold under the Plan is 2,100,000 shares of
Common Stock, $.001 par value per share ("Common Stock"). If an option granted
under the Plan shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares subject to such option shall again be
available for subsequent option grants or awards under the Plan.
5. Forms of Option Agreements.
As a condition to the grant of an option under the Plan, each recipient
of an option shall execute an option agreement in such form not inconsistent
with the Plan as may be approved by the Board of Directors. Such option
agreements may differ among recipients.
6. Purchase Price Upon Exercise of Options.
(a) General. The purchase price per share of Common Stock deliverable
upon the exercise of an option shall be determined by the Board of Directors,
provided, however, that in the case of an Incentive Stock Option, the exercise
price shall not be less than 100% of the fair market value of such stock, as
determined by the Board of Directors, at the time of grant of such option, or
less than 110% of such fair market value in the case of options described in
Section 11(b).
(b) Payment of Purchase Price. Options granted under the Plan may
provide for the payment of the exercise price by delivery of cash or a check to
the order of the Company in an amount equal to the exercise price of such
options, or, to the extent provided in the applicable option agreement, (i) by
delivery to the Company of shares of Common Stock of the Company already owned
by the optionee having a fair market value equal in amount to the exercise price
of the options being exercised, (ii) by any other means (including without
limitation by delivery of a promissory note of the optionee payable on such
terms as are specified by the Board of Directors) which the Board of Directors
determines are consistent with the purpose of the Plan and with applicable laws
and regulations (including, without limitation, the provisions of Rule 16b-3 and
Regulation T promulgated by the Federal Reserve Board) or (iii) by any
combination of such methods of payment. The fair market value of any shares of
the Company's Common Stock or other non-cash consideration which may be
delivered upon exercise of an option shall be determined in such manner as may
be prescribed by the Board of Directors.
7. Option Period.
Each option and all rights thereunder shall expire on such date as
shall be set forth in the applicable option agreement, except that such date, in
the case of an Incentive Stock Option, shall in no case be later than ten years
after the date on
<PAGE> 5
which the option is granted.
8. Exercise of Options.
Each option granted under the Plan shall be exercisable either in full
or in installments at such time or times and during such period as shall be set
forth in the agreement evidencing such option, subject to the provisions of the
Plan.
9. Nontransferability of Options.
Incentive Stock Options, and all options granted to Reporting Persons,
shall not be assignable or transferable by the person to whom it is granted,
either voluntarily or by operation of law, except by will or the laws of descent
and distribution, and, during the life of the optionee, shall be exercisable
only by the optionee; provided, however, that non-statutory options granted to
Reporting Persons may be transferred pursuant to a qualified domestic relations
order (as defined in Rule 16b-3).
10. Effect of Termination of Employment or Other Relationship.
The Board of Directors shall determine the period of time during which
an optionee may exercise an option following (i) the termination of the
optionee's employment or other relationship with the Company or (ii) the death
or disability of the optionee. Such periods shall be set forth in the agreement
evidencing such option.
11. Incentive Stock Options.
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such in the
option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option
is to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual:
(i) The purchase price per share of the Common Stock subject
to such Incentive Stock Option shall not be less than 110% of the fair
market value of one share of Common Stock at the time of grant; and
<PAGE> 6
(ii) The option exercise period shall not exceed five years
from the date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide,
options granted to any employee under the Plan (and any other incentive stock
option plans of the Company) which are intended to constitute Incentive Stock
Options shall not constitute Incentive Stock Options to the extent that such
options, in the aggregate, become exercisable for the first time in any one
calendar year for shares of Common Stock with an aggregate fair market value
(determined as of the respective date or dates of grant) of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:
(i) an Incentive Stock Option may be exercised within the
period of three months after the date the optionee ceases to be an
employee of the Company (or within such lesser period as may be
specified in the applicable option agreement), provided, that the
agreement with respect to such option may designate a longer exercise
period and that the exercise after such three-month period shall be
treated as the exercise of a non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the Company,
or within three months after the optionee ceases to be such an
employee, the Incentive Stock Option may be exercised, by the person to
whom it is transferred by will or the laws of descent and distribution,
within the period of one year after the date of death (or within such
lesser period as may be specified in the applicable option agreement);
and
(iii) if the optionee becomes disabled (within the meaning of
Section 22(e)(3) of the Code or any successor provision thereto) while
in the employ of the Company, the Incentive Stock Option may be
exercised within the period of one year after the date the optionee
ceases to be such an employee because of such disability (or within
such lesser period as may be specified in the applicable option
agreement).
For all purposes of the Plan and any option or award granted hereunder,
"employment" shall be defined in accordance with the provisions of Section
1.421-7(h) of the Income Tax Regulations (or any successor regulations).
Notwithstanding the foregoing provisions, no stock option may be exercised after
its expiration date.
12. Additional Provisions.
(a) Additional Option Provisions. The Board of Directors may, in its
sole
<PAGE> 7
discretion, include additional provisions in any option granted under the Plan,
including without limitation restrictions on transfer, repurchase rights,
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options, or such other
provisions as shall be determined by the Board of Directors; provided that such
additional provisions shall not be inconsistent with any other term or condition
of the Plan.
(b) Acceleration, Extension, Etc. The Board of Directors may, in its
sole discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all or any particular option or options granted under the
Plan may be exercised; provided, however, that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3.
13. Awards.
A restricted stock award (an "award") shall consist of the sale and
issuance by the Company of shares of Common Stock, and the purchase by the
recipient of such shares, subject to the terms, conditions and restrictions
described in the document evidencing the award and in this Section 13 and
elsewhere in the Plan.
(a) Execution of Restricted Stock Award Agreement. As a condition to an
award under the Plan, each recipient of an award shall execute an agreement in
such form, which may differ among recipients, as shall be specified by the Board
of Directors at the time of such award.
(b) Price. The Board of Directors shall determine the price at which
shares of Common Stock shall be sold to recipients of awards under the Plan. The
Board of Directors may, in its discretion, issue shares pursuant to awards
without the payment of any cash purchase price by the recipients or issue shares
pursuant to awards at a purchase price below the then fair market value of the
Common Stock. If a purchase price is required to be paid, it shall be paid in
cash or by check payable to the order of the Company at the time that the award
is accepted by the recipient, or by such other means as may be approved by the
Board of Directors.
(c) Number of Shares. The award shall specify the number of shares of
Common Stock granted thereunder.
(d) Restrictions on Transfer. In addition to such other terms,
conditions and restrictions upon awards as shall be imposed by the Board of
Directors, all shares issued pursuant to an award shall be subject to the
following restrictions:
(1) All shares of Common Stock subject to an award (including
any shares issued pursuant to paragraph (e) of this Section) shall be
subject to certain restrictions on disposition and obligations of
resale to the Company as provided in subparagraph (2) below for the
period specified in the document
<PAGE> 8
evidencing the award, and shall not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of until such restrictions
lapse. The period during which such restrictions are applicable is
referred to as the "Restricted Period."
(2) In the event that a recipient's employment with the
Company (or consultancy or advisory relationship, as the case may be)
is terminated within the Restricted Period, whether such termination is
voluntary or involuntary, with or without cause, or because of the
death or disability of the recipient, the Company shall have the right
and option for a period of three months following such termination to
buy for cash that number of the shares of Common Stock purchased under
the award as to which the restrictions on transfer and the forfeiture
provisions contained in the award have not then lapsed, at a price
equal to the price per share originally paid by the recipient. If such
termination occurs within the last three months of the applicable
restrictions, the restrictions and repurchase rights of the Company
shall continue to apply until the expiration of the Company's three
month option period.
(3) Notwithstanding subparagraphs (1) and (2) above, the Board
of Directors may, in its discretion, either at the time that an award
is made or at any time thereafter, waive its right to repurchase shares
of Common Stock upon the occurrence of any of the events described in
this paragraph (d) or remove or modify any part or all of the
restrictions. In addition, the Board of Directors may, in its
discretion, impose upon the recipient of an award at the time of such
award such other restrictions on any shares of Common Stock issued
pursuant to such award as the Board of Directors may deem advisable.
(e) Additional Shares. Any shares received by a recipient of an award
as a stock dividend on, or as a result of stock splits, combinations, exchanges
of shares, reorganizations, mergers, consolidations or otherwise with respect
to, shares of Common Stock received pursuant to such award shall have the same
status and shall bear the same restrictions, all on a proportionate basis, as
the shares initially purchased pursuant to such award.
(f) Transfers in Breach of Award. If any transfer of shares purchased
pursuant to an award is made or attempted contrary to the terms of the Plan and
of such award, the Board of Directors shall have the right to purchase for the
account of the Company those shares from the owner thereof or his or her
transferee at any time before or after the transfer at the price paid for such
shares by the person to whom they were awarded under the Plan. In addition to
any other legal or equitable remedies which it may have, the Company may enforce
its rights by specific performance to the extent permitted by law. The Company
may refuse for any purpose to recognize as a shareholder of the Company any
transferee who receives any shares contrary to the provisions of the Plan and
the applicable award or any recipient of an award who breaches his or her
obligation to resell shares as required
<PAGE> 9
by the provisions of the Plan and the applicable award, and the Company may
retain and/or recover all dividends on such shares which were paid or payable
subsequent to the date on which the prohibited transfer or breach was made or
attempted.
(g) Additional Award Provisions. The Board of Directors may, in its
sole discretion, include additional provisions in any award granted under the
Plan, including without limitation commitments to pay cash bonuses, make,
arrange for or guarantee loans or transfer other property to recipients upon the
grant of awards, or such other provisions as shall be determined by the Board of
Directors.
14. General Restrictions.
(a) Investment Representations. The Company may require any person to
whom an option or award is granted, as a condition of exercising such option or
purchasing the shares subject to the award, to give written assurances in
substance and form satisfactory to the Company to the effect that such person is
acquiring the Common Stock subject to the option or award for his or her own
account for investment and not with any present intention of selling or
otherwise distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and applicable state
securities laws.
(b) Compliance With Securities Laws. Each option and award shall be
subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
to such option or award upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental or regulatory body,
or that the disclosure of non-public information or the satisfaction of any
other condition is necessary as a condition of, or in connection with, the
issuance or purchase of shares thereunder, such option or award may not be
exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval, or satisfaction of such condition shall have
been effected or obtained on conditions acceptable to the Board of Directors.
Nothing herein shall be deemed to require the Company to apply for or to obtain
such listing, registration or qualification, or to satisfy such condition.
15. Rights as a Shareholder.
The holder of an option or recipient of an award shall have no rights
as a shareholder with respect to any shares covered by the option or award
(including, without limitation, any rights to receive dividends or non-cash
distributions with respect to such shares) until the date of issue of a stock
certificate to him or her for such shares. No adjustment shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
16. Adjustment Provisions for Recapitalizations and Related Transactions.
(a) General. If, through or as a result of any merger, consolidation,
sale of
<PAGE> 10
all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased or decreased or are exchanged for a different number or kind of
shares or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, an
appropriate and proportionate adjustment shall be made in (x) the maximum number
and kind of shares reserved for issuance under the Plan, (y) the number and kind
of shares or other securities subject to then outstanding options under the
Plan, and (z) the price for each share subject to any then outstanding options
under the Plan or repurchase rights of the Company, without changing the
aggregate purchase price as to which such options remain exercisable, provided
that no adjustment shall be made pursuant to this Section 16 if such adjustment
would cause the Plan to fail to comply with Section 422 of the Code or with Rule
16b-3.
(b) Board Authority to Make Adjustments. Any adjustments under this
Section 16 will be made by the Board of Directors, whose determination as to
what adjustments, if any, will be made and the extent thereof will be final,
binding and conclusive. No fractional shares will be issued under the Plan on
account of any such adjustments.
17. Merger, Consolidation, Asset Sale, Liquidation, etc.
(a) General. In the event of a consolidation or merger in which
outstanding shares of Common Stock are exchanged for securities, cash or other
property of any other corporation or business entity or in the event of a
liquidation of the Company or sale of all or substantially all of the assets of
the Company, the Board of Directors of the Company, or the board of directors of
any corporation assuming the obligations of the Company, may, in its discretion,
take any one or more of the following actions, as to outstanding options and
awards: (i) provide that such options shall be assumed, or equivalent options
shall be substituted, by the acquiring or succeeding corporation (or an
affiliate thereof), provided that any such options substituted for Incentive
Stock Options shall meet the requirements of Section 424(a) of the Code, (ii)
upon written notice to the optionees, provide that all unexercised options will
terminate immediately prior to the consummation of such transaction unless
exercised by the optionee within a specified period following the date of such
notice, (iii) in the event of a merger under the terms of which holders of the
Common Stock of the Company will receive upon consummation thereof a cash
payment for each share surrendered in the merger (the "Merger Price"), make or
provide for a cash payment to the optionees equal to the difference between (A)
the Merger Price times the number of shares of Common Stock subject to such
outstanding options (to the extent then exercisable at prices not in excess of
the Merger Price) and (B) the aggregate exercise price of all such outstanding
options in exchange for the termination of such options, and (iv) provide that
all or any outstanding options shall become exercisable in full, any
restrictions on exercising outstanding options issued
<PAGE> 11
pursuant to the Plan prior to any given date shall terminate and any
restrictions on and rights of the Company to repurchase shares covered by
outstanding awards issued pursuant to the Plan shall terminate.
(b) Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become
employees of the Company, or a subsidiary of the Company, as the result of a
merger or consolidation of the employing corporation with the Company or a
subsidiary of the Company, or as a result of the acquisition by the Company, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.
18. No Special Employment Rights.
Nothing contained in the Plan or in any option or award shall confer
upon any recipient of an award or optionee any right with respect to the
continuation of his or her employment by the Company or interfere in any way
with the right of the Company at any time to terminate such employment or to
increase or decrease the compensation of the optionee.
19. Other Employee Benefits.
Except as to plans which by their terms include such amounts as
compensation, neither the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise nor the value of an award granted to an employee will
constitute compensation with respect to which any other employee benefits of
such employee are determined, including, without limitation, benefits under any
bonus, pension, profit-sharing, life insurance or salary continuation plan,
except as otherwise specifically determined by the Board of Directors.
20. Amendment of the Plan.
(a) The Board of Directors may at any time, and from time to time,
modify or amend the Plan in any respect, except that if at any time the approval
of the shareholders of the Company is required as to such modification or
amendment under Section 422 of the Code or any successor provision with respect
to Incentive Stock Options or under Rule 16b-3 with respect to options held by
or awards made to Reporting Persons, the Board of Directors may not effect such
modification or amendment without such approval.
(b) The termination or any modification or amendment of the Plan shall
not, without the consent of an optionee or recipient of an award, affect his or
her rights under an option or award previously granted to him or her. With the
consent of the optionee or recipient of the award affected, the Board of
Directors may amend
<PAGE> 12
outstanding option agreements or awards in a manner not inconsistent with the
Plan. The Board of Directors shall have the right to amend or modify (i) the
terms and provisions of the Plan and of any outstanding Incentive Stock Options
granted under the Plan to the extent necessary to qualify any or all such
options for such favorable federal income tax treatment (including deferral of
taxation upon exercise) as may be afforded incentive stock options under Section
422 of the Code and (ii) the terms and provisions of the Plan and of any
outstanding option or award to the extent necessary to ensure the qualification
of the Plan under Rule 16b-3 or any successor rule.
21. Withholding.
(a) The Company shall have the right to deduct from payments of any
kind otherwise due to the optionee or recipient of an award any federal, state
or local taxes of any kind required by law to be withheld with respect to any
shares issued upon exercise of options under the Plan or the purchase of shares
subject to the award. Subject to the prior approval of the Company, which may be
withheld by the Company in its sole discretion, the optionee or recipient of an
award may elect to satisfy such obligations, in whole or in part, (i) by causing
the Company to withhold shares of Common Stock otherwise issuable pursuant to
the exercise of an option or the purchase of shares subject to an award or (ii)
by delivering to the Company shares of Common Stock already owned by the
optionee or award recipient. The shares so delivered or withheld shall have a
fair market value equal to such withholding obligation. The fair market value of
the shares used to satisfy such withholding obligation shall be determined by
the Company as of the date that the amount of tax to be withheld is to be
determined. An optionee or award recipient who has made an election pursuant to
this Section 21(a) may only satisfy his or her withholding obligation with
shares of Common Stock which are not subject to any repurchase, forfeiture,
unfulfilled vesting or other similar requirements.
(b) Notwithstanding the foregoing, in the case of a Reporting Person,
no election to use shares for the payment of withholding taxes shall be
effective unless made in compliance with any applicable requirements of Rule
16b-3.
(c) If the recipient of an award under the Plan elects, in accordance
with Section 83(b) of the Code, to recognize ordinary income in the year of
acquisition of any shares awarded under the Plan, the Company will require at
the time of such election an additional payment for withholding tax purposes
based on the difference, if any, between the purchase price of such shares and
the fair market value of such shares as of the date immediately preceding the
date of the award.
22. Cancellation and New Grant of Options, Etc.
The Board of Directors shall have the authority to effect, at any time
and from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new
<PAGE> 13
options under the Plan covering the same or different numbers of shares of
Common Stock and having an option exercise price per share which may be lower or
higher than the exercise price per share of the cancelled options or (ii) the
amendment of the terms of any and all outstanding options under the Plan to
provide an option exercise price per share which is higher or lower than the
then-current exercise price per share of such outstanding options.
23. Effective Date and Duration of the Plan.
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become exercisable unless and until the Plan shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months after the date of the Board's adoption of the Plan, no options
previously granted under the Plan shall be deemed to be Incentive Stock Options
and no Incentive Stock Options shall be granted thereafter. Amendments to the
Plan not requiring shareholder approval shall become effective when adopted by
the Board of Directors; amendments requiring shareholder approval (as provided
in Section 20) shall become effective when adopted by the Board of Directors,
but no Incentive Stock Option issued after the date of such amendment shall
become exercisable (to the extent that such amendment to the Plan was required
to enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's shareholders. If such shareholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee. Subject to this limitation, options
and awards may be granted under the Plan at any time after the effective date
and before the date fixed for termination of the Plan.
(b) Termination. Unless sooner terminated in accordance with Section
17, the Plan shall terminate, with respect to Incentive Stock Options, upon the
earlier of (i) the close of business on the day next preceding the tenth
anniversary of the date of its adoption by the Board of Directors, or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued pursuant to the exercise or cancellation of options or the final vesting
of awards granted under the Plan. Unless sooner terminated in accordance with
Section 17, the Plan shall terminate with respect to options which are not
Incentive Stock Options and awards on the date specified in (ii) above. If the
date of termination is determined under (i) above, then options outstanding on
such date shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such options.
24. Provision for Foreign Participants.
The Board of Directors may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside
the
<PAGE> 14
United States to recognize differences in laws, rules, regulations or customs of
such foreign jurisdictions with respect to tax, securities, currency, employee
benefit or other matters.
Adopted by the Board of Directors on
March 14, 1996
<PAGE> 1
EXHIBIT 10.4
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
SPONSORED RESEARCH AGREEMENT
BETWEEN
WHITEHEAD INSTITUTE FOR BIOMEDICAL RESEARCH,
AFFYMETRIX, INC.,
BRISTOL-MYERS SQUIBB COMPANY
AND
MILLENNIUM PHARMACEUTICALS, INC.
<PAGE> 2
TABLE OF CONTENTS
Article I. DEFINITIONS................................................... 1
1.1. "Additional Consortium Members" ..................... 2
1.2. "Advisory Board"..................................... 2
1.3. "Affiliate".......................................... 2
1.4. "AFFX Contribution".................................. 2
1.5. "AFFX Materials"..................................... 2
1.6. "Annual Research Program"............................ 2
1.7. "Annual Research Program Plan"....................... 2
1.8. "Background Know-How"................................ 2
1.9. "Background Patent Rights" .......................... 3
1.10. "Consortium Member Agreement"........................ 3
1.11. "Consortium Members"................................. 3
1.12. "Consortium Member Contribution"..................... 3
1.13. "Contract Year"...................................... 3
1.14. "Contributed Technology Upgrade"..................... 3
1.15. "Core License Field"................................. 3
1.16. "Existing Research Agreement"........................ 3
1.17. "Field".............................................. 4
1.18. "GAAP"............................................... 4
1.19. "Initial Consortium Members"......................... 4
1.20. "Institute Director"................................. 4
1.21. "Invention Notice"................................... 4
1.22. "IP Owning Consortium Member" ....................... 4
1.23. "Licensee Consortium Members"........................ 4
1.24. "License Field"...................................... 4
1.25. "Millennium Contributed Technology".................. 4
1.26. "Minimum Contribution Level"......................... 5
1.27. "Product Technology License Agreement"............... 5
1.28. "Program Copyrights"................................. 5
1.29. "Program Know-How"................................... 5
1.30. "Program Materials".................................. 5
1.31. "Program Patent Rights".............................. 5
1.32. "Requisite Majority"................................. 6
1.33. "Research Program"................................... 6
1.34. "Research Program Director".......................... 6
1.35. "Research Project"................................... 6
1.36. "Research Project Plan".............................. 6
1.37. "Research Technology License Agreement".............. 6
Article II. THE CONSORTIUM................................................ 7
2.1. Consortium Members................................... 7
<PAGE> 3
2.2. Advisory Board....................................... 7
2.3. Consortium Member Agreement.......................... 8
Article III. THE RESEARCH PROGRAM.......................................... 9
3.1. General.............................................. 9
3.2. Research Program Director. .......................... 9
3.3. Annual Research Program Plans........................ 12
3.4. Records.............................................. 14
3.5. Meetings............................................. 15
3.6. Reports.............................................. 15
3.7. Technology Transfer.................................. 16
3.8. Research Program Administrator....................... 16
3.9. Conduct of the Research Program by the Institute..... 16
Article IV. RESEARCH PROGRAM FUNDING, THIRD PARTY ACTIVITIES AND
TECHNOLOGY CONTRIBUTIONS...................................... 17
4.1. Consortium Members' Commitments. .................... 17
4.2. Funding Mechanics.................................... 18
4.3. Financial Records.................................... 18
4.4. Third Party Activities............................... 18
4.5. Consortium Member License Grants
and Technology Transfer.............................. 22
Article V. INTELLECTUAL PROPERTY RIGHTS.................................. 22
5.1. Background Know-How.................................. 22
5.2. Program Know-How, Program Materials
and Program Copyrights............................... 22
5.3. Ownership of Intellectual Property Rights............ 23
5.4. Research Technology License Option................... 23
5.5. Product Technology License Option.................... 24
5.6. Institute Rights..................................... 26
5.7. Patent Filing, Prosecution and Maintenance........... 27
5.8 Program Materials.................................... 29
5.9. Employee Agreements.................................. 30
5.10. No Implied Licenses.................................. 30
Article VI. CONFIDENTIAL INFORMATION...................................... 30
6.1. Confidentiality...................................... 30
6.2. Term................................................. 31
6.3. Return of Materials.................................. 32
Article VII. PUBLICATION AND ACADEMIC RIGHTS............................... 32
7.1. Use of Information................................... 32
<PAGE> 4
7.2. Publication or Public Disclosure of Information...... 32
Article VIII. WITHDRAWAL.................................................... 33
8.1. Voluntary Withdrawal................................. 33
8.3. Effect of Withdrawal................................. 33
Article IX. TERM; TERMINATION AND RENEWAL................................. 35
9.1. Term................................................. 35
9.2. Termination for Breach by the Institute.............. 36
9.3. Termination Rights of the Institute. ................ 36
9.4. Additional Termination Event......................... 36
9.5. Return of Funds; Continued Funding Obligation........ 37
9.6. Survival............................................. 37
9.7. Renewal.............................................. 37
Article X. REPRESENTATIONS AND WARRANTIES................................ 38
10.1. Representations and Warranties of All Parties........ 38
10.2. Representations and Warranties of the Institute...... 38
10.3. Limitations.......................................... 38
Article XI. LIABILITY AND INDEMNIFICATION................................. 38
11.1. Release from Liability............................... 39
11.2. Indemnification...................................... 39
Article XII. GENERAL PROVISIONS............................................ 40
12.1. Dispute Resolution................................... 40
12.2. Governing Law........................................ 40
12.3. Independent Contractors.............................. 41
12.4. Parties Bound........................................ 41
12.5. Assignment........................................... 41
12.6. Entire Agreement..................................... 41
12.7. Further Assurances................................... 41
12.8. Right to Develop Independently....................... 41
12.9. Notices.............................................. 42
12.10. Amendment............................................ 43
12.11. Waiver............................................... 43
12.12. Limitation of Liability. ............................ 43
12.13. Section Headings..................................... 43
12.14. Severability......................................... 43
12.15. Counterparts......................................... 43
12.16. Public Announcements................................. 43
12.17. No Third Party Beneficiary Rights.................... 44
<PAGE> 5
SPONSORED RESEARCH AGREEMENT
AGREEMENT made as of the 28th day of April, 1997 (the "Effective Date")
by and among Whitehead Institute for Biomedical Research, a Delaware corporation
("Institute"), Affymetrix, Inc., a California corporation ("AFFX"),
Bristol-Myers Squibb Company, a Delaware corporation ("BMS"), and Millennium
Pharmaceuticals, Inc., a Delaware corporation ("Millennium") (the "Agreement").
INTRODUCTION
1. In the pursuit of its objective of expanding human knowledge in the
biomedical sciences, the Institute has proposed a program of research in the
Field (as hereinafter defined). The Institute has research facilities and
experienced scientists and other personnel which enable it to conduct research
activities in the Field through the Whitehead Center for Genome Research.
2. The Consortium Members (as hereinafter defined) desire to sponsor
the Research Program (as hereinafter defined) in the Field.
3. The Consortium Members recognize that the Institute as a recipient
of U.S. government research funds is subject to certain federal guidelines and
regulations regarding use of federal funds, conflicts of interest and other
areas of concern to the federal government, and acknowledge that the Institute
will continue to follow its policies and procedures that ensure adherence to
such guidelines and regulations. The Consortium Members recognize that the
Institute is engaged in the Human Genome Project, aimed at determining the
genomic sequence of the human and mouse genomes. This project is supported by
the United States government and the Institute has committed to placing the
fruits of this work in the public domain on a rapid basis without patents or
other restrictions and without advance access to any party. The Consortium
Members acknowledge the Institute's commitment and seek no rights or special
access to the results of the Human Genome Project.
4. In consideration of the sponsorship by the Consortium Members of the
Research Program, the Institute is willing to grant the Consortium Members
certain licenses and options to license patents, patent applications and other
intellectual property rights arising out of the Research Program.
In consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt of which is
hereby acknowledged, the Institute and each of the Consortium Members agree as
follows:
Article I DEFINITIONS
(a) Defined Terms. As used in this Agreement, the following terms,
whether used in the singular or plural, shall have the following respective
meanings:
<PAGE> 6
1.1. "Additional Consortium Members" means Consortium Members, other
than the Initial Consortium Members, who become parties to this Agreement
pursuant to the procedures specified in Section 2.1.
1.2. "Advisory Board" means the committee comprising the Research
Program Director, the Institute Director and representatives of the Consortium
Members established pursuant to Section 2.2.
1.3. "Affiliate" means, with respect to a specified party to this
Agreement, any corporation, company, partnership, joint venture and/or firm
which now or hereafter controls, is controlled by or is under common control
with such specified party. For purposes of this Section 1.3, "control" shall
mean (a) in the case of corporate entities, direct or indirect ownership of at
least 50% of the stock or shares entitled to vote for the election of directors;
and (b) in the case of non-corporate entities, direct or indirect ownership of
at least 50% of the equity interest with the power to direct the management and
policies of such noncorporate entities.
1.4. "AFFX Contribution" means the technology rights and other
contributions of AFFX set forth on Schedule I to this Agreement. AFFX
Contribution shall not include any AFFX Materials provided to the Institute
pursuant to Section 4.1.2 of this Agreement.
1.5. "AFFX Materials" means the chips, hardware, chip design services
and software to be provided by AFFX to the Institute, as specifically set forth
in each Annual Research Program Plan and related Annual Research Program Budget.
1.6. "Annual Research Program" means the research undertaken during a
Contract Year by the Institute pursuant to this Agreement as part of the
Research Program as provided in Article III.
1.7. "Annual Research Program Plan" means the annual written research
plan for the conduct of the applicable Annual Research Program as prepared and
approved pursuant to Section 3.3.1.
1.8. "Background Know-How" means all discoveries, inventions, data,
software, biological materials, information, trade secrets and other technology
developed or generated by the Institute or its employees or contractors prior to
the Effective Date that satisfy all of the following conditions: (a) are
relevant to the Field, (b) are used by the Institute in the conduct of the
Research Program, and (c) are not subject to any contractual restrictions as of
the Effective Date that would prohibit the Institute from granting to the
Licensee Consortium Members the license set forth in Section 5.1.
-2-
<PAGE> 7
1.9. "Background Patent Rights" means any and all patent applications
and patents covering any invention included within the Background Know-How, as
set forth on Schedule VI to this Agreement, as Schedule VI may be amended from
time to time.
1.10. "Consortium Member Agreement" means the agreement, effective as
of the Effective Date of this Agreement, between and among the Consortium
Members governing the relations of the Consortium Members among themselves with
respect to the Research Program and their respective rights in and to the
Background Know-How, Program Know-How, Program Materials, Program Copyrights and
Program Patent Rights.
1.11. "Consortium Members" means the Initial Consortium Members and the
Additional Consortium Members.
1.12. "Consortium Member Contribution" means the AFFX Contribution
and/or the Millennium Contributed Technology.
1.13. "Contract Year" means (a) with respect to the first Contract
Year, the period commencing on the Effective Date and ending on June 30, 1998,
and (b) each subsequent twelve (12) months period commencing on each July 1
during the term of this Agreement.
1.14. "Contributed Technology Upgrade" means any invention, process,
revision, update, modification, addition and other improvement related thereto,
whether patentable or not, including but not limited to new hardware and
software, technical data, information, material and know-how (a) which is
necessary or useful to make, develop or otherwise utilize Millennium Contributed
Technology (b) which is developed or acquired by Millennium during the period
that Millennium is obligated to provide the Institute with Contributed
Technology Upgrades pursuant to the applicable Annual Research Program Plan and,
if applicable, Article VIII, and (c) to which Millennium has the right to grant
licenses or sublicenses without violating the terms of any agreement or other
arrangement with a third party.
1.15. "Core License Field" means all uses or applications of Program
Know-How, Program Materials, Program Copyrights, Program Patent Rights and
Background Know-How with respect to (a) the diagnosis, prediction, prevention
and/or treatment of human or animal diseases or medical conditions, (b) analysis
of nucleic acid samples and management of data relating thereto, and (c)
agriculture and related endeavors.
1.16. "Existing Research Agreement" means the Sponsored Research
Agreement effective as of October 21, 1996 between the Institute, Millennium and
Dr. Thomas Hudson.
-3-
<PAGE> 8
1.17. "Field" means the identification and development of new genomics
technologies and genetic information to, among other things, ascertain, process,
integrate and interpret genomic information in a high throughput, massively
parallel fashion, thereby enabling functional annotation of genomes (biological
function and disease relevance).
1.18. "GAAP" means United States generally accepted accounting
principles.
1.19. "Initial Consortium Members" means AFFX, BMS and Millennium.
1.20. "Institute Director" means the individual serving as the Director
of the Institute.
1.21. "Invention Notice" means a notice given by the Institute pursuant
to Section 5.3.2 or by the Institute or an IP Owning Consortium Member pursuant
to Section 5.3.3 of an invention covered by, or able to be covered by, a patent
or patent application within the Program Patent Rights, which includes a
description of the invention sufficient to permit each Consortium Member to
evaluate its interest in such invention.
1.22. "IP Owning Consortium Member" means a Consortium Member that (a)
jointly owns with the Institute or one or more other Consortium Members certain
patents or patent applications included in Program Patent Rights as a result of
joint conception and/or reduction to practice in the course of the Research
Program or (b) is the sole owner of certain patents or patent applications
included in Program Patent Rights as a result of that Consortium Member's
conception and/or reduction to practice in the course of the Research Program.
1.23. "Licensee Consortium Members" means the Consortium Member or
Members which, pursuant to the Consortium Member Agreement, are the designated
licensee or licensees of particular Program Know-How, Program Materials, Program
Copyrights, Program Patent Rights or Background Know-How.
1.24. "License Field" means all uses or applications of Program
Know-How, Program Materials, Program Copyrights, Program Patent Rights and
Background Know-How, as applicable.
1.25. "Millennium Contributed Technology" means such technology rights
developed or acquired by Millennium of the type set forth on Schedule II to this
Agreement as may be contributed by Millennium to the Institute pursuant to the
provisions of Section 4.5 of this Agreement.
-4-
<PAGE> 9
Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote such omission.
1.26. "Minimum Contribution Level" means (a) for the first Contract
Year, ***********, and (b) for each subsequent Contract Year,
**************************** *****, of which *****************, of which ******
is in the form of cash, provided that (a) the amount specified shall be subject
to adjustment, not to exceed five percent (5%) in any Contract Year, to reflect
the increase, if any, in the U.S. Consumer Price Index (or any comparable
successor index thereto) during the immediately preceding Contract Year, and (b)
no Consortium Member Contributions shall be considered in determining whether
the Minimum Contribution Level has been achieved, but the price of AFFX
Materials (as determined pursuant to Schedule III to this Agreement) shall be so
considered.
1.27. "Product Technology License Agreement" means a license agreement
substantially in the form of Exhibit A hereto, entered into by the Institute
(and, if applicable, any IP Owning Consortium Members), as licensor(s) and the
Licensee Consortium Members, as licensees.
1.28. "Program Copyrights" means any and all copyrights worldwide
developed or acquired by the Institute covering any written, oral, visual or
multimedia materials (including any assemblages of data and software in source
code or object code form) created or acquired by (a) the Institute or its
employees or contractors (either alone or jointly with one or more employees of
one or more Consortium Members) or (b) one or more contractors or employees of
one or more Consortium Members in the course of the Research Program.
1.29. "Program Know-How" means all discoveries, inventions, data,
software, information, trade secrets and other technology developed or generated
by (a) the Institute or its employees or contractors (either alone or jointly
with one or more contractors or employees of one or more Consortium Members) or
(b) one or more contractors or employees of one or more Consortium Members in
the course of the Research Program, provided that any discovery, invention,
data, software, information, trade secret or other technology constituting
Program Know-How shall cease to constitute Program Know-How from and after the
date it is (i) made generally available to the public by the Institute through
publication thereof in accordance with the procedures set forth in Article VII,
or (ii) is otherwise made generally available to the public without breach of
this Agreement. Program Know-How does not include Program Materials.
1.30. "Program Materials" means any and all biological materials,
including without limitation blood, plasma, DNA and RNA which are obtained
and/or developed in the course of the Research Program.
-5-
<PAGE> 10
1.31. "Program Patent Rights" means any and all patent applications and
patents covering any invention conceived and/or reduced to practice by (a) the
Institute or its employees or contractors (either alone or jointly with one or
more employees of one or more Consortium Members) either (i) in the course of
the Research Program, or (ii) at any time prior to the first anniversary of the
expiration or termination of the Research Program to the extent such invention
was developed using or otherwise employs Program Know-How, Program Materials
and/or inventions disclosed in Program Patent Rights conceived and/or reduced to
practice in the course of the Research Program; or (b) one or more contractors
or employees of one or more Consortium Members in the course of the Research
Program.
1.32. "Requisite Majority" means (a) at least one (1) representative of
each Consortium Member, and (b) the Research Program Director, and (c) the
Institute Director.
1.33. "Research Program" means the research conducted by the Institute
pursuant to this Agreement, including without limitation pursuant to Article
III, consisting of the Annual Research Programs, each of which shall consist of
a series of Research Projects.
1.34. "Research Program Director" means a tenured faculty member of the
Institute who has primary responsibility to direct the activities of the
Research Program and is designated pursuant to Section 3.2.
1.35. "Research Project" means a research project conducted by the
Institute as part of the Research Program involving matters of general interest
and utility to the Consortium Members.
1.36. "Research Project Plan" means the annual written research plan
for the conduct of a Research Project.
1.37. "Research Technology License Agreement" means a license agreement
substantially in the form of Exhibit B hereto, entered into between the
Institute (and, if applicable, any IP Owning Consortium Members), as licensor(s)
and the Licensee Consortium Members, as licensees.
(b) Cross-Reference to Other Defined Terms. The following terms are
defined in the Sections of this Agreement set forth below:
<TABLE>
<CAPTION>
Defined Term Section
------------ -------
<S> <C>
Additional Field Program 4.4.1
Announcements 12.16
Annual Research Program Budget 3.3.2
</TABLE>
-6-
<PAGE> 11
<TABLE>
<S> <C>
Cash Commitment 4.1
Commercial Third Party Project 4.4.2
Confidential Information 6.1
Disclosing Party 6.1
Effective Date Introduction
Excess Funding Amount 3.3.2
Executive Officers 2.2.4
Indemnitee 11.2.4
Indemnitors 11.2.4
Initial Product Technology Option Period 5.5
Initial Research Technology Option Period 5.4
Patent Administrator 5.7.1
Patent Portfolio Administration 5.7.1
Product Technology License 5.5
Product Technology Option Extension Period 5.5
Receiving Party 6.1
Research Program Director Death/Disability Notice 3.2.2
Research Program Director Termination Notice 3.2.2
Research Technology License 5.4
Research Technology Option Extension Period 5.4
Shortfall Amount 3.3.2
Total Cash Commitments 4.1
</TABLE>
Article II. THE CONSORTIUM
2.1. Consortium Members. As of the date of this Agreement, the sole
Consortium Members are the Initial Consortium Members. The Initial Consortium
Members agree to consider the advisability of including Additional Consortium
Members in the Consortium, in consultation with the Institute. The addition of
any such Additional Consortium Members to this Agreement shall require the
written approval of the Institute and all of the other then existing Consortium
Members. If a proposed Additional Consortium Member receives such approval, it
shall become a party to this Agreement by executing a counterpart hereof, which
counterpart shall include an appropriate amendment of Schedule III specifying
the funding commitment of such Additional Consortium Member for purposes of
Section 4.1, as well as a party to an amended version of the Consortium Member
Agreement.
2.2. Advisory Board.
2.2.1. Establishment of Advisory Board. The Institute and the
Consortium Members shall establish an Advisory Board consisting of the Institute
Director, the Research Program Director and two (2) representatives of each
Consortium Member. Each Consortium Member has designated the two (2)
-7-
<PAGE> 12
representatives to serve on its behalf on the Advisory Board listed on Schedule
IV to this Agreement. Each Consortium Member may change any of its
representatives on the Advisory Board at any time upon notice to the Institute
and all other Consortium Members, provided that each Consortium Member agrees
that at all times at least one of its representatives on the Advisory Board
shall be a senior officer of such Consortium Member (it being understood that a
senior officer of BMS shall include senior officers of the Pharmaceutical
Research Institute of BMS). In addition, each Consortium Member, with the prior
approval of the Institute and all other Consortium Members, and the Institute,
with the prior approval of all Consortium Members, may invite non-voting
employees, consultants or scientific advisors to attend the meetings of the
Advisory Board (provided that any such attendees shall be bound by obligations
of confidentiality).
2.2.2. Advisory Board Responsibilities. The purpose of the
Advisory Board shall be to provide guidance to the Research Program Director and
the Institute relating to the overall strategic direction of the Research
Program and the allocation of resources among Research Projects within the
Research Program. The Advisory Board shall also discharge the various tasks and
functions assigned to it under this Agreement.
2.2.3. Meetings of the Advisory Board. The Advisory Board
shall meet no less frequently than once each calendar quarter, and shall meet at
such other times as may be deemed appropriate by the Advisory Board. Unless
otherwise determined by the Advisory Board, meetings of the Advisory Board shall
rotate among the Institute's facility in Cambridge, Massachusetts and locations
specified by each Consortium Member in turn, with the initial meeting to be held
at the Institute's facility.
2.2.4. Advisory Board Decisions. All decisions of the Advisory
Board shall require the approval of a Requisite Majority of the Advisory Board.
In the event that the approval of a Requisite Majority cannot be obtained on a
particular issue, the Advisory Board shall refer such issue to designated senior
management representatives of the Consortium Members (the "Executive Officers")
and the Institute Director for resolution. It is the intention of the parties
that any issue referred to the Executive Officers and the Institute Director
shall be resolved by negotiation in good faith as soon as practicable, but no
later than thirty (30) days after its referral. Such resolution, if any, of a
referred issue shall be final and binding on the Consortium Members and the
Institute. The parties shall make reasonable efforts to maintain the efforts of
the Research Program pending resolution of the unresolved issue.
2.3. Consortium Member Agreement. In addition to being a party to
this Agreement, each Consortium Member shall, simultaneously with its becoming a
Consortium Member, become a party to the Consortium Member Agreement. The
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Institute has been provided with a copy of the Consortium Member Agreement
redacted to exclude financial terms and other confidential matters, and shall be
provided with a similarly redacted copy of all amendments thereto. The
Consortium Member Agreement shall govern the relations of the Consortium Members
among themselves relating to the Research Program, including with respect to
such matters as the distribution of Program Know-How, Program Materials, Program
Copyrights, Program Patent Rights and/or Background Know-How among such Licensee
Consortium Members. To the extent that the provisions of this Agreement refer to
determinations made pursuant to the Consortium Member Agreement, or otherwise
require the Institute to take certain actions based upon the terms or provisions
of the Consortium Member Agreement, the Consortium Members shall advise the
Institute in writing concerning any such determinations, terms or provisions.
Article III. THE RESEARCH PROGRAM
3.1. General. Subject to renewal as provided in Section 9.7, the
Research Program will consist of five Annual Research Programs, one Annual
Research Program for each Contract Year during the term of this Agreement. The
Research Program, including each Research Project encompassed therein, will be
conducted under the general supervision and direction of the Research Program
Director.
3.2. Research Program Director.
3.2.1. Commitment of Research Program Director. The Research
Program Director will be Dr. Eric Lander. The Institute agrees that the
management of the Research Program will be a major focus of the energies,
activities and time of the Research Program Director, it being understood by the
Institute and Dr. Lander that the active participation of Dr. Lander in the
management of the Research Program is a material factor in the determination by
the Consortium Members to participate in and fund the Research Program. However,
the Consortium Members recognize that Dr. Lander has, and will continue to have,
other important responsibilities, including (a) as Director of the Whitehead
Center for Genome Research (where Dr. Lander is responsible for the effort to
map and sequence human and mouse genomes under the sponsorship of the National
Institutes of Health and the Department of Energy), which will continue to be a
major focus of Dr. Lander's energies, activities and time; (b) as a laboratory
head at the Institute (where Dr. Lander has responsibilities to oversee student
and postdoctoral research and administrative responsibilities); and (c) as a
Professor at the Massachusetts Institute of Technology (where Dr. Lander has
teaching responsibilities). In the event that any Consortium Member believes
that the Research Program Director is not fulfilling the commitment to the
Research Program set forth above, it shall provide a written notice to the
Institute and all other Consortium Members setting forth its concerns and
requesting that a meeting of the Advisory Board be held to discuss the matter.
Such Advisory Board meeting shall be held on a mutually agreeable date and at a
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mutually agreeable location within (30) days after the date of such notice. The
purpose of such meeting shall be to review the concerns set forth in the notice
and seek to reach agreement on a mutually acceptable course of action to address
such concerns. If any Consortium Member, following such Advisory Board meeting,
believes that the Research Program Director has not fulfilled the commitment set
forth above and is not satisfied with the results of the Advisory Board meeting,
such Consortium Member shall have the right to submit a notice of material
breach to the Institute pursuant to Section 9.2 of this Agreement (subject to
the Institute's rights to remedy such breach pursuant to the provisions of
Section 9.2).
3.2.2. Research Program Director Termination. In the event
that the Research Program Director notifies the Institute that he does not
intend to continue serving as the Research Program Director, or the Institute
determines to terminate the employment of the Research Program Director or to
remove him from his role as Research Program Director, the Institute shall
provide written notice of such event within seven (7) days after receipt or
determination thereof to all Consortium Members (a "Research Program Director
Termination Notice"). In the event that the Research Program Director dies or
becomes disabled for a period in excess of sixty (60) days to the extent that he
is incapable of fulfilling his commitment to serve as Research Program Director,
the Institute shall provide written notice of such event to all Consortium
Members promptly following the occurrence thereof (a "Research Program Director
Death/Disability Notice"). Promptly following the receipt of a Research Program
Director Termination Notice or Research Program Director Death/Disability
Notice, the Institute and the Consortium Members shall confer concerning the
feasibility of appointing a successor Research Program Director, and the
Consortium Members shall consider in good faith proposals in this regard made by
the Institute, and the Institute shall consider in good faith proposals in this
regard made by any Consortium Member. Following consultation with the Consortium
Members, the Institute may appoint a new Research Program Director and shall
notify all Consortium Members of such appointment. Notwithstanding the
foregoing, each Consortium Member shall have the right to withdraw as a
Consortium Member by providing notice to the Institute and all other Consortium
Members within sixty (60) days after receipt of a Research Program Director
Termination Notice or a Research Program Director Death/Disability Notice. If a
Consortium Member elects to withdraw as a Consortium Member pursuant to this
Section 3.2.2 (irrespective of whether the Institute has appointed a new
Research Program Director), such Consortium Member shall continue to support the
then current Annual Research Program at the levels (in terms of cash and, in the
case of AFFX, AFFX Materials, subject to Section 8.3.2(e)) set forth in the
applicable Annual Research Program Budget (at the times and in the manner set
forth in Section 4.2) for the period ending nine (9) months after the date of
the applicable Research Program Director Termination Notice or Research Program
Director Death/Disability Notice. In the event that all Consortium Members elect
to withdraw pursuant to this Section 3.2.2, the Institute shall expeditiously
seek to shut down the Research Program and each
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Consortium Member shall be obligated to continue to fund the lesser of such shut
down costs or the funding for such nine (9) month period at the levels set forth
in the applicable Annual Research Program Plan (it being agreed that (a) funding
in the case of a shut down of the Research Program shall consist primarily of
cash, and (b) the period during which the Institute may actually disburse such
funds may extend for a twelve (12) month period, and the rights of Licensee
Consortium Members shall apply to Program Know-How, Program Copyrights, Program
Materials and Program Patent Rights discovered, developed, conceived and/or
reduced to practice during such disbursement period). If the continued support
or funding obligation of a Consortium Member upon a withdrawal pursuant to this
Section 3.2.2 above would extend beyond the conclusion of an Annual Research
Program, such support or funding obligation shall continue for the remainder of
the continued support or funding period with respect to the following Annual
Research Program, provided that the amount of such support or funding obligation
shall not exceed the amount that would have been applicable for such period of
time under the prior Annual Research Program.
3.2.3. New Research Program Director. If at least one
Consortium Member does not elect to withdraw as a Consortium Member pursuant to
Section 3.2.2, the Institute shall as expeditiously as possible appoint a new
Research Program Director. Each Consortium Member shall have the right to
withdraw as a Consortium Member by providing notice to the Institute and all
other Consortium Members within sixty (60) days after the date that the
Consortium Members have received notice from the Institute of the appointment of
such new Research Program Director. If a Consortium Member elects to withdraw as
a Consortium Member pursuant to this Section 3.2.3, such Consortium Member shall
continue to support the then current Annual Research Program at the levels (in
terms of cash and, in the case of AFFX, AFFX Materials, subject to Section
8.3.2(e)) set forth in the applicable Annual Research Program Budget (at the
times and in the manner set forth in Section 4.2) for the period ending six (6)
months after the date that such Consortium Member provides notice of withdrawal
pursuant to this subsection. In the event that all then remaining Consortium
Members elect to withdraw pursuant to this subsection, the Institute shall
expeditiously seek to shut down the Research Program and each Consortium Member
shall be obligated to continue to fund the lesser of such shut down costs or the
funding for such six (6) month period at the levels set forth in the applicable
Annual Research Program Plan (it being agreed that (a) funding in the case of a
shut down of the Research Program shall consist primarily of cash, and (b) the
period during which the Institute may actually disburse such funds may extend
for a twelve (12) month period after the date of notice of withdrawal, and the
rights of Licensee Consortium Members shall apply to Program Know-How, Program
Copyrights, Program Materials and Program Patent Rights discovered, developed,
conceived and/or reduced to practice during such disbursement period). If the
continued support or funding obligation of a Consortium Member upon a withdrawal
pursuant to this Section 3.2.3 would extend beyond the conclusion of an
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Annual Research Program, such support or funding obligation shall continue for
the remainder of the continued funding period with respect to the following
Annual Research Program, provided that the amount of such support or funding
obligation shall not exceed the amount that would have been applicable for such
period of time under the prior Annual Research Program.
3.3. Annual Research Program Plans.
3.3.1. General. The Annual Research Program Plan, encompassing
specific Research Project Plans, for each Annual Research Program shall be as
proposed by the Research Program Director in consultation with the Advisory
Board. Except as provided below with respect to the Annual Research Program Plan
for the first Contract Year, each Annual Research Program Plan shall be approved
by a Requisite Majority of the Advisory Board at least thirty (30) days prior to
the commencement of the relevant Contract Year. The Annual Research Program Plan
for the first Contract Year shall be approved by the Institute and each
Consortium Member on the Effective Date. Each Annual Research Program Plan shall
be subject to amendment from time to time by the approval of a Requisite
Majority of the Advisory Board. At such time as each Annual Research Program
Plan (other than the Annual Research Program Plan for the first Contract Year)
is approved as provided in this Section 3.3.1, such Annual Research Program Plan
shall be initialled by the Research Program Director and an authorized
representative of each Consortium Member. Each Annual Research Program Plan
shall describe in reasonable detail the work to be undertaken by the Institute
pursuant thereto, including the staffing for and goals and timetable of the
specific Research Projects to be undertaken as part of the Annual Research
Program.
3.3.2. Annual Research Program Budget. Each Annual Research
Program Plan shall include a budget for the estimated direct expenses to be
incurred by the Institute in carrying out such Annual Research Program plus
indirect costs at the Institute's indirect cost rate approved by the United
States government (the "Annual Research Program Budget"). The direct expenses of
the Institute shall include without limitation any travel and other expenses
incurred by the Institute in fulfilling its obligations pursuant to Section
2.2.3 (Meetings of the Advisory Board) and Section 3.7 (Technology Transfer).
The indirect cost rate shall be applied to the direct expenses in the manner
approved by the United States government, which shall be disclosed by the
Institute to the Advisory Board. The Institute shall not incur financial
obligations with respect to the Research Program except as authorized under an
Annual Research Program Budget, or make long-term financial commitments not
authorized under an Annual Research Program Budget, without the prior approval
of a Requisite Majority of the Advisory Board. Each Annual Research Program
Budget (other than for the first Contract Year) shall include a reconciliation
of the funding provided pursuant to Article IV for the preceding Contract Year
versus the amount actually expended by the Institute in the Research Program
during the preceding
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Contract Year. Any amount funded but not expended during the preceding Contract
Year shall be referred to as the "Shortfall Amount". All Shortfall Amounts shall
be carried forward and be available for use in the Research Program in
subsequent Contract Years, subject to Section 4.3. However, if the Shortfall
Amount exceeds twenty-five percent (25%) of the funding provided in the
preceding Contract Year (such excess referred to as the "Excess Funding
Amount"), the Consortium Members shall receive a credit in the amount of the
Excess Funding Amount in the Annual Research Program Budget for the Contract
Year following the Contract Year in which there exists an Excess Funding Amount,
such credit to be allocated among the Consortium Members in accordance with the
Consortium Member Agreement and reflected in an amendment to Schedule III.
3.3.3. Millennium Contributed Technology. Each Annual Research
Program Plan shall include a detailed description of the Millennium Contributed
Technology to be contributed to the Institute in connection with the Annual
Research Program.
3.3.4. AFFX Materials. Each Annual Research Program shall
include a detailed description of the expected requirements of the Institute for
AFFX Materials in connection with the Annual Research Program, broken down on a
quarterly basis.
3.3.5. Existing Research Agreement.
(a) The Institute and the Consortium Members agree that
the Research Program (as defined in the Existing Research Agreement) undertaken
by Millennium, the Institute and Dr. Thomas Hudson, as the principal
investigator, pursuant to the Existing Research Agreement shall constitute a
Research Project under this Agreement for the first Contract Year (and
thereafter if approved by the Advisory Board), and all research conducted
thereunder, and all results and findings therefrom, including any of the
foregoing that occurred prior to the Effective Date of this Agreement, shall be
deemed to be from the Research Program conducted under this Agreement. All
Program Materials (as defined in the Existing Research Agreement) shall be
deemed to be Program Materials under this Agreement, all Program Technology (as
defined in the Existing Research Agreement) shall be deemed to be Program
Know-How under this Agreement, and all Patent Rights (as defined in the Existing
Research Agreement) shall be deemed to be Program Patent Rights under this
Agreement.
(b) Millennium and the Institute agree that all
rights that Millennium has under the Existing Research Agreement shall be deemed
to be rights of the Consortium Members or the Advisory Board, as appropriate,
and, where applicable, any elections, options or other rights which are
exercisable by Millennium shall be exercisable by the Consortium Members,
including, without limitation, the following: (i) all data and information to be
provided to Millennium under the
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Existing Research Agreement shall be provided to the Advisory Board, (ii) all
meetings at which Millennium has the right or obligation to attend shall be
attended by a designee of the Advisory Board, who shall confer and consult with
other members of the Advisory Board about the agendas and discussions at such
meetings, (iii) all decisions regarding the scope of, and funding for, the
Research Program under the Existing Research Agreement shall become part of the
Annual Research Program Budget review and approval procedure under this
Agreement, (iv) the license and option granted to Millennium for the Program
Technology and the Patent Rights, respectively, under the Existing Research
Agreement are terminated, and each of the Licensee Consortium Members shall have
the rights with respect to such Program Technology and Patent Rights as the
Consortium Members have with respect to Program Know-How and Program Patent
Rights under this Agreement, (v) any rights or obligations of Millennium with
respect to patent filing, prosecution or maintenance of Patent Rights under the
Existing Research Agreement shall be terminated, and such rights and obligations
shall be governed by the terms of this Agreement applicable to Program Patent
Rights, (vi) Millennium's option with respect to New Opportunities (as defined
in the Existing Research Agreement) shall be terminated and such New
Opportunities shall be presented to the Advisory Board for consideration as part
of the Research Program, (vii) all rights of Millennium with respect to Program
Materials under the Existing Research Agreement shall be deemed to be granted to
each Consortium Member, (viii) all rights of Millennium with respect to review
and comment of proposed publications under the Existing Research Agreement shall
be terminated, and such rights shall be governed by the terms of Article VII of
this Agreement, (ix) any rights Millennium has to terminate the Existing
Research Agreement may only be exercised by the unanimous consent of the
Consortium Members, (x) any funds which may be required to be returned to
Millennium under the Existing Research Agreement shall be paid, instead, to the
Consortium Members, pro rata, in accordance with their Applicable Contribution
Percentage (as defined in the Consortium Member Agreement), (xi) each of the
benefits and protections granted by the Institute to Millennium under Sections
6.3 (with respect to collaborations), VII (with respect to confidentiality
obligations), X (with respect to representations and warranties made by the
Institute), and XI (with respect to release from liability and indemnification
by the Institute) shall be terminated, and such benefits and protections shall
be governed by the applicable provisions of this Agreement, and (xii) all
notices given by either the Institute or Millennium pursuant to the Existing
Research Agreement shall also be given to each of BMS and AFFX at their
respective addresses as set forth in this Agreement.
(c) The Institute and Millennium agree to execute
such amendments, assignments or other documents relating to the Existing
Research Agreement as may be required to effectuate this Section 3.3.5;
provided, however, that they shall not modify, amend or terminate the Existing
Research Agreement without the prior written consent of BMS and AFFX.
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3.4. Records. The Institute shall use reasonable efforts to
maintain records, in sufficient detail and in good scientific manner, which
shall be complete and accurate and shall fully and properly reflect all work
done and results achieved in the performance of each Research Project (including
all data in the form required under all applicable laws and regulations). It is
understood that such records shall include detailed, witnessed laboratory
notebooks sufficient to document any patentable inventions made in the course of
such Research Project. Upon request by the Advisory Board or a Consortium
Member, the Institute will provide copies of all such materials to the Advisory
Board or a Consortium Member, as the case may be (e.g., in order to assist the
appropriate Consortium Members in the preparation of patent applications related
to such inventions pursuant to Section 5.7.2).
3.5. Meetings. Joint scientific meetings between appropriate
representatives of the Institute (including the Research Program Director) and
the Consortium Members, shall occur on a regular basis during the course of each
Research Project to discuss the results generated under the Research Project and
to consider modifications to the Research Project based upon such results. Such
meetings shall occur at least on a quarterly basis in person or by
teleconference, as agreed by the Institute and the Consortium Members. The
Institute agrees to provide to the Advisory Board copies of any written
materials prepared or used by the Institute's representatives in connection with
such joint scientific meetings.
3.6. Reports.
3.6.1. Research Project Reports. The Institute shall promptly
disclose data and information obtained under each Research Project to the
Advisory Board. To the extent reasonably available, such disclosure will include
documentation necessary or useful in the development, manufacture or sale of
products or services based upon inventions or technology developed in the
Research Project. As part of the regular quarterly meetings described in Section
3.5, the Institute shall submit a written technical report to the Advisory Board
summarizing all activities under each Research Project, including without
limitation the number of scientists and other staff who worked on each Research
Project, and the research results and know-how obtained during the just-ended
quarter in connection with such Research Project. The Institute shall also
submit to the Advisory Board a comprehensive final report within ninety (90)
days after termination or expiration of each Research Project.
3.6.2. Quarterly Reports. Within thirty (30) days after the
end of each three (3) month period during each Contract Year, the Institute
shall submit to the Advisory Board a reporting of expenses incurred through the
end of such quarter in the Research Program (including a breakdown for each
Research Project). Within sixty (60) days after the end of each Contract Year,
the Institute shall submit to the Advisory Board a final report which will
include a detailed reporting of expenses
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incurred in the Research Program. To the extent applicable, such expense reports
shall comply with GAAP.
3.7. Technology Transfer. The Advisory Board shall establish
guidelines and procedures for the transfer of Background Know-How, Program
Know-How and Program Materials from the Institute to the Licensee Consortium
Members in order to ensure a prompt and continuous flow of technical information
from the Institute to the Licensee Consortium Members. Such guidelines and
procedures shall, at a minimum, include (a) delivery and periodic updating of
software programs, (b) access to hardware systems, and (c) technical assistance
rendered by employees of the Institute to Licensee Consortium Members in
utilizing and implementing transferred technology. The Institute agrees to
transfer the Background Know-How, Program Know-How and Program Materials
following such guidelines and procedures and to provide training to employees
and consultants of the Consortium Members at its facility located in Cambridge,
Massachusetts or at such other facility as approved by a Requisite Majority of
the Advisory Board to enable such technology transfer.
3.8. Research Program Administrator. The Institute shall retain a
research program administrator selected by the Research Program Director and
acceptable to a Requisite Majority of the Advisory Board, for the purposes of
(a) facilitating effective communication among the Research Program Director,
the Institute and the Consortium Members, (b) assisting in the scheduling of
Advisory Board meetings and joint scientific meetings pursuant to Section 3.5,
(c) coordination with the Patent Administrator (as defined in Section 5.7.1) and
the Consortium Members relating to intellectual property matters consistent with
Article V, and (d) undertaking such other administrative responsibilities as
shall be assigned by the Research Program Director or the Advisory Board. All
expenses relating to the research program administrator shall be included in the
budget for each Annual Research Program.
3.9. Conduct of the Research Program by the Institute. Subject to
the funding of the Research Program in accordance with the provisions of Article
IV, during the term of this Agreement, the Institute shall:
3.9.1. Use all reasonable efforts and proceed diligently to
perform the Research Program, including the Research Projects, as set forth in
the Annual Research Program Plans and Research Project Plans, including, without
limitation, by using its good faith efforts to allocate a sufficient number of
Institute scientists per year, using personnel with sufficient skills and
experience, together with sufficient equipment and facilities, to carry out its
obligations under the Research Program, including the Research Projects, and to
accomplish the objectives of the Research Program, including the Research
Projects;
3.9.2. Conduct the Research Program, including the Research
Projects, in good scientific manner, and in compliance in all material respects
with all
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requirements of applicable laws, rules and regulations, and all other
requirements of any applicable good laboratory practices to attempt to achieve
its objectives efficiently and expeditiously;
3.9.3. Subject to the provisions of Section 5.8.1, furnish
each Consortium Member with Program Materials, as the Consortium Members from
time to time shall reasonably request, in accordance with the procedures set
forth in Section 3.7;
3.9.4. Promptly provide an Invention Notice to each Consortium
Member with respect to any Program Patent Rights;
3.9.5. Allow representatives of each of the Consortium
Members, upon reasonable notice and during normal business hours, to visit the
facilities where the Research Program or any Research Project is being
conducted, and consult informally, during such visits and by telephone, with the
Institute personnel performing work on the Research Program or such Research
Project;
3.9.6. Maintain liability insurance with respect to the work
it is performing under the Research Program in such amounts as it customarily
maintains with respect to similar research programs, which insurance shall
designate each Consortium Member as an "insured", and to pay the premiums due
thereunder. Each Consortium Member shall receive a certificate indicating
coverage as an insured and the amount of such coverage; and
3.9.7. Apply all research funds received from the Consortium
Members pursuant to this Agreement to fund the Research Program, carry out its
obligations in connection therewith and accomplish the goals and objectives of
the Research Program as determined by the Advisory Board.
Article IV. RESEARCH PROGRAM FUNDING, THIRD PARTY ACTIVITIES AND
TECHNOLOGY CONTRIBUTIONS
4.1. Consortium Members' Commitments.
4.1.1. Cash Commitments. The maximum cash commitment of each
Consortium Member to fund each Annual Research Program is as set forth opposite
such Consortium Member's name on Schedule III hereto. Schedule III also sets
forth the cash commitment of each Consortium Member to fund the Annual Research
Program for the first Contract Year, and shall be amended for each subsequent
Contract Year to reflect the Annual Research Program Budget for such Contract
Year and the allocation of the resulting cash commitment among the Consortium
Members in accordance with the terms of the Consortium Member Agreement (the
cash commitment for each Contract Year being referred to as each Consortium
Member's
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"Cash Commitment" and, collectively, as the "Total Cash Commitments"). All
funding shall be provided by check or by wire transfer, except as otherwise
agreed by the Institute and all of the Consortium Members and as outlined in
Schedule III. Notwithstanding anything in this Agreement to the contrary, each
Consortium Member shall be severally (and not jointly) liable for its funding
commitment pursuant to this Agreement.
4.1.2. AFFX Materials. AFFX hereby agrees to supply to the
Institute the AFFX Materials set forth in each Annual Research Program Plan at
the times specified therein.
4.2. Funding Mechanics. On or before the first day of each calendar
quarter during each Contract Year (other than the first Contract Year), each
Consortium Member shall pay to the Institute, by check or wire transfer, an
amount equal to twenty five percent (25%) of the Cash Commitment of such
Consortium Member for such Contract Year. With respect to the first Contract
Year, each Consortium Member shall pay to the Institute the amounts set forth on
Schedule III within ten (10) days after the Effective Date, and thereafter
during such first Contract Year shall make the quarterly payments set forth in
the preceding sentence on the first day of October, January and April. In the
event that during any Contract Year the Advisory Board approves a modification
to the Annual Research Program Budget for such Contract Year, the payments to be
made during the remainder of the Contract Year shall be appropriately adjusted.
4.3. Financial Records. The Institute shall maintain funds with
respect to each Research Project in a separate account and shall expend such
funds for wages, supplies and other operating expenses incurred in the
performance of such Research Project. The Institute shall keep and maintain
adequate books and records (in compliance with GAAP, to the extent applicable)
so as to be able to furnish complete and accurate information to the Advisory
Board regarding funds provided for the conduct of Research Projects, including
the quarterly reports provided pursuant to Section 3.6.2. Representatives of
each Consortium Member shall be permitted to examine such books and records
during normal business hours and upon reasonable prior written notice to the
Institute. It is understood that funds which are not used or otherwise committed
prior to the completion or termination of a Research Project shall be retained
by the Institute and shall be utilized by the Institute for future expenditures
for other Research Projects. Upon the completion or termination of the Research
Program, any funds which have not previously been used or otherwise committed
shall be returned by the Institute to the appropriate Consortium Members within
sixty (60) days after such completion or termination in accordance with the
terms of the Consortium Member Agreement.
4.4. Third Party Activities.
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4.4.1. Non-Commercial Activities.
(a) The Institute and the Consortium Members
acknowledge that receipt of funding support from governmental or non-commercial
sources could be beneficial to the conduct of the Research Program. The
Institute may seek to obtain funding from governmental or non-commercial sources
for research projects in the Field in consultation with the Advisory Board,
provided that the Institute shall not be obligated to do so. With respect to
research projects in the Field that are not part of the Research Program but are
to be conducted by Institute personnel who are participants in the Research
Program (including, but not limited to, the Research Program Director), the
Institute agrees (i) to inform and consult with the Advisory Board prior to
undertaking any research projects in the Field which involve governmental or
non-commercial sources of funding, and to formally designate any such research
project in the Field as an "Additional Field Program", (ii) not to undertake any
such Additional Field Program (other than projects funded through governmental
sources) unless the project and the terms thereof are approved by a Requisite
Majority of the Advisory Board, and (iii) to continue to report to the Advisory
Board on a quarterly basis concerning the status and results of any Additional
Field Program undertaken by the Institute. However, the Institute shall not use
or otherwise apply Program Know-How, Program Materials, Program Copyrights or
Program Patent Rights in any Additional Field Program unless all intellectual
property resulting or derived from the use or application in any such Additional
Field Program of Program Know-How, Program Materials, Program Copyrights or
Program Patent Rights are exclusively licensed to Consortium Members to the same
extent, and upon the same terms, as if such intellectual property rights
constituted Program Know-How, Program Materials, Program Copyrights and/or
Program Patent Rights. Notwithstanding the foregoing, the Consortium Members
acknowledge that intellectual property rights developed in connection with the
projects funded by the United States government may be subject to limited use
rights retained by the United States government.
(b) The Institute may (i) provide Program Know-How,
Program Materials and/or Program Copyrights to a non-commercial party for
purposes of conducting non-commercial research and collaborating with such
non-commercial party and (ii) use Program Know-How, Program Materials and/or
Program Copyrights for purposes of conducting non-commercial research with such
non-commercial party (it being understood that Program Materials do not include
AFFX Materials). Program Know-How, Program Materials and/or Program Copyrights
shall only be transferred by the Institute to such recipients who execute an
agreement substantially in the form of Exhibit D-1 or D-2 (as determined
pursuant to subsection (c)) attached hereto, provided that no substantive
changes shall be made with respect to provisions relating to Intellectual
Property (as such term is defined in Exhibit D-1) without the prior approval of
a Requisite Majority of the Advisory Board. The Institute shall promptly inform
the Advisory Board of any
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Intellectual Property disclosed to it and shall take such actions with respect
thereto (including the exercise of an option to obtain a license thereto and the
negotiation of the terms thereof) as shall be determined by a Requisite Majority
of the Advisory Board. The Institute shall provide copies of agreements entered
into with recipients of Program Know-How, Program Materials and Program
Copyrights to the Advisory Board within fifteen days after execution thereof.
The Institute shall retain the right to use internally Program Know-How, Program
Materials, Program Copyrights and Program Patent Rights solely for purposes of
conducting non-commercial research.
(c) Attached as Exhibits D-1 and D-2 are alternative
forms of agreements to be used in connection with the transfer by the Institute
of Program Know-How, Program Materials and/or Program Copyrights pursuant to
subsection (b). Exhibit D-1 is intended for use in connection with the transfer
of significant Program Know-How, Program Materials and/or Program Copyrights,
while Exhibit D-2 is intended for use in connection with the transfer of less
significant Program Know-How, Program Materials and/or Program Copyrights. The
Advisory Board shall establish guidelines for determining the circumstances
under which the use of Exhibit D-1 is required, and the Institute agrees to
comply with such guidelines. In all other circumstances, the Institute may use
either Exhibit D-1 or Exhibit D-2.
4.4.2. Commercial Activities.
(a) The Institute shall not perform services for, or
conduct collaborative research with, commercial third parties using (a) the
funds provided to the Institute pursuant to this Agreement, (b) Consortium
Member Contributions or Contributed Technology Upgrades licensed to the
Institute pursuant to this Agreement, or (c) Program Know-How, Program
Materials, Program Copyrights or Program Patent Rights. In addition to the
foregoing, if the Institute intends to undertake research projects in the Field
with commercial third parties (a "Commercial Third Party Project"), the
Institute shall provide notice to the Advisory Board of its intention to
undertake such Commercial Third Party Project and shall discuss with the
Advisory Board (i) in the event that Institute personnel (including Dr. Lander)
assigned to the Research Program are also expected to be participants in such
Commercial Third Party Project, the likelihood of potential subject matter
overlaps between the Research Program and the Commercial Third Party Project,
(ii) the risks that, notwithstanding the previous sentence, Program Know-How or
Program Materials may be used in such Commercial Third Party Project and the
Institute's plans for mitigating such risks, (iii) the impact of such Commercial
Third Party Project on the personnel resources of the Institute allocated to the
Research Program, and (iv) any other matters that might have an adverse impact
on the Research Program and/or the Institute's ability to perform the Research
Program. In addition, in the event that the Institute personnel assigned to any
Research Project are also expected to be participants in any Commercial Third
Party Project, the Institute shall, prior to engaging in such Commercial Third
Party Project, provide written notice to
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the Consortium Members describing the proposed research project and the terms
(financial and otherwise) relating thereto, and, at the request of the
Consortium Members, shall enter into good faith negotiations with the Consortium
Members concerning the inclusion of such proposed research project in the
Research Program.
(b) The Institute shall not (i) distribute or
disclose, or knowingly allow to be distributed or disclosed, Program Know-How,
Program Materials and/or Program Copyrights to any third party commercial entity
or (ii) use Program Know-How, Program Materials and/or Program Copyrights in
research or consulting activities with any third party commercial entity.
4.4.3. Withdrawal Rights. In the event that the Institute
either (a) undertakes an Additional Field Program pursuant to Section 4.4.1
funded through governmental sources, or (b) undertakes a Commercial Third Party
Project with a commercial third party pursuant to Section 4.4.2 in which
Institute personnel (including Dr. Lander) assigned to the Research Program are
also expected to be participants, each Consortium Member shall have the right to
withdraw as a Consortium Member in the event that it believes in good faith that
the undertaking by the Institute of any such Additional Field Program or
Commercial Third Party Project would be materially detrimental to the Research
Program. Any Consortium Member electing to withdraw pursuant to this Section
4.4.3 shall provide notice of withdrawal to the Institute and all other
Consortium Members within sixty (60) days after the designation of the
applicable Additional Field Program or the notification to the Advisory Board of
such Commercial Third Party Project, as applicable. If a Consortium Member
elects to withdraw as a Consortium Member pursuant to this Section 4.4.3, such
Consortium Member shall continue to support the then current Annual Research
Program at the levels (in terms of cash and, in the case of AFFX, AFFX
Materials, subject to Section 8.3.2(e)) set forth in the applicable Annual
Research Program Budget (at the times and in the manner set forth in Section
4.2) for the period ending six (6) months after the date that such Consortium
Member provides notice of withdrawal pursuant to this Section 4.4.3, provided
that in the event that all Consortium Members elect to withdraw pursuant to this
Section 4.4.3, the Institute shall expeditiously seek to shut down the Research
Program and each Consortium Member shall be obligated to continue to fund the
lesser of such shut down costs or the funding for such six (6) month period at
the levels set forth in the applicable Annual Research Program Budget (it being
agreed that (a) funding in the case of a shut down of the Research Program shall
consist primarily of cash, and (b) the period during which the Institute may
actually disburse such funds may extend for a twelve (12) month period after the
date of notice of withdrawal, and the rights of Licensee Consortium Members
shall apply to Program Know-How, Program Copyrights, Program Materials and
Program Patent Rights discovered, developed, conceived and/or reduced to
practice during such disbursement period). If the continued support or funding
obligation of a Consortium Member upon a withdrawal pursuant to this Section
4.4.3 would extend beyond the conclusion of an
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Annual Research Program, such support or funding obligation shall continue for
the remainder of the continued support or funding period with respect to the
following Annual Research Program, provided that the amount of such support or
funding obligation shall not exceed the amount that would have been applicable
for such period of time under the prior Annual Research Program.
4.5. Consortium Member License Grants and Technology Transfer.
4.5.1. Millennium License Grant. Millennium hereby grants to
the Institute and each Consortium Member other than Millennium a worldwide,
paid-up, non-exclusive right and license, without the right to grant
sublicenses, to use the Millennium Contributed Technology only in the course of
the Research Program. Except as specifically provided herein, no rights to
Millennium Contributed Technology are being licensed or otherwise conveyed to
the Institute or Consortium Members other than Millennium.
4.5.2. AFFX License Grant. AFFX hereby grants to the Institute
and each Consortium Member other than AFFX a worldwide, paid-up non-exclusive
right and license, without the right to grant sublicenses, to use the AFFX
Materials only in the course of the Research Program. Except as specifically
provided herein, no rights to AFFX Materials are being licensed or otherwise
conveyed to the Institute or Consortium Members other than AFFX.
4.5.3. Technology Transfer. AFFX shall transfer to the
Institute the AFFX Materials, as specified in each Annual Research Program Plan.
Millennium shall transfer to the Institute the tangible manifestations of the
Millennium Contributed Technology, as specified in each Annual Research Program
Plan.
Article V INTELLECTUAL PROPERTY RIGHTS
5.1. Background Know-How. The Institute hereby grants to the Licensee
Consortium Members a perpetual, non-exclusive, worldwide, paid-up right and
license in the License Field, with a right to grant sublicenses, under
Background Know-How (i) to make, have made, import, distribute, use, offer for
sale and sell products, (ii) to use, practice, offer for sale and sell methods,
and (iii) to otherwise exploit Background Know-How. The rights in the Background
Know-How will be used by the Licensee Consortium Members only pursuant to, and
are subject to the limitations set forth in, the Consortium Member Agreement.
5.2. Program Know-How, Program Materials and Program Copyrights.
Subject to the provisions of Section 5.6, the Institute and each IP Owning
Consortium Member hereby grant to the applicable Licensee Consortium Member(s) a
perpetual, exclusive, worldwide, paid-up right and license in the License Field,
with a right to grant sublicenses, under Program Know-How, Program Materials and
Program
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Copyrights (i) to make, have made, import, distribute, use, offer for sale and
sell products, (ii) to use, practice, offer for sale and sell methods, and (iii)
to otherwise exploit Program Know-How, Program Materials and Program Copyrights,
provided that access to tangible manifestations of Program Materials shall be
subject to the limitations set forth in Section 5.8.1. The rights in the Program
Know-How, Program Materials and Program Copyrights will be used by the
Consortium Members only pursuant to, and are subject to the limitations set
forth in, the Consortium Member Agreement.
5.3. Ownership of Intellectual Property Rights.
5.3.1. Any and all (i) patents and patent applications
covering inventions conceived and reduced to practice, and (ii) copyrights in
any written, oral, visual or multimedia materials created solely by one or more
employees or contractors of one or more Consortium Members (but not an Institute
employee or contractor) in the course of the Research Program shall be the
property of and shall be owned by such Consortium Member(s), subject to the
rights granted to applicable Licensee Consortium Member(s) under this Agreement.
Such Consortium Member(s) shall be deemed to be (an) IP Owning Consortium
Member(s) with respect to such invention or copyright and shall promptly
disclose to the Advisory Board each such invention or copyright in writing (such
disclosures to be provided on at least a quarterly basis).
5.3.2. Any and all (i) patents and patent applications
covering inventions conceived or reduced to practice, and (ii) copyrights in any
written, oral, visual or multimedia materials created solely by one or more
employees or contractors of the Institute in the course of the Research Program
shall be the property of and shall be owned by the Institute, subject to the
rights granted to applicable Licensee Consortium Member(s) under this Agreement.
Institute shall promptly disclose to the Advisory Board each such invention or
copyright in writing (such disclosures to be provided on at least a quarterly
basis).
5.3.3. Any and all (i) patents and patent applications
covering inventions conceived and/or reduced to practice, and (ii) copyrights in
any written, oral, visual or multimedia materials created jointly by one or more
employees or contractors of the Institute and one or more employees or
contractors of one or more Consortium Members in the course of the Research
Program shall be the property of and shall be owned by the Institute and the
applicable IP Owning Consortium Members jointly, subject to the rights granted
to the applicable Licensee Consortium Member(s) by the Institute and any
applicable IP Owning Consortium Member under this Agreement. The Institute (and
any applicable IP Owning Consortium Member) shall promptly disclose to the
Advisory Board each such invention or copyright in writing (such disclosures to
be provided on at least a quarterly basis).
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5.4. Research Technology License Option. The Institute and each IP
Owning Consortium Member hereby grant to the applicable Licensee Consortium
Member(s) an option (exercisable on a Program Patent Right-by-Program Patent
Right basis) to obtain a co-exclusive (with the Institute (including any third
party to which the Institute has granted a license pursuant to the provisions of
Section 5.6 of this Agreement) and each other Consortium Member), worldwide,
paid-up right and license in the License Field, with a right to grant
sublicenses as provided below, under the Program Patent Rights: (i) to make,
have made and use products, (ii) to use and practice methods and (iii) to
otherwise exploit the Program Patent Rights, in all cases subject to the
limitation that the right and license granted under this Section 5.4 shall not
extend to the commercial sale of products or the commercial performance of
services (a "Research Technology License"). Such Research Technology License may
be sublicensed by a Licensee Consortium Member in the context of academic or
non-commercial relationships or to a commercial entity with which the Licensee
Consortium Member is conducting collaborative research activities only for use
in connection with such collaborative research activities. The rights in the
Program Patent Rights will be used by the Consortium Members only pursuant to,
and are subject to the limitations set forth in, the Consortium Member
Agreement. Each option to obtain a Research Technology License granted to the
applicable Licensee Consortium Member(s) pursuant to this Section shall extend
for a period of one hundred twenty (120) days after the date of receipt by the
applicable Licensee Consortium Member(s) of an Invention Notice (which Invention
Notice shall specifically indicate that such 120-day period commences upon such
receipt) (the "Initial Research Technology Option Period"). The Initial Research
Technology Option Period may be extended, at the election of one or more License
Consortium Members, by providing written notice to the Institute and all other
Consortium Members, prior to the expiration of the Initial Research Technology
Option Period, in which event the period during which the option may be
exercised shall be extended until such time, if ever, as the Institute grants a
license to a third party with respect to the applicable Program Patent Rights
pursuant to Section 5.6 (the "Research Technology Option Extension Period"),
provided that during the Research Technology Option Extension Period, the
Licensee Consortium Member(s) electing to extend the option period shall
reimburse the Institute for its reasonable out-of-pocket expenses incurred in
connection with the prosecution and maintenance of the applicable Program Patent
Rights, such reimbursement to be contributed to equally among all Licensee
Consortium Members electing to extend the option period and all Licensee
Consortium Members that have exercised such option during the Initial Research
Technology Option Period. Promptly following the exercise of the option granted
pursuant to this Section, the Institute, each IP Owning Consortium Member (if
any) and the applicable Licensee Consortium Member(s) shall execute and deliver
a Research Technology License Agreement covering the applicable Program Patent
Rights.
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5.5. Product Technology License Option. The Institute and each IP
Owning Consortium Member hereby grant to the applicable Licensee Consortium
Member(s) an option (exercisable on a Program Patent Right-by-Program Patent
Right basis) to obtain an exclusive, worldwide right and license in the License
Field, with a right to grant sublicenses, under the Program Patent Rights (and,
if applicable, Background Patent Rights): (i) to make, have made, use, offer for
sale, sell, import and distribute products, (ii) to use, practice, offer for
sale and sell methods, and (iii) to otherwise exploit the Program Patent Rights
(a "Product Technology License"). The rights in the Program Patent Rights will
be used by the Consortium Members only pursuant to, and are subject to the
limitations set forth in, the Consortium Member Agreement. The applicable
Licensee Consortium Member(s) shall be obligated to pay royalties to the
Institute and the other Consortium Members to the extent provided in the
applicable Product Technology License Agreement (with respect to the Institute
and any IP Owning Consortium Member) and the Consortium Member Agreement (with
respect to the other Consortium Members). The option to obtain a Product
Technology License granted to Licensee Consortium Members pursuant to this
Section may be exercised at any time from receipt by the applicable Licensee
Consortium Member(s) of an Invention Notice as to the particular Program Patent
Rights until one hundred fifty (150) days after receipt of such Invention Notice
(which Invention Notice shall specifically indicate that such 150-day period
commences upon such receipt) (the "Initial Product Technology Option Period").
The Initial Product Technology Option Period may be extended, at the election of
one or more Licensee Consortium Members, by providing written notice to the
Institute and all other Consortium Members prior to the expiration of the
Initial Product Technology Option Period, in which event the period during which
the option may be exercised shall be extended until such time, if ever, as the
Institute grants a license to a third party with respect to the applicable
Program Patent Rights pursuant to Section 5.6 (the "Product Technology Option
Extension Period"), provided that during the Product Technology Option Extension
Period, the Licensee Consortium Member(s) electing to extend the option period
shall reimburse the Institute for its reasonable out-of-pocket expenses incurred
in connection with the prosecution and maintenance of the applicable Program
Patent Rights, such reimbursement to be contributed to equally among all
Licensee Consortium Members electing to extend the option period and all
Licensee Consortium Members that have exercised such option during the Initial
Product Technology Option Period. Promptly following the exercise of the option
granted pursuant to this Section, the Institute and the applicable Licensee
Consortium Member(s) shall seek to agree upon the applicable royalty (which
royalty shall in any event be within the range specified on Schedule V hereto
and shall be split between the Institute and the applicable IP Owning Consortium
Member(s) in such manner as shall be determined by them in good faith based upon
the standards set forth in Schedule V and specified in the applicable Product
Technology License Agreement). In the event that the parties are unable to agree
upon such royalty, the matter shall be resolved by arbitration in accordance
with Section 12.1. Upon determination of the applicable royalty (by agreement of
the
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parties or arbitration), the Institute, each IP Owning Consortium Member (if
any) and the applicable Licensee Consortium Member(s) shall execute and deliver
a Product Technology License Agreement covering such Program Patent Rights for
the License Field, provided that the applicable Licensee Consortium Member(s)
shall have the right to revoke the exercise of the option in the event that the
royalty rate is determined by means of arbitration (in which event, for purposes
of this Section 5.5, such option shall not be considered to have been
exercised). In the event that there are one or more significant product
opportunities derived from the Program Patent Rights that fall outside of the
Core License Field, the applicable Licensee Consortium Member(s) and the
Institute agree to discuss in good faith reasonable diligence criteria (in
addition to the provisions set forth in Exhibit A attached hereto) only with
respect to such product opportunities outside of the Core License Field, which
criteria may include mutually agreed upon minimum royalties.
5.6. Institute Rights.
(a) In the event that no Licensee Consortium Member
exercises the option with respect to any Program Patent Rights pursuant to
Section 5.4 during the Initial Research Technology Option Period or pursuant to
Section 5.5 during the Initial Product Technology Option Period, the Institute
may negotiate a license under its rights to such Program Patent Rights (and any
directly related Program Know-How, Program Materials and/or Program Copyrights)
with any third party, provided that the Institute shall not grant any such
license until the expiration of a thirty (30) day period commencing on the date
on which the Licensee Consortium Member(s) receive written notice from the
Institute stating the Institute's intention to grant a license to the applicable
Program Patent Rights (and any directly related Program Know-How, Program
Materials and/or Program Copyrights) and describing in such notice the
applicable terms of such license (during which 30-day period each Licensee
Consortium Member electing to extend the option period under Section 5.4 and/or
5.5 shall have the right to exercise the option to obtain a Research Technology
License or a Product Technology License). If the terms the Institute proposes to
offer to a third party would be more favorable to the third party than either
(x) the terms set forth in the form of Product Technology License Agreement
(including the applicable royalty range), or (y) in the event that a Licensee
Consortium Member has exercised the Product Technology License option but has
not reached agreement with the Institute with respect to royalties or has
revoked the exercise of the option based on a royalty rate determined by
arbitration, the most favorable terms (from the perspective of the Licensee
Consortium Member) offered by the Institute or by the arbitrators, then the
Institute must first offer in writing such more favorable terms to the
applicable Licensee Consortium Members, and such Licensee Consortium Member(s)
will have thirty (30) days to accept or reject such offer.
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Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote such omission.
(b) All license fees, milestone payments and royalty
income derived by the Institute based on the licensing of Program Patent Rights
(and any directly related Program Know-How, Program Materials and/or Program
Copyrights) to third parties shall be divided as follows after deducting the
Institute's costs of licensing and enforcing such rights: (a) ********* to the
Institute, and (b) ***** ****** divided among the Consortium Members pursuant to
the terms of the Consortium Member Agreement. In the event that the Institute
grants a license pursuant to this Section 5.6 to any Program Know-How, Program
Materials and/or Program Copyrights, such license shall be non-exclusive, and
the licenses thereto to Licensee Consortium Members set forth in Section 5.2
shall remain exclusive except as to such license granted pursuant to this
Section 5.6.
5.7. Patent Filing, Prosecution and Maintenance.
5.7.1. Administration of Patent Portfolio. The Institute shall
designate an individual (the "Patent Administrator"), such individual to be
subject to the approval of a Requisite Majority of the Advisory Board, to be
responsible for Patent Portfolio Administration (as defined below). As used
herein, the term "Patent Portfolio Administration" means (a) the identification
of potentially patentable inventions in consultation with employees of and
contractors to the Institute; (b) communication of information regarding
potentially patentable inventions to designees of each Consortium Member and
patent counsel to the Institute; (c) coordination of discussions among
representatives of the Institute, each Consortium Member and Institute patent
counsel concerning the advisability of filing for patent protection on
potentially patentable inventions; (d) coordinating the preparation and filing
of appropriate patent applications, and providing copies thereof to Consortium
Members for comments prior to filing; (e) coordination of the preparation and
filing of corresponding foreign patent applications within required time
periods; (f) maintenance of databases concerning patent applications and patents
which indicate any critical dates for filings, responses, payments and other
patent-related actions (which databases shall, to the extent feasible, be
networked with Consortium Members in order to provide for access by Consortium
Members to such databases); (g) provision of Invention Notices to Consortium
Members, as well as notices concerning the commencement and expiration of the
option periods set forth in Sections 5.4 and 5.5; and (h) coordination of the
transition of responsibility for patent prosecution and maintenance with respect
to one or more Program Patent Rights from the Institute to the applicable
Licensee Consortium Member(s) pursuant to the provisions of Section 5.7.2.
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5.7.2. Control by Licensee Consortium Members. Subject to the
rights of the applicable Licensee Consortium Member(s) set forth in this Section
5.7.2 and in any applicable Research Technology License Agreements and/or
Product Technology License Agreements, the Institute shall be responsible for
the filing and prosecution of patent applications, and the maintenance of
patents that may issue therefrom, within the Program Patent Rights. The
applicable Licensee Consortium Member(s) shall have the right, at their option
and expense, to control the filing and prosecution of patent applications, and
maintenance of patents that may issue therefrom, within the Program Patent
Rights. Such activities shall be conducted in the name of the owner of such
invention (as set forth in Section 5.3). The Institute and each IP Owning
Consortium Member shall cooperate with and provide assistance to the applicable
Licensee Consortium Member(s) in connection with such activities, including
without limitation execution of all documents, and performance of all acts
reasonably necessary, to prosecute such patent applications, and maintain,
enforce and defend such patents. Such Licensee Consortium Member(s) shall keep
the Institute and each IP Owning Consortium Member reasonably informed as to the
status of any patent application and any patent within the Program Patent
Rights. The applicable Licensee Consortium Member(s) shall provide the Institute
and each IP Owning Consortium Member copies of all correspondence concerning
patent prosecution in sufficient time prior to due dates to allow the parties
and their attorneys to review the correspondence and comment on the prosecution,
such comments to be reasonably considered. Copies of such correspondence being
forwarded to the Institute should also be sent to its patent attorney, Patricia
Granahan, Esq., Hamilton, Brook, Smith & Reynolds, Two Militia Drive, Lexington,
MA 02173, telephone (617) 861-6240, fax (617) 861-9540 or such other attorney as
may be designated by the Institute from time to time. Each Licensee Consortium
Member exercising its right to control filing, prosecution and maintenance of a
Program Patent Rights under this Section 5.7.2 shall provide such information to
the Patent Administrator in order to permit him or her to maintain the databases
referred to in Section 5.7.1.
5.7.3. Institute/IP Owning Consortium Member Rights. If the
applicable Licensee Consortium Member(s) exercise rights of control pursuant to
Section 5.7.2 but thereafter elect not to file or thereafter prosecute any
patent application within the Program Patent Rights, or elect not to pay any fee
required to maintain a patent within the Program Patent Rights, in any country,
such Licensee Consortium Member(s) shall promptly notify the Institute and each
IP Owning Consortium Member. In such event, the Institute and each IP Owning
Consortium Member, in its discretion and at its expense, shall (a) have the
right to file and prosecute such application, and/or maintain such patent, in
such country, and (b) subject to the following sentence, have the right to grant
exclusive licenses to third parties to such patent application and/or patent
limited to such country(ies), in which event the options set forth in Sections
5.4 and 5.5 shall terminate with respect to such country(ies), provided that the
Institute shall only have the right to grant
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non-exclusive licenses to third parties to such patent application and/or patent
(and the options set forth in Sections 5.4 and 5.5 shall be for non-exclusive
rights for such country(ies)) in the event that the applicable License
Consortium Member(s) elect not to file, prosecute or pay fees as a result of
their good faith determination that seeking and/or maintaining patent protection
in such country(ies) would not be beneficial due to the existence of prior art
or previously issued patents, or because such patent protection would not
provide meaningful legal and/or business protection under the circumstances.
Prior to granting any such license to a third party, the Institute and each IP
Owning Consortium Member shall notify the applicable Licensee Consortium
Member(s) of its intent to grant such a license, and shall, at the request of
such Licensee Consortium Member(s), negotiate in good faith terms for the
maintenance of exclusivity under Sections 5.4 and 5.5 with respect to such
patent application and/or patent.
5.8. Program Materials.
5.8.1. Transfer of Program Materials. The Advisory Board shall
determine under which circumstances Program Materials shall be transferred to
Consortium Members. To the extent Program Materials are transferred, unless
otherwise determined by the Advisory Board, Program Materials relating to a
Research Project shall be transferred to all Consortium Members which wish to
receive such Program Materials. However, the Consortium Members acknowledge that
there may be situations in which the Institute enters into collaborations with
third parties to gain access to Program Materials under terms which limit the
dissemination of such Program Materials to third parties, including Consortium
Members; the Institute acknowledges that any such limitations need to be taken
into consideration when determining whether to enter into any such third party
agreements, and agrees to use reasonable efforts to obtain the rights to
disseminate such Program Materials to the Consortium Members.
5.8.2. Use of Biological Materials. (a) The Institute agrees
that biological materials to be obtained from human subjects for purposes of
conducting Research Projects shall be obtained only after all necessary review
and final approvals by the appropriate institutional review board, human
experimentation committee or similar body have been obtained, said process
specifically to include review and final approval of the consent form(s) to be
used to document that the human subject has had an opportunity to be informed
about the nature of and the potential risks and benefits associated with the
research and has decided to provide biological materials knowing that such
biological materials will be analyzed by the Institute and Consortium Members
and may be retained by Institute and/or Consortium Members.
(b) The Institute agrees that the Research Program
Director or an appropriately designated collaborator or assistant will enroll an
individual as a human subject only after he or she has provided said individual
full and complete
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disclosure of: (i) any and all risks known or anticipated to be associated with
participation, (ii) any benefits that might be realized by the individual as a
consequence of his or her participation, (iii) any involvement of Consortium
Members in the research, specifically including a statement in the consent form
and any necessarily related documents that cells, blood, plasma or nucleic acid
samples may be analyzed, retained indefinitely, and subjected to other uses by
the Institute and Consortium Members and that the Institute and Consortium
Members may derive economic benefit from the study of said samples, no part of
which will be shared with the subject, and (iv) any other information required
pursuant to the research protocol that is finally approved by institutional
review board, human experimentation committee or similar body.
(c) The Institute agrees that no human subject will
be enrolled until he or she has consented in writing to his or her
participation. The Institute agrees that no child aged seven (7) or older shall
be enrolled unless, in addition to obtaining the informed consent of said
child's parent or guardian, the written assent of the child is obtained.
(d) The Institute agrees to use a consent/assent form
the same as or substantially similar to Exhibit C attached hereto. In the event
that an institutional review board, human experimental committee or similar body
requires significant changes in such language, the Institute shall promptly so
inform the Advisory Board and shall not enroll any human subjects unless the
Advisory Board has provided its prior written approval to such changes, such
approval not to be unreasonably withheld.
5.9. Employee Agreements. Each employee and contractor of the
Institute involved in the Research Program, as well as all students, research
fellows and similar participants engaged by the Institute in the Research
Program, shall execute and deliver to Institute an agreement, in form reasonably
satisfactory to the Advisory Board, under which such person will assign to the
Institute any inventions made or copyrightable materials created by such person
in connection with the Research Program and agree to abide by the provisions of
Section 4.4.1 (b) and 4.4.2 (b) and the confidentiality obligations of the
Institute specified in Article VI.
5.10. No Implied Licenses. Except for the licenses and options to
obtain a license expressly pursuant to this Agreement, no licenses, implied or
otherwise, are granted by the Institute to any Consortium Member or by any
Consortium Member to the Institute or any other Consortium Member, including
licenses to so-called "background" technology.
Article VI. CONFIDENTIAL INFORMATION
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6.1. Confidentiality. Consortium Members may from time to time disclose
Confidential Information to the Institute in connection with the Research
Program, and the Institute may from time to time disclose Confidential
Information to one or more Consortium Members. For purposes of this Agreement,
(a) the term "Disclosing Party" means the Consortium Member or the Institute
which discloses Confidential Information as contemplated by the preceding
sentence, (b) the term "Receiving Party" means the Consortium Member or the
Institute to which Confidential Information is disclosed by a Disclosing Party,
and (c) the term "Confidential Information" means information and materials of a
Disclosing Party which are designated as confidential in writing by such
Disclosing Party, whether by letter or by use of an appropriate stamp or legend,
prior to or at the same time any such information or materials are disclosed by
such Disclosing Party to the Receiving Party. Notwithstanding the foregoing,
materials and other information which are orally, visually or electronically
disclosed by a Disclosing Party, or are disclosed in writing without an
appropriate letter, stamp, or legend, shall constitute Confidential Information
if such Disclosing Party, within 30 days after such disclosure, delivers to the
Receiving Party a written document or documents describing the material or
information and indicating that it is confidential, provided that any disclosure
of information by the Receiving Party prior to receipt of such notice shall not
constitute a breach by the Receiving Party of its obligations under this Section
6.1. The Receiving Party agrees, to the extent permitted by law, that
Confidential Information shall remain the property of the Disclosing Party, and
that, unless otherwise agreed to by the Disclosing Party, Confidential
Information shall not be disclosed, divulged or otherwise communicated by it to
third parties (including without limitation, other Consortium Members) or used
by it for any purposes other than in connection with the Research Program and
the exploitation of the licenses granted in Article 5; provided that the term
"Confidential Information" shall exclude materials or information that:
(a) are in possession of the Receiving Party at the
time of disclosure thereof as demonstrated by prior written records;
(b) are or later become part of the public domain
through no fault of the Receiving Party;
(c) are received by the Receiving Party from a third
party having no obligation of confidentiality to the Disclosing Party that made
the disclosure;
(d) are developed independently by the Receiving
Party without use of Confidential Information as evidenced by written records;
or
(e) are required by law or regulation to be
disclosed; provided, however, that the Receiving Party has provided written
notice to the
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Disclosing Party promptly so as to enable such Disclosing Party to seek a
protective order or otherwise prevent disclosure of such information.
6.2. Term. The obligations of the Receiving Party under this
Article VI shall continue for a period of five (5) years after the expiration or
termination of this Agreement; provided, however, that in the case of a
Consortium Member that withdraws, or is deemed to have withdrawn, as such
pursuant to Article VIII, the Receiving Party's obligations with respect to such
Consortium Member's Confidential Information shall continue only for a period of
five (5) years after the effective date of such Consortium Member's withdrawal.
6.3. Return of Materials. Upon request by a Consortium Member that
made a disclosure of Confidential Information to the Institute, the Institute
promptly shall return all copies and other tangible manifestations of the
Confidential Information disclosed.
Article VII. PUBLICATION AND ACADEMIC RIGHTS
7.1. Use of Information. Subject to the provisions of Section 7.2,
the Institute (and its employees) shall have the right to publish or otherwise
disclose information and/or data developed by the Institute under the Research
Program. The Institute (or its employees) shall include an appropriate
acknowledgment of the sponsorship of the Research Program by the Consortium
Members in such publication or disclosure. The Consortium Members shall have the
right to use, disclose and exploit any such data and information in accordance
with the rights held by them pursuant to this Agreement.
7.2. Publication or Public Disclosure of Information.
7.2.1. Notice. To avoid disclosure of Confidential Information
of a Consortium Member and the loss of patent rights as a result of premature
public disclosure of patentable information, the Institute agrees to provide
notice to the (i) Advisory Board, and (ii) each Consortium Member at least
thirty (30) days prior to any submission for publication or disclosure, together
with any and all materials intended for publication or disclosure relating to
technical reports, data, or information developed by the Institute or its
employees during the term of and pursuant to this Agreement.
7.2.2. Filing of Patent Application. During the course of any
such 30-day period, the Advisory Board or any Consortium Member shall provide
notice to the Institute whether it desires that a patent application be filed on
any invention disclosed in such materials. In the event that the Advisory Board
or a Consortium Member desires that such a patent application be filed, the
Institute agrees to withhold publication and disclosure of such materials until
the occurrence of the first
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of the following: (i) filing of a patent application covering such invention;
(ii) written agreement by the Advisory Board and/or the Consortium Member, as
the case may be, and the Institute that no patentable invention is disclosed in
such materials; or (iii) sixty (60) days after the date that such materials were
received by the Advisory Board and the Consortium Members from the Institute.
Further, during the course of any such 30-day period, any Consortium Member that
believes that any of its Confidential Information has been included in the
proposed publication or disclosure shall provide notice to the Institute of the
Confidential Information which should be removed from such proposed publication
or disclosure. The Institute agrees to remove all such Confidential Information
from the proposed publication or disclosure.
Article VIII. WITHDRAWAL
8.1. Voluntary Withdrawal. Any Consortium Member may voluntarily
withdraw as a Consortium Member under this Agreement by notice to the Institute
and the other Consortium Members as follows:
(i) pursuant to the provisions of Section 3.2.2, 3.2.3 or
Section 4.4.3; and
(ii) by notice of withdrawal given by such Consortium
Member (which it may elect to do in its sole
discretion) to the Institute and the other Consortium
Members no later than one (1) year prior to the
effective date of withdrawal, provided that the
effective date of withdrawal may be no earlier than
the last day of the third Contract Year.
In the case of a withdrawal pursuant to subsection (i) above, the effective date
of withdrawal shall be the expiration of the period during which the withdrawing
Consortium Member is required to fund the Research Program pursuant to Section
3.2.2, 3.2.3 or 4.4.3, as applicable, provided that if the Institute elects to
disburse funding over an extended period of time as permitted by such Sections,
the effective date of withdrawal for purposes of Section 8.3.1 only shall be the
last date upon which such funds were disbursed.
8.2. Involuntary Withdrawal. If a Consortium Member materially
breaches any material warranty, term or condition of this Agreement and fails to
remedy such material breach within ninety (90) days after receipt of notice in
writing of such material breach from the Institute, the Institute shall have the
right to cause the involuntary withdrawal of such Consortium Member, such
withdrawal to be effective immediately upon delivery of a written notice from
the Institute to such Consortium Member indicating the Institute's election to
cause such involuntary withdrawal to occur. For purposes of this Section 8.2,
any failure of a Consortium Member to make
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a funding payment pursuant to Article IV when due shall be deemed to be a
material breach of this Agreement by such Consortium Member pursuant to which
the Institute shall be entitled to send a 90-day notice under this Section 8.2.
8.3. Effect of Withdrawal.
8.3.1. Intellectual Property Rights. From and after the
effective date of withdrawal of a Consortium Member, such Consortium Member
shall cease to have any rights as a Consortium Member under this Agreement,
including rights as a Licensee Consortium Member to any Program Know-How,
Program Materials, Program Copyrights or Program Patent Rights arising after
such effective date of withdrawal. However, except in the event of an
involuntary withdrawal pursuant to Section 8.2, the withdrawing Consortium
Member shall retain its rights as a Licensee Consortium Member in Background
Know-How, Program Know-How, Program Materials, Program Copyrights and Program
Patent Rights arising prior to the effective date of such withdrawal as provided
in Article V and its rights under Article VI and Article VII, provided that in
the event that the remaining Consortium Members designate a successor Licensee
Consortium Member(s) pursuant to the Consortium Member Agreement, such
successor(s) shall have a non-exclusive license to such Background Know-How,
Program Know-How, Program Materials, Program Copyrights and Program Patent
Rights to the extent necessary to enable such successor(s) to develop and
commercialize products or services based upon Program Know-How, Program
Materials, Program Copyrights and/or Program Patent Rights arising after the
effective date of withdrawal. In the event of an involuntary withdrawal pursuant
to Section 8.2, the withdrawing Consortium Member's rights as a Licensee
Consortium Member in Background Know-How, Program Know-How, Program Materials,
Program Copyrights and Program Patent Rights arising prior to the effective date
of such withdrawal as provided in Article V shall terminate, effective as of the
effective date of such withdrawal.
8.3.2. Funding and Technology Contributions.
(a) In the event of a withdrawal pursuant to Section
8.1(i) above, the withdrawing Consortium Member shall continue to support or
fund the Research Program to the extent and for the period set forth in Section
3.2.2, 3.2.3 or 4.4.3, as applicable. In addition, if such withdrawing
Consortium Member is Millennium, it shall continue, during such continued
support or funding period, to provide, in the case of Millennium, the Millennium
Contributed Technology set forth in the applicable Annual Research Program Plan.
(b) In the event of a withdrawal pursuant to Section
8.1(ii) above, the withdrawing Consortium Member shall continue to support or
fund the Research Program until the effective date of withdrawal at the levels
(in terms of cash and, in the case of AFFX, AFFX Materials, subject to Section
8.3.2(e)) set forth in the
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applicable Annual Research Program Budget (at the times and in the manner set
forth in Section 4.2). In addition, if such withdrawing Consortium Member is
Millennium, it shall continue, during such continued support or funding period,
to provide the Millennium Contributed Technology set forth in the applicable
Annual Research Program Plan.
(c) In the event of an involuntary withdrawal
pursuant to Section 8.2 above, the withdrawing Consortium Member shall continue
to support or fund the Research Program until the later of (i) twelve (12)
months after the effective date of withdrawal, or (ii) the end of the third
Contract Year, at the levels (in terms of cash and, in the case of AFFX, AFFX
Materials, subject to Section 8.3.2(e)) set forth in the applicable Annual
Research Program Budget (at the times and in the manner set forth in Section
4.2). In addition, if such withdrawing Consortium Member is Millennium, it shall
continue, during such continued support or funding period, to provide the
Millennium Contributed Technology set forth in the applicable Annual Research
Program Plan.
(d) If the continued support/funding and technology
contribution obligations of a Consortium Member upon a withdrawal pursuant to
this Article VIII would extend beyond the conclusion of an Annual Research
Program, (i) such support or funding obligation shall continue for the remainder
of the continued support or funding period with respect to the following Annual
Research Program(s), provided that the amount of such support or funding
obligation shall not exceed the amount that would have been applicable for such
period of time under the prior Annual Research Program, and (ii) such technology
contribution obligation for the period beyond the conclusion of such Annual
Research Program shall be negotiated in good faith by the parties.
(e) In the event that AFFX withdraws pursuant to
Section 8.1 or 8.2, the Institute and the other Consortium Members shall have
the right to require that AFFX, in lieu of providing all or any portion of the
AFFX Materials to the Institute set forth in the applicable Annual Research
Program Plan, provide cash funding for the continued funding periods set forth
in subsections (a), (b) or (c) above, in an amount determined pursuant to the
Consortium Member Agreement.
(f) Such ongoing support/funding and technology
contributions, if any, by the withdrawing Consortium Member shall constitute
liquidated damages arising out of the withdrawal of such Consortium Member.
8.3.3. In the event of the withdrawal of a Consortium Member
pursuant to this Article VIII, or the termination by any Consortium Member
pursuant to Section 9.2, the Institute and the remaining Consortium Members
agree to meet and negotiate in good faith the continuation of the Research
Program, including ongoing funding obligations.
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Article IX. TERM; TERMINATION AND RENEWAL
9.1. Term. Subject to the provisions of Section 9.6, the term of this
Agreement shall commence on the Effective Date and continue in full force and
effect until the last day of the fifth Contract Year, unless this Agreement is
terminated in its entirety prior to such date in accordance with this Article
IX, or renewed as set forth in Section 9.7.
9.2. Termination for Breach by the Institute. If the Institute
materially breaches any material warranty, term or condition of this Agreement
and fails to remedy such material breach within ninety (90) days after receipt
of notice of such material breach from a Consortium Member (it being further
agreed that a Consortium Member providing notice pursuant to this Section shall
also provide notice to all other Consortium Members), each Consortium Member
may, at its or their option, as the case may be, and in addition to any other
remedies that such Consortium Member may have in law or in equity, terminate
this Agreement with respect to such Consortium Member by sending notice of
termination to the Institute, such termination to be effective immediately,
subject to the provisions of Section 9.6. From and after the effective date of
such termination, the terminating Consortium Member shall have no further
obligation to make cash payments and technology contributions to the Institute.
9.3. Termination Rights of the Institute. Subject to the provisions of
Section 9.6, the Institute may terminate this Agreement, at its option, by
notice to the Consortium Members, in the event that at any time:
(a) the cash funding commitments of the Consortium Members
total less than the Minimum Cash Funding Level for any Contract Year; or
(b) the Consortium Members default in their obligation to fund
Research Projects as provided in this Agreement and such default results in
total funding of any Annual Research Program being less than the Minimum Cash
Funding Level for the applicable Contract Year.
If the Institute desires to terminate this Agreement pursuant to this Section
9.3, it shall first give the Consortium Members notice of its intention to
terminate and afford the Consortium Members a period of ninety (90) days to
eliminate the factual circumstance that would permit the Institute to so
terminate. Such curative steps by the Consortium Members may include increasing
their funding commitments, paying the defaulted funding amount and/or arranging
for the addition of an Additional Consortium Member as provided in Section 2.1
(as to whose addition, the Institute shall not unreasonably withhold its
approval). In the event that the Consortium Members fail to eliminate the
factual circumstances that would permit the Institute to
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Confidential Materials omitted and filed separately with the
Securities and Exchange commission. Asterisks denote such omission.
terminate this Agreement within such 90-day period, the Institute may terminate
this Agreement by notice to the Consortium Members, such termination to be
effective immediately.
9.4. Additional Termination Event. Subject to the provisions of Section
9.6, the Institute or any Consortium Member may terminate this Agreement in the
event that at any time any material provisions of this Agreement violate a
binding law, statute, rule or regulation promulgated by the United States
government or any agency thereof, in which event the terminating party shall
provide notice to all other parties and, if within ninety (90) days after the
date of such notice, the Institute and the Consortium Members are unable to
negotiate an amendment that would cause this Agreement to be in compliance with
such regulation, this Agreement shall terminate effective immediately upon
further notice to all other parties from the terminating party (with any
termination by a Consortium Member being solely with respect to such Consortium
Member).
9.5. Return of Funds; Continued Funding Obligation. Any funds paid to
the Institute by the Consortium Members which have not been expended or
committed upon the date of expiration or termination of this Agreement pursuant
to this Article IX shall be refunded to the Consortium Members within sixty (60)
days after the date of expiration or termination in accordance with the terms of
the Consortium Member Agreement. In the event that the total funds paid to the
Institute by the Consortium Members as of the date of a termination by the
Institute pursuant to Section 9.3 are not sufficient to cover costs and
non-cancelable commitments actually incurred by the Institute in connection with
the Research Program as of such date, the Consortium Members shall reimburse the
Institute the deficiency (with each Consortium Member being severally, and not
jointly, liable for its share of such deficiency determined in accordance with
the formula x/y where x is the amount of the deficiency and y is the number of
Consortium Members as of the date of termination), such reimbursement to be made
within thirty (30) days after the date of notice provided by the Institute to
the Consortium Members specifying the amount of the deficiency (with supporting
documentation therefor); provided, however, that the Consortium Members shall
not be obligated to reimburse the Institute pursuant to this sentence an amount
in excess of ****** of the total funding commitment of the Consortium Members
pursuant to Section 4.1 for the twelve (12) month period commencing on the date
of termination. The Institute will use its best efforts to minimize any costs
and non-cancelable commitments to be paid for by the Consortium Members pursuant
to the previous sentence, including without limitation by reassigning personnel
and transferring supplies.
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9.6. Survival. The following articles and sections of this Agreement
shall survive the expiration or termination of this Agreement: Sections 3.4,
3.5, 3.6, 4.3 and 4.4 and Articles V, VI, VII, IX, XI and XII.
9.7. Renewal. Not later than the end of the third Contract Year, the
Consortium Members and the Institute shall meet (at a time and place designated
by the Institute in a notice to the Consortium Members and mutually agreed upon
by the Consortium Members) to consider a renewal of the term of this Agreement
for an additional five (5) Contract Years commencing at the end of the fifth
Contract Year. If the Institute and the Consortium Members shall so agree to
such a renewal, they shall enter into an appropriate amendment of this Agreement
reflecting the terms to be in effect during the renewal period, including the
funding commitments of the Consortium Members for each Contract Year in such
renewal term.
Article X REPRESENTATIONS AND WARRANTIES
10.1. Representations and Warranties of All Parties. Each party
represents and warrants to the other parties that: (i) it is free to enter into
this Agreement; (ii) in so doing, it will not violate any other agreement to
which it is a party; and (iii) it has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the performance of
its obligations under this Agreement.
10.2. Representations and Warranties of the Institute. The Institute
hereby represents and warrants to each of the Consortium Members that: (a) it
has not entered into any agreement with any third party which is in conflict
with the rights granted to any of the Consortium Members pursuant to this
Agreement; (b) except as indicated on Schedule VI, it is the owner of, or is the
licensee of, all of the Background Know-How in existence on the date of this
Agreement, and has the right to grant licenses or sublicenses therefor to the
Licensee Consortium Members; (c) except as indicated on Schedule VI, it is the
owner of, or has exclusive rights to, all of the Background Patent Rights, and
has the exclusive right to grant licenses therefor; (d) to the best of its
knowledge, all such Background Patent Rights are in full force and effect and
have been maintained to date; (e) it is not aware of any asserted or unasserted
claim or demand which it believes can be enforced against the Background Patent
Rights; (f) it has no current knowledge that the practice of the Background
Patent Rights infringes upon or conflicts with any patent, patent application or
other proprietary right of any third party; and (g) the Institute has not
granted and will not grant any right or interest in and to Program Know-How,
Program Materials, Program Copyrights or Program Patent Rights that is
inconsistent with the grant of rights to the Consortium Members hereunder, and,
to the best of its knowledge, has disclosed all grants of rights that would
materially impact its right to grant licenses in the Background Know-How or
Background Patent Rights relevant to the work to be performed hereunder.
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10.3. Limitations. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NO PARTY TO
THIS AGREEMENT MAKES ANY WARRANTY, EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW, BY STATUTE OR OTHERWISE, RELATING TO (i) ANY RESEARCH
CONDUCTED UNDER THIS AGREEMENT OR (ii) ANY INVENTION CONCEIVED AND/OR REDUCED TO
PRACTICE UNDER THIS AGREEMENT OR (iii) ANY OTHER INTELLECTUAL PROPERTY DEVELOPED
UNDER THIS AGREEMENT, AND EACH PARTY TO THIS AGREEMENT SPECIFICALLY DISCLAIMS
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
Article XI. LIABILITY AND INDEMNIFICATION
11.1. Release from Liability. The Institute agrees that no Consortium
Member shall be liable for, and hereby releases each Consortium Member from, any
liability as a result of damage to or loss of property or injury to or death of
any person as a result of or in connection with activities of the Institute and
the Institute's employees and agents relating to the Research Program, unless
such damage, loss, injury or death is the direct result of such Consortium
Member's negligence or willful acts or omissions.
11.2. Indemnification.
11.2.1. Indemnification by Consortium Members. Each Consortium
Member shall indemnify and hold each of the other Consortium Members and the
Institute, their respective Affiliates, licensees and sublicensees, and their
respective directors, officers, employees and agents, harmless from and against
any and all liabilities, damages to or loss or property or injury to or death of
any person or persons, costs and expenses (including reasonable attorneys' fees)
arising out of or resulting from such Consortium Member's (i) breach of any
representations or warranties set forth in this Agreement, or (ii) possession or
use of materials or information developed by the Institute in connection with
the Research Program, unless such damage, loss, injury or death is the direct
result of negligence or willful acts or omissions of the Institute, any other
Consortium Member or their employees or agents.
11.2.2. Indemnification by the Institute. The Institute shall
indemnify and hold each Consortium Member, their respective Affiliates,
licensees and sublicensees, and their respective directors, officers, employees
and agents, harmless from and against any and all liabilities, damages to or
loss of property or injury to or death of any person or persons arising out of
the Institute's (i) breach of any representations or warranties set forth in
this Agreement, or (ii) possession or use of materials or information developed
by such Consortium Member in connection with the Research Program, unless such
damage, loss, injury or death is the direct
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result of negligence or willful acts or omissions of such Consortium Member or
employees or agent thereof.
11.2.3. Costs and Expenses. As the parties intend to provide
complete indemnification, all costs and expenses of enforcing this Section 11.2
shall also be reimbursed by the indemnifying party.
11.2.4. Indemnification Procedures. A party that intends to
claim indemnification under this Section 11.2 (the "Indemnitee") shall promptly
notify the other parties (the "Indemnitors") of any loss, claim, damage,
liability or action in respect of which the Indemnitee intends to claim such
indemnification, and the Indemnitors shall assume the defense thereof with
counsel reasonably satisfactory to the Indemnitee whether or not such claim is
rightfully brought; provided, however, that an Indemnitee shall have the right
to retain its own counsel, with the fees and expenses to be paid by the
Indemnitors if the Indemnitors do not assume the defense, or if representation
of the Indemnitee by the counsel retained by the Indemnitors would be
inappropriate due to actual or potential differing interests between such
Indemnitee and any other person represented by such counsel in such proceedings.
The indemnity agreement in this Section 11.2 shall not apply to amounts paid in
settlement of any loss, claim, damage, liability or action if such settlement is
effected without the consent of the Indemnitors, which consent shall not be
withheld or delayed unreasonably. The failure to deliver notice to the
Indemnitors within a reasonable time after the commencement of any such action,
only if prejudicial to its ability to defend such action, shall relieve such
Indemnitors of any liability to the Indemnitee under this Section 11.2, but the
omission so to deliver notice to the Indemnitors will not relieve it of any
liability that it may have to any Indemnitee otherwise than under this Section
11.2. The Indemnitee under this Section 11.2, its employees and agents, shall
cooperate fully with the Indemnitors and its legal representatives in the
investigations of any action, claim or liability covered by this
indemnification.
Article XII. GENERAL PROVISIONS
12.1. Dispute Resolution. Any dispute or claim arising out of, or in
connection with, this Agreement shall be finally settled by binding arbitration
in accordance with the then current rules and procedures of the American
Arbitration Association. The arbitration shall be conducted by three (3)
arbitrators with experience with the issue under consideration (e.g., patent
experts in the case of patent-related disputes), one (1) to be appointed by the
Consortium Members, one to be appointed by the Institute and a third being
nominated by the two (2) arbitrators so selected or, if they cannot agree on a
third arbitrator, by the President of the American Arbitration Association. Such
arbitration will take place in Chicago, Illinois, unless otherwise determined by
a Requisite Majority of the Advisory Board. The arbitrators shall apply the law
of the Commonwealth of Massachusetts to the
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merits of any dispute or claim, without reference to rules of conflicts of laws.
Judgment on any award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The parties agree that, any provision of applicable
law notwithstanding, they will not request, and the arbitrators shall have no
authority to award, punitive or exemplary damages against any party. Nothing in
this Section 12.1 shall limit a party's right to seek injunctive relief with
respect to a breach or threatened breach of this Agreement.
12.2. Governing Law. This Agreement shall be governed by, construed,
and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, without reference to principles of conflicts of laws.
12.3. Independent Contractors. The relationship of the Consortium
Members and the Institute established by this Agreement is that of independent
contractors, and nothing contained in this Agreement shall be construed to (i)
give any of the parties hereto the power to direct or control the day-to-day
activities of another party hereto, (ii) constitute the parties as partners,
joint venturers, co-owners or otherwise as participants in a joint or common
undertaking, or (iii) allow any of the parties hereto to create or assume any
obligation on behalf of another party hereto for any purpose whatsoever.
12.4. Parties Bound. This Agreement, including the indemnification
provisions, shall be binding upon and inure to the benefit of the parties
hereto, their respective successors, assigns, legal representatives and heirs.
12.5. Assignment. This Agreement may not be assigned or transferred by
any of the parties hereto without the prior written consent of the other
parties; provided, however, that a Consortium Member may assign its rights and
delegate its obligations (i) to any Affiliate of such Consortium Member
(although, in the event of any such assignment and delegation, the assigning
Consortium Member shall remain primarily liable for its obligations hereunder)
and (ii) to a purchaser of all or substantially all of the business of such
Consortium Member to which this Agreement relates by merger, sale of assets or
otherwise.
12.6. Entire Agreement. This Agreement (together with the Consortium
Member Agreement, in the case of the Consortium Members) constitutes the entire
and only agreement between the parties relating to the subject matter hereof,
and all prior negotiations, representations, agreements and understandings are
superseded hereby.
12.7. Further Assurances. At any time or from time to time, the
Institute shall, at the request of the Advisory Board or any Consortium Member,
(i) deliver to the Advisory Board or such Consortium Member such records, data
or other documents consistent with the provisions of this Agreement, (ii)
execute, and deliver
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or cause to be delivered, all such assignments, consents, documents or further
instruments of transfer or license, and (iii) take or cause to be taken all such
other actions, as the Consortium Members may reasonably deem necessary or
desirable in order for the Consortium Members to obtain the full benefits of
this Agreement and the transactions contemplated hereby.
12.8. Right to Develop Independently. Nothing in this Agreement will
impair any Consortium Member's right to independently acquire, license, develop
or have developed, utilize or otherwise exploit similar information and
technology performing the same or similar functions as the information and
technology provided by the Institute or which is the subject of the Research
Program.
12.9. Notices. Any notice or other communication required or permitted
under this Agreement shall be in writing and (i) personally delivered, (ii)
mailed, postage prepaid, first class, certified mail, return receipt requested,
or (iii) sent, shipping prepaid, return receipt requested by national overnight
courier service, to the appropriate party or parties at the addresses listed
below or at such other addresses as may be given from time to time in accordance
with the terms of this notice provision.
(a) Notice to the Consortium Members shall be addressed to
them as follows:
i. In the case of BMS, to:
Bristol-Myers Squibb Company
P.O. Box 4000
Route 206 & Province Line Road
Princeton, New Jersey 08543-4000
Attention: Vice President and Senior Counsel,
Pharmaceutical Research Institute and
Worldwide Strategic Business Development
ii. In the case of Millennium, to:
Millennium Pharmaceuticals, Inc.
640 Memorial Drive
Cambridge, Massachusetts 02139
Attention: Chief Business Officer
iii. In the case of AFFX, to:
Affymetrix, Inc.
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3380 Central Expressway
Santa Clara, California 95051
Attn: President
(b) Notices to the Institute shall be addressed to:
Whitehead Institute for Biomedical Research
Nine Cambridge Center
Cambridge, Massachusetts
Attention: Associate Director
(c) Notices to the members of the Advisory Board shall be
addressed to them as set forth in Schedule IV.
Any notice or other communication given by personal delivery shall be deemed
given on the date personally delivered; any notice or other communication given
by mail shall be deemed given three days after the date deposited in the United
States mail; and any notice or other communication given by national overnight
courier service shall be deemed given on the next business day after being sent.
12.10. Amendment. This Agreement may only be amended by a written
instrument executed by the Institute and each of the Consortium Members, except
as provided in Schedule III.
12.11. Waiver. No waiver of any rights shall be effective unless
assented to in writing by the party to be charged, and the waiver of any breach
or default shall not constitute a waiver of any other right hereunder or any
subsequent breach or default.
12.12. Limitation of Liability. IN NO EVENT WILL ANY PARTY HERETO BE
LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN
ANY WAY OUT OF THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY.
THIS LIMITATION WILL APPLY EVEN IF THE OTHER PARTY OR PARTIES HERETO HAVE BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
12.13. Section Headings. The headings of the several sections of this
Agreement are intended for convenience of reference only and are not intended to
be a part of, or to affect the meaning or interpretation of this Agreement.
12.14. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
the result of such action
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materially changes the economic benefit of this Agreement to the Consortium
Members or the Institute.
12.15. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.16. Public Announcements.
12.16.1. Any written announcements, press releases or similar
publicity (collectively, "Announcements") with respect to the execution of this
Agreement shall be agreed upon by the Institute and the Consortium Members in
advance of such Announcement. Each party agrees to provide to each other Party a
copy of any proposed public Announcement relating to this Agreement or the
Research Program as soon as reasonably practicable under the circumstances prior
to its scheduled release. Each party shall have the right to expeditiously
review and recommend changes to any Announcement regarding this Agreement or
developments under the Research Program. Except as otherwise required by law,
the party whose Announcement has been reviewed shall consider in good faith the
removal of any information any reviewing party reasonably deems to be
inappropriate for disclosure. In proposing, reviewing and considering comments
on Announcements, the interests of the Institute and all Consortium Members
shall be taken into consideration, with the overall goal being the furtherance
of the objectives of the Research Program and the harmonization of the interests
of all parties.
12.16.2. The parties agree that the terms of this Agreement
shall be maintained in confidence by all parties, except that (a) any party may
disclose the terms hereof to the extent required by law (including without
limitation pursuant to the requirements of U.S. securities laws), and (b) the
Institute may disclose the terms hereof to government agencies (such as the NIH)
or the U.S. Congress to the extent it deems such disclosure to be necessary or
desirable, provided that such disclosure under (a) and/or (b) of this Section
12.16.2 shall, to the extent legally permissible, be in the form of the redacted
version of this Agreement to be agreed upon by the Institute and the Consortium
Members.
12.17. No Third Party Beneficiary Rights. The Institute and the
Consortium Members agree and acknowledge that the Institute is not intended to
be, and shall not constitute, a third party beneficiary of the Consortium Member
Agreement, which is intended exclusively as an agreement among, and for the
benefit of, the Consortium Members.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
WHITEHEAD INSTITUTE FOR BRISTOL-MYERS SQUIBB COMPANY
BIOMEDICAL RESEARCH
By: /s/ Gerald R. Fink By: /s/ Peter S. Ringrose
-------------------------------- ---------------------------------
Name: Gerald R. Fink Name: Peter S. Ringrose
------------------------------ -------------------------------
Title: Title: President R & D
------------------------------ -------------------------------
Date: Date: 4/28/97
------------------------------ -------------------------------
AFFYMETRIX, INC. MILLENNIUM PHARMACEUTICALS,
INC.
By: /s/ Stephen Fodor By: /s/ Steven H. Holzman
-------------------------------- ---------------------------------
Name: Stephen Fodor Name: Steven H. Holzman
------------------------------ -------------------------------
Title: President/CEO Title:
------------------------------ -------------------------------
Date: 28 April 97 Date:
------------------------------ --------------------------------
ACKNOWLEDGEMENT
The undersigned has read, understands and agrees to be bound by those
provisions of this Agreement specifically applicable to him as the Research
Program Director.
RESEARCH PROGRAM DIRECTOR
/s/ Eric Lander
-------------------------------
Dr. Eric Lander
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<PAGE> 50
EXHIBIT A
PRODUCT TECHNOLOGY LICENSE AGREEMENT
To be provided.
-46-
<PAGE> 51
EXHIBIT B
RESEARCH TECHNOLOGY LICENSE AGREEMENT
To be provided.
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<PAGE> 52
EXHIBIT C
HUMAN SUBJECT CONSENT FORM
NOTE: THE CONSENT FORM SHALL INCLUDE AT LEAST THE FOLLOWING CLAUSES, PLUS
SUCH OTHER PROVISIONS AS MAY BE REQUIRED BY APPLICABLE INSTITUTIONAL
REVIEW BOARDS AND AS MAY BE DETERMINED FROM TIME TO TIME BY THE
ADVISORY BOARD.
I understand that the research project in which I will enroll is designed in
part to identify genes which may predispose individuals to develop
__________________________ and/or other related diseases. This will be attempted
by determining the presence or absence of certain deoxyribonucleic acid (DNA)
markers in cells removed from a blood sample that I will provide. The
information provided by these markers will be compared to the presence or
absence of certain clinical findings in me and other participating family
members who decide to enroll in the research project.
I understand that the blood sample that I provide pursuant to the research will
be sent to the Whitehead Institute for Biomedical Research ("Whitehead") located
in Cambridge, Massachusetts, and that the scientists at Whitehead will analyze
the DNA taken from my blood to help locate genes that may predispose to
__________________________________.
I understand that when Whitehead receives a blood sample from me it will be
devoid of any accompanying information that could permit persons working there
to link the findings made concerning any DNA obtained pursuant to the project
with my identity.
I understand that my DNA (and possibly, cell lines derived from my white blood
cells) will be retained indefinitely (banked) by Whitehead.
I understand that Whitehead may analyze my sample as part of other research
activities or share anonymous portions of it with other researchers working in
other institutions or companies, including, but not limited to, Affymetrix,
Inc., Bristol-Myers Squibb Company and Millennium Pharmaceuticals, Inc.
I understand that the analysis of my DNA sample may contribute to the creation
of new diagnostic tests, new medicines, or other events that may be commercially
valuable to Whitehead and licensees of Whitehead (including the companies listed
in the preceding paragraph) and that I will receive no financial benefits from
such developments.
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<PAGE> 53
I understand that the genetic mapping research of this type could possibly
discover sensitive facts about families such as, for example, non-paternity, or
that some other presumed biological relationship is not in the fact the case.
I understand that should I in the course of this research be informed by the
physician-investigator who enrolled me in the study that I am genetically
predisposed to develop one or more serious disorders that such knowledge could
compromise my ability to obtain health, life, disability or other insurance
standard rates, or, possibly, render me unable to obtain insurance at all.
-49-
<PAGE> 54
EXHIBIT D-1
MATERIALS TRANSFER AGREEMENT
This Materials Transfer Agreement (the "Agreement"), effective as of
________________, 199___ ("Effective Date"), made by and between Whitehead
Institute for Biomedical Research, a Delaware corporation ("Whitehead"),
____________________, a not-for-profit organization (the "Institution"), and its
investigator, ________________ ("Principal Investigator"), shall govern the
terms and conditions of Whitehead's transfer of certain biological materials,
copyrighted materials and/or know-how to the Institution and the Principal
Investigator.
INTRODUCTION
1. Whitehead is the owner of the Materials (as defined below).
2. The Institute has requested that Whitehead provide the Materials to the
Institution, and Whitehead is willing to do so in accordance with the terms of
this Agreement.
3. The Materials constitute unique research materials developed at
considerable expense by Whitehead, and is subject to licensing rights granted to
third parties, which third party rights are intended to be protected by the
provisions of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. Biological Materials, Copyrighted Materials and Know-How.
"Biological Materials" shall mean the biological materials set forth on Exhibit
A hereto, together with any fragments, derivatives, modifications, variants,
progeny or improvements thereof; "Copyrighted Materials" shall mean the software
programs and other copyrighted materials set forth on Exhibit A hereto; and
"Know-How" shall mean the discoveries, inventions, data, software, information,
trade secrets and other technology set forth on Exhibit A hereto. The term
"Materials" shall mean the Biological Materials, Copyrighted Materials and
Know-How, as applicable.
2. Transfer. Whitehead shall transfer the Materials to the Institution.
Acceptance of the Materials by the Institution shall be for the purpose
described in Section 3 only and shall not be deemed a grant by Whitehead to the
Institution of any rights in or to the Materials.
3. Use of Materials. Whitehead will provide the Materials solely for
the purpose of allowing the Principal Investigator and anyone under his/her
direct
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<PAGE> 55
supervision to use the Materials for in vitro research or in vivo animal
research proposes only ("Research"). The Institution shall not disclose or
distribute the Materials to any third party without the express prior written
consent of Whitehead. The Institution shall not use the Materials for purposes
of conducting research with any third party. No commercial development will be
undertaken by the Institution with the Materials, and the Materials will not be
used in research sponsored or funded by a commercial entity or in research
programs to which any third party (other than the federal government) has
licensing rights. Institution and Principal Investigator acknowledge that the
Materials are experimental and will comply with all laws and regulations
applicable to their handling and use. Institution shall return all unused
Materials to Whitehead within thirty (30) days of the completion of the
Research.
4. Report of Results. The Principal Investigator shall periodically
review results generated during the performance of the Research with Whitehead
for evaluation of patentable information and coordination of ongoing research
efforts. In addition, the Principal Investigator will provide Whitehead with
periodic written summaries of results generated during the performance of the
Research. A final report shall be delivered to Whitehead with periodic written
summaries of results generated during the performance of the Materials
transferred to the Institution pursuant to the performance of this Agreement
within thirty (30) days of the completion of the Research.
5. Publications. It is acknowledged that the parties may desire to
publish and disclose the results of the Research. In order to balance this
interest with Whitehead's proprietary interests, Principal Investigator will
submit for Whitehead's review any manuscripts, abstracts, or presentations
intended for publication or other public disclosure. Whitehead will use
reasonable efforts to complete its review promptly and will complete its review
within thirty (30) days of receipt of the submitted documents. If during its
thirty (30) day review period, Whitehead notifies Principal Investigator and the
Institution that it desires patent applications to be filed on any results
disclosed or contained in the documents, Principal Investigator will defer
publication or other disclosure for a period, not to exceed sixty (60) days from
the date of submission to Whitehead, sufficient to permit any desired patent
applications to be filed. Further, during the course of any such 30-day period,
if the Whitehead believes that any Confidential Information (as defined in
Section 8) has been included in the proposed publication or disclosure, it shall
provide notice to the Principal Investigator and the Institution identifying
such information. The Principal Investigator and the Institution agree to remove
all such Confidential Information from the proposed publication or disclosure.
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<PAGE> 56
6. Intellectual Property Rights
(a) The Institution shall promptly and fully disclose in
writing to Whitehead any and all inventions, technology, improvements,
discoveries, developments, trade secrets or intellectual property conceived,
developed or reduced to practice by the Principal Investigator and/or anyone
under his or her direct supervision using the Materials ("Intellectual
Property"). Title to intellectual property rights, including patent applications
and patents issued thereon, in any invention or discovery arising out of the
Research invented solely by employees of the Institution shall be owned by the
Institution, subject to the rights granted to Whitehead under this Agreement.
Title to intellectual property rights, including patent applications and patents
issued thereon, in any invention or discovery invented jointly by employees of
the Institution and Whitehead arising out of the Research shall be owned jointly
by the Institution and Whitehead, subject to the rights granted to Whitehead
under this Agreement.
(b) The Institution hereby grants to Whitehead an option to
obtain an exclusive worldwide right and license, with a right to grant
sublicenses, under the Intellectual Property (i) to make, use, sell and import
products, (ii) to use, practice and sell methods, and (iii) to otherwise exploit
the Intellectual Property.
(c) The option granted to Whitehead pursuant to Section 6(b)
to obtain license rights shall extend for a period of one hundred eighty (180)
days after the date of Whitehead's receipt of a written notice given by the
Institution of an invention covered by, or able to be covered by, a patent or
patent application. Whitehead shall be deemed to have exercised such option if
it provides notice to the Institution of its decision to exercise the option
within such one hundred eighty (180) days period. Promptly following the
exercise of the option granted pursuant to Section 6(b), the parties shall
undertake good faith negotiations concerning the terms and conditions of any
such license. In the event that Whitehead does not exercise its option with
respect to any patent application or patent granted hereunder or the parties are
unable to agree upon the terms and conditions of any such license, the
Institution may enter into an agreement relating to such application or patent
with any third party; provided that the terms offered to a third party are not
more favorable to such third party than the terms offered to Whitehead and
rejected by Whitehead. If such terms offered to a third party are more favorable
to the third party, the Institution will offer such more favorable terms to
Whitehead, and Whitehead will have thirty (30) days to accept or reject such
offer.
(d) Institution hereby grants to Whitehead an exclusive,
worldwide, paid-up right and license, with the right to grant sublicenses, under
Intellectual Property, (i) to make and use products, (ii) to use and practice
methods and (iii) to otherwise exploit the Intellectual Property, in all cases
subject to the limitation that
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<PAGE> 57
the right and license granted under this Section 6(d) shall not extend to the
commercial sale of products or the commercial performance of services.
7. No Warranty. MATERIALS TRANSFERRED UNDER THIS AGREEMENT ARE
EXPERIMENTAL IN NATURE. MATERIALS PROVIDED BY WHITEHEAD TO THE INSTITUTION AND
THE PRINCIPAL INVESTIGATOR ARE "AS IS" AND WITHOUT ANY WARRANTIES, EXPRESS OR
IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR SAFETY. WHITEHEAD MAKES NO EXPRESS OR IMPLIED WARRANTY THAT THE USE
OF MATERIALS TRANSFERRED UNDER THIS AGREEMENT WILL NOT INFRINGE ANY PATENT OR
OTHER PROPRIETARY RIGHT OF ANY THIRD PARTY.
8. Confidentiality. As used herein, the term "Confidential
Information" means information received from Whitehead which is marked as being
confidential or which Whitehead, within 30 days after disclosure, indicates in
writing to the Institution is confidential. Subject to the provisions of Section
5, neither the Institution nor the Principal Investigator shall disclose,
divulge or otherwise transfer or communicate any of the Confidential Information
to third parties, unless and until such Confidential Information is in the
public domain through no fault of the Institution or the Principal Investigator.
9. Liability/Hold Harmless. In no event shall Whitehead or any
affiliate, be liable for any use of the Materials made by the Institution, and
the Institution hereby agrees to defend, indemnify, and hold Whitehead,
Whitehead's affiliates, and their respective successors in business harmless
from any loss, claim, damage, liability or expense (including reasonable
attorney's fees) that may arise from the Institution's use, storage, and
disposal of the Biological Materials, except to the extent such loss, claim,
damage, liability or expense is the direct result of Whitehead's gross
negligence or willful misconduct.
10. Nonexclusivity. Whitehead's transfer of the Materials to the
Institution shall not restrict Whitehead from transferring the Materials to
other organizations or from using the Materials in any manner Whitehead desires.
11. Ownership. Except as otherwise provided herein, no right, title or
interest in and to the Materials provided to the Institution is granted or
implied hereunder. Whitehead shall retain all right, title and interest in and
to the Materials.
12. Assignment This Agreement may not be assigned or transferred by any
of the parties hereto without the prior written consent of the other parties.
13. Notice. Notices (not including reports pursuant to Section 4, which
may be delivered by any reasonable means) required herein shall be given by
prepaid
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<PAGE> 58
certified or registered mail or courier requiring proof of receipt to the
address of the parties set forth on Exhibit B hereto.
14. Term and Termination. The term of this Agreement shall commence on
the Effective Date and continue in full force and effect until the one (1) year
anniversary of the Effective Date, subject to extension by written agreement.
Either party may terminate this Agreement on thirty (30) days prior written
notice to the other party. Upon termination, Institution shall immediately
return to Whitehead the unused Materials, and all of Institution's and Principal
Investigator's rights to use the Materials shall end. Following termination,
neither party shall have any further obligations under this Agreement, except
that Sections 5 through 9 shall survive.
15. No Conflict. The Institution and Principal Investigator warrant and
represent that to the best of their knowledge, each has the authority and
ability to enter into this Agreement and that no pre-existing or future
obligation, through contract or otherwise, would substantially interfere with,
and/or prohibit either party from performing all their respective obligations
and duties as described hereunder.
16. Miscellaneous. This Agreement contains the entire understanding of
the parties with respect to the Materials, and supersedes any prior oral or
written agreements or understanding with respect thereto, all of which, to the
extent that any exist, are hereby terminated. No change, modification,
alteration or addition to any provision of this Agreement shall be binding
unless it is made in writing and is executed by duly authorized representatives
of both parties. This Agreement shall be governed by and construed under the
laws of the Commonwealth of Massachusetts, without reference to conflict of laws
principles. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed by their duly authorized representatives.
AGREED AND ACCEPTED FOR:
INSTITUTION
Signature:__________________________
Name: __________________________
Title: __________________________
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<PAGE> 59
PRINCIPAL INVESTIGATOR
Signature:__________________________
Name: __________________________
Title: __________________________
WHITEHEAD INSTITUTE
FOR BIOMEDICAL RESEARCH
Signature:__________________________
Name: __________________________
Title: __________________________
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<PAGE> 60
EXHIBIT D-2
MATERIALS TRANSFER AGREEMENT
Date:
Subject: MATERIALS TRANSFER AGREEMENT
Dear
This is to acknowledge your request for certain material which will be provided
to you, for your use in non-commercial scientific research only, under the
following conditions:
1. The Material covered by this Agreement includes
___________________________________________________, any
additional progeny or derivatives thereof which could not have
been made but for the material provided. You will use
reasonable effort to keep confidential any related information
and know-how which will be received under this agreement and
is marked "confidential".
2. The Material will be used only by you and by individuals
working under your direct supervision in your Institution, and
will not be transferred, distributed or released to any other
person.
3. You will inform the Whitehead Institute in confidence of
research results related to the Material, by personal
communication or by providing Dr. Eric Lander with a
manuscript describing the results of such research at the time
the manuscript is submitted for publication. If publication
results from research using the Material, acknowledgement of
and/or credit will be given to Dr. Lander as scientifically
appropriate.
4. The Material is made available for investigational use only in
laboratory animals or in vitro experiments and will not be
used in humans or for any other purpose.
5. All characteristics of the Material are not fully understood
and its use may involve risks or dangers that are not known or
fully appreciated. The Material is being provided without
warranty of any sort, express or implied. You and your
Institution will use the Material in compliance with all laws
and governmental regulations and guidelines applicable to the
Material and will comply with NIH guidelines.
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<PAGE> 61
6. [To the extent permitted by law,] You will hold the Whitehead
Institute and its employees harmless from any loss, claim,
damage or liability, of any kind, which may arise from or in
connection with this Agreement or your use, handling or
storage, of the Material. In no case shall the Whitehead
Institute or Dr. Lander be liable for any use by you, by
individuals working under your direct supervision or by your
Institution, of the Material or any loss, claim, damage or
liability, of any kind, which may arise from or in connection
with this Agreement or your use, handling or storage of the
Material.
7. Whitehead Institute (and its licensees of the Materials) are
hereby granted a right of first refusal to obtain an exclusive
license (a) to commercialize any substance produced that
incorporates the Material or progeny or derivative of the
Materials and/or (b) under any patent or other intellectual
property rights covering a new use of the Materials, the terms
of said exclusive license to be negotiated in good faith.
8. You understand that no other right or license to this Material
or to its use is granted or implied as a result of our sending
the Material to you.
9. At the request of the Whitehead Institute, unused Material
will be returned to the Whitehead Institute or destroyed.
If you agree to accept the Material under the above conditions, please sign the
Agreement, have it signed by an authorized representative of your Institution
and return it to:
Mr. John Pratt
Associate Director
Whitehead Institute
Nine Cambridge Center
Cambridge, MA 02142
The Material will be sent to you as soon as possible after the receipt of the
signed Agreement.
Sincerely,
John Pratt
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<PAGE> 62
ACCEPTED:
REQUESTER
INSTITUTION:________________________________
By:______________________________ By:_________________________________________
(Requester's Signature) (Authorized Representative's Signature)
By:______________________________ By:_________________________________________
(Printed Name) (Authorized Representative's Name)
Date:____________________________ Date:_______________________________________
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SCHEDULE I
AFFX CONTRIBUTION
1. AFFX Commitment to Supply AFFX Materials. AFFX, as part of the AFFX
Contribution, hereby undertakes to supply to the Institute, in accordance with
the terms of each Annual Research Program Plan, the following types of AFFX
Materials at the fixed prices set forth in the Consortium Member Agreement
(which prices may not be modified without the approval of the Institute):
Custom and Standard Probe Arrays ("chips"):
- Expression monitoring custom probe arrays
- Expression monitoring standard probe arrays
- Genotyping custom probe arrays
- Genotyping standard probe arrays
GeneChip(R) Instruments
- GeneChip Fluidics Station
- GeneChip Scanner
- GeneChip Workstation
Software
- GeneChip Software
- GeneChip Analysis Software
2. Waiver of Access Fees. AFFX shall, as part of the AFFX Contribution,
waive all access fees relating to the supply of the AFFX Materials.
3. Grant of License. AFFX, hereby, as part of the AFFX Contribution,
grants rights to use to all AFFX Materials for use by the Institute and the
Consortium Members in the course of the Research Program.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
SCHEDULE II
MILLENNIUM CONTRIBUTED TECHNOLOGY
I. EXPRESSION PROFILING
*********************
*********************
*********************
*********************
*********************
II. HUMAN GENETICS
*********************
*********************
*********************
*********************
*********************
*********************
*********************
*********************
*********************
*********************
III. DNA SEQUENCE ANALYSIS SOFTWARE
*********************
IV. HUMAN/ANIMAL SAMPLES
*********************
(As available and appropriate)
Note: To the extent set forth in the applicable Annual Research Program Plan,
Millennium shall promptly transfer to the Institute any Contributed Technology
Upgrades to the Millennium Contributed Technology. Any such Contributed
Technology Upgrades shall be deemed to be part of the Millennium Contributed
Technology to which they relate, shall be transferred pursuant to Section 4.5.3
and shall not obligate the Institute or the other Consortium Members to deliver
any additional consideration.
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<PAGE> 65
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
SCHEDULE III
CONSORTIUM MEMBER CASH COMMITMENTS
A. BASIC FUNDING COMMITMENTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MAXIMUM CONSORTIUM MEMBER
CONSORTIUM MEMBER CASH COMMITMENT
CASH COMMITMENT PER FOR FIRST CONTRACT
CONSORTIUM MEMBER CONTRACT YEAR (1) YEAR (1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Affymetrix, Inc. ******* ****** (2)
- --------------------------------------------------------------------------------
BRISTOL-MYERS SQUIBB ****** ******
COMPANY
- --------------------------------------------------------------------------------
MILLENNIUM ****** ****** (3)
PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
</TABLE>
(1) Subject to adjustment pursuant to part B of this Schedule III.
(2) Of this amount, ****** has previously been provided by AFFX to
the Institute (in the form of a *********). Accordingly,
AFFX's remaining cash funding commitment for the first
contract year is ******.
(3) Of this amount, ****** has previously been advanced by
Millennium to the Institute pursuant to the Existing Research
Agreement. Accordingly, Millennium's remaining funding
commitment for the first contract year is ******.
(Schedule III is continued on the following page)
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<PAGE> 66
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
B. Adjustments to Consortium Member Cash Commitments
The Cash Commitments set forth in part A above are based upon the
assumption that each Annual Research Program Plan will require that AFFX supply
AFFX Materials to the Institute for use in connection with the Research Program.
In the event that for any Contract Year the amount of AFFX Materials to be
supplied by AFFX pursuant to the Annual Research Program Plan for such Contract
Year is greater or lesser than currently budgeted for the first Contract Year,
then the Cash Commitments set forth in part A above shall be subject to
adjustment as provided in the Consortium Member Agreement, provided that in no
event shall the Cash Commitments for any Contract Year exceed ********. The
Consortium Members shall notify the Institute concerning any adjustments made
pursuant to the Consortium Member Agreement, and the Institute agrees that any
such adjustments shall be considered to constitute an amendment to this Schedule
III and shall be binding upon the Institute, provided that no such adjustments
shall reduce the Total Cash Commitment of the Consortium Members set forth in
the applicable Annual Research Program Budget without the written consent of the
Institute. Furthermore, as provided in Section 4.1.1 of this Agreement, Schedule
III shall be amended for each Contract Year to reflect the Annual Research
Program Budget for such Contract Year, with the allocation of the Total Cash
Commitments among the Consortium Members to be determined pursuant to the terms
of the Consortium Member Agreement and set forth in such amended Schedule III.
For purposes of determining whether the Minimum Contribution Level has
been satisfied, the price of AFFX Materials shall be determined in the manner
provided in the Consortium Member Agreement, notice of which determination shall
be provided to the Institute and shall be subject to audit and dispute by the
Institute. The Consortium Members agree not to amend provisions in the
Consortium Member Agreement relating to the price of AFFX Materials without the
Institute's written consent, such consent not to be unreasonably withheld.
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<PAGE> 67
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
C. First Installment for First Contract Year
Within ten (10) days after the Effective Date, the Consortium Members
shall provide the following funds to the Institute:
Member Amount
------ ------
(reflecting the prior contribution
AFFX ****** described in footnote (2) above)
BMS ******
Millennium ****** (reflecting the prior ****** payment
described in footnote (3) above)
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<PAGE> 68
SCHEDULE IV
ADVISORY BOARD MEMBERS
Affymetrix: Dr. Robert Lipshutz and Dr. Thomas Gingeras
Bristol-Myers Squibb: Dr. Richard Gregg and Dr. William Koster
Millennium Pharmaceuticals, Inc.: Dr. Frank Lee and Dr. Robert Tepper.
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<PAGE> 69
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
SCHEDULE V
DETERMINATION OF ROYALTY RATES UNDER PRODUCT
TECHNOLOGY LICENSE AGREEMENTS
A. The royalty rates for products or services that are royalty-bearing
under the terms of a Product Technology License Agreement shall range up to
******% of Net Sales (as defined in the Product Technology License Agreement) on
a per-product/service basis (i.e. only one royalty within the foregoing range
will be payable, irrespective of the number of patents/patent applications
licensed).
In determining the appropriate royalty rate for a product or service,
all relevant factors shall be considered, including, but not limited to the
following:
**************************************************************
******************
**************************************************************
********************************************************************
******************
**************************************************************
********************************************************************
********************************************************************
********************************************************************
******************
**************************************************************
********************************************************************
**************************************************************
**************************************************************
********************************************************************
************************
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<PAGE> 70
B. As provided in Section 5.5, the royalty rate determined pursuant to
the provisions of Part A above shall be split between the Institute and any
applicable IP Owning Consortium Member(s) based upon all relevant factors,
including, but not limited to, the relative contributions of the Institute and
the IP Owning Consortium Members to the Program Patent Rights and whether such
Program Patent Rights are owned solely by the IP Owning Consortium Member,
jointly by IP Owning Consortium Members or jointly by the Institute and one or
more IP Owning Consortium Members.
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<PAGE> 71
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
SCHEDULE VI
BACKGROUND PATENT RIGHTS
****************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
**********************************************************************
*****.
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<PAGE> 1
Exhibit 10.5
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
CONSORTIUM MEMBER AGREEMENT
BETWEEN
AFFYMETRIX, INC.
BRISTOL-MYERS SQUIBB COMPANY
AND
MILLENNIUM PHARMACEUTICALS, INC.
<PAGE> 2
INTRODUCTION..................................................................1
Article I. DEFINITIONS..............................................1
1.1. "Additional Consortium Members"..........................1
1.2. "Affiliate"..............................................1
1.3. "AFFX Materials".........................................2
1.4. "AFFX Materials Price"...................................2
1.5. "Applicable Contribution Percentage".....................2
1.6. "Commercialization Party"................................2
1.7. "Consortium Members".....................................2
1.8. "Core Commercial Product"................................2
1.9. "Diagnostic Nucleic Acid Analyzer".......................2
1.10. "Diagnostic Product".....................................2
1.11. "Diagnostic Service".....................................2
1.12. "First Commercial Sale"..................................3
1.13. "Initial Consortium Members".............................3
1.14. "Licensee Consortium Members"............................3
1.15. "Minimum Consortium Member Cash Funding Level"...........3
1.16. "Minimum Consortium Member Contribution Level"...........3
1.17. "Net Sales" .............................................3
1.18. "Non-Commercialization Party"............................5
1.19. "Nucleic Acid Analyzer"..................................5
1.20. "Other Commercial Product"...............................5
1.21. "Research Nucleic Acid Analyzer".........................6
1.22. "Royalty-Bearing Product"................................6
1.23. "Sublicensees"...........................................6
1.24. "Therapeutic Product"....................................6
1.25. "Valid Claim"............................................6
Article II. THE CONSORTIUM...........................................7
2.1. Establishment of Consortium..............................7
2.2. Advisory Board...........................................8
2.3. Research Program.........................................8
2.4. Research Program Director................................8
Article III. RESEARCH PROGRAM FUNDING AND TECHNOLOGY
CONTRIBUTIONS............................................9
3.1. Consortium Members' Commitments..........................9
3.2. Funding Mechanics. .....................................9
3.3. Consortium Member Contributed Technology................10
Article IV. INTELLECTUAL PROPERTY LICENSES..........................11
4.1. License to Background Know-How. .......................11
4.3. Research Technology License. ...........................11
4.4. Product Technology Licenses. ...........................11
4.5. Institute Licensing Proceeds............................12
4.6. Patent Filing, Prosecution and Maintenance..............12
4.7. No Implied Licenses.....................................13
i
<PAGE> 3
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
Article V. COMMERCIALIZATION.......................................13
5.1. General. ...............................................13
5.2. Therapeutic Products....................................14
5.3 Nucleic Acid Analyzer...................................14
5.4. *******************************************
*******************************. .......................14
5.5. Waiver of Commercialization Rights......................15
Article VI. ROYALTIES *****.........................................16
6.1. Payments to Consortium Members. ........................16
6.2. Payment Obligations to Third Parties. .................17
6.3. Limitation on Royalties. ...............................17
6.4. Length of Royalty Payments..............................17
6.5. Royalties Payable Only Once.............................17
6.6. Royalty Reports; Payment................................17
6.7. Records and Audits......................................18
6.8. Currency of Payments....................................18
6.9. Tax Withholding.........................................18
Article VII. CONFIDENTIAL INFORMATION................................19
7.1. Confidentiality.........................................19
7.2. Term. ..................................................20
7.3. Return of Materials.....................................20
Article VIII. WITHDRAWAL..............................................20
8.1. Voluntary Withdrawal....................................20
8.2. Involuntary Withdrawal..................................21
8.3. Effect of Withdrawal....................................21
Article IX. TERM; TERMINATION AND RENEWAL...........................22
9.1. Term....................................................22
9.2. Termination for Breach by Institute.....................22
9.3. Termination Rights of Institute.........................22
9.4. Return of Funds; Continued Funding Obligation...........22
9.5. Survival................................................23
9.6. Renewal.................................................23
Article X. REPRESENTATIONS AND WARRANTIES..........................23
10.1. Representations of Consortium Members...................23
10.2. Limitations.............................................24
Article XI. LIABILITY AND INDEMNIFICATION...........................24
11.1. Indemnification.........................................24
Article XII. GENERAL PROVISIONS......................................25
12.1. Use of Name.............................................25
12.3. Governing Law...........................................25
12.4. Independent Contractors.................................25
ii
<PAGE> 4
12.5. Parties Bound...........................................26
12.6. Assignment..............................................26
12.7. Entire Agreement........................................26
12.8. Right to Develop Independently..........................26
12.9. Notices.................................................26
12.10. Amendment. .............................................26
12.11. Waiver..................................................26
12.12. Limitation of Liability.................................27
12.13. Section Headings. ......................................27
12.14. Severability............................................27
12.15. Counterparts............................................27
12.16. Public Announcements....................................27
iii
<PAGE> 5
CONSORTIUM MEMBER AGREEMENT
AGREEMENT made as of the 28th day of April, 1997 by and among
Affymetrix, Inc., a California corporation ("AFFX"), Bristol-Myers Squibb
Company, a Delaware corporation ("BMS"), and Millennium Pharmaceuticals, Inc., a
Delaware corporation ("Millennium") (the "Agreement").
INTRODUCTION
1. AFFX, BMS and Millennium have entered into a Sponsored Research
Agreement (the "Sponsored Research Agreement"), dated as of April 28, 1997, with
the Whitehead Institute for Biomedical Research (the "Institute") for the
funding of certain research activities of the Whitehead Center for Genome
Research.
2. The Sponsored Research Agreement provides, among other things, for
the grant of certain rights and licenses to technology arising out of the
research programs conducted by the Institute pursuant to the Sponsored Research
Agreement.
3. AFFX, BMS and Millennium are entering into this Agreement in order
to provide for (a) the establishment of the consortium to fund such research
programs, (b) their respective funding obligations relating to research programs
to be undertaken by the Institute, (c) their respective contributions of
technology rights to the Institute, (d) their respective rights in the
technology arising out of the research programs conducted by the Institute
pursuant to the Sponsored Research Agreement, and (e) other matters pertaining
to the conduct of joint activities as members of the consortium.
In consideration of the mutual covenants and promises contained in this
Agreement and other good and valuable consideration, the receipt of which is
hereby acknowledged, AFFX, BMS and Millennium agree as follows:
Article I. DEFINITIONS
(a) Defined Terms. As used in this Agreement, the following
terms, whether used in the singular or plural, shall have the following
respective meanings:
1.1. "Additional Consortium Members" means the Consortium Members,
other than the Initial Consortium Members, who become parties to this Agreement
pursuant to the procedures set forth in the Sponsored Research Agreement.
1.2. "Affiliate" means, with respect to a specified party to this
Agreement, any corporation, company, partnership, joint venture and/or firm
which now or hereafter controls, is controlled by or is under common control
with such specified party. For purposes of this Section 1.2, "control" shall
mean (i) in the case of
1
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
corporate entities, direct or indirect ownership of at least 50% of the stock or
shares entitled to vote for the election of directors; and (ii) in the case of
non-corporate entities, direct or indirect ownership of at least 50% of the
equity interest with the power to direct the management and policies of such
noncorporate entities.
1.3. "AFFX Materials" means the chips, hardware and related design
services of the types set forth on Exhibit C to this Agreement, as specifically
set forth in each Annual Research Program Plan and related Annual Research
Program Budget.
1.4. "AFFX Materials Price" means the price ascribed to AFFX Materials
in accordance with Exhibit C to this Agreement.
1.5. "Applicable Contribution Percentage" means the percentage set
forth opposite each Consortium Member's name on Exhibit A to this Agreement.
1.6. "Commercialization Party" means (a) AFFX in the case of Nucleic
Acid Analyzers, as further provided in Section 5.3 below, (b) BMS and Millennium
in the case of Therapeutic Products, as further provided in Section 5.2 below,
and (c) AFFX and Millennium in the case of Diagnostic Products, Diagnostic
Services and Other Commercial Products, as further provided in Section 5.4
below.
1.7. "Consortium Members" means the Initial Consortium Members and the
Additional Consortium Members.
1.8. "Core Commercial Product" means either (i) a Therapeutic Product,
(ii) a Diagnostic Nucleic Acid Analyzer, (iii) a Diagnostic Product, or (iv) a
Diagnostic Service.
1.9. "Diagnostic Nucleic Acid Analyzer" means a product in the form of
a Nucleic Acid Analyzer for use in *************************************
*******************************************************************
*******************************************************************
************.
1.10. "Diagnostic Product" means any product in the form of a device,
compound, or kit for use in ********************************************
*******************************************************************
*******************************************************************
************* provided that the term Diagnostic Product shall not include a
Diagnostic Nucleic Acid Analyzer.
2
<PAGE> 7
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
1.11. "Diagnostic Service" means any testing service which provides for
either *************************************************************************
********************************************************************************
*******************************************************************************.
1.12. "First Commercial Sale" means, with respect to each
Royalty-Bearing Product, the date such Royalty-Bearing Product is first
commercially sold, marketed or made publicly available in a country as part of a
nationwide introduction of such product or service. Royalty-Bearing Products
distributed or used for clinical trials or experimental purposes shall not be
considered marketed or made available and shall not establish the First
Commercial Sale.
1.13. "Initial Consortium Members" means AFFX, BMS and Millennium.
1.14. "Licensee Consortium Members" means the Consortium Member or
Members which, pursuant to the provisions of this Agreement, are the designated
licensee or licensees of particular Background Know-How, Program Know-How,
Program Materials, Program Copyrights or Program Patent Rights.
1.15. "Minimum Consortium Member Contribution Level" means for each
Contract Year, the following amounts: (a) $***** for AFFX in a combination of
cash and AFFX Materials (the dollar amount of any such AFFX Materials to be
equal to the AFFX Materials Price); (b) $***** for BMS in cash; and (c) $*****
for Millennium in cash, provided that (a) in no event shall the aggregate cash
portion of the foregoing amounts exceed $*****; and (b) the amounts specified
shall be subject to adjustment, not to exceed five percent (5%) in any Contract
Year, to reflect the increase, if any, in the U.S. Consumer Price Index (or any
successor index thereto) during the immediately preceding Contract Year.
1.16. "Net Sales" means, with respect to a Royalty-Bearing Product, the
gross amount invoiced by the Commercialization Party, its Affiliates and/or its
Sublicensees, on sales or other dispositions of the Royalty-Bearing Product to
unrelated third parties, less the following items, provided that such items are
included in the price charged and do not exceed reasonable and customary amounts
in the country in which such sale occurred:
(i) Trade, cash and quantity discounts, allowances and
rebates actually allowed and taken directly with
respect to such sales;
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<PAGE> 8
(ii) Tariffs, duties, excises, value-added and sales taxes
or other taxes imposed upon and paid directly with
respect to such sales (excluding national, state or
local taxes based on income);
(iii) Actual amounts repaid or credited by reason of
rejections, defects, recalls or returns or because of
rebates or retroactive price reductions; and
(iv) Freight, postage, insurance and other transportation
charges incurred in shipping a Royalty-Bearing
Product.
Such amounts shall be determined from the books and records of the
Commercialization Party, its Affiliates and/or its Sublicensees, maintained in
accordance with generally accepted accounting principles, consistently applied.
If a Royalty-Bearing Product is sold, or otherwise commercially disposed of for
value (including, without limitation, disposition in connection with the
delivery of other products or services), in a transaction that is not an
outright arm's length sale to an independent third party (including, for this
purpose, a sale of a Royalty-Bearing Product from one Consortium Member to
another Consortium Member), then the gross amount invoiced in such transaction
shall be deemed to be the gross amount that would have been paid had there been
such a sale at the average sale price of such Royalty-Bearing Product during the
applicable royalty reporting period. Net Sales shall not include any
consideration received by the Commercialization Party, its Affiliates or its
Sublicensees in respect of the sale, use or other disposition of a
Royalty-Bearing Product in a country as part of a clinical trial prior to the
receipt of all regulatory approvals required to commence full commercial sales
of such Royalty-Bearing Product in such country, including sales under
"treatment INDs", "named patient sales", "compassionate use sales", or their
equivalents pursuant to which the Commercialization Party, its Affiliates or
Sublicensees is/are entitled, under applicable regulatory policies, to recover
costs incurred in providing such products to the patients. In addition, Net
Sales shall not include the distribution of customary quantities of free samples
provided in connection with the marketing of Royalty-Bearing Products.
In the event the Royalty-Bearing Product is sold as part of a
Combination Product (as defined below), the Net Sales from the Combination
Product, for the purposes of determining royalty payments, shall be determined
by multiplying the Net Sales of the Combination Product (as defined in the
standard Net Sales definition), during the applicable royalty reporting period,
by the fraction, A/A+B where A is the average sale price of the Royalty-Bearing
Product included in the Combination Product when sold separately in finished
form and B is the average sale price of the other product(s) included in the
Combination Product when sold separately in finished form, in each case during
the applicable royalty reporting period or, if sales of both the Royalty-Bearing
Product and the other product(s) did not occur in such period, then in the most
recent royalty reporting period in which
4
<PAGE> 9
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
sales of both occurred. In the event that such average sale price cannot be
determined for both the Royalty-Bearing Product and all other product(s)
included in the Combination Product, Net Sales for the purposes of determining
royalty payments shall be calculated by multiplying the Net Sales of the
Combination Product by the fraction C/C+D where C is the fair market value of
the Royalty-Bearing Product and D is the fair market value of all other
product(s) included in the Combination Product. In such event, the
Commercialization Party shall in good faith make a determination of the
respective fair market values of the Royalty-Bearing Product and all other
products included in the Combination Product, and shall notify the
Non-Commercialization Parties of such determination and provide the
Non-Commercialization Parties with data to support such determination. The
Non-Commercialization Parties shall have the right to review such determination
and supporting data, and to notify the Commercialization Party if it/they
disagrees with such determination. If one or more of the Non-Commercialization
Parties do not agree with such determination and the Parties are unable to agree
in good faith as to such respective fair market values, then such matter shall
be referred to the Executive Officers.
As used above, the term "Combination Product" means any (i)
pharmaceutical product which comprises the Royalty-Bearing Product and other
active compounds and/or ingredients, (ii) any device which comprises the
Royalty-Bearing Product and other devices or components which have functional
significance apart from the Royalty-Bearing Product, and (iii) any diagnostic or
other service which comprises the Royalty-Bearing Product and other services,
products, devices or compounds that are sold together with such Royalty-Bearing
Product.
1.17. "Non-Commercialization Party" means (a) all Consortium Members
other than AFFX in the case of Nucleic Acid Analyzers, (b) all Consortium
Members other than BMS in the case of Therapeutic Products commercialized by BMS
or its Affiliates or Sublicensees, (c) all Consortium Members other than
Millennium in the case of Therapeutic Products commercialized by Millennium or
its Affiliates or Sublicensees, and (d) all Consortium Members other than AFFX
and Millennium in the case of Diagnostic Products, Diagnostic Services and Other
Commercial Products, provided that a Commercialization Party which waives its
commercialization rights under Section 5.5 shall thereafter be deemed a
Non-Commercialization Party.
1.18. "Nucleic Acid Analyzer" means a ******************************
*******************************************************************************
*******************************************************************************
********************************.
5
<PAGE> 10
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
1.19. "Other Commercial Product" means any product in the form of a
device, compound, kit, service or compilation of data (i.e., databases) that is
not a Core Commercial Product or a Research Nucleic Acid Analyzer.
1.20. "Research Nucleic Acid Analyzer" means a product in the form of a
Nucleic Acid Analyzer for use as a research tool in the development of Core
Commercial Products or Other Commercial Products, and that is neither a
Diagnostic Nucleic Acid Analyzer nor a Therapeutic Product.
1.21. "Royalty-Bearing Product" means a Core Commercial Product,
Research Nucleic Acid Analyzer or Other Commercial Product whose manufacture,
importation, use or sale is covered by a Valid Claim of any of the Program
Patent Rights.
1.22. "Sublicensees" means any third party other than an Affiliate
granted the right, subject to the terms and conditions of this Agreement, to
make, import, use, offer to sell or sell a Royalty-Bearing Product, but not
including a third party that is not granted the right to make such
Royalty-Bearing Product but merely purchases such Royalty-Bearing Product in
finished form for resale.
1.23. "Therapeutic Product" means any *********************************
*******************************************************************************
*************.
1.24. "Valid Claim" means either (a) a claim of an issued and unexpired
patent included within the Program Patent Rights which has not been held
permanently revoked, unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealed or unappealable within
the time allowed for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise, or (b) a claim of a
pending patent application included within the Program Patent Rights, which
claim (i) was filed in good faith, (ii) has not been abandoned or finally
disallowed without the possibility of appeal or refiling of said application,
and (iii) has not been pending for a period in excess of ***** years.
(b) Cross-Reference to Other Terms Defined in this Agreement.
The following terms are defined in the Sections of this Agreement set forth
below:
6
<PAGE> 11
Confidential Materials omitted and filed separately
with the Securities and Exchange Commission. Asterisks
denote such omissions.
<TABLE>
<CAPTION>
Defined Term Section
------------ -------
<S> <C>
AFFX Deficiency 3.2(c)
Announcements 12.16
Available Technology 3.3(b)
Cash Commitment 3.1(a)
Confidential Information 7.1
Consortium Share 4.5
Contribution Commitment 3.1(a)
Indemnified Parties 11.1(a)
Indemnified Party 11.1(a)
Indemnifying Parties 11.1(b)
Indemnitee 11.3
Indemnitors 11.3
Joint Commercialization Products 5.4
Other Payments 5.1
Royalty Standards 6.1(a)
Total Contribution Commitment 3.1(a)
</TABLE>
(c) Cross Reference to Other Terms Defined in Sponsored
Research Agreement. The following terms are defined in the Sections of the
Sponsored Research Agreement set forth below:
<TABLE>
<CAPTION>
Defined Term Section
------------ -------
<S> <C>
Advisory Board 1.2
AFFX Contribution 1.4
Annual Research Program 1.6
Annual Research Program Budget 3.3.2
Annual Research Program Plan 1.7
Background Know-How 1.8
Consortium Member Contribution 1.12
Contract Year 1.13
Contributed Technology Upgrade 1.14
Contribution Commitment 3.1
Executive Officers 2.2.4
Existing Research Agreement 1.16
Institute Director 1.20
IP Owning Consortium Member 1.22
Millennium Contributed Technology 1.25
Product Technology License 5.5
Product Technology License Agreement 1.27
Program Copyrights 1.28
Program Know-How 1.29
Program Materials 1.30
Program Patent Rights 1.31
Requisite Majority 1.32
Research Program 1.33
</TABLE>
7
<PAGE> 12
<TABLE>
<S> <C>
Research Program Director 1.34
Research Program Director Termination Notice 3.2.2
Research Program Director Death/
Disability Notice 3.2.2
Research Project 1.35
Research Project Plan 1.36
Research Technology License 5.4
Research Technology License Agreement 1.37
</TABLE>
Article II. THE CONSORTIUM
2.1. Establishment of Consortium. AFFX, BMS and Millennium are hereby
establishing the Consortium in order to support the Research Program, with the
following principal objectives: (a) the development of technologies to advance
the state-of-the-art of functional genomics; (b) the development of research
tools and biological paradigms meriting application of these tools; and (c) the
creation of intellectual property relevant to the development of Core Commercial
Products, Other Commercial Products and Research Nucleic Acid Analyzers.
2.2. Advisory Board. Pursuant to the Sponsored Research Agreement, the
Institute and the Consortium Members have established an Advisory Board
consisting of the Institute Director, the Research Program Director and two (2)
representatives of each Consortium Member. The Advisory Board shall have the
responsibilities set forth in the Sponsored Research Agreement.
2.3. Research Program. As provided in the Sponsored Research Agreement,
the Annual Research Program Plan for each Annual Research Program shall be
subject to the approval of a Requisite Majority of the Advisory Board. The
Consortium Members agree to use reasonable efforts to work together
constructively to ensure that each Annual Research Program Plan meets the
objectives set forth in Section 2.1 of this Agreement and furthers the mutual
and separate interests of the Consortium Members. It is specifically recognized
by each Consortium Member that one or more Research Projects included in an
Annual Research Program may be of greater interest and/or utility to another
Consortium Member; however it is the intent and expectation of the Consortium
Members that, over the term of the Sponsored Research Agreement, the types of
Research Projects of greater interest and/or utility to a specific Consortium
Member shall be counterbalanced by Research Projects of greater interest and/or
utility to each other Consortium Member.
2.4. Research Program Director. Under the circumstances described in
Section 3.2 of the Sponsored Research Agreement, each Consortium Member has the
right to provide notice to the Institute and all other Consortium Members
requesting a meeting of the Advisory Board to discuss its concerns regarding the
commitment of the Research Program Director, and to provide a notice of breach
if it is not satisfied with the results of such meeting. Furthermore, under the
circumstances and on the
8
<PAGE> 13
terms described in Sections 3.2.2 and 3.2.3 of the Sponsored Research Agreement,
each Consortium Member has the right to withdraw as a Consortium Member
following receipt of a Research Program Director Termination Notice or a
Research Program Director Death/Disability Notice, or following the appointment
of a new Research Program Director. Each Consortium Member agrees to consult
with all other Consortium Members prior to providing any notices or taking any
actions pursuant to Sections 3.2.1, 3.2.2, 3.2.3 or 4.4.3 of the Sponsored
Research Agreement.
Article III. RESEARCH PROGRAM FUNDING AND TECHNOLOGY
CONTRIBUTIONS
3.1. Consortium Members' Commitments.
(a) The commitment of each Consortium Member to support each
Annual Research Program is as set forth on Exhibit A to this Agreement opposite
each Consortium Member's name thereon (referred to as each Consortium Member's
"Contribution Commitment" and, collectively, the "Total Contribution
Commitment"). The Consortium Member Contribution Commitment encompasses cash
contributions by BMS and Millennium and cash contributions and contributions of
AFFX Materials by AFFX. The cash portion of each Consortium Member's
Contribution Commitment is referred to as the "Cash Commitment" of such
Consortium Member. Such Exhibit A also sets forth the Applicable Contribution
Percentage of each Consortium Member. The AFFX Cash Commitment shall be equal to
its Contribution Commitment less the AFFX Materials Price of the AFFX Materials
to be supplied by it in accordance with the applicable Annual Research Program
Plan. Notwithstanding anything in this Agreement or the Sponsored Research
Agreement to the contrary, each Consortium Member shall be severally (and not
jointly) liable for its funding commitment pursuant to this Agreement.
(b) Each Consortium Member agrees to support each Annual
Research Program at the applicable Minimum Consortium Member Contribution Level.
The Minimum Consortium Member Contribution Level may be reduced by mutual
agreement of all Consortium Members in the event that the Annual Research
Program Budget does not require the Consortium Members to support the Annual
Research Program at the Minimum Consortium Member Contribution Level. In the
event that the Minimum Consortium Member Contribution Level is reduced by mutual
agreement of all Consortium Members, each Consortium Member's Contribution
Commitment shall be equal to such Consortium Member's Applicable Contribution
Percentage of the total amount set forth in the applicable Annual Research
Program Budget for cash and AFFX Materials from the Consortium Members. However,
it is the intention of the Consortium Members to work constructively with the
Institute and each other in order to support each Annual Research Program at the
applicable Minimum Consortium Member Contribution Level.
9
<PAGE> 14
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
(c) In addition to the Contribution Commitments, AFFX and
Millennium have agreed to provide the Consortium Member Contributions to the
Institute pursuant to the Sponsored Research Agreement. No credit to, or
reduction in, the Contribution Commitments of any Consortium Member shall be
applicable as a result of the contribution of such Consortium Member
Contributions.
3.2. Funding Mechanics.
(a) On or before the first day of each calendar quarter during
each Contract Year (other than the first Contract Year), each Consortium Member
shall pay to the Institute, by check or wire transfer, an amount equal to twenty
five percent (25%) of the Cash Commitment of such Consortium Member for such
Contract Year, as determined pursuant to the applicable Annual Research Program
Budget. With respect to the first Contract Year, each Consortium Member shall
pay to the Institute the amounts set forth on Schedule III to the Sponsored
Research Agreement within ten (10) days after the Effective Date, and thereafter
during such first Contract Year shall make the quarterly payments set forth in
the preceding sentence on the first day of October, January and April. In the
event that during any Contract Year the Advisory Board approves a modification
to the Annual Research Program Budget for such Contract Year, the payments to be
made during the remainder of the Contract Year shall be appropriately adjusted.
Any credit received by the Consortium Members for an Excess Funding Amount in
the preceding Contract Year, pursuant to Section 3.3.2 of the Sponsored Research
Agreement, shall be allocated among the Consortium Members in accordance with
the Applicable Contribution Percentages of the Consortium Members.
(b) In connection with the establishment of the Annual
Research Program and the related Annual Research Program Budget for each
Contract Year, a determination shall be made concerning the amount of AFFX
Materials to be supplied to the Institute, resulting in the calculation of the
Cash Commitment of AFFX for each such Contract Year, and which Cash Commitment
(as well as the Cash Commitment of all Consortium Members) shall be reflected in
an amendment to Schedule III to the Sponsored Research Agreement. For example,
based on the Annual Research Program for the first Contract Year and the related
Annual Research Program Budget, the Consortium Members have agreed that AFFX
will provide $***** in AFFX Materials (measured by the applicable AFFX Materials
Price) and $***** in cash to the Institute (such amount being equal to the
Contribution Commitment of AFFX for such Contract Year less the AFFX Materials
Price of the AFFX Materials to be supplied in accordance with the applicable
Annual Research Program Plan).
10
<PAGE> 15
(c) The Consortium Members recognize that the amount of AFFX
Materials actually supplied by AFFX to the Institute in any Contract Year may
vary from the amount set forth in the Annual Research Program Plan. AFFX agrees
not to provide AFFX Materials with an AFFX Materials Price greater than that set
forth in the applicable Annual Research Program Budget without the consent of
all other Consortium Members, and the Consortium Members shall in such event
agree upon appropriate adjustments to the Cash Commitments of all Consortium
Members. Within thirty (30) days after the end of each Contract Year, AFFX shall
provide a written report to each other Consortium Member and the Institute
indicating the AFFX Materials supplied to the Institute during the preceding
Contract Year and the applicable AFFX Materials Price therefor, together with
reasonable supporting documentation. In the event that the sum of (i) the cash
paid by AFFX to the Institute pursuant to this Section 3.2 during a Contract
Year, and (ii) the AFFX Materials Price of the AFFX Materials supplied by AFFX
to the Institute during such Contract Year, is less than the Contribution
Commitment of AFFX for such Contract Year (the "AFFX Deficiency"), then such
report shall be accompanied by payments to BMS and Millennium from AFFX in the
amount of the AFFX Deficiency, to be split between BMS and Millennium in such
amounts as shall result in each Consortium Member paying its Applicable
Contribution Percentage of the total funding (in cash and AFFX Materials)
actually provided to the Institute during such Contract Year.
3.3. Consortium Member Contributions and AFFX Materials.
(a) Pursuant to the Sponsored Research Agreement, AFFX and
Millennium have granted to the Institute and to each other Consortium Member a
worldwide, paid-up, non-exclusive right and license, without the right to grant
sublicenses, to use AFFX Materials and Millennium Contributed Technology, only
in the course of the Research Program. Each Consortium Member hereby agrees and
acknowledges that, except as specifically provided in the Sponsored Research
Agreement, no rights to AFFX Materials are being licensed or otherwise conveyed
to the Institute or Consortium Members other than AFFX, and no rights to
Millennium Contributed Technology are being licensed or otherwise conveyed to
the Institute or Consortium Members other than Millennium.
(b) Each Annual Research Program Plan shall include a detailed
description of the AFFX Materials and Millennium Contributed Technology to be
contributed or provided to the Institute in connection with the Annual Research
Program. Prior to the approval by the Advisory Board of each Annual Report
Program Plan, AFFX, in the case of AFFX Materials, and Millennium, in the case
of Millennium Contributed Technology, shall indicate in writing to the Advisory
Board whether or not such AFFX Materials and/or Millennium Contributed
Technology is available for transfer and/or licensing to all other Consortium
Members upon commercially reasonable terms (such technology being referred to as
"Available Technology"). It is the general expectation of the Consortium Members
that, unless otherwise required pursuant to contractual provisions with third
parties, AFFX Materials and/or Millennium Contributed Technology will be
Available Technology,
11
<PAGE> 16
provided that neither AFFX nor Millennium shall be under obligation to designate
such AFFX Materials and/or Millennium Contributed Technology, respectively, as
Available Technology. However, if proposed AFFX Materials and/or Millennium
Contributed Technology will not be Available Technology, any Consortium Member
shall have the right to object to the inclusion in the Annual Research Program
Plan of Research Projects directed to improving or using such proposed AFFX
Materials and/or Millennium Contributed Technology.
Article IV. INTELLECTUAL PROPERTY LICENSES
4.1. License to Background Know-How. Each Consortium Member is hereby
designated as a Licensee Consortium Member for purposes of the non- exclusive
license under Background Know-How granted by the Institute pursuant to Section
5.1 of the Sponsored Research Agreement.
4.2. License to Program Know-How, Program Materials and Program
Copyrights. Each Consortium Member is hereby designated as a Licensee Consortium
Member for purposes of the license under Program Know-How, Program Materials and
Program Copyrights granted by Institute and each IP Owning Consortium Member
pursuant to Section 5.2 of the Sponsored Research Agreement. Such licenses shall
be co-exclusive among all Consortium Members.
4.3. Research Technology License. Each Consortium Member is hereby
designated as a Licensee Consortium Member for purposes of the option to obtain
a Research Technology License granted by the Institute and each IP Owning
Consortium Member pursuant to Section 5.4 of the Sponsored Research Agreement,
subject to the following limitations: (a) such Research Technology License(s)
shall be co-exclusive among the Consortium Members exercising the option and
executing and delivering a Research Technology License Agreement; (b) such
Research Technology License(s) shall not extend to the commercial sale of
products or the commercial performance of services, including Other Commercial
Products; and (c) such Research Technology License(s) shall include the right to
grant sublicenses only in the context of academic or non-commercial
relationships or to a commercial entity with which the Licensee Consortium
Member is conducting collaborative research activities only for use in
connection with such collaborative research activities. Each Consortium Member
exercising the option to obtain a Research Technology License shall provide
written notice to all other Consortium Members at the same time that the
Institute is notified that such option is being exercised. Promptly upon the
exercise of any such option, each IP Owning Consortium Member, if any, and the
applicable Licensee Consortium Members shall execute and deliver a Research
Technology License Agreement covering the applicable Program Patent Rights.
4.4. Product Technology Licenses. The applicable Commercialization
Party is hereby designated as the Licensee Consortium Member(s) for purposes of
the
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<PAGE> 17
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
option to obtain a Product Technology License granted by the Institute and each
IP Owning Consortium Member pursuant to Section 5.5 of the Sponsored Research
Agreement. Each Product Technology License shall be subject to the following
limitations: (i) such Product Technology License shall be (A) exclusive to AFFX
with respect to Nucleic Acid Analyzers, as further provided in Section 5.3, (B)
co-exclusive to BMS and Millennium with respect to Therapeutic Products, as
further provided in Section 5.2, and (C) co-exclusive to AFFX and Millennium
with respect to Diagnostic Products, Diagnostic Services and Other Commercial
Products, as further provided in Section 5.4; and (ii) such Product Technology
License shall permit the Commercialization Party to grant sublicenses under the
Product Technology License, limited to the field in which the Licensee
Consortium Member has been granted exclusive or co-exclusive rights. Each
Consortium Member exercising the option to obtain a Product Technology License
shall provide written notice to all other Consortium Members at the same time
that the Institute is notified that such option is being exercised. Promptly
following each exercise of such option, any applicable IP Owning Consortium
Member and the applicable Licensee Consortium Member shall seek to agree upon
the applicable royalty (which royalty shall in any event be within the ranges
for the applicable types of products and services specified in the Sponsored
Research Agreement), and shall execute and deliver a Product Technology License
Agreement. In the event that the Institute, any applicable IP Owning Consortium
Member and such Licensee Consortium Member are unable to agree upon such royalty
the matter shall be resolved by arbitration in accordance with the Sponsored
Research Agreement.
4.5. Institute Licensing Proceeds. As provided in Section 5.6 of the
Sponsored Research Agreement, the Consortium Members have the right to receive
*****% of certain payments derived by the Institute based on the licensing of
Program Patent Rights to third parties (such *****% share being referred to as
the "Consortium Share"). The Consortium Share shall be allocated equally among
all Consortium Members.
4.6. Patent Filing, Prosecution and Maintenance. Pursuant to Section
5.7.2 of the Sponsored Research Agreement, Licensee Consortium Members have the
right, at their option and expense, to control the filing and prosecution of
patent applications, and maintenance of patents that may issue therefrom, within
the Program Patent Rights. The Consortium Members shall in good faith allocate
responsibility for such filing, prosecution and maintenance in accordance with
the following principles: (a) to the extent that there is a single
Commercialization Party with respect to a Program Patent Right (e.g., the
Program Patent Rights includes only claims relating to a Nucleic Acid Analyzer),
such Commercialization Party shall have the initial responsibility for such
filing, prosecution and maintenance; (b) to the extent that
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<PAGE> 18
multiple Commercialization Parties have co-exclusive licenses to a Program
Patent Right (e.g., BMS and Millennium in the case of Therapeutic Products and
AFFX and Millennium in the case of Diagnostic Products, Diagnostic Services and
Other Commercial Products), the applicable Commercialization Parties shall
either jointly have the initial responsibility for such filing, prosecution and
maintenance or shall allocate such responsibility in a mutually agreeable
manner; (c) to the extent that there are multiple Commercialization Parties with
respect to a Program Patent Right that extends over more than one
commercialization rights category (e.g. a Program Patent Right that includes
claims applicable to both a Diagnostic Product and a Therapeutic Product), all
relevant Commercialization Parties shall discuss in good faith and agree upon an
appropriate allocation of initial responsibility for such filing, prosecution
and maintenance; and (d) in all other cases, as determined by mutual agreement
of the Consortium Members. In the event that the Consortium Member with initial
responsibility with respect to such filing, prosecution and maintenance, elects
not to file or thereafter prosecute any copyright registration or patent
applications within the Program Patent Rights in any country, or elects not to
pay any fee required to maintain a patent within the Program Patent Rights in
any country, such Consortium Member shall notify all other Consortium Members
prior to providing notice to the Institute and any IP Owning Consortium Member
under Section 5.7.3 of the Sponsored Research Agreement, and such notifying
Consortium Member shall have no further rights or licenses in such country(ies)
under Program Patent Rights identified in such notice. Upon receipt of such
notice, the other Consortium Members may, by mutual agreement, designate a
substitute Consortium Member(s) to be responsible for such filing, prosecution
and maintenance in such country(ies).
4.7. No Implied Licenses. Except for the licenses expressly granted by
IP Owning Consortium Members pursuant to the Sponsored Research Agreement or any
Research Technology License Agreement or Product Technology License Agreement,
no licenses, implied or otherwise, are granted by any Consortium Member to any
other Consortium Member, including licenses to so-called "background"
technology.
Article V. COMMERCIALIZATION
5.1. General. The Commercialization Party shall have the right to
determine the manner, if any, in which products or services for which it is the
Commercialization Party shall be developed, manufactured, marketed and sold,
which may include licensing all or any part of its rights under the relevant
Product Technology License Agreement to such product or service to a third party
or developing and commercializing such product or service directly. In the event
that the Commercialization Party licenses any such product or service to third
parties, (a) the sale of such product or services by such third parties shall be
deemed to constitute Net Sales by such Commercialization Party, and the
Commercialization Party shall be responsible for paying or causing such third
party to pay royalties to
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<PAGE> 19
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
the Non-Commercialization Parties at the rates determined pursuant to Section
6.1, ***************************************************************************
*******************************************************************************
********************************************************************************
******************************************************************************
*******************************************************************************
*************. The Commercialization Party shall use reasonable efforts to
exercise its development and commercialization rights in such a manner as not to
be detrimental to the activities reserved to other Consortium Members in other
areas. In the event that a Commercialization Party does not intend to exercise
its development and commercialization rights with respect to a specific product
or service, such Commercialization Party shall, if requested by one or more
Non-Commercialization Parties, consider in good faith waiving its rights as
Commercialization Party with respect to such product or service pursuant to
Section 5.5 of this Agreement, provided that such Commercialization Party shall
be under no obligation to do so.
5.2. Therapeutic Products. As provided in Section 4.4, each of BMS and
Millennium is the Licensee Consortium Member with respect to the option to
obtain a Product Technology License for Therapeutic Products. In the event that
both BMS and Millennium exercise the option to obtain a Product Technology
License with respect to a Therapeutic Product, BMS and Millennium shall each
possess the separate and independent, co-exclusive right to make, use, sell,
import and distribute such Therapeutic Product. If only one of BMS and
Millennium exercise the option to obtain a Product Technology License with
respect to a Therapeutic Product, the party exercising such option shall hold
the exclusive license to the Program Patent Rights covered by such Product
Technology License.
5.3. Nucleic Acid Analyzers. Rights to commercialize Nucleic Acid
Analyzers are held by AFFX, subject to the following principles:
(a) the exercise of development and commercialization rights
with respect to Nucleic Acid Analyzers shall be consistent
with the ongoing exercise of commercialization rights in
other areas and shall be coordinated with the
Commercialization Party for such other areas so as not to
be detrimental to the activities in such other areas;
provided that AFFX shall not be obligated to coordinate the
exercise of its commercialization rights with the
applicable Commercialization Party to the extent that
either (i) the technology represented by the applicable
Nucleic Acid Analyzer is in the public domain, or (ii)
there is no direct association between the applicable
Nucleic Acid Analyzer and a potential
15
<PAGE> 20
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
Therapeutic Product under development by the applicable
Commercialization Party; and
(b) to the extent that BMS and/or Millennium is commercializing
a Therapeutic Product which would be benefitted by the
development and commercialization of a related Diagnostic
Nucleic Acid Analyzer, BMS and/or Millennium, as the case
may be, shall have the right, if AFFX is legally permitted
to grant such rights, to co-promote such Diagnostic Nucleic
Acid Analyzer on terms to be negotiated on a case-by-case
basis in good faith by AFFX, BMS and/or Millennium, as
appropriate.
5.4. ******************************************************************
********. Rights to commercialize***********************************************
****************************(collectively, the "Joint Commercialization
Products") are held jointly by AFFX and Millennium. With respect to each
potential Joint Commercialization Product, AFFX and Millennium shall use
reasonable efforts to develop a mutually beneficial strategy and implementation
plan for the optimal development and commercialization of such Joint
Commercialization Product. AFFX and Millennium agree that the following
principles shall govern their joint commercialization efforts:
(a) unless otherwise agreed in any instance, it is the
intention of AFFX and Millennium that each shall have
a ***** interest in any Joint Commercialization
Product, both with respect to development expenses
and with regard to other expenses and profits;
(b) it is contemplated that one party may, by mutual
agreement, be provided with greater rights and
obligations with respect to a specific Joint
Commercialization Product or a category of Joint
Commercialization Products;
(c) to the extent that BMS and/or Millennium is
commercializing a Therapeutic Product which would be
benefitted by the development and commercialization
of a related Diagnostic Product, BMS and/or
Millennium, as the case may be, shall have the right
to co-promote such Diagnostic Product on terms to be
negotiated on a case-by-case basis in good faith by
AFFX, BMS and/or Millennium, as appropriate; and
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<PAGE> 21
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
(d) in the event that AFFX and Millennium are unable to
reach mutual agreement with respect to any aspect of
the development and/or commercialization of any Joint
Commercialization Product, the matter shall be
submitted to the Executive Officers of the two
companies; if these individuals are unable to reach
agreement as to such matter, then each of AFFX and
Millennium shall possess the separate and independent
co-exclusive right to make, use, sell, import and
distribute the applicable Joint Commercialization
Product.
5.5. Waiver of Commercialization Rights. If the Commercialization Party
elects to waive its rights to serve as the Commercialization Party with respect
to a specific product or service, then it shall give written notice to each
Non-Commercialization Party. In each such case, one or more
Non-Commercialization Parties may elect to become the Commercialization Party
for such product or service, and the licenses granted to the initial
Commercialization Party shall be automatically sublicensed exclusively to the
new Commercialization Parties, provided that if either BMS or Millennium waives
its rights with respect to any Therapeutic Product, the other party shall have
the right to be the sole Commercialization Party for such Therapeutic Product.
In the event that more than one Non-Commercialization Party elects to become the
Commercialization Party for a product or service, the electing parties shall
each use reasonable efforts to develop a mutually beneficial strategy and
implementation plan for the optimal development and commercialization of such
product or service. If the electing parties are unable to reach mutual agreement
with respect to any aspect of the development and/or commercialization then the
development and commercialization of such product or service may be pursued
independently by each such electing party.
5.6. Adverse Event Reporting. The Consortium Members shall, from time
to time, evaluate the need for a Commercialization Party to provide adverse
event reports to the other Consortium Members, and, if determined to be
desirable, the Consortium Members shall establish requirements and procedures
for such reporting.
Article VI. ROYALTIES *********************.
6.1. Payments to Consortium Members.
(a) Royalties. The Commercialization Party shall pay
royalties to each Non-Commercialization Party on Net Sales of Royalty-Bearing
Products for
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<PAGE> 22
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
which it is the Commercialization Party. The royalty rate shall range from
******** *****, and the royalty rate standards for Therapeutic Products,
Diagnostic Nucleic Acid Analyzers, Research Nucleic Acid Analyzers, Diagnostic
Products, Diagnostic Services and Other Commercial Products are set forth on
Exhibit B to this Agreement (the "Royalty Standards"). At least twelve (12)
months prior to the First Commercial Sale of any Royalty-Bearing Product, the
Commercialization Party and the Non-Commercialization Parties shall negotiate in
good faith the appropriate royalty rate for the Royalty-Bearing Product based
upon the applicable Royalty Standards. If the parties are unable to agree upon
the royalty rate, the matter shall be submitted to arbitration pursuant to
Section 12.2 below. The total royalty payment made by the Commercialization
Party shall be divided equally among all Non-Commercialization Parties.
(b) **********. The **************************************
************************* and/or **********************************************
***********************shall be determined by *********************************
******************************************************** including, but not
limited to ************************************************************ to the
************************************************************************ in the
of the ************************************************* to which the
************************* and/or *******************************************
**********. As soon as *****************************************************
pursuant to which **********************************************************
******************************************************************
*********************************************************************
******************************************************************* on the
foregoing considerations. *************************************************
*************************************************************************.
6.2. Payment Obligations to Third Parties.
(a) Royalty Obligations to Institute. Pursuant to the
Sponsored Research Agreement, the Commercialization Party is obligated to pay
royalties to the Institute and/or any IP Owning Consortium Member under certain
circumstances based on sales of products and services. The Commercialization
Party shall be solely responsible for the payment of royalties to the Institute
and/or any IP Owning Consortium Member with respect to the sale of products or
services for which it is the Commercialization Party.
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<PAGE> 23
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
(b) Other Obligations. The Commercialization Party shall be
solely responsible for fulfilling any past or future payment obligations arising
from the Commercialization Party's agreements or other arrangements with third
parties.
(c) Indemnity. Each Commercialization Party shall indemnify
and hold harmless each Non-Commercialization Party, their respective Affiliates,
Sublicensees, directors, officers, employees and agents, from and against any
and all claims, liabilities, payments and/or expenses of any kind arising from
such Commercialization Party's failure to fulfill its obligations to the
Institute, any IP Owning Consortium Member or to third parties with respect to
any product or service for which it is the Commercialization Party.
6.3. Limitation on Royalties. Notwithstanding the provisions of Section
6.1 and the Sponsored Research Agreement, in the event that the
Commercialization Party licenses rights to any product or service and receives
royalties with respect to the sale of such products or services, the aggregate
royalty rate payable to the Non-Commercialization Parties (under Section 6.1(a))
and the Institute and any IP Owning Consortium Member (under the terms of the
applicable Product Technology License Agreement) shall not exceed *****% of the
royalty rate payable to the Commercialization Party by such third party. In the
event such royalties would otherwise exceed *****%, the royalty rates payable to
the Non-Commercialization Parties shall be proportionately reduced so that the
aggregate royalty rate payable to the Non-Commercialization Parties, the
Institute and any IP Owning Consortium Member equal *****% of the royalty rate
payable to the Commercialization Party.
6.4. Length of Royalty Payments. The royalties payable under Section
6.1(a) shall be paid on a country-by-country basis, for so long as a
Royalty-Bearing Product is covered by a Valid Claim of Program Patent Rights in
such country.
6.5. Royalties Payable Only Once. The obligation to pay royalties is
imposed only once with respect to the same unit of Royalty-Bearing Product,
irrespective of the number of patents and/or patent applications applicable
thereto.
6.6. Royalty Reports; Payment. The Commercialization Party shall
deliver to each Non-Commercialization Party, within sixty (60) days after the
end of each calendar quarter, a written accounting of the (a) Commercialization
Party's and its Affiliates' and/or Sublicensee's sales and other consideration
received subject to royalty payment due to the Non-Commercialization Parties for
such quarter, **** ***********************************************************
****************************************************. Such quarterly reports
shall indicate the Net Sales of Royalty-Bearing Products on a country-by-country
basis. This obligation shall commence with the first
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<PAGE> 24
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
calendar quarter in which the Commercialization Party and/or its Affiliates
[redaction] or in which there is a Net Sale of Royalty-Bearing Product by the
Commercialization Party or any of its Affiliates or Sublicensees. When the
Commercialization Party delivers the accounting to the Non-Commercialization
Parties, the Commercialization Party shall also deliver all payments pursuant to
Section 6.1(b) and royalty payments due to the Non-Commercialization Parties for
the calendar quarter.
6.7. Records and Audits. The Commercialization Party shall keep, and
shall require its Affiliates and Sublicensees to keep, complete and accurate
records of the latest three (3) years of Net Sales ***********. The
Non-Commercialization Parties shall have the right annually at their expense to
have an independent, certified public accountant, reasonably acceptable to the
Commercialization Party, review such records in the locations(s) where such
records are maintained by the Commercialization Party or its Sublicensees upon
reasonable notice and during regular business hours for the purposes of
verifying royalties payable to the Non-Commercialization Parties, Net Sales
**********. Results of such review shall be made available to the all Consortium
Members. If the review reflects an underpayment, such underpayment shall be
promptly remitted to the Non-Commercialization Parties. If the underpayment is
equal to or greater than ten percent (10%) of the amount that was otherwise due,
the Commercialization Party shall promptly pay any shortfalls and shall also
reimburse all of the costs of such review. All overdue amounts shall bear
interest until payment at a per annum rate equal to the prime rate in effect at
the Chase Manhattan Bank (N.A.), or its successor, on the due date.
6.8. Currency of Payments. All payments under this Agreement shall be
made in United States dollars by wire transfer (or, if agreed by a
Non-Commercialization Party, by check) to such bank account as the
Non-Commercialization Parties may designate from time to time. Any payments due
hereunder on Net Sales outside of the United States shall be payable in United
States dollars at the rate of exchange of the currency of the country in which
the Net Sales are made as published by The Wall Street Journal for the last
business day of the calendar quarter for which the royalties are payable.
6.9. Tax Withholding. All Consortium Members shall use reasonable and
legal efforts to reduce tax withholding on payments made hereunder.
Notwithstanding such efforts, if tax withholdings under applicable laws are
required with respect to payments to the Non-Commercialization Parties under
this Article VI, the Commercialization Party shall withhold the required amount
and pay it to the appropriate governmental authority. In such a case, the
Commercialization Party will
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<PAGE> 25
promptly provide the Non-Commercialization Parties with original receipts or
other evidence sufficient to allow the Non-Commercialization Parties to obtain
the benefits of such tax withholdings.
Article VII. CONFIDENTIAL INFORMATION
7.1. Confidentiality. A Consortium Member may from time to time
disclose Confidential Information to other Consortium Members in connection with
the Research Program and/or the development and commercialization activities
contemplated by this Agreement. For purposes of this Agreement, "Confidential
Information" shall mean information and materials of a Consortium Member which
are designated as confidential in writing by such Consortium Member, whether by
letter or by use of an appropriate stamp or legend, prior to or at the same time
any such information or materials are disclosed by such Consortium Member to any
other Consortium Member. Notwithstanding the foregoing, materials and other
information which are orally, visually or electronically disclosed by a
Consortium Member, or are disclosed in writing without an appropriate letter,
stamp, or legend, shall constitute Confidential Information if (a) such
Consortium Member, within 30 days after such disclosure, delivers to the
recipient Consortium Member a written document or documents describing the
material or information and indicating that it is confidential, or (b) it would
be apparent to a reasonable person, familiar with the pharmaceutical or
biotechnology industries, that such information is of a confidential or
proprietary nature. Each Consortium Member receiving Confidential Information
disclosed by another Consortium Member agrees, to the extent permitted by law,
that such Confidential Information shall remain the property of the Consortium
Member making the disclosure, and further agrees to use all reasonable
commercial efforts to protect and refrain from unauthorized use or disclosure of
the Confidential Information, but in no event less than the same level of care
as it uses to protect its own proprietary information, except as otherwise
contemplated by this Agreement; provided that the term "Confidential
Information" shall exclude materials or information that:
(a) are in possession of the recipient Consortium Member at
the time of disclosure thereof as demonstrated by prior written records;
(b) are or later become part of the public domain through no
fault of the recipient Consortium Member;
(c) are received by the recipient Consortium Member from a
third party having no obligation of confidentiality to the Consortium Member
that made the disclosure;
(d) are developed independently by the recipient Consortium
Member without use of Confidential Information as evidenced by written records;
or
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<PAGE> 26
(e) are required by law or regulation to be disclosed;
provided, however, that the recipient Consortium Member has provided written
notice to the Consortium Member that made the disclosure promptly so as to
enable such Consortium Member to seek a protective order or otherwise prevent
disclosure of such information.
7.2. Term. The obligations of Consortium Members under this Article VII
shall continue for a period of five (5) years after the expiration or
termination of this Agreement; provided, however, that in the case of a
Consortium Member that withdraws, or is deemed to have withdrawn, as such
pursuant to Article VIII, the obligations with respect to such Consortium
Member's Confidential Information shall continue only for a period of five (5)
years after the effective date of such Consortium Member's withdrawal.
7.3. Return of Materials. Upon request by a Consortium Member that made
a disclosure of Confidential Information to another Consortium Member, the
recipient promptly shall return all copies and other tangible manifestations of
the Confidential Information disclosed.
Article VIII. WITHDRAWAL
8.1. Voluntary Withdrawal. Any Consortium Member may voluntarily
withdraw as a Consortium Member under this Agreement by notice to the Institute
and the other Consortium Members as follows:
(i) pursuant to the provisions of Section 3.2.2, 3.2.3 or
Section 4.4.3 of the Sponsored Research Agreement; and
(ii) by notice of withdrawal given by such Consortium Member
(which it may elect to do in its sole discretion) to the
Institute and the other Consortium Members no later than
one (1) year prior to the effective date of withdrawal,
provided that the effective date of withdrawal may be no
earlier than the last day of the third Contract Year.
In the case of a withdrawal pursuant to clause (i) above, the effective date of
withdrawal shall be the expiration of the period during which the withdrawing
Consortium Member is required to fund the Research Program pursuant to Section
3.2.2, 3.2.3 or 4.4.3, as applicable, provided that if the Institute elects to
disburse funding over an extended period of time as permitted by Sections 3.2.2,
3.2.3 or 4.4.3 of the Sponsored Research Agreement, the effective date of
withdrawal for purposes of Section 8.3(a) shall be the last date upon which such
funds were disbursed.
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<PAGE> 27
8.2. Involuntary Withdrawal. If a Consortium Member materially breaches
any material warranty, term or condition of this Agreement and fails to remedy
such material breach within ninety (90) days after receipt of notice in writing
of such material breach from all other Consortium Members, the other Consortium
Members shall have the right to cause the involuntary withdrawal of such
Consortium Member, such withdrawal to be effective immediately upon delivery of
a written notice from the other Consortium Members to such Consortium Member
indicating their election to cause such involuntary withdrawal to occur. For
purposes of this Section 8.2, any failure of a Consortium Member to make a
funding payment pursuant to Article III when due shall be deemed to be a
material breach of this Agreement by such Consortium Member.
8.3. Effect of Withdrawal.
(a) Rights of Licensee Consortium Member. From and after the
effective date of withdrawal of a Consortium Member, such Consortium Member
shall cease to have any rights as a Consortium Member under this Agreement,
including rights as a Licensee Consortium Member to any Program Know-How,
Program Materials, Program Copyrights or Program Patent Rights arising after
such effective date of withdrawal. However, except in the event of an
involuntary withdrawal pursuant to Section 8.2, the withdrawing Consortium
Member shall retain its rights as a Licensee Consortium Member in Background
Know-How, Program Know-How, Program Materials, Program Copyrights and Program
Patent Rights arising prior to the effective date of such withdrawal as provided
in Articles IV and V and its rights under Article VII, provided that in the
event that the remaining Consortium Members designate a successor Licensee
Consortium Member(s), such successor(s) shall have a non-exclusive license to
such Background Know-How, Program Know-How, Program Materials, Program
Copyrights and Program Patent Rights to the extent necessary to enable such
successor(s) to develop and commercialize products or services based upon
Program Know-How, Program Materials, Program Copyrights and Program Patent
Rights arising after the effective date of withdrawal. In the event of an
involuntary withdrawal pursuant to Section 8.2, the withdrawing Consortium
Member's rights as a Licensee Consortium Member in Background Know-How, Program
Know-How, Program Materials, Program Copyrights and Program Patent Rights
arising prior to the effective date of such withdrawal as provided in Articles
IV and V shall terminate, effective as of the effective date of such withdrawal.
In such event, the withdrawing Consortium Member shall transfer and assign to
any successor Licensee Consortium Member(s) designated by the remaining
Consortium Members all relevant biological materials and inventions arising from
research and development work undertaken by such withdrawing Consortium Member
as the Licensee Consortium Member prior to the effective date of withdrawal. In
the event of any withdrawal of a Consortium Member, the remaining Consortium
Member(s) shall negotiate in good faith to designate the successor
Commercialization Party or Parties with respect to Program Know-How, Program
Materials, Program Copyrights and Program Patent Rights arising after the
effective date of any withdrawal pursuant to Section 8.1, or arising at
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<PAGE> 28
any time during the course of the Research Program in the case of any withdrawal
pursuant to Section 8.2.
(b) In the event that a withdrawing Consortium Member is
required, pursuant to Section 8.3(a), to waive, transfer or assign any rights
such Consortium Member may have had prior to such withdrawal in any Background
Know-How, Program Know-How, Program Materials, Program Copyrights and/or Program
Patent Rights, the other Consortium Member(s), including any successor to such
withdrawing Consortium Member, shall indemnify the withdrawing Consortium Member
as provided in Section 11.1(b).
(c) Continued Funding and Technology Contribution Commitment.
In the event of the withdrawal of a Consortium Member pursuant to this Article
VIII, such Consortium Member shall continue to support or fund the Research
Program to the extent and for the period provided for in Section 8.3.2 of the
Sponsored Research Agreement, and shall, if such withdrawing Consortium Member
is Millennium, continue, during such continued support or funding period, to
provide the Millennium Contributed Technology set forth in the applicable Annual
Research Program Plan, as provided in Section 8.3.2 of the Sponsored Research
Agreement. Such support or payment by the withdrawing Consortium Member shall
constitute liquidated damages arising out of the withdrawal of such Consortium
Member.
(d) Adjustment of Applicable Percentage. In the event of the
withdrawal of a Consortium Member pursuant to this Article VIII, Exhibit A
hereto shall be appropriately adjusted to delete such Consortium Member's
funding commitment from and after the effective date of the withdrawal and to
adjust the Applicable Contribution Percentages of the remaining Consortium
Members.
Article IX. TERM; TERMINATION AND RENEWAL
9.1. Term. Subject to the provisions of Section 9.5, the term of this
Agreement shall commence on the Effective Date and continue in full force and
effect until the last day of the fifth Contract Year, unless this Agreement is
terminated prior to such date in accordance with this Article IX or renewed as
set forth in Section 9.6.
9.2. Termination for Breach by Institute. In the event that the
Sponsored Research Agreement is terminated by all Consortium Members pursuant to
Section 9.2 thereof, this Agreement shall terminate as of the effective date of
the termination of the Sponsored Research Agreement.
9.3. Termination Rights of Institute. In the event that the Institute
provides written notice of its intention to terminate the Sponsored Research
Agreement pursuant to the provisions of Section 9.3 or Section 9.4 thereof, the
Consortium Members shall promptly meet to discuss what curative steps, if any,
should be taken
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
to eliminate the factual circumstances that permit the Institute to so terminate
the Sponsored Research Agreement.
9.4. Return of Funds; Continued Funding Obligation. Any funds paid to
the Institute by the Consortium Members which have not been expended or
committed upon the date of expiration or termination of the Sponsored Research
Agreement shall be refunded to the Consortium Members within sixty (60) days
after the date of expiration or termination in proportion with each Consortium
Member's Applicable Contribution Percentage. In the event that the total funds
paid to the Institute by the Consortium Members as of the date of a termination
by the Institute pursuant to Section 9.3 of the Sponsored Research Agreement are
not sufficient to cover costs and non-cancelable commitments actually incurred
by the Institute in connection with the Research Program as of such date, the
Consortium Members shall reimburse the Institute the deficiency (with each
Consortium Member being severally, and not jointly, liable for its share of such
deficiency determined in accordance with the formula X/Y, where X is the amount
of the deficiency and Y is the number of Consortium Members as of the date of
termination), such reimbursement to be made within thirty (30) days after the
notice provided by the Institute to the Consortium Members specifying the amount
of the deficiency (with supporting documentation therefor); provided, however,
that the Consortium Members shall not be obligated to reimburse the Institute
pursuant to this sentence an amount in excess of *****% of the total funding
commitment of all Consortium Members pursuant to Section 3.1 for the twelve (12)
month period commencing on the date of termination. The Institute will use its
best efforts to minimize any costs and non-cancelable commitments to be paid for
by the Consortium Members pursuant to the previous sentence, including without
limitation by reassigning personnel and transferring supplies.
9.5. Survival. The following articles of this Agreement shall survive
the expiration or termination of this Agreement: Articles IV, V, VI, VII, IX, XI
and XII.
9.6. Renewal. Not later than the end of the third Contract Year, the
Consortium Members and the Institute shall meet (at a time and place designated
by the Institute in a written notice to the Consortium Members and mutually
agreed upon by the Consortium Members) to consider a renewal of the term of the
Agreement for an additional five (5) Contract Years commencing at the end of the
fifth Contract Year. If the Institute and the Consortium Members shall so agree
to such a renewal, they shall enter into an appropriate amendment of the
Sponsored Research Agreement, and the Consortium Members shall enter into an
appropriate amendment to this Agreement, reflecting the terms to be in effect
during the renewal period, including the funding commitments of the Consortium
Members for each Contract Year in such renewal term.
25
<PAGE> 30
Article X. REPRESENTATIONS AND WARRANTIES
10.1. Representations of Consortium Members. Each Consortium Member
severally represents and warrants that (i) it has the legal right, authority and
power to enter into this Agreement and meet its obligations set forth herein;
(ii) in so doing, it will not violate any other agreement to which it is a
party; and (iii) it has taken all corporate action necessary to authorize the
execution and delivery of this Agreement and the performance of its obligations
under this Agreement.
10.2. Limitations. EXCEPT AS EXPRESSLY PROVIDED HEREIN, NO PARTY TO
THIS AGREEMENT MAKES ANY WARRANTY, EXPRESS OR IMPLIED, EITHER IN FACT OR BY
OPERATION OF LAW, BY STATUTE OR OTHERWISE, RELATING TO ANY ACTIVITIES CONDUCTED
UNDER THIS AGREEMENT, AND EACH PARTY TO THIS AGREEMENT SPECIFICALLY DISCLAIMS
ANY IMPLIED WARRANTY OF MERCHANTABILITY OR WARRANTY OF FITNESS FOR A PARTICULAR
PURPOSE.
Article XI. LIABILITY AND INDEMNIFICATION
11.1. Indemnification.
(a) Each Consortium Member (an "Indemnifying Party") will
indemnify and hold each other Consortium Member, their respective Affiliates and
Sublicensees, and their respective directors, officer, employees and agents (the
"Indemnified Parties") harmless from and against any and all liability, damage
to or loss of property or injury to or death of any person or persons, costs and
expenses (including reasonable attorney's fees) arising out of the Indemnifying
Party's actions or omissions as a Commercialization Party and/or Licensee
Consortium Member, including actions or omissions in connection with the
development, manufacture, marketing and sale of products or services in such
capacities, unless such damage, loss, injury or death is the direct result of
negligence or willful acts or omissions of any of the Indemnified Parties.
(b) If required by Section 8.3(b), each Consortium Member, and
any successor to any withdrawing Consortium Member, (collectively, the
"Indemnifying Parties") will indemnify and hold such withdrawing Consortium
Member and its Affiliates, and their respective directors, officers, employees
and agents harmless from and against any and all liability, damage to or loss of
property or injury to or death of any person or persons, costs and expenses
(including reasonable attorney's fees) arising out of any Indemnifying Party's
or Parties' use or development of any Background Know-How, Program Know-How,
Program Materials, Program Copyrights and/or Program Patent Rights, or any
Indemnifying
26
<PAGE> 31
Party's development, manufacture, marketing, use and/or sale of products or
services from any of the foregoing.
11.2. Costs and Expenses. As the parties intend complete
indemnification, all costs and expenses of enforcing this Article XI shall also
be reimbursed by the indemnifying party.
11.3. Indemnification Procedures. A party that intends to claim
indemnification under this Article XI (the "Indemnitee") shall promptly notify
the other parties (the "Indemnitors") of any loss, claim, damage, liability or
action in respect of which the Indemnitee intends to claim such indemnification,
and the Indemnitors shall assume the defense thereof with counsel reasonably
satisfactory to the Indemnitee whether or not such claim is rightfully brought;
provided, however, that an Indemnitee shall have the right to retain its own
counsel, with the fees and expenses to be paid by the Indemnitors if the
Indemnitors do not assume the defense, or if representation of the Indemnitee by
the counsel retained by the Indemnitors would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other person
represented by such counsel in such proceedings. The indemnity agreement in this
Article XI shall not apply to amounts paid in settlement of any loss, claim,
damage, liability or action if such settlement of any loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Indemnitors, which consent shall not be withheld or delayed unreasonably. The
failure to deliver notice to the Indemnitors within a reasonable time after the
commencement of any such action, only if prejudicial to its ability to defend
such action, shall relieve such Indemnitors of any liability to the Indemnitee
under this Article XI, but the omission so to deliver notice to the Indemnitors
will not relieve it of any liability that it may have to any Indemnitee
otherwise than under this Section 11.3. The Indemnitee under this Article XI,
its employees and agents, shall cooperate fully with the Indemnitors and its
legal representatives in the investigations of any action, claim or liability
covered by this indemnification.
Article XII. GENERAL PROVISIONS
12.1. Use of Name. Except as otherwise provided herein, no Consortium
Member shall have any right, express or implied, to use in any manner the name
or other designation of any other Consortium Member, or any other trade name or
trademark of any other Consortium Member in connection with the performance of
this Agreement.
12.2. Dispute Resolution. Any dispute or claim arising out of, or in
connection with, this Agreement shall be finally settled by binding arbitration
in accordance with the then current rules and procedures of the American
Arbitration Association. The arbitration shall be conducted by a panel of
arbitrators with experience with the issue under consideration (e.g., patent
experts in the case of
27
<PAGE> 32
patent-related disputes), with one (1) member of the panel to be appointed by
each Consortium Member. Such arbitration will take place in Chicago, Illinois,
unless otherwise determined by mutual agreement of the Consortium Members. The
arbitrators shall apply the law of the Commonwealth of Massachusetts to the
merits of any dispute or claim, without reference to rules of conflicts of laws.
Judgment on any award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. The parties agree that, any provision of applicable
law notwithstanding, they will not request, and the arbitrators shall have no
authority to award, punitive or exemplary damages against any party. Nothing in
this Section 12.2 shall limit a party's right to seek injunctive relief with
respect to a breach or threatened breach of this Agreement.
12.3. Governing Law. This Agreement shall be governed by, construed,
and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, without reference to principles of conflicts of laws.
12.4. Independent Contractors. The relationship of the Consortium
Members established by this Agreement is that of independent contractors, and
nothing contained in this Agreement shall be construed to (i) give any of the
parties hereto the power to direct or control the day-to-day activities of
another party hereto, (ii) constitute the parties as partners, joint venturers,
co-owners or otherwise as participants in a joint or common undertaking, or
(iii) allow any of the parties hereto to create or assume any obligation on
behalf of another party hereto for any purpose whatsoever.
12.5. Parties Bound. This Agreement, including the indemnification
provisions, shall be binding upon and inure to the benefit of the parties
hereto, their respective successors, assigns, legal representatives and heirs.
12.6. Assignment. This Agreement may not be assigned or transferred by
any of the parties hereto without the prior written consent of the other
parties; provided, however, that a Consortium Member may assign its rights and
delegate its obligations (i) to any Affiliate of such Consortium Member
(although, in the event of any such assignment and delegation, the assigning
Consortium Member shall remain primarily liable for its obligations hereunder)
and (ii) to a purchaser of all or substantially all of the relevant business of
such Consortium Member by merger, sale of assets or otherwise.
12.7. Entire Agreement. This Agreement (together with the Sponsored
Research Agreement) constitutes the entire and only agreement between the
parties relating to the subject matter hereof, and all prior negotiations,
representations, agreements and understandings are superseded hereby.
12.8. Right to Develop Independently. Nothing in this Agreement will
impair any Consortium Member's right to independently acquire, license, develop
or have developed, utilize or otherwise exploit similar information and
technology
28
<PAGE> 33
performing the same or similar functions as the information and technology
provided by Institute or which is the subject of the Research Program.
12.9. Notices. Any notice or other communication required or permitted
under this Agreement shall be in writing and (i) personally delivered, (ii)
mailed, postage prepaid, first class, certified mail, return receipt requested,
or (iii) sent, shipping prepaid, return receipt requested by national overnight
courier service, to the appropriate party or parties at the addresses listed
below or at such other addresses as may be given from time to time in accordance
with the terms of this notice provision. Notices to Consortium Members shall be
addressed to them at their respective addresses on Exhibit D hereto.
Any notice or other communication given by personal delivery shall be
deemed given on the date personally delivered; any notice or other communication
given by mail shall be deemed given three days after the date deposited in the
United States mail; and any notice or other communication given by national
overnight courier service shall be deemed given on the next business day after
being sent.
12.10. Amendment. This Agreement may only be amended by a written
instrument executed by each of the Consortium Members.
12.11. Waiver. No waiver of any rights shall be effective unless
assented to in writing by the party to be charged, and the waiver of any breach
or default shall not constitute a waiver of any other right hereunder or any
subsequent breach or default.
12.12. Limitation of Liability. IN NO EVENT WILL ANY PARTY HERETO BE
LIABLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL OR INDIRECT DAMAGES ARISING IN
ANY WAY OUT OF THIS AGREEMENT, HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY.
THIS LIMITATION WILL APPLY EVEN IF THE OTHER PARTY OR PARTIES HERETO HAVE BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.
12.13. Section Headings. The headings of the several sections of this
Agreement are intended for convenience of reference only and are not intended to
be a part of, or to affect the meaning or interpretation of this Agreement.
12.14. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
the result of such action materially changes the economic benefit of this
Agreement to the Consortium Members or Institute.
29
<PAGE> 34
12.15. Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.16. Public Announcements.
(a) Any written announcements, press releases or similar
publicity (collectively, "Announcements") with respect to the execution of this
Agreement shall be agreed upon by the Institute and the Consortium Members in
advance of such Announcement. Each Consortium Member agrees to provide to each
other Consortium Member a copy of any proposed Announcement relating to this
Agreement, the Research Program and the development and commercialization of
Royalty-Bearing Products as soon as reasonably practicable under the
circumstances prior to its scheduled release. Each Consortium Member shall have
the right to expeditiously review and recommend changes to any such
Announcement. Except as otherwise required by law, the party whose Announcement
has been reviewed shall consider in good faith the removal of any information
any reviewing party reasonably deems to be inappropriate for disclosure. In
proposing, reviewing and considering comments on Announcements, the interests of
the Institute and all Consortium Members shall be taken into consideration, with
the overall goal being the furtherance of the objectives of the Research
Program, the optimal development of commercialization of Royalty-Bearing
Products and the harmonization of the interests of all parties.
(b) The parties agree that the terms of this Agreement shall be
maintained in confidence by all parties, except that any party may disclose the
terms hereof to the extent required by law (including without limitation
pursuant to the requirements of U.S. securities laws), to the extent it deems
such disclosure to be necessary or desirable, provided that such disclosure
under this Section 12.16(b) shall, to the extent legally permissible, be in the
form of the redacted version of this Agreement to be agreed upon by the
Institute and the Consortium Members. In the event that terms of this Agreement
are disclosed under the exception set forth above, the parties, with respect
only to those terms that are thereby generally made available to the public,
shall no longer be bound under the confidentiality requirement of this Section
12.16(b).
12.17. No Third Party Beneficiary Rights. The Consortium Members agree
and acknowledge that the Institute and other third parties are not intended to
be, and shall not constitute, third party beneficiaries of this Agreement, which
is intended exclusively as an agreement among, and for the benefit of, the
Consortium Members.
30
<PAGE> 35
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.
AFFYMETRIX, INC.
By: /s/ Stephen Fodor
-------------------------------
Name: Stephen Fodor
-----------------------------
Title: President/CEO
----------------------------
Date: 28 April 97
-----------------------------
BRISTOL-MYERS SQUIBB COMPANY MILLENNIUM
PHARMACEUTICALS, INC.
By: /s/ Peter S. Ringrose By: /s/ Steven H. Holzman
-------------------------------- -------------------------------
Name: Peter S. Ringrose Name: Steven H. Holzman
------------------------------ -----------------------------
Title: President R&D Title: President
----------------------------- ----------------------------
Date: 4/28/97 Date: April 28, 1997
------------------------------ -----------------------------
31
<PAGE> 36
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
EXHIBIT A
CONSORTIUM MEMBER CONTRIBUTION COMMITMENTS
<TABLE>
<CAPTION>
CONTRIBUTION APPLICABLE
COMMITMENT PER CONTRIBUTION
CONSORTIUM MEMBER NAME CONTRACT YEAR (1) PERCENTAGE
---------------------- ----------------- ------------
<S> <C> <C>
Affymetrix, Inc. $***** (2) *****%
Bristol-Myers Squibb Company $***** *****%
Millennium Pharmaceuticals, Inc. $***** (3) *****%
</TABLE>
(1) The Contribution Commitment for BMS and Millennium shall
relate solely to cash funding of the Research Program; the
Contribution Commitment for AFFX shall be fulfilled by a
combination of cash funding of the Research Program and supply
of AFFX Materials (based on the AFFX Materials Price of such
AFFX Materials). For Contract Years subsequent to the first
Contract Year, the Applicable Contribution Percentages shall
be applied to the Total Contribution Commitment to determine
each Consortium Member's Contribution Commitment. In no event
shall the cash portion of the aggregate Contribution
Commitments in any Contract Year exceed $*****.
(2) Of this amount, $***** has previously been provided by AFFX to
the Institute (in the form of a **********). Accordingly,
AFFX's remaining Contribution Commitment for the first
Contract Year is $*****.
(3) Of this amount, $***** has previously been advanced by
Millennium to the Institute pursuant to the Existing Research
Agreement. Accordingly, Millennium's remaining Contribution
Commitment for the first Contract Year is $*****.
<PAGE> 37
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
EXHIBIT B
ROYALTY RATE STANDARDS
A. THERAPEUTIC PRODUCTS
Definitions
"Candidate Target I" is a ************************************************
***********************************************************************
***********************************************************************
***********************************************************************
********.
"Candidate Target II" is a ***********************************************
***********************************************************************
***********************************************************************.
"Candidate Target III" means either a ************************************
***********************************************************************
***********************************************************************.
"Validated Target" means a ***********************************************
***********************************************************************
***********************************************************************
***********************************************************************
***********************************************************************.
"Candidate Gene Therapeutic I" is a ************************************
***********************************************************************
***********************************************************************
**************.
"Candidate Gene Therapeutic II" is a ************************************
***********************************************************************
************************************.
B-1
<PAGE> 38
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
"Candidate Gene Therapeutic III" means a ************************************
***********************************************************************
***********************************************************************
***************.
"Candidate Protein Therapeutic I" means the *****************************
***********************************************************************
***********************************************************************
***********************************************************************
*******************.
"Candidate Protein Therapeutic II" means a ******************************
***********************************************************************
***********************************************************************
*******************.
"Candidate Protein Therapeutic III" means a ****************************
***********************************************************************
***********************************************************************
**********************************.
Indirect Therapeutics
In the event that the therapeutic comprises ************************************
****************************************************************************,
the royalty payable to the Consortium Members shall be as follows for each of
the categories of reagent delivered by the Center.
Category Royalty
Candidate Target I *****%
Candidate Target II *****%
Candidate Target III *****%
Validated Target *****%
Gene Therapeutics
In the event that the reagent delivered by the Center is developed as a gene
therapeutic reagent and fell in the following categories at the time of
delivery, the royalty payable to Consortium Members shall be as follows:
B-2
<PAGE> 39
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
Category Royalty
Candidate Gene Therapeutic I *****%
Candidate Gene Therapeutic II *****%
Candidate Gene Therapeutic III *****%
Protein Therapeutic
In the event that the reagent delivered by the Center is developed as a protein
therapeutic reagent and fell in the following categories at the time of
delivery, the royalty payable to Consortium Members shall be as follows:
Category Royalty
Candidate Protein Therapeutic I *****%
Candidate Protein Therapeutic II *****%
Candidate Protein Therapeutic III *****%
B. NUCLEIC ACID ANALYZERS
DEFINITIONS
Product Candidate I
- A Nucleic Acid Analyzer including *********************
******************************************************
*******************************.
Product Candidate II
- A Nucleic Acid Analyzer including *********************
******************************************************
*******************************.
Product Candidate III
- ******************************************************
******************************************************
*******************************.
B-3
<PAGE> 40
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
ROYALTY RANGE
The royalty range of the diagnostic products will be ******** for
diagnostic products to reflect the lower margins and thus lower royalty
rates that can be expected from licensing diagnostic products.
ROYALTY RATES
<TABLE>
<CAPTION>
Research Nucleic Diagnostic Nucleic
Acid Analyzer Acid Analyzer
---------------- ------------------
<S> <C> <C>
Product Candidate I *****% *****%
Product Candidate II *****% *****%
Product Candidate III *****% *****%
</TABLE>
COMBINATION PRODUCTS
If a Research Nucleic Acid Analyzer or a Diagnostic Nucleic Acid
Analyzer is a combination product including **********************
***********************************************************************
the royalties shall be the sum of the percentages calculated by
- multiplying the royalty of a Product Candidate I by the
fraction A/B where********************************************
*************************************************************
****************.
- multiplying the royalty of a Product Candidate II by the
fraction A/B where********************************************
*************************************************************
****************.
- multiplying the royalty of a Product Candidate III by the
fraction A/B where********************************************
*************************************************************
****************.
C. DIAGNOSTIC PRODUCTS
*****% of Net Sales
B-4
<PAGE> 41
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
D. DIAGNOSTIC SERVICES
*****% of Net Sales
E. OTHER COMMERCIAL PRODUCTS
To be determined by good faith negotiations based upon all relevant
facts and circumstances.
B-5
<PAGE> 42
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
EXHIBIT C
AFFX MATERIALS
1. AFFX Materials. AFFX shall supply to the Institute, in accordance
with the terms of each Annual Research Program Plan, the following types of AFFX
Materials at the fixed prices set forth below (which prices may not be modified
without the approval of the Institute):
Custom and Standard Probe Arrays ("chips"):
- Expression monitoring custom probe arrays
- Expression monitoring standard probe arrays
- Genotyping custom probe arrays
- Genotyping standard probe arrays
GeneChip(R) Instrumentation
- GeneChip Fluidics Station
- GeneChip Scanner
- GeneChip Workstation
Software
- GeneChip Software
- GeneChip Analysis Software
2. Pricing of AFFX Materials to the Institute.
<TABLE>
<CAPTION>
# in first Contract Year Price Total
------------------------ ----- -----
<S> <C> <C> <C>
Chips ***** $***** $*****
Readers ***** $***** $*****
Regular designs ***** $***** $*****
Shift mask designs ***** $***** $*****
</TABLE>
C-1
<PAGE> 43
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
<TABLE>
<S> <C> <C>
TOTAL $*****
</TABLE>
3. Descriptions of AFFX Materials.
Custom Chips
- Affymetrix will make available to the Institute custom *****
chips (chips for which the Institute supplies sequences) as
agreed in each Annual Research Program Plan.
- Affymetrix will also make available to the Institute custom
***** chips as agreed in each Annual Research Program Plan.
This application is currently under development and will be
made available as they are developed.
- Affymetrix will do ********* with the Institute as agreed in
each Annual Research Program Plan. ***** will be done at
Affymetrix. ********** ***********************************.
- To order custom designs the Institute will provide Affymetrix
with sequences and Affymetrix will select probes, design
masks, manufacture, QC and deliver chips.
- The Institute can order custom designs for ******************
**************************************************************
**************************************************************
**************.
- Designs will incorporate commercially available design
strategies and chip types.
Standard chips
- Affymetrix will also make available to the Institute standard
chips (chips designed by Affymetrix without the Institute
providing the sequences for the design) specified and agreed
upon in each Annual Research Program Plan.
C-2
<PAGE> 44
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
- Contemplated in the Annual Research Program Plan for the first
Contract Year are ********************************************
**************************************************************
**************************************************************
*********************.
- No design fees will be charged and the price per chip will be
$****** *******************************.
Instrumentation
- Affymetrix will supply to the Institute the then commercially
available configuration of the instrumentation which will
include a GeneChip scanner, GeneChip fluidics station,
GeneChip Workstation, GeneChip Software 2.0 (or better) and
GeneChip Analysis software.
- The price of the instrumentation will be $***** as currently
configured and may change as improved/additional
instrumentation is developed.
Software
- Affymetrix will supply to the Institute commercially available
standard object code software developed for expression
monitoring as well as other commercially available application
software as it is developed.
- Software and software support will be contributed at no cost
to the Institute.
Pricing changes
- The prices as specified above will apply for the term of the
Research Program.
- Subsequent technology developments made by Affymetrix will be
made available as agreed in each Annual Research Program Plan
and will be priced at such time.
C-3
<PAGE> 45
EXHIBIT D
CONSORTIUM MEMBER NOTICE ADDRESSES
A. In the case of BMS, to:
Bristol-Myers Squibb Company
P.O. Box 4000
Route 206 & Province Line Road
Princeton, New Jersey 08543-4000
Attention: Vice President and Senior Counsel,
Pharmaceutical Research Institute and
Worldwide Strategic Business Development
B. In the case of Millennium, to:
Millennium Pharmaceuticals, Inc.
640 Memorial Drive
Cambridge, Massachusetts 02139
Attention: Chief Business Officer
C. In the case of AFFX, to:
Affymetrix, Inc.
3380 Central Expressway
Santa Clara, California 95051
Attn: President
<PAGE> 1
EXHIBIT 10.6
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
COLLABORATION AGREEMENT
by and between
Millennium BioTherapeutics, Inc.
and
Eli Lilly and Company
May 28, 1997
<PAGE> 2
TABLE OF CONTENTS
PAGE
----
ARTICLE I
DEFINITIONS..........................................................1
Section 1.1. General................................................1
Section 1.2. "Affiliate"............................................1
Section 1.3. "Antibody".............................................1
Section 1.4. "Antisense Drug".......................................2
Section 1.5. "Confidential Information of a Party"..................2
Section 1.6. "COPS".................................................2
Section 1.7. "Derivative"...........................................3
Section 1.8. "Diagnostic Product"...................................3
Section 1.9. "DOJ"..................................................3
Section 1.10. "Existing TANGO Technology"............................3
Section 1.11. "Field"................................................3
Section 1.12. "First Commercial Sale"................................3
Section 1.13. "First License Maintenance Fee"........................3
Section 1.14. "FTC"..................................................3
Section 1.15. "FTE"..................................................3
Section 1.16. "Gene Therapy Drug"....................................4
Section 1.17. "HSR Act"..............................................4
Section 1.18. "HSR Filing"...........................................4
Section 1.19. "IND"..................................................4
Section 1.20. "Joint Management Team"................................4
Section 1.21. "Know-How".............................................4
Section 1.22. "Level I Qualified Protein"............................4
Section 1.23. "Level II Qualified Protein"...........................4
Section 1.24. "Level III Qualified Protein"..........................5
Section 1.25. "License Agreement"....................................5
Section 1.26. "Lilly Accessible Program Clone".......................5
Section 1.27. "Lilly Contributed Know-How"...........................5
Section 1.28. "Lilly Contributed Know-How Patent Right"..............5
Section 1.29. "Lilly Corresponding Drug".............................6
Section 1.30. "Lilly Program Manager"................................6
Section 1.31. "Lilly Selected Protein"...............................6
Section 1.32. "Lilly Small Molecule Drug"............................6
Section 1.33. "Major Market Countries"...............................6
Section 1.34. "MBI Accessible Program Clone".........................6
Section 1.35. "MBI Contributed Know-How".............................6
Section 1.36. "MBI Contributed Know-How Patent Right"................7
Section 1.37. "MBI Discovery Program"................................7
Section 1.38. "MBI Program Know-How".................................7
-i-
<PAGE> 3
Section 1.39. "MBI Program Know-How Patent Right".....................7
Section 1.40. "MBI Program Methodology"...............................7
Section 1.41. "MBI Program Methodology Patent Right"..................7
Section 1.42. "MBI Selected Protein"..................................7
Section 1.43. "MBI Small Molecule Drug"...............................7
Section 1.44. "MBI Therapeutic Product"...............................7
Section 1.45. "Milestone Payment".....................................8
Section 1.46. "Net Sales".............................................8
Section 1.47. "Non-Pool Program Protein"..............................9
Section 1.48. "Party".................................................9
Section 1.49. "Patent Right"..........................................9
Section 1.50. "Peptido Mimetic".......................................9
Section 1.51. "Phase III Clinical Trials".............................9
Section 1.52. "Product"..............................................10
Section 1.53. "Program Clone"........................................10
Section 1.54. "Program Confidential Information".....................10
Section 1.55. "Program Director".....................................10
Section 1.56. "Program Plan".........................................10
Section 1.57. "Program Protein"......................................10
Section 1.58. "Protein"..............................................10
Section 1.59. "Protein License Fee"..................................10
Section 1.60. "PTAC Approval"........................................10
Section 1.61. "Second License Maintenance Fee".......................10
Section 1.62. "Selectable Pool"......................................11
Section 1.63. "Selection Date".......................................11
Section 1.64. "Small Molecule Drug"..................................11
Section 1.65. "Territory"............................................11
Section 1.66. "Therapeutic Product"..................................11
Section 1.67. "Valid Claim"..........................................11
ARTICLE II
MBI DISCOVERY PROGRAM................................................11
Section 2.1. The Program and Its Goals..............................11
Section 2.2. Program Term...........................................12
Section 2.3. Program Management.....................................12
Section 2.4. Program Staffing.......................................14
Section 2.5. Conduct of Program.....................................14
Section 2.6. Selection of Program Proteins by the Parties...........15
Section 2.7. Transfer of Biological Materials.......................22
Section 2.8. Exclusive Arrangement..................................23
ARTICLE III
COVENANTS AND GRANTS OF RIGHTS.......................................23
Section 3.1. Covenant Not to Sue....................................23
-ii-
<PAGE> 4
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Section 3.2. Licenses to Lilly......................................24
Section 3.3. Licenses to MBI........................................24
Section 3.4. ****************************...........................25
Section 3.5. Lilly's Option to Manufacture..........................27
Section 3.6. ****************************...........................28
ARTICLE IV
CONFIDENTIALITY......................................................30
Section 4.1. Confidential Information of a Party....................30
Section 4.2. Employee Obligations...................................31
Section 4.3. Disclosure of Program Confidential Information.........31
Section 4.4. Term...................................................31
ARTICLE V
PATENT OWNERSHIP AND PROTECTION......................................32
Section 5.1. Ownership..............................................32
Section 5.2. Review and Comment.....................................32
Section 5.3. Prosecution and Maintenance............................32
Section 5.4. Costs and Expenses.....................................32
ARTICLE VI
PAYMENTS.............................................................33
Section 6.1. Research Funds.........................................33
Section 6.2. Royalty Payments on Lilly Small Molecule Drugs.........34
Section 6.3. Royalty Payments on MBI Small Molecule Drugs...........34
ARTICLE VII
ACCOUNTING...........................................................35
Section 7.1. Royalty Reports........................................35
Section 7.2. Delivery of Royalty....................................35
Section 7.3. Audits.................................................35
Section 7.4. Exchange Rates.........................................35
Section 7.5. Withholding Taxes......................................36
Section 7.6. Reporting..............................................36
ARTICLE VIII
DURATION.............................................................36
ARTICLE IX
TERMINATION..........................................................36
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Section 9.1. Investment Termination Event...........................36
Section 9.2. Termination For Material Breach........................37
Section 9.3. Rights Upon Termination For Breach.....................37
Section 9.4. Residual Rights........................................40
ARTICLE X
PRODUCT LIABILITY INDEMNIFICATION....................................41
Section 10.1. Indemnification by Lilly...............................41
Section 10.2. Indemnification by MBI.................................42
ARTICLE XI
GOOD FAITH NEGOTIATION/DISPUTE RESOLUTION............................42
ARTICLE XII
GOVERNING LAW........................................................43
ARTICLE XIII
ASSIGNMENT...........................................................43
ARTICLE XIV
INSOLVENCY...........................................................43
ARTICLE XV
AMENDMENTS...........................................................43
ARTICLE XVI
NOTICES..............................................................44
ARTICLE XVII
FORCE MAJEURE........................................................45
ARTICLE XVIII
REPRESENTATIONS AND WARRANTIES.......................................45
Section 18.1. Representation of Authority...........................45
Section 18.2. Knowledge of Pending or Threatened Litigation.........45
Section 18.3. Employee Obligations..................................45
Article XIX
PUBLIC ANNOUNCEMENTS AND PUBLICATIONS................................46
Section 19.1. Press Releases and Announcements......................46
Section 19.2. Publications..........................................46
ARTICLE XX
ADDITIONAL AGREEMENT.................................................47
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Section 20.1. Independent Contractors................................47
Section 20.2. Consents Not Unreasonably Withheld.....................47
Section 20.3. No Strict Construction.................................47
Section 20.4. Headings...............................................47
Section 20.5. Severance of Clauses...................................48
Section 20.6. No Waiver..............................................48
Section 20.7. Counterparts...........................................48
EXHIBIT A PROGRAM PLAN
EXHIBIT B EXISTING TANGO TECHNOLOGY
EXHIBIT C PTAC APPROVAL INFORMATION
EXHIBIT D LICENSE AGREEMENT
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<PAGE> 7
COLLABORATION AGREEMENT
This Agreement is effective as of May 28, 1997 ("the Effective Date"),
by and between Millennium BioTherapeutics, Inc. ("MBI"), a corporation organized
and existing under the laws of the State of Delaware and a subsidiary of
Millennium Pharmaceuticals, Inc. ("Millennium") and having its principal office
at 640 Memorial Drive, Cambridge, Massachusetts 02139-4815, and Eli Lilly and
Company ("Lilly"), a corporation organized and existing under the laws of the
State of Indiana and having its principal place of business at Lilly Corporate
Center, Indianapolis, Indiana 46285.
WHEREAS, MBI is in the business of employing various discovery
methodologies to identify proteins with therapeutic utility;
WHEREAS, Lilly is in the business of discovering, developing and
marketing human therapeutics; and
WHEREAS, Lilly is interested in funding, and in collaborating with MBI
in the conduct of, a protein discovery program with the goal of identifying and
qualifying potential therapeutic proteins, small molecule targets and
diagnostics for further development and commercialization;
NOW, THEREFORE, MBI and Lilly agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. General. When used in this Agreement, each of the
following terms, whether used in the singular or plural, shall have the meanings
set forth in this Article.
Section 1.2. "Affiliate" means any corporation, company, partnership,
joint venture and/or firm which controls, is controlled by, or is under common
control with a Party. For purposes of this Section 1.2, "control" shall mean (a)
in the case of corporate entities, direct or indirect ownership of at least
fifty percent (50%) of the stock or shares having the right to vote for the
election of directors, and (b) in the case of non-corporate entities, direct or
indirect ownership of at least fifty percent (50%) of the equity interest with
the power to direct the management and policies of such non-corporate entities.
Section 1.3. "Antibody" means (a) a molecule comprising four (4)
polypeptide chains (two (2) identical light chains and two (2) identical heavy
chains) that are held together by disulfide bonds and form two (2) identical
antigen binding sites or (b) any combination, fragment or altered form of a
molecule(s) of the type described in (a) (e.g., single chain antibodies).
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Section 1.4. "Antisense Drug" means any drug or drug candidate which
consists of nucleic acid or a functional analog, derivative or homologue thereof
and which is complementary to a segment of DNA of a target gene or such target
gene's cognate RNA and which, upon delivery by any means, alters the
transcription, processing, elaboration, RNA expression or Protein production of
or by such target gene.
Section 1.5. "Confidential Information of a Party" means all materials,
Know-How or other information, including, without limitation, proprietary
information and materials (whether or not patentable) regarding a Party's
technology, products, business information or objectives, which is designated as
confidential in writing by the disclosing Party, whether by letter or by the use
of an appropriate stamp or legend, prior to or at the time any such material,
trade secret or other information is disclosed by the disclosing Party to the
other Party. Notwithstanding the foregoing to the contrary, materials, Know-How
or other information which is orally, electronically or visually disclosed by a
Party, or is disclosed in writing without an appropriate letter, stamp or
legend, shall constitute Confidential Information of a Party if the disclosing
Party, within thirty (30) days after such disclosure, delivers to the other
Party a written document or documents describing the materials, Know-How or
other information and referencing the place and date of such oral, visual,
electronic or written disclosure and the names of the persons to whom such
disclosure was made, provided, however, that any technical information of a
Party disclosed at a meeting of the Joint Management Team shall constitute
Confidential Information of a Party unless otherwise specified. Confidential
Information of a Party does not include Program Confidential Information.
Section 1.6. "COPS" means the cost of products sold and, with respect
to a Product, consists of MBI's direct and allocated indirect manufacturing cost
of such Product plus any applicable royalties and third party costs. The
standard cost is computed annually and shall include:
(a) all material and labor cost directly related to the
manufacturing of such Product, including without limitation,
direct costs relating to packaging, quality assurance and
quality control; and
(b) allocated indirect cost for labor and materials used in
support of the manufacturing process; and
(c) allocated fixed and variable manufacturing overhead costs,
including but not limited to production and support and
depreciation of production facilities and equipment.
The standard cost for such Product shall be calculated using methodology
consistent with MBI's approach for its other product costs.
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Section 1.7. "Derivative" means (a) any fragment of a Protein or (b)
any altered form of a Protein or a fragment thereof, including, without
limitation, amino acid substitutions, additions, deletions and C- and N-terminal
fusions. Derivative does not mean a Peptido Mimetic.
Section 1.8. "Diagnostic Product" means any diagnostic product, in the
form of a device, compound, kit or service, with utility in the diagnosis,
prognosis, prediction or disease management of a disorder that (a) is developed
through the use of MBI Program Know-How or, subject to any limitations on the
use of such Know-How by Lilly, MBI Contributed Know-How and/or is covered by a
Valid Claim included in MBI Program Know-How Patent Rights or, subject to any
limitations on the use of such Patent Rights by Lilly, MBI Contributed Know-How
Patent Rights, (b) embodies, or operates through the detection of a Program
Clone or a Program Protein (or a Derivative thereof), and (c) will complement
the use of any therapeutic product under development or marketed by Lilly or a
development or marketing partner of Lilly (a "Lilly Corresponding Drug").
Section 1.9. "DOJ" means the Antitrust Division of the United States
Department of Justice.
Section 1.10. "Existing TANGO Technology" means the cDNA libraries,
genomic sub-libraries, signal peptide trap libraries (including the clones
derived from such libraries and the Proteins encoded therein) and the Proteins
set forth in Exhibit B and all associated data and information.
Section 1.11. "Field" means therapeutic and/or prophylactic application
in human health care of Proteins or Derivatives thereof.
Section 1.12. "First Commercial Sale" means, for each Product, the
first commercial sale in a country as part of a nationwide introduction by a
Party, its Affiliates or its permitted sublicensees, other than for clinical
trial purposes or compassionate use.
Section 1.13. "First License Maintenance Fee" shall have the meaning
set forth in Section 6.1(a) of the License Agreement.
Section 1.14. "FTC" means the United States Federal Trade Commission.
Section 1.15. "FTE" means a full time equivalent scientific person year
(consisting of a total of forty-seven (47) weeks or one thousand eight hundred
eighty (1,880) hours per year of scientific work on or directly related to the
MBI Discovery Program), carried out by an employee of MBI, of an Affiliate of
MBI or of Lilly, having at least a Bachelor Degree in a science. Scientific work
on or directly related to the MBI Discovery Program to be performed by an
employee of MBI, of an Affiliate of MBI or of Lilly can include, but is not
limited to, experimental laboratory work, recording and writing of results,
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
reviewing literature and references, holding scientific discussions, managing
and leading scientific staff, development and application of tools related to
the MBI Discovery Program, and carrying out project management duties.
Section 1.16. "Gene Therapy Drug" means any drug or drug candidate,
excluding an Antisense Drug, which consists of nucleic acid or a functional
analog, derivative or homologue thereof and which, upon delivery by any means,
provides a gene product encoded therein which is expressed.
Section 1.17. "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (15 U.S.C. sec. 18a).
Section 1.18. "HSR Filing" means a filing by Lilly with the FTC and DOJ
of a Notification and Report Form (as that term is defined in the HSR Act) with
respect to a Lilly Selected Protein.
Section 1.19. "IND" means an Investigational New Drug Application filed
with the United States Food and Drug Administration or any equivalent filing
with the appropriate regulatory agency, or other committee whose approval is
required for the initiation of clinical trials, in a Major Market Country other
than the United States, or in Sweden, Denmark, Belgium, the Netherlands or such
other country as the Parties may agree upon.
Section 1.20. "Joint Management Team" means the joint management team,
as described in Section 2.3.
Section 1.21. "Know-How" means any information, data, methods,
processes, technology, nucleic acid and Protein sequences and materials,
including biological materials such as cell lines, RNA, DNA, DNA fragments,
organisms, Proteins, polypeptides, plasmids and vectors and software, user's
manuals and guides.
Section 1.22. "Level I Qualified Protein" means a Protein encoded by a
Program Clone which, in the good faith judgment of the Joint Management Team,
either (a) has been confirmed to be ********************************************
and has been demonstrated**************************************************which
includes***********************************************************************)
or (b) is a *************************************
Section 1.23. "Level II Qualified Protein" means any Level I Qualified
Protein which (a) has had ********************************, and (b) either (i)
has been
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
********************************************************************************
********************************************************************************
and, based on such data, is determined in good faith by the Joint Management
Team to be a *********************************** or (ii) is otherwise approved
by the Joint Management Team as being a Level II Qualified Protein.
Section 1.24. "Level III Qualified Protein" means any Level II
Qualified Protein which (a) in the good faith judgment of the Joint Management
Team, (i) has been ***********************************************************
and (ii) has been***************************************************************
******************************************************************* and (iii) is
presumed to be******************************************************************
************************************************ or (b) is otherwise approved by
the Joint Management Team as being a Level III Qualified Protein.
Section 1.25. "License Agreement" means an agreement, in the form
attached as Exhibit D, to be entered into by the Parties that sets forth the
rights and obligations of Lilly and of MBI with respect to products derived from
a Lilly Selected Protein.
Section 1.26. "Lilly Accessible Program Clone" means (a) a Program
Clone that is not identified through the use of MBI Contributed Know-How, or (b)
a Program Clone that is identified through the use of MBI Contributed Know-How
and with respect to which either (i) MBI has not placed any limitation on
Lilly's use of such Program Clone for the identification or design of Lilly
Small Molecule Drugs or (ii) MBI has placed the limitation that Lilly shall not
have the right to use such Program Clone for the identification or design of
Lilly Small Molecule Drugs for a period of ****************** from the date on
which such Program Clone is identified and such ***************** period has
elapsed.
Section 1.27. "Lilly Contributed Know-How" means Know-How (a) which is
necessary or useful in order to discover, develop, make, use, sell or seek
approval to market Therapeutic Products, and (b) to which Lilly has the right to
grant licenses or sublicenses without violating the terms of any agreement with
a third party, and (c) which is in Lilly's possession on the Effective Date or
is developed or acquired by Lilly during the term, but not in the course, of the
MBI Discovery Program, and (d) which Lilly has elected to contribute to the MBI
Discovery Program through written notification to, and with the approval of, the
Joint Management Team, which notification shall include any limitations on the
use of such Know-How by MBI, provided, however, that if such Know-How is a
biological source for the identification of Program Clones, then the only
permitted limitation shall be that MBI shall not have the right to use any such
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Program Clone for the identification or design of MBI Small Molecule Drugs for a
period of ****************** from the date on which such Program Clone is
identified, and (e) which is not properly in the public domain.
Section 1.28. "Lilly Contributed Know-How Patent Right" means a Patent
Right that relates to Know-How that is or was at any time Lilly Contributed
Know-How.
Section 1.29. "Lilly Corresponding Drug" shall have the meaning set
forth in Section 1.8.
Section 1.30. "Lilly Program Manager" means the employee of Lilly
selected by Lilly to work on the MBI Discovery Program who shall report either
directly to the Program Director or to MBI's head of program management. The
Lilly Program Manager shall be involved in the day to day activities of the MBI
Discovery Program, including, for example, staff meetings, personnel decisions,
external research collaborations relating to the MBI Discovery Program, and work
directly with the Program Director in the management of all work being conducted
under the MBI Discovery Program.
Section 1.31. "Lilly Selected Protein" means a Program Protein selected
by Lilly for further pre-clinical development, clinical development, manufacture
and commercialization, pursuant to Section 2.6.
Section 1.32. "Lilly Small Molecule Drug" means a Small Molecule Drug
identified or designed by Lilly through the use of a Lilly Accessible Program
Clone and/or the Protein encoded therein.
Section 1.33. "Major Market Countries" means the United States, Canada,
Japan, the United Kingdom, Germany, France, Spain and Italy.
Section 1.34. "MBI Accessible Program Clone" means (a) a Program Clone
that is not identified through the use of Lilly Contributed Know-How, or (b) a
Program Clone that is identified through the use of Lilly Contributed Know-How
and with respect to which either (i) Lilly has not placed any limitation on
MBI's use of such Program Clone for the identification or design of MBI Small
Molecule Drugs or (ii) Lilly has placed the limitation that MBI shall not have
the right to use such Program Clone for the identification or design of MBI
Small Molecule Drugs for a period of ****************** from the date on which
such Program Clone is identified and such ****************** period has elapsed.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Section 1.35. "MBI Contributed Know-How" means Know-How (a) which is
necessary or useful in order to discover, develop, make, use, sell or seek
approval to market Therapeutic Products, and (b) to which MBI has the right to
grant licenses or sublicenses without violating the terms of any agreement with
a third party, and (c) which is in MBI's possession on the Effective Date or is
developed or acquired by MBI during the term, but not in the course, of the MBI
Discovery Program, and (d) which MBI has elected to contribute to the MBI
Discovery Program through written notification to, and with the approval of, the
Joint Management Team, which notification shall include any limitations on the
use of such Know-How by Lilly, provided, however, that if such Know-How is a
biological source for the identification of Program Clones, then the only
permitted limitation shall be that Lilly shall not have the right to use any
such Program Clone for the identification or design of Lilly Small Molecule
Drugs for a period of ****************** from the date on which such Program
Clone is identified, and (e) which is not properly in the public domain. MBI
Contributed Know-How does not include the Existing TANGO Technology.
Section 1.36. "MBI Contributed Know-How Patent Right" means a Patent
Right that relates to Know-How that is or was at any time MBI Contributed
Know-How.
Section 1.37. "MBI Discovery Program" means the therapeutic Protein
discovery program to be undertaken by MBI pursuant to this Agreement, with the
goal of identifying and qualifying potential therapeutic Proteins for further
pre-clinical development, clinical development, manufacturing and
commercialization, as described in greater detail in the Program Plan.
Section 1.38. "MBI Program Know-How" means (a) all Know-How included in
the Existing TANGO Technology that is not properly in the public domain, and (b)
all Know-How, exclusive of MBI Program Methodology, that (i) is developed in the
course of the MBI Discovery Program and (ii) is not properly in the public
domain.
Section 1.39. "MBI Program Know-How Patent Right" means a Patent Right
that relates to Know-How that is or was at any time MBI Program Know-How.
Section 1.40. "MBI Program Methodology" means any methods (including
without limitation bioinformatics tools, processes, protocols, assays, automated
and semi-automated techniques, molecular biology methods and other methods for
the discovery, production and/or characterization of Proteins), that (a) are
developed in the course of the MBI Discovery Program, including any improvements
in methods technology derived from, or based upon, any Lilly Contributed
Know-How and/or MBI Contributed Know-How and (b) are not properly in the public
domain.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Section 1.41. "MBI Program Methodology Patent Right" means a Patent
Right that relates to methods that are or were at any time included in MBI
Program Metholodogy.
Section 1.42. "MBI Selected Protein" means a Program Protein selected
by MBI for further pre-clinical development, clinical development, manufacture
and commercialization, pursuant to Section 2.6.
Section 1.43. "MBI Small Molecule Drug" means a Small Molecule Drug
identified or designed by MBI through the use of a MBI Accessible Program Clone
and/or the Protein encoded therein.
Section 1.44. "MBI Therapeutic Product" means a Therapeutic Product in
which the active ingredient is a MBI Selected Protein or a Derivative thereof.
Section 1.45. "Milestone Payment" means a payment made by Lilly to MBI,
pursuant to Section 6.2 of the License Agreement, upon the achievement of a
development milestone with respect to a therapeutic or prophylactic product in
which the active ingredient is a Lilly Selected Protein or a Derivative thereof.
Section 1.46. "Net Sales" means, with respect to a Product, the gross
amount invoiced by a Party, its Affiliates or sublicensees to unrelated third
parties for such Product, in the Territory, less:
(a) Trade, quantity and cash discounts actually allowed;
(b) Discounts, refunds, rebates, chargebacks, retroactive
price adjustments, and any other allowances which effectively reduce the net
selling price;
(c) Actual Product returns and allowances;
(d) That portion of the net selling price associated with the
cost of drug delivery systems;
(e) Any tax imposed on the production, sale, delivery or use
of the Product (excluding federal, state or local taxes based on income);
(f) Distribution expenses reasonably documented by the Party;
and
(g) Any other similar and customary deductions (as defined and
accepted by generally accepted accounting principles ("GAAP")), actually
incurred.
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Such amounts shall be determined from the books and records of the Party
maintained in accordance with GAAP, consistently applied.
In the event that the Product is sold as part of a Combination Product,
the Net Sales from the Combination Product, for the purposes of determining
royalty payments, shall be determined by multiplying the Net Sales of the
Combination Product (as defined in the standard Net Sales definition) by the
fraction, A/A+B where A is the average sale price of the Product when sold
separately in finished form and B is the average sale price of the other
product(s) sold separately in finished form.
In the event that the average sale price of the Product can be
determined but the average sale price of the other product(s) cannot be
determined, Net Sales for purposes of determining royalty payments shall be
calculated by multiplying the Net Sales of the Combination Product by the
fraction C/C+D where C is the selling party's average sales price of the Product
and D is the difference between the average selling price of the Combination
Product and the average selling price of the Product.
If the average sale price of the other product(s) can be determined but
the average price of the Product cannot be determined, Net Sales for purposes of
determining royalty payments shall be calculated by multiplying the Net Sales of
the Combination Product by the following formula: one (1) minus C/C+D where C is
the average selling price of the other product(s) and D is the difference
between the average selling price of the Combination Product and the average
selling price of the other product(s). In no event, however, shall the Net Sales
of the Product be less than fifty percent (50%) of the Net Sales of the
Combination Products.
In the event that the average sale price of both the Product and the
other product(s) in the Combination Product cannot be determined, the Net Sales
of the Product shall be deemed to be equal to fifty percent (50%) of the Net
Sales of the Combination Product. The Net Sales price for a Combination Product
shall be calculated once each calendar year and such price shall be used during
all applicable royalty reporting periods for the entire calendar year. When
determining the average sale price of a Product or product(s), the average sale
price shall be calculated using data arising from the twelve (12) months
preceding the calculation of the Net Sales price for the Combination Product. As
used above, the term "Combination Product" means any pharmaceutical product
which comprises the Product and other active compounds and/or ingredients.
Section 1.47. "Non-Pool Program Protein" means a Program Protein that
has not been placed in the Selectable Pool pursuant to Section 2.6(a).
Section 1.48. "Party" means Lilly or MBI; "Parties" means Lilly and
MBI.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Section 1.49. "Patent Right" means a patent or patent application and
all divisions, continuations, continuations-in-part, reissues, reexaminations,
extensions, Supplementary Protection Certificates and foreign counterparts
thereof that is owned or otherwise controlled by MBI or by Lilly.
Section 1.50. "Peptido Mimetic" means a*******************************
************************************************************************
************************************************************************
************************************************************************
************************************************************************
************************************
Section 1.51. "Phase III Clinical Trials" means large scale,
multicenter, human clinical trials conducted in patients and designed to
establish Product efficacy in the particular indication tested and required to
obtain approval of Product with health regulatory authorities.
Section 1.52. "Product" means any product sold by a Party, its
Affiliate or its sublicensee, pursuant to this Agreement.
Section 1.53. "Program Clone" means a clone (including the DNA sequence
information, whether partial or full-length, pertaining to the clone),
identified in the course of the MBI Discovery Program or included in the
Existing TANGO Technology, MBI Contributed Know-How or Lilly Contributed
Know-How.
Section 1.54. "Program Confidential Information" means all materials,
Know-How or other information, including, without limitation, proprietary
information and materials (whether or not patentable) that (a) are developed in
the course of the MBI Discovery Program and (b) are not properly in the public
domain.
Section 1.55. "Program Director" means the employee of MBI selected by
MBI to direct the MBI Discovery Program.
Section 1.56. "Program Plan" means the research and development plan,
attached to this Agreement as Exhibit A, that sets forth the goals and research
and development time lines for the MBI Discovery Program.
Section 1.57. "Program Protein" means any Level I Qualified Protein,
Level II Qualified Protein, or Level III Qualified Protein.
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Section 1.58. "Protein" means a high molecular weight (i.e., weighing
greater than 1000 daltons) polymer compound composed of a variety of amino acids
joined by peptide linkages, including allelic variants thereof and
post-translationally modified variants thereof (i.e., glycosylated Proteins).
For purposes of this Agreement, Protein does not include an Antibody.
Section 1.59. "Protein License Fee" shall have the meaning set forth in
Section 1.32 of the License Agreement.
Section 1.60. "PTAC Approval" means approval by Lilly's Project Team
Approval Committee, or any successor thereto, of a compound proposed for project
team status, following review of scientific and marketing information of the
type set forth in Exhibit C. With respect to any Lilly Selected Protein, the
process of PTAC Approval shall not differ substantially from that employed by
Lilly in evaluating any of its other candidate therapeutic and/or prophylactic
Proteins that are at a comparable stage in the development process and are of
comparable commercial potential.
Section 1.61. "Second License Maintenance Fee" shall have the meaning
set forth in Section 6.1(b) of the License Agreement.
Section 1.62. "Selectable Pool" means the pool of Program Proteins that
are available to be selected by a Party for further preclinical development,
clinical development, manufacture and commercialization, pursuant to Section
2.6.
Section 1.63. "Selection Date" means the date on which a Program
Protein is selected by a Party pursuant to Section 2.6.
Section 1.64. "Small Molecule Drug" means a therapeutic or prophylactic
product, the active ingredient of which is a synthetic small molecule (including
but not limited to a Peptido Mimetic), a natural product or a macromolecule that
(a) is identified in a screening assay on the basis of its interaction with a
biological target that has been identified through use of a Program Clone, or
(b) is designed or developed using medicinal chemistry, SAR or combinatorial
chemistry techniques to interact with a biological target that has been
identified through use of a Program Clone, provided, however, that a Small
Molecule Drug does not include any Therapeutic Product or any therapeutic and/or
prophylactic product in which the active ingredient is a Protein, an Antibody,
an Antisense Drug or a Gene Therapy Drug.
Section 1.65. "Territory" means all countries of the world.
Section 1.66. "Therapeutic Product" means a therapeutic and/or
prophylactic product in which the active ingredient is a Program Protein or a
Derivative thereof.
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Section 1.67. "Valid Claim" means any claim pending in a patent
application or in an unexpired patent which has not been held unenforceable,
unpatentable or invalid by a decision of a court or other governmental agency of
competent jurisdiction, unappealable or unappealed within the time allowed for
appeal, and which has not been admitted to be invalid or unenforceable through
reissue or disclaimer. If in any country there should be two or more such
decisions conflicting with respect to the validity of the same claim, the
decision of the higher or highest tribunal shall thereafter control; however,
should the tribunals be of equal rank, then the decision or decisions upholding
the claim shall prevail when the decisions are equal in number, and the majority
of decisions shall prevail when the conflicting decisions are unequal in number.
ARTICLE II
MBI DISCOVERY PROGRAM
Section 2.1. The Program and Its Goals. MBI hereby agrees to undertake
the MBI Discovery Program under the terms and conditions set forth in this
Agreement. Lilly shall provide MBI with research funding to support, in part,
the activities undertaken by MBI in the course of the MBI Discovery Program
pursuant to Section 6.1, and may participate in the conduct of such program to
the extent permitted under Section 2.4. The goals of the MBI Discovery Program
are (a) to identify and characterize Level I Qualified Proteins employing
various discovery methodologies, including without limitation secreted protein
trapping, genomic cluster mapping and EST sequencing, (b) to identify the
therapeutic utility of Program Proteins employing various methodologies,
including without limitation transcription expression profiling, animal disease
recovery modeling and use of transgenic and knock out models, and (c) to qualify
selected Program Proteins for further development by the Parties as Therapeutic
Products. The activities to be undertaken by MBI, and by Lilly to the extent
permitted under Section 2.4, in the course of the MBI Discovery Program are set
forth in detail in the Program Plan, which plan is subject to review and
modification by the Joint Management Team.
Section 2.2. Program Term. The MBI Discovery Program shall commence on
the Effective Date and shall terminate on the fifth anniversary of the Effective
Date unless terminated earlier pursuant to this Section 2.2, Section 9.1 or
Section 9.2.
(a) Termination by Lilly. Lilly may terminate the MBI
Discovery Program on the third anniversary of the Effective Date or on the
fourth anniversary of the Effective Date upon at least one hundred twenty (120)
days prior written notice to MBI.
(b) Termination Following a Change of Control. Either Party
may terminate the MBI Discovery Program upon at least thirty (30) days prior
written notice to the other Party if at any time during the term of the MBI
Discovery Program the
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<PAGE> 19
majority control of the other Party is acquired by any pharmaceutical or other
health care company.
Section 2.3. Program Management
(a) Joint Management Team. As soon as practicable after the
Effective Date, the Parties shall establish a Joint Management Team, consisting
of three (3) representatives designated by Lilly and three (3) representatives
designated by MBI. Each Party shall make its initial designation of its
representation not later than thirty (30) days after the Effective Date. Each
Party shall cause its representatives to attend the meetings of the Joint
Management Team. If a representative of a Party is unable to attend a meeting,
such Party may designate an alternate to attend such meeting in place of the
missing representative. In addition, each Party may at its discretion invite
nonvoting employees, consultants or scientific advisors to attend the meetings
of the Joint Management Team. The Joint Management Team shall meet no less
frequently than once each calendar quarter, and shall meet at such other times
as deemed appropriate by the Joint Management Team. Each Party may change any
one or more of its representatives to the Joint Management Team at any time upon
notice to the other Party. The location of the Joint Management Team meetings
shall alternate between Massachusetts and Indiana, or as otherwise mutually
agreed.
(b) Joint Management Team Responsibilities. The Joint
Management Team shall be responsible for coordinating and reviewing the
activities of the Parties under this Agreement, including without limitation the
MBI Discovery Program. Without intending to limit the generality of the
foregoing, the Joint Management Team shall (i) allocate the resources and
personnel committed to the MBI Discovery Program, (ii) assess the progress of
the MBI Discovery Program and, if necessary, modify the Program Plan in order to
maximize the likelihood that the goals of the MBI Discovery Program will be
achieved, (iii) determine whether any Protein encoded by a Program Clone has
achieved the status of a Program Protein (i.e., has achieved the status of a
Level I Qualified Protein, a Level II Qualified Protein or a Level III Qualified
Protein (and therefore should be placed in the Selectable Pool)), (iv) comply
with the reporting obligations set forth in Sections 2.3(c) and 2.6(b), (v)
oversee and manage the Selection Process (as that term is defined in Section
2.6), (vi) determine whether Know-How which MBI or Lilly has elected to
contribute to the MBI Discovery Program shall be included in the MBI Discovery
Program as MBI Contributed Know-How or Lilly Contributed Know-How, as the case
may be, and (vii) review and approve all third party agreements, or parts
thereof, relating exclusively to the MBI Discovery Program. The Joint Management
Team shall be informed of the specific individuals who will work on the MBI
Discovery Program. The Joint Management Team shall also attempt to settle any
disputes that may arise between the Parties.
(c) Joint Management Team Reporting Obligations. During the
term of the MBI Discovery Program, the Joint Management Team shall provide the
Parties
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
with a list of the following items no less frequently than once per month or at
such other frequency as determined by the Joint Management Team:
(i) the Program Clones, including the available DNA
sequence information corresponding to such clones, and any other
information relating to a Program Clone that encodes a Program Protein;
and
(ii) the Program Proteins that have not been selected
by either Party for further development, manufacture and
commercialization pursuant to Section 2.6.
The Joint Management Team shall provide the Parties with the final version of
the foregoing list within thirty (30) days following the conclusion of the MBI
Discovery Program. In addition, the Joint Management Team shall provide each
Party with Quarterly Reviews (as that term is defined in Section 2.6), pursuant
to its reporting obligation set forth in Section 2.6
(d) Joint Management Team Decisions. The affirmative vote of
*** *************** of the members of the Joint Management Team shall be
required to take any action. Any member of the Joint Management Team who is not
present at any meeting either in person or by a designated alternate may appoint
another representative or alternate as his proxy to act on his behalf on all
matters coming to a vote. The Joint Management Team may conduct meetings by
telephone or video conference. If the Joint Management Team is unable to reach a
****************** or greater vote on any issue, it shall refer that issue to
Lilly's Vice President of Research Technologies and Proteins and the President
of MBI for resolution.
Section 2.4. Program Staffing.
(a) Program FTEs. MBI shall commit a minimum of
****************** FTEs per year to the conduct of the MBI Discovery Program,
provided that Lilly acknowledges that there will be a reasonable initial hiring
ramp-up period before MBI reaches the ******************-FTE level. MBI shall
use its best efforts to ramp-up to the ****************** FTE level as soon as
possible after the Effective Date. By decision of the Joint Management Team the
number of FTEs committed to the MBI Discovery Program may be increased or
decreased from the ******************-FTE level. Lilly shall have the option of
placing employees of Lilly at MBI in order to participate in the conduct of the
MBI Discovery Program as FTEs (which employees of Lilly shall be fully committed
to the MBI Discovery Program), and thereby reduce its research funding
obligations as set forth in Section 6.1, provided that (i) each such Lilly
employee shall be reasonably
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<PAGE> 21
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
acceptable to MBI and (ii) in no event shall the number of FTEs that are Lilly
employees exceed ****************** of the total number of FTEs committed to the
MBI Discovery Program. During the term of the MBI Discovery Program, MBI shall
submit to Lilly a quarterly report stating the name of each employee working as
a FTE in the MBI Discovery Program and the number of hours that each such
employee spent on the MBI Discovery Program.
(b) Program Director. The Parties acknowledge and agree that
the initial Program Director shall be Dr. David Gearing, an employee of MBI. In
the event that Dr. Gearing leaves the position of Program Director for any
reason, a successor shall be selected by MBI, provided, however, that Lilly must
approve such successor, which approval shall not be unreasonably withheld.
Section 2.5. Conduct of Program. The research and development
activities to be undertaken in the course of the MBI Discovery Program shall be
conducted at MBI under the direction of the Program Director, with the
assistance of the Lilly Program Manager. Each of the FTEs committed to the MBI
Discovery Program shall take direction from the Program Director. MBI shall use
reasonable efforts in achieving the goals of the MBI Discovery Program, as set
forth in the Program Plan. In addition, MBI shall use reasonable efforts to
carry out all work done in connection with the MBI Discovery Program in
compliance with any federal, state or local laws, regulations and guidelines
governing the conduct of such work. All animals involved in the MBI Discovery
Program shall be provided humane care and treatment in accordance with generally
acceptable current veterinary practices. Notwithstanding the foregoing, MBI's
obligations as set forth in this Section 2.5 shall extend only to the activities
of FTEs who are employees of MBI or of an Affiliate of MBI. To the extent that
Lilly employees participate in the conduct of the MBI Discovery Program pursuant
to Section 2.4, Lilly shall use reasonable efforts to insure that its employees
comply with the obligations set forth in this Section 2.5.
Section 2.6. Selection of Program Proteins by the Parties. During the
term of the MBI Discovery Program, each Party shall have the right to select
Program Proteins from the Selectable Pool for further preclinical development,
clinical development, manufacture and commercialization by such Party (the
"Selection Process"). The Selection Process shall operate as follows:
(a) The Selectable Pool. A Program Protein shall enter the
Selectable Pool at the time that it is determined by the Joint Management Team
that such Program Protein meets the criteria for qualification as a Level III
Qualified Protein.
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<PAGE> 22
(b) Quarterly Reviews. Within thirty (30) days following the
first business day of each calendar quarter during the term of the MBI Discovery
Program and within thirty (30) days following the conclusion of the MBI
Discovery Program, the Joint Management Team shall provide each Party with a
summary of the information available with respect to any Program Protein in the
Selectable Pool, including information relating to the status of MBI Program
Know-How Patent Rights, MBI Contributed Know-How Patent Rights and Lilly
Contributed Know-How Patent Rights with respect to such Program Proteins (the
"Quarterly Review"). The purpose of the Quarterly Review is to supply each Party
with the information necessary to enable such Party to make a determination as
to whether any of the Program Proteins in the Selectable Pool shall be selected
by such Party for further preclinical development, clinical development and
commercialization. At Lilly's request, MBI shall allow Lilly to review the
patent application prosecution history files of the MBI Program Know-How Patent
Rights and MBI Contributed Know-How Patent Rights relating to the Program
Proteins eligible for selection by Lilly at the Quarterly Selection Meeting (as
that term is defined in Section 2.6(c)(i)) or the Final Selection Meeting (as
that term is defined in Section 2.6(c)(ii)), at least two (2) weeks before such
Quarterly Selection Meeting or Final Selection Meeting, as the case may be. At
MBI's request, Lilly shall allow MBI to review the patent application
prosecution history files of the Lilly Contributed Know-How Patent Rights
relating to the Program Proteins eligible for selection by MBI at the Quarterly
Selection Meeting or the Final Selection Meeting, at least two (2) weeks before
such Quarterly Selection Meeting or Final Selection Meeting, as the case may be.
(c) Selection of Program Proteins.
(i) Quarterly Selection Meetings. Beginning in the
first calendar quarter during the term of the MBI Discovery Program in which the
most recent Quarterly Review indicates that the Selectable Pool contains at
least one Program Protein (the "Initial Quarter") and, thereafter, in each
subsequent calendar quarter during the term of the MBI Discovery Program
(including the last calendar quarter of the MBI Discovery Program) in which the
Selectable Pool contains at least one Program Protein, the Parties shall have
the opportunity to make their selections of Program Proteins in the Selectable
Pool for further development, manufacture and commercialization. The selection
of Program Proteins in the Selectable Pool shall be made by the Parties, through
their designated representatives on the Joint Management Team, at a meeting of
the Joint Management Team scheduled within thirty (30) days after receipt by the
Parties of a Quarterly Review (the "Quarterly Selection Meetings"). The Joint
Management Team shall provide each Party with any additional information
regarding Program Proteins in the Selectable Pool that is developed in the
course of the MBI Discovery Program after the receipt by the Parties of the
Quarterly Review and before the next
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<PAGE> 23
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Quarterly Selection Meeting. Lilly shall have the right to make the first
selection in the Initial Quarter and, thereafter, the right to select first in
the subsequent calendar quarters in which the Selectable Pool contains at least
one Program Protein shall alternate between the Parties. Each Party shall have
the right to select up to ******* Program Proteins from the Selectable Pool each
calendar quarter (the "Quarterly Selection Limit"), provided, however, that the
Quarterly Selection Limit may be waived on a case-by-case basis by mutual
agreement of the Parties, permitting one or both of the Parties, as the case may
be, to select more than ******* Program Proteins from the Selectable Pool at a
Quarterly Selection Meeting (where each such additional selection shall be
deemed to be an "Additional Quarterly Selection"). In the event that a Party
with the right to select at a Quarterly Selection Meeting elects not to make a
selection, despite the presence of at least one Program Protein in the
Selectable Pool, such Party shall forfeit such right to select, and the other
Party shall have the right to make the next selection at such Quarterly
Selection Meeting.
(ii) Final Selection Meeting. Subject to the provisions
of Section 9.2, the Parties shall hold a final meeting, if necessary, for the
purpose of selecting any Program Proteins that remain in the Selectable Pool
following the Quarterly Selection Meeting for the final calendar quarter of the
MBI Discovery Program (the "Final Selection Meeting"), within sixty (60) days
following the conclusion of the MBI Discovery Program. At the Final Selection
Meeting, the Parties shall make as many alternating selections as is necessary
to have selected all of the Program Proteins remaining in the Selectable Pool
(i.e., each Party shall have the right to select up to ***** percent ***** of
the Level III Qualified Proteins remaining in the Selectable Pool). In addition,
the Parties shall make as many alternating selections at the Final Selection
Meeting as is necessary for Lilly to have selected up to the percentages of the
Non-Pool Program Proteins that are indicated in the following table:
Percentage of Non-Pool
Duration of MBI Discovery Type of Non-Pool Program Program Proteins
Program Protein Selectable by Lilly
Three Years or less Level II Qualified Protein ***
Level I Qualified Protein ***
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<PAGE> 24
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Greater than Three Years Level II Qualified Protein ***
up to Four Years
Level I Qualified Protein ***
Greater than Four Years up Level II Qualified Protein ***
to Five Years
Level I Qualified Protein ***
The Party that was not entitled to make the first selection at the last
Quarterly Selection Meeting prior to the termination of the MBI Discovery
Program shall have the right to make the first selection at the Final Selection
Meeting.
(d) Rights and Obligations with Respect to Selected Program
Proteins.
(i) MBI Selected Proteins.
(A) General. Each Program Protein selected by
MBI pursuant to this Section 2.6 shall be deemed to be a MBI Selected Protein,
as of its Selection Date. MBI shall have the right to further develop,
manufacture and commercialize each MBI Selected Protein pursuant to the terms
and conditions of this Agreement.
(B) Diligence Obligations.
(1) MBI Obligations. MBI shall be
obligated, with respect to each MBI Selected Protein selected pursuant to
Section 2.6(c)(i), to either:
(a) (i) use commercially
reasonable efforts to generate experimental results in normal animals and/or
animal models of disease demonstrating the therapeutic potential of such MBI
Selected Protein within ****************** of its Selection Date (the "First
Diligence Deadline"), with Lilly having the right to receive evidence from MBI
upon request by Lilly of such diligence at *********** and at ******************
after such Selection Date; and
(ii) file an IND with
respect to a MBI Therapeutic Product based on such MBI Selected Protein within
************** following
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<PAGE> 25
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
the Selection Date of such MBI Selected Protein (the "Second Diligence
Deadline") or demonstrate to Lilly's reasonable satisfaction that such an IND
will be filed within *************** following the Second Diligence Deadline; or
(b) prior to the First Diligence
Deadline or the Second Diligence Deadline, as applicable, enter into a
sublicense agreement with respect to the development and commercialization of a
MBI Therapeutic Product based on such MBI Selected Protein in the United States
or Japan or at least ************************ Major Market Countries that are
not the United States or Japan, which agreement shall obligate MBI's sublicensee
to use commercially reasonable efforts to seek regulatory approval of, market
and sell such MBI Therapeutic Product in the United States or Japan or at least
************************ Major Market Countries that are not the United States
or Japan.
(2) MBI Failure of Diligence. In the
event that MBI fails to meet its diligence obligations pursuant to Section
2.6(d)(i)(B)(1) and MBI has not entered into an agreement with Lilly with
respect to the commercialization of a MBI Therapeutic Product based on such MBI
Selected Protein, pursuant to Section 3.4, prior to the First Diligence Deadline
or the Second Diligence Deadline, as applicable (a "MBI Failure of Diligence"),
then (1) if such MBI Failure of Diligence occurs during the term of the MBI
Discovery Program, MBI's rights to further develop, manufacture and
commercialize such MBI Selected Protein shall terminate and such Program Protein
shall, at Lilly's election, either be returned to the Selectable Pool or be
deemed to be a Lilly Selected Protein, or (2) if such MBI Failure of Diligence
occurs after the termination of the MBI Discovery Program, MBI's rights to
further develop, manufacture and commercialize such MBI Selected Protein shall
terminate and such Program Protein shall be deemed to be a Lilly Selected
Protein. A MBI Failure of Diligence shall not be considered a material breach of
this Agreement by MBI for purposes of Section 9.2.
(3) MBI Selected Proteins Deemed To Be
Lilly Selected Proteins. With respect to any Program Protein that is deemed to
be a Lilly Selected Protein as a result of a MBI Failure of Diligence that
occurs during the first ***************** period following the selection of such
Program Protein by MBI, the Parties shall enter into a license agreement
covering such Lilly Selected Protein, which license agreement shall conform
substantially with the License Agreement, except that the provisions regarding
the Protein License Fee set forth in Section 6.1 of the License Agreement shall
not apply, and the provision regarding diligence set forth in Section 5 of the
License Agreement shall not apply. With respect to any Program Protein that is
deemed to be a Lilly Selected Protein as a result of a MBI Failure of Diligence
that occurs during the second ***************** period following the selection
of such Program
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<PAGE> 26
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Protein by MBI, the Parties shall enter into a license agreement covering such
Lilly Selected Protein, which license agreement shall conform substantially with
the License Agreement, except that the provisions regarding the Protein License
Fee set forth in Section 6.1 of the License Agreement shall not apply, the
provision regarding diligence set forth in Section 5 of the License Agreement
shall not apply, and Lilly's milestone payment obligations set forth in Section
6.2 of the License Agreement and royalty payment obligations set forth in
Section 6.3 of the License Agreement shall continue, provided, however, that the
amounts of the milestone and royalty payments shall be ***************** of the
amounts set forth in the License Agreement. With respect to any Program Protein
that is deemed to be a Lilly Selected Protein as a result of a MBI Failure of
Diligence that occurs after the second anniversary of the selection of such
Program Protein by MBI, the Parties shall enter into a license agreement
covering such Lilly Selected Protein, which license agreement shall conform
substantially with the License Agreement, except that the provisions regarding
the Protein License Fee set forth in Section 6.1 of the License Agreement shall
not apply, the provision regarding diligence set forth in Section 5 of the
License Agreement shall not apply, and Lilly's milestone payment obligations set
forth in Section 6.2 of the License Agreement and royalty payment obligations
set forth in Section 6.3 of the License Agreement shall continue, provided,
however, that the amounts of the milestone and royalty payments shall be
***************** of the amounts set forth in the License Agreement.
(ii) Lilly Selected Proteins.
(A) Lilly Rights and Obligations.
(1) General. Each Program Protein
selected by Lilly pursuant to this Section 2.6 shall be deemed to be a Lilly
Selected Protein as of its Selection Date.
(2) Program Proteins Selected at
Quarterly Selection Meetings.
(a) With respect to each Lilly
Selected Protein that is selected pursuant to Section 2.6(c)(i) (i.e., during a
Quarterly Selection Meeting) and is not an Additional Quarterly Selection, Lilly
shall execute a License Agreement within ***************** following the
Selection Date of such Lilly Selected Protein, provided, however, that in the
event that Lilly makes an HSR Filing with respect to such Lilly Selected Protein
and neither the FTC nor DOJ challenges the exclusive license to such Lilly
Selected Protein to be granted under the License Agreement (an "HSR Clearance"),
then Lilly shall execute the License Agreement with respect to such Lilly
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<PAGE> 27
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Selected Protein within ***************** following the date on which Lilly is
made aware of the HSR Clearance.
(b) With respect to each Lilly
Selected Protein that is an Additional Quarterly Selection, Lilly shall enter
into a license agreement which shall conform substantially with the License
Agreement, except that the provisions regarding the Protein License Fee set
forth in Section 6.1 of the License Agreement shall not apply. Such license
agreement shall be executed within ***************** following the Selection
Date of such Lilly Selected Protein.
(3) Level III Qualified Proteins Selected
at Final Selection Meeting. With respect to any Lilly Selected Proteins that are
Level III Qualified Proteins and are selected pursuant to Section 2.6(c)(ii)
(i.e., during the Final Selection Meeting), the Parties shall enter into a
single license agreement covering all such Lilly Selected Proteins, which
license agreement shall conform substantially with the License Agreement, except
that the provisions regarding the Protein License Fee set forth in Section 6.1
of the License Agreement shall not apply, except with respect to the *********
of such Lilly Selected Proteins to receive PTAC Approval and the provision
regarding diligence set forth in Section 5 of the License Agreement shall not
apply.
(4) Level II Qualified Proteins Selected
at Final Selection Meeting. With respect to any Lilly Selected Proteins that are
Level II Qualified Proteins and are selected pursuant to Section 2.6(c)(ii), the
Parties shall enter into a single license agreement covering all such Lilly
Selected Proteins, which license agreement shall conform substantially with the
License Agreement, except that the provisions regarding the Protein License Fee
set forth in Section 6.1 of the License Agreement shall not apply, the provision
regarding diligence set forth in Section 5 of the License Agreement shall not
apply, and Lilly's milestone payment obligations set forth in Section 6.2 of the
License Agreement and royalty payment obligations set forth in Section 6.3 of
the License Agreement shall continue, provided, however, that the amounts of the
milestone and royalty payments shall be ******* to (a) ***************** of the
amounts set forth in the License Agreement, in the event that the duration of
the MBI Discovery Program is *****************, (b) ***************** of the
amounts set forth in the License Agreement, in the event that the duration of
the MBI Discovery Program is greater than ***************** but does not exceed
*****************, or (c) ***************** of the amounts set forth in the
License Agreement, in the event that the duration of the MBI Discovery Program
exceeds *****************.
(5) Level I Qualified Proteins Selected
at Final Selection Meeting. With respect to any Lilly Selected Proteins that are
Level I Qualified
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<PAGE> 28
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Proteins and are selected pursuant to Section 2.6(c)(ii), the Parties shall
enter into a single license agreement covering all such Lilly Selected Proteins,
which license agreement shall conform substantially with the License Agreement,
except that the provisions regarding the Protein License Fee set forth in
Section 6.1 of the License Agreement shall not apply, the provision regarding
diligence set forth in Section 5 of the License Agreement shall not apply, and
Lilly's milestone payment obligations set forth in Section 6.2 of the License
Agreement and royalty payment obligations set forth in Section 6.3 of the
License Agreement shall continue, provided, however, that the amounts of the
milestone and royalty payments shall be ******* to (a)
*************************************** of the amounts set forth in the License
Agreement, in the event that the duration of the MBI Discovery Program is
greater than ***************** but does not exceed *****************, or (b)
***************** of the amounts set forth in the License Agreement, in the
event that the duration of the MBI Discovery Program exceeds *****************.
(B) Compensatory Selections. With respect to any
Lilly Selected Protein referred to in Section 2.6(d)(ii)(A)(2)(a) that is the
subject of an HSR Filing made during the MBI Discovery Program, Lilly shall have
the right to return such Lilly Selected Protein to the Selectable Pool (a
"Released Lilly Selected Protein") and to make a Compensatory Selection (as that
term is defined below) upon the earlier to occur of (1) the receipt by Lilly of
notification that the FTC and/or DOJ intend to challenge the grant of an
exclusive license that is the subject of such HSR Filing and (2) the receipt by
Lilly of a Request for Additional Information (as that term is defined in the
HSR Act) with respect to such HSR Filing. A "Compensatory Selection" is a
selection by Lilly of a Program Protein in the Selectable Pool that is to
replace a Released Lilly Selected Protein. A Compensatory Selection shall (a) be
made at the Quarterly Selection Meeting or the Final Selection Meeting, as the
case may be, that immediately follows the return by Lilly of a Released Lilly
Selected Protein to the Selectable Pool (the "Next Selection Meeting"), and (b)
be made in accordance with the following procedure:
(i) The rank order of a Released
Lilly Selected Protein shall be determined by its position in the order of
selections of Program Proteins made by the Parties at the Quarterly Selection
Meeting at which such Released Lilly Selected Protein was chosen. For example,
if the Released Lilly Selected Protein was the third selection made at a
Quarterly Selection Meeting, the rank order of such Protein shall be third.
(ii) At the Next Selection
Meeting, Lilly shall make its Compensatory Selection at the position in the
order of selections of Program Proteins that corresponds to the rank order of
the Released Lilly Selected Protein. Subsequent permitted selections by the
Parties shall be made as if the
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<PAGE> 29
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Compensatory Selection had not occurred. For example, if the rank order
of the Released Lilly Selected Protein is third and the Next Selection
Meeting is a Quarterly Selection Meeting (at which each Party shall
have the right to select two (2) Program Proteins from the Selectable
Pool), then each of the Parties shall make one selection prior to
Lilly's making the Compensatory Selection at the third position in the
order of selections. The Party that would have selected third absent
the Compensatory Selection shall then make its selection, followed by
the final permitted selection by the other Party.
A Compensatory Selection that is the first selection at a Quarterly Selection
Meeting shall have no effect in determining which Party is to select first at
the next Quarterly Selection Meeting or at the Final Selection Meeting, as the
case may be.
(C) Credits with Respect to Lilly Selected
Proteins. For each Lilly Selected Protein that (1) is the subject of a License
Agreement, (2) with respect to which Lilly has paid to MBI the First License
Maintenance Fee, and (3) with respect to which Lilly has elected to discontinue
its development efforts by not paying to MBI the Second License Maintenance Fee,
Lilly shall receive a credit of ************************************************
which may be applied to any Protein License Fee and/or Milestone Payment payable
by Lilly to MBI with respect to any Lilly Selected Protein for which such
payments are due. Notwithstanding the foregoing (i) Lilly may not accumulate
more than six (6) such credits for a total of *****************
********************************** during the ***************** of the MBI
Discovery Program, more than two (2) such credits for a total of
*************************** during the ***************** of the MBI Discovery
Program and more than one (1) such credit for a total of
*********************************** during the ***************** of the MBI
Discovery Program, (ii) Lilly shall not have the right to apply any such credits
to any Protein License Fee and/or Milestone Payment payable by Lilly to MBI
prior to the *********** anniversary of the Effective Date, and (iii) in no
event shall the application of any such credits reduce a Protein License Fee or
Milestone Payment by greater than ***************** of the amount that would be
payable to MBI in the absence of any reductions permitted under this Agreement
or the License Agreement.
(iii) Return of Selected Program Proteins to the
Selectable Pool. Nothing set forth in this Section 2.6 shall preclude a Party
that has continued to fulfill its diligence obligations with respect to a
Program Protein that such Party had selected pursuant to Section 2.6(c) from
electing to return such Program Protein to the Selectable Pool during the term
of the MBI Discovery Program and, thereby, terminating such Party's rights to
develop, manufacture and commercialize such Program Protein, unless
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<PAGE> 30
such Program Protein is again selected by such Party during a subsequent
Quarterly Selection Meeting or the Final Selection Meeting.
Section 2.7. Transfer of Biological Materials.
(a) Program Clones. MBI shall promptly provide Lilly with all
Lilly Accessible Program Clones and related biological materials requested by
Lilly in writing for use in the discovery, development and commercialization of
Lilly Small Molecule Drugs pursuant to Section 3.2(b) (the "Program Clone
Biological Materials"). The Program Clone Biological Materials shall include,
without limitation, cDNA clones and genomic clones, provided, however, that,
with respect to Lilly Accessible Program Clones that are identified through the
use of Lilly Contributed Know-How, Program Clone Biological Materials shall
include related cDNA libraries and genomic sublibraries. The costs associated
with the transfer of such Program Clone Biological Materials shall be borne by
Lilly. Notwithstanding the foregoing, Millennium need not provide Lilly with any
Program Clone Biological Materials included in MBI Contributed Know-How that MBI
is under no obligation to provide to Lilly pursuant to restrictions attached by
MBI to such MBI Contributed Know-How and approved by the Joint Management Team.
(b) Selected Program Proteins. Each Party shall provide the
other with any biological materials in such Party's possession that (1) relate
to a Program Protein selected by the other Party pursuant to Section 2.6 and (2)
are generated in the course of the MBI Discovery Program or are contributed to
the MBI Discovery Program as MBI Contributed Know-How or Lilly Contributed
Know-How, as the case may be, (the "Available Selected Protein Biological
Materials"), within (10) business days following the selection of such Program
Protein. The Available Selected Protein Biological Materials shall include,
without limitation, recombinant Protein preparations, cDNA expression constructs
and cell lines expressing recombinant Proteins. The costs associated with the
transfer of such Available Selected Protein Biological Materials shall be borne
by the Party receiving such materials. Notwithstanding the foregoing, a Party
need not provide the other with any Available Selected Protein Biological
Materials included in MBI Contributed Know-How or Lilly Contributed Know-How, as
the case may be, that such Party is under no obligation to provide to the other
pursuant to restrictions attached by MBI or Lilly, as the case may be, to such
MBI Contributed Know-How or Lilly Contributed Know-How and approved by the Joint
Management Team.
Section 2.8. Exclusive Arrangement. During the term of the MBI
Discovery Program, MBI agrees that it shall not participate, in collaboration
with a commercial third party, in a broad-based therapeutic Protein discovery
program that has as its goals the identification of Proteins with therapeutic
utility, whereby MBI employs discovery methodologies such as secreted Protein
trapping, genomic cluster mapping and EST sequencing. For purposes of clarity,
MBI shall not be precluded from participating, either alone or in collaboration
with a commercial third party, in the characterization of the potential
therapeutic utility of gene sequences (and the Proteins encoded therein)
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<PAGE> 31
wherein such sequences are provided by third parties (e.g., academic
laboratories and commercial providers of DNA sequence databases (such as Incyte,
GenSet and Genetic Institute's Discoverease Program)).
ARTICLE III
COVENANTS AND GRANTS OF RIGHTS
Section 3.1. Covenant Not to Sue. MBI hereby agrees that it shall not
at any time in the future assert or authorize any third party to assert or seek
to obtain any recovery with respect to any legal or equitable cause of action,
claim, defense, offset, counterclaim, cross-claim or pleading of any sort
whatsoever, participate in any proceeding or action, or make any allegations
against Lilly that the practice, in accordance with the terms and conditions of
this Agreement, of MBI Contributed Know-How, MBI Program Know-How or MBI Program
Methodology by any Lilly employee who assists in the discovery, researching
and/or development of Program Proteins in (but only in) the course of the MBI
Discovery Program pursuant to Section 2.4 infringes, misappropriates or
otherwise violates any MBI Contributed Know-How, MBI Program Know-How or MBI
Program Methodology and/or MBI Contributed Know-How Patent Rights, MBI Program
Know-How Patent Rights or MBI Program Methodology Patent Rights.
Section 3.2. Licenses to Lilly.
(a) Research License. Subject to the terms and conditions of
this Agreement, MBI hereby grants to Lilly a non-exclusive, non-royalty bearing
license, under MBI Program Methodology Patent Rights and MBI Program
Methodology, to utilize MBI Program Methodology, in the Territory, for research
purposes only; such license shall not include the right to grant sublicenses.
(b) Product License. Subject to the terms and conditions of
this Agreement, MBI hereby grants to Lilly a non-exclusive, royalty bearing
license, under MBI Program Know-How Patent Rights, MBI Contributed Know-How
Patent Rights, MBI Program Methodology Patent Rights, MBI Program Know-How, MBI
Contributed Know-How and MBI Program Methodology, to use Lilly Accessible
Program Clones and Proteins encoded therein in order to discover, research,
develop, make, import, use, offer to sell and sell Lilly Small Molecule Drugs in
the Territory; such license shall include the right to grant sublicenses.
Section 3.3. Licenses to MBI.
(a) Research License. Subject to the terms and conditions of
this Agreement, Lilly hereby grants to MBI (and to any Affiliate of MBI whose
employee(s) participate in the conduct of the MBI Discovery Program as FTEs, but
only to the extent
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
necessary to permit such participation), a non-exclusive, non-royalty bearing
license, under Lilly Contributed Know-How Patent Rights and Lilly Contributed
Know-How, to utilize Lilly Contributed Know-How in order to discover, research
and/or develop Program Proteins in the course of the MBI Discovery Program; such
license shall not include the right to grant sublicenses.
(b) Product License.
(i) Subject to the terms and conditions of this
Agreement, Lilly hereby grants to MBI an exclusive, non-royalty bearing license,
under Lilly Contributed Know-How Patent Rights and Lilly Contributed Know-How,
to develop, make, import, use, offer to sell and sell MBI Therapeutic Products
in the Territory; such license shall include the right to grant sublicenses on
prior notice to Lilly, **********
********************************************************************
********************************************************************.
(ii) Subject to the terms and conditions of this
Agreement, Lilly hereby grants to MBI a non-exclusive royalty bearing license,
under Lilly Contributed Know-How Patent Rights and Lilly Contributed Know-How,
to use MBI Accessible Program Clones and Proteins encoded therein in order to
discover, research, develop, make, import, use, offer to sell include the right
to grant sublicenses. The Parties acknowledge and agree that MBI shall have the
right, on prior written notice to Lilly, to assign all of MBI's rights and
obligations with respect to MBI Small Molecule Drugs under this Agreement to any
of MBI's Affiliates, including Millennium, and to any Millennium Affiliate (as
that term is defined in Section 1.2 with respect to a Party but redefined for
the purposes of this Section 3.3(b)(ii) with respect to Millennium).
Section 3.4. ***************** MBI hereby grants to Lilly**************
regarding any MBI Therapeutic Product that MBI has elected to commercialize in
the Field in collaboration with another party (the "*****************"). The
***************** with respect to a MBI Therapeutic Product shall terminate upon
the earlier of the initiation of Phase III Clinical Trials for such MBI
Therapeutic Product or ***************** from the date of the termination of the
MBI Discovery Program. The ***************** shall operate as follows:
(a) MBI shall promptly notify Lilly in writing (the "MBI
Notification") of its intention to seek a collaborator for the commercialization
of a MBI Therapeutic Product and shall provide a detailed written description of
such Product.
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(b) Lilly shall notify MBI within thirty (30) days of its
receipt of the MBI Notification (the "Lilly Response Period"), indicating its
interest, if any, in initiating discussions regarding a collaboration with MBI
with respect to the commercialization of such MBI Therapeutic Product.
(c) In the event that Lilly notifies MBI prior to the
termination of the Lilly Response Period that it has an interest in
collaborating with MBI in the commercialization of such MBI Therapeutic Product
(a "Lilly Expression of Interest"), then the Parties shall negotiate in good
faith reasonable terms that are intended to form the basis of a final agreement,
based upon the anticipated contributions of the Parties to the commercialization
of such Product, for a period of up to ninety (90) days from the date of MBI's
receipt of the Lilly Expression of Interest. Notwithstanding the foregoing, in
the event that Lilly requests a sample of such MBI Therapeutic Product from MBI
for evaluation when providing MBI with the Lilly Expression of Interest, (i) MBI
shall provide to Lilly a sufficient amount of such MBI Therapeutic Product, if
available, to allow Lilly to conduct such evaluation, but in no event shall MBI
be required to provide more than reasonable experimental quantities of such
sample that are consistent with the amounts utilized by MBI for similar
evaluations, and (ii) the ninety (90) day period specified in this Section
3.4(c) shall begin upon Lilly's receipt of such sample. Lilly hereby agrees to
promptly provide MBI with any results obtained by Lilly in evaluating a sample
of such MBI Therapeutic Product, which results shall not be disclosed to any
third party, without the written consent of Lilly, for the period commencing on
the date of the receipt of such results and ending on the date on which the
Lilly Right of First Negotiation with respect to such MBI Therapeutic Product
has terminated and is not revivable pursuant to Section 3.4(e).
(d) In the event that (i) Lilly fails to notify MBI prior to
the termination of the Lilly Response Period, or (ii) Lilly notifies MBI prior
to the termination of the Lilly Response Period that it has no interest in
collaborating with MBI in the commercialization of such MBI Therapeutic Product,
or (iii) the Parties fail to reach agreement on the terms that are intended to
form the basis of a final agreement within the ninety (90) day period specified
in Section 3.4(c), or (iv) the Parties fail to reach a final agreement within
sixty (60) days following the date on which the Parties reach agreement on the
terms that are intended to form the basis of a final agreement, then MBI shall
be free to enter into a collaboration with a third party with respect to the
commercialization of such MBI Therapeutic Product, provided, however, that MBI
shall not, without Lilly's prior written consent, enter into a collaboration
with any third party with respect to the commercialization of such MBI
Therapeutic Product pursuant to an agreement, the terms and conditions of which
are, on the whole, less than ten percent (10%) more favorable to MBI than the
most favorable terms and conditions offered by Lilly in any negotiation with MBI
regarding such Product. MBI shall disclose the terms of any such proposed third
party agreement to Lilly, and in the event that Lilly disputes that such terms
meet the requirements of the preceding sentence, then an independent third party
with the requisite expertise, selected by the Parties, shall make such
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
determination. The expense of such independent third party shall be shared
equally by the Parties. Both Parties recognize that in evaluating the
favorability to MBI of the terms and conditions of such third party agreement,
numerous factors may be taken into account and given appropriate weight,
including without limitation, the amount of upfront payments, the amount and
timing of subsequent payments, the royalty rate(s), the definition of territory,
the purchase and pricing of equity, the identity, experience and market position
of the other party in the relevant markets, and the contribution of patent or
other intellectual property rights material to the commercial success of MBI.
Moreover, Lilly agrees that MBI is entitled to assign reasonable value to
co-marketing, co-promotion, manufacturing or patent rights or other
consideration that MBI receives in return for the rights granted by MBI.
(e) In the event that Lilly provides MBI with a timely offer
of terms, pursuant to Section 3.4(c), with respect to a collaboration with MBI
in the commercialization of a MBI Therapeutic Product (the "Lilly Offered
Terms"), but MBI does not enter into an agreement with Lilly or any third party
with respect to the commercialization of such MBI Therapeutic Product pursuant
to the provisions of this Section 3.4 within twelve (12) months of the receipt
by MBI of the Lilly Offered Terms, then, at any time prior to the earlier of the
initiation of Phase III Clinical Trials for such MBI Therapeutic Product or the
****** anniversary of the date of the termination of the MBI Discovery Program,
the ***************** with respect to such MBI Therapeutic Product shall be
revived.
(f) Nothing in this Section 3.4 shall prevent MBI from
discussing a collaboration to commercialize a MBI Therapeutic Product with a
third party during the term of the *****************, provided, however, that
MBI shall not discuss any such collaboration with a third party prior to the
conclusion of the ***************** following the receipt by Lilly of the MBI
Notification, unless discussion of such a collaboration is initiated by a third
party. If, during the term of the *****************, discussion of such a
collaboration is initiated by a third party and MBI intends to seriously
consider such a collaboration, MBI shall provide Lilly with a MBI Notification
with respect to such MBI Therapeutic Product within thirty (30) days of MBI's
decision to seriously consider such a collaboration. In such instance, MBI shall
have the right to continue its discussions with such third party, but shall be
bound by its other obligations under the ***************** as set forth in this
Section 3.4.
Section 3.5. Lilly's Option to Manufacture. MBI hereby grants to Lilly
an option to manufacture any MBI Therapeutic Product that MBI or a sublicensee
of MBI with rights to such Product has elected to have manufactured by another
party (the "Lilly Option to Manufacture"). The Lilly Option to Manufacture with
respect to a MBI
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Therapeutic Product shall terminate upon the earlier of the initiation of Phase
III Clinical Trials for such MBI Therapeutic Product or ***************** from
the date of the termination of the MBI Discovery Program. The Lilly Option to
Manufacture shall operate as follows:
(a) MBI or its sublicensee shall promptly notify Lilly in
writing (the "Notification Regarding Manufacture") of its intention to seek a
supplier to manufacture an MBI Therapeutic Product and shall provide Lilly with
available detailed written descriptions of such Product, including but not
limited to, all analytical, purification, formulation, safety, and environmental
information relating thereto.
(b) Lilly shall respond to MBI or its sublicensee within
thirty (30) days of its receipt of the Notification Regarding Manufacture (the
"Manufacture Response Period"), indicating its interest, if any, in
manufacturing such MBI Therapeutic Product for MBI or its sublicensee.
(c) In the event that Lilly notifies MBI or its sublicensee
prior to the termination of the Manufacture Response Period that it has an
interest in manufacturing such MBI Therapeutic Product for MBI or its
sublicensee (an "Expression of Interest in Manufacturing"), then Lilly shall
have up to one hundred twenty (120) days from the date of its receipt of the
Notification Regarding Manufacturing to extend an offer to MBI or its
sublicensee that sets forth the terms and conditions under which Lilly would
manufacture such Product (the "Lilly Terms for Manufacturing").
(d) In the event that (i) Lilly fails to respond to MBI or
its sublicensee prior to the termination of the Manufacture Response Period, or
(ii) Lilly notifies MBI or its sublicensee prior to the termination of the
Manufacture Response Period that it has no interest in manufacturing such MBI
Therapeutic Product, or (iii) Lilly fails to provide MBI or its sublicensee with
the Lilly Terms for Manufacturing within the one hundred twenty (120) day period
specified in Section 3.5(c), or (iv) Lilly and MBI or its sublicensee fail to
reach a final agreement within sixty (60) days following the receipt by MBI or
its sublicensee of the Lilly Terms for Manufacturing, then MBI or its
sublicensee shall be free to enter into an agreement with any third party with
respect to the manufacture of such MBI Therapeutic Product, provided, however,
that if (x) Lilly provides MBI or its sublicensee with an Expression of Interest
in Manufacturing with respect to such MBI Therapeutic Product prior to the
termination of the Manufacture Response Period and (y) Lilly provides MBI or its
sublicensee with the Lilly Terms for Manufacturing with respect to such MBI
Therapeutic Product within the one hundred twenty (120) day period specified in
Section 3.5(c), but (z) Lilly and MBI or its sublicensee fail to reach final
agreement within sixty (60) days following the receipt by
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
MBI or its sublicensee of such Lilly Terms for Manufacturing, then MBI or its
sublicensee shall not, without Lilly's prior written consent, enter into an
agreement with a third party with respect to the manufacture of such MBI
Therapeutic Product unless, within sixty (60) days following the receipt by
Lilly of a description of the terms of any such proposed third party agreement,
Lilly fails to enter into an agreement with MBI or its sublicensee on the same
terms as those in the proposed third party agreement or on terms more favorable
to MBI or its sublicensee.
(e) Nothing in this Section 3.5 shall prevent MBI or its
sublicensee from discussing a collaboration to manufacture an MBI Therapeutic
Product with a third party during the term of the Lilly Option to Manufacture.
Section 3.6. ***************** During the period commencing on the
Effective Date and ending on the ***************** anniversary of the
termination of the MBI Discovery Program, **********************************
Products as follows:
(a) ***************** or its development partner an *****************
**********************************(provided that MBI is made aware of the Lilly
Corresponding Drug at least ***************** in advance of the date on which
this ********************************** as specified in this paragraph) which
are not being developed by MBI, a MBI Affiliate or a commercial partner of MBI.
With respect to each *************************, this ***************** shall
become ***************** after the commencement of Phase III Clinical Trials in
a Major Market Country for the Lilly Corresponding Drug, in the event that MBI,
a MBI Affiliate or its commercial partner has not earlier submitted the
pertinent regulatory approval package for said ***************** to the United
States Food and Drug Administration (or its equivalent in any Major Market
Country) for marketing approval or, if relevant, is not capable of providing, or
is unwilling to provide, diagnostic services. **********************************
***************** and the Parties shall negotiate the specific terms of such an
agreement in good faith. ***************** set forth in this Section 3.6(a),****
********************************************************************************
************************ shall be ***************** by the *********************
********************************************************************************
***********. *******************************************************************
*************
When ***************** are ***************** shall thereafter *****************
on MBI's Net Sales of the ***************** in the Territory for a period of
***************** years following the First Commercial Sale of such
*****************, subject to a reduction in the royalty rate, in the event that
the COPS on a ***************** exceeds ***************** of Net Sales of such
Product in a country, by an amount (the "Reduction Amount") determined in
accordance with the following formula:
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Reduction Amount = **********************************
***************** plus the number of third parties, if any,
from whom MBI has obtained a license in order to sell such
***************** in such country (wherein such third party
license contains a royalty reduction provision and MBI's
royalty obligation to such third party is reduced pursuant to
such provision under the circumstances contemplated by this
paragraph that warrant a reduction in the royalty payable by
MBI to Lilly);
provided, however, that in no event shall the royalty rate be reduced below
*****************. The royalty payment obligations set forth in Sections 6.3(c)
and 6.3(d) and the accounting obligations set forth in Article VII with respect
to a MBI Small Molecule Drug shall also apply to MBI with respect to any
***************** sold by MBI, its Affiliates or sublicensees upon which a
royalty payment is due Lilly pursuant to this Section 3.6(a), in which case all
references to MBI Small Molecule Drug shall mean *****************.
(b) The Parties acknowledge and agree that promotion by Lilly
of a ***************** may advantageously affect the sales of a Lilly
Corresponding Drug. Therefore, MBI grants Lilly an option to co-promote those
***************** then being promoted by MBI, a MBI Affiliate or a commercial
partner of MBI, where Lilly has a Lilly Corresponding Drug on the market or in
development. The ***************** shall not be promoted under the Lilly label
but shall be promoted under the label of MBI, a MBI Affiliate or a commercial
partner of MBI. MBI shall review the position of Lilly and the Parties shall
negotiate in good faith a co-promotion agreement with respect to such
******************. MBI shall pay Lilly a three percent (3%) royalty on the Net
Sales of the ************ in those countries where Lilly co-promotes the
***************** ********************************** of Lilly's co-promotional
costs, whichever is lower; provided, however, that (i) in the event that the
COPS on a ***************** *********************************** of Net Sales of
such Product in a country, the royalty rate is subject to a reduction by an
amount equal to the Reduction Amount, provided, further, that in no event shall
the royalty rate be reduced below *****************, and (ii) no royalty shall
be payable pursuant to this Section 3.6(b) if Lilly is receiving royalty
payments pursuant to Section 3.6(a). The royalty payment obligations set forth
in Sections 6.3(c) and 6.3(d) and the accounting obligations set forth in
Article VII with respect to a MBI Small Molecule Drug shall also apply to MBI
with respect to any ****************** sold by MBI, its Affiliates or
sublicensees upon which a royalty payment is due Lilly pursuant to this Section
3.6(b), in which case all references to MBI Small Molecule Drug shall mean
******************. MBI shall also supply Lilly with a
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
reasonable quantity of samples of the ****************** per year to aid Lilly
in its co-promotion efforts, at MBI's, its Affiliate's or its partner's standard
cost ***************** for such ******************.
(c) The Parties acknowledge and agree that MBI shall have the
right, on prior written notice to Lilly, to assign all of MBI's rights and
obligations with respect to ***************** under this Agreement to any of
MBI's Affiliates, including Millennium, and to any Millennium Affiliate (as that
term is defined in Section 1.2 with respect to a Party but redefined for the
purposes of this Section 3.6(c) with respect to Millennium).
ARTICLE IV
CONFIDENTIALITY
Section 4.1. Confidential Information of a Party. Except as provided
for in this Agreement, all Confidential Information of a Party disclosed by one
Party to the other during the term of this Agreement shall not be used by the
receiving Party except in connection with the MBI Discovery Program or the
identification, selection, preparation, development, manufacture or sale of
Products, shall be maintained in confidence by the receiving Party, and shall
not be disclosed by the receiving Party to any other person, firm, or agency,
governmental or private, without the prior written consent of the disclosing
Party, except to the extent that the Confidential Information of a Party:
(a) is known by or in possession of the receiving Party at
the time of its receipt as documented in contemporaneous written records; or
(b) is properly in the public domain; or
(c) is subsequently disclosed to the receiving Party without
obligation of confidentiality by a third party who may lawfully do so; or
(d) is required to be disclosed to governmental agencies in
order to gain approval to sell Products; or
(e) is necessary to be disclosed to agents, consultants,
Affiliates and/or other third parties for the research and development and/or
marketing of Products, under this Agreement, which entities first agree to be
bound by the confidentiality obligations contained in this Agreement; or
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(f) is independently developed by the receiving Party without
the benefit of the disclosure of the disclosing Party, as evidenced by
contemporaneous written documentation of the receiving Party.
Section 4.2. Employee Obligations. MBI and Lilly each agree that it
shall provide the Confidential Information of a Party received from the other
Party only to FTEs and to its employees, consultants and advisors who have a
need to know and have an obligation to treat such information and materials as
confidential. On a regular basis, MBI and Lilly each agree to explicitly counsel
its consultants and advisors of the implications arising from such obligations.
Section 4.3. Disclosure of Program Confidential Information. MBI and
Lilly agree that (a) each shall inform the Joint Management Team of the type and
scope of Program Confidential Information that either Party plans to disclose to
a third party prior to such disclosure and (b) MBI shall inform the Joint
Management Team of the type and scope of Program Confidential Information that
MBI plans to disclose to Millennium prior to such disclosure. Any such
disclosure shall be made (a) in the exercise of the disclosing Party's rights
under this Agreement and/or (b) with respect to a publication that is permitted
pursuant to the terms of Section 19.2 and/or (c) in relation to the financing of
a Party and/or (d) under the condition that the receiving third party or
Millennium, as the case may be, maintain such Program Confidential Information
in confidence. Each Party agrees to protect the Program Confidential Information
from unauthorized use in the Field.
Section 4.4. Term. All obligations of confidentiality and nonuse
imposed under this Article IV shall expire ten (10) years following termination
of the MBI Discovery Program.
ARTICLE V
PATENT OWNERSHIP AND PROTECTION
Section 5.1. Ownership. MBI shall own all inventions made within the
course of the MBI Discovery Program. If, in the course of the MBI Discovery
Program, an invention is made solely by an employee of an Affiliate of MBI or
jointly by an employee of an Affiliate of MBI and an employee of MBI and/or of
Lilly, then such Affiliate of MBI shall assign its entire right to and interest
in such invention to MBI. If, in the course of the MBI Discovery Program, an
invention is made solely by an employee of Lilly or jointly by an employee of
Lilly and an employee of MBI and/or of an Affiliate of MBI, then Lilly shall
assign its entire right to and interest in such invention to MBI. Lilly shall
own all inventions made by its employees during the term, but not in the course,
of the MBI Discovery Program.
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Section 5.2. Review and Comment. MBI shall provide the Joint Management
Team with a copy of any patent application which first discloses any MBI
Contributed Know-How that relates to a Program Protein or any MBI Program
Know-How prior to filing the first of such applications in any jurisdiction, if
possible, for review and comment by the Joint Management Team or its designees.
If such patent application cannot be provided to the Joint Management Team prior
to filing, such patent application shall be provided to the Joint Management
Team within fifteen (15) days following such filing, provided, however, that any
patent application relating to the Existing Tango Technology filed prior to the
Effective Date shall be provided to the Joint Management Team within thirty (30)
days following the Effective Date. The Joint Management Team and/or its
designees shall maintain any such patent application in confidence, pursuant to
Article IV.
Section 5.3. Prosecution and Maintenance. MBI agrees to prosecute and
maintain the MBI Contributed Know-How Patent Rights that relate to a Program
Protein and the MBI Program Patent Rights and to prosecute any interference
proceedings with respect to such Patent Rights. MBI shall give notice to Lilly
of any decision to cease such prosecution and maintenance and, in such case,
Lilly shall have the right at its sole discretion and expense to continue such
prosecution or maintenance. If Lilly continues prosecution or maintenance, MBI
shall execute such documents and perform such acts as may be reasonably
necessary for Lilly to continue such prosecution or maintenance.
Section 5.4. Costs and Expenses. Except as provided in any License
Agreement, Lilly shall have no obligation to reimburse MBI for any costs
associated with filing, prosecuting, maintaining and extending any MBI Program
Know-How Patent Rights.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
ARTICLE VI
PAYMENTS
Section 6.1. Research Funds.
(a) Signing Payment. Within twenty (20) business days
following the Effective Date, Lilly shall pay to MBI a signing payment of
$1,419,257 (the "Estimated Signing Payment"). Within thirty (30) business days
following the Effective Date, MBI shall provide Lilly with a written statement
setting forth the exact amount of the signing payment to be paid by Lilly, and
MBI shall reimburse Lilly for any amount overpaid by Lilly in making the
Estimated Signing Payment or bill Lilly for any amount underpaid by Lilly in
making the Estimated Signing Payment.
(b) Future Payments. In support of research and development
to be conducted by MBI in the course of the MBI Discovery Program pursuant to
this Agreement, Lilly shall make the following payments to MBI:
(i) Lilly shall pay to MBI an amount equal to
***************** of the FTE expenses incurred by MBI in the conduct of the MBI
Discovery Program up to a maximum of ***************** of the expenses
associated with a total personnel commitment of ***************** FTEs,
provided, however, that if the number of FTEs is projected by MBI to be less
than ***************** for any calendar quarter or portion thereof, then MBI
shall so inform Lilly for the purpose of calculating the funding payment to be
made by Lilly to MBI pursuant to this Section 6.1(b) for such calendar quarter
or portion thereof. The full-time equivalent rate shall be *****************
************************ per FTE from the Effective Date to December 31, 1997
(the "FTE Rate"). On each January 1 thereafter, the FTE Rate shall be increased
by an amount equal to the percentage increase, if any, in the United States
Consumer Price Index For All Urban Consumers, Urban Wage Earners and Clerical
Workers (or any comparable successor index thereto) (the "CPI") from the
immediately preceding calendar year. In the event that, pursuant to Section 2.4,
the Joint Management Team elects to increase or decrease the number of FTEs
committed to the MBI Discovery Program, then Lilly shall pay to MBI the base
rate of ********************************** for each FTE funded by Lilly, subject
to any adjustment as set forth above. Notwithstanding the foregoing, Lilly may
reduce its research funding obligations under this Section 6.1(b)(i) by
exercising its option to commit employees of Lilly to the conduct of the MBI
Discovery Program, pursuant to Section 2.4. In such event, for each FTE that
Lilly contributes to the MBI Discovery Program, Lilly shall pay to MBI, in lieu
of the payment of the full FTE Rate, (A) the amount of *****************,
subject to increases based on increases in the CPI, for each such FTE who has a
Ph.D., M.D., D.V.M. or equivalent graduate degree and has
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
more than eight (8) years of post-doctoral experience, provided, however, that
the foregoing requirements as to graduate degree and/or years of post-doctoral
experience may be waived by mutual agreement of the Parties, and (B) the amount
of ********** ************************, subject to increases based on increases
in the CPI, for each such FTE who does not have the experience set forth in
subsection (A) of this sentence.
(ii) Within twenty (20) business days following the
Effective Date, Lilly shall pay to MBI the amount of FTE funding due MBI
pursuant to Section 6.1(b)(i) for the period from the Effective Date through
June 30, 1997. Within five (5) business days following the first day of each
subsequent calendar quarter, Lilly shall pay to MBI the amount due MBI pursuant
to Section 6.1(b)(i) for the upcoming calendar quarter. Within thirty (30) days
following the completion of each calendar quarter, MBI shall provide Lilly with
a written statement setting forth the actual numbers of FTEs provided and the
funds expended during such calendar quarter, and shall provide Lilly with a
credit for any amounts overpaid by Lilly or bill Lilly for any amounts underpaid
by Lilly during such calendar quarter. Within thirty (30) days following the
completion of the final calendar quarter or portion thereof of the MBI Discovery
Program, MBI shall provide Lilly with a written statement of the funds expended
during such calendar quarter or portion thereof, and shall reimburse Lilly for
any amounts overpaid by Lilly or bill Lilly for any amounts underpaid by Lilly
during such calendar quarter or portion thereof.
Section 6.2. Royalty Payments on Lilly Small Molecule Drugs.
(a) Royalty Rates. Lilly shall pay to MBI a royalty of
***************** on the Net Sales of each Lilly Small Molecule Drug.
(b) Length of Royalty Payments. The royalties payable under
Section 6.2(a) shall be paid on a country-by-country basis from the date of
First Commercial Sale of each Lilly Small Molecule Drug in a particular country
until ***************** after such First Commercial Sale in such country.
(c) Sales To Affiliate. Sales of a Lilly Small Molecule Drug
between Lilly and its Affiliates, or its permitted sublicensees, or among such
Affiliates and permitted sublicensees, shall not be subject to a royalty
obligation, but in such cases the royalty shall be calculated upon Lilly's or
its Affiliates' or sublicensees' Net Sales to an independent third party.
(d) Royalties Payable Only Once. The obligation to pay
royalties under this Agreement is imposed only once with respect to the same
unit of Lilly Small
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Molecule Drug. Except as specifically provided in this Agreement, it is
understood and agreed that there shall be no deductions from the royalties
payable hereunder.
Section 6.3. Royalty Payments on MBI Small Molecule Drugs.
(a) Royalty Rates. MBI shall pay to Lilly a royalty of
***************** on the Net Sales of each MBI Small Molecule Drug.
(b) Length of Royalty Payments. The royalties payable under
Section 6.3(a) shall be paid on a country-by-country basis from the date of
First Commercial Sale of each MBI Small Molecule Drug in a particular country
until ***************** after such First Commercial Sale in such country.
(c) Sales to Affiliate. Sales of a MBI Small Molecule Drug
between MBI and its Affiliates, or its permitted sublicensees, or among such
Affiliates and permitted sublicensees, shall not be subject to a royalty
obligation, but in such cases the royalty shall be calculated upon MBI's or its
Affiliates' or sublicensees' Net Sales to an independent third party.
(d) Royalties Payable Only Once. The obligation to pay
royalties under this Agreement is imposed only once with respect to the same
unit of MBI Small Molecule Drug. Except as specifically provided in this
Agreement, it is understood and agreed that there shall be no deductions from
the royalties payable hereunder.
ARTICLE VII
ACCOUNTING
Section 7.1. Royalty Reports. Each Party shall deliver to the other
Party within sixty (60) days after the end of each calendar quarter a written
accounting of such Party's and its Affiliates' and sublicensees' sales and other
consideration received subject to royalty payment due to the other Party for
such quarter. Such quarterly reports shall indicate the Net Sales of Lilly Small
Molecule Drugs or MBI Small Molecule Drugs, as the case may be, on a
country-by-country basis.
Section 7.2. Delivery of Royalty. When a Party delivers the accounting
under Section 7.1, such Party shall also deliver all royalty payments due for
the calendar quarter.
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Section 7.3. Audits. Both Parties shall keep accurate records in
sufficient detail to enable the amounts due to be determined. Within the term of
this Agreement and within one year after its termination, each Party shall, not
more than once each year, have the right at its expense to have the other
Party's independent certified public accountants inspect the other Party's
records for any of the two preceding years for the purpose of determining the
accuracy of royalty payments. The independent certified accountants shall keep
confidential any information obtained during such inspection and shall report
only the amounts of royalties due and payable. If a Party has underpaid a
royalty amount under this Agreement, such Party shall promptly pay the
appropriate amount to the other Party. If a Party has underpaid a royalty amount
due under this Agreement by more than five percent (5%), such Party shall also
reimburse the other Party for the cost of such audit.
Section 7.4. Exchange Rates. All payments to be made under this
Agreement shall be made in United States dollars. In the case of sales outside
the United States, the rate of exchange to be used in computing the amount of
currency equivalent in United States dollars shall be determined using the
paying Party's then current standard exchange rate methodology, which
methodology shall be in conformity with generally accepted accounting
principles.
Section 7.5. Withholding Taxes. Neither Party shall have liability for
any income taxes levied against the other Party on account of royalties paid
pursuant to this Agreement. If laws or regulations require that any such taxes
be withheld by the paying Party, such paying Party shall deduct such taxes from
the payment due the other Party, pay the taxes so withheld to the proper taxing
authority, and send proof of payment to the other Party within thirty (30) days
following such payment. If the other Party desires to obtain a refund of any
taxes so withheld and paid to a taxing authority, upon request the paying Party
shall cooperate in the pursuit of such refund.
Section 7.6. Reporting. To enable Lilly to comply with applicable
United States Federal tax laws and regulations, MBI, if requested by Lilly,
shall report to Lilly within ninety (90) days after the close of each calendar
year the amount of the FTE expenses that were expended on research activities
during such calendar year in the United States. To assist in the completion of
the required statement, Lilly shall, at the request of MBI, endeavor to provide
MBI with a summary of the payments made to MBI during the applicable calendar
year.
ARTICLE VIII
DURATION
This Agreement becomes effective as of the Effective Date, may be
terminated as set forth in Article IX hereof, and otherwise remains in effect
until the expiration of the term of Lilly's and MBI's obligations to pay
royalties.
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ARTICLE IX
TERMINATION
Section 9.1. Investment Termination Event. Upon the occurrence of an
Investment Termination Event (as that term is defined below), MBI may terminate
this Agreement by providing Lilly with thirty (30) days written notice of such
termination, such notice to be provided within three (3) months after the
occurrence of such Investment Termination Event. As used herein, the term
"Investment Termination Event" means the failure by Lilly to purchase 2,000,000
shares of Series B Convertible Preferred Stock of MBI at a price of $10.00 per
share pursuant to the Series B Preferred Stock Purchase Agreement dated as of
May 28, 1997 (the "Series B Agreement") on or before July 31, 1997 (the "Cutoff
Date"), provided that (a) the Parties may extend the Cutoff Date by mutual
agreement, and (b) the Cutoff Date shall automatically be extended if, as of the
Cutoff Date, one or more conditions set forth in Section 6 (other than Section
6.11 or 6.12 or any other conditions set forth in Section 6 to the extent
relating to the matters set forth in Section 6.11 or 6.12) of the Series B
Agreement shall not have been satisfied or waived by Lilly, such extension to
continue until such date as all such conditions shall have been satisfied or
waived by Lilly. Upon any termination pursuant to this Section 9.1, (a) all
rights and obligations of the Parties shall cease except as set forth in Section
9.4 and (b) MBI shall reimburse Lilly for any payments made by Lilly to MBI
pursuant to Section 6.1 prior to such termination.
Section 9.2. Termination For Material Breach. Upon any material breach
under this Agreement by either Party (the "Breaching Party"), the other Party
(the "Non-Breaching Party") may terminate this Agreement by ninety (90) days'
written notice to the Breaching Party, specifying the material breach, default
or other defect. The termination becomes effective at the end of the ninety (90)
day period unless the Breaching Party cures the breach during the ninety (90)
day period. The Parties will use best efforts to work together to cure any
breach.
Section 9.3. Rights Upon Termination For Breach.
(a) General. If the Non-Breaching Party terminates this
Agreement under Section 9.2 following material breach by the Breaching Party,
the Breaching Party shall return to the Non-Breaching Party all of the
Non-Breaching Party's Confidential Information of a Party and all materials
received from the Non-Breaching Party during the Agreement, and the Breaching
Party shall cease all use of the Non-Breaching Party's Confidential Information
of a Party and materials received from the Non-Breaching Party for any purpose,
except that the Breaching Party may (1) keep a copy of all documents for record
keeping purposes only and (2) keep and use any Confidential Information of a
Party and materials received from the Non-Breaching Party that are necessary for
the Breaching Party to exercise those of its rights and fulfill those of its
obligations that survive the termination of this Agreement.
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
(b) MBI as Breaching Party. In the event that the Breaching
Party is MBI, then upon termination of this Agreement by Lilly:
(i) MBI's covenant not to sue set forth in Section 3.1
shall continue in effect and be deemed to be perpetual,
(ii) the licenses granted by MBI to Lilly pursuant to
Sections 3.2(a) and (b) shall be deemed to be perpetual and the license granted
pursuant to Section 3.2(a) shall be deemed to be fully-paid up,
(iii) the license granted by Lilly to MBI pursuant to
Section 3.3(a) shall terminate,
(iv) the license granted by Lilly to MBI pursuant to
Section 3.3(b)(i) shall terminate, except to the extent necessary for MBI to
develop and commercialize MBI Therapeutic Products in which the active
ingredient is a MBI Selected Protein that was selected pursuant to Section
2.6(c)(i) prior to such termination of the Agreement by Lilly or a Derivative
thereof,
(v) the license granted by Lilly to MBI pursuant to
Section 3.3(b)(ii) shall terminate, except to the extent necessary for MBI to
use Program Clones that were deemed to be MBI Accessible Program Clones prior to
the date of such termination of this Agreement by Lilly and Proteins encoded
therein to discover, develop and commercialize MBI Small Molecule Drugs,
(vi) the ***************************granted by MBI to
Lilly pursuant to Section 3.4, the Lilly Option to Manufacture granted by MBI to
Lilly pursuant to Section 3.5 and the options with respect to *****************
granted by MBI to Lilly pursuant to Section 3.6 shall continue in effect,
(vii) Lilly's royalty payment obligations set forth in
Section 6.2 with respect to Lilly Small Molecule Drugs shall continue, provided,
however, that the amounts of the royalty payments shall be decreased to reflect
the nature of MBI's breach and the damages caused thereby by amounts to be
agreed upon by the Parties or, if the Parties are unable to reach agreement, by
an independent third party with the requisite expertise selected by the Parties,
the expense of which shall be borne by MBI,
(viii) MBI's royalty payment obligations set forth in
Section 6.3 with respect to MBI Small Molecule Drugs shall continue, provided,
however, that the amounts of the royalty payments shall be increased to reflect
the nature of MBI's breach
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
and the damages caused thereby by amounts to be agreed upon by the Parties or,
if the Parties are unable to reach agreement, by an independent third party with
the requisite expertise selected by the Parties, the expense of which shall be
borne by MBI,
(ix) MBI's obligation to reimburse Lilly for any costs
(plus interest) incurred by Lilly in the development of a **************
pursuant to Section 3.6 and MBI's royalty payment obligations, if any, with
respect to each such ************** pursuant to Section 3.6 shall continue,
provided, however, that the amounts of the royalty payments shall be increased
to reflect the nature of MBI's breach and the damages caused thereby by amounts
to be agreed upon by the Parties or if the Parties are unable to reach
agreement, by an independent third party with the requisite expertise selected
by the Parties, the expense of which shall be borne by MBI,
(x) all Program Proteins in the Selectable Pool on the
date of such termination of this Agreement by Lilly shall be deemed to be Lilly
Selected Proteins and the Parties shall enter into a single license agreement
that covers all such Lilly Selected Proteins, which license agreement shall
conform substantially with the License Agreement, except that (A) the provisions
regarding the Protein License Fee set forth in Section 6.1 of the License
Agreement shall not apply, (B) the provision regarding diligence set forth in
Section 5 of the License Agreement shall not apply, and (C) Lilly's milestone
payment obligations set forth in Section 6.2 of the License Agreement and
royalty payment obligations set forth in Section 6.3 of the License Agreement
shall continue, provided, however, that the amounts of the milestone and royalty
payments shall be decreased to reflect the nature of MBI's breach and the
damages caused thereby by amounts to be agreed upon by the Parties or, if the
Parties are unable to reach agreement, by an independent third party with the
requisite expertise selected by the Parties, the expense of which shall be borne
by MBI, and
(xi) ***************** of the Non-Pool Program
Proteins, selected by Lilly within forty-five (45) days following the date of
such termination of this Agreement by Lilly, shall be deemed to be Lilly
Selected Proteins and the Parties shall enter into a single license agreement
that covers all such Lilly Selected Proteins, which license agreement shall
conform substantially with the License Agreement, except that (A) the provisions
regarding the Protein License Fee set forth in Section 6.1 of the License
Agreement shall not apply, (B) the provision regarding diligence set forth in
Section 5 of the License Agreement shall not apply, and (C) Lilly's milestone
payment obligations set forth in Section 6.2 of the License Agreement and
royalty payment obligations set forth in Section 6.3 of the License Agreement
shall continue, provided, however, that the amounts of the milestone and royalty
payments shall be decreased to reflect the stage of development of such Lilly
Selected Proteins and the nature of MBI's breach and the
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
damages caused thereby by amounts to be agreed upon by the Parties or, if the
Parties are unable to reach agreement, by an independent third party with the
requisite expertise selected by the Parties, the expense of which shall be borne
by MBI.
(c) Lilly as Breaching Party. In the event that the Breaching
Party is Lilly, then upon termination of this Agreement by MBI:
(i) MBI's covenant not to sue set forth in Section 3.1
shall continue in effect and be deemed to be perpetual,
(ii) the license granted by MBI to Lilly pursuant to
Section 3.2(a) shall terminate,
(iii) the license granted by MBI to Lilly pursuant to
Section 3.2(b) shall terminate, except to the extent necessary for Lilly to use
Program Clones that were deemed to be Lilly Accessible Program Clones prior to
the date of such termination of this Agreement by MBI and Proteins encoded
therein to discover, develop and commercialize Lilly Small Molecule Drugs,
(iv) the license granted by Lilly to MBI pursuant to
Section 3.3(a) shall terminate,
(v) the licenses granted by Lilly to MBI pursuant to
Sections 3.3(b)(i) and 3.3(b)(ii) shall be deemed to be perpetual and the
license granted pursuant to Section 3.3(b)(i) shall be deemed to be fully
paid-up,
(vi) *********************** granted by MBI to Lilly
pursuant to Section 3.4, the Lilly Option to Manufacture granted by MBI to Lilly
pursuant to Section 3.5 and the options with respect to *****************
granted by MBI to Lilly pursuant to Section 3.6 shall terminate,
(vii) Lilly shall pay to Millennium an amount equal to
Lilly's share of the FTE expenses that would be incurred by MBI, but for the
termination of this Agreement, in the conduct of the MBI Discovery Program for
the ****** **** ***** period commencing on the date of such termination,
(viii) Lilly's royalty payment obligations set forth in
Section 6.2 with respect to Lilly Small Molecule Drugs shall continue, provided,
however, that the amounts of the royalty payments shall be increased to reflect
the nature of Lilly's breach and the damages caused thereby by amounts to be
agreed upon by the Parties or, if the
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
Parties are unable to reach agreement, by an independent third party with the
requisite expertise selected by the Parties, the expense of which shall be borne
by Lilly,
(ix) MBI's royalty payment obligations set forth in
Section 6.3 with respect to MBI Small Molecule Drugs shall continue, provided,
however, that the amounts of the royalty payments shall be decreased to reflect
the nature of Lilly's breach and the damages caused thereby by amounts to be
agreed upon by the Parties or, if the Parties are unable to reach agreement, by
an independent third party with the requisite expertise selected by the Parties,
the expense of which shall be borne by Lilly,
(x) MBI's obligation to reimburse Lilly for any costs
(plus interest) incurred by Lilly in the development of a *****************
pursuant to Section 3.6 and MBI's royalty payment obligations, if any, with
respect to each such ************ pursuant to Section 3.6 shall continue,
provided, however, that the amounts of the royalty payments shall be decreased
to reflect the nature of Lilly's breach and the damages caused thereby by
amounts to be agreed upon by the Parties or if the Parties are unable to reach
agreement, by an independent third party with the requisite expertise selected
by the Parties, the expense of which shall be borne by Lilly, and
(xi) MBI shall retain all rights to all Non-Pool
Program Proteins and all Program Proteins in the Selectable Pool on the date of
such termination of this Agreement by MBI, with no obligations to Lilly with
respect to such Program Proteins.
Section 9.4. Residual Rights. Upon expiration or early termination of
this Agreement, all rights and obligations of the Parties shall cease, except as
follows:
(a) Each of the Product licenses set forth in Sections 3.2(b)
and 3.3.(b) shall survive and shall be deemed to be perpetual and fully paid up,
provided that (i) this Agreement has not been terminated pursuant to Section
9.1, and (ii) such license has not been terminated pursuant to Section 9.3 and
all payment and other obligations with respect to such license have been
fulfilled;
(b) The obligations to pay royalties and other sums accruing
hereunder up to the date of termination shall survive, provided that this
Agreement has not been terminated pursuant to Section 9.1;
(c) The obligations of confidentiality set forth in Article IV
shall survive for the period stated therein;
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(d) The obligations for record keeping and accounting reports
set forth in Article VII shall survive for so long as Products are sold. At such
time after termination of this Agreement when sales or other dispositions of
Products have ceased, the Party selling such Product shall render a final report
along with any royalty payment due;
(e) MBI's and Lilly's rights to inspect books and records as
described in Article VII shall survive;
(f) The obligations of defense and indemnity set forth in
Article X shall survive;
(g) Any cause of action or claim of MBI or Lilly accrued or
to accrue because of any breach or default by the other Party hereunder shall
survive; and
(h) All other terms, provisions, representations, rights and
obligations contained in this Agreement that are intended to survive as
specifically set forth elsewhere in this Agreement shall survive.
ARTICLE X
PRODUCT LIABILITY INDEMNIFICATION
Section 10.1. Indemnification by Lilly. Lilly agrees to defend MBI at
Lilly's cost and expense, and will indemnify and hold MBI and its directors,
officers, employees and agents (the "MBI Indemnified Parties") harmless from and
against any losses, costs, damages, fees or expenses arising out of (a) any
claim relating to personal injury from the development, manufacture, use, sale
or other disposition of any Lilly Small Molecule Drug, and (b) any claim arising
out of a failure by Lilly to manufacture any MBI Therapeutic Product, pursuant
to the rights granted in Section 3.5, in conformity with specifications agreed
upon by the Parties. In the event of any such claim against the MBI Indemnified
Parties by any party, MBI shall promptly notify Lilly in writing of the claim
and Lilly shall manage and control, at its sole expense, the defense of the
claim and its settlement. The MBI Indemnified Parties shall cooperate with Lilly
and may, at their option and expense, be represented in any such action or
proceeding. Lilly shall not be liable for any litigation costs or expenses
incurred by the MBI Indemnified Parties without Lilly's prior written
authorization. In addition, Lilly shall not be responsible for the
indemnification of any MBI Indemnified Party arising from any negligent or
intentional acts by such party.
Section 10.2. Indemnification by MBI. MBI agrees to defend Lilly at
MBI's cost and expense, and will indemnify and hold Lilly and its directors,
officers, employees and agents (the "Lilly Indemnified Parties") harmless from
and against any losses, costs,
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Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
damages, fees or expenses arising out of (a) any claim relating to personal
injury from the development, manufacture, use, sale or other disposition of any
MBI Small Molecule Drug, (b) any claim relating to personal injury from the
development, manufacture, use, sale or other disposition of any MBI Therapeutic
Product, provided that such claim does not arise out of a failure by Lilly to
manufacture such MBI Therapeutic Product, pursuant to the rights granted in
Section 3.5, in conformity with specifications agreed upon by the Parties or (c)
any claim relating to personal injury from the development, manufacture, use,
sale or other disposition of any ************ sold by MBI, its Affiliates or its
sublicensees, provided that such claim does not arise out of any action taken by
Lilly or its development partner in the development and/or promotion of such
************ pursuant to Section 3.6. In the event of any such claim against the
Lilly Indemnified Parties by any party, Lilly shall promptly notify MBI in
writing of the claim and MBI shall manage and control, at its sole expense, the
defense of the claim and its settlement. The Lilly Indemnified Parties shall
cooperate with MBI and may, at their option and expense, be represented in any
such action or proceeding. MBI shall not be liable for any litigation costs or
expenses incurred by the Lilly Indemnified Parties without MBI's prior written
authorization. In addition, MBI shall not be responsible for the indemnification
of any Lilly Indemnified Party arising from any negligent or intentional acts by
such party.
ARTICLE XI
GOOD FAITH NEGOTIATION/DISPUTE RESOLUTION
Any controversy, claim, or dispute arising out of or relating to this
Agreement shall be settled if possible through good faith negotiations between
the Parties. Only if such efforts are not successful shall such dispute be
resolved by arbitration (if agreed by the Parties) or litigation.
ARTICLE XII
GOVERNING LAW
This Agreement shall be construed and the respective rights of the
Parties hereto determined according to the substantive laws of the State of
Delaware notwithstanding the provisions governing conflict of laws under such
Delaware law to the contrary, except matters of intellectual property law which
shall be determined in accordance with the national intellectual property laws
relevant to the intellectual property in question.
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ARTICLE XIII
ASSIGNMENT
Neither Party may assign this Agreement in whole or in part without the
consent of the other, except if such assignment occurs in connection with the
sale or transfer of all or substantially all of the business and assets of MBI
or Lilly to which the subject matter of this Agreement pertains. Notwithstanding
the foregoing, either Party may assign this Agreement in whole or in part to an
Affiliate of such Party, provided, however, that, except as specifically set
forth in this Agreement, MBI may not assign this Agreement in whole or in part
to Millennium unless MBI ceases business operations.
ARTICLE XIV
INSOLVENCY
All rights and licenses granted under or pursuant to any section of
this Agreement are, and shall otherwise be, deemed to be, for purposes of
Section 365(n) of the Bankruptcy Code, licenses of rights to "intellectual
property" as defined under Section 101 (35A) of the Bankruptcy Code. The Parties
shall retain and may fully exercise all of their respective rights and elections
under the Bankruptcy Code.
ARTICLE XV
AMENDMENTS
This Agreement constitutes the entire agreement between the Parties
with respect to the subject matter hereof, and supersedes all previous
arrangement with respect to the subject matter hereof, whether written or oral.
Any amendment or modification to this Agreement shall be made in writing signed
by both Parties.
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ARTICLE XVI
NOTICES
Notices to MBI shall be addressed to:
Millennium BioTherapeutics, Inc.
640 Memorial Drive
Cambridge, Massachusetts 02139-4815
Attention: General Manager
Facsimile No.: (617) 374-7795
with a copy to:
Attention: Legal Department
Notices to Lilly shall be addressed to:
Eli Lilly and Company, Inc.
Lilly Corporate Center
Indianapolis, Indiana 46285
Attention: Vice-President, Research Technologies and Proteins
Facsimile No.: (317) 277-7979
with a copy to:
Attention: General Counsel
Either Party may change its address by giving notice to the other Party
in the manner herein provided. Any notice required or provided for by the terms
of this Agreement shall be in writing and shall be (a) sent by registered or
certified mail, return receipt requested, postage prepaid, (b) sent via a
reputable overnight courier service, or (c) sent by facsimile transmission, in
each case properly addressed in accordance with the paragraph above. The
effective date of notice shall be the actual date of receipt by the Party
receiving the same.
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ARTICLE XVII
FORCE MAJEURE
No failure or omission by the Parties hereto in the performance of any
obligation of this Agreement shall be deemed a breach of this Agreement or
create any liability if the same shall arise from any cause or causes beyond the
control of the Parties, including, but not limited to, the following: acts of
God; acts or omissions of any government; any rules, regulations or orders
issued by any governmental authority or by any officer, department, agency or
instrumentality thereof; fire; storm; flood; earthquake; accident; war;
rebellion; insurrection; riot; and invasion and provided that such failure or
omission resulting from one of the above causes is cured as soon as is
practicable after the occurrence of one or more of the above-mentioned causes.
ARTICLE XVIII
REPRESENTATIONS AND WARRANTIES
Section 18.1. Representation of Authority. MBI and Lilly each
represents and warrants to the other that as of the Effective Date it has full
right, power and authority to enter into this Agreement, including the right to
grant the licenses and sublicenses granted under Article III hereof.
Section 18.2. Knowledge of Pending or Threatened Litigation. Each Party
represents and warrants to the other that as of the Effective Date it is not
aware of any pending or threatened litigation (and has not received any
communication) which alleges that such Party's activities in the Field to date
have violated, or by conducting its business as currently proposed under the MBI
Discovery Program contemplated herein would violate, any of the intellectual
property rights of any other person. To the best of each Party's knowledge as of
the Effective Date, such Party's activities have not violated, or by conducting
its business as currently proposed under the MBI Discovery Program contemplated
herein would not violate, any of the intellectual property rights of any other
person. To the best of each Party's knowledge as of the Effective Date, there is
no material unauthorized use, infringement or misappropriation of any of its
intellectual property rights licensed hereunder to the other Party.
Section 18.3. Employee Obligations. Each Party represents and warrants
that all of its employees, officers, and consultants have executed agreements or
have existing obligations under law requiring, in the case of employees and
officers, assignment to such Party of all inventions made during the course of
and as the result of their association with such Party and obligating the
individual to maintain as confidential Program Confidential Information and such
Party's Confidential Information of a Party as well as confidential information
of any party other than such Party which such Party may receive, to the extent
required to support such Party's obligations under this Agreement. MBI
represents and warrants that any employee of an Affiliate of MBI who
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participates in the conduct of the MBI Discovery Program shall have executed
agreements or have existing obligations under law requiring assignment to such
Affiliate of MBI of all inventions made by such employee in the course of the
MBI Discovery Program and obligating such individual to maintain as confidential
Program Confidential Information and both Parties' Confidential Information of a
Party.
ARTICLE XIX
PUBLIC ANNOUNCEMENTS AND PUBLICATIONS
Section 19.1. Press Releases and Announcements. Any announcements or
similar publicity with respect to the execution of this Agreement shall be
agreed between the Parties in advance of such announcement. Both Parties
understand that this Agreement is likely to be of significant interest to
investors, analysts and others, and MBI and Lilly therefore may make such public
announcements with respect thereto. The Parties agree that any such announcement
will not contain confidential business or technical information and, if
disclosure of confidential business or technical information is required by law
or regulation, will make reasonable efforts to minimize such disclosure and
obtain confidential treatment for any such information which is disclosed to a
governmental agency or group. Each Party agrees to provide to the other Party a
copy of any public announcement as soon as reasonably practicable under the
circumstances prior to its scheduled release. Except under extraordinary
circumstances, each Party shall provide the other with an advance copy of any
press release at least five (5) business days prior to the scheduled disclosure.
Each Party shall have the right to expeditiously review and recommend changes to
any announcement regarding this Agreement or any studies carried out under this
Agreement. Except as otherwise required by law, the Party whose press release
has been reviewed shall remove any information the reviewing Party reasonably
deems to be inappropriate for disclosure. Except as set forth in Article XIX of
the License Agreement, MBI shall not have the right to make any announcement or
similar publicity in regard to a Lilly Small Molecule Drug or Lilly Selected
Protein without the express written approval of Lilly. Lilly shall not have the
right to make any announcement or similar publicity in regard to a MBI Small
Molecule Drug or MBI Therapeutic Product without the express written approval of
MBI.
Section 19.2. Publications. The Parties acknowledge and agree that
scientific lead time is a key element of the value of the research to be
performed under this Agreement. The Parties also acknowledge and agree that the
ability to publish selected results of the research to be performed under this
Agreement is essential for the recruitment and retention of scientific talent by
the Parties. In order to ensure that scientific publications are strictly
monitored to prevent any adverse effect of premature publication, the Joint
Management Team shall establish a procedure for publication review and approval
and each Party shall first submit to the Joint Management Team an early draft of
all such publications, whether they are to be presented orally or in written
form, at least sixty (60) days prior to submission for publication. The Joint
Management
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Team shall review each such proposed publication in order to avoid the
unauthorized disclosure of any Confidential Information of a Party and to
preserve the patentability of inventions arising from the research performed in
the course of the MBI Discovery Program. If, within thirty (30) days following
receipt of an advance copy of a Party's proposed publication, the Joint
Management Team informs such Party that its proposed publication contains the
other Party's Confidential Information of a Party, then such Party shall delete
such Confidential Information of a Party from its proposed publication. If,
within thirty (30) days following receipt of an advance copy of a Party's
proposed publication, the Joint Management Team informs such Party that its
proposed publication contains Program Confidential Information, the publication
of which could be expected to have a material adverse effect on any MBI Program
Know-How Patent Rights or MBI Program Know-How, then such Party shall at the
election of the Joint Management Team, either (1) delete such Program
Confidential Information from such Party's proposed publication or (2) delay
such proposed publication sufficiently long to permit the timely preparation and
filing of a patent application(s) on the information involved. If, within forty
five (45) days following receipt of an advance copy of a Party's proposed
publication, the Joint Management Team fails to approve of such Party's proposed
publication, then such proposed publication shall be regarded as denied by the
Joint Management Team and shall not be published.
ARTICLE XX
ADDITIONAL AGREEMENTS
Section 20.1. Independent Contractors. It is understood and agreed that
the relationship between the Parties hereunder is that of independent
contractors and that nothing in this Agreement shall be construed as
authorization for either Lilly or MBI to act as agent for the other. Members of
the Joint Management Team shall be, and shall remain, employees of MBI or Lilly,
as the case may be. Neither Party shall incur any liability for any act or
failure to act by members of the Joint Management Team who are employees of the
other Party.
Section 20.2. Consents Not Unreasonably Withheld. Whenever provision is
made in this Agreement for either Party to secure the consent or approval of the
other, that consent or approval shall not unreasonably be withheld, and whenever
in this Agreement provisions are made for one Party to object to or disapprove a
matter, such objection or disapproval shall not unreasonably be exercised.
Section 20.3. No Strict Construction. This Agreement has been prepared
jointly and shall not be strictly construed against either Party.
Section 20.4. Headings. The captions or headings of the Sections or
other subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.
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Section 20.5. Severance of Clauses. Each Party agrees that, should any
provision of this Agreement be determined by a court of competent jurisdiction
to violate or contravene any applicable law or policy, such provision will be
severed or modified by the court to the extent necessary to comply with the
applicable law or policy, and such modified provision and the remainder of the
provisions hereof will continue in full force and effect.
Section 20.6. No Waiver. The waiver of a breach hereunder may be
effected only by a writing signed by the waiving Party and shall not constitute
a waiver of any other breach.
Section 20.7. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original but all of
such together shall constitute one and the same instrument.
-51-
<PAGE> 58
IN WITNESS WHEREOF, this Agreement is executed this 28th day of May,
1997, to be effective as of the Effective Date.
ELI LILLY COMPANY, INC. MILLENNIUM BIOTHERAPEUTICS, INC.
/s/John M. Maraganore
- --------------------------------- -------------------------------------
John M. Maraganore, Ph.D.
Executive Vice President
- ---------------------------------
Title
May 28, 1997 May 28, 1997
- --------------------------------- -------------------------------------
Date Date
Millennium hereby agrees to (a) guarantee the obligations of MBI under
this Agreement for the term of the MBI Discovery Program, and (b) to transfer
and/or license such of its assets and to make available such of its personnel,
facilities, technology, equipment and other resources as are necessary to enable
MBI to fulfill MBI's obligations under this Agreement.
/s/Steven H. Holzman
----------------------------
Steven H. Holtzman
Chief Business Officer
----------------------------
Title
5/28/97
----------------------------
Date
-52-
<PAGE> 59
EXHIBIT A
PROGRAM PLAN
Exhibit A contains Confidential Materials which have been deleted and
filed separately with the Securities and Exchange Commission.
<PAGE> 60
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
EXHIBIT B
EXISTING TANGO TECHNOLOGY
cDNA LIBRARIES
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
***** *********************
<PAGE> 61
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
*********************
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
********** ***********
<PAGE> 62
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
*****************************
*** ***********
*** ***********
*** ***********
*** ***********
*** ***********
*** ***********
*** ***********
*** ***********
TANGO PROTEIN CANDIDATES
*****
*********** also known as********** is a novel ******************************,
originally isolated by ****************************** in the
************************************************************ have been
*************** of the *************** has been ******************************
have been *************** in which the *************** has been ***************
was recently published as ***************. Our own data is in press at Nature.
*****
********** also known as ************************** is a novel ***************
of the ***************. Originally isolated by**********************************
have since been *************** to completion. ******************************
have been ***************.
<PAGE> 63
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
We have demonstrated ****************************************** and differential
effects of ********************************************* in the
****************************** close to the ***************
*****
************************** was isolated ****************************************
since derived. ********************************************* is a member of the
***************
*****
********* is a member of the ***************. Originally isolated by************
***************************************************************************
****************************** have been built for****************************
*****
**************************** originally isolated as an ************************
********************************************************************** have been
****************************** are being made.
*****
****************************** was originally isolated by ***************
************************************** in the ****************************** has
been isolated and a *********************************************
*****
****************************** was originally isolated by ***************
*************************************************************************** and
exists in ****************************** is in ******** to test for the presence
of ***************. As such, ****************************** will be useful to
*************** and, as ****************************** have been made.
Preliminary results suggest that ********************************************
*****
************************ was originally isolated by****************************
are involved in early *************** is in the process of full ***************
*****
************************************************************ was isolated from a
****************************** although ****************************************
are being isolated.
*****
<PAGE> 64
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
********************************************* was isolated by ***************
********************************************************************************
** are being isolated.
*****
********************************************* was isolated by ***************
************************************** might therefore by useful in treatment of
*************************** in the *********************************************
*****
*************************************************************************** is a
*************************** of the ****************************** the ability to
********************************************* is currently being prepared.
*****
******************************************* and was isolated by ***************
********************************************************************************
***************** is being derived.
<PAGE> 65
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omission.
EXHIBIT C
PTAC APPROVAL INFORMATION
I. Purpose: Approve or reject new compounds, including therapeutic
Proteins, proposed for project team status following review of
available scientific and marketing data.
II. Required Information for Project Team Approval
- Rationale for therapy
- Chemistry
- Manufacturing
- Patent considerations
- Pharmacology
- Toxicology
- Clinical strategy
- Marketing assessment
PROJECT TEAM APPROVAL COMMITTEE (PTAC) INFORMATION
I. Manufacturing: Data should include enough information to demonstrate
that a viable route for the production of the compound for clinical
testing and marketing has been established.
II. Patents: Information to determine patentability of the candidate
compound on a worldwide basis.
III. Pharmacology: Preclinical pharmacology ******************************
demonstrating potential utility in a therapeutic area. This data should
include dose response information.
IV. A.D.M.E.: *************** need to be shown they are bioavailable
through a *************** Data should include a correlation between
*********************************************
V. Toxicology: Preliminary toxicology should generally include
**************************************************
<PAGE> 1
EXHIBIT 10.7
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
TECHNOLOGY TRANSFER AND LICENSE AGREEMENT
This Agreement is effective as of May 28, 1997 (the "Effective Date") by
and between Millennium Pharmaceuticals, Inc., a Delaware corporation having its
principal office at 640 Memorial Drive, Cambridge, Massachusetts 02139-4815
("MPI"), and Millennium BioTherapeutics, Inc., a Delaware corporation having its
principal place of business at 640 Memorial Drive, Cambridge, Massachusetts,
02139-4815 ("MBI").
INTRODUCTION
1. MPI is willing to transfer and license to MBI, and MBI desires to
acquire and license from MPI, certain technology and intellectual property
rights thereto for the purpose of allowing MBI to develop and market products in
the MBI Core Field (as defined below) using such technology and intellectual
property rights thereto.
2. In the future, MPI may develop certain inventions, improvements,
processes or know-how and, in each such case to the extent it is able, MPI is
willing to grant to MBI a license or sublicense to use such developments,
technology or rights for research, and to exploit such developments, technology
or rights for development and commercialization in the MBI Core Field.
3. In the future, MBI may develop certain inventions, improvements,
processes or know-how and, in each such case to the extent it is able, MBI is
willing to grant to MPI a license or sublicense to use such developments,
technology or rights for research, and to exploit such developments, technology
or rights for development or commercialization in the MPI Core Field (as defined
below).
4. In consideration of the transfer and license by MPI to MBI of such
technology and rights, MBI has agreed to issue certain equity securities to MPI.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, MPI and MBI hereby agree as follows:
SECTION 1. Definitions
As used herein, the following terms shall have the meanings set forth
below:
1
<PAGE> 2
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
"Affiliate" means any corporation, company partnership, joint venture
and/or firm which controls, is controlled by or is under common control with a
Party. For the purposes of this definition, "control" shall mean, (a) in the
case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors, and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.
"Agreement Term" means the period commencing on the Effective Date and
ending on the later of (a) May 31, 2002, and (b) the date on which MBI ceases to
be an Affiliate of MPI.
"Antibody-based Product" means any drug or drug candidate which comprises
(a)
********************************************************************************
********************************************************************************
**************************************************or (b)
********************************** *************************** of the type
described in (a) (e.g., ********************** ***************.
"Antisense-based Product" means any drug or drug candidate which comprises
************************************************************************ and
which is complementary to a ****************************************************
***** and which, upon delivery *************************************************
******************************** of or by such target gene.
"Collaborative Partner" means a party (other than MPI or MBI) to a
collaboration agreement with either of MPI or MBI.
"Confidential Information" means all trade secrets or confidential or
proprietary information designated as such in writing, whether by letter or by
the use of an appropriate proprietary stamp or legend, prior to or at the time
any such trade secret or confidential or proprietary information is disclosed to
the receiving Party. Notwithstanding the foregoing, information which is orally
or visually disclosed to the receiving Party, or is disclosed in writing without
an appropriate letter, proprietary stamp or legend, shall constitute
Confidential Information if (i) it would be apparent to a reasonable person,
familiar with the business and the industry of the disclosing Party, that such
information is of a confidential or proprietary nature the maintenance of which
is important to the disclosing Party or if (ii) the disclosing Party, within
thirty (30) days after such disclosure, delivers to the receiving Party a
written document or documents describing such information and referencing the
2
<PAGE> 3
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
place and date of such oral, visual or written disclosure and the names of the
employees or officers.
"Gene Therapy-based Product" shall mean any ****************************
********************************************************************************
and which, upon delivery ****************************************************
which is expressed.
"Joint Product Technology" means all information and methods, exclusive of
Joint Research Technology, that directly relates to the development, manufacture
and/or commercialization of a product in either the MPI Core Field or the MBI
Core Field, and which is developed, acquired or otherwise controlled jointly by
the Parties during the Agreement Term, including, but not limited to, any
improvement to Joint Product Technology that is developed or acquired or
otherwise controlled jointly by the Parties during the Agreement Term.
"Joint Product Technology Patent Right(s)" means a Patent Right that
covers Joint Product Technology.
"Joint Research Technology" means all information (including without
limitation concepts, ideas, trade secrets, data and formulations) and methods
(including without limitation the methods and technology listed on Schedule E
which may be updated by the Parties in writing from time to time, and other
processes, protocols, assays, automated and semi-automated techniques and
molecular biology methods) for the research, discovery, production and/or
characterization of genes and/or proteins which is developed, acquired or
otherwise controlled jointly by the Parties during the Agreement Term, including
but not limited to any improvements to Joint Research Technology that is
developed, acquired or otherwise controlled jointly by the Parties during the
Agreement Term.
"Joint Research Technology Patent Right(s)" means a Patent Right that
covers Joint Research Technology.
"MBI Core Field" means the discovery, development and commercialization of
********************************************************************************
********************************************************************************
The MBI Core Field shall *******************************************************
********************************************************************************
********************************************************************************
3
<PAGE> 4
"MBI Product Technology" means all information and methods, exclusive of
MBI Research Technology, that directly relates to the development, manufacture
and/or commercialization of a product in the MPI Core Field, and which is
developed, acquired or otherwise controlled by MBI during the Agreement Term,
including, but not limited to, any improvement to MPI Product Technology that is
developed, acquired or otherwise controlled by MBI during the Agreement Term.
"MBI Product Technology Patent Right(s)" means a Patent Right that covers
MBI Product Technology.
"MBI Research Technology" means all information (including without
limitation concepts, ideas, trade secrets, data and formulations) and methods
(including without limitation the methods and technology listed on Schedule C
which may be updated by the Parties in writing from time to time, and other
processes, protocols, assays, automated and semi-automated techniques and
molecular biology methods) for the research, discovery, production and/or
characterization of genes and/or Proteins, which is developed, acquired or
otherwise controlled by MBI during the Agreement Term, including but not limited
to any improvement to MPI Research Technology that is developed, acquired or
otherwise controlled by MBI during the Agreement Term.
"MBI Research Technology Patent Right(s)" means a Patent Right that covers
MBI Research Technology.
"MPI Core Field" means the discovery, development and commercialization of
all products and services outside of the MBI Core Field.
"MPI Product Technology" means all information and methods, exclusive of
MPI Research Technology, that directly relates to the development, manufacture
and/or commercialization of a product in the MBI Core Field, and is developed,
acquired or otherwise controlled by MPI prior to the Effective Date or by MPI
during the Agreement Term, including but not limited to any improvement to MBI
Product Technology that is developed, acquired or otherwise controlled by MPI
during the Agreement Term.
"MPI Product Technology Patent Right(s)" means (a) the Patent Rights
listed on Schedule A ("Initial Product Technology Patent Rights") and (b) any
additional Patent Right that covers MPI Product Technology.
"MPI Research Technology" means all information (including without
limitation concepts, ideas, trade secrets, data and formulations) and methods
(including without limitation the methods and technology listed on Schedule D
which may be updated in writing by the Parties from time to time, and other
processes, protocols, assays, automated and semi-automated techniques and
molecular biology
4
<PAGE> 5
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
methods) for the research, discovery, production and/or characterization of
genes and/or Proteins which are controlled by MPI on the Effective Date or are
developed, acquired or otherwise controlled by MPI during the Agreement Term,
including, but not limited to, any improvement to MBI Research Technology that
is developed, acquired or otherwise controlled by MPI during the Agreement Term.
"MPI Research Technology Patent Right(s)" means (a) the Patent Rights
listed on Schedule B ("Initial Research Technology Patent Rights"), and (b) any
additional Patent Right that covers MPI Research Technology.
"Patent Right" means a patent or patent application and all divisions,
continuations, continuation-in-part, reissues, reexaminations, extensions,
Supplementary Protection Certificates and foreign counterparts thereof that is
owned or otherwise controlled by MBI or by MPI.
"Party" means MPI or MBI; "Parties" means MPI and MBI.
"Peptidomimetic" means a *************************** that (a) is designed
or developed using *************************************************************
*******************.
"Person" means any individual, partnership, corporation, firm,
association, unincorporated organization, joint venture, trust or other entity.
"Protein-based Product" means any drug or drug candidate that comprises a
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
******************************************************************************
************************************. Protein-based Products shall not include a
Peptidomimetic.
"Rights Exchange Agreement" means the Rights Exchange Agreement between
MPI and MBI dated as of May 28, 1997.
"Small Molecule Drug" has the meaning set forth for such term in the
Collaboration Agreement between MBI and Eli Lilly and Company to be executed on
or about the Effective Date.
5
<PAGE> 6
SECTION 2. Transfer of Certain Existing Patent Rights
Subject to the terms and conditions of this Agreement, MPI hereby
transfers and assigns to MBI all of MPI's right, title and interest in and to
(i) the Initial Product Technology Patent Rights, and (ii) the Initial Research
Technology Patent Rights. MPI shall deliver to MBI a separate, recordable
assignment document of such MPI Patent Rights within thirty (30) days of the
Effective Date of this Agreement.
SECTION 3. Licenses
3.1 MPI Licenses to MBI. Subject to the terms and conditions of this
Agreement, MPI hereby grants to MBI the following licenses.
(a) MPI Research Technology. MPI hereby grants to MBI and its Affiliates
(other than MPI) a royalty-free, non-exclusive right and license, without
the right to grant sublicenses except to Affiliates of MBI, to MPI
Research Technology and MPI Research Technology Patent Rights (excluding
the Initial Research Technology Patent Rights which are subject to the
assignment set forth in Section 2) and MPI's rights in Joint Research
Technology and Joint Research Technology Patent Rights, for use by MBI
solely in the MBI Core Field. MBI shall not be permitted or authorized to
use or practice MPI Research Technology, MPI Research Technology Patent
Rights or MPI's rights in Joint Research Technology and Joint Research
Technology Patent Rights outside the MBI Core Field except with the
written consent of MPI.
(b) MPI Product Technology. MPI hereby grants to MBI and its Affiliates
(other than MPI) a royalty-free, exclusive right and license, with the
right to grant sublicenses, to MPI Product Technology, MPI Product
Technology Patent Rights (excluding the Initial Product Technology Patent
Rights, which are subject to the assignment set forth in Section 2) and
MPI's rights in Joint Product Technology and Joint Product Technology
Patent Rights for use by MBI or MBI's sublicensee solely in the MBI Core
Field. Notwithstanding the foregoing, in the event that MPI enters into a
collaboration agreement, strategic alliance, license agreement or similar
arrangement with a Collaborative Partner (a "Collaboration Agreement"),
and pursuant to Section 2(c) of the Rights Exchange Agreement, MPI is
permitted to grant licenses and rights to such Collaborative Partner in
the MBI Core Field, then the license set forth in this subsection (b)
shall not apply with respect to MPI Product Technology and MPI Product
Technology Patent Rights developed or acquired pursuant to such
Collaboration Agreement.
3.2 MBI Licenses to MPI. Subject to the terms and conditions of this
Agreement, MBI hereby grants to MPI the following licenses.
6
<PAGE> 7
(a) MBI Research Technology. MBI hereby grants to MPI and its Affiliates
(other than MBI) a royalty-free, non-exclusive right and license, without
the right to grant sublicenses except to Affiliates of MPI, to MBI
Research Technology, MBI Research Technology Patent Rights and MBI's
rights in Joint Research Technology and Joint Research Technology Patent
Rights for use by MPI solely in the MPI Core Field. MPI shall not be
permitted or authorized to use or practice MBI Research Technology, MBI
Research Technology Patent Rights outside the MPI Core Field except with
the written consent of MBI.
(b) MBI Product Technology. MBI hereby grants to MPI and its Affiliates
(other than MBI) a royalty-free, exclusive right and license, with the
right to grant sublicenses, to MBI Product Technology, MBI Product
Technology Patent Rights and MBI's rights in Joint Product Technology and
Joint Product Technology Patent Rights for use by MPI or MPI's sublicensee
solely in the MPI Core Field. Notwithstanding the foregoing, in the event
that MBI enters into a Collaboration Agreement with a Collaborative
Partner, and pursuant to Section 2(c) of the Rights Exchange Agreement,
MBI is permitted to grant licenses and rights to such Collaborative
Partner in the MPI Core Field, then the license set forth in this
subsection (b) shall not apply with respect to such MBI Product Technology
and MBI Product Technology Patent Rights developed or acquired pursuant to
such Collaboration Agreement.
SECTION 4. Disclosure and Transfer of Technology
4.1 MPI shall disclose to MBI on an ongoing basis during the Agreement
Term all MPI Research Technology and MPI Product Technology which MPI reasonably
believes to be pertinent to the MBI Core Field. At the time MPI discloses MPI
Research Technology to MBI that is not currently listed on Schedule D, the
Parties shall agree upon an update to Schedule D describing such technology.
Notwithstanding the foregoing, MPI need not disclose to MBI any MPI Research
Technology and/or MPI Product Technology which MPI is precluded from disclosing
under any agreement binding upon it.
4.2 MBI shall disclose to MPI on an ongoing basis during the Agreement
Term all MBI Research Technology and MBI Product Technology which MBI reasonably
believes to be pertinent to the MPI Core Field. At the time MBI discloses a MBI
Research Technology to MPI, the Parties shall agree upon an update to Schedule C
describing such technology. Notwithstanding the foregoing, MBI need not disclose
to MPI any MBI Research Technology and/or MBI Product Technology which MBI is
precluded from disclosing under any agreement binding upon it.
4.3 MPI shall provide to MBI biological materials related to the MBI Core
Field and MBI shall provide to MPI biological materials related to the MPI Core
Field in either case, such as genes, gene fragments, vectors, cell lines,
strains, transgenic
7
<PAGE> 8
organisms, model organisms, DNA and DNA fragments, as well as information
relating to such materials. At the time of each transfer of biological material
the Parties shall establish a written record evidencing the transfer and
indicating the type and amount of transfer and any limitations on the
transferred biological materials. The written record shall be initialed by the
appropriate officer or senior employee of each Party. Without limiting the
foregoing, the Parties acknowledge the transfer from MPI to MBI of the
biological materials listed on Schedule F. The Party receiving such transferred
biological materials shall not be permitted or authorized to transfer such
biological material to a third party without the prior written authorization of
the providing Party. Notwithstanding the foregoing, neither Party is required to
transfer any biological materials which such Party is precluded from
transferring under any agreement binding upon such Party.
4.4 MPI shall provide reasonable technical assistance and instruction, at
MBI's sole option and expense, in understanding, interpreting and applying MPI
Research Technology and MPI Product Technology, and MBI shall provide reasonable
technical assistance and instruction, at MPI's sole option and expense, in
understanding, interpreting and applying MBI Research Technology and MBI Product
Technology. Each Party shall make its employees reasonably available for
consultation by telephone, or in person at the Party's offices, in connection
with such assistance and instruction, all at the requesting Party.
SECTION 5. Issuance of Equity
In consideration for the transfers and licenses set forth herein, MBI
hereby agrees to issue, and MPI hereby agrees to accept, 9,000,000 shares of
Series A Convertible Preferred Stock, $.001 par value per share of MBI pursuant
to a Stock Purchase Agreement in the form of Exhibit A hereto.
SECTION 6. Grantback of Licenses to Assigned MPI Patent Rights.
MBI hereby grants back to MPI (a) a perpetual, royalty-free and exclusive
right and license to the Initial Research Technology Patent Rights, and (b) a
perpetual royalty-free and exclusive right and license to the Initial Product
Technology Patent Rights (except such license shall be co-exclusive with Eli
Lilly and Company with respect to the development and/or commercialization Small
Molecule Drugs) in either case for use solely in the MPI Core Field.
SECTION 7. Patent Rights
The Patent Rights of the Parties on a country by country basis shall be as
defined below, provided that, in no event shall either Party have the right to
prepare and prosecute a patent application which discloses Confidential
Information of the other Party without the prior written consent of the other
Party. Except as provided
8
<PAGE> 9
in the Research Services and Collaboration Agreement between MPI and MBI dated
as of May 28, 1997, each Party shall solely own inventions conceived or reduced
to practice by their own employees and the Parties shall jointly owned any
inventions conceived or reduced to practice jointly by the Parties.
7.1 Patent Rights of MPI.
(a) MPI Research Technology Patent Rights. MPI shall have the exclusive
right, at its expense and its sole discretion, to prepare and prosecute
patent applications, and to maintain and enforce any patents issued
thereon, with respect to inventions relating to MPI Research Technology
(other than Joint Research Technology Patent Rights).
(b) MPI Product Technology Patent Rights in the MPI Core Field. MPI shall
have the exclusive right, at its expense and its sole discretion, to
prepare and prosecute patent applications, and to maintain and enforce any
patents issued thereon, with respect to inventions relating to MPI Product
Technology in the MPI Core Field (other than Joint Product Technology
Patent Rights).
(c) MPI Product Technology Patent Rights in the MBI Core Field. At MBI's
expense, MPI shall prepare and prosecute patent applications and shall
maintain and enforce any patents issued thereon, with respect to MPI
Product Technology in the MBI Core Field. In the event that MBI elects not
to assume these costs in any country, MPI shall have the right and option
to undertake such responsibilities, at its sole expense. If MPI undertakes
such responsibilities at its sole expense, then (i) the license under
Section 3 to any such MPI Product Technology Patent Right in such country
shall terminate and (ii) MPI shall have the exclusive right to develop
and/or commercialize such MPI Product Technology in either the MBI Core
Field or the MPI Core Field.
7.2 Patent Rights of MBI.
(a) MBI Research Technology Patent Rights. MBI shall have the exclusive
right, at its expense and its sole discretion, to prepare and prosecute
patent applications, and to maintain and enforce any patents issued
thereon, with respect to inventions relating to MBI Research Technology
(other than Joint Research Technology Patent Rights).
(b) MBI Product Technology Patent Rights in the MBI Core Field. MBI shall
have the exclusive right, at its expense and its sole discretion, to
prepare and prosecute patent applications, and to maintain and enforce any
patents issued thereon, with respect to inventions relating to MBI Product
Technology in the MBI Core Field (other than Joint Product Technology
Patent Rights).
9
<PAGE> 10
(c) MBI Product Technology Patent Rights in the MPI Core Field. At MPI's
expense, MBI shall prepare and prosecute patent applications and shall
maintain and enforce any patents issued thereon, with respect to MBI
Product Technology in the MPI Core Field. In the event that MPI elects not
to assume these costs in any country, MBI shall have the right and option
to undertake such responsibilities, at its sole expense. If MBI undertakes
such responsibilities at its sole expense, then (i) the license under
Section 3 to any such MBI Product Technology Patent Right in such country
shall terminate and (ii) MBI shall have the exclusive right to develop
and/or commercialize such MBI Product Technology in either the MBI Core
Field or the MPI Core Field.
7.3 Joint Product Technology Patent Rights and Joint Research Technology
Patent Rights. Patent applications relating to Joint Research Technology Patent
Rights and Joint Product Technology Patent Rights shall be prepared and
prosecuted by patent counsel selected by the Party in whose core field the
technology is most relevant; provided that, if the technology is relevant to the
core fields of both Parties then MPI shall select the patent counsel to prepare
and prosecute such patent application. The costs of such preparation and
prosecution of such patent applications, and the maintenance of any patent
issuing thereon, shall be borne equally by the Parties. Should either Party
determine that it no longer desires to prosecute such patent application or
maintain any patent issued thereon, then such Party shall be obligated to
transfer its entire right, title and interest in and to such patent application
or patent to the other Party and such patent application or patent shall not be
subject to the license provisions of Section 3.
7.4 Improvements.
(a) Improvements made by MPI to MBI Research Technology or MBI Product
Technology. MBI shall have the right to prohibit MPI from preparing and
prosecuting a patent application directed to any improvement made by MPI
to MBI Research Technology or MBI Product Technology. If MBI consents to
the preparation and prosecution of such patent application, then such
patent application shall be prepared and prosecuted, in MPI's name and at
MPI's expense, by patent counsel selected by MBI. If MPI decides not to
prepare and prosecute such patent application, then MBI shall not have the
right to assume the preparation and prosecution of such patent
application.
(b) Improvements made by MBI to MPI Research Technology or MPI Product
Technology. MPI shall have the right to prohibit MBI from preparing and
prosecuting a patent application directed to any improvement made by MBI
to a MPI Research Technology or MPI Product Technology. If MPI consents to
the preparation and prosecution of such patent application, then such
patent application shall be prepared and prosecuted, in MBI's name and at
MBI's expense, by patent counsel selected by MPI. If MBI decides not to
10
<PAGE> 11
prepare and prosecute such patent application, then MPI shall not have the
right to assume the preparation and prosecution of such patent
application.
(c) Joint Improvements. The Parties shall discuss and shall mutually agree
to prepare and prosecute patent applications relating to jointly developed
improvements to any of the MPI Product Technology, MPI Research
Technology, MBI Product Technology or MBI Research Technology, provided
that the Party from whose technology such improvement derives shall have
the right to prohibit the preparation and prosecution of any such patent
applications. If the Parties agree to prepare and prosecute any such
patent applications, then the preparation and prosecution shall be
controlled by the Party to whose technology such improvement relates. The
costs of the preparation and prosecution of such patent applications shall
be borne equally by the Parties. Should either Party determine that it no
longer desires to prosecute such patent application or maintain any patent
issued thereon, then such Party shall be obligated to transfer its entire
right, title and interest in and to such patent application or patent to
the other Party and such patent application or patent shall not be subject
to the license provisions of Section 3.
SECTION 8. Confidential Information and Permitted Disclosures.
8.1 Confidential Information. Any Party receiving Confidential Information
shall maintain the confidential and proprietary status of such Confidential
Information, keep such Confidential Information and each part thereof within its
possession or under its control sufficient to prevent any activity with respect
to the Confidential Information that is not specifically authorized by this
Agreement, use commercially reasonable efforts to prevent the disclosure of any
Confidential Information to any other Person, and use commercially reasonable
efforts to ensure that such Confidential Information is used only for those
purposes specifically authorized herein; provided, however, that such
restriction shall not apply to any Confidential Information which is (a)
independently developed by the receiving Party, (b) in the public domain at the
time of its receipt or thereafter becomes part of the public domain through no
fault of the receiving Party, (c) received without an obligation of
confidentiality from a third party having the right to disclose such
information, (d) released from the restrictions of this Section 8.1 by the
express written consent of the disclosing Party, (e) disclosed to any permitted
assignee, permitted sublicensee or permitted subcontractor of either MPI or MBI
hereunder (if such assignee, sublicense or subcontractor is subject to the
provisions of this Section 8.1 or comparable provisions of such other
documents), or (f) required by law, statute, rule or court order to be disclosed
(the disclosing Party shall, however, use commercially reasonable efforts to
obtain confidential treatment of any such disclosure).
11
<PAGE> 12
8.2 Employee Obligations. MPI and MBI each agree that it shall provide
Confidential Information received from the other Party only to its employees,
consultants, advisors and third party collaborators who have a need to know and
have an obligation to treat such information and materials as confidential.
Without limiting the generality of the foregoing, MPI and MBI each shall use
commercially reasonable efforts to obtain confidentiality agreements from its
respective employees and agents, similar in scope to Section 8.1, to protect the
Confidential Information.
8.3 Third Party Obligations. Each Party acknowledges that the other Party
may from time to time have agreements with other persons which impose
obligations or restrictions on such other Party with respect to the disclosure
or use of inventions or information relating to the subject matter of such
agreements ("Third Party Agreements"). Without limiting the generality of the
foregoing, MPI acknowledges that MBI is subject to certain obligations and
restrictions under the Lilly Collaboration Agreement. Each Party agrees to be
bound by all such obligations and restrictions which are made known to it under
Third Party Agreements (excluding the Lilly Collaboration Agreement) relating to
Confidential Information, and MPI agrees to be bound by all such obligations and
restrictions under the Lilly Collaboration Agreement relating to Confidential
Information.
8.4 Permitted Disclosures. Notwithstanding the provisions of Section 8.1
hereof, MPI and MBI may, to the extent necessary, disclose and use Confidential
Information, consistent with the rights of MPI and MBI otherwise granted
hereunder (a) for the purpose of engaging in research and development,
conducting clinical testing and marketing programs, or securing institutional or
government approval to clinically test or market any product, (b) for the
purpose of sharing clinical trial results and data with third parties conducting
clinical trials, (c) for the purpose of securing patent protection to the extent
provided in Section 7, or (d) for the purpose of obtaining private investment.
8.5 Term The obligations set forth in this Section 8 shall survive for a
period of five (5) years from the expiration of the Agreement Term.
SECTION 9. Term
This Agreement becomes effective as of the Effective Date and shall remain
in effect during the Agreement Term. Upon the expiration of this Agreement, the
provisions of Sections 3, 6, 7, 8, 10, 11 and 12 shall survive the termination
of this Agreement.
SECTION 10. Disclaimer of Warranty; Consequential Damages.
12
<PAGE> 13
10.1 Disclaimer of Warranty. Nothing in this Agreement shall be construed
as a representation made or warranty given by either Party hereto that any
patents will issue based on pending applications or that any such pending
applications or patents issued thereon will be valid, or that the practice by
the other Party hereto of any license granted hereunder will not infringe the
patent or proprietary rights of any other Person. In addition, MPI and MBI
acknowledge that ALL KNOW-HOW LICENSED OR TRANSFERRED HEREUNDER IS LICENSED AND
TRANSFERRED, AS TO THE CASE MAY BE, TO MBI AND MPI, RESPECTIVELY, AS IS, AND MPI
AND MBI EXPRESSLY DISCLAIM AND HEREBY WAIVE, RELEASE AND RENOUNCE ANY WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO SUCH KNOW-HOW, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
10.2 Consequential Damages. EXCEPT AS OTHERWISE SET FORTH HEREIN, NEITHER
PARTY TO THIS AGREEMENT SHALL BE ENTITLED TO RECOVER FROM TO THE OTHER ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.
SECTION 11. Indemnification
11.1 Indemnification by MPI. MPI agrees to defend MBI at MPI's cost and
expense, and will indemnify and hold MBI and its directors, officers, employees
and agents (the "MBI Indemnified Parties") harmless from and against any losses,
costs, damages, fees or expenses arising out of any claim relating to personal
injury from the exploitation by MPI or its licensees of the licenses granted
pursuant to Section 3, including the development, manufacture, use sale or other
disposition of products or services resulting therefrom. In the event of any
such claim against the MBI Indemnified Parties by any party, MBI shall promptly
notify MPI in writing of the claim and MPI shall manage and control, at its sole
expense, the defense of the claim and its settlement. The MBI Indemnified
Parties shall cooperate with MPI and may, at their option and expense, be
represented in any such action or proceeding. MPI shall not be liable for any
litigation costs or expenses incurred by the MBI Indemnified Parties without
MPI's prior written authorization. In addition, MPI shall not be responsible for
the indemnification of any MBI Indemnified Party arising from any negligent or
intentional acts by such party.
11.2. Indemnification by MBI. MBI agrees to defend MPI at MBI's cost and
expense, and will indemnify and hold MPI and its directors, officers, employees
and agents (the "MPI Indemnified Parties") harmless from and against any losses,
costs, damages, fees or expenses arising out of any claim relating to personal
injury from the exploitation by MBI or its licensees of the Patent Rights
transferred and assigned pursuant to Section 2 and the licenses granted pursuant
to Section 3, including the development, manufacture, use sale or other
disposition of products or services resulting therefrom. In the event of any
such claim against the MPI Indemnified
13
<PAGE> 14
Parties by any party, MPI shall promptly notify MBI in writing of the claim and
MBI shall manage and control, at its sole expense, the defense of the claim and
its settlement. The MPI Indemnified Parties shall cooperate with MBI and may, at
their option and expense, be represented in any such action or proceeding. MBI
shall not be liable for any litigation costs or expenses incurred by the MPI
Indemnified Parties without MBI's prior written authorization. In addition, MBI
shall not be responsible for the indemnification of any MPI Indemnified Party
arising from any negligent or intentional acts by such party.
SECTION 12. General Provisions
12.1 No Implied Waivers; Rights Cumulative. No failure on the part of MPI
or MBI to exercise, and no delay in exercising, any right, power, remedy or
privilege under this Agreement, or provided by statute or at law or in equity or
otherwise, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
12.2 Force Majeure. Neither Party to this Agreement shall be responsible
to the other Party for nonperformance or delay in performance of the terms or
conditions of the Agreement due to acts of God, acts of governments, war, riots,
strikes, accidents in transportation, or other causes beyond the reasonable
control of such Party.
12.3 Cooperation. Each Party agrees to cause each of its employees and
agents to take all actions and to execute, acknowledge and deliver all
instruments or agreements reasonably requested by the other Party, and necessary
for the perfection, maintenance, enforcement or defense of that Party's rights
as set forth herein.
12.4 Notices. All notices, requests and other communications to MPI or MBI
hereunder shall be in writing (including telecopy or similar electronic
transmissions), shall refer specifically to this Agreement and shall be
personally delivered or sent by telecopy or other electronic facsimile
transmission or by certified mail, return receipt requested, postage prepaid, in
each case to the respective address specified below (or to such other address as
may be specified in writing to the other Party hereto):
Millennium Pharmaceuticals, Inc.
640 Memorial Drive
Cambridge, MA 02139-4815
Attention: Chief Business Officer
with a copy to: Legal Department
14
<PAGE> 15
Millennium BioTherapeutics, Inc.
640 Memorial Drive
Cambridge, MA 02139-4815
Attention: Vice President and General Manager
with a copy to: Legal Department
Any notice or communication given in conformity with this Section 12.4 shall be
deemed to be effective when received by the addressee, if delivered by hand,
telecopy or other electronic facsimile transmission, and three (3) days after
mailing, if mailed.
12.5 Further Assurances. Each of MPI and MBI agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other Party hereto may at any time
and from time to time reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other Party its rights and remedies under, this Agreement.
12.6 Successors and Assigns. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, MPI, MBI, and their
respective successors and assigns; provided, however, that neither MPI nor MBI
may assign or otherwise transfer any of its rights and interests, nor delegate
any of its respective obligations hereunder, including, without limitation,
pursuant to a merger or consolidation, without the prior written consent of the
other Party hereto, which consent shall not be unreasonably withheld. Any
attempt to assign or delegate any portion of this Agreement in violation of this
Section 12.6 shall be null and void. Subject to the foregoing, any reference to
MPI and MBI hereunder shall be deemed to include the successors thereto and
assigns thereof.
12.7 Amendments. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure by
MPI or MBI therefrom, shall be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by MPI and MBI,
and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreements course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by MPI and MBI.
12.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
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<PAGE> 16
12.9 Severability. If any provision hereof should be held invalid, illegal
or unenforceable in any respect in any jurisdiction, then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the Parties as nearly as may be possible and (b) such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, MPI and MBI hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
12.10 Headings. Headings used herein are for convenience only and shall
not in any way affect the construction of, or be taken into consideration
interpreting, this Agreement.
12.11 Execution in Counterparts. This Agreement may be executed in
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.
12.12 Entire Agreement. This Agreement together with the Rights Exchange
Agreement, the Research Services and Collaboration Agreement, the Trademark
License Agreement, the Administrative Services Agreement, the Bioinformatics
License Agreement, and the Tax Sharing Agreement, each dated as of the date
hereof, constitute, on and as of the date hereof, the entire agreement of MPI
and MBI with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
MPI and MBI with respect to such subject matter are hereby superseded in their
entirety.
16
<PAGE> 17
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
duly executed under seal and delivered as of the date first above written.
MILLENNIUM PHARMACEUTICALS, INC.
By: /s/Steven H. Holtzman
-----------------------------------
Steven H. Holtzman
Chief Business Officer
MILLENNIUM BIOTHERAPEUTICS, INC.
By: /s/John Maraganore
-----------------------------------
John Maraganore
Vice President and General Manager
17
<PAGE> 18
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
SCHEDULE A
Initial Product Technology Patent Rights
****************************************************************************
*********************************
****************************************************************************
************************************************
****************************************************************************
***************************************************
****************************************************************************
*********************************
****************************************************************************
****************************************************************************
*********************************
****************************************************************************
****************************************************************************
*********************************
****************************************************************************
****************************************************************************
*********************************
****************************************************************************
****************************************************************************
*********************
****************************************************************************
*********************************
****************************************************************************
*********************************
****************************************************************************
*********************************
****************************************************************************
*********************************
<PAGE> 19
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
SCHEDULE B
Initial Research Technology Patent Rights
****************************************************************************
****************************************************************************
*********************
****************************************************************************
<PAGE> 20
SCHEDULE C
MBI Research Technology
To be provided.
<PAGE> 21
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
SCHEDULE D
MPI Research Technology
********
*************************
**************************************************
**************************************
***********************************************
************************************************
*************
*************
**************************************
*************************
*************
<PAGE> 22
SCHEDULE E
Joint Research Technology
To be provided.
<PAGE> 23
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
SCHEDULE F
Biological Materials Transferred from MPI to MBI
***************************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
<PAGE> 24
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
*******************************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
<PAGE> 25
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
********************************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
***** ***********************
*****************************************
*****
******, also known as *************, is a novel ********************************
originally isolated by *********************************************************
in the brain *******************************************************************
******************************************************* have been **************
of the ************** has been *************************************************
have been ********** in which the ********** has been *******. *****************
was recently published as ************************************. Our own data
is in press at Nature.
*****
**********, also known as ************************************ is a novel ******
of the **********. Originally isolated by *************************************
**************************** have since been ********* to completion. *********
********************************* have been ************. We have demonstrate
<PAGE> 26
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
************************************************** and differential effects of
**************************************************************************
***************************************************** in the **************
has been ************************************************* close to the
**************************.
*****
************************************, was isolated by **************************
**************************************************** since derived. **********
**************************************************************************
is a member of the ******************************************************.
*****
***** is a member of the ***************************. Originally isolated by
**************************************************************************
**************************************************************************
******************have been built for**********************************.
*****
****************************************originally isolated as an *******
**************************************************************************
******************************************************************have been
*************************************************are being made.
*****
********************************************, was originally isolated by *****
**********************************************************************
********************* in the ******************************** has been isolated
and a ******************************************.
*****
********************************************, was originally isolated by *****
**********************************************************************
*****************and exists in ********************************* is in ********
to test for the presence of an ***********************. As such, *******
*********************** will be useful to *********************** and, as
********************************************************************* have been
made. *********************************************************************
***********************.
<PAGE> 27
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
*****
******************************************************************, was
originally isolated by ****************************** are involved in early
**********************************************************is in the process of
*********************.
*****
****************************************************************** was
isolated from a ******************************************, although
*************************************************************************** are
being isolated.
*****
*********************************************************** was isolated by ***
********************************************************************************
************************************************************are being isolated.
*****
********************************************************************was isolated
by *************************************************************might therefore
be useful in the treatment of *******************************************in the
******************************************************************************.
*****
********************************************************************************
***************************, is a ************************** of the ***********.
*************************** the ability to *************************************
*************************** is currently being prepared.
*****
****************************************************** and was isolated by ****
********************************************************************************
********** is being derived.
<PAGE> 1
EXHIBIT 10.8
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
RIGHTS EXCHANGE AGREEMENT
This Agreement is effective as of May 28, 1997 (the "Effective Date")
by and between Millennium Pharmaceuticals, Inc., a Delaware corporation having
its principal office at 640 Memorial Drive, Cambridge, Massachusetts 02139-4815
("MPI"), and Millennium BioTherapeutics, Inc., a Delaware corporation having its
principal place of business at 640 Memorial Drive, Cambridge, Massachusetts
02139-4815 ("MBI").
INTRODUCTION
1. MPI is engaged in the discovery and development of pharmaceutical
products, and has entered into a number of collaboration agreements with
pharmaceutical companies relating to such discovery and development activities.
2. MPI has established MBI as a wholly-owned subsidiary and, pursuant
to a Technology Transfer and License Agreement dated as of May 28, 1997 (the
"Transfer Agreement"), has transferred and/or licensed certain technology to MBI
in exchange for the issuance of 9,000,000 shares of Series A Convertible
Preferred Stock, $.001 par value per share.
3. MBI has been established in order to pursue the identification,
discovery, research, development and commercialization of products in the MBI
Core Field (as defined below).
4. MPI has agreed to transfer and assign to MBI certain existing and
future rights that it may develop or acquire in the MBI Core Field to MBI, and
MBI wishes to accept such assignment.
5. MBI has agreed to transfer and assign to MPI certain existing and
future rights that it may develop or acquire in the MPI Core Field (as defined
below), and MPI wishes to accept such assignment.
NOW THEREFORE, in consideration of the mutual covenants set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, MPI and MBI hereby agree as
follows:
SECTION 1. Definitions
As used herein, the following terms shall have the meanings set forth
below:
1
<PAGE> 2
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
"Affiliate" means any corporation, company partnership, joint venture
and/or firm which controls, is controlled by or is under common control with a
Party. For the purposes of this definition, "control" shall mean, (a) in the
case of corporate entities, direct or indirect ownership of at least fifty
percent (50%) of the stock or shares having the right to vote for the election
of directors, and (b) in the case of non-corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the equity interest with the power
to direct the management and policies of such non-corporate entities.
"Agreement Term" means the period commencing on the Effective Date and
ending on the later of (a) May 31, 2002, and (b) the date on which MBI ceases to
be an Affiliate of MPI.
"Antibody-based Product" means any drug or candidate drug which
comprises (a) a ***************************************************************
********************************************************************************
********************************************************************************
************* or (b) *********************************** ***********************
******** of the type described in (a) (e.g., *****************************.
"Antisense-based Product" shall mean any drug or drug candidate which
comprises **********************************************************************
***** and which is complementary to a ******************************************
**************** ************** and which, upon delivery by ********************
********************************************************************************
*********** of or by such target gene.
"Collaborative Partner" means a party (other than MPI or MBI) to an MPI
Collaboration Agreement or an MBI Collaboration Agreement.
"Confidential Information" means all trade secrets or confidential or
proprietary information designated as such in writing, whether by letter or by
the use of an appropriate proprietary stamp or legend, prior to or at the time
any such trade secret or confidential or proprietary information is disclosed to
the receiving Party. Notwithstanding the foregoing, information which is orally
or visually disclosed to the receiving Party, or is disclosed in writing without
an appropriate letter, proprietary stamp or legend, shall constitute
Confidential Information if (i) it would be apparent to a reasonable person,
familiar with the business and the industry of the disclosing Party, that such
information is of a confidential or proprietary nature the maintenance of which
is important to the disclosing Party or if (ii) the disclosing Party, within
thirty (30) days after such disclosure, delivers to the receiving Party a
2
<PAGE> 3
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
written document or documents describing such information and referencing the
place and date of such oral, visual or written disclosure and the names of the
employees or officers.
"Force Majeure" shall mean any act of God, any accident, explosion,
fire, storm, earthquake, flood, drought, peril of the sea, riot, embargo, war or
foreign, federal, state or municipal order of general application seizure,
requisition or allocation, any failure or delay of transportation, shortage of
or inability to obtain supplies, equipment fuel or labor or any other
circumstances or event beyond the reasonable control of the party relying upon
such circumstance or event.
"Gene Therapy-based Product" shall mean *******************************
********************************************************************************
******** and which, upon delivery ******************** ************ which is ***
*******************************. A Gene Therapy-based Product shall not include
an Antisense-based Product.
"Lilly Collaboration Agreement" means the Collaboration Agreement dated
as of May 28, 1997 between MBI and Eli Lilly and Company.
"MBI Collaboration Agreements" means collaboration agreements,
strategic alliances, license agreements and similar arrangements entered into by
MBI during the Agreement Term, pursuant to which, and to the extent that, MBI
retains or obtains development or commercialization rights in the MPI Core
Field, including, but not limited to, the Lilly Collaboration Agreement.
"MBI Core Field" means the discovery, development and commercialization
of *****************************************************************************
********************************************************************************
*********************. The MBI Core Field shall *******************************
********************************************************************************
********************************************************************************
**********************************************************************.
"MBI Retained Rights" means all research, development and
commercialization rights, if any, retained by MBI in the MPI Core Field pursuant
to the MBI Collaboration Agreements.
"MPI Collaboration Agreements" means (a) the MPI Existing Collaboration
Agreements, and (b) MPI Future Collaboration Agreements.
3
<PAGE> 4
Confidential Materials omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
"MPI Core Field" shall mean the discovery, development and
commercialization of all products and services outside of the MBI Core Field.
"MPI Existing Collaboration Agreements" means the agreements listed in
Exhibit A to this Agreement.
"MPI Future Collaboration Agreements" means collaboration agreements,
strategic alliances, license agreements and similar arrangements entered into by
MPI from time to time during the Agreement Term pursuant to which, and to the
extent that, MPI retains or obtains development or commercialization rights in
the MBI Core Field.
"MPI Retained Rights" shall mean all research, development and
commercialization rights, if any, retained by MPI in the MBI Core Field pursuant
to the MPI Collaboration Agreements.
"Party" means MPI or MBI; "Parties" means MPI and MBI.
"Peptidomimetic" means a ************** which is designed and developed
using **************************************************************************
**********************.
"Protein-based Product" means any drug or drug candidate that comprises
a ******************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
********************************************************************************
***********. Protein-based Products shall not include a Peptidomimetic.
SECTION 2. Core Field Opportunities
(a) MBI Core Field. MBI and MPI agree that MBI has been organized in
order to engage in the identification, discovery, research, development and
commercialization of products in the MBI Core Field. Except as provided in
subsection (c) below, MPI hereby agrees that it shall transfer, assign and/or
license to MBI or otherwise make available to MBI, all product development
opportunities and other technology rights developed or acquired or otherwise
controlled by MPI during the Agreement Term to the extent applicable to the MBI
Core Field, including, but not limited to, the transfer and assignment of MPI
Retained Rights pursuant to Section 3 below. Except as provided in subsection
(c), MPI shall not engage in the
4
<PAGE> 5
Confidential Materials have been omitted and filed separately with the
Securities and Exchange Commission. Asterisks denote such omissions.
development or commercialization of products in the MBI Core Field during the
Agreement Term without the prior written consent of MBI.
(b) MPI Core Field. MPI and MBI agree that MPI is engaged in the
identification, discovery, research, development and commercialization of
products in the MPI Core Field. Except as provided in subsection (c) below, MBI
hereby agrees that it shall transfer, assign and/or license to MPI, or to
otherwise make available to MPI, all product development opportunities and other
technology rights developed or acquired or otherwise controlled by MBI during
the Agreement Term to the extent applicable to the MPI Core Field, including,
but not limited to, the transfer and assignment of MBI Retained Rights pursuant
to Section 4 below. Except as provided in subsection (c), MBI shall not engage
in the development or commercialization of products in the MPI Core Field during
the Agreement Term without the prior written consent of MPI.
(c) Collaborative Agreements. MPI and MBI each recognize that the
other party intends to enter into collaboration agreements, strategic alliances,
license agreements and similar arrangements with Collaborative Partners (a
"Collaboration Agreement"). MPI and MBI each agree to use reasonable efforts in
negotiating such arrangements to limit the licenses and rights granted to a
Collaborative Partner to the MPI Core Field and MBI Core Field, respectively.
However, (i) in the event that ***, ** *********** * ************* *********,
******** ** **** ***** that the ******* ** include in such ********* ****** ***
******** ** *** *** **** ***** ** ********** ********* pursuant to the
Collaboration Agreement would have a ******** ****** ** ****** *** ***********
** *** ************* ******* ** ***** **** * ************* ********* ** ***
********* ***** *******, **** *** ***, ***** ********* *** ** ******* ***
********** ** ** ********* ***** **** *** *** ***** ******** to the ********
************* *********, ***** **** **** ************* ********* and the
provisions of subsection (a) shall *** ***** ** *** ******** *** ****** **
*******, provided that the ***** ** **** ******** *** ****** ******* *** ***
**** ***** ** ********** ** * **** **** ********* ********** ** *** *** ****
*****; and (ii) in the ***** **** ***, ** *********** * ************* *********,
******** ** **** ***** that the ******* ** ******* ** **** ********* ****** ***
******** ** *** *** **** ***** ** ********** ********* ******** ** ***
************* ********* would have a ******** ****** ** ****** *** ***********
** *** ************* ******* ** ***** **** *** ************* ********* ** ***
********* ***** *******, **** *** ***, ***** ********* *** ** ******* ***
********** ** ** ********* ***** **** *** *** ***** ******** to the ********
************* *********, ***** **** **** ************* ********* and the
provisions of subsection (b) shall *** ***** ** *** ******** *** ****** **
*******, provided that the ***** ** **** ******** *** ****** ** ********** ** *
**** **** ********* ********** ** *** *** **** *****.
5
<PAGE> 6
SECTION 3. Transfer of MPI Retained Rights
(a) MPI Existing Collaboration Agreements. MPI hereby transfers and
assigns to MBI all MPI Retained Rights under the MPI Existing Collaboration
Agreements, subject to receipt of approvals and consents to such transfer and
assignment from the applicable Collaborative Partners (to the extent required
under the applicable MPI Existing Collaboration Agreements). MPI agrees to use
its best efforts to obtain such approvals and consents as soon as reasonably
practicable following the Effective Date. By accepting the transfer and
assignment of MPI Retained Rights under each MPI Existing Collaboration
Agreement, MBI agrees to perform all obligations, and to undertake all
responsibilities, financial or otherwise, relating to the exploitation of the
MPI Retained Rights.
(b) Other MPI Collaboration Agreements. The Parties anticipate that
from time to time after the Effective Date and during the Agreement Term, MPI
will enter into MPI Future Collaboration Agreements with Collaborative Partners
pursuant to which MPI Retained Rights may exist. MPI hereby agrees to transfer
and assign to MBI all MPI Retained Rights under each such MPI Future
Collaboration Agreements, if any, and shall use its best efforts to include in
each such MPI Future Collaboration Agreement provisions enabling MPI to effect
such transfer and assignment, or to obtain such approval or consent thereafter.
By accepting the transfer and assignment of MPI Retained Rights under each MPI
Future Collaboration Agreement, MBI agrees to perform all obligations, and to
undertake all responsibilities, financial or otherwise, relating to the
exploitation of the MPI Retained Rights.
(c) Failure to Obtain Approval and Consent. In the event that MPI is
unable to obtain any approval or consent required from a Collaborative Partner
in connection with the transfer and assignment of MPI Retained Rights under any
MPI Existing or Future Collaboration Agreement (referred to as "Nonassigned MPI
Retained Rights"), MPI shall, in consultation with and at the direction of MBI,
take such reasonable actions as shall be necessary to confer the benefits of any
Nonassigned MPI Retained Rights to MBI, including undertaking research or
development work, granting sublicenses to relevant patent rights and know how to
MBI or its designees and taking such other reasonable actions as may be agreed
upon by the Parties, in all cases at the expense of MBI.
(d) Direct Agreement. At MPI's request, MBI shall use reasonable
efforts to enter into an agreement directly with MPI and the Collaborative
Partner with respect to the MPI Retained Rights under a MPI Collaboration
Agreement, on such terms as shall be mutually agreeable.
6
<PAGE> 7
(e) No Additional Compensation. MBI shall not be required to account
to MPI with respect to its exploitation of the MPI Retained Rights, and shall
not be obligated to make any royalty or other payments to MPI relating thereto.
SECTION 4. Transfer of MBI Retained Rights
(a) MBI Collaboration Agreements. The Parties anticipate that from
time to time from and after the Effective Date and during the Agreement Term MBI
will enter into MBI Collaboration Agreements with Collaborative Partners
pursuant to which MBI Retained Rights may exist. MBI hereby agrees to transfer
and assign to MPI all MBI Retained Rights under each such MBI Collaboration
Agreement, if any, and shall use its best efforts to include in each such MBI
Collaboration Agreement provisions enabling MBI to effect such transfer and
assignment, or to obtain such approval or consent thereafter. By accepting the
transfer and assignment of MBI Retained Rights under each MBI Collaboration
Agreement, MPI agrees to perform all obligations, and to undertake all
responsibilities, financial or otherwise, relating to the exploitation of the
MBI Retained Rights.
(b) Failure to Obtain Approval and Consent. In the event that MBI is
unable to obtain any approval or consent required from a Collaborative Partner
in connection with the transfer and assignment of MBI Retained Rights under any
MBI Collaboration Agreement (referred to as "Nonassigned MBI Retained Rights"),
MBI shall, in consultation with and at the direction of MPI, take such
reasonable actions as shall be necessary to confer the benefits of any
Nonassigned MBI Retained Rights to MPI, including undertaking research and
development work, granting sublicenses to relevant patent rights and know-how to
MBI or its designees and taking such other reasonable actions as may be agreed
upon by the Parties, in all cases at the expense of MPI.
(c) Direct Agreement. At MBI's request, MPI shall use reasonable
efforts to enter into an agreement directly with MBI and the Collaborative
Partner with respect to the MBI Retained Rights under a MBI Collaboration
Agreement, on such terms as shall be mutually agreeable.
(d) No Additional Compensation. MPI shall not be required to account
to MBI with respect to its exploitation of the MBI Retained Rights and shall not
be obligated to make any royalty or other payments to MBI relating thereto.
SECTION 5. Confidential Information and Permitted Disclosures.
5.1 Confidential Information. Any party receiving Confidential
Information shall maintain the confidential and proprietary status of such
Confidential Information, keep such Confidential Information and each part
thereof within its possession or under its control sufficient to prevent any
activity with respect to the
7
<PAGE> 8
Confidential Information that is not specifically authorized by this Agreement,
use commercially reasonable efforts to prevent the disclosure of any
Confidential Information to any other Person, and use commercially reasonable
efforts to ensure that such Confidential Information is used only for those
purposes specifically authorized herein; provided, however, that such
restriction shall not apply to any Confidential Information which is (a)
independently developed by the receiving party, (b) in the public domain at the
time of its receipt or thereafter becomes part of the public domain through no
fault of the receiving party, (c) received without an obligation of
confidentiality from a third party having the right to disclose such
information, (d) released from the restrictions of this Section 5.1 by the
express written consent of the disclosing party, (e) disclosed to any permitted
assignee, permitted sublicensee or permitted subcontractor of either MPI or MBI
hereunder (if such assignee, sublicense or subcontractor is subject to the
provisions of this Section 5.1 or comparable provisions of such other
documents), or (f) required by law, statute, rule or court order to be disclosed
(the disclosing party shall, however, use commercially reasonable efforts to
obtain confidential treatment of any such disclosure).
5.2 Employee Obligations. MPI and MBI each agree that it shall provide
Confidential Information received from the other Party only to its employees,
consultants and advisors who have a need to know and have an obligation to treat
such information and materials as confidential. Without limiting the generality
of the foregoing, MPI and MBI each shall use commercially reasonable efforts to
obtain confidentiality agreements from its respective employees and agents,
similar in scope to Section 5.1, to protect the Confidential Information.
Notwithstanding anything to the contrary herein, MPI and MBI shall each be
deemed to have satisfied its obligations under Section 5.1 if it protects the
Confidential Information of the other party with the same degree of care that it
uses to protect its own similar Confidential Information.
5.3 Third Party Obligations. Each Party acknowledges that the other
Party may from time to time have agreements with other persons which impose
obligations or restrictions on such other Party with respect to the disclosure
or use of inventions or information relating to the subject matter of such
agreements ("Third Party Agreements"). Without limiting the generality of the
foregoing, MPI acknowledges that MBI is subject to certain obligations and
restrictions under the Lilly Collaboration Agreement. Each Party agrees to be
bound by all such obligations and restrictions which are made known to it under
Third Party Agreements (excluding the Lilly Collaboration Agreement) relating to
Confidential Information, and MPI agrees to be bound by all such obligations and
restrictions under the Lilly Collaboration Agreement relating to Confidential
Information.
5.4 Permitted Disclosures. Notwithstanding the provisions of Section
5.1 hereof, MPI and MBI may, to the extent necessary, disclose and use
Confidential
8
<PAGE> 9
Information, consistent with the rights of MPI and MBI otherwise granted
hereunder (a) for the purpose of engaging in research and development,
conducting clinical testing and marketing programs, or securing institutional or
government approval to clinically test or market any product, (b) for the
purpose of sharing clinical trial results and data with third parties conducting
clinical trials on products arising from MPI Retained Rights or MBI Retained
Rights, as applicable, (c) for the purpose of securing patent protection for an
invention arising from the exploitation of MPI Retained Rights or MBI Retained
Rights, as applicable, or (d) for the purpose of obtaining private investment.
5.5 Term The obligations set forth in this Section 5 shall survive for
a period of five (5) years from the termination or expiration of this Agreement.
SECTION 6. Disclaimer of Warranty; Consequential Damages.
6.1 Disclaimer of Warranty. Nothing in this Agreement shall be
construed as a representation made or warranty given by either party hereto that
the practice by the other party hereto of any rights transferred hereunder, or
that the exploitation of any MPI Retained Rights or MBI Retained Rights, will
not infringe the patent or proprietary rights of any other Person. In addition,
MPI and MBI acknowledge that THE MPI RETAINED RIGHTS AND MBI RETAINED RIGHTS ARE
TRANSFERRED, AS THE CASE MAY BE, TO MBI AND MPI, RESPECTIVELY, AS IS, AND MPI
AND MBI EXPRESSLY DISCLAIM AND HEREBY WAIVE, RELEASE AND RENOUNCE ANY WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO SUCH TECHNOLOGY, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
6.2 Consequential Damages. EXCEPT AS OTHERWISE SET FORTH HEREIN,
NEITHER PARTY TO THIS AGREEMENT SHALL BE ENTITLED TO RECOVER FROM THE OTHER ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES.
SECTION 7. Indemnification
7.1 Indemnification by MPI. MPI agrees to defend MBI, at MPI's cost and
expense, and will indemnify and hold MBI and its directors, officers, employees
and agents (the "MBI Indemnified Parties") harmless from and against, any
losses, costs, damages, fees or expenses arising out of any claim relating to
personal injury from the exploitation by MPI or its licensees of the MBI
Retained Rights or other rights transferred by MBI to MPI pursuant to Section 2,
including the development, manufacture, use, sale or other disposition of
products or services resulting therefrom. In the event of any such claim against
the MBI Indemnified Parties by any party, MBI shall promptly notify MPI in
writing of the claim and MPI shall
9
<PAGE> 10
manage and control, at its sole expense, the defense of the claim and its
settlement. The MBI Indemnified Parties shall cooperate with MPI and may, at
their option and expense, be represented in any such action or proceeding. MPI
shall not be liable for any litigation costs or expenses incurred by the MBI
Indemnified Parties without MPI's prior written authorization. In addition, MPI
shall not be responsible for the indemnification of any MBI Indemnified Party
arising from any negligent or intentional acts by such party.
7.2 Indemnification by MBI. MBI agrees to defend MPI, at MBI's cost and
expense, and will indemnify and hold MPI and its directors, officers, employees
and agents (the "MPI Indemnified Parties") harmless from and against any losses,
costs, damages, fees or expenses arising out of any claim relating to personal
injury from the exploitation by MBI or its licensees of the MPI Retained Rights
or other rights transferred by MPI to MBI pursuant to Section 2, including the
development, manufacture, use, sale or other disposition of products or services
resulting therefrom. In the event of any such claim against the MPI Indemnified
Parties by any party, MPI shall promptly notify MBI in writing of the claim and
MBI shall manage and control, at its sole expense, the defense of the claim and
its settlement. The MPI Indemnified Parties shall cooperate with MBI and may, at
their option and expense, be represented in any such action or proceeding. MBI
shall not be liable for any litigation costs or expenses incurred by the MPI
Indemnified Parties without MBI's prior written authorization. In addition, MBI
shall not be responsible for the indemnification of any MPI Indemnified Party
arising from any negligent or intentional acts by such party.
SECTION 8. General Provisions
8.1 No Implied Waivers; Rights Cumulative. No failure on the part of
MPI or MBI to exercise and no delay in exercising any right, power, remedy or
privilege under this Agreement, or provided by statute or at law or in equity or
otherwise, shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach of this
Agreement or as an acquiescence therein, nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof or the exercise of any other right, power, remedy or
privilege.
8.2 Force Majeure. MPI and MBI shall each be excused for any failure or
delay in performing any of its respective obligations under this Agreement, if
such failure or delay is caused by Force Majeure.
8.3 Cooperation. Each party agrees to cause each of its employees and
agents to take all actions and to execute, acknowledge and deliver all
instruments or agreements reasonably requested by the other party, and necessary
for the perfection, maintenance, enforcement or defense of that party's rights
as set forth herein.
10
<PAGE> 11
8.4 Notices. All notices, requests and other communications to MPI or
MBI hereunder shall be in writing (including telecopy or similar electronic
transmissions), shall refer specifically to this Agreement and shall be
personally delivered or sent by telecopy or other electronic facsimile
transmission or by certified mail, return receipt requested, postage prepaid, in
each case to the respective address specified below (or to such other address as
may be specified in writing to the other party hereto):
Millennium Pharmaceuticals, Inc.
640 Memorial Drive
Cambridge, MA 02139-4815
Attention: Chief Business Officer (with a copy to Legal Department)
Millennium BioTherapeutics, Inc.
640 Memorial Drive
Cambridge, MA 02139-4815
Attention: Vice President and General Manager (with a copy to Legal
Department)
Any notice or communication given in conformity with this Section 8.4 shall be
deemed to be effective when received by the addressee, if delivered by hand,
telecopy or other electronic facsimile transmission, and three (3) days after
mailing, if mailed.
8.5 Further Assurances. Each of MPI and MBI agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
8.6 Successors and Assigns. The terms and provisions of this Agreement
shall inure to the benefit of, and be binding upon, MPI, MBI, and their
respective successors and assigns; provided, however, that neither MPI nor MBI
may assign or otherwise transfer any of its rights and interests, nor delegate
any of its respective obligations hereunder, including, without limitation,
pursuant to a merger or consolidation, without the prior written consent of the
other party hereto, which consent shall not be unreasonably withheld. Any
attempt to assign or delegate any portion of this Agreement in violation of this
Section 8.6 shall be null and void. Subject to the foregoing, any reference to
MPI and MBI hereunder shall be deemed to include the successors thereto and
assigns thereof.
11
<PAGE> 12
8.7 Amendments. No amendment, modification, waiver, termination or
discharge of any provision of this Agreement, nor consent to any departure by
MPI or MBI therefrom, shall be effective unless the same shall be in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by MPI and MBI,
and each such amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreements course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by MPI and MBI.
8.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Massachusetts.
8.9 Severability. If any provision hereof should be held invalid,
illegal or unenforceable in any respect in any jurisdiction, then, to the
fullest extent permitted by law, (a) all other provisions hereof shall remain in
full force and effect in such jurisdiction and shall be liberally construed in
order to carry out the intentions of the parties hereto as nearly as may be
possible and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. To the extent permitted by applicable law, MPI and MBI hereby
waive any provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
8.10 Headings. Headings used herein are for convenience only and shall
not in any way affect the construction of, or be taken into consideration
interpreting, this Agreement.
8.11 Execution in Counterparts. This Agreement may be executed in
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original, and all of which counterparts, taken together,
shall constitute one and the same instrument.
8.12 Entire Agreement. This Agreement together with the Technology
Transfer and License Agreement, the Research Services and Collaboration
Agreement, Bioinformatics License Agreement, Trademark License Agreement,
Administrative Services Agreement and Tax Sharing Agreement, each dated as of
the date hereof, constitute, on and as of the date hereof, the entire agreement
of MPI and MBI with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
MPI and MBI with respect to such subject matter are hereby superseded in their
entirety.
12
<PAGE> 13
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal and delivered as of the date first above written.
MILLENNIUM BIOTHERAPEUTICS, INC. MILLENNIUM
PHARMACEUTICALS, INC.
By: /s/John Maraganore By: /s/Steven H. Holtzman
----------------------------------- ---------------------------
John Maraganore, Vice President Steven H. Holtzman,
and General Manager Chief Business Officer
13
<PAGE> 14
EXHIBIT A
A. MPI Collaboration Agreements
1. Research and License Agreement between MPI and
Hoffmann-LaRoche, Inc. dated March 25, 1994.
2. Collaborative Research Agreement between Pfizer, Inc. and Myco
Pharmaceuticals, Inc. (later renamed ChemGenics
Pharmaceuticals, Inc.) dated January 1, 1995.
3. License Option, License and Royalty Agreement between Pfizer,
Inc. and Myco Pharmaceuticals, Inc. (later renamed ChemGenics
Pharmaceuticals, Inc.) dated January 1, 1995.
4. Research and License Agreement between MPI and Eli Lilly and
Company dated October 2, 1995.
5. Research and License Agreement between MPI and Astra AB, dated
December 9, 1995.
6. Research and License Agreement between MPI and Eli Lilly and
Company dated March 31, 1996.
7. Research and License Agreement between MPI and American Home
Products Corporation, dated August 1, 1996.
8. Collaborative Research and License Agreement between American
Home Products represented by its Wyeth-Ayerst Laboratories
Division and ChemGenics Pharmaceuticals, Inc. dated November
1, 1996.
14
<PAGE> 1
EXHIBIT 10.9
[GE CAPITAL LETTERHEAD]
June 16, 1997
Mr. Peter Courossi
Director of Finance
Millennium Pharmaceuticals, Inc.
640 Memorial Drive, 5th Floor
Cambridge, MA 02139-4815
Dear Peter:
We are pleased to advise you that our Senior Management Committee has approved a
firm commitment for a lease line to Millennium Pharmaceuticals, Inc., (the
"Lessee"), to be funded by us or our nominee, on the following terms and
conditions.
1. TRANSACTION: The transaction is structured as a true lease in which the
Lessor will be entitled to claim and retain all of the tax benefits
associated with ownership of the equipment. The lease will be a net lease
in which the Lessee will be responsible for all expenses relating to the
equipment and the transaction, including equipment maintenance, insurance
coverage, payment of personal property taxes, recording fees and other
expenses. Information provided to GE Capital may be used by GE Capital or
its potential nominees in evaluating the transaction.
2. LESSEE: Millennium Pharmaceuticals, Inc.
2a. LESSOR: GE Capital or its nominee.
3. ORIGINATOR: Meier Mitchell & Company.
4. EQUIPMENT: Various new laboratory test, office and other equipment all of
which must be acceptable to Lessor. Transportation and other soft costs
cannot exceed ten percent (10%) of the Acquisition Cost.
5. DELIVERY: All Equipment must be delivered, accepted and scheduled on or
before December 31, 1997.
<PAGE> 2
6. ACQUISITION COST: TRANCHE A: $ 6,000,000
TRANCHE B: $ 4,000,000 (see Section 16)
-----------
$10,000,000
7. TERM: Five (5)years from the Base Lease Commencement Date.
8. BASE LEASE COMMENCEMENT DATE: See Section 16
9. BASE LEASE RENTAL PAYMENT: Lessee will be required to make sixty (60)
monthly rental payments, each payable in advance and equal to 1.9625% or
1.9983% of the Acquisition Cost for 1997 takedowns for 5-years MACRS
Equipment or 7-years MACRS Equipment, respectively. The Base Lease Rental
Payment was calculated using current money market rates; however, money
market conditions at the Base Lease Commencement Date will control the final
Base Lease Rental Payment that is fixed for the Term. See "Adjustments to
the Base Lease Rental Payment" on the following page.
9a. INTERIM RENTAL PAYMENT: From the date of scheduling to the Base Lease
Commencement Date, the Lessee will be required to make Interim Rental
Payments at the prime rate of interest.
10. TAX BENEFITS: Lessee will represent and warrant that the depreciation
deductions arising out of the ownership of all of the Equipment will be for
the account of Lessor and will be recognized over a five (5) year or seven
(7) year period as appropriate on a 200% declining balance switching to
straight-line (DDB/SL) formula using the half-year convention. A Federal
corporate tax rate of 35% for 1997 and thereafter was assumed in calculating
the Base Lease Rental Payment. Lessee will indemnify Lessor for any loss of
any Tax Benefits caused by an act, omission or misrepresentation of Lessee.
11. ADMINISTRATIVE FEE: An Administrative Fee equal to $100,000 has been paid
to GE Capital. Upon scheduling, this fee shall be applied pro rata to the
first monthly rental payment under each schedule. Any portion of this fee
which has not been applied by December 31, 1997 will be considered earned.
If by July 31, 1997, Lessor has not committed to funding the $4,000,000
Tranche B, $40,000 of this Administrative Fee shall be promptly returned
to Lessee.
12. LESSEE OPTIONS AT LEASE EXPIRATION: At the expiration of the Term, Lessee
will have the following options:
A. Renew all the Equipment under the lease for ten (10) months at 1.2% of
Acquisition Cost per month, in advance, after which time the Lessee may:
1. Return all the Equipment to the Lessor;
2. Renew all the Equipment under lease at a term and rate to be
negotiated by the parties based upon the then remaining useful life
and fair market value of the Equipment; or
3. Purchase all the Equipment at its then fair market value; OR
B. Purchase all the Equipment for the greater of ten percent (10%) of
original Acquisition Cost or its then fair market value. The Lessee may
select the qualified appraiser.
<PAGE> 3
13. ADJUSTMENTS TO THE BASE LEASE RENTAL PAYMENT: The Base Lease Rental
Payment stated above reflects current money market rates as indicated by the
yield to maturity of 6.29% for five-year Treasury Notes (the Reference Yield).
The table below sets forth the U.S. Treasury Notes with similar then
remaining lives to maturity which will be used to establish the final Base
Lease Rental Payment, depending upon the Base Lease Commencement Date
BASE LEASE COMMENCEMENT DATE APPLICABLE TREASURY NOTE
Coupon Maturity
------ --------
July 1 to September 30, 1997 6.375% August, 2002
October 1 to December 31, 1997 11.625% November, 2002
The Base Lease Rental Payment actually used will be that stated above,
increased or decreased by basis point for basis point for any change in the
yield to maturity of the Applicable Treasury Note from the Reference Yield.
The yield to maturity of the Applicable Treasury Note used to calculate the
adjustment to the Base Lease Rental Payment will be the yield quoted in the
most recently published issue of The Wall Street Journal two days before
the Base Lease Commencement Date.
14. ELECTRONIC PAYMENT SYSTEM: All payments to GE Capital shall be made under
an electronic payment system.
15. FINANCIAL COVENANTS: Lessee agrees that its consolidated a) unrestricted
cash, cash equivalents and marketable securities shall always total at
least $30,000,000; b) tangible net worth shall always be at least
$30,000,000; c) current ratio shall always be at least 2.0:1 and (d) total
liabilities/tangible net worth ratio shall never exceed 1.0:1. Unrestricted
cash and cash equivalents and marketable securities will be defined as
being net of any non-GE Capital contingent liability associated with other
cash triggers or pledge agreements. If for any reason Lessee does not meet
these covenants, Lessee will provide Lessor with an irrevocable letter of
credit in a form acceptable to Lessor and from a bank acceptable to Lessor
equal to Lessor's then stipulated loss value on all schedules. Lessee's
chief financial officer or other senior officer will provide Lessor with a
monthly compliance statement in a form acceptable to Lessor.
16. COMMITMENT MECHANICS:
Tranche A: $6,000,000 of Equipment is expected to be scheduled on or before
June 30, 1997. This Equipment will be accumulated on an interim schedule.
The Equipment contained in the interim schedule will be converted to final
schedules, as determined by Lessor, with Base Lease Commencement Date of
August 1, 1997. The Lessee will pay Interim Rental Payments at the prime
rate of interest between the scheduling date and the Base Lease
Commencement Date of August 1, 1997. As of the Base Lease Commencement
Date, the Base Lease Rental Payments will be fixed for the 60-month Term of
the lease.
Tranche B: Lessor will have through July 31, 1997 to determine whether or
not to commit to leasing the remaining $4,000,000. If Lessor does so
commit, one or more schedules can be created any time before December 31,
1997 depending on when the
<PAGE> 4
remaining Equipment is available. Scheduling will be done the same way
as discussed in Tranche A. The Base Lease Commencement Date for these
schedules will be the first day of the month following scheduling.
Lessee will pay Interim Rental Payments at the prime rate of interest
between scheduling and the Base Lease Commencement Date. Lessee agrees
that it will not seek or entertain proposals from any financing sources
other than TransAmerica between now and July 31, 1997. If Lessor does
not commit to this $4,000,000, by July 31, 1997, Lessee may finance that
amount with others of Lessee's choice.
The firm commitment has been rendered in express reliance on the financial or
other statements respecting the conditions, operation, and affairs of the
Lessee, or respecting the equipment to be leased, which Lessee has previously
provided to us, and is based on the understanding that Lessee has committed to
complete the transaction with us or our nominee. The Lessor's commitment is
subject to the condition that there shall be no material adverse change in
either (i) the business or financial condition of the Lessee or (ii) proposed
Federal tax law, prior to any funding under the lease. In addition, funding
under this lease will be for a minimum of $300,000 each.
An express condition of the commitment is that all documentation be
satisfactory to our counsel.
This firm commitment will expire on June 20, 1997 unless you acknowledge your
receipt hereof and acceptance by executing the enclosed copy of this letter and
returning it to us by that date. If accepted by you, this commitment will
expire on December 31, 1997.
GE Capital
/s/ Richard L. Dauphinias
-------------------------
Richard L. Dauphinias
Senior Transaction Manager
Third Party Originations
ACCEPTED BY THE LESSEE:
By:
---------------------
Date:
-------------------
<PAGE> 1
<TABLE>
Exhibit 11.1
Statement Regarding Computation of Per Share Earnings
Millennium Pharmaceuticals, Inc.
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1997 1996 1997 1996
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Average common stock outstanding 28,764,467 18,231,808 27,663,696 12,644,635
Assumed conversion of Convertible
Preferred Stock - 4,036,574 - 8,073,147
Common stock equivalents - - - -
---------------------------------------------------------------
Total 28,764,467 22,268,382 27,663,696 20,717,782
===============================================================
Net loss $(9,477,000) $(4,129,000) $(96,896,000) $(4,271,000)
===============================================================
Net loss per share $ (0.33) $ (0.19) $ (3.50) $ (0.21)
===============================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 18,591,000
<SECURITIES> 40,935,000
<RECEIVABLES> 22,294,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 85,589,000
<PP&E> 36,806,000
<DEPRECIATION> (12,075,000)
<TOTAL-ASSETS> 120,981,000
<CURRENT-LIABILITIES> 14,156,000
<BONDS> 0
0
0
<COMMON> 29,000
<OTHER-SE> 73,611,000
<TOTAL-LIABILITY-AND-EQUITY> 120,981,000
<SALES> 0
<TOTAL-REVENUES> 13,372,000
<CGS> 0
<TOTAL-COSTS> 23,522,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 303,000
<INCOME-PRETAX> (9,477,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,477,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,477,000)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> 0
</TABLE>
<PAGE> 1
Exhibit 99.1
RISK FACTORS
The Shares of Common Stock offered hereby include a high degree of
risk. The following risk factors should be considered carefully in addition to
the other information included or incorporated by reference in this Prospectus
before purchasing the Shares offered hereby.
UNCERTAINTIES RELATING TO TECHNOLOGICAL APPROACHES OF THE COMPANY
To date, the Company has not developed or commercialized any products
based on its technological approaches. There can be no assurance that these
approaches will enable the Company to successfully identify and characterize
genes that predispose individuals to the diseases that are the principal focus
of its disease research programs or to use any resulting information to develop
molecular targets of utility for pharmaceutical product development. The
Company's lead programs and development focus are primarily directed to complex
polygenic and multifactorial diseases. There is limited scientific understanding
generally relating to the role of genes in these diseases and relatively few
products based on gene discoveries have been developed and commercialized.
Accordingly, even if the Company is successful in identifying genes associated
with specific diseases, there can be no assurance that its gene discoveries will
lead to the development of therapeutic and diagnostic products. The Company's
success will depend, in part, upon its ability to focus its research efforts on
diseases that are suitable candidates for diagnostic and therapeutic products.
The development of diagnostic and therapeutic products based on the
Company's gene discoveries also will be subject to the risks of failure inherent
in the development of products based on new technologies. These risks include
the possibilities that any products based on these technologies will be found to
be ineffective or toxic, or otherwise fail to receive necessary regulatory
approvals; the products, if safe and effective, will be difficult to manufacture
on a large scale or will be uneconomical to market; proprietary rights of third
parties will preclude the Company or its strategic partners from marketing
products; or third parties will market superior or equivalent products. As a
result, there can be no assurance that the Company's research and development
activities will result in any commercially viable products.
Genomics, biotechnology and pharmaceutical technologies have undergone
and are expected to continue to undergo rapid and significant change. The
Company's future success will depend in large part on its ability to maintain a
competitive position with respect to these technologies. Rapid technological
developments by the Company or others may result in compounds, products or
processes becoming obsolete before the Company recovers any expenses it incurs
in connection with the development of such products.
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HISTORY OF OPERATING LOSSES; ANTICIPATION OF FUTURE LOSSES
Substantially all of the Company's resources have been, and will for
the foreseeable future continue to be, dedicated to the development of the
Company's technology and its application to discovering and elucidating the
function of genes associated with major common diseases. To date, all of the
Company's revenues have resulted from payments from strategic partners. The
Company has not yet identified any lead compounds nor generated any products
which have entered preclinical studies or generated any revenue. All of the
Company's potential products and services will require significant research and
development expenditures. It will be a number of years, if ever, before the
Company recognizes revenue from sales or royalties.
As of March 31, 1997, the Company had an accumulated deficit of
approximately $105,562,000 (including a non-recurring charge of $83,800,000 for
acquired in-process research and development related to the acquisition of
ChemGenics). Even if the Company succeeds in developing a commercial product,
the Company expects to incur losses for at least the next several years and that
such losses will increase as the Company expands its research and development
activities. To achieve profitability, the Company, alone or with others, must
successfully discover genes associated with particular diseases and, thereafter,
utilize such discoveries to develop products, conduct clinical trials, obtain
required regulatory approvals and successfully manufacture, introduce and market
such products. The time required to reach commercial revenue and profitability
is highly uncertain and there can be no assurance that the Company will be able
to achieve any such revenue and profitability on a sustained basis, if at all.
FUTURE CAPITAL REQUIREMENTS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company's comprehensive technological approach to developing
products through the application of genomics has required that Millennium
establish a substantial scientific infrastructure. The Company has consumed
substantial amounts of cash to date and expects capital and operating
expenditures to increase over the next several years as it expands its
infrastructure and its research and development activities. The Company believes
that existing cash and investment securities and anticipated cash flow from
existing strategic alliances will be sufficient to support the Company's
operations for at least the next 24 months. The Company's actual future capital
requirements, however, will depend on many factors, including progress of its
disease research programs, the number and breadth of these programs, achievement
of milestones under strategic alliance arrangements, the ability of the Company
to establish and maintain additional strategic alliance and licensing
arrangements, and the progress of the development efforts of the Company's
strategic partners. These factors also include the level of the Company's
activities relating to commercialization rights it has retained in its strategic
alliance arrangements, competing technological
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and market developments, the costs associated with collection of patient
information and DNA samples, the costs involved in enforcing patent claims and
other intellectual property rights and the costs and timing of regulatory
approvals. The Company expects that it will require significant additional
financing in the future, which it may seek to raise through public or private
equity offerings, debt financings or additional strategic alliance and licensing
arrangements. No assurance can be given that additional financing will be
available when needed, or that, if available, such financing will be obtained on
terms favorable to the Company or its stockholders. To the extent the Company
raises additional capital by issuing equity securities, ownership dilution to
stockholders will result. To the extent that the Company raises additional funds
through strategic alliance and licensing arrangements, the Company may be
required to relinquish rights to certain of its technologies or product
candidates, or to grant licenses on terms that are not favorable to the Company,
either of which could have a material adverse effect on the Company's business,
financial condition and results of operations. In the event that adequate funds
are not available, the Company's business would be adversely affected.
RELIANCE ON STRATEGIC PARTNERS
The Company's strategy for development and commercialization of
diagnostic and therapeutic products based upon its gene discoveries depends upon
the formation of various strategic alliances and licensing arrangements. The
Company has entered into strategic alliances with Roche, Lilly, Astra, Pfizer
and PBIO. There can be no assurance that the Company will be able to establish
additional strategic alliance or licensing arrangements necessary to develop and
commercialize products based upon the Company's disease research programs, that
any such arrangements or licenses will be on terms favorable to the Company, or
that the current or any future strategic alliances or licensing arrangements
ultimately will be successful. The Company is dependent on its strategic
partners for the preclinical study, clinical development, regulatory approval,
manufacturing and marketing of products based on the results of these
collaborative research programs. The agreements with these strategic partners
allow them significant discretion in electing whether to pursue any of these
activities. The Company cannot control the amount and timing of resources its
strategic partners devote to the Company's programs or potential products. If
any of the Company's strategic partners were to breach or terminate its
agreement with the Company or otherwise fail to conduct its collaborative
activities successfully in a timely manner, the preclinical or clinical
development or commercialization of product candidates or research programs
would be delayed or terminated. Any such delay or termination could have a
material adverse effect on the Company's business, financial condition and
results of operations.
The Company relies on its strategic partners for significant funding in
support of its research operations. The Company would be required to devote
additional
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internal resources to product development, or scale back or terminate certain
development programs or seek alternative collaborative partners, if funding from
one or more of its collaborative programs were reduced or terminated.
Disputes may arise in the future with respect to the ownership of
rights to any technology developed with strategic partners. These and other
possible disagreements between strategic partners and the Company could lead to
delays in the collaborative research, development or commercialization of
certain product candidates, or could require or result in litigation or
arbitration, which could be time consuming and expensive, in which case it would
have a material adverse effect on the Company's business, financial condition
and results of operations.
Generally, in each of its strategic alliances, the Company agrees not
to conduct certain research, independently or with any commercial third party,
that is in the same field as the research conducted under the alliance
agreement. Consequently, these arrangements may have the effect of limiting the
areas of research the Company may pursue, either alone or with others. The
Company's strategic partners, however, may develop, either alone or with others,
products that are similar to or competitive with the products that are the
subject of the Company's collaborations with such partners. Competing products,
either developed by a strategic partner or to which the strategic partner has
rights, may result in the partner withdrawing financial and related support for
the Company's product candidates, which could have a material adverse effect on
the Company's business, financial condition and results of operations.
All of the Company's strategic alliance agreements are subject to
termination under various circumstances. Each strategic partner has the right to
terminate the research program it is funding (while maintaining rights and
licenses to certain Company discoveries) should the Company fail to meet certain
performance criteria specified in the relevant strategic alliance agreement.
Certain of the Company's strategic alliance agreements provide that, upon
expiration of a specified period after commencement of the agreement, its
strategic partner has the right to terminate the agreement on short notice
without cause. The termination of any strategic alliance could have a material
adverse effect on the Company's business, financial condition and results of
operations.
POTENTIAL CONFLICTS OF INTEREST
The Company has established relationships with strategic partners,
research collaborators and scientific advisors. Conflicts of interest could
arise between the Company and these third parties which, depending upon the
nature of such conflicts, could have a material adverse effect on the Company's
business, financial condition and results of operations.
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The Company relies on its strategic partners for support in its disease
research programs and intends to rely on its strategic partners for preclinical
evaluation and clinical development of its potential products and manufacturing
and marketing of any products. Each of the Company's strategic partners is
conducting multiple product development efforts within each disease area that is
the subject of its strategic alliance with the Company. Generally, in each of
its strategic alliances, the Company's strategic partners may develop, either
alone or with others, products that are similar to or competitive with the
products that are the subject of the Company's collaborations with such
partners. Competing products, either developed by a strategic partner or to
which the strategic partner has rights, may result in the partner withdrawing
financial and related support for the Company's product candidates, which could
have a material adverse effect on the Company's business, financial condition
and results of operations.
The Company has relationships with collaborators and scientific
advisors at academic and other institutions, some of whom conduct research at
the Company's request, particularly with respect to the Company's human genetics
programs. These collaborators and scientific advisors are not employees of the
Company and may have commitments to, or consulting or advisory contracts with,
other entities that may limit their availability to the Company. As a result,
the Company has limited control over their activities and, except as otherwise
required by its collaboration and consulting agreements, can expect only limited
amounts of their time to be dedicated to the Company's activities.
INTENSE COMPETITION
Millennium faces, and will continue to face, intense competition from
organizations such as large pharmaceutical, biotechnology and diagnostic
companies, as well as academic and research institutions and government
agencies. The Company is subject to significant competition from organizations
that are pursuing the same or similar technologies as those which constitute the
Company's technology platform and from organizations that are pursuing
pharmaceutical or diagnostic products that are competitive with the Company's
potential products. Most of the organizations competing with the Company have
greater capital resources, research and development staffs and facilities, and
greater experience in drug discovery and development, obtaining regulatory
approvals and pharmaceutical product manufacturing and greater marketing
capabilities than the Company.
In addition, research in the field of genomics is highly competitive.
Competitors of the Company in the genomics area include, among others, public
companies such as Genome Therapeutics Corporation, Human Genome Sciences, Inc.,
Incyte Pharmaceuticals, Inc., Myriad Genetics, Inc. and Sequana Therapeutics,
Inc., as well as private companies and major pharmaceutical companies.
Universities and other research institutions, including those receiving funding
from the federally
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funded Human Genome Project, also compete with Millennium. A number of entities
are attempting to rapidly identify and patent randomly sequenced genes and gene
fragments, typically without specific knowledge of the function of such genes or
gene fragments. In addition, certain other entities are pursuing a gene
identification, characterization and product development strategy based on
positional cloning. The Company's competitors may discover, characterize or
develop important genes in advance of Millennium, which could have a material
adverse effect on any related Millennium disease research program. The Company
also faces competition from these and other entities in gaining access to DNA
samples used in its research and development projects. The Company expects
competition to intensify in genomics research as technical advances in the field
are made and become more widely known.
The Company relies on its strategic partners for support in its disease
research programs and intends to rely on its strategic partners for preclinical
evaluation and clinical development of its potential products and manufacturing
and marketing of any products. Each of the Company's strategic partners is
conducting multiple product development efforts within each disease area that is
the subject of its strategic alliance with the Company. For example, Roche, with
whom the Company is collaborating in the field of obesity, currently has a
product for the treatment of obesity in late stage clinical trials. Generally,
the Company's strategic alliance agreements do not restrict the strategic
partner from pursuing competing development efforts. Any product candidate of
the Company, therefore, may be subject to competition with a potential product
under development by a strategic partner.
PATENTS AND PROPRIETARY RIGHTS; THIRD PARTY RIGHTS
The Company's commercial success will depend in part on obtaining
patent protection on gene discoveries and on products, methods and services
based on such discoveries. The Company has more than 100 pending United States
and foreign patent applications and has two issued United States patents. The
patent positions of pharmaceutical, biopharmaceutical and biotechnology
companies, including Millennium, are generally uncertain and involve complex
legal and factual questions. There can be no assurance that any of the Company's
pending patent applications will result in issued patents, that the Company will
develop additional proprietary technologies that are patentable, that any
patents issued to the Company or its strategic partners will provide a basis for
commercially viable products or will provide the Company with any competitive
advantages or will not be challenged by third parties, or that the patents of
others will not have an adverse effect on the ability of the Company to do
business. In addition, patent law relating to the scope of claims in the
technology fields in which the Company operates is still evolving. The degree of
future protection for the Company's proprietary rights, therefore, is uncertain.
Furthermore, there can be no assurance that others will not independently
develop similar or alternative technologies, duplicate any of the Company's
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technologies, or, if patents are issued to the Company, design around the
patented technologies developed by the Company. In addition, the Company could
incur substantial costs in litigation if it is required to defend itself in
patent suits brought by third parties or if it initiates such suits.
The Company has applied for patent protection for novel genes, partial
gene sequences ("ESTs") of novel genes and novel uses for known genes identified
through its research programs. There is substantial uncertainty regarding the
patentability of ESTs or full-length genes absent data demonstrating functional
relevance. Based on recent technological advances in gene sequencing technology,
a number of groups other than the Company are attempting to rapidly identify
ESTs and full-length genes, the functions of which have not been characterized.
Washington University, for example, is currently identifying ESTs through
partial sequencing pursuant to funding provided by Merck & Co., Inc., and
depositing the ESTs identified in a public database. The public availability of
EST information prior to the time the Company applies for patent protection on a
corresponding full-length gene could adversely affect the Company's ability to
obtain patent protection with respect to such gene. To the extent any patents
issue to other parties on such partial or full-length genes, the risk increases
that the potential products and processes of the Company or its strategic
partners may give rise to claims of patent infringement.
Others may have filed and in the future are likely to file patent
applications covering genes or gene products that are similar or identical to
those of the Company. No assurance can be given that any such patent application
will not have priority over patent applications filed by the Company. Any legal
action against the Company or its strategic partners claiming damages and
seeking to enjoin commercial activities relating to the affected products and
processes could, in addition to subjecting the Company to potential liability
for damages, require the Company or its strategic partner to obtain a license in
order to continue to manufacture or market the affected products and processes.
There can be no assurance that the Company or its strategic partners would
prevail in any such action or that any license required under any such patent
would be made available on commercially acceptable terms, if at all. The Company
believes that there may be significant litigation in the industry regarding
patent and other intellectual property rights. If the Company becomes involved
in such litigation, it could consume a substantial portion of the Company's
managerial and financial resources.
There is substantial uncertainty concerning whether human clinical data
will be required for issuance of patents for human therapeutics. If such data is
required, the Company's ability to obtain patent protection could be delayed or
otherwise adversely affected. Although the United States Patent and Trademark
Office ("USPTO") issued new utility guidelines in July 1995 that address the
requirements for demonstrating utility for biotechnology inventions,
particularly for inventions relating to human therapeutics, there can be no
assurance that USPTO examiners will
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follow such guidelines or that the USPTO's position will not change with respect
to what is required to establish utility for gene sequences and products and
methods based on such sequences. Furthermore, the enactment of the legislation
implementing the General Agreement on Trade and Tariffs has resulted in certain
changes to United States patent laws that became effective on June 8, 1995. Most
notably, the term of patent protection for patent applications filed on or after
June 8, 1995 is no longer a period of seventeen years from the date of grant.
The new term of United States patents will commence on the date of issuance and
terminate twenty years from the earliest effective filing date of the
application. Because the time from filing to issuance of biotechnology patent
applications is often more than three years, a twenty-year term from the
effective date of filing may result in a substantially shortened term of patent
protection, which may adversely impact the Company's patent position. If this
change results in a shorter period of patent coverage, the Company's business
could be adversely affected to the extent that the duration and level of the
royalties it is entitled to receive from its strategic partners is based on the
existence of a valid patent.
The Company relies upon trade secret protection for its confidential
and proprietary information. The Company believes that it has developed
proprietary technology for use in gene discovery, including proprietary genetic
marker sets, proprietary software (including proprietary software for DNA
sequence analysis and laboratory automation) and an integrated bioinformatics
system. The Company has not sought patent protection for these technologies. In
addition, the Company has developed a database of proprietary gene sequences
which it updates on an ongoing basis. The Company has taken security measures to
protect its data and continues to explore ways to further enhance the security
for its data. There can be no assurance, however, that such measures will
provide adequate protection for the Company's trade secrets or other proprietary
information. While the Company requires employees, academic collaborators and
consultants to enter into confidentiality agreements, there can be no assurance
that proprietary information will not be disclosed, that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets or disclose
such technology, or that the Company can meaningfully protect its trade secrets.
The Company's academic collaborators have certain rights to publish
data and information in which the Company has rights. While the Company believes
that the limitations on publication of data developed by its collaborators
pursuant to its collaboration agreements will be sufficient to permit the
Company to apply for patent protection on genes in which it is interested in
pursuing further research, there is considerable pressure on academic
institutions to publish discoveries in the genetics and genomics fields. There
can be no assurance that such publication would not affect the Company's ability
to obtain patent protection for some genes in which it may have an interest.
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The Company is party to various license agreements which give it rights
to use certain technologies in its research and development processes. There can
be no assurance that the Company will be able to continue to license such
technology on commercially reasonable terms, if at all. Failure by the Company
to maintain rights to such technology could have a material adverse effect on
the Company's business, financial condition and results of operations.
UNCERTAINTIES RELATING TO RETAINED COMMERCIALIZATION RIGHTS
In each of its strategic alliances, Millennium has retained
commercialization rights for the development and marketing of certain
pharmaceutical and diagnostic products and services. The Company may seek to
exploit these retained rights directly or may seek to develop certain retained
rights through collaborations with others. To date, the Company has not
initiated significant activities with respect to the exploitation of these
retained commercialization rights. The value of these rights, if any, will be
largely derived from the Company's gene identification and target validation
efforts, the success of which is also uncertain. Even if the Company identifies
and characterizes relevant disease genes, the exploitation of retained
commercialization rights requires, in addition to capital resources,
technological, product development, manufacturing, regulatory, marketing and
sales resources that the Company does not currently possess. There can be no
assurance that the Company will be able to develop or obtain such resources. To
the extent that the Company is required to rely on third parties for these
resources, such as Lilly for access to combinational chemistry libraries and
high-throughput screening technology, failure to establish and maintain such
relationships could have a material adverse effect on the Company's ability to
realize value from its retained commercialization rights. If the Company seeks
to exploit retained commercialization rights through joint ventures or strategic
alliances, it may be required to relinquish material rights on terms that may
not be favorable to the Company. No agreements concerning any such arrangements
currently exist, and there can be no assurance that the Company will be able to
enter into any such agreements on acceptable terms, if at all, or that the
Company will be able to realize any value from its retained commercialization
rights.
GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL
Prior to marketing, any new drug developed by the Company and its
strategic partners must undergo an extensive regulatory approval process in the
United States and other countries. This regulatory process, which includes
preclinical studies and clinical trials, and may include post-marketing
surveillance, of each compound to establish its safety and efficacy, can take
many years and require the expenditure of substantial resources. Data obtained
from preclinical studies and clinical trials are susceptible to varying
interpretations that could delay, limit or prevent regulatory approval. The rate
of completion of clinical trials is dependent upon, among other
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factors, the enrollment of patients. Patient accrual is a function of many
factors, including the size of the patient population, the proximity of patients
to clinical sites, the eligibility criteria for the study and the existence of
competitive clinical trials. Delays in planned patient enrollment in clinical
trials may result in increased costs, program delays or both, which could have a
material adverse effect on the Company. Delays or rejections may also be
encountered based upon changes in United States Food and Drug Administration
("FDA") policies for drug approval during the period of product development and
FDA regulatory review of each submitted new drug application ("NDA") in the case
of new pharmaceutical agents, or product license application ("PLA") in the case
of biologics. Similar delays also may be encountered in the regulatory approval
of any diagnostic product and in obtaining regulatory approvals in foreign
countries. Under current guidelines, proposals to conduct clinical research
involving gene therapy at institutions supported by the National Institutes of
Health ("NIH") must be approved by the Recombinant DNA Advisory Committee
("RAC") and the NIH. There can be no assurance that regulatory approval will be
obtained for any drugs or diagnostic products developed by the Company or its
strategic partners. Furthermore, regulatory approval may entail limitations on
the indicated use of a drug. Because certain of the products likely to result
from the Company's disease research programs involve the application of new
technologies and may be based upon a new therapeutic approach, such products may
be subject to substantial additional review by various government regulatory
authorities and, as a result, regulatory approvals may be obtained more slowly
than for products using more conventional technologies.
Even if regulatory approval is obtained, a marketed product and its
manufacturer are subject to continuing review. Discovery of previously unknown
problems with a product may have adverse effects on the Company's business,
financial condition and results of operations, including withdrawal of the
product from the market. Violations of regulatory requirements at any stage,
including preclinical studies and clinical trials, the approval process or
post-approval, may result in various adverse consequences to the Company,
including the FDA's delay in approval or refusal to approve a product,
withdrawal of an approved product from the market or the imposition of criminal
penalties against the manufacturer and NDA or PLA holder. The Company has not
submitted an investigational new drug application ("IND") for any product
candidate, and no product candidate has been approved for commercialization in
the United States or elsewhere. The Company intends to rely primarily on its
strategic partners to file INDs and generally direct the regulatory approval
process. No assurance can be given that the Company or any of its strategic
partners will be able to conduct clinical testing or obtain the necessary
approvals from the FDA or other regulatory authorities for any products. Failure
to obtain required governmental approvals will delay or preclude the Company's
strategic partners from marketing drugs or diagnostic products developed by the
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Company or limit the commercial use of such products and could have a material
adverse effect on the Company's business, financial condition and results of
operations.
The Company's research and development activities involve the
controlled use of hazardous materials, chemicals and various radioactive
materials. The Company is subject to federal, state and local laws and
regulations governing the use, storage, handling and disposal of such materials
and certain waste products. Although the Company believes that its safety
procedures for handling and disposing of such materials comply with the
standards prescribed by federal, state and local laws and regulations, the risk
of accidental contamination or injury from these materials cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages that result and any liability could exceed the resources of the
Company.
ETHICAL, LEGAL AND SOCIAL IMPLICATIONS OF GENETIC DIAGNOSTIC TESTING
The prospect of broadly available diagnostic tests which evaluate
genetic predisposition to disease has raised issues regarding the appropriate
utilization and the confidentiality of information provided by such testing. It
is possible that discrimination by third party payors could occur through the
raising of premiums by such payors to prohibitive levels, outright cancellation
of insurance or unwillingness to provide coverage to patients shown to have a
genetic predisposition to a particular disease. If insurance discrimination were
to become a significant barrier to the acceptance of such diagnostic tests, the
Company could experience a delay in diagnostic market penetration or a reduction
in the size of the potential serviceable market. Similarly, employers could
discriminate against employees with a genetic predisposition due to the
increased risk of developing disease resulting in possible cost increases for
health insurance and the potential for lost employment time. Finally,
governmental authorities could, for social or other purposes, limit the use of
genetic testing or prohibit testing for genetic predispositions to certain
conditions. If efforts by the Company and others to mitigate potential
discrimination are not successful, the Company could experience a delay or
reduction in test acceptance, which could have a material adverse effect on the
Company's or its strategic partners' ability to commercialize certain potential
diagnostic products.
ATTRACTION AND RETENTION OF KEY EMPLOYEES
The Company is highly dependent on the principal members of its
management and scientific staff. The loss of services of any of these personnel
could impede significantly the achievement of the Company's development
objectives. Furthermore, recruiting and retaining qualified scientific personnel
to perform research and development work in the future will also be critical to
the Company's success. There is intense competition among pharmaceutical and
health care
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companies, universities and nonprofit research institutions for experienced
scientists, and there can be no assurance that the Company will be able to
attract and retain personnel on acceptable terms. Pursuant to the Lilly
strategic alliance agreements in the atherosclerosis and oncology fields, Lilly
has the right to suspend funded research programs under these agreements upon
the termination of the employment of two or more specified employees of the
Company without replacement reasonably acceptable to Lilly.
EXPANSION OF OPERATIONS; MANAGEMENT OF GROWTH
The Company recently has significantly increased the scale of its
operations to support the expansion of its disease research programs and its
strategic alliances, including expansion due to the acquisition of ChemGenics in
February 1997. The increase has included the hiring of a significant number of
additional personnel. The Company currently employs 400 persons and plans to
hire approximately 100 additional employees by the end of 1997. The resulting
growth in personnel and facilities could place significant strains on the
Company's management, operations and systems.
DEPENDENCE ON RESEARCH COLLABORATORS AND SCIENTIFIC ADVISORS
The Company has relationships with collaborators at academic and other
institutions who conduct research at the Company's request, particularly with
respect to the Company's human genetics programs. Such collaborators are not
employees of the Company. All of Millennium's consultants are employed by
employers other than the Company and may have commitments to, or consulting or
advisory contracts with, other entities that may limit their availability to the
Company. As a result, the Company has limited control over their activities and,
except as otherwise required by its collaboration and consulting agreements, can
expect only limited amounts of their time to be dedicated to the Company's
activities. The Company's ability to discover genes involved in human disease
and commercialize products based on those discoveries may depend in part on
continued collaborations with researchers at academic and other institutions.
There can be no assurance that the Company will be able to negotiate additional
acceptable collaborations with collaborators at academic and other institutions
or that its existing collaborations will be successful.
The Company's research collaborators and scientific advisors sign
agreements which provide for confidentiality of the Company's proprietary
information and results of studies. There can be no assurance, however, that the
Company will be able to maintain the confidentiality of its technology and other
confidential information in connection with every collaboration, and any
unauthorized dissemination of the Company's confidential information could have
an adverse effect on the Company's business.
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UNCERTAINTY OF PHARMACEUTICAL PRICING, REIMBURSEMENT AND RELATED MATTERS
The Company's business, financial condition and results of operations
may be materially adversely affected by the continuing efforts of government and
third party payors to contain or reduce the costs of health care through various
means. For example, in certain foreign markets pricing and profitability of
prescription pharmaceuticals are subject to government control. In the United
States, the Company expects that there will continue to be a number of federal
and state proposals to implement similar government control. In addition,
increasing emphasis on managed care in the United States will continue to put
pressure on the pricing of pharmaceutical products and diagnostic tests. Cost
control initiatives could decrease the price that the Company or any of its
strategic partners receives for any products in the future and have a material
adverse effect on the Company's business, financial condition and results of
operations. Further, to the extent that cost control initiatives have a material
adverse effect on the Company's strategic partners, the Company's ability to
commercialize its products and to realize royalties may be adversely affected.
The ability of the Company and any strategic partner to commercialize
pharmaceutical or diagnostic products may depend in part on the extent to which
reimbursement for the products will be available from government and health
administration authorities, private health insurers and other third party
payors. Significant uncertainty exists as to the reimbursement status of newly
approved health care products. Third party payors, including Medicare,
increasingly are challenging the prices charged for medical products and
services. Government and other third party payors are increasingly attempting to
contain health care costs by limiting both coverage and the level of
reimbursement for new therapeutic products and by refusing in some cases to
provide coverage for uses of approved products for disease indications for which
the FDA has not granted labeling approval. There can be no assurance that any
third party insurance coverage will be available to patients for any products
discovered and developed by the Company or its strategic partners. If adequate
coverage and reimbursement levels are not provided by government and other third
party payors for the Company's products, the market acceptance of these products
may be reduced, which may have a material adverse effect on the Company's
business, financial condition and results of operations.
PRODUCT LIABILITY EXPOSURE
Clinical trials, manufacturing, marketing and sale of any of the
Company's or its strategic partners' potential pharmaceutical products may
expose the Company to liability claims from the use of such pharmaceutical
products. The Company currently does not carry product liability insurance.
There can be no assurance that the Company or its strategic partners will be
able to obtain such insurance or, if obtained, that sufficient coverage can be
acquired at a reasonable cost. An inability
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to obtain sufficient insurance coverage at an acceptable cost or otherwise to
protect against potential product liability claims could prevent or inhibit the
commercialization of pharmaceutical products developed by the Company or its
strategic partners. A product liability claim or recall could have a material
adverse effect on the business or financial condition of the Company. While
under certain circumstances the Company is entitled to be indemnified against
losses by its strategic partners, there can be no assurance that this
indemnification would be available or adequate should any such claim arise.
POTENTIAL ADVERSE EFFECT OF ANTI-TAKEOVER PROVISIONS
Provisions of the Company's Restated Certificate of Incorporation (the
"Restated Certificate") require that any action required or permitted to be
taken by stockholders of the Company must be effected at a duly called annual or
special meeting of stockholders and may not be effected by any consent in
writing. Special meetings of stockholders may be called only by the Chief
Executive Officer or, if none, the President of the Company or by the Board of
Directors. The Restated Certificate provides for a classified Board of
Directors, and members of the Board of Directors may be removed only for cause
upon the affirmative vote of holders of at least two-thirds of the shares of
capital stock of the Company entitled to vote. The Company's Board of Directors
is authorized to issue up to 5,000,000 shares of Preferred Stock and to
determine the price, rights, preferences and privileges of those shares without
further vote or action by the Company's stockholders. The rights of the holders
of Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any shares of Preferred Stock that may be issued in the
future. While the Company has no current intention to issue shares of Preferred
Stock, any such issuance could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company. In addition, any such Preferred Stock may have other rights, including
economic rights senior to the Common Stock, and, as a result, the issuance
thereof could have a material adverse effect on the market value of the Common
Stock. Furthermore, the Company is subject to anti-takeover provisions of
Section 203 of the Delaware General Corporation Law, which prohibits the Company
from engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
first becomes an 'interested stockholder," unless the business combination is
approved in a prescribed manner. The application of Section 203 also could have
the effect of delaying or preventing changes of control or management of the
Company, which could adversely affect the market price of the Company's Common
Stock. These provisions, and other provisions of the Restated Certificate, may
have the effect of deterring hostile takeovers or delaying or preventing changes
in control or management of the Company, including transactions in which
stockholders might otherwise receive a premium for their shares over then
current market prices. In addition, these
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provisions may limit the ability of stockholders to approve transactions that
they may deem to be in their best interests.
POSSIBLE VOLATILITY OF STOCK PRICE
The trading price of the Company's Common Stock could be subject to
significant fluctuations in response to announcements of results of research
activities, technological innovations or new commercial products by the Company
or its competitors, changes in government regulations, regulatory actions,
changes in patent laws, developments concerning proprietary rights, quarterly
variations in operating results, litigation or other events. The stock market
has from time to time experienced extreme price and volume fluctuations that
have affected particularly the market prices for biotechnology companies and
that often have been unrelated to the operating performance of such companies.
These broad market fluctuations may adversely affect the market price of the
Company's Common Stock.
ABSENCE OF DIVIDENDS
The Company has never paid dividends and does not intend to pay any
dividends for the foreseeable future.
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