<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A-1
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: November 25, 1995
-----------------
Commission File No: 0-10824
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GENOME THERAPEUTICS CORP.
-------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2297484
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(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
IDENTIFICATION OF INCORPORATION OR ORGANIZATION) NO.)
100 BEAVER STREET; WALTHAM, MASSACHUSETTS 02154
------------------------------------------ -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER: (617) 893-5007
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of Common Stock, as of the latest practicable date.
<TABLE>
<S> <C>
COMMON STOCK 13,751,011
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$.10 PAR VALUE Outstanding January 3, 1996
SERIES B RESTRICTED STOCK 57,512
------------------------- ---------------------------
$.10 PAR VALUE Outstanding January 3, 1996
</TABLE>
<PAGE> 2
Part II
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Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits:
---------
10.29 Collaboration and License Agreement between the Company,
Schering Corporation and Schering-Plough Ltd. dated as of
December 6, 1995.
b) Reports on Form 8-K
-------------------
None.
12
<PAGE> 3
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this amended report to be signed on its behalf by the
undersigned thereunto duly authorized who also serves in the capacity of
principal financial officer.
Genome Therapeutics Corp.
/s/ Fenel M. Eloi
-----------------------------
Fenel M. Eloi
(Principal Financial Officer)
Date: February 13, 1996
13
<PAGE> 1
EXHIBIT 10.29
Confidential information
omitted and filed separately
with the Commission.
COLLABORATION AND LICENSE AGREEMENT
AMONG
GENOME THERAPEUTICS CORPORATION,
SCHERING CORPORATION
AND
SCHERING-PLOUGH LTD.
dated as of December 6, 1995
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<S> <C>
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
1.1. "Affiliate" . . . . . . . . . . . . . . . . . . . . 1
1.2. "Contract Year" . . . . . . . . . . . . . . . . . . 2
1.3. "Development Candidate" . . . . . . . . . . . . . . 2
1.4. "Diagnostic Product" . . . . . . . . . . . . . . . 2
1.5. " * Database" . . . . . . . . . . . . . . . . 2
1.6. "Enabled by GTC " . . . . . . . . . . . . . . . . . 2
1.7. "Event of Default" . . . . . . . . . . . . . . . . 2
1.8. "FDA" . . . . . . . . . . . . . . . . . . . . . . . 2
1.9. "First Commercial Sale" . . . . . . . . . . . . . . 2
1.10. "Funding Commencement Date" . . . . . . . . . . . . 2
1.11. "GTC Databases" . . . . . . . . . . . . . . . . . . 2
1.12. "GTC Software". . . . . . . . . . . . . . . . . . . 2
1.13. "GTC Technology". . . . . . . . . . . . . . . . . . 3
1.14. "IND" . . . . . . . . . . . . . . . . . . . . . . . 3
1.15. "Lead Compound" . . . . . . . . . . . . . . . . . . 3
1.16. "Major Market Country . . . . . . . . . . . . . . . 3
1.17. "NDA" . . . . . . . . . . . . . . . . . . . . . . . 3
1.18. "Net Sales" . . . . . . . . . . . . . . . . . . . . 3
1.19. "Other Product" . . . . . . . . . . . . . . . . . . 4
1.20. "Overall Research Plan" . . . . . . . . . . . . . . 4
1.21. "Pharmaceutical Product". . . . . . . . . . . . . . 5
1.22. "Pharmaceutical Product Class". . . . . . . . . . . 5
1.23. "Product" . . . . . . . . . . . . . . . . . . . . . 5
1.24. "Product Category". . . . . . . . . . . . . . . . . 5
1.25. "Product Patent Rights" . . . . . . . . . . . . . . 5
1.26. "Research Collaboration". . . . . . . . . . . . . . 5
1.27. "SC Assay Technology" . . . . . . . . . . . . . . . 5
1.28. " * Database" . . . . . . . . . . . . . . . . 5
1.29. "Third Party" . . . . . . . . . . . . . . . . . . . 5
1.30. "Vaccine" . . . . . . . . . . . . . . . .
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
1.31. "Vaccine Product" . . . . . . . . . . . . . . . . . . 6
1.32. "Valid Claim" . . . . . . . . . . . . . . . . . . . . 6
ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION . . . . . . 6
2.1. General . . . . . . . . . . . . . . . . . . . . . . . 6
2.2. Right of First Negotiation . . . . . . . . . . . . . 6
2.3. Acknowledgment of Other Collaborations . . . . . . . 7
ARTICLE 3. LICENSE GRANTS; MARKETING RIGHTS . . . . . . . . . . 7
3.1. Grant of Rights by GTC to SC . . . . . . . . . . . . 7
3.1.1. Exclusive Grant for GTC Databases and
Product Patent Rights . . . . . . . . . . . . 7
3.1.2. Non-Exclusive Grant for GTC Technology
and GTC Software . . . . . . . . . . . . . . . 7
3.1.3. Sublicenses . . . . . . . . . . . . . . . . . 8
3.2. Grant of Rights by SC to GTC . . . . . . . . . . . . 8
3.3. Reservation of Rights . . . . . . . . . . . . . . . . 8
3.4. No Grant of Other Technology or Patent Rights . . . . 8
ARTICLE 4. CONDUCT OF THE RESEARCH COLLABORATION . . . . . . . . 8
4.1. Obligations of the Parties . . . . . . . . . . . . . 8
4.1.1. Reasonable Efforts . . . . . . . . . . . . . . 8
4.1.2. Deliveries by GTC . . . . . . . . . . . . . . 9
4.2. Access to Data, Information Exchange and Reports . . 9
4.3. Electronic Access to Scientific Data . . . . . . . . 9
4.4. Level of Effort by GTC Scientists . . . . . . . . . . 10
4.5. Availability of Employees . . . . . . . . . . . . . . 10
4.6. Joint Research Committee . . . . . . . . . . . . . . 10
4.6.1. Research Plan . . . . . . . . . . . . . . . . . 10
4.6.2. Annual Research Plans . . . . . . . . . . . . . 11
4.6.3. Periodic Reviews . . . . . . . . . . . . . . . 11
4.6.4. Membership of Joint Research Committee . . . . 11
4.6.5. Joint Research Committee Meetings . . . . . . . 11
4.6.6. Decision Making . . . . . . . . . . . . . . . . 11
4.7. Joint Patent Committee . . . . . . . . . . . . . . . 12
ARTICLE 5. DEVELOPMENT AND MARKETING DUE DILIGENCE . . . . . . . 12
5.1. Diligent Discovery Efforts . . . . . . . . . . . . . 12
5.2. Diligent Development Efforts . . . . . . . . . . . . 12
5.3. Diligent Marketing and Distribution Efforts . . . . . 13
5.4. Reports . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 6. PAYMENTS . . . . . . . . . . . . . . . . . . . . . . 13
6.1. License Fees . . . . . . . . . . . . . . . . . . . . 13
6.1.1. Initial License Fee . . . . . . . . . . . . . . 13
6.2. Milestone Payments . . . . . . . . . . . . . . . . . 13
6.2.1. * Payments. . . . . . . . . . . . . . . . . 14
6.2.2. * Payments . . . . . . . . . . . . . . . . 14
6.3. Research Funding . . . . . . . . . . . . . . . . . . 15
6.3.1. Funding During First * Contract Years . . . 15
6.3.2. Funding After the * Contract Year . . . . 15
6.3.3. Additional Expenditures . . . . . . . . . . . . 15
6.4. Royalties Payable by SC and its Affiliates and
Sublicensees . . . . . . . . . . . . . . . . . . . . 16
6.4.1. Royalties on Net Sales of the Products . . . . 16
6.4.2. Sublicenses . . . . . . . . . . . . . . . . . . 16
6.4.3. Adjustments for Third Party Royalties . . . . . 16
6.4.4. Royalty Reports, Exchange Rates . . . . . . . . 16
6.4.5. Audits . . . . . . . . . . . . . . . . . . . . 17
6.4.6. Royalty Payment Terms . . . . . . . . . . . . . 17
6.5. Royalties Payable by GTC . . . . . . . . . . . . . . 18
6.6. Withholding Taxes . . . . . . . . . . . . . . . . . . 18
6.7. Blocked Currency . . . . . . . . . . . . . . . . . . . 18
<FN>
* Confidential information omitted and filed separately with the Commission
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
6.8. Allocation of Payments by SC . . . . . . . . . . . 18
6.9. Interest on Late Payments . . . . . . . . . . . . . 18
ARTICLE 7. INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . 19
7.1. Ownership of Intellectual Property . . . . . . . . 19
7.2. Filing, Prosecution and Maintenance of Product
Patent Rights . . . . . . . . . . . . . . . . . . . 19
7.2.1. Prosecution and Maintenance of Product
Patent Rights . . . . . . . . . . . . . . . . 19
7.2.2. Abandonment; Failure to Pay . . . . . . . . . 19
7.2.3. Cooperation . . . . . . . . . . . . . . . . . 19
7.3. Infringement by Others; Prosecution by SC . . . . . 20
7.4. Infringement by Others; Prosecution by GTC . . . . 20
7.5. Cooperation in Infringement Actions . . . . . . . . 20
7.6. Trademarks . . . . . . . . . . . . . . . . . . . . 20
ARTICLE 8. CONFIDENTIALITY . . . . . . . . . . . . . . . . . . 21
8.1. Nondisclosure Obligations . . . . . . . . . . . . . 21
8.1.1. General . . . . . . . . . . . . . . . . . . . 21
8.1.2. Limitations . . . . . . . . . . . . . . . . . 21
8.2. Samples . . . . . . . . . . . . . . . . . . . . . . 21
8.3. Injunctive Relief . . . . . . . . . . . . . . . . . 22
ARTICLE 9. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 22
9.1. Representations, Warranties and Covenants of GTC . 22
9.2. Representations, Warranties and Covenants of SC . . 23
9.3. Validity and Scope . . . . . . . . . . . . . . . . 23
9.4. Warranty Disclaimer. . . . . . . . . . . . . . . . 23
9.5. Limited Liability. . . . . . . . . . . . . . . . . 24
ARTICLE 10. INDEMNITY . . . . . . . . . . . . . . . . . . . . 24
10.1. SC Indemnity Obligations . . . . . . . . . . . . . 24
10.2. Limitation on SC Indemnity Obligations . . . . . . 24
10.3. Procedure . . . . . . . . . . . . . . . . . . . . 24
10.4. Insurance . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 11. EXPIRATION AND TERMINATION . . . . . . . . . . . . 25
11.1. Expiration . . . . . . . . . . . . . . . . . . . . 25
11.1.1. Term of Research Collaboration . . . . . . . 25
11.1.2. Term of Agreement . . . . . . . . . . . . . 25
11.2. Events of Default . . . . . . . . . . . . . . . . 25
11.2.1. Default by Either Party . . . . . . . . . . 25
11.2.2. Default by SC . . . . . . . . . . . . . . . 25
11.3. Effect of an Event of Default . . . . . . . . . . 26
11.3.1. Remedies Available to GTC . . . . . . . . . 26
11.3.2. Remedies Available to SC . . . . . . . . . . 28
11.4. * SC . . . . . . . . . . . . . . . . . . 28
11.5. Effect of Expiration or Termination of
Research Collaboration . . . . . . . . . . . . . . 28
11.6. Effect of Expiration or Termination of
Agreement . . . . . . . . . . . . . . . . . . . . . 29
<FN>
* Confidential information omitted and filed separately with the Commission
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C> <C>
11.6.1. Survival of Provisions Upon Expiration . . 29
11.6.2. Survival of Provisions Upon Termination . 29
ARTICLE 12. PROVISIONS FOR INSOLVENCY . . . . . . . . . . . 29
12.1. General . . . . . . . . . . . . . . . . . . . . 29
12.2. Rejection of Agreement in Title 11 . . . . . . . 29
12.3. Additional Rights . . . . . . . . . . . . . . . 30
ARTICLE 13. MISCELLANEOUS . . . . . . . . . . . . . . . . . 30
13.1. Force Majeure . . . . . . . . . . . . . . . . . 30
13.2. Assignment . . . . . . . . . . . . . . . . . . . 30
13.3. Severability . . . . . . . . . . . . . . . . . . 31
13.4. Notices . . . . . . . . . . . . . . . . . . . . 31
13.5. Applicable Law . . . . . . . . . . . . . . . . . 32
13.6. Dispute Resolution . . . . . . . . . . . . . . . 32
13.7. Entire Agreement . . . . . . . . . . . . . . . . 33
13.8. Publicity . . . . . . . . . . . . . . . . . . . 33
13.9. Headings . . . . . . . . . . . . . . . . . . . . 33
13.10. Independent Contractors . . . . . . . . . . . . 33
13.11. Agreement Not to Solicit Employees . . . . . . . 33
13.12. Exports . . . . . . . . . . . . . . . . . . . . 33
13.13. Waiver . . . . . . . . . . . . . . . . . . . . . 33
13.14. Counterparts . . . . . . . . . . . . . . . . . . 34
Exhibit A1 Draft Overall Research Plan
Exhibit A2 GTC Research Plan Gantt Chart and Manpower Allocation
Exhibit B Benchmarks for * Milestone Payments
Exhibit C Form of Material Transfer Agreement
<FN>
* Confidential information omitted and filed separately with the Commission
</TABLE>
(iv)
<PAGE> 6
COLLABORATION AND LICENSE AGREEMENT
THIS COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is dated as of
December 6, 1995 (the "Effective Date") and is made by and among GENOME
THERAPEUTICS CORPORATION, a Massachusetts corporation having its principal
place of business at 100 Beaver Street, Waltham, Massachusetts 02154 U.S.A.
("GTC"), SCHERING CORPORATION, a New Jersey corporation having its principal
place of business at 2000 Galloping Hill Road, Kenilworth, New Jersey 07033 and
SCHERING-PLOUGH LTD., a Swiss corporation having its principal place of
business at Toepferstrasse 5, CH-6004 Lucerne, Switzerland (together with
Schering Corporation, "SC"). GTC and SC are sometimes referred to herein
individually as a party and collectively as the parties.
R E C I T A L S
WHEREAS, GTC is involved in research programs to sequence the genome of
* and a portion of the genome of *
* and has developed or is in the process of developing * and *
Databases (as hereinafter defined); and
WHEREAS, GTC has expertise in the development and utilization of the
software tools necessary to assemble, annotate, process, search, manipulate and
analyze the genomic sequence information it generates in its bacterial and
* research programs (GTC's "bioinformatics" capability); and
WHEREAS, SC is interested in obtaining access to such databases and
bioinformatics capability by entering into a collaboration with GTC for the
development, manufacture and sale of novel human and animal pharmaceuticals
and/or vaccines against infectious pathogens; and
WHEREAS, GTC is willing to grant SC such access and enter into such a
collaboration upon the terms and conditions set forth below;
NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the parties hereto mutually agree as follows:
ARTICLE 1. DEFINITIONS
For purposes of this Agreement, the terms defined in this Article 1 shall
have the meanings specified below:
1.1. "AFFILIATE" shall mean any corporation or other entity which directly
or indirectly controls, is controlled by or is under common control with a
party to this Agreement. A corporation or other entity shall be regarded as in
control of another corporation or entity if it owns or directly or indirectly
controls more than fifty percent
* Confidential information omitted and filed separately with the Commission
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<PAGE> 7
(50%) of the outstanding voting stock or other ownership interest of the other
corporation or entity, or if it possesses, directly or indirectly, the
power to manage, direct or cause the direction of the management and policies
of the corporation or other entity or the power to elect or appoint fifty
percent (50%) or more of the members of the governing body of the corporation
or other entity.
1.2. "CONTRACT YEAR" shall mean each twelve (12) month period starting on
(i) the Funding Commencement Date in the case of the first Contract Year and
(ii) the anniversary of the Funding Commencement Date for each subsequent
Contract Year.
1.3. "DEVELOPMENT CANDIDATE" shall mean any compound, including a Lead
Compound, (i) designated by the Schering-Plough Research Institute Project
Assessment Committee or its successor for full clinical development or (ii)
with respect to which SC, its Affiliates, sublicensees or designees have
initiated an in vivo toxicology program necessary to obtain approval for use of
such compound in human clinical trials.
1.4. "DIAGNOSTIC PRODUCT" shall mean any product or service used for
disease testing or monitoring (whether such diseases are related to *
or * or not).
1.5. " * DATABASE" shall mean GTC's * DNA sequence database
and any and all electronic and hard copy data related thereto.
1.6. "ENABLED BY GTC " shall mean that the use of the GTC Databases, GTC
Technology or GTC Software materially contributed to the relevant discovery or
development.
1.7. "EVENT OF DEFAULT" shall have the meanings set forth in Section 11.2
hereof.
1.8. "FDA" shall mean the United States Food and Drug Administration.
1.9. "FIRST COMMERCIAL SALE" of a Product in a country shall mean the
first sale for use or consumption by the general public of a Product in such
country after the required marketing and pricing approval granted by the
governing health authority of such country has been obtained.
1.10. "FUNDING COMMENCEMENT DATE" shall mean the date on which the
first two milestones under Section 6.2.1 hereof are accomplished or such
earlier date as the parties may mutually agree upon.
1.11. "GTC DATABASES" shall mean GTC's * Database and GTC's
* Database.
1.12. "GTC SOFTWARE" shall mean software and components thereof, and
any associated documentation, whether existing on the Effective Date or
developed by GTC during the Research Collaboration, which is owned or
controlled by, or licensed (with the right to sublicense) to, GTC and which is
necessary or useful to pursue searches in the GTC Databases and/or to interpret
or analyze the data contained in the GTC Databases, excluding,
* Confidential information omitted and filed separately with the Commission
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<PAGE> 8
however, any software used in the creation of, as opposed to providing access
to and interpretation or analysis of, the GTC Databases.
1.13. "GTC TECHNOLOGY" shall mean and include all proprietary
materials (excluding Products), procedures, processes, technical information,
know-how, data, formulae, expertise and trade secrets discovered or developed
by GTC during the course of the Research Program and owned or controlled by
GTC, including any screening assays developed or acquired by GTC during the
course of the Research Program, excluding, however, the SC Assay Technology,
the GTC Databases, the GTC Software and GTC's patented sequencing technology
and the procedures, processes, technical information, know-how, data, formulae,
expertise and trade secrets related thereto.
1.14. "IND" shall mean an investigational new drug application or its
equivalent filed with the FDA and necessary for beginning clinical trials in
humans, or any comparable application filed with the regulatory authorities of
a country other than the United States prior to beginning clinical trials in
humans in that country, with respect to Products.
1.15. "LEAD COMPOUND" shall mean (i) in the case of a Pharmaceutical
Product, a compound with respect to which SC, its Affiliates, sublicensees or
designees have initiated a program of medicinal chemistry optimization or (ii)
in the case of a Vaccine Product, a compound with respect to which SC, its
Affiliates, sublicensees or designees have initiated testing in one or more
animal models and where antibodies raised against a subunit antigen are
protective in passive prophylaxis.
1.16. "MAJOR MARKET COUNTRY" shall mean France, Italy, Germany, Japan,
the United Kingdom and the United States or any one or more of them.
1.17. "NDA" shall mean a new drug application or product license
application or its equivalent filed with the FDA after completion of human
clinical trials to obtain marketing approval for a Product, or any comparable
application filed with the regulatory authorities of a country other than the
United States, including, where applicable, any applications for pricing or
price reimbursement.
1.18. "NET SALES" shall mean the gross invoice price for Products sold
by SC or its Affiliates or permitted sublicensees to a Third Party customer
less the reasonable and customary accrual-basis deductions from such gross
amounts for: (i) normal and customary trade, cash and other discounts,
allowances and credits; (ii) credits or allowances actually granted for damaged
goods, returns or rejections of Products and retroactive price reductions;
(iii) sales or similar taxes (including duties or other governmental charges
levied on, absorbed or otherwise imposed on the sales of Products including,
without limitation, value added taxes or other governmental charges otherwise
measured by the billing amount, which are included in billing amount; (iv)
freight, postage, shipping, customs duties and insurance charges which are
included in the billing amount; and (v) charge back payments and rebates
granted to managed health care organizations or to federal, state and local
governments, their agencies, and purchasers and reimbursers or to trade
customers, including but not limited to, wholesalers and chain and pharmacy
buying groups. The transfer of Products by SC or one of its Affiliates to (i)
another Affiliate of SC or (ii) a permitted
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<PAGE> 9
sublicensee of SC shall not be considered a sale; in such cases, Net Sales
shall be determined based on the invoiced sales price by the Affiliate or
permitted sublicensee to its Third Party customer, less the deductions allowed
under this Section. Every other commercial use or disposition of Products by
SC or its Affiliates or permitted sublicensees of SC in barter or similar
transactions, not including samples, shall be considered a sale of the Products
at the weighted average Net Sales price for Products during the preceding
quarter.
In the event that a Product is sold in the form of a combination product
containing one or more active ingredients other than a component whose
discovery or development was Enabled by GTC (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 Product if sold separately by SC, an Affiliate or a
sublicensee and containing a component whose discovery or development was
Enabled by GTC as the only active ingredient and B is the invoice price of any
other active component or components in the Combination Product if sold
separately by SC, an Affiliate or a sublicensee. In the event that the Product
is sold in the form of a Combination Product containing one or more active
ingredients other than a component whose discovery or development was Enabled
by GTC and one or more such active ingredients of the Combination Product are
not sold separately, then the above formula shall be modified such that A shall
be the total manufacturing cost to SC, its Affiliate or sublicensee of the
Product and B shall be the total manufacturing cost to SC, its Affiliate,
sublicensee or other supplier of any other active component or components in
the Combination Product. Notwithstanding the foregoing, (i) biologically
active ingredients shall not include diluents, vehicles or adjuvants and (ii)
in no event shall Net Sales for any Combination Product calculated under this
provision be less than fifty percent of the invoice price of such Combination
Product.
In the event that SC, its Affiliates or permitted sublicensees sell
Products pursuant to an agreement with an independent customer specifying, for
a combination of products or services, a single price, other terms of purchase
not separately identifying either a price per product or the effective
deductions referred to above per product or a price for units of the Products
which is discounted below SC's, its Affiliates' or its permitted sublicensee's
standard invoice price per unit of the Products by at least five (5) percentage
points more than the amount that any other product or service included in the
arrangement is discounted below such other product's or service's standard
invoice price, then GTC and SC will determine a mutually agreeable method of
calculation so that a fair and reasonable portion of the aggregate purchase
price is allocated to the Product(s) included in any such arrangement.
1.19. "OTHER PRODUCT" shall mean any product which is based upon genes
or proteins contained in the GTC Database, other than a Diagnostic Product,
Pharmaceutical Product or Vaccine Product, and which (i) contains a component
which is covered by one or more Valid Claims included within the Product Patent
Rights or (ii) contains a component whose discovery or
development was Enabled by GTC.
1.20. "OVERALL RESEARCH PLAN" shall mean the research plan agreed upon
by the Joint Research Committee pursuant to Section 4.6.1 hereof, as it may be
subsequently amended, improved or modified from time to time, the draft of
which is attached hereto as EXHIBIT A1 (the "Draft Overall Research Plan").
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<PAGE> 10
1.21. "PHARMACEUTICAL PRODUCT" shall mean any product used to treat
disease (whether related to * or * or not) which (i) contains a
component which is covered by one or more Valid Claims included within the
Product Patent Rights or (ii) contains a component whose discovery or
development was Enabled by GTC.
1.22. "PHARMACEUTICAL PRODUCT CLASS" shall mean any one of the
following three classes of Pharmaceutical Products: (i) broad spectrum
antibiotics; (ii) narrow spectrum antibiotics; and (iii) * products.
1.23. "PRODUCT" shall mean collectively Pharmaceutical Products,
Vaccine Products, Other Products, or any one or more of them, but shall not
include Diagnostic Products.
1.24. "PRODUCT CATEGORY" shall mean any one of the following two
categories of Products: (i) Pharmaceutical Products, including products in any
Pharmaceutical Product Class, and (ii) Vaccine Products.
1.25. "PRODUCT PATENT RIGHTS" shall mean (a) the United States and
foreign patent applications filed covering Products (including components
thereof) or biological targets discovered and/or developed during the course of
the Research Collaboration or during the course of SC's performance of its
development obligations under Article 5 of this Agreement, (b) any United
States patents and foreign patents issuing from such patent applications and
(c) any continuations, continuations-in-part directed to subject matter
specifically described in such patent applications, divisionals, reissues or
extensions of any of the foregoing. Product Patent Rights shall not include
any of the foregoing to the extent that they are specifically directed to and
cover Diagnostic Products.
1.26. "RESEARCH COLLABORATION" shall mean the period of time during
which GTC alone or GTC and SC shall perform the work described under the
Research Plan. The first day of the Research Collaboration shall be the
Funding Commencement Date.
1.27. "SC ASSAY TECHNOLOGY" shall mean and include all genomic-based
screening assays for anti-infectives discovered and initially reduced to
practice or acquired by SC before or during the course of the Research Program,
including all proprietary materials (excluding Products), procedures,
processes, technical information, know-how, data, formulae, expertise and trade
secrets associated therewith.
1.28. " * DATABASE" shall mean GTC's * DNA sequence
database and any and all electronic and hard copy data related thereto.
1.29. "THIRD PARTY" shall mean any entity other than GTC or SC and
their respective Affiliates.
1.30. "VACCINE" shall mean an infectious agent or component(s) thereof
administered to a human being or other mammal in order to elicit a protective
or therapeutic immune response against an infectious agent, including but not
limited to synthetic or recombinantly produced antigens, epitopes or genetic
material encoding corresponding antigens or epitopes
* Confidential information omitted and filed separately with the Commission
-5-
<PAGE> 11
and monoclonal antibodies made against recombinant antigen for passive or
post-exposure prophylaxis.
1.31. "VACCINE PRODUCT" shall mean any Vaccine (whether related to
* or * * or not) which (i) contains a component which is covered
by one or more Valid Claims included within the Product Patent Rights or (ii)
contains a component whose discovery or development was Enabled by GTC.
1.32. "VALID CLAIM" shall mean a claim of an issued and unexpired
patent which has not been held permanently revoked, unenforceable or invalid by
a decision of a court or other governmental agency of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal.
ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION
2.1. GENERAL. GTC and SC wish to establish a collaborative alliance to
develop Pharmaceutical Products and Vaccine Products effective against
infectious pathogens. During the course of this collaboration, GTC and SC
shall communicate regularly and shall assume different rights and
responsibilities for the development of Products, all as more specifically
described below.
2.2. RIGHT OF FIRST NEGOTIATION. In the event that during the Research
Collaboration, GTC determines, in its sole discretion either alone or in
consultation with SC, that it desires to enter into a collaboration with a
Third Party with respect to research, development, use, manufacture, or sale of
any compounds directed against * as their primary indication, which
compounds have been derived or otherwise acquired by GTC without use of the GTC
Databases or any information provided by SC and separate from the activities of
the Research Collaboration as demonstrated by written records, then SC shall
have the right of first negotiation (the "First Negotiation Right") to enter
into such collaboration with GTC. GTC shall notify SC in writing of its
determination to enter into such a collaboration (the "First Notice"). Unless
SC shall have waived the First Negotiation Right in writing within *
following receipt by SC of the First Notice, GTC and SC shall negotiate in
good faith a term sheet for such collaboration for an additional period of up
to * and a definitive agreement for such collaboration for an
additional period of up to * . If, at the end of
either of such periods, GTC and SC are unable to agree on terms for the
collaboration then, unless the parties agree to extend the negotiation period,
GTC shall promptly deliver to SC a final proposal detailing the terms on which
it would enter into such a collaboration (the "Final Proposal"). SC shall have
* * from receipt of the Final Proposal to
notify GTC of its willingness to enter into an arrangement on such terms.
If SC does not so notify GTC, then GTC shall be free to enter into a
collaboration for the relevant compounds with a Third Party; provided,
however, that,
*
*
*
* , then (i) GTC shall *
* , (ii) SC shall *
* Confidential information omitted and filed separately with the Commission
-6-
<PAGE> 12
*
* , and (iii) *
*
*
*
*
*
2.3. ACKNOWLEDGMENT OF OTHER COLLABORATIONS. SC acknowledges that GTC is
currently engaged in certain research collaborations with Third Parties and
intends to enter into additional research collaborations in the future. GTC
agrees to use commercially reasonable efforts to
*
*
*
ARTICLE 3. LICENSE GRANTS; MARKETING RIGHTS
3.1. Grant of Rights by GTC to SC.
-----------------------------
3.1.1. EXCLUSIVE GRANT FOR GTC DATABASES AND PRODUCT PATENT RIGHTS.
Subject to the terms of this Agreement, GTC hereby grants to SC the right of
exclusive access to the GTC Databases and the exclusive worldwide right and
license under the Product Patent Rights to research, develop, use, manufacture,
have manufactured, and sell Pharmaceutical Products, Vaccine Products and Other
Products. The rights granted to SC in this Subsection 3.1.1. shall survive the
termination of the Research Collaboration and continue for the entire term of
this Agreement.
3.1.2. NON-EXCLUSIVE GRANT FOR GTC TECHNOLOGY AND GTC SOFTWARE.
Subject to the terms of this Agreement, GTC hereby grants to SC (i) the
non-exclusive right and license to use the GTC Technology to research, develop,
use, manufacture, have manufactured, and sell Pharmaceutical Products, Vaccine
Products and Other Products and (ii) the non-exclusive right and license to use
the GTC Software for the purpose of obtaining access to, pursuing searches in,
and/or interpreting or analyzing the data contained in the GTC Databases and
other genomic databases which may be or become available to SC, provided,
however, that to the extent that the GTC Software incorporates or requires the
use of software licensed by GTC from a Third Party, SC shall be responsible for
obtaining any necessary license and paying all fees and charges associated with
SC's use of any such software licensed from a Third Party. The rights granted
to SC in this Subsection 3.1.2 shall survive the termination of the Research
Collaboration and continue for the entire term of this Agreement. SC agrees to
use the GTC Software only for the internal purposes of SC and its Affiliates,
and agrees not to use the GTC Software for processing data for Third Parties or
to make the GTC Software available to Third Parties. SC agrees that all copies
of the GTC Software will be treated as confidential Information of GTC and
agrees to establish reasonable security measures to prevent copies of the GTC
Software from being made available to Third Parties.
* Confidential information omitted and filed separately with the Commission
-7-
<PAGE> 13
3.1.3. SUBLICENSES. SC shall have the right to grant sublicenses
under (i) the GTC Databases and Product Patent Rights to Affiliates of SC and,
with the prior written consent of GTC which shall not be unreasonably withheld,
to Third Parties and (ii) under GTC Technology and GTC Software to Affiliates
of SC, provided, however, that in either case each such sublicensee shall
execute a written agreement pursuant to which it assumes the applicable
obligations of SC hereunder.
3.2. GRANT OF RIGHTS BY SC TO GTC. Subject to the terms of this
Agreement, SC hereby grants to GTC the perpetual, non- exclusive, royalty-free
right and license to use the SC Assay Technology for GTC's internal research
programs; provided, however, that GTC shall have no right to use the SC Assay
Technology in research collaborations with Third Parties, to grant sublicenses
with respect to the SC Assay Technology or to sell or otherwise transfer any
interest in the SC Assay Technology to any Third Party.
3.3. RESERVATION OF RIGHTS. Notwithstanding the rights granted to SC
under this Article 3, GTC at all times reserves the right to (i) use the GTC
Databases, Product Patent Rights, GTC Technology and GTC Software to research,
develop, use, manufacture, have manufactured, and sell Diagnostic Products,
including the right to grant licenses with respect to any such intellectual
property rights for such purpose, (ii) use the GTC Databases, Product Patent
Rights, GTC Technology and GTC Software to research, develop, use, manufacture,
have manufactured, and sell
* *
and (iii) search and otherwise access the GTC
Databases and utilize information contained therein in GTC's other research
programs for purposes of performing comparison searches provided, however, that
GTC does not (a) *
* (b) * or (c) *
*
*
*
3.4. NO GRANT OF OTHER TECHNOLOGY OR PATENT RIGHTS. Except as otherwise
expressly provided in this Agreement, under no circumstances shall a party
hereto, as a result of this Agreement, obtain any ownership interest in or
other right to any technology, know-how, patents, patent applications, genomic
sequence data, products, or biological materials of the other party, including
items owned, controlled or developed by the other party, or transferred by the
other party to said party, at any time pursuant to this Agreement. Any
compounds, technology or know-how derived, developed or acquired by either
party independent of the * and * Databases and/or the Research
Collaboration shall be the property of such party.
ARTICLE 4. CONDUCT OF THE RESEARCH COLLABORATION
4.1. OBLIGATIONS OF THE PARTIES.
4.1.1. REASONABLE EFFORTS. During the Research Collaboration and
thereafter, each of the parties agrees to use its respective commercially
reasonable efforts to perform its
* Confidential information omitted and filed separately with the Commission
-8-
<PAGE> 14
obligations under the Overall Research Plan, each Annual Research Plan and
this Agreement in a timely manner.
4.1.2. DELIVERIES BY GTC. Within thirty (30) days following the
Funding Commencement Date, GTC shall deliver to SC electronic and hard copies
of the * Database and associated GTC Software and, within ninety (90)
days following the delivery of the * Database, the * Database, as
well as an outline of the methodologies and procedures used to obtain data and
for sequence analysis. Updates of the GTC Databases, including annotations,
will be furnished to SC periodically without additional cost during the term of
the Research Collaboration, not less frequently than * , if there is
information that requires updating. New releases of GTC Software will be
furnished to SC without additional cost during the term of the Research
Collaboration within * after GTC's release of such software.
After the end of the Research Collaboration and prior to the termination of the
Agreement, SC may request, and GTC agrees to furnish, updates of the GTC
Databases, including annotations, and new releases of GTC Software upon such
terms and conditions, including the payment by SC of fair and reasonable
additional consideration therefor, as may be negotiated in good faith by GTC
and SC at the time of any such request.
4.2. ACCESS TO DATA, INFORMATION EXCHANGE AND REPORTS. SC will have
direct access to raw sequence data that form part of the GTC Databases and to
other work resulting from the Research Collaboration including, but not limited
to, targeted sequencing data, comparative sequence data, gene mapping,
representational difference analysis data, gene expression and protein
expression data, gene mutation data, molecular genetic methodologies and
technologies, protein purification procedures and biochemical assay
methodologies. Except for electronic access via a computer network pursuant to
Section 4.3 hereof, SC's access shall be during normal business hours and upon
reasonable notice, granting SC treatment and priority not less favorable than
granted to GTC's other collaborators.
During the Research Collaboration and thereafter, each party shall keep
the other informed as to its progress related to the development of Products by
either party or its Affiliates or sublicensees in connection with the Research
Collaboration. In a timely manner during the Research Collaboration, each
party shall provide the other party with a reasonably detailed report which
shall describe the reporting party's progress with respect to its efforts under
this Agreement.
4.3. ELECTRONIC ACCESS TO SCIENTIFIC DATA. To the extent practicable, SC's
access to scientific data contemplated by Section 4.2 will at all times be, at
the expense of SC, via electronic computer network with twenty-four (24) hours
accessibility except for downtime required to maintain or otherwise service the
database and under unforeseen circumstances; provided, however, that SC shall
take such measures to insure the security of such computer link as GTC shall
reasonably request, including, without limitation, restricting access thereto
and regulating the information communicated pursuant thereto for purposes of
maintaining confidentiality. In addition to electronic access via a computer
network, SC shall be entitled to install and maintain for the term of this
Agreement electronic copies of the GTC Databases and any updates thereto on
computers maintained by SC at SC facilities; provided, however, that prior to
any such installation GTC and SC shall agreed upon reasonable
* Confidential information omitted and filed separately with the Commission
-9-
<PAGE> 15
security measures to be instituted by SC to protect the GTC Databases from
access by Third Parties.
4.4. LEVEL OF EFFORT BY GTC SCIENTISTS. The Research Collaboration shall
continue for a minimum term of * Contract Years and may be extended,
at the option of SC, for a total term of * Contract Years. During the
first Contract Year, GTC will provide * scientist man-years of
effort (including bioinformatics) for the Research Collaboration. During the
*, GTC will provide * * scientist man-years of
effort (including bioinformatics) for the Research Collaboration. After
completion of the * Contract Year, (i) if SC does not elect to extend the
Research Collaboration, the number of GTC scientist man-years (including
bioinformatics) committed to the Research Collaboration shall continue at a
minimum of * for the final * * of the Research
Collaboration, subject to GTC's right to engage in an orderly wind-down
pursuant to Section 11.1.1 hereof, and (ii) if SC elects to extend the Research
Collaboration to a total term of * Contract Years, the number of GTC
scientist man-years (including bioinformatics) committed to the Research
Collaboration during each of the * and * Contract Years shall be
a minimum of * . Any number of scientist man-years in excess of the
minimum applicable to any Contract Year shall be subject to the mutual
agreement of GTC and SC.
4.5. AVAILABILITY OF EMPLOYEES. GTC agrees to make its employees
reasonably available at their places of employment to consult with SC on issues
arising during the Research Collaboration.
4.6. JOINT RESEARCH COMMITTEE.
4.6.1. RESEARCH PLAN. Within thirty (30) days after the Effective
Date, a joint committee comprised of three (3) named representatives of each
party (the "Joint Research Committee") shall be appointed and shall agree upon
an overall written plan for the research and development to be conducted by the
parties during the Research Collaboration (the "Overall Research Plan"). The
Overall Research Plan shall be consistent with the scope, scale and direction
of Draft Overall Research Plan attached hereto as Exhibit A1 and shall
establish:
(i) the scope of the Research Collaboration;
(ii) the research objectives, work plan activities and time
schedules with respect to identification of novel and
essential bacterial genomic targets; and
(iii) the responsibilities of each party with respect to the work
to be performed under the Research Collaboration.
The Overall Research Plan may be revised and updated from time to
time as agreed upon by the Joint Research Committee.
* Confidential information omitted and filed separately with the Commission
-10-
<PAGE> 16
4.6.2. ANNUAL RESEARCH PLANS. Within forty-five (45) days after
the Effective Date, the Joint Research Committee shall agree upon a written
plan for the specific activities to be conducted in connection with the
Research Collaboration during calendar year 1996 (the "Annual Research Plan").
Thereafter, by October 1 of each year during the Research Collaboration
beginning with October 1, 1996, GTC shall submit to the Joint Research
Committee a written proposed Annual Research Plan for the following calendar
year. The Joint Research Committee shall review each such proposal as soon as
practicable and shall approve no later than December 31 of such year the final
Annual Research Plan for the next succeeding calendar year.
4.6.3. PERIODIC REVIEWS. The Joint Research Committee shall
review the Overall Research Plan on an ongoing basis and may make changes to
the Annual Research Plan then in effect; provided, however, the Annual Research
Plan then in effect shall not be modified except as agreed in writing by the
Joint Research Committee.
4.6.4. MEMBERSHIP OF JOINT RESEARCH COMMITTEE. The Joint Research
Committee shall be comprised of three (3) representatives from each of SC and
GTC, with each party's members to be selected by that party. GTC and SC may
replace one or more of its representatives on the Joint Research Committee at
any time upon written notice to the other party. Unless the parties otherwise
agree, the chairmanship of the Joint Research Committee shall rotate at the end
of each Contract Year between a representative of GTC and a representative of
SC, with a representative of GTC serving as chairman during the first Contract
Year. From time to time the Joint Research Committee may establish
subcommittees to oversee particular projects or activities, and such
subcommittees will be constituted as the Joint Research Committee shall agree.
4.6.5. JOINT RESEARCH COMMITTEE MEETINGS. The Joint Research
Committee shall meet six (6) time per year at regular intervals during the term
of the Research Collaboration, or more often as agreed upon by both parties, at
such locations as the parties may agree upon. Regularly scheduled meetings or
special meetings of the Joint Research Team may be in such form (e.g. in
person, by telephone or by video conference) as the members of the Joint
Research Committee shall agree. At such meetings, the Joint Research Committee
shall formulate and review the objectives of the Research Collaboration as
expressed in the Overall Research Plan, monitor the progress of the Annual
Research Plan toward those objectives and take such other actions as may be
specified under this Agreement or as the parties may deem appropriate. With
the consent of both parties, other representatives of GTC or SC or their
respective Affiliates or, in the case of SC and its Affiliated, their
sublicensees, may attend the meetings of the Joint Research Committee as
nonvoting observers. Each party shall be responsible for all expenses of its
representatives on the Joint Research Committee. The Joint Research Committee
shall keep accurate minutes of its deliberations which shall record all
proposed decisions and all actions recommended or taken and which shall be
countersigned by one representative of each party. All records of the Joint
Research Committee shall be available to both parties.
4.6.6. DECISION MAKING. Any approval, determination or other
action agreed to by all members of the Joint Research Committee or their
respective designees present at the relevant Joint Research Committee meeting
shall be the approval, determination or other
-11-
<PAGE> 17
action of the entire Joint Research Committee. Except as otherwise agreed, all
decisions require the approval of all of the representatives of each party,
regardless of the number of such representatives present. The Joint Research
Committee may, however, delegate to one party or to a specific representative
the authority to make certain decisions. In the event of a dispute within the
Joint Research Committee, if the members of the Joint Research Committee are
unable to resolve such dispute after engaging in good faith negotiations for
thirty (30) days, then such dispute shall be resolved in accordance with
Section 13.6 hereof.
4.7. JOINT PATENT COMMITTEE. A joint committee comprised of one (1) named
representatives of each party (the "Joint Patent Committee") shall be appointed
and shall meet as needed. A party may change one or more of its
representatives to the Joint Patent Committee at any time. Members of the
Joint Patent Committee may be represented at any meeting by another member of
the Joint Patent Committee, or by a deputy. Additional members of the Joint
Patent Committee may be appointed on an ad hoc basis upon the mutual consent of
the parties. The Joint Patent Committee shall formulate and supervise the
execution of an intellectual property protection strategy with regard to all
matters in connection with the Research Collaboration. In any instance in
which GTC informs SC in writing that it objects to the filing of any patent
application by SC, the filing of such application shall be subject to the prior
written approval of the Joint Patent Committee. The policies and procedures
set forth in Section 4.6.6 shall apply to the Joint Patent Committee and
references to the Joint Research Committee made therein shall be deemed to
refer to the Joint Patent Committee for purposes of this Section 4.7.
ARTICLE 5. DEVELOPMENT AND MARKETING DUE DILIGENCE
5.1. DILIGENT DISCOVERY EFFORTS. SC agrees, at its own expense, to use
diligent efforts to use the GTC Databases, GTC Technology and GTC Software to
discover one or more Lead Compounds for each Product Category. Such diligent
efforts shall be comparable to those efforts used by SC for other SC discovery
programs with comparable commercial potential, value and development status.
Without limiting the foregoing, SC will at a minimum (i) pursue diligent
efforts to screen representative compounds, not previously tested, from SC's
in-house synthetic and natural product libraries against genomic targets
identified by GTC during the Research Collaboration and (ii) in each twelve-
month period following the end of Research Collaboration, either (a) screen not
less than * * new representative compounds, not previously tested,
against genomic targets identified by GTC during the Research Collaboration or
(b) if new assay development is required, commit at least * full time
equivalent scientists to assay development; provided, however, that such
minimum screening effort may be suspended in whole or in part at the sole
discretion of SC during any period in which SC is actively developing *
* Lead Compounds or Development Candidates for each Product Category.
5.2. DILIGENT DEVELOPMENT EFFORTS. SC agrees, at its own expense, to use
diligent efforts to develop and commercialize, either directly or through its
Affiliates or permitted sublicensees, the Lead Compounds and Development
Candidates selected by it pursuant to Section 5.1. Such diligent efforts shall
be comparable to those efforts used by SC for other SC product candidates with
comparable commercial potential, value and development status
* Confidential information omitted and filed separately with the Commission
-12-
<PAGE> 18
and shall include the active conduct of in vivo toxicology trials necessary to
obtain approval for use of such compound in human clinical trials or the active
conduct of human clinical trials, in each case for at least one Lead Compound
or Development Candidate in each Product Category. The selection of Lead
Compounds and Development Compounds for development and commercialization shall
be in the sole discretion of SC. SC, its Affiliates and permitted sublicensees
may, but shall have no obligation under this Agreement to, develop and
commercialize more than * in each Product Category at any time
during the term of this Agreement. If SC discontinues development of a Lead
Compound or Development Candidate, SC will resume the diligent screening
efforts described in Section 5.1 with the objective of selecting a replacement
Lead Compound or Development Candidate, as the case may be, and maintaining at
least * under active pre-clinical or clinical
development in each Product Category. Such diligent development efforts will
continue until marketing approval has been obtained for at least one Product in
each Product Category in each Major Market Country.
5.3. DILIGENT MARKETING AND DISTRIBUTION EFFORTS. SC shall have the
exclusive worldwide right to market and distribute the Products. Upon receipt
of approval for commercial sale of a Product in any country, SC agrees, at its
own expense, to use diligent efforts to launch, promote, market and sell such
Product in such country. Such efforts shall be comparable to those efforts
used by SC to promote its own products of similar commercial potential, value
and development status in such country or a comparable country, as the case may
be. Both parties recognize that extenuating circumstances may arise that
warrant a delay in launching a Product in a particular country, including but
not limited to unfavorable pricing, pricing reimbursement or labelling of the
Product in such country. The parties agree that such extenuating circumstances
shall be considered in connection with any determination concerning whether SC
has fulfilled its obligation to use diligent efforts to launch, promote, market
and sell such Product in such country.
5.4. REPORTS. After the expiration or termination of the Research
Collaboration, SC shall provide GTC with reasonably detailed reports which
shall describe SC's progress with respect to its development, commercialization
and marketing efforts under this Agreement. Such reports shall be furnished
semi-annually for the first five (5) years after the expiration or
termination of the Research Collaboration and annually thereafter.
ARTICLE 6. PAYMENTS
6.1. License Fees.
-------------
6.1.1. INITIAL LICENSE FEE. Within five (5) business days after
the execution of this Agreement, SC shall pay to GTC a license fee in the
amount of $3,000,000 United States dollars by certified or bank check or wire
transfer for the rights granted hereunder.
6.2. MILESTONE PAYMENTS. SC shall pay to GTC in United States dollars by
certified or bank check or wire transfer the milestone payments described below
as and when the corresponding milestones are achieved:
* Confidential information omitted and filed separately with the Commission
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<PAGE> 19
6.2.1. * PAYMENTS. SC shall pay the following milestone
payments to GTC within ten (10) business days of receipt by SC of a written
confirmation from the Joint Research Committee that the corresponding milestone
(as set forth herein and further defined in EXHIBIT B) has been achieved. The
Joint Research Committee shall deliver its written confirmation to SC or
deliver to GTC a written statement describing in detail any respect in which
the milestone has not been achieved within thirty (30) days following receipt
by the Joint Research Committee of a written statement from GTC claiming the
accomplishment of the corresponding milestone supported by adequate documents
providing reasonable detail concerning the accomplishment of the such
milestone. The milestone payments set forth under this Section 6.2.1 shall be
payable * during the term of this Agreement.
<TABLE>
<CAPTION>
---------------------------------------------------
Milestone Payment
===================================================
<S> <C>
* *
*
---------------------------------------------------
* *
*
---------------------------------------------------
* *
*
---------------------------------------------------
* *
*
*
*
---------------------------------------------------
* *
*
*
---------------------------------------------------
</TABLE>
6.2.2. * PAYMENTS. SC will immediately notify GTC upon
the accomplishment of the following milestones and, within thirty (30) days
following the accomplishment of each milestone, SC shall make the corresponding
milestone payment. Each milestone payment set forth in this Section 6.2.2
shall be made (i) * * and (ii)
* ; provided, however, that under no circumstances shall
any of the milestone payments set forth in this Section 6.2.2 *
; and provided, further, that milestone payments *
*
* in the Research Collaboration.
<TABLE>
<CAPTION>
---------------------------------------------------
Milestone Payment
===================================================
<S> <C>
* *
---------------------------------------------------
* *
---------------------------------------------------
</TABLE>
* Confidential information omitted and filed separately with the Commission
-14-
<PAGE> 20
<TABLE>
<S> <C>
---------------------------------------------------
* *
---------------------------------------------------
* *
*
---------------------------------------------------
* *
*
---------------------------------------------------
* *
---------------------------------------------------
* *
---------------------------------------------------
</TABLE>
6.3. Research Funding.
----------------
6.3.1. FUNDING DURING FIRST * CONTRACT YEARS. During the
first * Contract Years, SC will pay GTC * United States dollars per
year by certified or bank check or wire transfer for funding of the sponsored
research outlined in the Overall Research Plan. Such amounts shall be payable
in advance in four quarterly payments of * United States
dollars each, with the first quarterly payment due within fifteen (15) days
after the Funding Commencement Date. In the event that the parties agree to
exceed the number of scientist man-years set forth in Section 4.4 hereof in
* of the first * Contract Years, in addition to the amounts set forth in
this Sections 6.3.1, SC shall reimburse GTC at the rate of * United States
dollars per man-year for each such additional scientist (including
bioinformatics) engaged in the Research Collaboration. Such payments shall be
made in accordance with the procedure set forth in Section 6.3.2.
6.3.2. FUNDING AFTER THE * CONTRACT YEAR. After the
completion of the * Contract Year, SC will reimburse GTC at the rate
of * United States dollars per man-year for each scientist
(including bioinformatics) engaged in the Research Collaboration, such
reimbursement to be indexed to reflect changes in GTC's actual cost of
performing research during the first * Contract Years. Reimbursements
will be payable by certified or bank check or wire transfer in advance of each
quarter of such Contract Year in which the work is to be performed based on
reasonable estimates. Payments for partial quarters shall be prorated. After
the completion of the * Contract Year, GTC will, within forty-five (45)
days after the end of each quarter of a Contract Year, provide SC with a
written report specifying the scientists engaged in the Research Collaboration,
the time devoted thereto by each of them during the preceding quarter, a
calculation of the amount due to GTC from SC for such quarter and the debit
or credit balance at the end of such quarter. Debit balances shall reduce the
estimated payment to be made by SC for work under the Research Collaboration in
the next quarter and credit balances shall be paid by SC to GTC within fifteen
(15) days after the receipt of GTC's written report.
6.3.3. ADDITIONAL EXPENDITURES. In the event that the scope,
scale or direction of the Research Collaboration as described in the draft
Overall Research Plan attached hereto as EXHIBIT A1 changes after the Effective
Date, any additional expenditures required to be made by GTC to support the
Research Collaboration shall be funded by SC. All changes in the scope, scale
or direction of the Research Collaboration which may trigger additional funding
by SC shall be approved in advance by the Joint Research Committee. If such
* Confidential information omitted and filed separately with the Commission
-15-
<PAGE> 21
additional payments relate to items of capital equipment or Third Party
software which are reasonably anticipated to be used by GTC to a greater extent
outside the Research Collaboration than within the Research Collaboration, then
GTC and SC shall negotiate in good faith regarding the allocation of such costs
between GTC and SC; provided, however, that GTC cannot not be required to
contribute to such costs without its consent. Any payments which become due
under this Subsection shall be made in United States dollars quarterly in
advance by certified or bank check or wire transfer.
6.4. ROYALTIES PAYABLE BY SC AND ITS AFFILIATES AND SUBLICENSEES.
Following the First Commercial Sale of any Product, SC will pay, on a quarterly
basis, a royalty in the amounts set forth below on Net Sales of the Products
during the previous quarter.
6.4.1. ROYALTIES ON NET SALES OF THE PRODUCTS. In consideration
of the licenses granted to SC, SC shall pay to GTC a royalty in the amount of
(i) * on cumulative Net Sales by SC, its Affiliates and
sublicensees of less than * and (ii) * on
cumulative Net Sales by SC, its Affiliates and sublicensees equal to or greater
than * . In the event that a Product comprises a Lead Compound or
derivatives or analogues thereof initially discovered to have activity against
a GTC-identified target during the first * Contract Years, the royalty
rate on Net Sales of such Product payable pursuant to the preceding sentence
shall be increased by * .
6.4.2. SUBLICENSES. If SC grants a sublicense hereunder to any
Third Party to make, have made, use, or sell Products in any country, SC shall
(i) pay to GTC * * of the fair market value of all consideration
received by SC from such Third Party in connection therewith which are not
based upon Net Sales of the Products by such Third Party in such country and
(ii)(A) pay to GTC royalties on Net Sales of the Products sold by such Third
Party in such country or (B) provide in such sublicense that such sublicensee
shall pay to GTC royalties on Net Sales of the Products sold by such
sublicensee in such country, in either case at the royalty rate set forth in
Section 6.4 that would be applicable had such sales been made by SC, and
provided that in either case, SC shall remain liable for the timely payment of
all such royalties.
6.4.3. ADJUSTMENTS FOR THIRD PARTY ROYALTIES. If SC is required
to pay royalties and/or lump sum license fees to Third Parties for rights under
patents necessary to make or sell the Products, it may deduct an amount equal
to up to * of such royalties and/or lump sum license fees from
the royalties due GTC under Section 6.4, provided, however that the aggregate
royalties due to GTC under this Agreement may not be reduced by more than
* in any given quarter by all deductions or credits allowed under
this Agreement.
6.4.4. ROYALTY REPORTS, EXCHANGE RATES. During the term of this
Agreement following the First Commercial Sale of any Product, SC shall within
sixty (60) days after each calendar quarter furnish to GTC a written quarterly
report showing: (i) the gross sales of the Products sold by SC and its
Affiliates and sublicensees during the reporting period and the calculation of
Net Sales from such gross sales; (ii) the sublicense payments received by SC
during the reporting period; (iii) the royalties and other payments payable in
United States dollars which shall have accrued hereunder in respect of such
sales and sublicense
* Confidential information omitted and filed separately with the Commission
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<PAGE> 22
payments; (iv) withholding taxes, if any, required by law to be deducted in
respect of such royalties and sublicense payments; (v) the dates of the
First Commercial Sales of Products in any country during the reporting period;
and (iv) the exchange rates used in determining the amount of United States
dollars payable hereunder. Royalties payable on sales in countries other than
the United States shall be calculated by multiplying the appropriate royalty
rate times the sales in each currency in which they are made and converting the
resulting amount into United States dollars at the rates of exchange used by SC
for reporting such sales for United States financial statement purposes. If no
royalty or payment is due for any royalty period hereunder, SC shall so report.
SC shall keep complete and accurate records in sufficient detail to properly
reflect all gross sales and Net Sales and to enable the royalties payable
hereunder to be determined.
6.4.5. AUDITS. Upon the written request of GTC, SC shall permit
an independent certified public accountant selected by GTC and acceptable to
SC, which acceptance shall not be unreasonably withheld, to have access during
normal business hours to such records of SC as may be reasonably necessary to
verify the accuracy of the royalty reports described herein, in respect of any
fiscal year ending not more than twenty-four (24) months prior to the date of
such request. GTC and SC shall use commercially reasonable efforts to schedule
all such verifications within forty-five (45) days after GTC makes its written
request. All such verifications shall be conducted at GTC's expense and not
more than once in each calendar year. In the event GTC's independent certified
public accountant concludes that additional royalties were owed to GTC during
such period, the additional royalty shall be paid by SC within thirty (30) days
of the date GTC delivers to SC such independent certified public accountant's
written report so concluding. In the event GTC's independent certified public
accountant concludes that there was an overpayment of royalties to GTC during
such period, the overpayment less the reasonable fees and expenses charged by
such representative shall be repaid by GTC within thirty (30) days of the date
GTC received such independent certified public accountant's written report so
concluding. The fees charged by such independent certified public accountant
shall be paid by GTC unless the audit discloses an underpayment of the
royalties payable by SC for the audited period of more than five percent (5%),
in which case SC shall pay the reasonable fees and expenses charged by such
representative. SC shall include in each Third Party sublicense granted by it
pursuant to this Agreement a provision requiring the sublicensee to make
reports to SC, to keep and maintain records of sales made pursuant to such
sublicense and to grant access to such records by GTC's independent certified
public accountant to the same extent required of SC under this Agreement. GTC
agrees that all information subject to review under this Section 6.4.5 or under
any sublicense agreement is confidential and that GTC shall cause its
independent certified public accountant to retain all such information in
confidence. GTC's independent certified public accountant shall only report to
GTC as to the computation of the royalties and other payments due to GTC under
this Agreement and shall not disclose to GTC any other information of SC or its
sublicensees.
6.4.6. ROYALTY PAYMENT TERMS. Royalties shown to have accrued by
each royalty report provided for under this Agreement shall be due sixty (60)
days after the end of each calendar quarter. Payment of royalties in whole or
in part may be made in advance of such due date. Royalties determined to be
owing with respect to any prior quarter shall be added, together with interest
thereon accruing under this Agreement from the date of the
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<PAGE> 23
report for the quarter for which such amounts are owing, to the next quarterly
payment hereunder.
6.5. ROYALTIES PAYABLE BY GTC. Following the First Commercial Sale of any
Other Product by GTC or its Affiliates, GTC will pay to Schering Corporation,
on a quarterly basis, a royalty in the amount of * on Net
Sales, subject to the terms and conditions of Sections 1.19, 6.4.3 through
6.4.6, and 6.6 through 6.8 hereof. For purposes of this Section 6.5, all
references to SC in the aforementioned sections of this Agreement shall be
deemed to refer to GTC and vice-versa.
6.6. WITHHOLDING TAXES. SC shall *
*
* . SC shall *
* including but not
limited to any such taxes or charges incurred as a result of an assignment
or sublicense by SC to any Affiliate or any Third Party *
. SC shall *
*
The parties will exercise their best efforts to ensure that any withholding
taxes imposed are reduced as far as possible under the provisions of any
treaties applicable to any payment made hereunder.
6.7. BLOCKED CURRENCY. If transfer of amounts payable hereunder to United
States dollars is subject to administrative authorization, SC shall promptly
file the transfer application with the competent authorities supported by all
requisite documentation, and use its reasonable efforts to obtain such
authorization and effect the remittance within the applicable period set forth
under this Article 6; provided, however, that nothing in this Section 6.7 shall
relieve SC from its obligation to pay any amounts payable hereunder within the
applicable period set forth under this Article 6.
6.8. ALLOCATION OF PAYMENTS BY SC. Fifty percent (50%) of all payments to
be made by SC to GTC pursuant to this Article 6 shall be paid by Schering
Corporation and the balance shall be paid by Schering-Plough Ltd.; provided,
however, that Schering Corporation and Schering-Plough Ltd. are jointly and
severally liable for any and all amounts payable by SC to GTC pursuant to this
Article 6.
6.9. INTEREST ON LATE PAYMENTS. Any payments by SC to GTC that are not
paid on or before thirty (30) days after the date such payments are due under
this Agreement shall bear interest, to the extent permitted by applicable law,
at one and one half percent (1.5%) per month, calculated on the total number of
days payment is delinquent; provided, however, that interest shall not accrue
pursuant to this Section 6.8 on any amounts payable under this Agreement with
respect to which payment is disputed in good faith; provided further that
interest shall accrue pursuant to this Section 6.8 once such dispute has been
resolved if payment is not made promptly thereafter.
* Confidential information omitted and filed separately with the Commission
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<PAGE> 24
ARTICLE 7. INTELLECTUAL PROPERTY
7.1. OWNERSHIP OF INTELLECTUAL PROPERTY. Subject to the rights and
licenses granted under this Agreement (i) GTC shall retain ownership of the GTC
Databases, the GTC Technology and the GTC Software and (ii) SC shall retain
ownership of the SC Assay Technology and Product Patent Rights.
7.2. Filing, Prosecution and Maintenance of Product Patent Rights.
------------------------------------------------------------
7.2.1. PROSECUTION AND MAINTENANCE OF PRODUCT PATENT RIGHTS. SC
shall be responsible for the filing, prosecution (including oppositions) and
maintenance of the Product Patent Rights at its expense in its own name;
provided, however, that the filing, prosecution (including oppositions) and
maintenance of Product Patent Rights relating to Other Products shall be at
SC's expense in GTC's name. SC shall consult with GTC and keep GTC fully
informed of important issues relating to the preparation, filing, prosecution
and maintenance of such patent applications and the patents related thereto,
including SC's patent strategy with respect to both existing and future patent
applications, patents and patent extensions, and shall furnish to GTC copies of
documents relevant to such preparation or filing (such copies of documents with
respect to initial patent filings to be furnished to GTC sufficiently prior to
filing such document or making any payment due thereunder to allow for review
and comment by GTC, and SC shall seriously consider all GTC comments on such
initial patent filings) and, upon GTC's request, copies of documents relevant
to such prosecution or maintenance; and provided, further, that in any instance
in which GTC informs SC in writing that it objects to the filing of any patent
application by SC, the filing of such application shall be subject to the prior
written approval of the Joint Patent Committee pursuant to Section 4.7 hereof.
If SC elects not to continue to seek or maintain patent protection on any
patent or patent application included in the Product Patent Rights in any
country, GTC shall have the right, at its option and expense, with the
reasonable assistance of SC to file, prosecute (including oppositions) and
maintain such patent applications and patents; provided, however, that the
rights of the parties with respect to any such Product Patent Rights shall in
all other respects be as described in this Agreement. SC will advise GTC of
all decisions taken with respect to any such election in a timely manner in
order to allow GTC to protect its rights under this Section 7.1.1.
7.2.2. ABANDONMENT; FAILURE TO PAY. SC agrees that it will not
abandon the prosecution of any patent applications included within the Product
Patent Rights nor shall it fail to make any payment or fail to take any other
action necessary to maintain a patent under the Product Patent Rights unless
it has notified GTC in sufficient time for GTC to assume such prosecution or
make such payment.
7.2.3. COOPERATION. Each party shall make available to the other
party (or to the other party's authorized attorneys, agents or
representatives), its employees, agents or consultants to the extent reasonably
necessary or appropriate to enable the appropriate party to file, prosecute and
maintain patent applications and resulting patents as set forth in this Section
7.1 for periods of time reasonably sufficient for such party to obtain the
assistance it needs from such personnel. Where appropriate, each party shall
sign or cause to have signed all documents relating to said patent applications
or patents at no charge to the other party.
* Confidential information omitted and filed separately with the Commission
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<PAGE> 25
7.3. INFRINGEMENT BY OTHERS; PROSECUTION BY SC. GTC and SC shall each
promptly notify the other in writing of any alleged or threatened infringement
of patents or patent applications included in the Product Patent Rights of
which they become aware, and the parties shall consult concerning the action to
be taken. SC shall have the right, but not the obligation, to prosecute at its
own expense any such infringement. Any recovery or damages derived from such
action shall be used (i) first to reimburse SC for all legal expenses relating
to the suit and (ii) second to pay GTC the royalty it would have been entitled
to receive had the sale of such infringing products been sales of Products
licensed by SC hereunder. *
* .
7.4. INFRINGEMENT BY OTHERS; PROSECUTION BY GTC. If, within six (6)
months after SC first becomes aware of any infringement of the Product Patent
Rights, SC fails to cause such infringement to terminate or to bring a suit or
action to compel termination, GTC shall have the right, but not the obligation,
to bring such suit or action to compel termination at the sole expense of GTC.
In such event, GTC shall have the right, if SC is a legally indispensable
party, to bring such suit or action in the name of SC. Any recovery or damages
in such suit shall be retained by GTC.
SC shall have the right, prior to the commencement of the trial of any
suit or action brought by GTC, to join any such suit or action and, in such
event, shall pay one-half of the entire cost of such suit or action. Provided
that SC has joined in the action and shared the costs thereof as stated in the
preceding sentence, no settlement, consent judgment or other voluntary final
disposition of the suit may be entered into without the consent of SC, which
consent shall not unreasonably be withheld. Any recovery or damages derived
from such action shall be used (i) first to reimburse GTC for all legal
expenses relating to the suit and (ii) second to pay GTC the royalty it would
have been entitled to receive had the sale of such infringing products been
sales of Products licensed by SC hereunder. * * of any
remaining recovery or damages shall thereafter be retained by GTC and the
balance shall be distributed to SC.
7.5. COOPERATION IN INFRINGEMENT ACTIONS. In any infringement suit which
either party may institute to enforce the Product Patent Rights pursuant to
this Agreement, the other party hereto shall, at the request of the party
initiating such suit, cooperate in all respects and, to the extent possible,
have its employees testify when requested and make available relevant records,
papers, information, samples and the like. GTC's cooperation in any suit
initiated by SC shall be at SC's expense. SC's cooperation in any suit
initiated by GTC shall be at GTC's expense.
7.6. TRADEMARKS. SC shall be free to use and to register in any trademark
office in the world any trademark for use with Products it desires in its sole
discretion. SC shall own all right, title and interest in and to any such
trademark in its own name or that of its designated Affiliate during and after
the term of this Agreement.
* Confidential information omitted and filed separately with the Commission
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<PAGE> 26
ARTICLE 8. CONFIDENTIALITY
8.1. Nondisclosure Obligations.
-------------------------
8.1.1. GENERAL. Except as otherwise provided in this Article 8,
during the term of this Agreement and for a period of ten (10) years
thereafter, the parties shall maintain in confidence and use only for purposes
specifically authorized under this Agreement (i) GTC Databases, (ii) the SC
Assay Technology, (iii) any other information and data received from the other
party resulting from or related to the Research Collaboration and the Products
and (iv) all information and data not described in clauses (i), (ii) or (iii)
but supplied by the other party under this Agreement marked "Confidential."
For purposes of this Article 8, information and data described in clauses (i),
(ii), (iii) or (iv) shall be referred to as "Information."
8.1.2. LIMITATIONS. To the extent it is reasonably necessary or
appropriate to fulfill its obligations or exercise its rights under this
Agreement: (i) a party may disclose Information it is otherwise obligated under
this Section 8.1 not to disclose to its Affiliates, sublicensees, consultants,
outside contractors and clinical investigators, on a need-to-know basis and on
condition that such entities or persons agree to keep the Information
confidential for the same time periods and to the same extent as such party is
required to keep the Information confidential; and (ii) a party or its
sublicensees may disclose such Information to government or other regulatory
authorities to the extent that such disclosure is reasonably necessary to
obtain patents or authorizations to conduct clinical trials of, and to
commercially market, Products pursuant to this Agreement. The obligation not
to disclose Information shall not apply to any part of such Information that:
(i) is or becomes part of the public domain other than by unauthorized acts of
the party obligated not to disclose such Information or its Affiliates or
sublicensees; (ii) can be shown by written documents to have been disclosed to
the receiving party or its Affiliates or sublicensees by a Third Party,
provided such Information was not obtained by such Third Party directly or
indirectly from the other party to this Agreement pursuant to a confidentiality
agreement; (iii) prior to disclosure under this Agreement, was already in the
possession of the receiving party or its Affiliates or sublicensees, provided
such Information was not obtained directly or indirectly from the other party to
this Agreement pursuant to a confidentiality agreement; (iv) can be shown by
written documents to have been independently developed by the receiving party
or its Affiliates without breach of any of the provisions of this Agreement; or
(v) is disclosed by the receiving party pursuant to interrogatories, requests
for information or documents, subpoena, civil investigative demand issued by a
court or governmental agency or as otherwise required by law, provided,
however, that the receiving party notifies the other party immediately upon
receipt thereof, giving such other party sufficient advance notice to permit it
to seek a protective order or other similar order with respect to such
Information and provided, further, that the disclosing party furnishes only
that portion of the Information which it is advised by counsel is legally
required whether or not a protective order or other similar order is obtained
by the other party.
8.2. SAMPLES. Samples of genes, other biological targets, antigens or
compounds identified, sequenced, synthesized, purified or developed in the
course of the Research Collaboration shall not be supplied or sent by either
party to any Third Party, other than to
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<PAGE> 27
regulatory agencies or for use in clinical trials, unless such release is
approved by a member of the Joint Research Committee from the other party and
protected by an appropriate materials transfer agreement substantially similar
to the form of Material Transfer Agreement attached hereto as EXHIBIT C.
Samples of materials other than those described above provided by one party
(the "supplying party") to the other party (the "receiving party") in the
course of the Research Collaboration shall not be supplied or sent by the
receiving party to any Third Party, other than to regulatory agencies or for
use in clinical trials, without the written consent of the supplying party.
8.3. INJUNCTIVE RELIEF. The parties hereto understand and agree that
remedies at law may be inadequate to protect against any breach of any of the
provisions of this Article 8 by either party or their employees, agents,
officers or directors or any other person acting in concert with it or on its
behalf. Accordingly, each party shall be entitled to the granting of
injunctive relief by a court of competent jurisdiction against any action that
constitutes any such breach of this Article 8.
ARTICLE 9. REPRESENTATIONS AND WARRANTIES
9.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF GTC. GTC represents and
warrants to and covenants with SC that:
9.1.1. GTC is a corporation duly organized, validly existing and
in corporate good standing under the laws of Massachusetts;
9.1.2. GTC has the legal right, authority and power to enter into
this Agreement, and to extend the rights and licenses granted to SC in this
Agreement;
9.1.3. GTC has taken all necessary action to authorize the
execution, delivery and performance of this Agreement;
9.1.4. upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of GTC enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
9.1.5. the performance of its obligations under this Agreement
will not conflict with its charter documents or result in a breach of any
agreements, contracts or other arrangements to which it is a party;
9.1.6. to the best of GTC's knowledge but without independent
investigation, the performance of GTC's obligations under this Agreement,
including without limitation *
* ;
* Confidential information omitted and filed separately with the Commission
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9.1.7. GTC will not during the term of this Agreement enter into
any agreements, contracts or other arrangements that would be inconsistent with
its obligations under this Agreement; and
9.1.8. GTC will not during the term of this Agreement *
*
* , including without limitation *
*
*
* GTC is currently *
*
* .
9.2. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SC. SC represents and
warrants to and covenants with GTC that:
9.2.1. SC are corporations duly organized, validly existing and in
corporate good standing under the laws of New Jersey and Switzerland,
respectively;
9.2.2. SC has the legal right, authority and power to enter into
this Agreement, and to extend the rights and licenses granted to GTC in this
Agreement;
9.2.3. SC has taken all necessary action to authorize the execution,
delivery and performance of this Agreement;
9.2.4. upon the execution and delivery of this Agreement, this
Agreement shall constitute a valid and binding obligation of SC enforceable in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' and contracting parties' rights generally and except as
enforceability may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
9.2.5. the performance of its obligations under this Agreement will
not conflict with SC's charter documents or result in a breach of any
agreements, contracts or other arrangements to which it is a party; and
9.2.6. SC will not after the Effective Date enter into any
agreements, contracts or other arrangements that would be inconsistent with its
obligations under this Agreement.
9.3. VALIDITY AND SCOPE. Nothing in this Agreement shall be construed as
a warranty or representation by either party as to the validity or scope of any
GTC Technology, GTC Databases, GTC Software or Product Patent Rights.
9.4. WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY GTC TECHNOLOGY,
GTC DATABASES, GTC SOFTWARE,
* Confidential information omitted and filed separately with the Commission
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<PAGE> 29
PRODUCT PATENT RIGHTS, GOODS, SERVICES OR OTHER SUBJECT MATTER OF THIS AGREEMENT
AND HEREBY DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE AND NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
9.5. LIMITED LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT
OR OTHERWISE TO THE CONTRARY, NEITHER GTC NOR SC WILL BE LIABLE WITH RESPECT TO
ANY SUBJECT MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT
LIABILITY OR OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY PUNITIVE, EXEMPLARY,
INCIDENTAL OR CONSEQUENTIAL DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT
OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.
ARTICLE 10. INDEMNITY
10.1. SC INDEMNITY OBLIGATIONS. SC agrees to defend, indemnify and
hold GTC, its Affiliates and their respective employees and agents harmless
from all claims, losses, damages or expenses arising as a result of: (a)
actual or asserted violations of any applicable law or regulation by SC, its
Affiliates or sublicensees by virtue of which the Products manufactured,
distributed or sold hereunder shall be alleged or determined to be adulterated,
misbranded, mislabeled or otherwise not in compliance with any applicable law
or regulation; (b) claims for bodily injury, death or property damage
attributable to the manufacture, distribution, sale or use of the Products by
SC, its Affiliates or sublicensees; or (c) a Product recall ordered by a
governmental agency or required by a confirmed Product failure as reasonably
determined by the parties hereto.
10.2. LIMITATION ON SC INDEMNITY OBLIGATIONS. GTC, its Affiliates and
their respective employees and agents shall not be entitled to the indemnities
set forth in Section 10.1 where the claim, loss, damage or expense for which
indemnification is sought was caused by a grossly negligent or intentional act
or omission by GTC, its directors, officers, employees or authorized agents.
10.3. PROCEDURE. If GTC or any of its Affiliates or their respective
employees or agents (the "Indemnitee") intends to claim indemnification under
this Article 10, the Indemnitee shall promptly notify the other party (the
"Indemnitor") of any loss, claim, damage, liability or action in respect of
which the Indemnitee intends to claim such indemnification, and the Indemnitor
shall assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an Indemnitee shall have the right to retain
its own counsel, with the fees and expenses to be paid by the Indemnitor, if
representation of such Indemnitee by the counsel retained by the Indemnitor
would be inappropriate due to actual or potential differing interests between
such Indemnitee and any other party represented by such counsel in such
proceedings. The indemnity agreement in this Article 10 shall not apply to
amounts paid in settlement of any loss, claim, damage, liability or action if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such
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<PAGE> 30
action, shall relieve such Indemnitor of any liability to the Indemnitee under
this Article 10, but the omission so to deliver notice to the Indemnitor will
not relieve it of any liability that it may have to any Indemnitee otherwise
than under this Article 10. The Indemnitee under this Article 10, its
employees and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigation of any action, claim or liability covered
by this indemnification. The Indemnitor shall additionally be liable to pay
the reasonable legal costs and attorneys' fees incurred by the Indemnitee in
establishing its claim for indemnity.
10.4. INSURANCE. SC shall maintain appropriate product liability
insurance with respect to development, manufacture and sales of the Products
by SC in such amount as SC customarily maintains with respect to sales of its
other products. SC shall maintain such insurance for so long as it continues
to manufacture or sell the Products, and thereafter for so long as SC maintains
insurance for itself covering such manufacture or sales.
ARTICLE 11. EXPIRATION AND TERMINATION
11.1. Expiration.
----------
11.1.1. TERM OF RESEARCH COLLABORATION. Unless this Agreement is
sooner terminated in accordance with the provisions of this Article 11, the term
of the Research Collaboration shall expire thirty (30) months from the Funding
Commencement Date; provided, however, that SC may, in its discretion, elect to
extend the Research Collaboration for an additional eighteen (18) months. SC
shall deliver written notice to GTC at least * * prior to the
expiration of the initial term of the Research Collaboration definitively
stating whether SC intends to exercise its option to extend the term of the
Research Collaboration. In any event, GTC may, in its discretion, engage in an
orderly wind-down of the Research Collaboration, including the reassignment of
the scientists devoted thereto, during the last * thereof.
11.1.2. TERM OF AGREEMENT. Unless this Agreement is sooner
terminated in accordance with the provisions of this Article 11, this Agreement
shall expire and the licenses granted by GTC to SC hereunder shall become fully
paid, on a Product by Product and country by country basis, *
after the First Commercial Sale of the relevant Product in the relevant country
or, if later, upon the last to expire of any Valid Claim included in the
Product Patent Rights with respect to such Product in such country.
11.2. Events of Default.
-----------------
11.2.1. DEFAULT BY EITHER PARTY. An Event of Default shall have
occurred upon (i) the occurrence of a material breach (other than a material
breach described in clause (ii) hereof or in Section 11.2.2 below) if
breaching party fails to remedy such breach within ninety (90) days after
written notice thereof by the non-breaching party, or (ii) the bankruptcy,
insolvency, dissolution or winding up of a party.
11.2.2. Default by SC. An Event of Default shall have occurred if:
-------------
* Confidential information omitted and filed separately with the Commission
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<PAGE> 31
(i) SC fails to make payments due hereunder, sixty (60) days after
GTC delivers written notice thereof to SC specifying such failure and its
claim of right to terminate, unless SC makes such payments plus interest
within such sixty (60) day period;
(ii) SC fails to achieve the milestones set forth in Section 5.1
hereof for each of the Product Categories, or fails to diligently develop
and commercialize the Lead Compounds and Development Candidates selected
by it as required by Section 5.2 hereof, and does not cure such breach
within ninety (90) days after GTC delivers written notice thereof to SC
specifying such failure; or
(iii) SC fails to market each approved Product in each Major
Market Country as required by Section 5.3 hereof and does not cure such
breach within ninety (90) days after GTC delivers written notice thereof
to SC specifying such failure.
11.3. Effect of an Event of Default.
-----------------------------
11.3.1. Remedies Available to GTC.
-------------------------
(a) UPON MATERIAL BREACH. In the event that an Event of Default
described in Section 11.2.1 or Section 11.2.2(i). occurs relating to SC and SC
fails to cure such default during any applicable cure period, GTC shall have
the right, at its option exercisable in its sole discretion, in addition to any
other rights or remedies available to it at law or in equity, to either (i) to
terminate this Agreement upon notice thereof to SC, in which case (A) the
licenses granted to SC pursuant to Article 3 shall terminate, (B) any all
Information and materials provided by GTC pursuant to this Agreement shall be
promptly returned by SC to GTC, (C) SC shall promptly deliver to GTC all
preclinical and clinical data relating to Products owned or controlled by SC
and necessary or useful to the development or commercialization of such
Products, (D) if SC has obtained any regulatory approvals in any country for
the Products, then SC shall, to the extent legally permissible, take all
additional action reasonably necessary to assign all of its right, title and
interest in and transfer possession and control to GTC of such regulatory
approvals, (E) if SC has filed Product Patent Rights in relating to any
Product, then SC shall take all action reasonably necessary to exclusively
license all of its right, title and interest in, and transfer possession and
control to GTC of, such Product Patent Rights, (F) SC will grant GTC licenses on
reasonable and customary terms to be negotiated in good faith by the parties for
any technology or know-how developed by SC or its Third Party manufacturer, if
any, relating to the manufacture of the Products and (G) if SC has marketed the
Products in any country, SC will assign to GTC all of its right, title and
interest in any trademark under which SC shall have marketed the Products in
such country together with the goodwill associated therewith or (ii) (Y)
terminate only Articles 2, 4, 5 and 7, including the Research Collaboration (if
not earlier expired pursuant to Section 11.1 hereof), and Sections 6.1 and 6.3
hereof and (Z) convert the licenses granted by GTC to SC pursuant to Article 3
hereof into non-exclusive licenses.
(b) UPON BREACH OF DEVELOPMENT DUE DILIGENCE OBLIGATIONS. In the
event that an Event of Default described in Section 11.2.2(ii) occurs relating
to either Product
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<PAGE> 32
Category, then GTC shall have the right, at its option exercisable in its sole
discretion, in addition to any other rights or remedies available to it at law
or in equity, to terminate the licenses granted to SC pursuant to Article 3 as
to such Product Category, in which case (A) the licenses granted to SC pursuant
to Article 3 with respect to such Product Category shall terminate, (B) any all
Information and materials provided by GTC pursuant to this Agreement which
pertain solely to such Product Category shall be promptly returned by SC to
GTC, (C) SC shall promptly deliver to GTC all preclinical and clinical data
relating to all Products in such Product Category owned or controlled by SC and
necessary or useful to the development or commercialization of such Products,
(D) if SC has obtained any preliminary or final regulatory approvals in any
country for Products in such Product Category, then SC shall, to the extent
legally permissible, take all additional action reasonably necessary to assign
all of its right, title and interest in and transfer possession and control to
GTC of such regulatory approvals, (E) if SC has filed Product Patent Rights in
relating to any Product in such Product Category, then SC shall take all action
reasonably necessary to exclusively license all of its right, title and
interest in, and transfer possession and control to GTC of, such Product Patent
Rights, (F) SC will grant GTC licenses on reasonable and customary terms to be
negotiated in good faith by the parties for any technology or know-how
developed by SC or its Third Party manufacturer, if any, relating to the
manufacture of the Products in such Product Category and (G) if SC has marketed
any Products in such Product Category in any country, SC will assign to GTC all
of its right, title and interest in any trademark under which SC shall have
marketed such Products in such country together with the goodwill associated
therewith. In the event that an Event of Default described in Section
11.2.2(ii) occurs relating to both Product Categories, then the provisions of
Section 11.3.1(a) shall apply.
(c) UPON BREACH OF MARKETING DUE DILIGENCE OBLIGATIONS. In the
event that an Event of Default described in Section 11.2.2(iii) occurs relating
SC's obligation to market each approved Product in each Major Market Country,
then GTC shall have the right, at its option exercisable in its sole
discretion, in addition to any other rights or remedies available to it at law
or in equity, to terminate the licenses granted to SC pursuant to Article 3 as
to such Product in the Major Market Country with respect to which the Event of
Default occurred, in which case (i) the licenses granted to SC pursuant to
Article 3 shall terminate as to such Product (A) in the Major Market Country
with respect to which the Event of Default occurred and (B) in all other
countries in which SC is not at the time of such termination using diligent
efforts to market such Product (collectively, the "Terminated Countries"), (ii)
if SC has filed Product Patent Rights in any Terminated Country with respect to
such Product, then SC shall, to the extent legally permissible, take all action
reasonably necessary to exclusively license all of its right, title and
interest in, and transfer possession and control to GTC of, such Product Patent
Rights (or an undivided interest therein in such Product Patent Rights also
cover Products as to which SC retains its license rights under this Agreement),
(iii) if SC has obtained any regulatory approvals for such Products in any
Terminated Country, then SC shall, to the extent legally permissible, take all
additional action reasonably necessary to assign all of its right, title and
interest in, and transfer possession and control to GTC of, such regulatory
approvals and (iv) SC will assign to GTC all of its right, title and interest in
any trademark under which SC shall have registered for use with such Product in
such Terminated Country together with the goodwill
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<PAGE> 33
associated therewith. In the event that SC fails to market the Products in all
Major Market Countries pursuant to Section 5.3, then the provisions of Section
11.3.1(a) shall apply.
(d) * . In the event that GTC exercises its
rights under Section 11.3.1 and utilizes the preclinical and clinical data,
regulatory approvals, Product Patent Rights, manufacturing technology or
know-how or trademarks obtained by it to develop and commercialize Products,
either directly or through one or more corporate partners, then *
, and upon the other terms and conditions, *
*
provided, however, that *
*
*
*
11.3.2. REMEDIES AVAILABLE TO SC. In the event that GTC materially
breaches its obligations pursuant to Section 11.2.1, and GTC fails to cure such
breach within the applicable cure period, then SC shall have the right, at its
option exercisable in its sole discretion, to seek any rights or remedies
available to it at law or in equity, subject to the limitations set forth in
Section 9.5 and Section 13.6 hereof.
11.4. * SC. SC may * after the
expiration of * upon * prior written
notice to GTC.
11.5. EFFECT OF EXPIRATION OR TERMINATION OF RESEARCH COLLABORATION.
Upon the expiration or termination of the Research Collaboration, GTC's
obligation to provide updates to the GTC Databases, the GTC Technology and the
GTC Software shall terminate but all licenses to SC to continue to use the GTC
Databases, the GTC Technology and the GTC Software as they exist on the
termination of the Research Collaboration shall continue in full force and
effect for the remaining term of the Agreement.
* Confidential information omitted and filed separately with the Commission
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<PAGE> 34
11.6. EFFECT OF EXPIRATION OR TERMINATION OF AGREEMENT. The
expiration or termination of this Agreement shall not relieve the parties of
any obligation accruing prior to such expiration or termination.
11.6.1. SURVIVAL OF PROVISIONS UPON EXPIRATION. The provisions of
Articles 7, 8, 10 and 11 and Sections 9.4, 9.5, 13.6 and 13.11 hereof shall
survive the expiration of this Agreement.
11.6.2. SURVIVAL OF PROVISIONS UPON TERMINATION. The provisions of
Articles 7, 8, 10 and 11 and Sections 9.4, 9.5, 13.6 and 13.11 hereof shall
survive the termination of this Agreement; provided, however, that GTC shall
have no obligation to maintain the confidentiality of the GTC Databases in the
event that this Agreement is terminated due to breach by SC. The provisions of
Article 6 hereof shall survive the termination of this Agreement until such
time as the Agreement would have expired with respect to any Product in any
country pursuant to Section 11.1.2 hereof had it not been earlier terminated.
ARTICLE 12. PROVISIONS FOR INSOLVENCY
12.1. GENERAL. All rights and licenses granted under or pursuant to
this Agreement by GTC to SC are, for all purposes of Section 365(n) of Title 11
of the U.S. Code ("Title 11"), licenses of rights to intellectual property as
defined in Title 11. GTC agrees during the term of this Agreement to maintain
and preserve any current copies of all such intellectual property which are in
existence and in its possession as of the commencement of a case under Title 11
by or against GTC. If a case is commenced by or against GTC under Title 11,
then, unless and until this Agreement is rejected as provided in Title 11, GTC
(in any capacity, including debtor-in-possession) and its successors and
assigns (including, without limitation, a Title 11 Trustee) shall, as SC may
elect in a written request, immediately upon such request (A) (i) perform all
of the obligations provided in this Agreement to be performed by GTC, or (ii)
provide to SC copies of all such intellectual property (including all
embodiments thereof) held by GTC and such successors and assigns as of the
commencement of a case under Title 11 by or against GTC and from time to time
thereafter, and (B) not interfere with the rights of SC as provided in this
Agreement, or any agreement supplementary hereto, to such intellectual property
(including all such embodiments thereof), including any right of SC to obtain
such intellectual property (or such embodiment) from any other entity.
12.2. REJECTION OF AGREEMENT IN TITLE 11. If a Title 11 case is
commenced by or against GTC and this Agreement is rejected as provided in Title
11 and SC elects to retain its rights hereunder as provided in Title 11, then
GTC (in any capacity, including debtor-in-possession) and its successors and
assigns (including, without limitation, a Title 11 Trustee shall provide to SC
copies of all such intellectual property (including all embodiments thereof)
held by GTC and such successors and assigns immediately upon SC's written
request therefor. Whenever GTC or any of its successors or assigns provides
to SC any of the intellectual property licensed hereunder (or any embodiment
thereof) pursuant to this Article 12, SC shall have the right to perform the
obligations of GTC hereunder with respect
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<PAGE> 35
to such intellectual property, but neither such provision nor such performance
by SC shall release GTC from any such obligation or liability for failing to
perform it; provided, however, that in such event SC shall not be entitled to
compel specific performance by GTC under this Agreement except to the extent of
enforcing the exclusivity of the license granted hereunder.
12.3. ADDITIONAL RIGHTS. All rights, powers, remedies, obligations
and conditions of SC provided herein are in addition to and not in substitution
for any and all other rights, powers, remedies, obligations and conditions of
GTC or SC now or hereafter existing at law or in equity (including, without
limitation, Title 11) in the event of the commencement of a Title 11 case by or
against GTC. SC, in addition to the rights, power and remedies expressly
provided herein, shall be subject to all obligations and conditions, and shall
be entitled to exercise all other such rights and powers and resort to all
other such remedies as may now or hereafter exist at law or in equity
(including, without limitation, Title 11) in such event. The parties agree
that they intend the foregoing rights and obligations of SC to apply to the
maximum extent permitted by law, including without limitation for purposes of
Title 11, (i) the right of access to any intellectual property (including all
embodiments thereof) of GTC, or any third party with whom GTC contracts to
perform an obligation of GTC under this Agreement, and in, the case of the
third party, which is necessary for the development, registration and
manufacture of a Product, and (ii) the right to contract directly with any
third party described in clause (i) in this sentence to complete the contracted
work.
ARTICLE 13. MISCELLANEOUS
13.1. FORCE MAJEURE. Neither party shall be held liable or
responsible to the other party nor be deemed to have defaulted under or
breached this Agreement for failure or delay in fulfilling or performing any
term of this Agreement when such failure or delay is caused by or results from
causes beyond the reasonable control of the affected party, including but not
limited to fire, floods, embargoes, war, acts of war (whether war is declared
or not), insurrections, riots, civil commotions, strikes, lockouts or other
labor disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party; provided, however, that the party so
affected shall use reasonable commercial efforts to avoid or remove such causes
of nonperformance, and shall continue performance hereunder with reasonable
dispatch whenever such causes are removed. Either party shall provide the
other party with prompt written notice of any delay or failure to perform that
occurs by reason of force majeure. The parties shall mutually seek a
resolution of the delay or the failure to perform as noted above.
13.2. ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by either party without the consent of the other party; provided,
however, that either GTC or SC may, without such consent, assign its rights and
obligations under this Agreement (i) to any Affiliate, all or substantially all
of the equity interest of which is owned and controlled by such party or its
direct or indirect parent corporation, or (ii) in connection with a merger,
consolidation or sale of substantially all of such party's assets to an
unrelated Third Party; provided, however, that such party's rights and
obligations under this Agreement shall be assumed by its successor in interest
in any such transaction and shall not be transferred
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<PAGE> 36
separate from all or substantially all of its other business assets, including
those business assets that are the subject of this Agreement. Any purported
assignment in violation of the preceding sentence shall be void. Any permitted
assignee shall assume all obligations of its assignor under this Agreement.
13.3. SEVERABILITY. Each party hereby agrees that it does not intend
to violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more
provisions of this Agreement be or become invalid, the parties hereto shall
substitute, by mutual consent, valid provisions for such invalid provisions
which valid provisions in their economic effect are sufficiently similar to the
invalid provisions that it can be reasonably assumed that the parties would
have entered into this Agreement with such valid provisions. In case such
valid provisions cannot be agreed upon, the invalidity of one or several
provisions of this Agreement shall not affect the validity of this Agreement as
a whole, unless the invalid provisions are of such essential importance to this
Agreement that it is to be reasonably assumed that the parties would not have
entered into this Agreement without the invalid provisions.
<TABLE>
13.4. NOTICES. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by telephone, personal delivery or courier) or courier, postage
prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and shall be effective upon receipt by
the addressee.
<S> <C>
If to GTC: Genome Therapeutics Corporation
100 Beaver Street
Waltham, Massachusetts 02154
Attention: Vice President, Business Development
Telephone: 1-617-893-5007
FAX: 1-617-893-8277
with a copy to: Palmer & Dodge
One Beacon Street
Boston, Massachusetts 02108
Attention: Peter Wirth, Esq.
Telephone: 1-617-573-0100
FAX: 1-617-227-4420
If to SC: Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attention: Vice President, Business Development
Telephone: 1-908-298-4030
FAX: 1-908-298-5379
</TABLE>
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<PAGE> 37
<TABLE>
<S> <C>
with a copy to: Legal Director Licensing
Schering Corporation
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attention: Georgina K. Wertman, Esq.
Telephone: 1-908-298-4768
FAX: 1-908-298-2927
</TABLE>
13.5. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
without giving effect to the choice of laws provisions thereof.
13.6. Dispute Resolution.
------------------
13.6.1. The parties hereby agree that they will attempt in good
faith to resolve any controversy or claim arising out of or relating to this
Agreement promptly by negotiations. If a controversy or claim should arise
hereunder, the members of the Joint Research Committee or the Joint Patent
Committee, as applicable, will confer at least once and will attempt to resolve
the matter. If any such matter arises under Section 4.6 or Section 4.7 hereof
and has not been resolved within thirty (30) days, the matter shall be referred
to the Senior Vice President of Research and Development (or the equivalent
position) of GTC and the President of the Schering-Plough Research Institute
(or the equivalent position) of SC (the "Representatives"). If the matter has
not been resolved within thirty (30) days by the Representatives, or if the
matter arises under other provisions of this Agreement, then the matter shall
be referred to the Chief Executive Officers of GTC and SC or their respective
designees. If the matter has not been resolved within thirty (30) days of the
first meeting of the Chief Executive Officers of the parties (which period may
be extended by mutual agreement) concerning such matter, subject to rights to
injunctive relief and specific performance, and unless otherwise specifically
provided for herein, any controversy or claim arising out of or relating to
this Agreement, or the breach thereof, will be settled as set forth in Section
13.6.2.
13.6.2. All disputes arising in connection with this Agreement shall
be finally settled under the Commercial Arbitration Rules of the American
Arbitration Association by a single arbitrator appointed in accordance with
said Rules. The place of arbitration shall be Boston, Massachusetts if
arbitration is requested by SC and Newark, New Jersey if arbitration is
requested by GTC. Notwithstanding the above, either party has the right to
bring suit in a court of competent jurisdiction against the other party for (i)
any breach of such other party's duties of confidentiality pursuant to Article
8 of this Agreement and (ii) any infringement of its own proprietary rights by
the other party. Judgment upon the arbitrator's award may be entered in any
court of competent jurisdiction. The award of the arbitrator may include
compensatory damages against either party, but under no circumstances will the
arbitrator be authorized to, nor shall he, award punitive damages or multiple
damages against either party. The parties agree not to institute any
litigation or proceedings against each other in connection with this Agreement
except as provided in this Section 13.6.1.
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<PAGE> 38
13.7. ENTIRE AGREEMENT. This Agreement, together with the exhibits
hereto, contains the entire understanding of the parties with respect to the
subject matter hereof. All express or implied agreements and understandings,
either oral or written, heretofore made are expressly merged in and made a part
of this Agreement. This Agreement may be amended, or any term hereof modified,
only by a written instrument duly executed by both parties hereto.
13.8. PUBLICITY. GTC and SC each agree not to disclose any terms or
conditions of this Agreement to any Third Party without consulting the other
party prior to such disclosure. Notwithstanding the foregoing, prior to
execution of this Agreement, GTC and SC shall agree upon the substance of
information that can be used as a routine reference in the usual course of
business to describe the terms of this transaction, and GTC and SC may disclose
such information, as modified by mutual agreement from time to time, without
consulting the other party.
13.9. HEADINGS. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.
13.10. INDEPENDENT CONTRACTORS. It is expressly agreed that GTC and SC
shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither
GTC nor SC shall have the authority to make any statements, representations or
commitments of any kind, or to take any action, which shall be binding on the
other, without the prior consent of the other party to do so.
13.11. AGREEMENT NOT TO SOLICIT EMPLOYEES. During the term of this
Agreement and for a period of * years following the expiration or
termination of this Agreement pursuant to Article 11, GTC and SC agree not to
seek to persuade or induce any employee of the other company to discontinue his
or her employment with that company in order to become employed by or
associated with any business, enterprise or effort that is associated with its
own business *
*
*
*
13.12. EXPORTS. The parties acknowledge that the export of technical
data, materials or products is subject to the exporting party receiving any
necessary export licenses and that the parties cannot be responsible for any
delays attributable to export controls which are beyond the reasonable control
of either party. GTC and SC agree not to export or re-export, directly or
indirectly, any information, technical data, the direct product of such data,
samples or equipment received or generated under this Agreement in violation of
any applicable export control laws or governmental regulations. GTC and SC
agree to obtain similar covenants from their licensees, sublicensees and
contractors with respect to the subject matter of this Section.
13.13. WAIVER. The waiver by either party hereto of any right hereunder
or the failure to perform or of a breach by the other party shall not be deemed
a waiver of any
* Confidential information omitted and filed separately with the Commission
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<PAGE> 39
other right hereunder or of any other breach or failure by said other party
whether of a similar nature or otherwise.
13.14. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused their duly authorized officer
to execute and deliver this Agreement as of the date first set forth above.
GENOME THERAPEUTICS CORPORATION
By: /s/ Robert J. Hennessey
---------------------------------------
Robert J. Hennessey
Title: Chairman & CEO
------------------------------------
SCHERING CORPORATION
By: /s/ David Poorvin
---------------------------------------
David Poorvin
LEGAL REVIEW
Title: Vice President /s/ GKW
------------------------------------
SCHERING-PLOUGH LTD.
By: /s/ David Poorvin
---------------------------------------
David Poorvin
Title: Prokurist
------------------------------------
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<PAGE> 40
EXHIBIT A1
RESEARCH PLAN FOR 1996
*
* Confidential information omitted and filed separately with the Commission
<PAGE> 41
*
* Confidential information omitted and filed separately with the Commission
- 2 -
<PAGE> 42
EXHIBIT A2
Genome Therapeutics Corporation Research Plan
1996
*
* Confidential information omitted and filed separately with the Commission
<PAGE> 43
EXHIBIT B
<TABLE>
<CAPTION>
BENCHMARKS FOR * MILESTONE PAYMENTS
<S> <C>
1. *
*
2. *
*
*
3. *
*
*
*
*
4. *
*
*
*
5. *
*
*
</TABLE>
* Confidential information omitted and filed separately with the Commission
<PAGE> 44
EXHIBIT C
MATERIAL TRANSFER AGREEMENT
---------------------------
This MATERIAL TRANSFER AGREEMENT, including the attached Schedules,
(collectively the "Agreement") is entered into as of the last date on the
signature page hereof (the "Effective Date") by and between the Schering-Plough
Research Institute, a Delaware corporation with its office and place of
business at 2015 Galloping Hill Road, Kenilworth, New Jersey 07033, (the
"SUPPLIER"), and the organization identified on the signature page (the
"RECIPIENT").
1. BACKGROUND. SUPPLIER has developed and produced certain
Material (as defined below). RECIPIENT is conducting certain
non-commercial Research (as defined below). RECIPIENT desires to obtain
samples of the Material for use in conjunction with said Research.
SUPPLIER is willing to provide the Material to RECIPIENT on the terms and
conditions set forth in this Agreement.
2. Definitions.
-----------
2.1 "CONFIDENTIAL INFORMATION" includes, without limitation any
scientific, technical, trade or business information given to one
party (the "Receiving Party") by the other party (the "Disclosing
Party") which is treated by the Disclosing Party as confidential or
proprietary, whether or not such information is labeled or identified
as "confidential."
Confidential Information does not include information:
(a) in or entering the public domain (through no fault of Receiving
party), or
(b) which is lawfully made available to Receiving Party by an independent
third party owing no obligation of confidentiality to Disclosing
Party with regard thereto (and such lawful right can be properly
demonstrated by Receiving Party), or
(c) already in Receiving Party's possession at the time of receipt from
Disclosing Party (and such prior possession can be properly
demonstrated by Receiving Party), or
(d) which is independently developed by employees of Receiving Party (and
such independent development can be properly demonstrated by
Receiving Party), or
(e) which is required by law, regulation, statute, rule, act or order of
any governmental authority or agency to be disclosed by Receiving
Party.
To permit Disclosing Party an opportunity to intervene, in order to
obtain a protective order or other similar order to limit or prevent
disclosures of Confidential Information, Receiving Party shall
immediately notify Disclosing Party, in writing, if it is requested
by a court order, a governmental agency, or any other entity to
disclose Confidential Information in Receiving Party's possession and
thereafter Receiving Party shall disclose only the minimum
<PAGE> 45
Confidential Information required to be disclosed in order to comply,
whether or not a protective order or other similar order is obtained
by Disclosing Party.
2.2 "DEVELOPMENTS" include, without limitation, ideas, concepts,
discoveries, inventions, developments, know- how, trade secrets,
techniques, methodologies, modifications, innovations, improvements,
writings, documentation, data and rights (whether or not protectable
under state, federal, or foreign patent, trademark, copyright or
similar laws) that incorporate the Material, or that could not have
been developed without the use of the Material, or that require the
use of the Material, that are discovered, developed, created,
conceived or reduced to practice by the RECIPIENT, alone or jointly
with others, during the term of this Agreement. Developments
include, without limitation, New Substances and New Uses.
2.3 "MATERIAL" means the material to be transferred from SUPPLIER to
RECIPIENT, as described in Schedule A attached to this Agreement,
together with any refills of the Material and any progeny and
unmodified derivatives of the Material (including, without
limitation, expression products, subclones, sub-units or
fractionations).
2.4 "NEW SUBSTANCE" means any material first produced or isolated with or
by use of the Material.
2.5 "NEW USE" means any new use of the Material, including, without
limitation, new therapeutic uses or methods of treatment.
2.6 "RESEARCH" means RECIPIENT's noncommercial research, as described in
Schedule B attached to this Agreement.
2.7 "PROGENY" means an unmodified descent generated from the Material,
such as virus from virus, cell from cell, or organism from organism.
2.8 "UNMODIFIED DERIVATIVE" means substances created by the RECIPIENT
which constitute an unmodified functional subunit or product
expressed by or generated from the original Material, including, but
not limited to, subclones of unmodified cell lines, purified or
fractionated subsets of the original Material, proteins expressed by
DNA/RNA supplied by SUPPLIER, or monoclonal antibodies secreted by a
hybridoma cell line.
2.9 "MODIFICATIONS" means substances created by the RECIPIENT which
contain or incorporate the Material.
2.10 "COMMERCIAL PURPOSE" means the sale, lease, license, or other
transfer of the Material or Modifications to a for-profit
organization. Commercial Purposes shall also include uses of the
Material or Modifications by any organization, including RECIPIENT,
to perform contract research, to screen compound
- 2 -
<PAGE> 46
libraries, to produce or manufacture products for general sale, or to
conduct research activities that result in any sale, lease, license,
or transfer of the Material or Modifications to a for-profit
organization. However, industrially sponsored academic research
shall not be considered a use of the Material or Modifications for
Commercial Purposes per se, unless any of the above conditions of
this definition are met.
3. USE OF MATERIAL. RECIPIENT certifies and attests that it
will use the Material only in connection with its Research as described in
Schedule B, and that the Material will not be used for any other purpose
or for any Commercial Purpose. RECIPIENT further attests that no quantity
of the Materials will be distributed to any third party without the prior
written permission of SUPPLIER.
4. Acknowledgment.
--------------
4.1 RECIPIENT acknowledges that the Material is experimental in nature
and may have hazardous properties. RECIPIENT agrees to comply with
all laws and regulations applicable to its handling.
4.2 RECIPIENT acknowledges and agrees that the Material is or may be the
subject of a patent or patent application. Except as expressly
provided in this Agreement, no licenses or other rights, either
expressed or implied, are provided to the RECIPIENT under any
patents, patent applications, trade secrets or other proprietary
rights of the SUPPLIER. In particular, no express or implied
licenses or other rights are provided to use the Material,
Modifications, Developments, or any related patent or patent
applications of SUPPLIER for any Commercial Purposes.
5. NO WARRANTY. THE MATERIAL IS PROVIDED BY SUPPLIER TO RECIPIENT WITHOUT
ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND SUPPLIER MAKES NO
REPRESENTATION THAT RECIPIENT'S USE OF THE MATERIAL WILL NOT INFRINGE ANY
PATENT OR OTHER PROPRIETARY RIGHTS OF ANY THIRD PARTY. THE MATERIAL IS
PROVIDED TO RECIPIENT WITH THE UNDERSTANDING THAT SUPPLIER AND ITS AGENTS,
EMPLOYEES AND AFFILIATES, HAVE NO LIABILITY WHATSOEVER IN CONNECTION WITH
SUCH MATERIAL OR ITS USE.
6. INDEMNIFICATION. Except to the extent prohibited by law,
RECIPIENT assumes all liability for damages which may arise from its use,
storage or disposal of the Material. To the extent allowable under
applicable law, RECIPIENT agrees to indemnify and hold SUPPLIER harmless
from any claims and liabilities which might arise from RECIPIENT's use of
the Material, except for those arising from the gross negligence or
willful misconduct of SUPPLIER.
- 3 -
<PAGE> 47
7. Ownership and Grant of Rights.
-----------------------------
7.1 MATERIAL. SUPPLIER has developed the Material over a substantial
period of time at considerable expense, and the Material is of great
importance to SUPPLIER's business. RECIPIENT acknowledges that
SUPPLIER is and will at all times remain the owner of the Material.
7.2 OWNERSHIP OF DEVELOPMENTS. RECIPIENT acknowledges and agrees that
all rights, title and interest in and to any and all Developments
resulting from RECIPIENT's use of the Materials provided hereunder
will belong solely to SUPPLIER, and RECIPIENT will take all steps
necessary to enable SUPPLIER to perfect its rights to all such
Developments.
7.3 DISCLOSURE OF DEVELOPMENTS. RECIPIENT will promptly and fully
disclose in writing to SUPPLIER any and all Developments. RECIPIENT
will keep complete and accurate written records of its Research. At
SUPPLIER's request, RECIPIENT will meet with SUPPLIER to discuss the
Research. In addition, RECIPIENT will provide SUPPLIER with periodic
written summaries of its Research. RECIPIENT acknowledges and agrees
that data transmitted to SUPPLIER cannot be considered as
confidential.
7.4 PATENT APPLICATIONS. Any patent applications considered necessary in
the reasonable legal and business judgment of SUPPLIER to protect
SUPPLIER's proprietary position in any Developments will be prepared
and filed by SUPPLIER (jointly in SUPPLIER's and RECIPIENT's names,
if jointly invented; solely in SUPPLIER's or RECIPIENT's name, if
solely invented) with the expenses of these patent applications being
born by SUPPLIER. At SUPPLIER's request and expense, RECIPIENT will
cause its interest in any Developments to be assigned to SUPPLIER and
will provide SUPPLIER with reasonable assistance in preparing such
applications, including causing the execution of any assignments or
other documents.
8. Confidentiality
---------------
8.1 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Except as provided in
Section 9 below, neither party will directly or indirectly publish,
disseminate or otherwise disclose, deliver or make available to any
third party any of the other party's Confidential Information other
than in furtherance of this Agreement.
8.2 PROTECTION. RECIPIENT will exercise all commercially reasonable
precautions to protect the integrity and confidentiality of the
Material. RECIPIENT will not remove the Material from RECIPIENT's
premises except to the extent necessary to fulfill its obligations
under this Agreement, and then only with the prior written consent of
SUPPLIER.
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<PAGE> 48
9. Publication.
-----------
9.1 RIGHT TO PUBLISH; REVIEW BY SUPPLIER. Notwithstanding RECIPIENT's
confidentiality obligations under Section 8 above, RECIPIENT will
have the right to publish and disclose the final results of the
Research. In order to balance this right with SUPPLIER's proprietary
interests, RECIPIENT will submit for SUPPLIER's review all
manuscripts, abstracts or presentations intended for publication or
other public disclosure ("Publications") at least sixty (60) days
prior to the date of submission for publication or public disclosure.
SUPPLIER will use reasonable efforts to complete its review promptly
and will complete its review within sixty (60) days of receipt of the
Publications. No Publication shall contain any Confidential
Information of SUPPLIER. At SUPPLIER's request RECIPIENT shall
delete from its Publications any references deemed by SUPPLIER to be
Confidential Information. At the end of this sixty (60) day period,
RECIPIENT will have the right to publish the Publications, as amended
by SUPPLIER and subject to SUPPLIER's rights under Section 9.2 below.
9.2 OPPORTUNITY TO FILE PATENT APPLICATIONS. If during its sixty (60)
day Publication review period SUPPLIER notifies RECIPIENT that it
desires patent applications to be filed on any developments disclosed
or contained in the Publications, RECIPIENT will defer publication or
other disclosure for a period sufficient to permit SUPPLIER to file
any such patent applications, such period not to exceed ninety (90)
days from the date of submission of the Publication to SUPPLER.
10. TERMINATION.
-----------
10.1 This Agreement will terminate upon completion of the RECIPIENT's
current Research as defined in Section 2.6.
10.2 TERMINATION FOR CAUSE. Either party may terminate this Agreement for
cause at any time upon thirty (30) days prior written notice to the
other party. "Cause" means a material breach of this Agreement by
the other party where such breach, if curable, is not remedied to the
nonbreaching party's satisfaction within such thirty (30) day period.
10.3 TERMINATION BY EITHER PARTY WITHOUT CAUSE. Either party may
terminate this Agreement at any time without cause upon not less than
sixty (60) days prior written notice to the other party.
10.4 EFFECT OF TERMINATION OR EXPIRATION. Upon termination or expiration
of this Agreement for any reason RECIPIENT shall immediately return
to SUPPLIER all its Confidential Information and copies thereof, and
shall return, or at SUPPLIER's direction to destroy, any and all
unused Material, and if instructed to destroy such Material will
provide evidence documenting the manner of destruction to SUPPLIER.
All of RECIPIENT's rights to use the
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<PAGE> 49
Material shall cease. Following termination or expiration, neither
party shall have any further obligations under this Agreement, except
that Sections 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 and 16 hall
survive and remain in force.
11. NOTICE. All communications and notices from one party to
the other will be in writing and will be given by addressing the same to
the other party at the address or facsimile number set forth in this
Agreement, or at such other address or facsimile number as either party
may specify in writing to the other. All notices will become effective
when deposited in the United States Mail with proper postage for first
class registered or certified mail prepaid, return receipt requested, or
when delivered personally, or, if promptly confirmed by mail as above,
when dispatched by facsimile.
12. ASSIGNMENT. This Agreement, and the rights and obligations
hereunder, may not be assigned or transferred by either party without the
prior written consent of the other party, except that SUPPLIER may assign
this Agreement to an affiliated company or in connection with the merger,
consolidation or sale of all or substantially all of its assets.
13. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties with regard to its subject matter, and supersedes
all previous written or oral representations, agreements and
understandings between SUPPLIER and RECIPIENT.
14. NO MODIFICATION. This Agreement may be changed only by a
writing signed by both parties.
15. SEVERABILITY. In the event that any one or more of the
provisions in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Agreement,
and all other provisions shall remain in full force and effect. If any of
the provisions of this Agreement is held to be excessively broad, it shall
be reformed and construed by limiting and reducing it so as to be
enforceable to the maximum extent permitted by law.
16. APPLICABLE LAW. This Agreement will in all events and for
all purposes by governed by, and construed in accordance with the law of
the State of New Jersey without regard to any choice of law principles
that would dictate the application of the law of another jurisdiction.
17. Miscellaneous Provisions.
------------------------
17.1 RECIPIENT acknowledges and agrees that receipt of the Materials from
SUPPLIER does not create or imply a particular relationship between
SUPPLIER and RECIPIENT, and further agrees that RECIPIENT is acting
independently of SUPPLIER and not as an affiliate, employee, agent,
or joint venturer of or with SUPPLIER. RECIPIENT shall have no
authority to represent, bind or act on behalf of SUPPLIER.
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<PAGE> 50
17.2 In accordance with the requirements of the Federal Food, Drug and
Cosmetic Act and with Drug Enforcement Agency ("DEA") regulations,
where applicable, RECIPIENT certifies that it is regularly engaged in
conducting laboratory studies or animal tests and that all shipments
of Materials received pursuant hereto will be actually used by
RECIPIENT or under RECIPIENT's direction for tests in vitro and in
animals used only for laboratory research and will not be used in
tests involving administration of the Materials in humans. RECIPIENT
understands that the Materials are not to be used for in vitro use in
the regular course of treating or diagnosing disease in humans.
RECIPIENT also certifies that no animals used in such tests, or their
products, shall be used for food purposes without the prior approval
of the Food and Drug Administration. RECIPIENT further certifies and
attests that RECIPIENT's handling and use of the Materials will be
done in accordance with all provisions and requirements of the
Federal Food, Drug and Cosmetic Act and with DEA regulations, where
applicable.
17.3 RECIPIENT certifies that it will not use the services of any
individual who has been debarred under the Federal Food, Drug and
Cosmetic Act in the course of the Research with the Materials.
IN WITNESS WHEREOF, duly-authorized representatives of the parties have
signed this Agreement as a document under seal as of the Effective Date.
SUPPLIER RECIPIENT:
By: By:
Name: Name:
Title: Title:
Address:
Agreed and Acknowledged:
By:
Name:
Principal Investigator
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