<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
-------------
Date of Report (Date of earliest event reported) May 19, 1999
--------------
AXONYX INC.
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
NEVADA 86-0883978
- ------------------------------------------------------------------------------
<S> <C> <C>
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
750 LEXINGTON AVE., SUITE 1400, NEW YORK, NEW YORK 10022
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 688-4770
---------------------------
- ------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
</TABLE>
<PAGE>
Item 5. OTHER EVENTS.
On May 19, 1999 Axonyx Inc. ("Axonyx" or "the Company") signed a
Development Agreement and Right to License (the "Agreement") between itself
and Applied Research Systems ARS Holding N.V., a wholly owned subsidiary of
Ares Serono International, S.A. ("Ares Serono"). Under the Agreement, the
Company granted an exclusive right to license its patent rights and know-how
regarding the Amyloid Inhibiting Peptides and the Prion Inhibiting Peptides
to Ares Serono. Ares Serono paid Axonyx a fee for the right to license in
the amount of $250,000. The right to license has a one year term, renewable
for an additional one year period upon payment of a fee of $500,000. In
addition, Ares Serono undertakes to conduct research on the Amyloid
Inhibiting Peptide technology during the term of the Agreement. Any patent
rights or know-how developed by Ares Serono arising out of the conduct of the
research shall revert to Axonyx if Ares Serono elects not to exercise the
right to license. The parties agreed to basic license terms that will become
applicable should Ares Serono choose to exercise its right to license.
The foregoing summary of the Development Agreement and Right to License
is qualified in its entirety by reference to the Development Agreement and
Right to License.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Development Agreement and Right to License dated as of May 19, 1999,
by and among Axonyx Inc. and Applied Research Systems ARS Holding N.V.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AXONYX INC.
By: /s/ Marvin S. Hausman, M.D.
------------------------------------
Marvin S. Hausman, M.D.
President & Chief Executive Officer
DATED: May 27, 1999
<PAGE>
DEVELOPMENT AGREEMENT AND RIGHT TO LICENSE
This Development Agreement and Right to License (the "Agreement"),
effective as of May 17, 1999 (the "Effective Date"), is made by and between
Axonyx Inc., a company organized and existing under the laws of the State of
Nevada, USA and having its principal place of business at 750 Lexington
Avenue, Suite 1400, New York, New York 10022, USA (hereafter "Axonyx") and
Applied Research Systems ARS Holding N.V., a company organized and existing
under the laws of the Netherlands Antilles and having a principal place of
business at John B. Gorsiraweg 14, Curacao, the Netherlands Antilles
(hereafter "ARS"). References to Axonyx and ARS shall include their
respective Affiliates (as hereafter defined).
WHEREAS:
Axonyx has developed and acquired proprietary patent rights and know
how relating to peptides useful in the inhibition or disassembly of amyloid
aggregation or prion formation and that could be useful as therapeutic agents
in the treatment of diseases associated with amyloid or prion formation
either per se, as analogs thereof or as peptidomimetics developed on the
basis of structural leads derived from such peptides; and
ARS desires to evaluate the Axonyx know-how and patent rights by
initiating and diligently conducting a research program that is defined below
and further desires to have the right during the term of this Agreement to
obtain a worldwide, exclusive license under the aforesaid Axonyx know-how
and/or patent rights;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or plural, shall have the respective meanings set forth below:
1.1 The term "Affiliate" shall mean any individual or entity
directly or indirectly controlling, controlled by or under common control
with a party to this Agreement. For purposes of this Agreement, the direct
or indirect ownership of over fifty percent (50%) of the outstanding voting
securities of an entity, or the right to receive over fifty percent (50%) of
the profits or earnings of an entity shall be deemed to constitute control.
Such other relationship as in fact gives such individual or entity the power
or ability to control the management, business and affairs of an entity shall
also be deemed to constitute control.
<PAGE>
1.2 The term "ARS Know-How" shall mean any information and
materials, including without limitation, discoveries, improvements processes,
procedures, formulas, Compounds, compositions, matter, data, inventions,
know-how, trade secrets and Health Registrations (and all information and
data contained therein), patentable or otherwise, that during the term of
this Agreement are not generally known, that arise out of the Research, and
that are developed by ARS or its agents.
1.3 The term "ARS Patent Rights" shall mean any and all patents
and patent applications (which for the purposes of this Agreement shall be
deemed to include certificates of invention and applications for certificates
of invention) owned or controlled by ARS that claim inventions that were
conceived and/or reduced to practice in the conduct of the Research and that
relate to a Compound and/or a Product and the divisions, continuations,
continuations-in-part, patents of addition, reissues, renewals, extensions,
registrations, confirmations, re-examinations, any provisional application,
supplementary protection certificates or the like of any such patents and
patent applications and any foreign equivalents thereof.
1.4 The term "Axonyx Know-How" shall mean all information and
materials, including, without limitation, discoveries, improvements,
processes, procedures, formulas, Compounds, compositions, matter, data,
inventions, know-how and trade secrets, patentable or otherwise, in each case
that during the term of this Agreement (i) are owned or controlled by Axonyx
and to which Axonyx has the right to grant licenses or sublicenses or to
disclose, (ii) are not generally known and (iii) are useful to ARS in
connection with the discovery, research, development, registration,
manufacture, marketing, use or sale of a Product. Know-How shall include,
without limitation, all biological, chemical, pharmacological, toxicological,
pharmaceutical, physical and analytical, clinical, safety, manufacturing and
quality control data and information related thereto, and all applications,
registrations, licenses, authorizations, documents, approvals and
correspondence related to a Product, including, without limitation,
correspondence submitted to regulatory authorities with jurisdiction over an
investigational drug containing a Product.
1.5 The term "Axonyx Patent Rights" shall mean any and all patents
and patent applications (which for the purposes of this Agreement shall be
deemed to include certificates of invention and applications for certificates
of invention) that during the term of this Agreement are owned by Axonyx or
to which Axonyx through license or otherwise has acquired rights and that
relate to a Compound and/or a Product, including, without limitation, those
listed on Schedule 1.5, and the divisions, continuations,
continuations-in-part, patents of addition, reissues, renewals, extensions,
registrations, confirmations, re-examinations, any provisional applications,
supplementary protection certificates or the like of any such patents and
patent applications and any foreign equivalents thereof.
1.6 The term "Business Day" shall mean any day other than a
Saturday, Sunday or other day on which the principal commercial banks located
in Geneva, Switzerland or Stevenson, Washington are not open for business
during normal banking hours.
2
<PAGE>
1.7 The term "Calendar Quarter" shall mean the respective periods
of three (3) consecutive calendar months ending on March 31, June 30,
September 30 and December 31.
1.8 The term "Calendar Year" shall mean each successive period of
twelve (12) months commencing on January 1 and ending on December 31.
1.9 The term "Combination Product" shall mean a Product that
includes one or more active ingredients other than a Compound in combination
with one or more Compounds or that includes other products, devices,
equipment or components.
1.10 The term "Competitive Product" shall mean a product with a
mechanism of action substantially equivalent to that of a Patented Product or
Other Product, which has an approved Health Registration in a given country
for an indication for which such Patented Product or Other Product also has
an approved Health Registration in such country and which has a market share
of fifteen percent (15%) or more in such country as measured by prescriptions
or other similar information for such country.
1.11 The term "Compound" shall mean any and all peptides, peptide
analogs or derivatives or peptidomimetics that are active in the inhibition
or disassembly of amyloid aggregation or prion formation in the brain.
1.12 The term "EU" shall mean each of the countries of the European
Union (or its successor), that currently include Austria, Belgium, United
Kingdom, Denmark, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, the Netherlands, Portugal, Spain and Sweden, as such membership
may change from time to time, and includes countries upon their admission for
full membership (with commercial rights and privileges substantially
comparable to those of the foregoing countries); PROVIDED, HOWEVER, that for
purposes of this Agreement, if a country is or becomes a member of the
European Union (or its successor) at any time during the term of this
Agreement, such country shall be deemed to be included in the European Union
even if such country in fact withdraws from or is otherwise no longer a
member of the European Union (or its successor).
1.13 The term "First Commercial Sale" shall mean, with respect to
any Patented Product or Other Product, the first sale by ARS or its
sublicensees for end use or consumption of such Product in a country after
all required approvals, including without limitation Health Registrations,
have been granted by the governing Regulatory Authority of such country.
1.14 The term "Health Registrations" shall mean the technical,
medical and scientific licenses, registrations, authorizations and/or
approvals of a Patented Product or Other Product (including any prerequisite
manufacturing approvals or authorizations related thereto) that are required
or deemed necessary by any national, supra-national (e.g., the European
Commission or the Council of the European Union), regional, state or local
regulatory agency, department, bureau or other governmental entity, and any
3
<PAGE>
pricing, third party reimbursement approvals and labeling approvals required
or deemed necessary for the manufacture, distribution, use or sale of such
Product.
1.15 The term "License Agreement" shall have the meaning set forth
in Section 2.1 of Schedule 3.1.
1.16 The term "License Right" shall have the meaning set forth in
Section 3.1 of this Agreement.
1.17 The term "License Period" shall have the meaning set forth in
Section 3.2 of this Agreement.
1.18 The term "Net Sales" shall mean with respect to each country
the amounts received by ARS or its sublicensees for all sales of a Patented
Product and/or Other Product to an unaffiliated third party (whether an
end-user, a distributor or otherwise), and exclusive of sales or transfers to
Affiliates, LESS the reasonable and customary deductions from such gross
amounts including:
(a) trade, cash and quantity discounts, rebates, reimbursements,
allowances and credits;
(b) credits or allowances actually granted for damaged goods,
returns or rejections of a Patented Product and/or Other Product and
retroactive price reductions;
(c) sales, use or similar taxes (including duties or other
governmental charges levied on, absorbed or otherwise imposed on the sale or
use of a Patented Product or Other Product including, without limitation,
value added taxes or other governmental charges otherwise measured by the
billing amount, when included in billing);
(d) freight, postage, shipping, customs duties and insurance
charges; and
(e) commissions paid to third parties other than sales personnel
and sale representatives or sales agents.
For purposes of calculating Net Sales under this Agreement, all sales of a
Patented Product or Other Product hereunder, whether made for cash or
otherwise, shall be deemed to be made for cash, at the applicable fair market
value of such Product.
In the event that a Patented Product or Other Product is sold in the
form of a Combination Product, Net Sales for such Combination Product will be
calculated by multiplying actual Net Sales of such Combination Product by the
fraction A/(A+B) where A is the invoice price of the Patented Product or
Other Product containing Compound as the only active ingredient if sold
separately and B is the invoice price of any other active ingredients,
products, devices, equipment or components in the Combination Product if sold
separately. In the event that the Patented Product or Other Product or one
or more of such active ingredients, products, devices, equipment or
components in the Combination Product are not sold separately, then the
parties shall negotiate in
4
<PAGE>
good faith a formula for calculating Net Sales for such Combination Product
that reflects the respective contributions of the Patented Product or Other
Product and such other components to the overall value of such Combination
Product.
1.19 The term "NYU Agreement" shall mean the Agreement between New
York University and Axonyx effective April 1, 1997, as amended,
1.20 The term "Other Product" shall mean a Product that is not a
Patented Product and that contains a Compound that was conceived and/or
reduced to practice in the conduct of the Research or whose manufacture,
importation, use, offer to sell or sale, but for the license granted by
Axonyx to ARS in the License Agreement, would infringe a Valid Claim of the
ARS Patent Rights licensed thereunder.
1.21 The term "Patented Product" shall mean a Product the
manufacture, import, use, offer to sell or sale of which, but for the license
granted by Axonyx to ARS in the License Agreement, would infringe a Valid
Claim of the Axonyx Patent Rights licensed thereunder.
1.22 The term "Product(s)" shall mean preparations in final form
for sale that contain a Compound as an active ingredient, including, without
limitation, any Combination Product.
1.23 The term "Regulatory Authority" shall mean the applicable
government regulatory authority in each country involved in granting the
Health Registrations for the Patented Product or Other Product. Such term
includes, without limitation, the United States Food and Drug Administration
and any successor agency thereto and the Committee on Proprietary Medicinal
Products of the European Community and any successor thereto.
1.24 The term "Research" shall mean that research and evaluation
program set forth in Schedule 1.24.
1.25 The term "Valid Claim" means a claim of an issued and
unexpired patent included within the Axonyx Patent Rights or the ARS Patent
Rights that has not lapsed, been revoked or abandoned or held unenforceable
or invalid by a final decision of a court or other appropriate body of
competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and that has not been disclaimed, denied or admitted to be
invalid or unenforceable through reissue, re-examination, disclaimer or
otherwise.
5
<PAGE>
ARTICLE II
RESEARCH
2.1 CONDUCT OF THE RESEARCH.
(a) During the period beginning on the Effective Date and ending
six (6) months thereafter, the Research may be amended only after
consultation with the Joint Coordination Committee (as defined in Section
2.3). Thereafter the Research may be amended at any time at ARS' sole
discretion, with subsequent notice to the Joint Coordination Committee.
(b) ARS shall diligently conduct the Research in accordance with
the terms and conditions of this Agreement, in compliance with applicable
good laboratory practices, and for the sole purpose of evaluating its
interest in exercising the License Right.
(c) ARS shall maintain appropriate records and assure appropriate
handling, storage and use of the Axonyx Know-How supplied to it in connection
with the Research.
2.2 TERM. ARS shall conduct the Research for one year, unless
this Agreement is earlier terminated in accordance with its terms. ARS may
elect to conduct the Research for an additional year by notice to Axonyx
ninety (90) days prior to the first anniversary of the Effective Date.
2.3 DELIVERY OF INFORMATION.
(a) Promptly after the Effective Date, Axonyx shall disclose to
ARS in writing all Axonyx Know-How not previously disclosed. During the term
of the Research, Axonyx shall also promptly disclose to ARS all Axonyx
Know-How on an ongoing basis and in a form as shall best facilitate the use
of such Know-How by ARS.
(b) In order to facilitate scientific communication, a Joint
Coordination Committee with scientists from Axonyx and Ares Serono shall meet
at least twice a year during the term of the Research with the location for
such meeting alternating between New York and Geneva (or such other locations
as is determined by the Committee). Each party shall appoint its respective
scientific representatives to the Committee from time to time, and may
substitute representatives from time to time, as it sees fit in its sole
discretion provided that the Committee shall initially be composed of Dr.
Salvador and Dr. Hausman for Axonyx and Dr. Soto and other designated
individuals for ARS. As the sole purpose of the Committee is to facilitate
scientific exchange, including but not limited to exchange regarding all
clinical and pre-clinical protocols, the Committee may not direct or control
the Research, but Axonyx may provide advice, support and assistance
concerning the Research.
6
<PAGE>
2.4 REPORTS. Within thirty (30) days following the end of each
Calendar Quarter during the term of the Research, ARS shall provide to Axonyx
a written progress report that shall describe the work performed in relation
to the goals of the Research. Within thirty (30) days following the
completion of the term of the Research or the earlier termination of the
Research, ARS shall provide to Axonyx a final written progress report. Each
such report shall be deemed "Confidential Information" of ARS subject to the
terms and conditions of Section 6.1.
2.5 USE OF RESEARCH RESULTS. If ARS exercises the License Right,
ARS shall be free to use the Axonyx Know-How, the Ares Serono Know-How and
the Axonyx and/or ARS Patent Rights in accordance with the License Agreement
to be entered into between the parties as contemplated in Article III hereof.
If ARS does not exercise the License Right, all right, title and interest in
and to all Axonyx Know-How, Axonyx Patent Rights, Ares Serono Know-How and
Ares Serono Patent Rights shall revert to or vest in Axonyx. ARS agrees that
if the License Period expires without its exercise of the License Right, ARS
will promptly transfer all ARS Know-How to Axonyx and will promptly assign
its interest in the ARS Patent Rights to Axonyx. Axonyx shall be free to
utilize such ARS Know-How and Patent Rights without any restriction or
obligation including any confidentiality obligation.
ARTICLE III
RIGHT TO LICENSE
3.1 GRANT. Upon the terms and conditions set forth herein, Axonyx
hereby grants to ARS an exclusive right (the "License Right") to receive an
exclusive, worldwide, royalty-bearing license under the Axonyx Know-How and
ARS Patent Rights and/or the Axonyx Patent Rights to make, have made, use,
import, offer to sell and sell Patented Products and Other Products pursuant
to the license terms that are attached hereto as Schedule 3.1. and are made a
part of this Agreement (hereinafter the "Basic License Terms"). Such license
shall include the right to sublicense the Axonyx Know-How and the ARS Patent
Rights to an entity that, in the reasonable business judgement of ARS, is
capable of performing such sublicense and, subject to obtaining the consent
of New York University pursuant to Section 7.5 hereof, shall also include the
right to sublicense the Axonyx Patent Rights to such an entity.
3.2. LICENSE PERIOD. The License Right shall commence on the
Effective Date and shall continue in effect until the earlier of (i) the date
that ARS notifies Axonyx in writing that it has no further interest in
exercising its License Right hereunder or (ii) twelve (12) months from the
Effective Date (the "License Period"). The License Period may be extended
for one additional year by written notice and payment of the consideration
set forth in Section 4.2.
3.3 INDEPENDENT EXERCISE. ARS may independently exercise the
License Right in its sole discretion with respect to (i) the Axonyx Patent
Rights, on one hand, or (ii) the Axonyx Know-How and the ARS Patent Rights,
on the other hand. ARS may exercise the License Right with respect to either
such group of rights during the
7
<PAGE>
License Period, and if ARS has exercised the License Right with respect to
one group of rights, then during the License Agreement term for such group of
rights, ARS may exercise the License Right with respect to the other group of
rights within six (6) months of the grant of any patent within such other
group of rights. Upon such exercise, ARS shall have a license to such patent
and all other patents subsequently granted within such other group of rights
but shall not have a license to any patents within such other group of rights
that granted prior to the grant of the patent with respect to which ARS
exercised its License Right.
3.4 EXERCISE OF LICENSE RIGHT. On or before the expiration of the
License Period, ARS shall advise Axonyx in writing if it elects to exercise
the License Right. If ARS determines in its sole discretion to exercise the
License Right, then upon receipt of ARS' notice of such exercise, which
notice shall state the scope of the License Right exercised, the parties
shall negotiate in good faith a License Agreement containing terms and
conditions consistent with the Basic License Terms together with such further
customary representations, warranties, covenants and conditions as are
necessary or appropriate for transactions of this type and are satisfactory
in form and substance to the parties and their legal advisors. Such License
Agreement shall, if necessary, also provide for a subsequent License Right
exercise pursuant to Section 3.3 including without limitation appropriate
amendment of Sections 2.5 and 3.5 hereof. Notwithstanding anything to the
contrary contained herein, it is understood by the parties that ARS is not
obligated to enter into such a License Agreement even if ARS determines that
the results of the Research were favorable.
3.5 STANDSTILL. During the License Period Axonyx shall not
disclose the Axonyx Patent Rights or Axonyx Know-How to any other party, nor
offer such Axonyx Patent Rights or Axonyx Know-How to any other party for
purposes of discussion or collaboration, nor make any understandings or
agreements that may diminish ARS' rights hereunder without the prior written
consent of ARS.
ARTICLE IV
PAYMENTS
4.1 CONSIDERATION FOR LICENSE RIGHT. In consideration for the
License Right granted hereunder, ARS shall pay to Axonyx U.S. $250,000.00
within thirty (30) days of the Effective Date.
4.2 LICENSE RIGHT EXTENSION. If ARS elects to extend the License
Period, then ARS shall pay to Axonyx U.S. $500,000.00 within thirty (30) days
of the date ARS provides the requisite notice of extension to Axonyx.
4.3 METHOD OF PAYMENT. Payments by ARS to Axonyx under this
Agreement shall be made by bank wire transfer in immediately available funds
to such bank account as Axonyx designates in writing to ARS.
8
<PAGE>
ARTICLE V
PATENTS
5.1 FILING, PROSECUTION AND MAINTENANCE OF AXONYX PATENT RIGHTS.
Axonyx agrees to file, prosecute and maintain, upon appropriate consultation
with ARS, the Axonyx Patent Rights. Axonyx shall give ARS an opportunity to
review the text of the application before filing any new patent application
within the Axonyx Patent Rights, shall consult with ARS with respect thereto,
and shall supply ARS with a copy of the application as filed together with
notice of its filing date and serial number. Axonyx shall keep ARS advised
of the status of actual and prospective patent applications and, upon the
request of ARS, provide advance copies of any papers related to the filing,
prosecution and maintenance of such patent applications.
5.2 REVOCATION OR GRANT. Axonyx shall give notice to ARS at least
ninety (90) days prior to the revocation or invalidation of any Axonyx Patent
Rights and shall promptly give notice to ARS of the grant of any Axonyx
Patent Rights.
5.3 ARS PATENT RIGHTS. The provisions of Sections 5.1 and 5.2
shall apply MUTATIS MUTANDI to the ARS Patent Rights and ARS agrees to carry
out its obligations with respect to the ARS Patent Rights in the same manner
as Axonyx with respect to the Axonyx Patent Rights.
ARTICLE VI
CONFIDENTIALITY, PUBLICITY AND PUBLICATIONS
6.1 CONFIDENTIALITY OBLIGATION. Axonyx shall use only in
accordance with this Agreement and shall not disclose to any third party,
without ARS' prior written consent, any ARS Know-How, and ARS shall use only
in accordance with this Agreement and shall not disclose to any third party,
without Axonyx's prior written consent, any Axonyx Know-How. The foregoing
obligations shall survive the expiration or termination of this Agreement for
a period of ten (10) years. These obligations shall not apply to information
that:
(a) is known by the receiving party at the time of its receipt,
other than through a prior disclosure by the disclosing party, as documented
by the receiving party's prior written records;
(b) is at the time of disclosure or thereafter becomes published
or otherwise part of the public domain without breach of this Agreement by
the receiving party;
(c) is subsequently disclosed to the receiving party by a third
party who has the right to make such disclosure;
(d) is developed by the receiving party independently of
information received from the disclosing party and such independent
development can be demonstrated by the receiving party with written or other
documentary evidence;
9
<PAGE>
(e) is disclosed to Regulatory Authorities or other governmental
agencies in order to obtain patents or to gain approval to conduct clinical
trials or to market a Patented Product or Other Product, but such disclosure
may be only to the extent reasonably necessary to obtain such patents or
authorizations;
(f) is disclosed to agents, consultants, and/or other third
parties for the conduct of the Research (or for such parties to determine
their interest in performing such activities) in accordance with this
Agreement on the condition that such third parties agree to be bound by
confidentiality obligations consistent with those contained in this Agreement;
(g) is required to be disclosed by law or court order, PROVIDED,
HOWEVER, that notice is promptly delivered to the disclosing party in order
to provide an opportunity to seek a protective order or other similar order
with respect to such information and the receiving party thereafter discloses
only the minimum information required to be disclosed in order to comply with
the request, whether or not a protective order or other similar order is
obtained by the disclosing party, and uses its best efforts to have
confidential treatment accorded to the disclosed information.
6.2 NO PUBLICITY. A party may not use the name of the other party
in any publicity or advertising and may not issue a press release or
otherwise publicize or disclose any information related to this Agreement, or
the terms or conditions hereof, without the prior written consent of the
other party, which consent shall not be unreasonably withheld.
Notwithstanding the foregoing, either party shall have the right to disclose
information concerning this Agreement to the extent required, in the
reasonable opinion of such party's legal counsel, by applicable federal or
state securities laws, or any rule or regulation of any nationally recognized
securities exchange, but only after providing the other party reasonable
notice of such intended disclosure, consulting with the other party to
determine the reasonable nature and scope of such intended disclosure, and,
if so requested by the other party, requesting the most stringent
confidentiality restrictions it is reasonably possible to secure.
6.3 PUBLICATION. In the event ARS, its employees or consultants
wish to publish or present the Research, ARS shall deliver to Axonyx a copy
of the proposed written publication or an outline of a proposed oral
disclosure at least forty-five (45) days prior to submission for publication
or presentation. For the avoidance of doubt, Axonyx shall have no right to
publish or present the Research. Axonyx shall have the right (a) to propose
modifications of the publication or presentation for patent reasons, trade
secret reasons or business reasons or (b) to request a reasonable delay in
the publication or presentation in order to protect patentable information.
If Axonyx requests a delay, ARS shall delay submission or presentation for a
period of sixty (60) days to enable patent applications protecting each
party's rights in such information to be filed. If Axonyx requests
modifications to the publication or presentation, ARS shall edit such
publication or presentation to prevent disclosure of trade secret or
proprietary business information prior to submission of the publication or
presentation.
10
<PAGE>
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each of Axonyx
and ARS hereby represents, warrants and covenants to the other party hereto
as follows:
(a) it is a corporation duly organized and validly existing under
the laws of the state or other jurisdiction of incorporation or formation;
(b) the execution, delivery and performance of this Agreement by
such party has been duly authorized by all requisite corporate action;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such party of this
Agreement and its compliance with the terms and conditions hereof do not and
will not conflict with or result in a breach of any of the terms and
conditions of, or constitute a default under, (i) a loan agreement, guaranty,
financing agreement, agreement affecting a product or other agreement or
instrument binding or affecting it or its property; (ii) the provisions of
its charter documents or bylaws; or (iii) any order, writ, injunction or
decree of any court or governmental authority entered against it or by which
any of its property is bound;
(e) the execution, delivery and performance of this Agreement by
such party does not require the consent, approval or authorization of, or
notice, declaration, filing or registration with, any governmental or
regulatory authority, and the execution, delivery and performance of this
Agreement will not violate any law, rule or regulation applicable to such
party;
(f) this Agreement constitutes such party's legal, valid and
binding obligation enforceable against it in accordance with its terms
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to the availability of particular remedies under general equitable
principles; and
(g) it shall comply with all applicable material laws, rules and
regulations relating to its activities under this Agreement.
11
<PAGE>
7.2 AXONYX'S REPRESENTATIONS AND WARRANTIES. Axonyx hereby
represents, warrants and covenants to ARS as follows:
(a) to the best of Axonyx's knowledge, the Axonyx Patent Rights
and the Axonyx Know-How are subsisting and are not invalid or unenforceable,
in whole or in part;
(b) it has the full right, power and authority to grant the
License Right granted under Article III hereof and to grant the license to be
entered into by the parties upon the exercise of such right;
(c) it has not previously assigned, transferred, conveyed or
otherwise encumbered its right, title and interest in and to the Axonyx
Patent Rights or the Axonyx Know-How;
(d) to the best of Axonyx's knowledge, it is the owner or
exclusive licensee of the Axonyx Patent Rights and the Axonyx Know-How, all
of which are free and clear of any liens, charges, encumbrances or rights of
others to possession or use, and no other person or entity, private or
public, other than New York University, has or shall have any claim to an
ownership interest in the Axonyx Patent Rights or the Axonyx Know-How;
(e) Axonyx has obtained any required third-party consents to this
Agreement and the performance of its obligations hereunder;
(f) to the best of Axonyx's knowledge, the Axonyx Patent Rights,
the Axonyx Know-How and the development, manufacture, use, import, offer to
sell and sale of Patented Products and Other Products do not interfere with
or infringe any intellectual property or other proprietary or property rights
owned or possessed by any third party;
(g) there are no claims, litigation, judgments or settlements
against or owed by Axonyx or pending or threatened claims or litigation
relating to the Axonyx Patent Rights or the Axonyx Know-How; and
(h) it has disclosed to ARS all Axonyx Know-How and other relevant
information, including, without limitation, all Axonyx Know-How and other
information relating to the Axonyx Patent Rights.
7.3 NO ACTIONS TO DIMINISH RIGHTS. During the term of this
Agreement, each party will use diligent efforts not to diminish the rights
under their Patent Rights and their Know-How subject to the License Right
granted to ARS hereunder, including without limitation by not committing or
permitting any actions or omissions that would cause the breach of any
agreements between itself and third parties relating to such rights. In
particular Axonyx shall not commit or permit any actions or omissions that
would cause a breach of the NYU Agreement. Immediately after the Effective
Date, Axonyx shall meet with New York University and negotiate and sign an
amendment to the NYU Agreement to make the terms of the Development Plan (as
defined therein)
12
<PAGE>
consistent both with the new Research Project defined in the March 19, 1999
amendment to the NYU Agreement and with Axonyx's current reasonable research
and development plans for Patented Products, as required under the NYU
Agreement.
7.4 NO INCONSISTENT AGREEMENTS. Neither party has in effect and
after the Effective Date neither party shall enter into any oral or written
agreement or arrangement that would be inconsistent with its obligations
under this Agreement.
7.5 CONSENT OF NEW YORK UNIVERSITY. Within ninety (90) days of
the Effective Date, Axonyx will make its best efforts consistent with its
reasonable business judgment to obtain the written consent of New York
University to the following terms and conditions:
(a) Upon any uncontested termination of the NYU Agreement or upon
any determination by an appropriate body of competent jurisdiction that the
NYU Agreement has terminated, Axonyx's rights and obligations under Article
III hereof with respect to any Axonyx Patent Rights subject to the NYU
Agreement shall be automatically assigned to New York University;
(b) Following the exercise of the License Right under Section 3.4
hereof, upon any uncontested termination of the NYU Agreement or upon any
determination by an appropriate body of competent jurisdiction that the NYU
Agreement has terminated, the License Agreement shall not terminate but
Axonyx's rights and obligations thereunder with respect to any Axonyx Patent
Rights covered by the NYU Agreement shall be automatically assigned to New
York University;
(c) Axonyx shall be permitted to grant ARS a right to sublicense
the Axonyx Patent Rights pursuant to the License Agreement to any entity
that, in the reasonable business judgement of ARS, is capable of performing
such sublicense; and
(d) Axonyx shall be permitted to grant ARS the right to assign the
License Agreement to ARS' Affiliates.
In the event Axonyx obtains such consent of New York University, this
Agreement, including without limitation the Basic License Terms set forth in
Schedule 3.1 hereof, shall be deemed amended by the parties hereto to
incorporate the terms and conditions set forth above.
13
<PAGE>
ARTICLE VIII
INDEMNIFICATION AND LIMITATION ON LIABILITY
8.1 INDEMNIFICATION BY ARS. ARS shall indemnify, defend and hold
harmless Axonyx and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each, an "Axonyx Indemnified
Party") from and against any and all liability, loss, damage, cost, and
expense (including reasonable attorneys' fees), subject to the limitations in
Section 8.5 (collectively, a "Liability"), sustained, incurred by or imposed
upon the Axonyx Indemnified Party (i) by any third party in connection with
the breach by ARS of any covenant, representation or warranty contained in
this Agreement or any negligent act or omission or willful misconduct of ARS
in the performance of the Research or (ii) in connection with its successful
enforcement of any of the foregoing, PROVIDED, HOWEVER, that ARS shall have
no obligation to defend, indemnify, and hold harmless hereunder to the extent
a Liability arises from the negligence or willful misconduct of an Axonyx
Indemnified Party.
8.2 INDEMNIFICATION BY AXONYX. Axonyx shall indemnify, defend and
hold harmless ARS and its Affiliates, and each of its and their respective
employees, officers, directors and agents (each an "ARS Indemnified Party")
from and against any Liability sustained, incurred by or imposed upon the ARS
Indemnified Party (i) by any third party in connection with the breach by
Axonyx of any covenant, representation or warranty contained in this
Agreement or any negligent act or omission or willful misconduct of Axonyx
arising in connection with this Agreement, (ii) arising out of third-party
claims (such as infringement) relating to the Axonyx Patent Rights or Axonyx
Know-How; or (iii) in connection with its successful enforcement of any of
the foregoing, PROVIDED, HOWEVER, that Axonyx shall have no obligation to
defend, indemnify, and hold harmless hereunder to the extent a Liability
arises from the negligence or willful misconduct of an ARS Indemnified Party.
8.3 CONDITIONS TO INDEMNIFICATION. The obligations of the
indemnifying party under Sections 8.1 and 8.2 are conditioned upon the
delivery of notice to the indemnifying party of any potential Liability
promptly after the indemnified party becomes aware of such potential
Liability. The indemnifying party shall have the right to assume the defense
of any action, suit, proceeding, claim or demand ("Action") related to the
Liability if it has assumed responsibility for such Action in writing;
PROVIDED, HOWEVER, that if in the reasonable judgment of the indemnified
party, such Action involves an issue or matter that could have a materially
adverse effect on the business operations or assets of the indemnified party,
the indemnified party may waive its right to indemnity under this Agreement
and control the defense or settlement thereof, but in no event shall any such
waiver be construed as a waiver of any indemnification rights such party may
have at law or in equity. If the indemnifying party defends the Action, the
indemnified party may participate in (but not control) the defense thereof at
its sole cost and expense. The indemnifying party shall keep the indemnified
party informed of developments in any Action. The indemnified party shall
cooperate with the indemnifying party in the defense or settlement of any
such Action.
14
<PAGE>
8.4 SETTLEMENTS. Neither party may settle an Action related to a
Liability without the consent of the other party if such settlement would
impose any monetary obligation on the other party or require the other party
to submit to an injunction or otherwise limit the other party's rights under
this Agreement. Any payment made by a party to settle any such Action shall
be at its own cost and expense.
8.5 LIMITATION OF LIABILITY. With respect to any claim by one
party against the other party arising out of an alleged breach of this
Agreement, the parties expressly agree that the liability of such other party
for such breach shall be limited under this Agreement or otherwise at law or
equity to direct damages only and in no event shall a party be liable for
punitive, exemplary or consequential damages.
8.6 INSURANCE. Each party agrees that during the term of this
Agreement it shall maintain insurance and/or a self-insurance program for
liability insurance, including without limitation products liability and
contractual liability insurance, that adequately covers such party's
obligations under this Agreement. It is understood that such insurance shall
not be construed to limit a party's liability with respect to such
obligations. Upon request of the other party, each party shall furnish to
the other party written evidence of such insurance (or financial information
that describes the amounts available under any self-insurance facility).
ARTICLE IX
TERM AND TERMINATION
9.1 TERM AND EXPIRATION. This Agreement shall be effective as of
the Effective Date, and unless terminated earlier pursuant to Sections 9.2,
9.3, or 9.4 below, this Agreement shall continue in effect until the
expiration of the License Period.
9.2 TERMINATION BY ARS. Notwithstanding anything contained herein
to the contrary, ARS shall have the unilateral right to terminate this
Agreement, with or without cause, at any time by giving thirty (30) days
advance notice to Axonyx.
9.3 TERMINATION FOR BREACH. This Agreement may be terminated by
either party at any time during its term if the other party is in breach of
its material obligations hereunder and has not cured such breach within
ninety (90) days after receipt of notice from the other party requesting cure
of such breach.
9.4 TERMINATION ON ARS' BANKRUPTCY. This Agreement may be
terminated by notice by Axonyx upon the filing or institution of bankruptcy,
reorganization, liquidation or receivership proceedings with respect to ARS,
upon an assignment of a substantial portion of ARS' assets for the benefit of
creditors, in the event a receiver or custodian is appointed for ARS'
business, or if a substantial portion of ARS' business is subject to
attachment or similar process; PROVIDED, HOWEVER, in the case of any
involuntary bankruptcy proceeding such right to terminate shall only become
effective if such proceeding is not dismissed within sixty (60) days after
the filing thereof.
15
<PAGE>
9.5 NO TERMINATION ON AXONYX'S BANKRUPTCY. The License Right is,
and shall otherwise be deemed to be, for purposes of Section 365(n) of the
United States Bankruptcy Code, as amended from time to time (the "Bankruptcy
Code"), a license or right to "intellectual property" as defined under
Section 101(35A) of the Bankruptcy Code. The parties agree that ARS, as a
licensee of such right under this Agreement, shall retain and may fully
exercise all of its rights and elections under the Bankruptcy Code. The
parties further agree that, in the event of the commencement of a bankruptcy
proceeding by or against Axonyx under the Bankruptcy Code, ARS shall be
entitled to a complete duplicate of (or complete access to, as appropriate)
any such intellectual property and all embodiment of such intellectual
property. Such intellectual property and all embodiments thereof shall be
promptly delivered to ARS (i) upon any such commencement of a bankruptcy
proceeding upon written request therefor by ARS, unless Axonyx elects to
continue to perform all of its obligations under this Agreement or (ii) if
not delivered under (i) above, upon the rejection of this Agreement by or on
behalf of Axonyx upon written request therefor by ARS.
9.6 TERMINATION OF UNDERLYING LICENSES. Subject to obtaining the
consent of New York University pursuant to Section 7.5 hereof, upon any
termination of the Agreement between New York University and Axonyx effective
April 1, 1997, as amended, Axonyx's rights and obligations under Article III
hereof with respect to any Axonyx Patent Rights subject to such Agreement
shall be automatically assigned to New York University.
9.7 EFFECT OF TERMINATION. Expiration or termination of the
Agreement shall not relieve the parties of any obligation accruing prior to
such expiration or termination, and the provisions of Articles VI and VIII
and Sections 10.2, 10.3 and 10.7 shall survive the expiration or termination
of the Agreement and continue in force and effect to the extent necessary to
effectuate such provisions. Any expiration or termination of this Agreement
shall be without prejudice to the rights of either party against the other
accrued or accruing under this Agreement prior to termination, including
without limitation rights under the United States Bankruptcy Code.
ARTICLE X
MISCELLANEOUS
10.1 ASSIGNMENT. Neither this Agreement nor any or all of the
rights and obligations of a party hereunder shall be assigned, delegated,
sold, transferred, sublicensed (except as otherwise provided herein) or
otherwise disposed of, by operation of law or otherwise, to any third party
other than an Affiliate of such party, without the prior written consent of
the other party, and any attempted assignment, delegation, sale, transfer,
sublicense or other disposition, by operation of law or otherwise, of this
Agreement or of any rights or obligations hereunder contrary to this Section
10.1 shall be a material breach of this Agreement by the attempting party,
and shall be void and without force or effect; PROVIDED, HOWEVER, ARS,
without such consent, may assign the Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or substantially all
of its assets or in the event
16
<PAGE>
of its merger or consolidation or change of control or similar transaction.
This Agreement shall be binding upon, and inure to the benefit of, each
party, its Affiliates, and its permitted successors and assigns. Each party
shall be responsible for the compliance by its Affiliates with the terms and
conditions of this Agreement.
10.2 GOVERNING LAW. This Agreement shall be governed, interpreted
and construed in accordance with the laws of the Commonwealth of
Massachusetts, without giving effect to conflict of law principles.
10.3 DISPUTE RESOLUTION.
(a) In the event that ARS and Axonyx are unable, after exercising
good faith efforts, to reach agreement on any disputes, questions or claims
relating to this Agreement (the "Dispute"), then upon written notice to the
other party, the Dispute shall be referred to the Chief Executive Officer of
ARS and the Chief Executive Officer of Axonyx, or other members of senior
management of such parties, each with full authority from the Chief Executive
Officer to settle the Dispute. The parties' representatives shall meet
within fifteen (15) Business Days of receipt of such notice and use good
faith efforts to reach agreement on the Dispute. If the representative of
either party intends to be accompanied at the meeting by counsel, the other
party shall be given at least four (4) Business Days notice of such intention
and may also be accompanied by counsel. All negotiations pursuant to this
Section 10.3(a) shall be confidential and treated as compromise and
settlement negotiations and shall not be admissible in any arbitration or
other proceeding. In the event that the representatives of ARS and of Axonyx
are unable to reach agreement on the Dispute within fifteen (15) Business
Days following the meeting, either party may by notice to the other Party
submit the Dispute to arbitration in accordance with the provisions below.
(b) The Dispute shall be finally settled by arbitration in
accordance with the Center for Public Resources Rules for Non-Administered
Arbitration of International Disputes (and the Center for Public Resources
shall serve, if necessary, as the "Neutral Organization") by three
arbitrators appointed in accordance with such Rules who shall be impartial
and disinterested individuals who do not have a direct or indirect interest
in either party or the subject matter of the arbitration. The parties agree
that notices served in the manner provided herein shall be valid for such
arbitration. Any such arbitration shall be conducted in English and shall be
held in Boston, Massachusetts. The arbitrators shall apply the substantive
law that the parties have chosen as the governing law pursuant to Section
10.2 hereof.
(c) Within fifteen (15) Business Days after the receipt of the
notice provided for in Section 10.3(a) of this Agreement, each party shall
appoint an independent expert, knowledgeable in the field of the Dispute, to
serve on the arbitration panel. The two independent experts so appointed by
the parties, shall, within fifteen (15) Business Days thereafter, appoint a
neutral third independent expert, knowledgeable in the field of the Dispute.
Such neutral third independent expert shall serve as the chairperson of the
arbitration panel. Each of the members of the arbitration panel shall be
required to
17
<PAGE>
sign a confidentiality agreement, acceptable in form to both parties, with
respect to any information provided by either party during the arbitration
procedure.
(d) Within ten (10) business days after the chairperson of the
arbitration panel is appointed, each party shall submit, to each member of
the arbitration panel and to the other party, a written statement setting
forth the relevant facts with respect to the Dispute in reasonable detail and
arguments and documentation supporting such party's position with respect to
the resolution of the Dispute.
(e) Pending the issuance of the arbitrators' decision, the parties
shall continue to operate under the Agreement as it existed on the date the
Dispute notice was given; PROVIDED, HOWEVER, that the arbitrators' decision
shall be retroactive to such date. The parties hereby exclude any right of
appeal to any court on the merits of the Dispute. Judgment on the award may
be entered in any court having jurisdiction over the award or any of the
parties or their assets The award may grant any relief appropriate under the
applicable law, including without limitation declaratory relief and/or
specific performance.
(f) Each party shall bear its own costs incurred in connection
with the arbitration (including without limitation the fees and expenses of
attorneys and experts, the travel and other expenses of witnesses, as well as
the fees and expenses in any collateral actions, such as actions for
enforcement), PROVIDED, HOWEVER, that the nonprevailing party shall bear the
fees, costs and expenses of the arbitration panel.
10.4 WAIVER. No failure on the part of either party to exercise,
and no delay in exercising, any right shall operate as a waiver thereof, and
a waiver of any breach or any provision of this Agreement shall not be
construed as a continuing waiver of other breaches of the same or other
provisions of this Agreement.
10.5 INDEPENDENT RELATIONSHIP. Nothing herein contained shall be
deemed to create an employment, agency, joint venture or partnership
relationship between the parties hereto or any of their agents or employees,
or any other legal arrangement that would impose liability upon one party for
the act or failure to act of the other party. Neither party shall have any
power to enter into any contracts or commitments or to incur any liabilities
in the name of, or on behalf of, the other party, or to bind the other party
in any respect whatsoever.
10.6 ENTIRE AGREEMENT; AMENDMENT. This Agreement, including the
Schedules attached hereto, sets forth the complete, final and exclusive
agreement and all the covenants, promises, agreements, warranties,
representations, conditions and understandings between the parties hereto
with respect to the subject hereof and supersedes and terminates all prior
agreements and understandings between the parties with respect to such
subject. There are no covenants, promises, agreements, warranties,
representations, conditions or understandings, either oral or written,
between the parties with respect to this subject other than as are set forth
herein. No subsequent alteration, amendment, change or addition to this
Agreement shall be
18
<PAGE>
binding upon the parties unless reduced to a writing referencing this
Agreement and signed by an authorized representative of each party.
10.7 NOTICES. Each notice required or permitted to be given or
sent under this Agreement shall be given by facsimile transmission (with
confirmation copy by overnight courier) or by overnight courier to the
parties at the address and facsimile numbers indicated below.
If to Axonyx Inc., to:
750 Lexington Avenue, Suite 1400
New York, New York 10022
U.S.A.
Attention: Mr. Michael Strage
Facsimile No.: (212) 688-4843
If to Applied Research Systems ARS Holding N.V., to
John B. Gorsiraweg 14
Curacao
Netherlands Antilles
Attention: Caribbean Management Company N.V.
Facsimile No.: 599-9-461-4129
With a copy to:
Ares-Serono International S.A.
15bis Chemin des Mines
1202 Geneva, Switzerland
Attention: General Counsel
Facsimile No.: 41-22-739-3070
Any such notice shall be deemed to have been received on the earlier of the
date actually received or three (3) days after the date of deposit with the
overnight courier company. Either party may change its address or its
facsimile number by giving the other party written notice, delivered in
accordance with this Section 10.7.
10.8 FORCE MAJEURE. Failure of any party to perform its
obligations under this Agreement (except the obligation to make payments when
properly due) shall not subject such party to any liability or place it in
breach of any term or condition of this Agreement to the other party if such
failure is caused by any cause beyond the reasonable control of such
nonperforming party, including without limitation acts of God, fire,
explosion, flood, drought, war, riot, sabotage, embargo, strikes or other
labor trouble, failure in whole or in part of suppliers to deliver on
schedule materials, equipment or machinery, interruption of or delay in
transportation, a national health emergency or compliance with any order or
regulation of any government entity acting with color of right; PROVIDED,
HOWEVER, that the party affected shall promptly notify the
19
<PAGE>
other party of the condition constituting FORCE MAJEURE as defined herein and
shall exert reasonable efforts to eliminate, cure and overcome any such
condition and to resume performance of its obligations hereunder with all
possible speed. If a condition constituting FORCE MAJEURE as defined herein
exits for more than ninety (90) consecutive days, the parties shall meet to
negotiate a mutually satisfactory solution to the problem, if practicable.
10.9 SEVERABILITY. If any provision of this Agreement is declared
illegal, invalid or unenforceable by a court having competent jurisdiction,
it is mutually agreed that this Agreement shall endure except for the part
declared invalid or unenforceable by order of such court; PROVIDED, HOWEVER,
that if as a result of such declaration the terms and conditions of this
Agreement are materially altered, the parties shall, in good faith,
renegotiate the terms and conditions of this Agreement to find a reasonable
substitute for such illegal, invalid or unenforceable provision in light of
the intent of this Agreement.
10.10 CAPTIONS. The captions of this Agreement are solely for the
convenience of reference and shall not affect its interpretation.
10.11 FURTHER ACTIONS. Each party agrees to execute, acknowledge
and deliver such further instruments, and to do all such other acts, as may
be necessary or appropriate in order to carry out the purposes and intent of
this Agreement.
10.12 COUNTERPARTS. This Agreement shall become binding when any
one or more counterparts hereof, individually or taken together, shall bear
the signatures of each of the parties hereto. This Agreement may be executed
in any number of counterparts, each of which shall be an original as against
either party whose signature appears thereon, but all of which taken together
shall constitute but one and the same instrument.
10.13 NO THIRD-PARTY BENEFICIARY. Nothing in this Agreement,
express or implied, is intended to confer on any person other than the
parties hereto, or their respective permitted successors and assigns, any
benefits, rights or remedies.
10.14 EXPORT CONTROL. This Agreement is made subject to any
restriction concerning the export of products or technical information from
the United States of America that may be imposed upon or related to Axonyx or
ARS from time to time by the government of the United States of America.
Furthermore, ARS agrees that it will not export, directly or indirectly, any
technical information acquired from Axonyx under this Agreement or any
products using such technical information to any country for which the United
States government or any agency thereof at the time of export requires an
export license or other governmental approval, without first obtaining the
written consent to do so from the Department of Commerce or other agency of
the United States government when required by an applicable statute or
regulation.
20
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their duly authorized representative with effect as
of the date and year first above written.
Axonyx Inc. Applied Research Systems ARS Holding N.V.
By: /s/Michael Strage By: CARIBBEAN MANAGEMENT COMPANY N.V.
------------------------ ----------------------------------------
Title: V.P., Dir. Bus. Dev. Title: Managing Director
--------------------- -------------------------------------
By:/s/ Anneke Soedhoe/Reginald D. Schotborgh
-----------------------------------------
Title: Managing Directors
--------------------------------------
21
<PAGE>
SCHEDULE 1.5
AXONYX PATENT RIGHTS
United States application entitled "ANTI-AMYLOID PEPTIDES IN THE TREATMENT OF
ALZHEIMER'S DISEASE AND OTHER AMYLOIDOSIS DISORDERS."
United States application entitled "PEPTIDES AND PHARMACEUTICAL COMPOSITIONS
THEREOF FOR TREATMENT OF DISORDERS OR DISEASES ASSOCIATED WITH ABNORMAL
PROTEIN FOLDING INTO AMYLOID OR AMYLOID-LIKE DEPOSITS."
United States application entitled "PEPTIDES AND PHARMACEUTICAL COMPOSITIONS
THEREOF FOR TREATMENT OF DISORDERS OR DISEASES ASSOCIATED WITH ABNORMAL
PROTEIN FOLDING INTO AMYLOID OR AMYLOID-LIKE DEPOSITS."
Applicants: Claudio Soto-Jara, Marc Baumann, Blas Frangione
22
<PAGE>
SCHEDULE 1.24
RESEARCH
OBJECTIVES
The overall goal of this study is to develop compounds with the potential to
be useful in the treatment of neurodegenerative disorders, specifically in
Alzheimer's disease and prion-related diseases. The aim of the research
described here is to complete the pre-clinical experiments required to begin
human clinical trials.
The specific aims are the following:
1. To study the in vivo efficacy of lead compounds and their derivatives
using animal models of Alzheimer's disease and prion diseases.
2. To evaluate the pharmacokinetics, biodistribution, blood-brain barrier
permeability and toxicity of the lead compounds and their derivatives in
animals.
3. To design and evaluate chemical derivatives of the lead compounds with
improved efficacy, stability and brain uptake.
SUMMARY OF PREVIOUS RESULTS
Extensive evidence suggests that defective protein folding is a central event
in both Alzheimer's and prion diseases as well as in a number of
etiologically unrelated diseases. Although both disorders are obviously
different in clinical, neuropathological and biochemical terms, the molecular
event that may trigger the disease process appears to be the same: the
formation of an altered protein conformer composed of a high content of
BETA-sheet structure. The pathological protein has a high tendency to
aggregate, forming cerebral amyloid plaques and is highly neurotoxic,
inducing neuronal death, brain damage and dementia.
The pathological conformation is stabilized by intermolecular interactions
with other protein monomers that have the potential to become structured in
the BETA-pleated sheet conformation. Therefore Dr Claudio Soto et al.
proposed that short synthetic peptides designed to specifically interact with
the protein fragment that is undergoing the conformational changes and
containing a sequence unable to become a part of a BETA-sheet structure
(BETA-sheet breaker peptides) may destabilize the abnormal conformation and
hence preclude amyloid formation and neurotoxicity.
BETA-sheet breaker peptides have been designed for blocking the
conformational changes which both the BETA-amyloid peptide and Prion Peptide
undergo. Co-injections of ALPHA BETA1-42 and a 5-residue-BETA-sheet breaker
peptide was shown to decrease cerebral ALPHA BETA accumulation and completely
block the deposition of fibrillar amyloid-like lesions in the
23
<PAGE>
rat brain. When the BETA-sheet breaker peptide was injected in rats already
containing amyloid deposits produced by an earlier injection of ALPHA
BETA-1-42, the inhibitor was able to disassemble preformed ALPHA BETA fibrils
in rat brain in vivo, leading to a reduction in the size off the amyloid
deposits. Removal of the amyloid by the BETA-sheet breaker peptide reversed
the associated histological changes, including neuronal shrinkage and
microglial activation. Chemical modifications have been made of the
11-resdidue BETA-sheet breaker peptide that do not alter its ability to
prevent fibrillogenesis in vitro, but significantly in crease its
permeability at the blood brain-barrier and its resistance to proteolysis in
plasma.
BETA-sheet breaker peptides have also been designed for preventing and
reverting prion protein conformational changes. Several in vitro, cell
cultures and in vivo assays were used to show that it is possible not only to
prevent the abnormal conversion of the protein, but more interestingly to
reverse the infectious PrP conformer to a biochemical and structural sate
similar to the physiological form of the protein. Studies carried out in mice
with experimentally induced scrapie, demonstrated that BETA-sheet breaker
peptides dramatically delay the onset of clinical symptoms and clearly reduce
the prion infectivity titer.
EXPERIMENTAL DESIGN AND METHODOLOGIES
SPECIFIC AIM 1. IN VIVO EFFICACY STUDIES.
There is not a universally accepted model for Alzheimer's disease. The
models currently in use reproduce some, but not all, of the features of the
disease. The following three models will be considered for use in this study
and a final decision on which model to use will depend on a more detailed
analysis of their availability, utility and cost.
1. Rodent models of ALPHA BETA deposition in which amyloid lesions are
induced by intracerebral injections or intraventricular perfusion of
synthetic ALPHA BETA in solution.
The peptide aggregates inside the rat brain resulting in the formation
of a single amyloid deposit in the place of injection. The lesions
have similar properties to those observed in brains from Alzheimer's
disease patients. The advantages of this model are that the amyloid
deposit is very well localized and the results of tests on potential
inhibitor compounds can be obtained in about two months. The major
disadvantage is that the amyloid formation is acute and not the
gradual process that happens in AD brain and that the amyloid
deposition is localized at the site of injection rather than as
multiple lesions throughout the brain as in Alzheimer's disease.
24
<PAGE>
2. Aged monkeys or dogs as a model of spontaneous deposition of diffuse and
early amyloid plaques.
The advantages of this model is that it does not require any
artificial manipulation to induce a histological profile similar to
that found in Alzheimer's disease brain (at least with respect to
amyloid deposition). However, amyloid is found only in aged animals
and the amyloid burden can be dramatically different among animals.
The studies can be difficult and expensive therefore.
3. Transgenic mice overexpressing mutant forms of human amyloid precursor
protein.
These animals progressively develop many of the pathological hallmarks
of Alzheimer's disease. Although the cerebral histopathological
damage is not identical to that observed in Alzheimer's disease brain,
it is the closest among the available models. The major problem is
that the models may not be readily available for commercial and
economic reasons.
Two kinds of experiment will be carried out, although the details will be
depend on the actual animal models selected.
1. Studies of the ability of the BETA-sheet breaker peptides to inhibit
cerebral amyloid deposition and to preclude the development of
behavioral alterations.
2. Analysis of the capability of inhibitor peptides to reverse amyloid
plaque deposition and to improve clinical symptoms
Different doses of BETA-sheet breaker peptides will be given periodically to
the animals. Until blood-brain barrier studies have been completed, peptides
will be administered by intracerebral injection. After a derivative having
good brain uptake is identified, the compounds will be administered by i.v.
injection. Behavioral analyses will be done every week using standard tests
such as Y-maze, water maze and corner index test as appropriate to the
species under test. Animals will be sacrificed at different times and the
brains analyzed neuropathologically for the presence of amyloid plaques,
neuronal death, synaptic loss astrocytosis and gliosis. In the second set of
experiments, BETA-sheet peptides will be given to the animals after they
develop significant amounts of cerebral amyloid plaques and behavioral
alterations. After injection of different doses, the animals will be tested
for the temporal progression of the behavioral problems and neuropathological
alterations.
Contrary to Alzheimer's disease, prion-related disorders affect a variety of
animal species. Animal models that develop the full pathological pattern are
readily available. A positive result in this system could be useful as a
"proof-of principle" for Alzheimer's disease inhibitors. The in vivo effect
of prion-targeted, beta sheet breaker peptides will be studied in rodents
with experimental scrapie, which is regarded as a model of prion disorders.
25
<PAGE>
SPECIFIC AIM 2. PHARMACOKINETIC AND BIOAVAILABILITY STUDIES
Peptide stability, biodistribution and blood-brain barrier permeability
studies will be performed using rats. Some of these experiments have already
been done for the 11- and 5- residue Alzheimer's BETA-sheet breaker peptides
and the results show that the unmodified peptides are quickly degraded in rat
plasma, indicating that chemical modifications to improve peptide stability
are needed. Appropriately labeled peptide will be used to monitor the fate
of the peptides. The integrity of the labeled BETA-sheet breaker peptides
will be analyzed in rat plasma after i.v. bolus injection. The material will
be injected into the brachial vein of adult male rats and blood will be
sampled for analysis from the same place at several intervals over the next
30 minutes. Peptide biodistribution will be studied by sacrificing the
animals at different times and determining total radioactive label in
different organs.
Cerebrovascular sequestration, blood-to-brain and brain-to-blood transport
and metabolism of BETA-sheet breaker peptides will be determined at the
blood-brain barrier (BBB). These experiments will be carried out by using
in vivo brain perfusion and ventriculo-cisternal perfusion techniques in
rats. First, labeled peptides will be delivered to the BBB by the perfusion
technique. Following perfusion, leptomeningeal and cerebral cortical vessels
will be isolated from the ipsilateral perfused forebrain and the
radioactivity analyzed by HPLC to determine the kinetics of vascular
sequestration and metabolism of the inhibitor peptides within the
vasculature. Capillary-depleted brain will be also analyzed by the same
method to determine transport and metabolism of the peptide into the brain
parenchyma. In some experiments, mass spectrometry in combination with HPLC
and /or immunoprecipitation will be used to determine the presence of
degradation products. Rat brains will also be perfused for longer periods of
time (up to 60-120 min) with labeled beta-sheet breaker peptides and the
distribution of the radioactivity within the CNS analyzed by autoradiography.
SPECIFIC AIM 3. DERIVATIVE COMPOUNDS
Derivatives of the peptides will be made to improve their characteristics in
such properties as efficacy, bioavailability and stability. Derivatives may
include peptide sequence derivatives, including natural and unnatural amino
acids, conjugated peptides to improve blood-brain barrier permeability,
peptide mimetics and small molecules. The lead molecule research will focus
on defining a compound that has the in vivo efficacy, pharmacokinetic profile
and safety profile that will make it a suitable candidate for a Phase I
clinical trial.
26
<PAGE>
SCHEDULE 3.1
BASIC LICENSE TERMS
ARTICLE I
DEFINITIONS
1.1 The relevant definitions in Article I of the Development
Agreement and Right to License are incorporated herein by reference.
ARTICLE II
LICENSE
2.1 LICENSE GRANT. Pursuant to a License Agreement to be
negotiated in accordance with Article VI (the "License Agreement"), Axonyx
agrees to grant to ARS an exclusive, worldwide license under the Axonyx
Know-How and the ARS Patent Rights and/or the Axonyx Patent Rights to make,
have made, import, use, offer for sale and sell Patented Products and Other
Products. Such license shall include the right to sublicense the Axonyx
Know-How and the ARS Patent Rights to an entity that, in the reasonable
business judgement of ARS, is capable of performing such sublicense and,
subject to obtaining the consent of New York University pursuant to Section
7.5 of the Development Agreement and Right to License, shall also include the
right to sublicense the Axonyx Patent Rights to such an entity.
2.2 DUE DILIGENCE. Pursuant to the License Agreement, ARS shall,
at its own expense, use diligent efforts, consistent with the usual practice
followed by ARS in pursuing the commercialization and marketing of its other
pharmaceutical products of similar potential, value and status to develop and
commercialize Patented Products and Other Products.
ARTICLE III
PAYMENTS AND ROYALTIES
3.1 LICENSE ISSUANCE FEES.
(a) In consideration for the grant of an exclusive license under
the Axonyx Patent Rights, ARS shall pay to Axonxy within thirty (30) days of
the signature of a License Agreement with respect thereto U.S. $500,000.00.
(b) In consideration for the grant of an exclusive license under
the Axonyx Know-How and the ARS Patent Rights, ARS shall pay to Axonyx
within thirty (30) days of the signature of a License Agreement with respect
thereto U.S. $1,000,000.00.
27
<PAGE>
(c) The payments due under Subsections 3.1(a) and (b) above are
separate and distinct and thus if the License Right is exercised for both the
Axonyx Patent Rights and the Axonyx Know-How and ARS Patent Rights then the
total payment due Axonyx shall be U.S. $1,500,000.00.
3.2 MILESTONE PAYMENTS. Subject to the terms and conditions of
the License Agreement and in consideration for the grant of an exclusive
license thereunder, ARS shall make the following payments to Axonyx based on
the development of Patented Products and Other Products within thirty (30)
days of the occurrence of the following events (each milestone payment shall
be made only once with respect to any given Patented Product or Other
Product):
(a) For a Patented Product:
Milestone Payment
--------- -------
Phase I Clinical Trial Start $1,000,000.00
Phase III Clinical Trial Start $2,000,000.00
Health Registration Submission $4,000,000.00
Health Registration Approval $7,000,000.00
(b) For an Other Product:
Milestone Payment
--------- -------
Phase I Clinical Trial Start $1,000,000.00
Phase III Clinical Trial Start $1,500,000.00
Health Registration Submission $2,000,000.00
Health Registration Approval $2,500,000.00
(c) For purposes of this Section 3.2, Phase I and Phase III
Clinical Trial Start shall be deemed to occur on the date the first patient
is enrolled in the first such clinical trial conducted by or on behalf of
ARS. Health Registration submission shall be deemed to occur on the date ARS
submits the first application for Health Registration in any one of the
United States, the EU, or Japan. Health Registration approval shall be
deemed to occur when the first Health Registration approval is received by
ARS in any one of the United States, the EU or Japan.
3.3 METHOD OF PAYMENT. Payments by ARS to Axonyx under the
License Agreement shall be made by bank wire transfer in immediately
available funds to such bank account as Axonyx designates in writing to ARS.
3.4 ROYALTIES. Subject to the terms and conditions of the License
Agreement and in consideration for the grant of an exclusive license
thereunder, ARS shall pay, or cause to be paid, to Axonyx royalties on a
country-by-country basis in an amount equal to:
28
<PAGE>
(a) with respect to total annual Net Sales of Patented Products at
or below One Hundred Fifty Million U.S. dollars (U.S. $150,000,000.00), six
percent (6%) of Net Sales of such Patented Products;
(b) with respect to total annual Net Sales of Patented Products
above One Hundred Fifty Million U.S. dollars (U.S. $150,000,000.00), six and
one half percent (6.5%) of Net Sales of such Patented Products;
(c) with respect to total annual Net Sales of Other Products at or
below One Hundred Fifty Million U.S. dollars (U.S. $150,000,000.00), four
percent (4%) of Net Sales of such Other Products; and
(d) with respect to annual Net Sales of Other Products above One
Hundred Fifty Million U.S. dollars (U.S. $150,000,000.00), four and one-half
percent (4.5%) of Net Sales of such Other Products.
3.5 TERM OF THE ROYALTY OBLIGATION. ARS' obligation to pay
royalties under the License Agreement with respect to any country shall
extend from the date of the First Commercial Sale of a Patented Product or
Other Product in such country to the later of (i) the tenth anniversary of
the date of such First Commercial Sale in such country or (ii) the date of
expiration or invalidation of the last Valid Claim of the Axonyx Patent
Rights or the Ares Serono Patent Rights claiming such Patented Product or
Other Product in such country, as applicable.
ARTICLE IV
PATENT ENFORCEMENT, INFRINGEMENT, CONSENT AND COMPETITIVE PRODUCTS
The License Agreement shall contain the following terms and conditions on
patent enforcement, infringement, consent and competitive products.
4.1 ENFORCEMENT.
4.1.1 NOTICE AND DISCONTINUANCE OF INFRINGEMENT. In the
event that either party becomes aware of any third-party infringement of any
Valid Claim of the Axonyx Patent Rights or ARS Patent Rights, such party will
notify the other party to that effect, including within such notice evidence
to support an allegation of infringement by such third party. Axonyx shall
have ninety (90) days from the date of such notice to obtain a discontinuance
of such infringement or to bring suit against the third-party infringer and
shall notify ARS thirty (30) days prior to bringing such suit. Axonyx shall
bear all the expenses of any suit brought by it. ARS shall have the right,
prior to commencement of the suit brought by Axonyx, to join any such suit,
and in such event shall pay one-half of the costs of such suit. In the event
that ARS has joined the suit and shared the costs thereof as set forth above,
no settlement, consent judgment or other voluntary final disposition of the
suit may be entered into without the consent of ARS, and any recovery or
damages derived from such suit shall be used first to reimburse each of
Axonyx and ARS for its reasonable documented out-of-pocket legal expenses
relating
29
<PAGE>
to the suit, with any remaining amounts to be shared equally by the parties.
In the event that ARS has not joined the suit, ARS shall reasonably cooperate
with Axonyx in any such suit and shall have the right to consult with Axonyx
and be represented by independent counsel at its own expense, PROVIDED,
HOWEVER, that Axonyx shall reimburse ARS for its out-of-pocket costs
(excluding the costs of retaining its independent counsel) incurred in
cooperating with Axonyx. Axonyx shall keep Ares informed of the status of
any such suit and shall provide Ares with copies of all pleadings filed in
such suit. Any recovery or damages derived from such suit or the settlement
thereof shall be retained by Axonyx.
4.1.2 CONTINUANCE OF INFRINGEMENT. If, after the expiration
of ninety (90) days from the date of the notice specified in Subsection
4.1.1, Axonyx has not overcome the allegation of infringement, obtained a
discontinuance of such infringement, or brought suit against the third-party
infringer, then the royalty in effect in such country pursuant to Section 3.4
hereof on the Net Sales of Patented Products, in the case of an infringement
of Axonyx Patent Rights, or on the Net Sales of Other Products, in the case
of an infringement of ARS Patent Rights, shall be reduced by fifty percent
(50%). Said reduced royalty shall continue to be the prevailing royalty on
such Net Sales until such infringement ceases and, thereafter, the royalty
shall revert to the full royalty set forth in Section 3.4 hereof. In
addition, ARS shall have the right , but not the obligation, to bring suit
against such infringer under the Axonyx Patent Rights or the ARS Patent
Rights, as applicable, and join Axonyx as a party plaintiff, provided that
ARS shall bear all the expenses of the suit and shall control the prosecution
of such suit. Axonyx shall cooperate with ARS in any suit brought by ARS and
shall have the right to consult with ARS and be represented by independent
counsel at its own expense, PROVIDED, HOWEVER, that ARS shall reimburse
Axonyx for its out-of-pocket costs (excluding the costs of retaining
independent counsel) incurred in cooperating with ARS. ARS shall keep Axonyx
informed of the status of any such suit and shall provide Axonyx with copies
of all pleadings filed in such suit. ARS shall incur no liability to Axonyx
as a consequence of such suit or any unfavorable decision resulting
therefrom, including any decision holding any of the Axonyx Patent Rights or
ARS Patent Rights invalid or unenforceable. Any recovery or damages derived
from such suit or the settlement thereof shall be retained by ARS.
4.2 INFRINGEMENT AND THIRD-PARTY LICENSES.
4.2.1 COURSE OF ACTION. In the event that ARS or its
sublicensees making, having made, importing, using, offering for sale or
selling a Patented Product or Other Product infringes, will infringe or is
alleged by a third party to infringe a third party's patent, the party
becoming aware of same shall promptly notify the other party. The parties
shall thereafter attempt to agree upon a course of action that may include:
(a) modification of the Patented Product of Other Product or its use and
manufacture so as to be non-infringing; or (b) obtaining a license or
assignment of such third-party patent from such third party.
30
<PAGE>
4.2.2 THE ARS OPTION TO NEGOTIATE. In the event the parties
cannot agree on modifying the Patented Product or Other Product pursuant to
Subsection 4.2.1, ARS shall have the right to negotiate with said third party
for a suitable license or assignment. In the event that such negotiation
results in a consummated agreement, then any lump sum payment or royalties
paid thereunder by ARS or its sublicensees shall be offset against any
royalties due Axonyx pursuant to Section 3.4 hereof until the total amount
paid has been offset, PROVIDED, HOWEVER, that such offset shall not reduce
such royalty due in any Calendar Quarter below fifty percent (50%) of the
royalty otherwise due in such Calendar Quarter.
4.3 CONSENT OF NEW YORK UNIVERSITY. In the event Axonyx has not
obtained the written consent of New York University pursuant to Section 7.5
of the Development Agreement and Right to License, ARS shall have the right
within ninety (90) days of the execution and delivery of the License
Agreement to begin negotiations with New York University to obtain such
consent. In the event that such negotiations result in a consummated
agreement, then fifty percent (50%) of any lump sum payment and royalties
paid thereunder by ARS or its sublicensees shall be offset against any
royalties due Axonyx pursuant to Section 3.4 hereof for any country or
countries for which New York University has consented to Axonyx granting ARS
a right to sublicense, until the total amount paid has been offset, PROVIDED,
HOWEVER, that such offset shall not reduce such royalty due in any Calendar
Quarter for any such country or countries below fifty percent (50%) of the
royalty otherwise due in such Calendar Quarter for such country or countries.
4.4 COMPETITIVE PRODUCT. If a Competitive Product exists in any
country for a continuous period in excess of a Calendar Quarter, then for
each Calendar Quarter during which such Competitive Product continues to
exist in such country, the royalty in effect in such country pursuant to
Section 3.4 hereof on the Net Sales of Patented Products and/or Other
Products, as applicable, depending upon the Product or Products with which
the Competitive Product competes, shall be reduced by fifty percent (50%).
Said reduced royalty shall continue to be the prevailing royalty on such Net
Sales until such Competitive Product ceases to exist in such country and,
thereafter, the royalty shall revert to the full royalty set forth in Section
3.4 hereof.
4.5 ROYALTY REDUCTIONS AND OFFSETS NOT CUMULATIVE. In no event
shall the individual royalty reductions and offsets set forth in this Article
IV cumulate to reduce the royalty due Axonyx under Section 3.4 hereof below
fifty percent (50%) of the royalty otherwise due thereunder.
31
<PAGE>
ARTICLE V
TERM AND TERMINATION
5.1 TERM AND EXPIRATION. The License Agreement shall be effective
as of the date of execution and delivery thereof, and unless terminated
earlier pursuant to Sections 5.2, 5.3 or 5.4 below, the License Agreement
shall continue in effect until the expiration of ARS' royalty obligation.
Upon expiration of the License Agreement due to expiration of the royalty
obligation, ARS' licenses shall become fully paid-up, perpetual licenses.
5.2 TERMINATION BY ARS. Notwithstanding anything contained in the
License Agreement to the contrary, ARS shall have the unilateral right to
terminate the License Agreement, with or without cause, at any time by giving
thirty (30) days advance notice to Axonyx. In the event of such termination,
the rights and obligations thereunder, including any payment obligations not
due and owing as of the termination date shall terminate and all right, title
and interest in and to all Axonyx Know-How, Axonyx Patent Rights, Ares Serono
Know-How and Ares Serono Patent Rights shall revert to or vest in Axonyx.
ARS will promptly execute any documents reasonably required to perfect such
reversion.
5.3 TERMINATION FOR BREACH. The License Agreement may be
terminated by either party at any time during its term if the other party is
in breach of its material obligations thereunder and has not cured such
breach within ninety (90) days after receipt of notice from the other party
requesting cure of such breach. In the event ARS terminates the License
Agreement under this Section 5.3, the licenses under the License Agreement
shall become fully paid-up, perpetual licenses.
5.4 TERMINATION ON ARS' BANKRUPTCY. The License Agreement may be
terminated by notice by Axonyx upon the filing or institution of bankruptcy,
reorganization, liquidation or receivership proceedings with respect to ARS,
upon an assignment of a substantial portion of ARS' assets for the benefit of
creditors, in the event a receiver or custodian is appointed for ARS'
business, or if a substantial portion of ARS' business is subject to
attachment or similar process; PROVIDED, HOWEVER, in the case of any
involuntary bankruptcy proceeding such right to terminate shall only become
effective if such proceeding is not dismissed within ninety (90) days after
the filing thereof.
5.5 NO TERMINATION ON AXONYX'S BANKRUPTCY. The licenses granted
under the License Agreement by Axonyx to ARS are, and shall otherwise be
deemed to be, for purposes of Section 365(n) of the United States Bankruptcy
Code, as amended from time to time (the "Bankruptcy Code"), licenses or
rights to "intellectual property" as defined under Section 101(35A) of the
Bankruptcy Code. The parties agree that ARS, as a licensee of such rights
under the License Agreement, shall retain and may fully exercise all of its
rights and elections under the Bankruptcy Code. The parties further agree
that, in the event of the commencement of a bankruptcy proceeding by or
against Axonyx under the Bankruptcy Code, ARS shall be entitled to a complete
duplicate of (or complete access to, as appropriate) any such intellectual
property and all embodiment
32
<PAGE>
of such intellectual property. Such intellectual property and all
embodiments thereof shall be promptly delivered to ARS (i) upon any such
commencement of a bankruptcy proceeding upon written request therefor by ARS,
unless Axonyx elects to continue to perform all of its obligations under the
License Agreement or (ii) if not delivered under (i) above, upon the
rejection of the License Agreement by or on behalf of Axonyx upon written
request therefor by ARS.
5.6 TERMINATION OF UNDERLYING LICENSES. Subject to obtaining the
consent of New York University pursuant to Section 7.5 of the Development
Agreement and Right to License, upon any termination of the NYU Agreement,
the License Agreement shall not terminate but Axonyx's rights and obligations
thereunder with respect to any Axonyx Patent Rights covered by the License
Agreement shall be automatically assigned to New York University.
ARTICLE VI
OTHER PROVISIONS
The License Agreement will also contain such further customary
representations, warranties, covenants and conditions as are necessary or
appropriate for transactions of this type and are satisfactory in form and
substance to the parties and their legal advisors, including without
limitation terms and conditions relating to royalty reports, maintenance of
royalty records, withholding tax, and audit rights of Axonyx, and will adopt
confidentiality, publicity, publication, patent filing, prosecution and
maintenance, representations and warranties, indemnification, and
miscellaneous provisions relating to assignment, governing law, dispute
resolution, force majeure and notices comparable to those in the Development
Agreement and Right to License. In addition the License Agreement will
contain specific insurance and indemnity provisions for the benefit of New
York University in the form set forth in Exhibit A hereto. Axonyx will
indemnify ARS against any liability, damage, loss, cost or expense ARS incurs
in connection with such provisions.
33
<PAGE>
EXHIBIT A
LIABILITY AND INDEMNIFICATION
(a) ARS shall indemnify, defend and hold harmless New York University
('NYU") and its trustees, officers, medical and professional staff,
employees, students and agents and their respective successors, heirs
and assigns (the "Indemnitees"), against any liability, damage, loss
or expense (including reasonable attorneys' fees and expenses of
litigation) incurred by or imposed upon the Indemnitees or any one of
them in connection with any claims, suits, actions, demands or
judgments arising out of the design, production, manufacture, sale,
use in commerce or in human clinical trials, lease or promotion by
ARS, its Affiliates or any agent or sublicensee of ARS of any Patented
Product; except for claims arising out of the sole gross negligence of
an Indemnitee.
(b) With respect to an Indemnitee, ARS' indemnification under subsection
(a) above shall apply to any liability, damage, loss or expense
whether or not it is attributable to the negligent activities of such
Indemnitee but shall not apply if such liability, damage, loss or
expense is attributable to the sole gross negligence of such
Indemnitee.
(c) ARS agrees, at its own expense, to provide attorneys reasonably
acceptable to NYU to defend against any actions brought or filed
against any Indemnitee with respect to the subject of indemnity to
which such Indemnitee is entitled hereunder, whether or not such
actions are rightfully brought.
(d) Whenever an event or situation arises which, it is reasonable to
believe, may lead to an indemnification obligation by ARS, the
Indemnitee shall give prompt written notice to ARS of such event or
situation and, if a claim or demand is made or a suit or action is
brought, the Indemnitee shall promptly forward a copy of every demand,
notice, summons, complaint or other process received by it to ARS.
ARS shall assume the defense of such claim and all costs thereof. ARS
shall have the right to negotiate and consent to settlement; PROVIDED
that the consent of NYU shall be obtained prior to any settlement of a
claim, demand or litigation that involves affirmative action on the
part of NYU or any Indemnitee or the payment of money for which ARS
has not made satisfactory arrangements for reimbursement of NYU or
such Indemnitee. The Indemnitee shall cooperate reasonably with ARS in
all respects in all phases of a claim or demand and any proceeding
arising therefrom, including but not limited to, assisting in the
conduct of lawsuits, assisting in enforcing an agreement of
contribution or indemnity against a third party, providing witnesses,
and making records and information available to ARS. The Indemnitee
shall have the right to employ separate counsel in any such action and
to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnitee unless the
employment of such counsel has been specifically
34
<PAGE>
authorized in writing by ARS. ARS shall not be responsible for any
settlement of any such claim, demand, suit or action effected without
its consent.
SECURITY FOR INDEMNIFICATION
(a) At such time as any Patented Product is being commercially distributed
or sold (other than for the purpose of obtaining regulatory approvals)
by ARS, any Affiliate or any agent or sublicensee of ARS, ARS shall at
its sole cost and expense, procure and maintain policies of
comprehensive general liability insurance in amounts not less than
$2,000,000 per incident and $5,000,000 annual aggregate. Such
comprehensive general liability insurance shall provide (i) product
liability coverage and (ii) broad form contractual liability coverage
for ARS' indemnification obligations set forth above. If ARS elects
to self-insure all or part of the limits described above (including
deductibles or retentions which are in excess of $250,000 annual
aggregate), such self-insurance program must be acceptable to NYU.
The minimum amounts of insurance coverage required under this
subsection a shall not be construed to create a limit of ARS'
liability with respect to its indemnification obligations set forth
above.
(b) ARS shall provide NYU with written evidence of such insurance upon
request of NYU. ARS shall provide NYU with written notice at least
sixty (60) days prior to the cancellation, non-renewal or material
change in such insurance; if ARS does not obtain replacement insurance
providing comparable coverage within such sixty (60) day period, NYU
shall have the right to terminate the Agreement between New York
University and Axonyx effective April 1, 1997, as amended, effective
at the end of such sixty (60) day period without notice or any
additional waiting periods.
(c) ARS shall maintain such comprehensive general liability insurance
beyond the expiration or termination of the License Agreement during
(i) the period that any Patented Product is being commercially
distributed or sold (other than for the purpose of obtaining
regulatory approvals) by ARS, any Affiliate or any agent or
sublicensee of ARS and (ii) a reasonable period after the period
referred to in subsection (c)(i) above which in no event shall be less
than fifteen (15) years.
35
