<PAGE> 1
As filed with the Securities and Exchange Commission on August 25, 1998.
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
ARQULE, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3221586
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
200 Boston Avenue, Medford, Massachusetts 02155 (781) 395-4100
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------------
ERIC B. GORDON
President and Chief Executive Officer
ArQule, Inc.
200 Boston Avenue,
Medford, Massachusetts 02155
(781) 395-4100
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
with copies to:
MICHAEL LYTTON, ESQUIRE
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108
(617) 573-0100
----------------------
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
----------------------
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------------------------
Title of each class of securities Amount to be Proposed maximum offering Proposed maximum aggregate Amount of
to be registered registered price per share(1) offering price(1) registration fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 78,000 shares $5.46875 $426,562.50 $126.00
- ------------------------------------------------------------------------------------------------------------------------------
(1) Estimated solely for the purpose of determining the registration fee and computed pursuant to Rule 457(c), based upon
the average of the high and low sale prices on August 21, 1998, as reported by the Nasdaq National Market.
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
Subject to Completion, dated August 25, 1998
ArQule, Inc.
78,000 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale of up to 78,000 shares (the
"Shares") of Common Stock, $0.01 par value (the "Common Stock"), of ArQule, Inc.
("ArQule" or the "Company") by certain of the Company's existing stockholders
(the "Selling Stockholders"). The Shares may be offered and sold by the Selling
Stockholders, or their respective pledgees, donees, transferees or other
successors in interest, from time to time in one or more transactions (which may
involve block transactions), in open-market transactions, in privately-
negotiated transactions through the purchase or writing of options on the
Shares, in short sales or in a combination of such methods of sale, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders or the purchasers of the Shares for
whom such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Selling Stockholders" and "Plan of Distribution."
All of the Shares offered hereunder are to be sold by the Selling
Stockholders. The Company will not receive any of the proceeds from the sale of
the Shares by the Selling Stockholders. The Company has agreed to bear certain
expenses (other than fees and expenses, if any, of counsel or other advisors to
the Selling Stockholders) in connection with the registration and sale of the
Shares. The Company has agreed to indemnify the Selling Stockholders against
certain liabilities, including certain liabilities under the Securities Act of
1933, as amended (the "Securities Act").
The Common Stock of the Company is listed for quotation on the Nasdaq
National Market under the symbol ARQL. On August 21, 1998, the closing sale
price of the Common Stock, as reported on the Nasdaq National Market, was
$5.4375 per share.
______________
AN INVESTMENT IN THE SECURITIES REGISTERED HEREBY INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS BEGINNING ON PAGE 4 OF THIS
PROSPECTUS."
______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION; NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. No person is authorized, in connection with the offering made hereby,
to give any information or to make any representation other than as contained in
this Prospectus, and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company. This Prospectus is
not an offer to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or
solicitation.
The date of this Prospectus is August ____, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy and
information statements and other information filed by the Company can be
inspected and copied at the public reference facilities of the Commission, Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices located at 7 World Trade Center, 13th Floor, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such materials can be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Such reports and other information
can also be reviewed through the Commission's web site on the Internet
(http://www.sec.gov). The Common Stock of the Company is quoted on the Nasdaq
National Market. Reports and other information concerning the Company may be
inspected at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006-1506.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 000-21429),
pursuant to the Exchange Act, are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997 and the Company's amended Annual Report on Form 10-K/A
for the fiscal year ended December 31, 1997, filed with the Commission on
March 17, 1998 and April 17, 1998, respectively.
(b) All other reports, if any, filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the Annual Report referred to in
paragraph (a) above.
(c) The description of the Common Stock of the Company contained in the
Company's Registration Statement on Form 8-A, filed on September 25, 1996,
including any amendment or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities offered hereby shall be deemed
incorporated by reference into this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained in any document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded, for purposes of this Prospectus, to the extent that a
statement contained herein (or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein) modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide, without charge, to each person to whom a copy of
this Prospectus is delivered, upon written or oral request of any such person, a
copy of any or all of the documents which are incorporated herein by reference,
except for certain exhibits to such documents. Requests should be directed to
the Company, 200 Boston Avenue, Medford, Massachusetts 02155, attention: James
R. Fitzgerald, Jr., telephone: (781) 395-4100.
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<PAGE> 4
RISK FACTORS
An investment in the shares of Common Stock being offered hereby involves a
high degree of risk. Prospective investors should carefully consider the
following risk factors, in addition to the other information contained in this
Prospectus, before purchasing the shares of Common Stock offered hereby.
LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES; UNCERTAINTY OF
FUTURE PROFITABILITY. The Company has had a limited operating history. For the
years ended December 31, 1995 and 1996, the Company had net losses of
approximately $2.3 million and $3.0 million, respectively. For the year ended
December 31, 1997, the Company had net income of approximately $291,000. The
Company's expansion of its operations and enhancements to its technology will
result in significant expenses over the next several years that may not be
offset by significant revenues. The Company expects that revenue for the
foreseeable future and the Company's ability to achieve profitability will be
dependent upon the ability of the Company to recognize revenue from the
achievement of milestones or royalties, licensing of developmental candidates,
collaborators and entering into additional collaborative arrangements with
customers. To date, all revenue received by the Company has been derived from
up-front fees, payments for compound deliveries, milestones, and research and
development funding paid pursuant to collaborative agreements with the Company's
collaborative partners. The Company has not realized any material revenue from
the achievement of milestones or royalties from the discovery, development or
sale of a commercial product by one of the Company's collaborative partners, and
there can be no assurance that any such revenue will be realized. The Company is
unable to determine whether, and for how long, it will be profitable.
UNPROVEN BUSINESS STRATEGY. The Company's modular building block approach
to chemistry has not yet resulted in the commercialization of a product. The
Company uses chemical building blocks for the purpose of rapidly identifying,
optimizing and obtaining proprietary rights to as many compounds with commercial
potential as possible. The pricing and nature of the Company's programs are such
that there may only be a limited number of companies that are potential
customers for such programs. The Company's ability to succeed is dependent upon
the acceptance by potential customers of the Company's approach to chemistry and
compound optimization as an effective tool in the discovery and development of
compounds with commercial potential. Due to the highly proprietary nature of the
activities being conducted, the central importance of these activities to their
product discovery and development efforts, and the desire to obtain maximum
patent and other proprietary protection on the results of their internal
programs, pharmaceutical, biotechnology and agrochemical companies have
historically conducted lead compound identification and optimization within
their own research departments. There can be no assurance that the Company's
present or future collaborators will not pursue existing or alternative
technology, either independently or in collaboration with others, in preference
to that of the Company or that the Company will be able to attract future
collaborators on acceptable terms or develop a sustainable, profitable business.
COMPETITION AND THE RISK OF OBSOLESCENCE OF TECHNOLOGY. Competition among
the many organizations actively attempting to identify and optimize compounds,
or development in the pharmaceutical industry and in other areas is intense.
ArQule competes with the research departments of pharmaceutical companies,
biotechnology companies, agrochemical companies, combinatorial chemistry
companies and research and academic institutions. Many of these competitors have
greater financial and human resources, and more experience in research and
development, than the Company. Historically, pharmaceutical and agrochemical
companies have maintained close control over their research activities,
including the synthesis, screening and optimization of chemical compounds. Many
of these companies, which represent the greatest potential market for ArQule's
products and services, have developed or are developing internal combinatorial
chemistry and other methodologies to improve productivity, including major
investments in robotics technology to permit the automated parallel synthesis of
compounds. In addition, ArQule competes with biotechnology and combinatorial
chemistry companies that offer a range of products and services. Academic
institutions, governmental agencies and other research organizations are also
conducting research in areas in which the Company is working, either on their
own or in collaboration with others. The Company anticipates that it will face
increased competition in the future as new companies enter the market and
advanced technologies, including more sophisticated information technologies,
become available. The Company's technological approaches may be rendered
obsolete or uneconomical by advances in existing technological approaches or the
development of different approaches by one or more of the Company's competitors.
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LIMITED SALES AND MARKETING EXPERIENCE; EXPANSION OF SALES ACTIVITIES. To
date, the Company has sold its products to its collaborative partners primarily
through the efforts of its senior management. The Company's senior management
has limited experience in marketing products similar to those of the Company. In
order to achieve significant long-term growth in revenue and its overall
strategic goals, the Company intends to hire several dedicated sales and
marketing personnel. There can be no assurance that the Company will be able to
achieve anticipated expansion of its business, attract a significant number of
new collaborative partners as customers or build an efficient and effective
sales and marketing organization. In the event the Company is unable to achieve
any one or more of the foregoing goals, the Company's business, financial
condition and results of operations could be materially adversely affected. In
addition to the risks inherent in the Company's efforts to market its own
products, the Company's revenue from royalties and milestone payments from its
collaborative partners is substantially dependent upon the marketing efforts of
such collaborative partners as discussed below under "Dependence on Third
Parties."
DEPENDENCE ON THIRD PARTIES. The Company's strategy for the development and
commercialization of its products and services involves the formation of
collaborative arrangements with third parties, initially pharmaceutical,
biotechnology and agrochemical companies. To date, the Company has entered into
numerous such arrangements. There can be no assurance that the Company's
existing collaborations will not be terminated under certain circumstances by
its collaborators and any such terminations could have a material adverse effect
on the Company. There can be no assurance that the Company will be able to
establish additional collaborative arrangements, that any such arrangements will
be on terms favorable to the Company, or that current or future collaborative
arrangements will ultimately be successful. Further, ArQule's receipt of revenue
from collaborative arrangements is affected by the timing of efforts expended by
third parties. The Company's products and services will result in commercialized
pharmaceutical and agrochemical products generating milestone payments and
royalties only after significant preclinical and clinical development efforts or
the completion of preliminary field trials, the receipt of the requisite
regulatory approvals, and the integration of manufacturing capabilities and
successful marketing efforts. With the exception of certain aspects of
preclinical drug development, the Company does not currently intend to perform
any of these activities. Therefore, the Company will be dependent upon the
expertise of, and dedication of sufficient resources by, third parties to
develop and commercialize products. Should a collaborative partner fail to
develop or commercialize a compound or product to which it has obtained rights
from the Company, the Company may not receive any future milestone payments or
royalties associated with such compound or product. Furthermore, there can be no
assurance that any such development or commercialization would be successful or
that disputes will not arise over the application of payment provisions to such
products. There can be no assurance that current or future collaborative
partners will not pursue alternative technologies or develop alternative
products, either on their own or in collaboration with others, including the
Company's competitors, as a means for developing alternative solutions in the
areas targeted by collaborative arrangements with the Company.
DEPENDENCE ON KEY EMPLOYEES. The Company is highly dependent on the
principal members of its scientific and management staff, in particular, Dr.
Joseph C. Hogan, Jr. and Dr. David L. Coffen. The loss of one or more members of
its staff could have a material adverse effect on the Company's business,
financial condition and results of operations. The Company does not maintain key
person life insurance on the life of any employee. The Company's future success
will also depend, in part, on its ability to identify, hire and retain
additional qualified personnel, including individuals with doctorates in basic
sciences. There is intense competition for such personnel in the areas of the
Company's activities, and there can be no assurance that the Company will be
able to continue to attract and retain personnel with the advanced technical
qualifications necessary for the development of the Company's business. Failure
to attract and retain key personnel could have a material adverse effect on the
Company's business, financial condition and results of operations.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING. The Company may be
required to raise additional capital over a period of several years in order to
conduct its operations. Such capital may be raised through additional public or
private equity financings, as well as collaborative arrangements, borrowings and
other available sources. The Company's capital requirements depend on numerous
factors, including entering into additional collaborative arrangements,
competing technological and market developments, changes in the Company's
existing collaborative relationships, the cost of filing, prosecuting, defending
and enforcing patent claims and other intellectual property rights, the purchase
of additional capital equipment, the progress of the Company's
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drug discovery programs and the progress of the Company's collaborators'
milestone and royalty-producing activities. The Company does not currently plan
to independently develop, manufacture or market any products it discovers.
Should the Company choose to develop any such products, however, the Company
will require substantial funds to conduct research and development, preclinical
studies, clinical trials and field trials and to market any products that may be
developed. There can be no assurance that additional funding, if necessary, will
be available on favorable terms, if at all. If adequate funds are not available,
the Company may be required to curtail operations significantly or to obtain
funds by entering into arrangements with collaborative partners or others that
may require the Company to relinquish rights to certain of its technologies,
product candidates, products or potential markets. To the extent that additional
capital is raised through the sale of equity or securities convertible into
equity, the issuance of such securities could result in dilution to the
Company's existing stockholders.
DEPENDENCE ON SCALE UP AND MANAGEMENT OF GROWTH. The Company's success will
depend on the expansion of its operations and the management of these expanded
operations. To be cost-effective in its delivery of services and products, the
Company must enhance productivity through further automation of its processes
and improvements to its technology. The Company also must successfully structure
and manage multiple additional collaborative relationships. There can be no
assurance that the Company will be successful in its engineering efforts to
further automate its processes or that the Company will be successful in
managing and meeting the staffing requirements of additional collaborative
relationships. Failure to achieve any of these goals could have a material
adverse effect on the Company's business, financial condition or results of
operations.
DEPENDENCE ON PATENTS AND PROPRIETARY RIGHTS. ArQule has six U.S. issued
utility patents, two foreign issued utility patents, one U.S. issued design
patent and has filed a number of patent applications. There can be no assurance
that patent applications filed by ArQule will result in patents being issued,
that the claims of such patents will offer significant protection of the
Company's technology, or that any patents issued to or licensed by ArQule will
not be challenged, narrowed, invalidated or circumvented. The Company believes
its success will depend in large part on its ability, and the ability of its
licensees and its licensors, to obtain patents for its technologies and the
compounds and other products, if any, resulting from the application of such
technologies, to defend such patents once obtained and to maintain trade
secrets, both in the United States and in foreign countries. In the absence of
such patents, the Company may be unable to prevent others from utilizing the
Company's technology and may need to rely upon expertise developed during
pre-commercial implementation of the technology, which may not provide the same
level of competitive advantages. The commercial success of the Company will also
depend upon avoiding the infringement of patents issued to others and
maintaining the technology licenses upon which certain of the Company's current
products are, or any future products under development might be, based.
Some of the Company's competitors have, or are affiliated with companies
having, substantially greater resources than the Company, and such competitors
may be able to sustain the costs of complex patent litigation to a greater
degree and for longer periods of time than the Company. Uncertainties resulting
from the initiation and continuation of any patent or related litigation could
have a material adverse effect on the Company's ability to compete in the
marketplace pending resolution of the disputed matters. To date, six U.S.
utility patents, two foreign utility patents and one U.S. design patent have
been issued to the Company. There can be no assurance that other patents will
issue to the Company or its licensors as a result of their pending applications
or that, if issued, such patents will contain claims sufficiently broad to
afford protection against competitors with similar technology. Moreover, there
can be no assurance that the Company or its customers will be able to obtain
significant patent protection for compounds or products based upon the Company's
technology. There can be no assurance that any patents issued to the Company or
its collaborative partners, or for which the Company has license rights, will
not be challenged, narrowed, invalidated or circumvented, or that the rights
granted thereunder will provide competitive advantages to the Company.
Litigation, which could result in substantial cost to the Company, may be
necessary to enforce the Company's patent and license rights, to enforce or
defend an infringement claim, or to determine the scope and validity of others'
proprietary rights. If competitors of the Company prepare and file patent
applications in the United States or abroad that claim technology also claimed
by the Company, the Company may have to participate in interference proceedings
declared by the U.S. Patent and Trademark Office to determine the priority of
invention, or opposition proceedings in a foreign patent office, both of which
could result in substantial cost to the Company, even if the outcome is
favorable. An adverse outcome could subject the Company to significant
liabilities to third parties, and require the Company to cease using the
technology or to license disputed rights from third parties, which licenses may
not be available at reasonable cost.
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A number of pharmaceutical, biotechnology and agrochemical companies, as
well as research and academic institutions, have developed technologies, filed
patent applications or received patents on various technologies that may be
related to the Company's business. Some of these technologies, applications or
patents may conflict with the Company's technologies or patent applications.
Such conflicts could also limit the scope of the claim of any patents that the
Company may be able to obtain, or result in the rejection of the Company's
patent applications. The Company currently has certain licenses to patents and
patent applications from third parties, and in the future may require additional
licenses from other parties. There can be no assurance that: (i) such licenses
will be obtainable on commercially reasonable terms, if at all; (ii) the patents
underlying such licenses will be valid and enforceable; (iii) patents having
commercially valuable claims will issue from any licensed patent applications;
or (iv) the proprietary nature of any other technology underlying such licenses
will remain proprietary.
The Company relies substantially on certain technologies that are not
patentable or proprietary and are therefore available to the Company's
competitors. The Company also relies on certain proprietary trade secrets and
know-how that are not patentable. Although the Company has taken steps to
protect its unpatented trade secrets and know-how, in part through the use of
confidentiality agreements with its employees, consultants and certain of its
collaborators, there can be no assurance that (i) the agreements will not be
breached; (ii) the Company would have adequate remedies for any breach; or (iii)
the Company's trade secrets will not otherwise become known or be independently
developed or discovered by competitors.
POTENTIAL LIABILITY REGARDING HAZARDOUS MATERIALS. The research and
development processes of the Company involve the controlled use of hazardous
materials. The Company is subject to federal, state and local laws and
regulations governing the use, manufacture, storage, handling and disposal of
such materials and certain waste products. 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 such liability could exceed the resources of the Company. In addition,
there can be no assurance that the Company will not be required to incur
significant costs to comply with environmental laws and regulations in the
future.
GOVERNMENT REGULATION. Although the manufacture, transportation and storage
of the Company's products are subject to the laws and regulations regarding
hazardous materials discussed in the preceding risk factor, the sale of the
Company's products is not subject to significant government regulations.
However, the Company's future profitability is dependent on the sales of
pharmaceuticals and other products developed from the Company's compounds by its
customers and collaborators. Regulation by governmental entities in the United
States and other countries may be a significant factor in the production and
marketing of products that may be developed by a customer or collaborative
partner of the Company. The nature and the extent to which such regulation may
apply to the Company's customers or its collaborative partners will vary
depending on the nature of any such products.
Virtually all pharmaceutical products developed by the Company's customers
or its collaborative partner will require regulatory approval by governmental
agencies prior to commercialization. In particular, human pharmaceutical
products are subject to rigorous preclinical and clinical testing and other
approval procedures by the U.S. Food and Drug Administration (the "FDA") and by
foreign regulatory authorities. Various federal and, in some cases, state
statutes and regulations also govern or influence the manufacturing, safety,
labeling, storage, record keeping and marketing of such pharmaceutical products.
The process of obtaining these approvals and the subsequent compliance with
appropriate federal and foreign statutes and regulations are time consuming and
require the expenditure of substantial resources. Generally, in order to gain
FDA approval, a company first must conduct preclinical studies in the laboratory
and in animal models to gain preliminary information on a compound's efficacy
and to identify any safety problems. The results of these studies are submitted
as a part of an Investigational New Drug application ("IND") that the FDA must
review before human clinical trials of an investigational drug can start. In
order to commercialize any products, the Company or its customers or its
collaborative partners will be required to sponsor and file an IND and will be
responsible for initiating and overseeing the clinical studies to demonstrate
the safety and efficacy that are necessary to obtain FDA approval of any such
products. Clinical trials are normally done in three phases and generally take
two to five years, but may take longer, to complete. After completion of
clinical trials of a new product, FDA and foreign regulatory authority
marketing, approval must be obtained. If the product is classified as a new
drug, a New Drug Application ("NDA") must be filed and approved before
commercial marketing of the drug. The testing and approval processes require
substantial time and effort and there
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can be no assurance that any approval will be granted on a timely basis, if at
all. NDAs submitted to the FDA can take several years to obtain approval. Even
if FDA regulatory clearances are obtained, a marketed product is subject to
continual review, and later discovery of previously unknown problems or failure
to comply with the applicable regulatory requirements may result in restrictions
on the marketing of a product or withdrawal of the product from the market as
well as possible civil or criminal sanctions. For marketing outside the United
States, the Company will also be subject to foreign regulatory requirements
governing human clinical trials and marketing approval for pharmaceutical
products. The requirements governing the conduct of clinical trials, product
licensing, pricing and reimbursement vary widely from country to country.
Fertilizers, pesticides and other agrochemical products sold by the
Company's collaborators will be subject to rigorous testing and approval
processes by the U.S. Environmental Protection Agency and similar regulatory
authorities in certain states and in other countries. The process of obtaining
these approvals can be time consuming and costly. There can be no assurance that
such approvals will be granted on a timely basis.
THE COMPANY
ArQule is a chemistry company focused primarily in the field of accelerated
drug discovery using its high throughput lead generation and lead optimization
technologies. ArQule provides new pathways to product discovery by integrating
five core technologies--modular building block technology, structure-guided
design, high speed parallel chemical synthesis, information technology and an
Automated Molecular Assembly Plant (AMAP(TM)) parallel synthesis system to
accelerate the identification and optimization of drug and product development
candidates in the pharmaceutical, biotechnology, and agrochemical industries.
ArQule's Mapping Array(TM) Program is comprised of libraries of novel, diverse,
small organic, pure compounds used for screening against biological targets in
new product discovery. ArQule's Directed Array(TM) Program is an iterative
parallel process used to produce analog sets of desired lead compounds and
rapidly develop optimized drug candidates.
For additional information concerning the Company, please refer to the
documents listed under "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
ArQule's principal executive offices are located at 200 Boston Avenue,
Medford, Massachusetts 02155, and its telephone number at that location is
(781) 395-4100.
RECENT DEVELOPMENTS
On August 13, 1998, the Company entered into a Research Collaboration and
License Agreement (the "Collaboration Agreement") with Amersham Pharmacia
Biotech AB ("Pharmacia") as well as a Commercialization Agreement (the
"Commercialization Agreement"). Pursuant to the Collaboration Agreement and the
Commercialization Agreement, the Company and Pharmacia will jointly develop and
commercialize customized bioseparations products for industrial, life science,
and research applications.
Under terms of the Collaboration Agreement, ArQule will utilize its
chemistry capabilities to identify and optimize small molecules which meet the
highly specific binding characteristics needed for customized bioseparations
applications. Pharmacia will integrate ArQule's molecules into customized
separations tools including reagents, columns and equipment. Pursuant to the
Commercialization Agreement, Pharmacia will commercialize any bioseparations
products developed, and ArQule will receive research and development payments
and royalties on product sales upon commercialization.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Stockholders.
8
<PAGE> 9
SELLING STOCKHOLDERS
The Selling Stockholders are the holders of 78,000 shares of Common Stock.
The following table sets forth the name of, and the number of shares of Common
Stock beneficially owned by, each Selling Stockholder as of August 24, 1998, the
number of the shares to be offered by each Selling Stockholder pursuant to this
Prospectus and the number of the Company's outstanding shares to be beneficially
owned by each Selling Stockholder after the offering if all of the shares
offered hereby by such Selling Stockholder are sold as described herein. The
Selling Stockholders have not held any position or office with, been employed
by, or otherwise had a material relationship with, the Company or any of its
predecessors or affiliates other than as stockholders of ArQule subsequent to
their respective acquisition of shares of ArQule securities. The Shares are
being registered to permit public secondary trading of the Shares, and the
Selling Stockholders may offer the Shares for resale from time to time. See
"Plan of Distribution."
In recognition of the fact that Selling Stockholders may wish to be legally
permitted to sell their Shares when they deem appropriate, the Company has filed
the Registration Statement with respect to the resale of the Shares from time to
time in the public markets or in privately-negotiated transactions and has
agreed to prepare and file such amendments and supplements to the Registration
Statement as may be necessary to keep the Registration Statement effective until
the Shares are no longer required to be registered for the sale thereof by the
Selling Stockholders.
Except as set forth herein, the Company has agreed to pay for all costs and
expenses incident to the issuance, offer, sale and delivery of the Shares,
including, but not limited to, all expenses and fees of preparing, filing and
printing the Registration Statement and Prospectus and related exhibits,
amendments and supplements thereto and mailing of such items. The Selling
Stockholders have agreed to pay up to $10,000 of these expenses. The Company
will not pay selling commissions and expenses associated with any such sales by
the Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain liabilities including liabilities under the
Securities Act.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF NUMBER OF SHARES
BENEFICIALLY OWNED SHARES OF BENEFICIALLY
AS OF COMMON STOCK OWNED AFTER
NAME OF SELLING STOCKHOLDER AUGUST 24, 1998 OFFERED HEREBY OFFERING
- --------------------------- ------------------ -------------- ----------------
<S> <C> <C> <C>
H. Lawrence Ross 13,301 13,301 0
Merlin D. Schulze 64,699 64,699 0
- ----------------- ------ ------ -
TOTAL 78,000 78,000 0
</TABLE>
PLAN OF DISTRIBUTION
The Company has filed with the Commission the Registration Statement, of
which this Prospectus forms a part, with respect to the resale of the Shares
from time to time by the Selling Stockholders or their respective pledgees,
donees, transferees or other successors in interest as described below.
The Shares being offered by the Selling Stockholders, or their respective
pledgees, donees, transferees or other successors in interest, will be sold in
one or more transactions (which may involve block transactions) on the Nasdaq
National Market or on such other market on which the Common Stock may from time
to time be trading, in privately-negotiated transactions, through the writing of
options on the Shares, short sales or any combination thereof. The sale price to
the public may be the market price prevailing at the time of sale, a price
related to such prevailing market price or such other price as the Selling
Stockholders determine from time to time. The Shares
9
<PAGE> 10
may also be sold pursuant to Rule 144 of the Securities Act. The Selling
Stockholders shall have the sole and absolute discretion not to accept any
purchase offer or make any sale of Shares if they deem the purchase price to be
unsatisfactory at any particular time.
The Selling Stockholders or their respective pledgees, donees, transferees
or other successors in interest, may also sell the Shares directly to market
makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Brokers acting as agents for the Selling
Stockholders will receive usual and customary commissions for brokerage
transactions, and market makers and block purchasers purchasing the Shares will
do so for their own account and at their own risk. Each Selling Stockholder will
be responsible for all brokerage commissions and other amounts payable with
respect to any sale of Shares with respect to such Selling Stockholder and any
legal, accounting or their expenses incurred.
It is possible that a Selling Stockholder will attempt to sell shares of
Common Stock in block transactions to market makers or other purchasers at a
price per share which may be below the then market price. There can be no
assurance that all or any of the Shares offered hereby will be issued to, or
sold by, the Selling Stockholders. The Selling Stockholders and any brokers,
dealers or agents, upon effecting the sale of any of the Shares offered hereby,
may be deemed "underwriters" as that term is defined under the Securities Act or
the Exchange Act, or the rules and regulations thereunder, and any commissions
received by them or profit on any resale of the Shares as principal might be
deemed to be underwriting discounts and commissions under the Securities Act.
The Selling Stockholders, alternatively, may sell all or any part of the
Shares offered hereby through an underwriter. No Selling Stockholder has entered
into any agreement with a prospective underwriter, and there is no assurance
that any such agreement will be entered into. If a Selling Stockholder enters
into such an agreement or agreements, the relevant details will be set forth in
a supplement or revisions to this Prospectus.
The Selling Stockholders and any other persons participating in the sale or
distribution of the Shares will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Stockholders or any other such person. The foregoing may affect the
marketability of the Shares.
In the event of an underwritten public offering for the account of the
Company, the Selling Stockholders may, upon the written request of the managing
underwriter of such offering, be prohibited from selling any of the shares
offered hereby for a period beginning 10 days prior to the effective date of the
registration statement relating to such public offering and ending 30 days after
such effective date.
The Company has agreed to indemnify the Selling Stockholders, or their
transferees or assignees, against certain liabilities, including liabilities
under the Securities Act, or to contribute to payments the Selling Stockholders
or their respective pledgees, donees, transferees or other successors in
interest, may be required to make in respect thereof.
LEGALITY OF COMMON STOCK
The validity of the securities offered hereby will be passed upon for the
Company by Palmer & Dodge LLP, Boston, Massachusetts. Michael Lytton, a partner
of Palmer & Dodge LLP, is Secretary of the Company and Lynnette C. Fallon, also
a partner of Palmer & Dodge LLP, is Assistant Secretary of the Company.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K for the year ended December 31, 1997 and the
amended Annual Report on Form 10-K/A for the year ended December 31, 1997 have
been so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
10
<PAGE> 11
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses to be borne by the Company in connection with this offering
are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC registration fee............................... $ 126.00
Accounting fees and expenses....................... $1,500.00
Legal fees and expenses............................ $2,860.00
Miscellaneous expenses............................. $ 514.00
---------
Total......................................... $5,000.00
=========
</TABLE>
All of the above figures, except the SEC registration, are estimates. The
Selling Stockholders will pay all of these expenses. Selling Stockholders will
bear the costs of their own counsel fees and may also incur fees and expenses in
connection with the resale of the Common Stock offered hereby.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation law grants the Company the
power to indemnify each person who was or is a party or is threatened to be made
a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the fact
that he is or was a director, officer, employee or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, against expenses (including attorneys' fees), judgements, fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action, suit or proceeding if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
Company, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful, provided, however, no
indemnification shall be made in connection with any proceeding brought by or in
the right of the Company where the person involved is adjudged to be liable to
the Company except to the extent approved by a court. Article V of the Company's
Amended and Restated By-laws provides that the Company shall, to extent legally
permitted, indemnify each person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action, suit or proceeding
by reason of the fact that he is or was, or has agreed to become, a director or
officer of the Company, or is or was serving, or has agreed to serve, at the
request of the Company, as a director, officer or trustee of, or in a similar
capacity with, another corporation, partnership, joint venture, trust or other
enterprise. The indemnification provided for in Article V is expressly not
exclusive of any other rights to which those seeking indemnification may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such persons. Article V also provides that the Company
shall have the power to purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the Company, or is or
was serving at the request of the Company, as a director, officer or trustee of,
or in a similar capacity with, another corporation, partnership, joint venture,
trust or other enterprise, against any liability asserted against and incurred
by such person in any such capacity.
ITEM 16. EXHIBITS
See the Exhibit Index immediately following the signature page.
ITEM 17. UNDERTAKINGS
1
<PAGE> 12
(a) The undersigned registrant hereby undertakes as follows:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this Registration
Statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in this Registration Statement;
provided, however, that no filing will be made pursuant to paragraph
(a)(1)(i) or (a)(1)(ii) if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or 15(d) of the Exchange Act that
are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
this offering.
(b) The undersigned hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to section 13(a) or section 15(d) of the Exchange Act that is
incorporated by reference in this Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
2
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Medford, Commonwealth of Massachusetts, on August 25,
1998.
ARQULE, INC.
By: /s/ Eric B. Gordon
-------------------------------------
Eric B. Gordon
President and Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of ArQule, Inc., hereby
severally constitute and appoint Eric B. Gordon, James R. Fitzgerald, Jr.,
Michael Lytton, and Lynnette C. Fallon, and each of them singly, our true and
lawful attorneys-in-fact, with full power to them in any and all capacities, to
sign any amendments to this Registration Statement on Form S-3 (including any
post-effective amendments thereto), and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Eric B. Gordon President, Chief Executive Officer and Director August 25, 1998
- -------------------------------- (Principal Executive Officer)
Eric B. Gordon
/s/ James R. Fitzgerald, Jr. Vice President, Chief Financial Officer and August 25, 1998
- -------------------------------- Treasurer
James R. Fitzgerald, Jr. (Principal Financial Officer and Principal
Accounting Officer)
/s/ Joseph C. Hogan, Jr. Chairman of the Board, Senior August 25, 1998
- -------------------------------- Vice President of Research and
Joseph C. Hogan, Jr. Development, Chief Scientific
Officer and Director
/s/ Adrian de Jonge Director August 25, 1998
- --------------------------------
Adrian de Jonge
</TABLE>
3
<PAGE> 14
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Allan R. Ferguson Director August 25, 1998
- --------------------------------
Allan R. Ferguson
/s/ Stephen M. Dow Director August 25, 1998
- --------------------------------
Stephen M. Dow
/s/ L. Patrick Gage Director August 25, 1998
- --------------------------------
L. Patrick Gage
/s/ Michael Rosenblatt Director August 25, 1998
- --------------------------------
Michael Rosenblatt
</TABLE>
4
<PAGE> 15
EXHIBIT INDEX
NUMBER DESCRIPTION
- ------ -----------
4.1 Amended and Restated Certificate of Incorporation of the Company.
Filed as Exhbit 3.1 to the Company's Registration Statement on Form
S-1 (File No. 333-22945) and incorporated herein by reference.
4.2 Amended and Restated By-laws of the Company. Filed as Exhibit 3.5 to
the Company's Registration Statement on Form S-1 (File No. 333-11105)
and incorporated herein by reference.
4.3 Specimen Common Stock Certificate. Filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-1 (File No. 333-11105) and
incorporated herein by reference.
4.4 Investors' Rights Agreement among the Company and certain
stockholders of the Company dated November 2, 1995. Filed as Exhibit
10.5 to the Company's Registration Statement on Form S-1 (File No.
333-11105) and incorporated herein by reference.
4.5 Common Stock Purchase Agreement between the Company and American Home
Products Corporation dated July 3, 1997. Filed as Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1997 and incorporated herein by reference.
5 Opinion of Palmer & Dodge LLP. Filed herewith.
10.1+ Research Collaboration and License Agreement between the Company and
Amersham Pharmacia Biotech AB dated August 13, 1998. Filed herewith.
10.2+ Commercialisation Agreement between the Company and Amersham
Pharmacia Biotech AB dated August 13, 1998. Filed herewith.
23.1 Consent of counsel (contained in opinion of Palmer & Dodge LLP filed
as Exhibit 5).
23.2 Consent of PricewaterhouseCoopers LLP. Filed herewith.
24 Power of Attorney. Included on signature page to this Registration
Statement.
___________________
+ Certain confidential material contained in the document has been omitted and
filed separately with the Securities and Exchange Commission pursuant to Rule
406 of the Securities Act of 1933, as amended.
5
<PAGE> 1
EXHIBIT 5
[Palmer & Dodge LLP letterhead]
Telephone: (617) 573-0100 Facsimile: (617) 227-4420
August 25, 1998
ArQule, Inc.
200 Boston Avenue
Medford, MA 02155
Ladies & Gentlemen:
We are rendering this opinion in connection with the Registration Statement
on Form S-3 (the "Registration Statement") filed by ArQule, Inc. (the "Company")
with the Securities and Exchange Commission under the Securities Act of 1933, as
amended, on or about the date hereof. The Registration Statement relates to up
to 78,000 shares of the Company's Common Stock, $0.01 par value (the "Shares").
We understand that the Shares are to be offered and sold in the manner described
in the Registration Statement.
We have acted as your counsel in connection with the preparation of the
Registration Statement. We are familiar with the proceedings taken by the
Company in connection with the authorization and issuance of the Shares. We have
examined all such documents as we consider necessary to render this opinion.
Based upon the foregoing, we are of the opinion that the Shares have been
duly authorized, validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as a part of the
Registration Statement and to the reference to our firm under the caption
"Legality of Common Stock" in the Prospectus filed as part thereof.
Very truly yours,
/s/ PALMER & DODGE LLP
PALMER & DODGE LLP
6
<PAGE> 1
EXHIBIT 10.1
RESEARCH COLLABORATION AND LICENSE AGREEMENT
By and Between
ARQULE, INC.
and
AMERSHAM PHARMACIA BIOTECH AB
Dated August 13, 1998
<PAGE> 2
RESEARCH COLLABORATION AND LICENSE AGREEMENT
This Research Collaboration and License Agreement (this "Agreement") is
entered into as of August 13, 1998 (the "Effective Date") by and between ArQule,
Inc. ("ArQule"), a Delaware corporation, and Amersham Pharmacia Biotech AB
("APB"), a Swedish corporation having its principal office at S-751-84, Uppsala,
Sweden.
R E C I T A L S
WHEREAS, APB and ArQule previously entered into the Prior Research and
Development Agreement (as herein defined);
WHEREAS, pursuant to the Prior Research and Development Agreement, APB
and ArQule conducted joint research and development activities to determine the
feasibility of applying the ArQule technologies to certain APB product areas;
and
WHEREAS, APB and ArQule now desire to extend and expand their joint
research efforts, whereby pursuant to this Agreement and to the
Commercialization Agreement (as hereinafter defined), the parties will jointly
develop[*].
NOW, THEREFORE, in consideration of the foregoing and the covenants and
promises set forth herein, APB and ArQule hereby agree as follows:
1. DEFINITIONS.
1.1 "Affiliate" means any legal entity (such as a corporation,
partnership, or limited liability company) that is controlled by a party. For
the purposes of this definition, the term "control" means (i) beneficial
ownership of at least fifty percent (50%) of the voting securities of a
corporation or other business organization with voting securities or (ii) a
fifty percent (50%) or greater interest in the net assets or profits of a
partnership or other business organization without voting securities.
1.2 "APB Background Technology" means Background Technology that
(i) is owned or controlled by APB and (ii) APB has the right to license or
sublicense and use for the purposes set forth in this Agreement.
1.3 "APB Collaboration Technology" means Collaboration Technology
that was conceived, developed, discovered or reduced to practice solely by
employees or others acting on behalf of APB pursuant to this Agreement.
1.4 "APB Core Technology" means Technology that principally
consists of [*].
- ----------
* Confidential Treatment has been requested for the marked portion.
<PAGE> 3
1.5 "APB Patent Rights" means Patent Rights covering APB
Technology.
1.6 "APB Technology" means (i) APB Background Technology, (ii) APB
Collaboration Technology, and (iii) Joint Background Technology and Joint
Collaboration Technology that is within the APB Core Technology.
1.7 "ArQule Background Technology" means Background Technology
that (i) is owned or controlled by ArQule, and (ii) ArQule has the right to
license or sublicense and use for the purposes set forth in this Agreement.
1.8 "ArQule Collaboration Technology" means Collaboration
Technology conceived, developed, discovered or reduced to practice solely by
employees or others acting on behalf of ArQule pursuant to this Agreement.
1.9 "ArQule Compound" means a small organic chemical molecule that
is synthesized and optimized by ArQule and is capable of binding to a particular
Biomolecule, including a chemical derivative thereof or a compound that exhibits
structural similarity thereto.
1.10 "ArQule Core Technology" means Technology that principally
consists of [*].
1.11 "ArQule Patent Rights" means Patent Rights covering ArQule
Technology.
1.12 "ArQule Technology" means (i) ArQule Background Technology,
(ii) ArQule Collaboration Technology, and (iii) Joint Background Technology and
Joint Collaboration Technology that is within the ArQule Core Technology.
1.13 "Background Technology" means Technology that is useful in the
field of [*] and which is conceived, developed, discovered, reduced to practice,
acquired, or licensed by a party prior to or outside of this Agreement.
1.14 "Biomolecules" means polypeptides, proteins, oligonucleotides,
polynucleotides, oligosaccharides, polysaccharides or any combination of such
molecules, whether produced by natural means or by organic synthesis on solid
support or in solution.
1.15 [*].
1.16 "Collaboration Milestones" means the specific collaboration
objectives described in EXHIBIT B, as amended and updated by the parties
pursuant to Section 7.1.
1.17 "Collaboration Technology" means Technology that was
conceived, developed, discovered, or reduced to practice pursuant to this
Agreement.
1.18 "Collaborative Research Program" means the collaborative
research program described in Article 2 of this Agreement.
- ----------
* Confidential Treatment has been requested for the marked portion.
2
<PAGE> 4
1.19 "Commercialization Agreement" means the agreement entered into
between the parties dated as of the Effective Date and relating to their joint
efforts in the marketing, distribution and sale of [*].
1.20 "Confidential Information" has the meaning set forth in
Section 6.1.
1.21 "Customer Project" means a project to deliver [*] to a third
party customer.
1.22 "Customer Project Plan" means a description of activities that
each party will conduct with respect to a particular Customer Project.
1.23 [*].
1.24 "Joint Background Technology" means Background Technology that
was conceived, developed, discovered, or reduced to practice pursuant to the
Prior Research and Development Agreement by employees or others acting on behalf
of ArQule together with employees or others acting on behalf of APB pursuant to
this Agreement.
1.25 "Joint Collaboration Technology" means Collaboration
Technology that was conceived, developed, discovered, or reduced to practice by
employees or others acting on behalf of ArQule together with employees or others
acting on behalf of APB pursuant to this Agreement.
1.26 "Joint Patent Rights" means Patent Rights covering Joint
Technology.
1.27 "Joint Technology" means Joint Background Technology and Joint
Collaboration Technology, excluding Technology that is within the ArQule Core
Technology or APB Core Technology.
1.28 "Licensed Product" means[*].
1.29 "Licensed Service" means[*].
1.30 [*].
1.31 "Net Sales" means[*].
In the event any Licensed Product or Licensed Service is sold or
provided as a component of a combination of functional elements, Net Sales for
purposes of determining royalty payments on such combination shall be
calculated[*].
1.32 "Patent Rights" means any United States or foreign patent
applications, together with any and all patents that have issued or in the
future issue therefrom, and all related
- ----------
* Confidential Treatment has been requested for the marked portion.
3
<PAGE> 5
divisionals, continuations, continuations-in-part, reissues, renewals,
extensions or additions and foreign counterparts thereof.
1.33 "Prior Research and Development Agreement" means the Research
and Development Agreement between the parties dated March 10, 1995 and the
amendments thereto dated February 19, 1996 (Amendment No. 1), September 25, 1996
(Amendment No. 2) and June 27, 1997 (Amendment No. 3).
1.34 "Program Manager" has the meaning set forth in Section 2.3.
1.35 "Proprietary Materials" has the meaning set forth in Section
6.2(a).
1.36 "Royalty Period" means the partial calendar quarter commencing
on the date on which the first Licensed Product is sold or the first Licensed
Service is provided, and every complete or partial calendar quarter thereafter
during which APB has the obligation to pay a royalty to ArQule pursuant to
Article 9.
1.37 "Steering Committee" means the Steering Committee described in
Article 3.
1.38 "Technical Milestones" means the specific technical milestones
described in the Technology Development Plan attached as EXHIBIT A, as
subsequently amended by the parties.
1.39 "Technology" means any proprietary development, idea, design,
concept, technique, process, invention, Proprietary Materials, discovery, or
improvement, whether or not patentable or copyrightable.
1.40 "Technology Development Plan" means a plan for the
development, maintenance and improvement of [*].
1.41 "Valid Claim" means either (i) a claim of an issued patent
that has not been held unenforceable or invalid by an agency or a court of
competent jurisdiction in any unappealable or unappealed decision or (ii) a
claim of a pending patent application that has not been abandoned or finally
rejected without the possibility of appeal or refiling.
2. THE COLLABORATIVE RESEARCH PROGRAM.
2.1 OVERVIEW OF COLLABORATIVE RESEARCH PROGRAM. The overall
purposes of the Collaborative Research Program are [*].
2.2 OVERALL CONDUCT OF THE COLLABORATIVE RESEARCH PROGRAM. During
the term of this Agreement, ArQule and APB agree to use their best efforts to
conduct all activities pursuant to the Collaborative Research Program in
accordance with the Technology Development Plan and each Customer Project Plan
and as directed by the Steering Committee.
- ----------
* Confidential Treatment has been requested for the marked portion.
4
<PAGE> 6
2.3 PROGRAM MANAGER. Each party shall designate a program manager
(the "Program Manager") who shall have primary responsibility for (i) the
performance of activities pursuant the Collaborative Research Program conducted
by such party and (ii) coordination of efforts with the other party. The Program
Managers shall report on project activities directly to the Steering Committee.
Each party shall have the right to change its Program Manager immediately upon
written notice to the other party.
2.4 RESPONSIBILITIES OF ARQULE.
(a) RESPONSIBILITIES UNDER THE TECHNOLOGY DEVELOPMENT
PLAN. In connection with the development of the technology platform, ArQule will
be responsible for the activities set forth in the Technology Development Plan.
(b) RESPONSIBILITIES IN THE CONDUCT OF CUSTOMER PROJECTS.
ArQule shall be responsible for identifying and synthesizing ArQule
Compounds[*]. ArQule's specific responsibilities will be set forth in the
Customer Project Plan, and in the event of any inconsistency between the
Customer Project Plan and this Section 2.4(b), the Customer Project Plan
shall govern.
2.5 RESPONSIBILITIES OF APB.
(a) RESPONSIBILITIES UNDER THE TECHNOLOGY DEVELOPMENT
PLAN. In connection with the development of the technology platform, APB will be
responsible for the activities set forth in the Technology Development Plan.
(b) RESPONSIBILITIES IN THE CONDUCT OF CUSTOMER PROJECTS.
APB shall be responsible for development of [*] for use with a particular ArQule
Compound and pursuant to a Customer Project. Such activities will generally
include, without limitation, [*]. APB's specific responsibilities will be set
forth in each Customer Project Plan, and in the event of any inconsistency
between the Customer Project Plan and this Section 2.5(b), the Customer Project
Plan shall govern.
2.6 PERSONNEL. In addition to the Program Managers, each party
agrees to assign to the Collaborative Research Program such qualified and
competent members of its staff as may be required to achieve the aims and goals
set forth in the Technology Development Plan and in each Customer Project Plan.
All such commitments of personnel, including the number of dedicated full-time
equivalents to be committed by each party, shall be set by the Steering
Committee.
2.7 PAYMENT OF COSTS AND EXPENSES. Except for the research fees
payable to ArQule by APB pursuant to Section 9.1, each party shall bear the
costs and expenses of its respective activities in connection with the
Collaborative Research Program, and shall promptly make payments to third
parties arising therefrom.
- ----------
* Confidential Treatment has been requested for the marked portion.
5
<PAGE> 7
2.8 REPORTS AND RECORDS. Each party agrees to promptly and
regularly communicate to the other party all research results arising from
activities under the Collaborative Research Program, including quarterly reports
to the Steering Committee detailing all research activities and research results
conducted or obtained by such party. Each party shall prepare and maintain
adequate records, including bound laboratory notebooks maintained in accordance
with standard scientific procedures, containing all appropriate data reflecting
all research results arising from activities pursuant to the Collaborative
Research Program.
3. GOVERNANCE OF THE COLLABORATIVE RESEARCH PROGRAM.
3.1 CREATION OF STEERING COMMITTEE. The parties hereby create a
Steering Committee which shall consist of six (6) members, including [* ]. If
any member of the Steering Committee dies, resigns, or becomes incapacitated,
the party which designated such member shall designate his or her successor
(whose term shall commence immediately), and any party may withdraw the
designation of any of its members of the Steering Committee and designate a
replacement (whose term shall commence immediately) at any time by giving notice
of the withdrawal and replacement to the other party. If a member of the
Steering Committee cannot attend a meeting, that member may appoint a substitute
to attend the meeting in his or her place. The chairperson of the Steering
Committee shall be designated annually on an alternating basis between the
parties. The party not designating the chairperson shall designate one of its
representatives as secretary of the Steering Committee for such year.
3.2 MEETINGS OF THE STEERING COMMITTEE. Regular meetings of the
Steering Committee shall be held semiannually within forty-five (45) days of the
end of each calendar half year, or at such other times as the parties may deem
appropriate, at such times and places as the members of the Steering Committee
shall from time to time agree. Special meetings of the Steering Committee may be
called by either party on fifteen (15) days written notice to the other party
unless notice is waived by the parties. All meetings shall alternate between the
offices of the parties unless the parties otherwise agree. In the event a
Steering Committee member is unable to attend a meeting of the Steering
Committee, such Steering Committee member may designate an alternate member who
will serve solely for that Steering Committee meeting.
3.3 DECISIONS OF THE STEERING COMMITTEE. A quorum of the Steering
Committee shall be present at any meeting of the Steering Committee if every
member or a duly appointed substitute are present at such meeting in person or
by telephone. If a quorum exists at any meeting, the unanimous consent of all
members of the Steering Committee present at such meeting is required to take
any action on behalf of the Steering Committee. Unless otherwise specifically
stated to the contrary herein, no individual party shall purport to act on
behalf of the other party unless and then only to the extent authorized to do so
by the Steering Committee.
3.4 RESPONSIBILITY OF STEERING COMMITTEE. The Steering Committee
shall be responsible for oversight of the day-to-day conduct and progress of the
Collaborative Research
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Program and approval of all activities relating to the Collaborative Research
Program, including without limitation:
(i) preparing and recommending overall budgets
for the Technology Development Plans and the Customer Project Plans;
(ii) recommending changes to the Collaboration
Milestones subject to Section 7.1;
(iii) assessing, at least once every [*] during
the first [*] of the Collaborative Research Program, whether the parties are on
target to meet the Collaboration Milestones and Technical Milestones, and
conducting a formal evaluation whether the Collaboration Milestones have been
met at the end of that [*] period;
(iv) determining the type of intellectual
property protection that should be sought for a particular item of Joint
Technology, e.g. patent protection or trade secret protection, and allocating
the costs of intellectual property protection of the Joint Technology between
the parties;
(v) determining which party should take the lead
regarding the preparation, filing, prosecution and maintenance of Joint Patent
Rights, and determining which party should take the lead regarding the
enforcement or defense of infringement or declaratory judgment actions relating
to the Joint Patent Rights, and allocating any expenses relating thereto between
the parties;
(vi) recommending, for the purpose of calculating
Net Sales pursuant to Section 1.31, [*] of the Licensed Product or Licensed
Service portion of a combination product;
(vii) directing and administering the
Collaborative Research Program and overseeing the conduct of each Customer
Project, including preparing, updating and revising the Customer Project Plans;
(viii) preparing, updating and revising the
Technology Development Plan including setting, reviewing and modifying the
Technical Milestones;
(ix) reviewing reports and research results
submitted by ArQule and APB regarding their respective activities pursuant to
the Collaborative Research Program, providing a forum for the exchange of
scientific information among the scientists participating in the Collaborative
Research Program, and approving public disclosures of technical information; and
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(x) determining whether a Technology that is
conceived, developed, discovered or reduced to practice pursuant to the Prior
Research and Development Agreement or this Agreement constitutes an APB
Technology, an ArQule Technology, or a Joint Technology.
The Steering Committee actions described in items (i), (ii), and (vi) require
the approval of the Chief Executive Officers of each party.
3.5 STEERING COMMITTEE REPORTS. Within ten (10) days following
each meeting of the Steering Committee held pursuant to Section 3.2, the
secretary of the Steering Committee shall prepare and send to the members of the
Steering Committee a detailed written report of actions taken at the meeting in
such form and containing such detail as shall be determined by the Steering
Committee.
3.6 DEADLOCK. In the event that the Steering Committee cannot
reach agreement with respect to any matter that is subject to its
decision-making authority, then the matter shall be referred to the dispute
resolution procedure described in Section 13.12.
4. GRANTS OF RIGHTS
4.1 RIGHTS TO ARQULE TECHNOLOGY AND ARQULE PATENT RIGHTS. Subject
to the terms of this Agreement, including without limitation the provisions of
Article 8 below, ArQule hereby grants to APB and its Affiliates a [* ] license
[*] under the ArQule Patent Rights and other rights in the ArQule Technology, to
develop, make, use, sell, import and distribute Licensed Products and to develop
and provide Licensed Services in the field of [*]. In addition, subject to the
terms of this Agreement, including without limitation the provisions of Article
8 below, ArQule hereby grants to APB and its Affiliates a [*] license under the
ArQule Patent Rights and other rights in the ArQule Technology [*].
4.2 RIGHTS TO APB TECHNOLOGY AND APB PATENT RIGHTS. Subject to the
terms of this Agreement, including without limitation the provisions of Article
8 below, APB hereby grants to ArQule and its Affiliates a [*] license [*] under
the APB Patent Rights and other rights in the APB Technology, to the extent
necessary to enable ArQule to practice ArQule Patent Rights or Joint Patent
Rights or to use the ArQule Technology or the Joint Technology in [*], and to
the extent necessary to enable ArQule to fulfill its responsibilities pursuant
to the Collaborative Research Program; provided, however, that ArQule shall not
have the right to use any APB Background Technology in the field of [* ] except
to fulfill its responsibilities under the Collaborative Research Program.
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4.3 USE OF JOINT TECHNOLOGY.
(a) Subject to the terms of this Agreement, including without
limitation the provisions of Article 8, APB and its Affiliates shall have the
right to use the Joint Technology and to practice the Joint Patent Rights for
any purpose in the field of [*] which are determined according to the procedures
set forth in Section 9.5(a) below. APB and its Affiliates shall have the right
to use the Joint Technology and to practice the Joint Patent Rights for any
purpose outside the field of [*].
(b) Subject to the terms of this Agreement, including without
limitation the provisions of Article 8, ArQule and its Affiliates and
sublicensees shall have the right to use the Joint Technology and to practice
the Joint Patent Rights for any purpose in the field of [*], which are
determined according to the procedures set forth in Section 9.5(b) below and
included in a definitive license agreement before the relevant product or
service is made commercially available. ArQule and its Affiliates and
sublicensees shall have the right to use the Joint Technology and to practice
the Joint Patent Rights for any purpose outside of the field of[*].
4.4 USE OF [*]. Each party hereby agrees to grant to any third
party customer of a [*] any and all rights and licenses that are necessary to
effectuate any grant of rights in that [*] pursuant to a contract executed by
APB and approved by ArQule under the Commercialization Agreement.
4.5 OTHER TECHNOLOGY. In the event that either party desires to
contribute to the Collaborative Research Program a Technology that is not useful
in the [*]field[*] and therefore does not constitute Background Technology under
this Agreement, but which such party believes may become useful in the [*] field
through research and development efforts in the Collaborative Research Program,
such party may propose to the Steering Committee that the Technology be included
under this Agreement. If the Steering Committee decides to include such a
Technology, the Steering Committee may establish different contractual terms
that apply to that Technology, subject to the approval of the Chief Executive
Officers of both parties.
5. INTELLECTUAL PROPERTY OWNERSHIP; PATENT PROSECUTION; INFRINGEMENT
5.1 OWNERSHIP OF INTELLECTUAL PROPERTY
(a) APPLICABLE LAW. The principles of U.S. patent law
shall be applied to determine whether (i) employees or others acting on behalf
of APB, or (ii) employees or others acting on behalf of ArQule, or (iii)
employees or others acting on behalf of APB together with employees or others
acting on behalf of ArQule, conceived, developed, discovered or reduced to
practice a Technology, whether patentable or not, pursuant to the Prior Research
and Development Agreement or this Agreement.
(b) ARQULE PATENT RIGHTS AND ARQULE TECHNOLOGY. The
ArQule Technology and the ArQule Patent Rights are solely owned by ArQule.
ArQule shall have sole responsibility for and control over the prosecution,
maintenance and enforcement of the ArQule Patent Rights.
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(c) APB PATENT RIGHTS AND APB TECHNOLOGY. The APB
Technology and the APB Patent Rights are solely owned by APB. APB shall have
sole responsibility for and control over the prosecution, maintenance and
enforcement of the APB Patent Rights.
(d) JOINT PATENT RIGHTS AND JOINT TECHNOLOGY. ArQule and
APB shall have joint ownership of all right, title, and interest in the Joint
Technology and under the Joint Patent Rights, and the parties agree to execute
all documents of assignment necessary to effectuate this result. Each party
shall ensure that its employees, consultants, agents, and representatives are
contractually required to assign to such party all Joint Patent Rights and other
rights in the Joint Technology, and to promptly disclose all Joint Technology to
such party.
(e) NOTICE OF JOINT TECHNOLOGY. Each party shall provide
prompt written notice to the Steering Committee of the internal disclosure of
(i) any Joint Background Technology developed by such party pursuant to the
Prior Research and Development Agreement and (ii) any Joint Collaboration
Technology developed by such party pursuant to this Agreement. The Steering
Committee shall evaluate whether such Technology is within the APB Core
Technology or ArQule Core Technology, in which case Subsection 5.1(b) or 5.1(c)
shall apply. If such Technology is outside the APB Core Technology or ArQule
Core Technology, the Steering Committee shall determine whether to seek Joint
Patent Rights claiming the Joint Technology, or to maintain the Joint Technology
as a trade secret. The Steering Committee shall make its recommendations to the
Steering Committee for final approval.
5.2 MANAGEMENT OF INTELLECTUAL PROPERTY.
(a) RESPONSIBILITY FOR JOINT PATENT RIGHTS. The party
responsible for the filing, prosecution and maintenance of Joint Patent Rights
shall be determined by the Steering Committee on a case-by-case basis. Expenses
relating to the preparation, filing, prosecution and maintenance of the Joint
Patent Rights shall be divided evenly by the parties, unless a different
allocation is decided by the Steering Committee.
(b) COOPERATION. Each party agrees to cooperate fully in
the preparation, filing, prosecution, and maintenance of all Joint Patent Rights
claiming Joint Technology. Such cooperation includes, without limitation, (i)
promptly executing all papers and instruments, or requiring its employees,
consultants, and agents to execute such papers and instruments, as reasonable
and appropriate so as to enable one or both parties to file, prosecute, and
maintain such Patent Rights in any country; (ii) promptly informing the other
party of matters that may affect the preparation, filing, prosecution, or
maintenance of any such Joint Patent Rights; (iii) providing the other party
with the opportunity to review and consult on, any filings with the United
States Patent and Trademark Office and the equivalent of such office in foreign
countries; and (iv) undertaking no actions that are potentially deleterious to
the preparation, filing, or prosecution of any such Joint Patent Rights.
(c) ASSUMPTION OF RIGHTS BY OTHER PARTY. In the event
that a party desires to decline responsibility for obtaining or maintaining
Joint Patent Rights in a country for any of the Joint Technology, such party
will notify the other party before taking such action and, upon request, will
allow the other party to assume responsibility for, and all expenses relating
to, the
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relevant Joint Patent Rights in those countries; provided, that, neither party
shall have the right to seek patent protection for any Joint Technology with
respect to which the Steering Committee has determined, in its discretion, to
maintain as a trade secret. In the event that a party desires to cease further
payment of patent-related expenses for a Joint Patent Right in any country, such
party shall assign all rights in that Joint Patent Right in such country to the
other party, and thereafter shall have no further obligation to pay such
expenses.
5.3 INFRINGEMENT. Neither party shall have the obligation to
initiate an infringement action to assert any Patent Right. However, if a party
does initiate an infringement action in connection with a Patent Right claiming
Joint Technology, the other party shall have the right to join in the action. In
such event, the parties shall determine an allocation of the costs and expenses
of the litigation, and damages will be awarded as follows: [*].
6. CONFIDENTIAL INFORMATION; PROPRIETARY MATERIALS
6.1 CONFIDENTIAL INFORMATION.
(a) DEFINITION OF CONFIDENTIAL INFORMATION. Confidential
Information shall mean any technical or business information furnished by one
party (the "Disclosing Party") to the other party (the "Receiving Party") in
connection with this Agreement. Such Confidential Information may include,
without limitation, the ArQule Background Technology, the APB Background
Technology or the Joint Technology, the use of a chemical compound, as well as
trade secrets, know-how, inventions, technical data or specifications, testing
methods, business or financial information, research and development activities,
Research and Steering Committee reports or minutes, product and marketing plans,
and customer and supplier information.
(b) OBLIGATIONS. The Receiving Party agrees that it
shall:
(i) maintain all Confidential Information in
strict confidence, except that the Receiving Party may disclose or permit the
disclosure of any Confidential Information to its directors, officers,
employees, consultants, and advisors who are obligated to maintain the
confidential nature of such Confidential Information and who need to know such
Confidential Information for the purposes set forth in this Agreement;
(ii) use all Confidential Information solely for
the purposes set forth in this Agreement; and
(iii) allow its directors, officers, employees,
consultants, and advisors to reproduce the Confidential Information only to the
extent necessary to effect the purposes set forth in this Agreement, with all
such reproductions being considered Confidential Information.
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(c) EXCEPTIONS. The obligations of the Receiving Party
under Section 6.1(b) above shall not apply to the extent that the Receiving
Party can demonstrate that certain Confidential Information:
(i) was in the public domain prior to the time
of its disclosure under this Agreement;
(ii) entered the public domain after the time of
its disclosure under this Agreement through means other than an unauthorized
disclosure resulting from an act or omission by the Receiving Party;
(iii) was independently developed or discovered by
the Receiving Party without use of the Confidential Information;
(iv) is or was disclosed to the Receiving Party
at any time, whether prior to or after the time of its disclosure under this
Agreement, by a third party having no fiduciary relationship with the Disclosing
Party and having no obligation of confidentiality with respect to such
Confidential Information; or
(v) is required to be disclosed to comply with
applicable laws or regulations, or with a court or administrative order,
provided, that the Disclosing Party receives prior written notice of such
disclosure and that the Receiving Party takes all reasonable and lawful actions
to obtain confidential treatment for such disclosure and, if possible, to
minimize the extent of such disclosure.
6.2 PROPRIETARY MATERIALS.
(a) DEFINITION OF PROPRIETARY MATERIALS. "Proprietary
Materials" means any tangible chemical, biological, or physical materials that
are furnished by one party (the "Materials Provider") to the other party (the
"Materials Recipient") in connection with this Agreement regardless of whether
such materials are specifically designated as proprietary to the Materials
Provider, including without limitation all ArQule Compounds. The Materials
Provider shall furnish such Proprietary Materials to the Materials Recipient in
a mutually acceptable form, including appropriate labelling and packaging.
(b) LIMITED USE. The Materials Recipient shall use the
Proprietary Materials solely for the purposes set forth in this Agreement. The
Materials Recipient shall use the Proprietary Materials only in compliance with
all applicable governmental laws and regulations, and not for any in vivo
experiments on human subjects. The Materials Recipient assumes all liability for
damages that may arise from the use, storage, or disposal of any Proprietary
Materials. The Materials Recipient will not be liable to the Materials Provider
for any loss, claim, or demand made by Materials Recipient, or made against the
Materials Recipient by any other party, due to or arising from the use, storage,
or disposal of any Proprietary Materials by the Materials Recipient, and the
Materials Recipient agrees, to the extent allowed under applicable law, to
defend, indemnify, and hold the Materials Provider harmless from and against any
such losses,
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claims, or demands, except to the extent caused by the gross negligence or
willful misconduct of the Materials Provider.
(c) LIMITED DISPOSITION. Except as otherwise expressly
provided herein, the Materials Recipient shall not transfer or distribute any
Proprietary Materials to any third party without the prior written consent of
the Materials Provider, which consent may be withheld at the sole discretion of
the Materials Provider.
(d) APPLICABLE LAWS AND REGULATIONS. The Materials
Recipient agrees to comply with all federal, state, and local laws and
regulations applicable to the use, storage, disposal, and transfer of
Proprietary Materials furnished by the Materials Provider, including without
limitation the Toxic Substances Control Act (15 USC 2601 et seq.) and
implementing regulations (in particular, 40 CFR 720.36 [Research and Development
Exemption]), the Food, Drug, and Cosmetic Act (21 USC 301 et seq.) and
implementing regulations, all Export Administration Regulations of the U.S.
Department of Commerce, and equivalent laws and regulations in countries outside
the United States. The Materials Recipient assumes sole responsibility for any
violation of such laws or regulations by the Materials Recipient, its employees
or its consultants.
6.3 RETURN OF CONFIDENTIAL INFORMATION AND PROPRIETARY MATERIALS.
(a) CONFIDENTIAL INFORMATION. Upon the termination of
this Agreement, at the request of the Disclosing Party, the Receiving Party
shall return to the Disclosing Party all originals, copies, and summaries of
documents, materials, and other tangible manifestations of Confidential
Information in the possession or control of the Receiving Party, except that the
Receiving Party may retain one copy of the Confidential Information in the
possession of its legal counsel solely for the purpose of monitoring its
obligations under this Agreement.
(b) PROPRIETARY MATERIALS. Upon the termination of this
Agreement, the Materials Recipient shall, at the instruction of the Materials
Provider, either destroy or return any unused Proprietary Materials.
6.4 SURVIVAL OF OBLIGATIONS. The obligations set forth in this
Article 6 shall remain in effect for a period of [* ] after termination of this
Agreement, except that the obligations of the Receiving Party to return
Confidential Information to the Disclosing Party and the obligations of the
Materials Recipient to return or destroy Proprietary Materials received from the
Materials Provider shall survive until fulfilled.
7. DILIGENCE; TECHNICAL MILESTONES AND COLLABORATION MILESTONES
7.1 ESTABLISHMENT AND MONITORING OF TECHNICAL MILESTONES AND
COLLABORATION MILESTONES. The parties, through the Steering Committee, have
established Technical Milestones in the Technology Development Plan on EXHIBIT A
and the Collaboration Milestones set forth on
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EXHIBIT B. The parties will work together in good faith, each using best
efforts, to achieve the initial Technical Milestones by the times indicated in
the Technology Development Plan and to achieve the Collaboration Milestones on
or before [*] from the Effective Date. The Steering Committee will monitor
progress toward accomplishing the Technical Milestones and will produce a
written evaluation every [*]. To assist the Steering Committee, each party shall
appoint as an informal technical auditor one of its employees who is reasonably
knowledgeable in the subject matter of the Collaborative Research Program but is
not significantly involved in the Collaborative Research Program. The Steering
Committee may modify the Technical Milestones in its discretion. The Steering
Committee will monitor progress toward accomplishing the Collaboration
Milestones and will produce a written evaluation every [*]. The Steering
Committee may modify the Collaboration Milestones in its discretion provided,
that no modification to the Collaboration Milestones shall take effect without
the prior written approval of the Chief Executive Officers of both parties.
7.2 FAILURE TO ARCHIVE THE TECHNICAL MILESTONES. At [*] from the
start of the Collaborative Research Program, the Steering Committee shall
conduct a formal evaluation of whether the initial Technical Milestones have
been achieved. If the parties have been unable to meet the initial Technical
Milestones, the parties may [*].
7.3 FAILURE TO ACHIEVE THE COLLABORATION MILESTONES.
(a) At [*] from the start of the Collaborative Research
Program, the Steering Committee shall conduct a formal evaluation of the
progress toward achieving the Collaboration Milestones. If the parties determine
that it is unlikely that the Collaboration Milestones will be met by the end of
[*] from the Effective Date, or if the parties desire to terminate the
Collaborative Research Program, then by mutual written agreement the parties may
[*].
(b) At [*] from the Effective Date, the Steering
Committee shall conduct a formal evaluation of whether the Collaboration
Milestones have been achieved. If the parties have not achieved the
Collaboration Milestones, ArQule or APB may [ *].
7.4 CONVERSION TO [*] RELATIONSHIP. In the event the [*]
relationship of the parties is converted, pursuant to Sections 7.2 or 7.3, to a
[*] relationship, the following shall occur:
(a) the Collaborative Research Program shall[*];
(b) the [*] license granted to APB pursuant to Section
4.1 shall be converted to a [*] license;
(c) the non-exclusive license granted to ArQule pursuant
to Section 4.2 shall remain in effect;
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(d) the licenses on use of the Joint Patent Rights and
Joint Technology set forth in Section 4.3 shall survive;
(e) the parties shall negotiate in good faith regarding
adjustments to the royalty rates on the Net Sales of [*] set forth in Section
9.2; and
(f) the parties' obligations regarding exclusivity
pursuant to Article 8 shall terminate.
8. EXCLUSIVE RELATIONSHIP IN THE AREA OF [*].
8.1 GENERAL. The parties agree to work together exclusively to
provide [*]based on small organic molecule ligands in the field of [*] to third
party customers in the bioseparations market.
8.2 SCOPE OF EXCLUSIVITY.
(a) ArQule agrees that it will not enter into any
agreements with another supplier of separations media products or services to
develop and/or furnish ligands to such supplier as part of [*], or to endorse
such supplier; provided, that ArQule shall not be precluded from supplying
ligands to an end-user customer for use in the field of [*].
(b) APB agrees not to enter into any agreements with
another developer or manufacturer of small molecules in order to develop and/or
furnish ligands to its end user customers as part of an [*], or to endorse
another supplier of such services. APB further agrees that it will not use the
ArQule Technology or the Joint Technology in any project to provide [*] in the
field of [*] unless ArQule participates in that project. The foregoing
notwithstanding, APB is not precluded from [*].
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9. PAYMENTS
9.1 RESEARCH AND DEVELOPMENT FEES. APB agrees to pay ArQule a
total of [*] within [*] of the Effective Date for performance of activities
under the initial [*] phase of the Technology Development Plan.
9.2 ROYALTIES ON MEDIA PRODUCTS. In partial consideration of the
services performed by ArQule in Customer Projects pursuant to the
Commercialization Agreement and this Agreement, as well as the technology
contributions by ArQule that enable the parties to provide [*], APB shall pay
ArQule a royalty on the Net Sales of [*], on a [*]-by-[*] basis, at the rates
set forth below:
ESTIMATED ANNUAL NET SALES ROYALTY
OF THE [*]
[*]
[*]
[*]
provided, that, if the cumulative actual Net Sales for a particular [*] exceeds
[*], the annual royalty on any future Net Sales of such [*] shall be increased
by [*]. By way of example, but not limitation, [*].
9.3 ADJUSTMENTS TO ROYALTY PAYMENTS. At the commencement of each
calendar year APB will estimate the total annual Net Sales for each [*]
anticipated to be sold by APB during such calendar year, and thereby determine
the royalty percentage that will apply to the total annual Net Sales of such [*]
during such calendar year. After the end of each calendar year, APB will
provide, together with the first quarterly report due pursuant to Section 9.6, a
written report setting forth the total actual annual Net Sales for each such [*]
in such calendar year, reconciling the royalties paid by APB during such
calendar year with the royalties actually due from APB. Together with said
report, APB will either make a payment to ArQule or issue to ArQule an invoice
for any overpayments. All invoices provided for under this Section 9.3 shall be
stated, and all amounts payable thereunder shall be paid in United States
dollars as provided in Section 9.7.
9.4 DURATION OF ROYALTY OBLIGATION. APB's obligation to pay
royalties on the annual Net Sales of [*] pursuant to Section 9.2 shall continue
for as long as such [*] are being sold.
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9.5 ROYALTIES ON OTHER LICENSED PRODUCTS OR LICENSED SERVICES.
(a) If APB wishes to develop, market or sell Licensed
Products other than [*] or Licensed Services other than services within [*] or
incidental services in support of [*], APB shall notify ArQule in writing and
promptly thereafter the parties shall enter into good faith negotiations to[*],
for the development and commercialization of such Licensed Products or Licensed
Services. Until such terms are established,[*].
(b) If ArQule wishes to develop, market or sell products
or services for which a royalty or other payment is due to APB pursuant to
Sections 4.2 or 4.3(b), ArQule shall notify APB in writing and promptly
thereafter the parties shall enter into good faith negotiations to [*] for the
development and commercialization of such products or services. Until the
parties execute a definitive license agreement, [*].
9.6 REPORTS. Within [*] days after the conclusion of each Royalty
Period, APB shall deliver to ArQule a report containing the following
information:
(i) gross sales of Licensed Products and Licensed
Services by APB during the applicable Royalty Period in each country of sale;
(ii) adjustments and calculation of Net Sales for each
Licensed Product and/or Licensed Service for the applicable Royalty Period in
each country of sale;
(iii) total Net Sales of each Licensed Product and/or
Licensed Service together with the exchange rates used for conversion; and
(iv) total royalty payment due for the Royalty Period for
each Licensed Product and/or Licensed Service.
If no payment is to be made by APB for any reporting period, the report
shall so state. All such reports shall be considered Confidential Information
under this Agreement. Concurrent with this report, APB shall remit to ArQule any
payment due for the applicable Royalty Period.
9.7 PAYMENTS IN U.S. DOLLARS. Subject to Section 9.8, all payments
due under this Article 9 shall be payable in United States dollars. Conversion
of foreign currency to U.S. dollars shall be made at the conversion rate
existing in the United States (as reported in the WALL STREET JOURNAL) on the
last working day of the calendar quarter preceding the applicable Royalty
Period. Such payments shall be without deduction of exchange, collection, or
other charges.
9.8 PAYMENTS IN OTHER CURRENCIES. If by law, regulation, or fiscal
policy of a particular country, conversion into United States dollars or
transfer of funds of a convertible currency to the United States is restricted
or forbidden, APB shall give ArQule prompt written notice of such restriction,
which notice shall satisfy the payment deadlines described in Section 9.6. APB
shall
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pay any amounts due ArQule through whatever lawful methods ArQule reasonably
designates; provided, however, that if ArQule fails to designate such payment
method within thirty (30) days after being notified of the restriction, APB may
deposit such payment in local currency to the credit of ArQule in a recognized
banking institution selected by APB and identified by written notice to ArQule,
and such deposit shall fulfill all obligations of APB to the other party with
respect to such payment.
9.9 RECORDS. APB shall maintain complete and accurate records of
(i) Licensed Products and/or Licensed Services sold or provided and (ii) any
royalties payable to ArQule in relation to each such Licensed Product and/or
Licensed Service, which records shall contain sufficient information to permit
ArQule to confirm the accuracy of any reports delivered under Section 9.6. APB
shall retain such records relating to a given Royalty Period for at least [*]
after the conclusion of that Royalty Period, during which time ArQule shall have
the right, at its expense, to cause an independent, certified public accountant
to inspect such records during normal business hours for the sole purpose of
verifying any reports and payments delivered under this Agreement. Such
accountant shall not disclose to ArQule any information other than information
relating to accuracy of reports and payments delivered under this Agreement. The
parties shall reconcile any underpayment or overpayment within thirty (30) days
after the accountant delivers the results of the audit. In the event that any
audit performed under this Section reveals an underpayment in excess of [*] in
any Royalty Period, APB shall bear the full cost of such audit. ArQule may
exercise its rights under this Section only once every year and only with
reasonable prior notice to APB.
9.10 LATE PAYMENTS. Any payments by APB that are not paid on or
before the date such payments are due under this Agreement shall bear interest,
to the extent permitted by law, at two percentage points above the Prime Rate of
interest as reported in the WALL STREET JOURNAL on the date payment is due, with
interest calculated based on the number of days that payment is delinquent.
9.11 PAYMENTS UNDER COMMERCIALIZATION AGREEMENT. In addition to the
payments set forth in this Agreement, under the Commercialization Agreement APB
has agreed to pay ArQule [*] of Technology Access, R&D, and Success Fees and
[*]of Customer Royalties (as those terms are defined in the Commercialization
Agreement).
10. EXPIRATION AND TERMINATION.
10.1 TERM OF COLLABORATIVE RESEARCH PROGRAM. Unless this Agreement
is sooner terminated pursuant to this Article 10, the Collaborative Research
Program shall commence on September 1, 1998 and remain in effect for a period of
[*], subject to automatic extension for additional [*] periods unless and until
terminated by a party upon [*] prior written notice before the expiration of the
then-current term. Notwithstanding the foregoing, APB shall have the right to
terminate the Collaborative Research Program at any time after [*] upon payment
to ArQule of
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an amount negotiated in good faith by the parties (the "Buyout Right"). This
compensation is intended to repay ArQule for the fair market value of the lost
business opportunity. In the event that APB elects to exercise the Buyout Right,
APB shall furnish ArQule with [*] written notice at any time after [*],
whereupon the parties shall negotiate in good faith the amount of compensation
payable to ArQule. After the parties agree on the amount of compensation, this
Agreement shall terminate immediately upon payment of that compensation to
ArQule.
10.2 TERM OF AGREEMENT. Unless sooner terminated pursuant to this
Article 10, this Agreement shall expire on a Licensed Product-by-Licensed
Product or Licensed Service-by-Licensed Service basis and country-by-country
basis, upon the date of the last sale of such Licensed Product and/or the last
provision of a Licensed Service in such country.
10.3 EVENTS OF DEFAULT.
(a) DEFAULT BY EITHER PARTY. Subject to Section 10.3(b),
an Event of Default by either party shall have occurred upon (i) the occurrence
of a breach of a material term of this Agreement (other than a material breach
described in clause (ii) hereof or in Section 10.3(b)) if the breaching party
fails to remedy such breach within ninety (90) days after written notice thereof
by the non-breaching party or (ii) the bankruptcy, insolvency, dissolution or
winding up of a party.
(b) DEFAULT BY APB. An Event of Default by APB shall have
occurred if (i) APB fails to make payments due hereunder within thirty (30) days
after ArQule delivers written notice thereof to APB specifying such failure and
its claim of right to terminate, unless APB makes such payments plus interest
within such thirty (30) day period.
10.4 EFFECT OF AN EVENT OF DEFAULT.
(a) REMEDIES AVAILABLE TO ARQULE. If an Event of Default
described in Section 10.3(a) or 10.3(b) occurs relating to APB, and APB fails to
cure such default during any applicable cure period, ArQule shall have the
right, at its option exercisable in its sole discretion, in addition to any
other rights or remedies available to it at law or in equity, and subject to the
limitations of Section 13.12, to terminate this Agreement upon written notice
thereof to APB.
(b) REMEDIES AVAILABLE TO APB. If an Event of Default
described in Section 10.3(a) occurs relating to ArQule, and ArQule fails to cure
such default during any applicable cure period, APB shall have the right, at its
option exercisable in its sole discretion, in addition to any other rights or
remedies available to it at law or in equity, and subject to the limitations of
Section 13.12, to terminate this Agreement upon written notice thereof to
ArQule.
10.5 OTHER TERMINATION.
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(a) TERMINATION BY APB. APB may terminate this Agreement,
upon thirty (30) days written notice to ArQule, if ArQule [*].
(b) TERMINATION BY ARQULE. ArQule may terminate this
Agreement, upon thirty (30) days written notice to APB, if APB [*].
10.6 EFFECT OF TERMINATION. Except as otherwise agreed by the
parties, upon the termination of this Agreement:
(i) the Collaborative Research Program shall immediately
terminate, and all collaborative research and development activities shall
cease;
(ii) each party shall have the right to practice the Joint
Patent Rights and to use the Joint Technology in the field of [*], subject to
payment of a commercially reasonable royalty to the other party, and subject to
the negotiation of other financial terms regarding such use; provided, that,
neither party shall be required to grant the other party the right to practice
the Joint Patent Rights or use the Joint Technology, on any terms, for [*];
(iii) each party shall have the right to practice the Joint
Patent Rights and use the Joint Technology outside the field of [*], without
payment to or the consent of the other party;
(iv) the rights and licenses granted to ArQule pursuant to
Section 4.2 shall continue, provided that ArQule and APB shall enter into a [*];
(v) the rights and licenses granted to APB pursuant to
Section 4.1 shall terminate, provided that ArQule shall be required to grant APB
or its Affiliates a license [*] to practice the ArQule Patent Rights and to use
the ArQule Technology to the extent necessary to permit use of the Joint
Technology by APB; and
(vi) any rights granted to a third party pursuant to
Section 4.4 regarding the use of [*] shall survive.
10.7 SURVIVAL. The expiration or termination of this Agreement
shall not relieve the parties of any obligation accruing prior to such
expiration or termination. The provisions of Articles 5, 6, 9, 11 and 12, and
Sections 13.1, 13.10 and 13.12 shall survive the expiration or termination of
this Agreement.
11. REPRESENTATIONS AND WARRANTIES.
11.1 REPRESENTATIONS, WARRANTIES AND COVENANTS OF ARQULE. ArQule
represents and warrants to and covenants with APB that:
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(a) ArQule is a corporation duly organized, validly
existing and in corporate good standing under the laws of the State of Delaware;
(b) ArQule has the legal right, authority and power to
enter into this Agreement, and to extend the rights and licenses granted to APB
in this Agreement;
(c) ArQule has taken all necessary action to authorize
the execution, delivery and performance of this Agreement;
(d) upon the execution and delivery of this Agreement,
this Agreement shall constitute a valid and binding obligation of ArQule
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(e) the performance of its obligations under this
Agreement will not conflict with its charter documents or result in a breach of
any agreements, contracts or other arrangements to which it is a party; and
(f) ArQule will not during the term of this Agreement
enter into any agreements, contracts or other arrangements that would be
inconsistent with its obligations under this Agreement.
11.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF APB. APB
represents and warrants to and covenants with ArQule that:
(a) APB is a corporation duly organized, validly existing
and in corporate good standing under the laws of Sweden;
(b) APB has the legal right, authority and power to enter
into this Agreement, and to extend the rights and licenses granted to ArQule in
this Agreement;
(c) APB has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
(d) upon the execution and delivery of this Agreement,
this Agreement shall constitute a valid and binding obligation of APB
enforceable in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(e) the performance of its obligations under this
Agreement will not conflict with APB's charter documents or result in a breach
of any agreements, contracts or other arrangements to which it is a party; and
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(f) APB will not after the Effective Date enter into any
agreements, contracts or other arrangements that would be inconsistent with its
obligations under this Agreement.
11.3 DISCLAIMER. NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR
IMPLIED, REGARDING THE QUALITY OF ANY RESEARCH RESULTS GENERATED PURSUANT TO THE
COLLABORATIVE RESEARCH PROGRAM. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE FOR ANY PROPRIETARY
MATERIALS OF EITHER PARTY. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT,
NEITHER PARTY MAKES ANY WARRANTIES THAT THE USE OF ARQULE TECHNOLOGY, THE APB
TECHNOLOGY, THE JOINT TECHNOLOGY, OR ANY PROPRIETARY MATERIALS WILL NOT INFRINGE
ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY.
12. INDEMNIFICATION AND INSURANCE.
12.1 GENERAL INDEMNIFICATION. Each party (the "Indemnifying party")
shall indemnify and hold harmless the other party, and their respective
directors, officers, employees and agents (collectively, the "Indemnitees") from
and against all claims, expenses or liability of whatever nature arising from or
alleged to arise from (i) any default, act, omission or negligence of the
Indemnifying party, its agents or employees, or others exercising rights by,
through, or under the Indemnifying party, or the failure of the Indemnifying
party or such persons to comply with any applicable laws, rules, regulations,
codes, ordinances or directives of governmental authorities, in each case to the
extent the same are related, directly or indirectly, to the Collaborative
Research Program described herein, and/or the sale of Licensed Products and/or
the provision of Licensed Services; (ii) any theory of product liability
(including, but not limited to, actions in the form of tort, warranty or strict
liability) concerning any Licensed Product sold or Licensed Service rendered by
such party; or (iii) a breach by such party of any of its representations or
warranties made pursuant to Article 11 hereof; provided, however, that in no
event shall the Indemnifying party be obligated under this section to indemnify
the Indemnitees where such claim, expense or liability results solely from any
omission, fault, negligence, or other misconduct of any of the Indemnitees.
12.2 PROCEDURE. The Indemnitees agree to provide the Indemnifying
Party with prompt written notice of any claim, suit, action, demand, or judgment
for which indemnification is sought under this Agreement. If an Indemnitee fails
to provide such notice within a reasonable time, and if such failure
prejudicially affects the ability of the Indemnifying Party to defend such
action, the Indemnifying Party shall be relieved of its liability to such
Indemnitee under this Article 12. The Indemnifying Party agrees, at its own
expense, to provide attorneys reasonably acceptable to the Indemnitees to defend
against any such claim. The Indemnitees shall cooperate fully with the
Indemnifying Party in such defense and will permit the Indemnifying Party to
conduct and control such defense and the disposition of such claim, suit, or
action (including all decisions relative to litigation, appeal, and settlement);
provided, however, that any Indemnitee shall have the right to retain its own
counsel, at the expense of the Indemnifying Party, if representation of such
Indemnitee by the counsel retained by the Indemnifying Party would be
inappropriate because of actual or potential differences in the interests of
such Indemnitee and any other party represented
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by such counsel. The Indemnifying Party agrees to keep the other party informed
of the progress in the defense and disposition of such claim and to consult with
such party with regard to any proposed settlement.
12.3 INSURANCE. APB shall maintain adequate product liability
insurance with respect to development, manufacture, and sale of Licensed
Products and Licensed Services by APB in such amount as it customarily maintains
with respect to sales of its other products, and in no event less than a
reasonable amount. APB shall maintain such insurance for so long as it continues
to manufacture or sell Licensed Products and/or to provide Licensed Services,
and thereafter for so long APB customarily maintains such insurance for itself
covering such manufacture or sale.
13. MISCELLANEOUS.
13.1 PUBLICITY. No press release, advertising, promotional sales
literature, or other promotional oral or written statements to the public in
connection with or alluding to work performed under this Agreement or the
relationship between the parties created by it, having or containing any
reference to ArQule or APB, shall be made by either party without the prior
written approval of the other party, except for restatements of
previously-approved statements and disclosures required by applicable law or
regulation.
13.2 RELATIONSHIP OF PARTIES. For the purposes of this Agreement,
each party is an independent contractor and not an agent or employee of the
other party. Neither party shall have authority to make any statements,
representations, or commitments of any kind, or to take any action which shall
be binding on the other party, except as may be explicitly provided for herein
or authorized in writing.
13.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
13.4 HEADINGS. All headings in this Agreement are for convenience
only and shall not affect the meaning of any provision hereof.
13.5 BINDING EFFECT. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective lawful successors and
assigns.
13.6 ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party, except that either of the
parties may assign this Agreement to an Affiliate or successor in connection
with the merger, consolidation, or sale of all or substantially all of its
assets or that portion of its business pertaining to the subject matter of this
Agreement.
13.7 FORCE MAJEURE. Neither party will be responsible for delays
resulting from acts beyond the control of such party, provided, that the
non-performing party uses commercially reasonable efforts to avoid or remove
such causes of nonperformance and continues performance hereunder with
reasonable dispatch whenever such causes are removed.
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13.8 NOTICES. All notices, requests, demands and other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given upon the date of
receipt if delivered by hand, recognized national overnight courier, confirmed
facsimile transmission, or registered or certified mail, return receipt
requested, postage prepaid, to the following addresses or facsimile numbers:
If to APB:
Amersham Pharmacia Biotech AB
S-751-84 Uppsala
Sweden
Attention: Johan von Heijne
Telephone: +46 1816 5000
Facsimile: +46 1816 5322
with a copy (which shall not constitute notice) to:
Ulf Lundberg
General Counsel
S-751-84 Uppsala
Sweden
Telephone: +46 1816 3000
Facsimile: +46 1816 5322
If to ArQule:
ArQule, Inc.
200 Boston Avenue
Medford, MA 02155
Attn: President
Telephone: (781) 395-4100
Facsimile: (781) 393-8321
with a copy (which shall not constitute notice) to:
ArQule, Inc.
200 Boston Avenue
Medford, MA 02155
Attn: Legal Department
Telephone: (781) 395-4100
Facsimile: (781) 393-8321
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section 13.8.
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13.9 AMENDMENT AND WAIVER. This Agreement may be amended,
supplemented, or otherwise modified at any time, but only by means of a written
instrument signed by both parties. Any waiver of any rights or failure to act in
a specific instance shall relate only to such instance and shall not be
construed as an agreement to waive any rights or fail to act in any other
instance, whether or not similar.
13.10 GOVERNING LAW. This Agreement and the legal relations among
the parties shall be governed by and construed in accordance with the laws of
the State of Delaware irrespective of any conflict of laws principles.
13.11 SEVERABILITY. In the event that any provision of this
Agreement shall, for any reason, be held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid or
unenforceable provision had not been included herein.
13.12 DISPUTE RESOLUTION. Any disputes between the parties that
arise under or relate to this Agreement and are not resolved by the Steering
Committee shall be resolved in accordance with the following procedures. The
parties shall first attempt in good faith to resolve the matter among
themselves. If the matter remains unresolved after a period of thirty (30) days
after the dispute first arose, the dispute shall be referred to the Chief
Executive Officers of each party, who shall meet at a mutually acceptable time
and location. If the matter remains unresolved within sixty (60) days after the
dispute first arose, the matter will be finally settled by binding arbitration
as follows. If the dispute relates to intellectual property matters under this
Agreement, including without limitation inventorship issues and whether a
particular Technology constitutes ArQule Technology, APB Technology, or Joint
Technology, the parties will submit the matter to binding arbitration in
accordance with the then current Center for Public Resources Institute for
Dispute Resolution Rules for Non-Administered Arbitration, with the exception
that the arbitration shall be conducted in New York, New York by a sole
arbitrator who is an experienced patent attorney with reasonable expertise in
the technological subject matter at issue. If the dispute relates to any other
matter under this Agreement, the parties will submit the matter to binding
arbitration in London, England under the Rules of Conciliation and Arbitration
of the International Chamber of Commerce. Judgment upon the award rendered by
the arbitrator may be entered and enforced in any court having jurisdiction
thereof.
13.13 ENTIRE AGREEMENT. This Agreement, together with the
Commercialization Agreement, constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes any and all
prior or contemporaneous oral and prior written agreements and understandings
including, without limitation, the Prior Research and Development Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.
AMERSHAM PHARMACIA BIOTECH AB ("APB")
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By: /s/ Ingvar Wiberger
--------------------------------------------
Name: Ingvar Wiberger
Title: Vice President Separations
ARQULE, INC.
By: /s/ Eric B. Gordon
--------------------------------------------
Name: Eric B. Gordon
Title: President and Chief Executive Officer
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EXHIBIT A
[*]
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EXHIBIT B
[*]
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EXHIBIT 10.2
COMMERCIALISATION AGREEMENT
This Commercialisation on Agreement (the "AGREEMENT") is entered into as of 13th
August, 1998 (the "EFFECTIVE DATE") by and between AMERSHAM PHARMACIA BIOTECH
AB, a Swedish company having its principal office at Bjorkgatan 30, S-751 84
Uppsala, Sweden and ARQULE, INC. ("ARQULE"), a Delaware Company having its
principal office at 200 Boston Avenue, Medford, MA 02155, USA.
RECITALS
WHEREAS, AP Biotech and ArQule entered into the Research Collaboration and
License Agreement of even date herewith (as herein defined);
WHEREAS, pursuant to the Research Collaboration and License Agreement, AP
Biotech and ArQule have agreed to conduct a Collaborative Research Program with
the aim [*];
WHEREAS, AP Biotech and ArQule have agreed to jointly market the [*] thus
developed.
NOW, THEREFORE, in consideration of the foregoing and the covenants and promises
set forth herein, AP Biotech and ArQule hereby agree as follows:
1. DEFINITIONS
Terms which is not expressly defined in this Agreement shall have same meaning
as is given to it in the Research Collaboration and License Agreement.
1.1 "AFFILIATE" means any legal entity (such as a corporation, partnership,
or limited liability company) that is controlled by a party. For the purposes of
this definition, the term "control" means (i) beneficial ownership of at least
fifty percent (50%) of the voting securities of a corporation or other business
organization with voting securities or (ii) a fifty percent (50%) or greater
interest in the net assets or profits of a partnership or other business
organisation without voting securities.
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1.2 "BIOMOLECULES" means polypeptides, proteins, oligonucleotides,
polynucleotides, oligosaccharides, polysaccharides or any combination of such
molecules, whether produced by natural means or by organic synthesis on solid
support or in solution.
1.3 [*].
1.4 CONFIDENTIAL INFORMATION" has the meaning set forth in Section 6.1.
1.5 "CUSTOMER CONTRACT" means the contract between AP Biotech and the
customer and which specifies the terms and conditions for a particular Customer
Project.
1.6 "CUSTOMER PROJECT" means the project undertaken by AP Biotech in
collaboration with ArQule in respect of a particular customer which shall
specify the development work to be performed by AP Biotech and ArQule as defined
in clause 2.3.
1.7 "CUSTOMER ROYALTIES" mean the royalties to be paid by a customer on its
sales of a product which has utilized the [*].
1.8 [*].
1.9 "KAM" means the Key Account Managers employed or otherwise engaged by
AP Biotech and/or its Affiliates to market its industrial separation products to
key accounts, such as major pharmaceutical companies.
1.10 "MARKETING MANAGER" means the individual designated by AP Biotech to
supervise and have the overall responsibility in relation to AP Biotech for the
marketing and sales activities relating to [*].
1.11 "MARKETING PLAN" means the plan which shall describe the marketing and
sales efforts to be undertaken by AP Biotech and its Affiliates in each of AP
Biotech's marketing regions, Europe, International, Japan and North America, to
achieve firstly the Commercial Milestones, and thereafter to maximize the market
penetration and sales of Media Products.
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1.12 [*].
1.13 "RESEARCH COLLABORATION AND LICENSE AGREEMENT" means that particular
agreement of even date herewith between the parties of even date hereof which
provides for the perfection of the [*] technology platform and the grant of
certain licensing rights from and to both parties.
1.14 "STEERING COMMITTEE" means the Steering Committee defined in the
Research Collaboration and License Agreement.
1.15 "TECHNOLOGY ACCESS, R&D AND SUCCESS FEES" means the fees to be paid by
a customer in consideration of the development services offered to the customer
under a Customer Contract.
2. JOINT MARKETING AND PROMOTION
2.1 CO-MARKETING AND PROMOTION. The parties agree to co-operate in the
joint introduction, promotion and marketing of the [*] concept to all potential
customers on a world wide basis. In doing so AP Biotech shall have the primary
responsibility for the promotion, marketing and sales activities. ArQule shall
Actively Participate with AP Biotech in such sales and marketing activities, in
particular relating to the ligand design and synthesis, in the marketing and
sales process and in Customer Projects. Further, ArQule shall perform all
research and development work to adapt ArQule Compounds to the needs of the
customers in accordance with a Customer Project. The promotion and marketing
efforts will include visits and presentations to individual customers,
participation in international scientific conferences and exhibitions,
publications in external and internal scientific journals, advertisements in
media, product leaflets and other appropriate means.
For the purposes of this Agreement the term "Actively Participate" means the
contribution of knowledgeable resources in marketing and selling activities
(e.g. customer visits, participation in scientific conferences and external and
internal seminars, Customer Project planning and reviews), organised or
initiated by APB, and for the production of promotion material (e.g. prints,
manuscripts, pictures, text material) relating to ArQule Technology, Joint
Technology and [*].
2.2 SALES AND MARKETING PROCEDURE. The marketing and sales activities under
this Agreement will consist of the following;
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(i) Lead generation and identification of customers. AP Biotech
shall engage its KAM's and its world wide marketing and sales
organisation to identify the customers who have or may develop an
interest to participate in the [*] concept execute a Customer
Contract. Both AP Biotech and ArQule shall inform the Steering
Committee and the other party of any actual or potential lead which may
be generated or discovered by it in pursuit of its regular business.
(ii) Qualification of customers, presentation of the [*] concept to
the customer, and technical feasibility of a customer project. Any such
potential project shall be reported to the marketing Manager, who shall
initiate a detailed description of the [*] concept and a proposal to be
presented to the customer.
(iii) Presentation to the customer of a proposal for a Customer
Project, and negotiations and development of a tentative Customer
Project Plan.
(iv) Agreement between AP Biotech and ArQule on the technical and
commercial terms for the Customer Project approved by the Steering
Committee to be negotiated with the customer and the final negotiations
with the customer. ArQule shall be bound to perform the research and
development activities thus allocated to and agreed by it. In the event
that ArQule chooses not to participate together with AP Biotech in the
final negotiations together with the customer ArQule shall be bound to
the reasonable outcome negotiated by AP Biotech based on such agreement
between AP Biotech and ArQule.
(v) Final negotiations with the customer.
(vi) Initiation of the Customer Project
2.3 CUSTOMER PROJECTS. The parties anticipate that a Customer Project will
consist of the following elements:
[*]
2.4 INFORMATION. Both AP Biotech and ArQule shall inform each other of
their respective activities under this or relating to this Agreement. Further
both parties shall at the request of the other provide such reasonable
additional information as will enhance the co-marketing activities described
herein.
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2.5 PERSONNEL. In addition to the Marketing Manager designated by AP
Biotech, each party agrees to assign to the marketing and sales activities under
this Agreement such qualified and competent members of its staff as may be
required to achieve the goals set forth in the Commercial Milestones and the
Marketing Plan and in each Customer Project Plan.
2.6 PAYMENT OF COSTS AND EXPENSES. Each party shall bear the costs and
expenses of its respective activities in connection with its performance
hereunder.
3. CUSTOMER CONTRACTS, CUSTOMER FEES AND ROYALTIES, AND SUPPLY OF [*]
3.1 CUSTOMER CONTRACTS. AP Biotech shall be the contracting party with the
customer in respect of the Customer Contracts approved by the Steering
Committee, but ArQule shall have the right to be informed of the development of
the negotiation thereof and the right to participate in such negotiations. The
Customer Contracts shall be based on a template agreement agreed to by the
parties and shall cover [*] as described in clause 2.3 above.
3.2 TECHNOLOGY ACCESS, R&D AND SUCCESS FEES, AND CUSTOMER ROYALTIES. The
parties shall introduce to the customers and shall in their marketing and sales
effort present the value added of the [*] in consideration of which the customer
will be required to pay Technology Access, R&D and Success Fees, as well as
Customer Royalties, as further defined in the template Customer Contract. Such
fees should be in amount of [*] aiming at an average of [*] during the first [*]
of the term of this Agreement. In the event that the customer does not accept to
pay fees in such amount or any royalties, AP Biotech and ArQule shall agree on a
joint approach to jointly negotiate the terms of the Customer Contract with such
customer. AP Biotech and ArQule shall share all such fees with [*] thereof being
due to AP Biotech and [*] to ArQule, and [*] of all Customer Royalties being due
to each of AP Biotech and ArQule.
3.3 PAYMENTS TO ARQULE. AP Biotech shall pay to ArQule its share of the
fees and the royalties in United States dollar. Payments shall be made within
sixty (60) days of AP Biotech's receipt of such fees from the customer.
Conversion of foreign currency to US dollars shall be made at the conversion
rate quoted by a first class commercial bank in Sweden on the due date for
payment to ArQule.
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3.4 LATE PAYMENTS. Any payments by AP Biotech that are not paid on or
before the due date for payment under this Agreement shall bear interest, to the
extent permitted by law, at two percentage unit above the 3 month LIBOR for USD.
3.5 CONTRACTS FOR THE SUPPLY OF [*]. Upon completion of the development
work described in the Customer Contract AP Biotech will negotiate and enter into
a supply contract with the customer for the supply of [*]. AP Biotech shall pay
to ArQule the royalties on such sales as are defined in the Research
Collaboration and License Agreement.
4. TRADE NAME
The parties shall agree on a suitable trade name for the [*] concept and shall
promote and market the [*] under such name. AP Biotech shall register the trade
name as a trademark in such countries as the parties may agree. AP Biotech shall
pay the reasonable costs to obtain such registrations. AP Biotech shall grant to
ArQule a co-exclusive license to use the trademark in its performance under this
Agreement.
5. STEERING COMMITTEE
5.1 MEETING OF STEERING COMMITTEE. The Steering Committee shall hold
regular meetings at the intervals specified in Article 3.2(d) of the Research
Collaboration and License Agreement.
5.2 RESPONSIBILITY OF STEERING COMMITTEE. The Steering Committee shall be
responsible for the co-ordination between the parties and the supervision of the
sales and marketing activities and this Agreement.
5.3 DECISION OF STEERING COMMITTEE AND REPORTS. The Steering Committee
shall take its decision as specified in Article 3.2(c and d) of the Research
Collaboration and License Agreement.
- ----------
* Confidential Treatment has been requested for the marked portion.
<PAGE> 7
6. CONFIDENTIAL INFORMATION
6.1 DEFINITION OF CONFIDENTIAL INFORMATION. Confidential Information shall
mean any technical or business information furnished by one party (the
"Disclosing Party") to the other party (the "Receiving Party") in connection
with this Agreement. Such Confidential information may include, without
limitation, the ArQule Background Technology, the AP Biotech Background
Technology or the Joint Technology, the use of a chemical compound, as well as
trade secrets, know-how, inventions, technical data or specifications, testing
methods, business or financial information, research, and development
activities, Research and Steering Committee reports or minutes, product and
marketing plans, and customer and supplier information.
6.2 OBLIGATIONS. The Receiving Party agrees that it shall:
(i) maintain all Confidential Information in strict confidence,
except that the Receiving Party may disclose or permit the disclosure
of any Confidential Information to its directors, officers, employees,
consultants, and advisors who are obligated to maintain the
confidential nature of such Confidential information and who need to
know such Confidential Information for the purposes set forth in this
Agreement;
(ii) allow its directors, officers, employees, consultants, and
advisors to reproduce the Confidential Information only to the extent
necessary to effect the purpose set forth in this Agreement, with all
such reproductions being considered Confidential Information.
6.3 EXCEPTIONS. The obligations of the Receiving Party under Section 6.1
(ii) above shall not apply to the extent that the Receiving Party can
demonstrate that certain Confidential Information:
(i) was in the public domain prior to the time of its disclosure
under this Agreement;
(ii) entered the public domain prior to the time of its disclosure
under this Agreement; through means the public domain after the time of
its disclosure under this Agreement through means other than an
unauthorized disclosure resulting from an act or omission by the
Receiving Party;
(iii) was independently developed or discovered by the Receiving
Party without use of the Confidential Information;
<PAGE> 8
(iv) is or was disclosed to the Receiving party at any time,
whether prior to or after the time of its disclosure under this
Agreement, by a third party having an no fiduciary relationship with
the Disclosing Party and having no obligation of confidentiality with
respect to such Confidential Information; or
(v) is required to be disclosed to comply with applicable laws or
regulations, or with a court or administrative order, provided, that
the Disclosing Party receives prior written notice of such disclosure
and that the Receiving Party takes all reasonable and lawful actions to
obtain confidential treatment for such disclosure and, if possible, to
minimize the extent of such disclosure.
6.4 RETURN OF CONFIDENTIAL INFORMATION. Upon the termination of this
Agreement, at the request of the Disclosing Party, the Receiving Party shall
return to the Disclosing Party all originals, copies, and summaries of
documents, materials, and other tangible manifestations of Confidential
Information in the possession or control of the Receiving Party, except that the
Receiving Party may retain one copy of the Confidential Information in the
possession of its legal counsel solely for the purpose of monitoring its
obligations under this Agreement.
6.5 SURVIVAL OF OBLIGATIONS. The obligations set forth in this Article 6
shall remain in effect for a period of [*] after termination of this Agreement,
except that the obligations of the Receiving Party to return Confidential
Information to the Disclosing Party and the obligations of the Materials
Recipient to return or destroy Proprietary Materials received from the Materials
Provider shall survive until fulfilled.
7. EXCLUSIVE RELATIONSHIP
The parties agree to work with each other exclusively as described in detail in
the Research Collaboration and License Agreement to provide [*] based on small
organic molecule ligands in the field of [*] to third party customers in the
bioseparations market.
8. EXPIRATION AND TERMINATION
- ----------
* Confidential Treatment has been requested for the marked portion.
<PAGE> 9
8.1 TERM OF AGREEMENT. Unless sooner terminated pursuant to this Article 8
or by mutual Agreement by the parties, this Agreement shall continue until
terminated by mutual agreement in writing of the parties.
8.2 DEFAULT BY EITHER PARTY. An Event of Default by either party shall have
occurred upon; (i) the occurrence of a breach of a material term of this if the
breaching party fails to remedy such breach within ninety (90) days after
written notice thereof by the non-breaching party or (ii) the bankruptcy,
insolvency, dissolution or winding up of a party.
8.3 DEFAULT BY AP BIOTECH. An Event of Default by AP Biotech shall have
occurred if AP Biotech fails to make payments due hereunder within thirty (30)
days after ArQule delivers written notice thereof to AP Biotech specifying such
failure and its claim of right to terminate, unless AP Biotech makes such
payments plus interest within such thirty (30) day period.
8.4 REMEDIES AVAILABLE. If an Event of Default described in Section 8.3 or
8.2 occurs relating to either party and the party in default fails to cure such
default during any applicable cure period, the other party shall have the right,
at its option exercisable in its sole discretion, in addition to any other
rights or remedies available to it at law or in equity, and subject to the
limitations of Section 13.12, to terminate this Agreement upon written notice
thereof the party in default.
8.5 SURVIVAL. The expiration of termination of this Agreement shall not
relieve the parties of any obligation accruing prior to such expiration or
termination. The provisions of Articles 6, 9, and 10, and Sections 11.1, 11.10
and 11.12 shall survive the expiration or termination of this Agreement.
9. REPRESENTATION AND WARRANTIES
9.1 REPRESENTATION, WARRANTIES AND COVENANTS OF ARQULE. ArQule represents
and warrants to and covenants with AP Biotech that:
(i) ArQule is a corporation duly organized, validly existing and
in corporate good standing under the laws of the State of Delaware;
(ii) ArQule has the legal right, authority and power to enter into
this Agreement, and to extend the rights and licenses granted to AP
Biotech in this Agreement;
<PAGE> 10
(iii) ArQule has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
(iv) upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of ArQule
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganisation,
moratorium or similar laws affecting creditor's and contracting
parties' rights generally and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(v) the performance of its obligations under this Agreement will
not conflict with its charter documents or result in a breach of any
agreements, contracts or other arrangements to which it is a party; and
(vi) ArQule will not during the term of this Agreement enter into
any agreements, contracts or other arrangements that would be
inconsistent with its obligations under this Agreement.
9.2 REPRESENTATIONS, WARRANTIES AND COVENANTS OF AP BIOTECH. AP Biotech
represents and warrants to and covenants with ArQule that:
(i) AP Biotech is a corporation duly organized, validly existing
and in corporate good standing under the laws of Sweden;
(ii) AP Biotech has the legal right, authority and power to enter
into this Agreement, and to extend the rights and licenses granted to
ArQule in this Agreement;
(iii) AP Biotech has taken all necessary action to authorize the
execution, delivery and performance of this Agreement:
(iv) upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of AP Biotech
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganisation,
moratorium or similar laws affecting creditors and contracting parties'
rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
<PAGE> 11
(v) the performance of its obligations under this Agreement will
not conflict with AP Biotech's charter documents or result in a breach
of any agreements, contracts or other arrangements to which it is a
party; and
(vi) AP Biotech will not after the Effective Date enter into any
agreements, contract or other arrangements that would be inconsistent
with its obligations under this Agreement.
9.3 DISCLAIMER. NEITHER PARTY MAKES ANY WARRANTIES, EXPRESS OR IMPLIED,
WITH RESPECT TO THE ACTIVITIES TO BE UNDERTAKEN UNDER THIS AGREEMENT. THERE ARE
NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
BY EITHER PARTY. EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER PARTY
MAKES ANY WARRANTIES THAT THE USE OF THE ARQULE BACKGROUND TECHNOLOGY, THE AP
BIOTECH BACKGROUND TECHNOLOGY OR THE JOINT TECHNOLOGY WILL NOT INFRINGE ANY
PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY.
10. INDEMNIFICATION AND INSURANCE
10.1 GENERAL INDEMNIFICATION. Each party (the "INDEMNIFYING PARTY") shall
indemnify and hold harmless the other party, and their respective directors,
officers, employees and agents (collectively, the "INDEMNITEES") from and
against all claims, expenses or liability of whatever nature arising from or
alleged to arise from (i) any default, act, omission or negligence of the
Indemnifying party, or the failure of the Indemnifying party or such persons to
comply with any applicable laws, rules, regulations, codes, ordinances or
directive of governmental authorities, in each case to the extent the same are
related, directly or indirectly, to the sales and marketing activities described
herein, and/or the sale of License Products and/or the provision of Licenses
Service; (ii) any theory of product liability (including, but not limited to,
actions in the form of tort, warranty or strict liability) concerning any
License Product sold or Licensed Service rendered by such party; or (iii) a
breach by such party of any of its representations of warranties made pursuant
to Article 9 hereof; provided, however, that in no event shall the Indemnifying
party be obligated under this section to indemnify the Indemnitees where such
claim, expense or liability results solely from any omission, fault, negligence,
or other misconduct of any of the Indemnitees.
10.2 PROCEDURE. The Indemnitees agree to provide the Indemnifying Party with
prompt written notice of any claim, suit, action, demand, or judgment for which
indemnification is sought under this Agreement. If an Indemnitee fails to
provide such notice within a reasonable time, and if such failure prejudicially
affects the ability of the Indemnifying Party to defend such action, the
Indemnifying Party shall be relieved of its liability to such Indemnitee under
<PAGE> 12
this Article 10. The Indemnifying Party agrees, at its own expense, to provide
attorneys reasonably acceptable to the Indemnitees to defend against any such
claim. The Indemnitees shall co-operation fully with the Indemnifying Party in
such defense and will permit the Indemnifying Party to conduct and control such
defense and the disposition of such claim, suit or action (including all
decisions relative to litigation, appeal, and settlement); provide, however,
that any Indemnitee shall have the right to retain its own counsel, at the
expense of the Indemnifying Party, if representation of such Indemnitee by the
counsel retained by the Indemnifying Party would be inappropriate because of
actual or potential differences in the interests of such Indemnitee and any
other party represented by such counsel. The Indemnifying Party agrees to keep
the other party informed of the progress in the defense and disposition of such
claim and to consult with such party with regards to any proposed settlement.
10.3 INSURANCE. AP Biotech shall maintain adequate product liability
insurance with respect to development, manufacture, and sale of Licensed
Products and Licensed Services by AP Biotech in such amount as it customarily
maintains with respect to sales of its other products, and in no event less than
a reasonable amount. AP Biotech shall maintain such insurance for so long as it
continuos to manufacture or sell Licensed Products and/or to provide Licensed
Services, and thereafter for so long AP Biotech customarily maintains such
insurance for itself covering such manufacture or sale.
11. MISCELLANEOUS
11.1 PUBLICITY. No press release, advertising, promotional sales literature,
or other promotional oral or written statements to the public in connection with
or alluding to work performed under this Agreement or the relationship between
the parties created by it, having or containing any reference to ArQule or AP
Biotech, shall be made by either party without the prior written approval of the
other party, except for restatements of previously-approve statements and
disclosures required by applicable law or regulations.
11.2 RELATIONSHIP OF PARTIES. For the purposes of this Agreement, each party
is an independent contractor and not an agent or employee of the other party.
Neither party shall have authority to make any statements, representations, or
commitments of any kind, or to take any action which shall be binding on the
other party, except as may explicitly provided for herein or authorized in
writing.
11.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
<PAGE> 13
11.4 HEADINGS. All headings in this Agreement are for convenience only and
shall not affect the meaning of any provision hereof.
11.5 BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties and their respective lawful successors and assigns.
11.6 ASSIGNMENT. This Agreement may not be assigned by either party without
the prior written consent of the other party, except that either of the parties
may assign this Agreement to an Affiliate or successor in connection with the
merger, consolidation, or sale of all or substantially all of its assets or that
portion of its business pertaining to the subject matter of this Agreement.
11.7 FORCE MAJEURE. Neither party will be responsible for delays resulting
from acts beyond the control of such party, provided, that the non-performing
party uses commercially reasonable efforts to avoid or remove such causes of
non-performance and continues performance hereunder with reasonable dispatch
whenever such causes are removed.
11.8 NOTICES. All notices, requests, demands and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given upon the date of receipt if
delivered by hand, recognised national overnight courier, confirmed facsimile
transmission, or registered or certified mail, return receipt requested, postage
prepaid, to the following addresses or facsimile numbers:
If to AP Biotech: Amersham Pharmacia Biotech AB
S-751 84 Uppsala
Sweden
Attention: Johan von Heijne
Telephone: +46 18 16 50 00
Facsimile: +46 18 16 53 22
with a copy (which shall not constitute notice) to:
Ulf Lundberg
General Counsel
S-751 84 Uppsala
Sweden
Telephone: +46 18 16 50 00
Facsimile: +46 18 16 53 22
If to ArQule: ArQule, Inc
<PAGE> 14
200 Boston Avenue
Medford, MA 02155
Attn: President
Telephone: (781) 395-4100
Facsimile: (781) 393 8321
<PAGE> 15
with a copy (which shall not constitute notice) to:
ArQule, Inc.
200 Boston Avenue
Medford, MA 02155
Attn: Legal Department
Telephone: (781) 395 4100
Facsimile: (781) 393 8321
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section 13.7.
11.9 AMENDMENT AND WAIVER. This Agreement may be amended, supplemented, or
otherwise modified at any time, but only by means of a written instrument signed
by both parties. Any waiver of any rights or failure to act in a specific
instance shall related only to such instance and shall not be construed as an
agreement to waive any rights or fail to act in any other instance, whether or
not similar.
11.10 GOVERNING LAW. This Agreement and the legal relations among the parties
shall be governed by and construed in accordance with the laws of the State of
New York irrespective of any conflict of laws principles.
11.11 SEVERABILITY. In the event that any provision of this Agreement shall,
for any reason, be held to be invalid or unenforceable in any respect, such
invalidity or unenforceability shall not affect any other provision hereof, and
this Agreement shall be construed as if such invalid or unenforceable provision
had not been included herein.
11.12 DISPUTE RESOLUTION. Any disputes between the parties that arise under
or relate to this Agreement and are not resolved by the Steering Committee shall
be resolved in accordance with the following procedures. The parties shall first
attempt in good faith to resolve the matter among themselves. If the matter
remains unresolved after a period of thirty (30) days after the dispute first
arose, the dispute shall be referred to a member of senior management from each
party, who shall meet at a mutually acceptable time and location. If the matter
remains unresolved within sixty (60) days after the dispute first arose, the
dispute shall be finally settled by binding arbitration in London, England under
the Rules of Conciliation and Arbitration of the International Chamber of
Commerce.
11.13 ENTIRE AGREEMENT. This Agreement, together with the Research
Collaboration and License Agreement, constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes any and all
prior or contemporaneous oral and prior written agreements and understandings
including, without limitation, the Prior Research and Development Agreement.
<PAGE> 16
IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as a sealed instrument effective as of the date first above written.
AMERSHAM PHARMACIA BIOTECH AB
By: /s/ Ingvar Wiberger
--------------------------------------------
Name: Ingvar Wiberger
Title: Vice President Separations
ARQULE, INC.
By: /s/ Eric B. Gordon
--------------------------------------------
Name: Eric B. Gordon
Title: President and Chief Executive Officer
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus constituting part
of this Registration Statement of ArQule, Inc. on Form S-3 of our report dated
February 9, 1998, except as to the last paragraph of Note 2, which is as of
April 17, 1998, which appears on page 21 of ArQule's 1997 Annual Report on Form
10-K for the year ended December 31, 1997. We also consent to the reference to
us under the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Boston, Massachusetts
August 24, 1998
7
