<PAGE> 1
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-------------------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------ -------------
Commission file number 0-15190
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ONCOGENE SCIENCE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3159796
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
106 Charles Lindbergh Blvd., Uniondale, New York 11553
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
516-222-0023
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(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
At May 9, 1996 the registrant had outstanding 21,482,353 shares of common stock
.$01 par value.
<PAGE> 2
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I - FINANCIAL INFORMATION - UNAUDITED
Consolidated Balance Sheets - March 31, 1996
and September 30, 1995 3
Consolidated Statements of Operations
- Three months ended March 31, 1996 and 1995 4
Consolidated Statements of Operations
- Six months ended March 31, 1996 and 1995 5
Consolidated Statements of Cash Flows
- Six months ended March 31, 1996 and 1995 6, 7
Notes to Consolidated Financial Statements 8, 9
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10, 11
PART II - OTHER INFORMATION 12-15
SIGNATURES 16
</TABLE>
* * * *
<PAGE> 3
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 28,765,848 $ 17,919,609
Short-term investments 20,013,287 8,866,957
Receivables, including
trade receivables of $62,363 and
$163,132 at March 31, 1996 and
September 30, 1995, respectively 3,129,056 1,320,015
Interest receivable 231,765 45,263
Grants receivable 216,039 433,530
Prepaid expenses and other 686,465 518,150
------------ ------------
Total current assets 53,042,460 29,103,524
Property, equipment and leasehold
improvements - net 5,429,752 5,709,515
Other receivables 594,815 262,703
Loans to officers and employees 25,343 25,516
Other assets 380,751 325,582
Intangible assets, net 7,904,203 8,630,581
------------ ------------
$ 67,377,324 $ 44,057,421
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 1,787,957 $ 2,825,702
Current portion of unearned revenue 91,539 150,041
------------ ------------
Total current liabilities 1,879,496 2,975,743
Other liabilities:
Long-term portion of unearned revenue 137,178 165,839
Accrued post-retirement benefit cost 434,018 366,203
------------ ------------
Total liabilities 2,450,692 3,507,785
------------ ------------
Stockholders' equity:
Common stock, $.01 par value;
50,000,000 shares authorized,
21,091,971 and 17,683,047 shares
issued at March 31, 1996 and
September 30, 1995, respectively 210,920 176,830
Additional paid-in capital 95,020,176 66,735,375
Accumulated deficit (29,893,685) (26,129,341)
Cumulative foreign currency
translation adjustment (40,220) (55,669)
Unrealized holding loss on
short-term investments (228,000) (35,000)
------------ ------------
65,069,191 40,692,195
Less: treasury stock, at cost,
222,521 shares at March 31, 1996
and September 30, 1995 (142,559) (142,559)
------------ ------------
Total stockholders' equity 64,926,632 40,549,636
------------ ------------
Commitments and contingencies $ 67,377,324 $ 44,057,421
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------
Revenues: 1996 1995
------------ ------------
<S> <C> <C>
Collaborative program revenues,
principally from related parties $ 2,298,649 $ 2,461,403
Sales 31,525 1,283,899
Other research revenue 216,039 523,780
------------ ------------
2,546,213 4,269,082
------------ ------------
Expenses:
Research and development 3,231,892 3,348,571
Production 41,525 393,974
Selling, general and administrative 1,320,014 1,826,436
Amortization of intangibles 363,188 436,507
------------ ------------
4,956,619 6,005,488
------------ ------------
Loss from operations (2,410,406) (1,736,406)
Other income:
Net investment income 390,540 221,219
Other 26,116 46,419
------------ ------------
Net loss $ (1,993,750) $ (1,468,768)
============ ============
Weighted average number of shares
of common stock outstanding 18,016,251 16,343,241
============ ============
Net loss per weighted share of
common stock outstanding $ (.11) $ (.09)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
--------------------------------
Revenues: 1996 1995
------------ ------------
<S> <C> <C>
Collaborative program revenues,
principally from related parties $ 4,286,107 $ 4,779,777
Sales 60,567 2,597,588
Other research revenue 475,787 1,099,698
------------ ------------
4,822,461 8,477,063
------------ ------------
Expenses:
Research and development 5,915,154 6,425,536
Production 63,388 799,252
Selling, general and administrative 2,651,553 3,700,865
Amortization of intangibles 726,377 872,841
------------ ------------
9,356,472 11,798,494
------------ ------------
Loss from operations (4,534,011) (3,321,431)
Other income:
Net investment income 755,065 441,891
Other 14,602 19,785
------------ ------------
Net loss $ (3,764,344) (2,859,755)
============ ============
Weighted average number of shares
of common stock outstanding 17,745,190 16,342,919
============ ============
Net loss per weighted share of
common stock outstanding $ (.21) $ (.18)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,764,344) $(2,859,755)
Adjustments to reconcile net loss
to net cash used by operating activities:
Gain on sale of investments (61,276) --
Depreciation and amortization 665,312 650,187
Amortization of intangibles 726,377 872,841
Foreign exchange (gain) loss 15,449 (44,034)
Changes in assets and liabilities:
Receivables (1,809,041) 21,980
Inventory -- 152,902
Interest receivable (186,502) (140,721)
Grants receivable 217,491 160,686
Prepaid expenses and other (168,315) 122,164
Other receivables (332,112) 168,460
Other assets (55,169) (3,430)
Accounts payable
and accrued expenses (1,037,745) (680,103)
Unearned revenue (87,163) 397,935
Accrued postretirement
benefit cost 67,815 69,378
----------- -----------
Net cash used by
operating activities $(5,809,223) $(1,111,510)
----------- -----------
</TABLE>
Continued
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from investing activities:
Additions to short-term
investments $(22,564,209) $ (499,688)
Maturities and sales of short-term
investments 11,286,155 3,441,932
Additions to property,
equipment and leasehold
improvements (385,548) (539,668)
Net change in loans to officers
and employees 173 10,400
Other -- (13,306)
------------ ------------
Net cash provided by (used in)
investing activities (11,663,429) 2,399,670
------------ ------------
Cash flows from financing activities:
Net proceeds from issuance
of common stock 27,995,708 --
Proceeds from exercise
of stock options and
employee stock purchase plan 323,183 3,622
------------ ------------
Net cash provided by
financing activities 28,318,891 3,622
Net increase in cash
and cash equivalents 10,846,239 1,291,782
Cash and cash equivalents at
beginning of period 17,919,609 322,308
------------ ------------
Cash and cash equivalents
at end of period $ 28,765,848 $ 1,614,090
============ ============
</TABLE>
7
<PAGE> 8
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Opinion of Management
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the Company's financial position as of
March 31, 1996 and September 30, 1995, its results of operations for the three
and six months ended March 31, 1996 and 1995 and its cash flows for the six
months ended March 31, 1996 and 1995. Certain reclassifications have been made
to the prior period financial statements to conform them to the current
presentation.
It is recommended that these consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto in the
Company's 1995 Annual Report on Form 10-K.
Results for interim periods are not necessarily indicative of results for the
entire year.
Net loss per share of common stock outstanding is based on the weighted average
number of shares outstanding. Common share equivalents (stock options) are not
included in the computation for the three months and six months ended March 31,
1996 and 1995 since their inclusion would be anti-dilutive.
(2) Stock Offering
In March 1996, the Company completed a public offering for 2,825,000 shares of
common stock. The sale price was $9.125 per share. Concurrent with the public
offering, the Company sold 500,000 shares at $9.125 per share directly to
BioChem Pharma, Inc. The proceeds to the Company from these sales, net of
underwriting commissions and other costs, was approximately $28.0 million. The
net proceeds were added to the Company's general funds and are to be used for
research and development expenses, including funds for enhancing the Company's
drug discovery technologies, and for general corporate purposes. In April 1996,
the Company's underwriter exercised its option to purchase an additional 293,750
shares of common stock at $9.125 per share to cover over-allotments. The
additional net proceeds to the Company from this sale was approximately $2.5
million.
(3) Subsequent Events
Effective April 1, 1996, the Company and Pfizer Inc. ("Pfizer") renewed their
ten-year-old collaboration for a new five-year term by entering into new
Collaborative Research and License Agreements. Under these documents, all patent
rights and patentable inventions derived from the research under this
collaboration are owned jointly by the Company and Pfizer. Under the
collaborative research agreement, Pfizer has committed to provide research
funding to the Company in an aggregate amount of approximately $18.8 million.
Pursuant to a schedule set forth in the collaborative research agreement, Pfizer
will make maximum annual research funding payments to the company, which will
gradually increase from approximately $3.5 million in the first year of the
five-year term to approximately $4 million in the fifth year. The collaborative
research agreement will expire on April 1, 2001. However, it may be terminated
earlier by either party upon the occurrence of certain defaults by the other
party. Any termination of the collaboration resulting
8
<PAGE> 9
from a Pfizer default will cause a termination of Pfizer's license rights.
Pfizer will retain its license rights if it terminates the agreement in response
to a default by the Company. In addition, between July 1 and September 30, 1998,
Pfizer may terminate the collaborative research agreement, with or without
cause, effective March 31, 1999. Furthermore, between July 1 and September 30,
1999, Pfizer may termiinate the collaborative research agreement, with or
without cause, effective March 31, 2000. Upon such early termination by Pfizer,
Pfizer will retain its license rights. The Company has granted Pfizer an
exclusive, worldwide license to make, use, and sell the therapeutic products
resulting from this collaboration in exchange for royalty payments. This license
terminates on the date of the last to expire of the Company's relevant patent
rights.
On April 11, 1996, the Company acquired MYCOsearch, Inc., a privately owned
North Carolina corporation ("MYCOsearch"), in a transaction in which MYCOsearch
was merged into a newly formed subsidiary (the "Subsidiary") of the Company
pursuant to an Agreement and Plan of Merger dated April 11, 1996 among the
Company, MYCOsearch Acquisition Corp., MYCOsearch and the shareholders of
MYCOsearch (the "Merger"). The Subsidiary was the surviving corporation in the
Merger, and in connection therewith, its name was changed to MYCOsearch, Inc.
The purchase price paid by the Company to the shareholders of MYCOsearch
consisted of $1.75 million in cash, $2.95 million in common stock of the Company
(316,553 shares at $9.319 per share, plus cash for fractional shares) and
warrants to purchase 100,000 shares of the Company's common stock at $9.319 per
share (the "Warrants"). The Warrants, which will be exercisable for a three-year
period starting on April 11, 1998, were valued at approximately $483,000. In
connection with the Merger, two principals of MYCOsearch became employed by the
Company as its Vice President, Microbial Discovery, Pharmaceutical Division and
Director, Fermentation Biology. MYCOsearch specializes in the collection of
fungi cultures and the development of extracts derived therefrom. These fungal
extracts contain natural chemical structures that the Company tests against
target proteins in its high throughput drug screens.
Effective as of May 1, 1996, the Company entered into a Collaborative Research,
Development and Commercialization Agreement with BioChem Pharma (International)
Inc. ("BioChem Pharma"). Under this agreement, the parties will seek to discover
and develop antiviral drugs for the treatment of Hepatitis C virus and for
HIV, although the focus of the collaborative efforts may change at the
discretion of a joint steering committee. This agreement provides that the
Company and BioChem Pharma will jointly commit resources to the collaborative
program. The Company and BioChem Pharma will share equally the
commercialization rights in the U.S. and Europe for any product resulting from
the collaboration. BioChem Pharma will exclusively own commercialization rights
in Canada. The agreement is for a term of five years, with automatic,
successive one-year renewal periods thereafter. After May 1, 1999, however,
either party may terminate the agreement by giving the other party six-months
prior written notice. The agreement is also subject to early termination in the
event of certain defaults by either party.
9
<PAGE> 10
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
REVENUES
Revenues for the three and six months ended December 31, 1996 were approximately
$2.5 million and $4.8 million, respectively, a decrease of $1.7 million and $3.9
million or 40% and 43%, respectively, compared to revenues of $4.2 million and
$8.5 million, respectively, reported for the three and six months ended March
31, 1995. The decrease was due to lower sales of research products, which
accounted for approximately $1.3 million and $2.5, respectively, of the decrease
in revenues. The Company sold its Research Products Business for $6.0 million in
cash plus other considerations in August 1995, and accordingly there were no
significant sales of research products recorded after this date. In the sale
agreement, the Company agreed to indemnify the purchaser for a period of two
years for certain breaches of the agreement. Collaborative program revenue
decreased approximately $163,000 and $494,000 or 7% and 10%, respectively. This
was largely due to a reduction in revenue under the collaborative arrangement
with Hoechst Marion Roussel, Inc. (HMRI) as compared to the total revenue in the
prior year's periods from Marion Merrell Dow Inc. (MMDI), Hoechst Roussel
Pharmaceuticals, Inc. (Hoechst Roussel) and Hoechst AG ("Hoechst"). Other
research revenues, representing primarily government grants, decreased
approximately $308,000 and $624,000, respectively, due in part to the expiration
of a U.S. government grant. The balance of the decrease represents changes in
the timing and amount of grant awards. The Company expects that grant revenue
will be somewhat lower in the current fiscal year.
EXPENSES
The Company's operating expenses decreased by approximately $1.0 million and
$2.4 million or 17% and 21%, respectively, for the three and six months ended
March 31, 1996, compared to the three and six months ended March 31, 1995.
Research and development expenses decreased approximately $117,000 and $510,000
or 3% and 8% respectively, due to reductions in expenses in the collaborations
with HMRI and Becton Dickinson and Company ("Becton") commensurate with the
reduced funding in these programs. This was offset in part by increased
expenditures in the Company's proprietary research programs. Production expenses
and selling, general and administrative expenses decreased approximately
$859,000 and $1.8 million, respectively. These reductions were directly related
to expenses that were associated with the Company's Research Products Business
in the prior year's periods. The reduction of approximately $73,000 and
$146,000, respectively, of amortization of intangibles is due to a portion of
goodwill relating to the Research Products Business, which was expensed when the
business was sold in 1995.
OTHER INCOME AND EXPENSE
Net investment income increased approximately $169,000 and $313,000 or 77% and
71%, respectively, for the three and six months ended March 31, 1996 compared to
the three and six months ended March 31, 1995. This increase was largely due to
the increase in funds invested as a result of the proceeds from the sale of the
Research Products Business, the sale of stock to Ciba-Geigy, Ltd. ("Ciba") in
April 1995, and the stock offering, which was completed in April 1996.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1996, working capital (representing primarily cash, cash
equivalents and short-term investments) aggregated approximately $51.2 million.
The Company has been, and will continue to be, dependent upon collaborative
research revenues, government research grants, interest income and cash balances
until products developed from its technology are commercially marketed. In April
1995, Ciba purchased 909,091 shares of the Company's common stock for an
aggregate purchase price of $5.0 million. In April 1996, the Company completed a
public offering of its common stock that provided total net proceeds of
approximately $30.5 million.
During 1995, the pharmaceutical operations of Hoechst, Hoechst Roussel and MMDI
were consolidated into HMRI. The Company is aware that HMRI is conducting a
review of all its research and development programs. Based on discussions with
HMRI, the Company expects its programs with HMRI to continue under one overall
agreement in the future, although there can be no assurance that the Company and
HMRI will enter into such an agreement, or if such an agreement is entered into,
that it will not be on terms less favorable than the existing agreements with
each of Hoechst, Hoechst Roussel and MMDI. The Company anticipates that the
total funding under the consolidated agreement will be lower than the aggregate
funding under the three previously separate agreements.
Since its commencement in 1991 and until the second quarter of fiscal 1995, the
cancer diagnostics collaborative program with Becton has focused on both
serum-based and histochemical immunoassays. During the second quarter of fiscal
1995, Becton decided to focus exclusively on cellular cancer diagnostics,
including histochemical immunoassays. Becton has reduced its funding under this
program in fiscal 1996, and the Company is uncertain as to Becton's ongoing
support for this program. The Company is continuing the development of
serum-based cancer diagnostic products and is in discussions with possible new
collaborative partners in this area. However, there can be no assurance that the
development of these products will not be terminated.
The Company believes that with the funding from its collaborative research
programs, government research grants, interest income, and cash balances, the
Company's financial resources are adequate for its operations through fiscal
1999. However, the Company's capital requirements may vary as a result of a
number of factors, including competitive and technological developments, funds
required for expansion of the Company's technology platorm, including possible
joint ventures, collaborations, and acquisitions, the time and expense required
to obtain governmental approval of products, and any potential indemnification
payments to the purchaser of the Research Products Business, some of which
factors are beyond the Company's control. The Company intends to substantially
increase its expenditures and capital investment over the next several years to
enhance its drug discovery technologies, pursue internal proprietary drug
discovery programs, and to commit resources to new collaborative ventures, such
as the new programs with Anaderm and BioChem Pharma. In April 1996, the Company
purchased MYCOsearch, Inc., owner of a collection of fungi and actinomycetes,
for approximately $1.7 million in cash and $3.4 million in common stock and
warrants. There can be no assurance that scheduled payments will be made by
third parties, that current agreements will not be cancelled, that government
research grants will continue to be received at current levels or that
unanticipated events requiring the expenditure of funds will not occur. Further,
there can be no assurance that the Company will be able to obtain any additional
required funds, or, if such funds are available, that such funds will be
11
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available on favorable terms. Failure to obtain additional funds when required
would have a material adverse effect on the company's business, financial
condition and result of operations.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company's annual meeting of stockholders was held March 25, 1996. The
following ten directors were elected:
<TABLE>
<CAPTION>
Name For Withholding Authority
---- --- ---------------------
<S> <C> <C>
Edwin A. Gee 12,538,807 115,639 Shares
Gary E. Frashier 12,541,248 113,198 Shares
Steve M. Peltzman 12,541,248 113,198 Shares
J. Gordon Foulkes 12,533,242 121,204 Shares
G. Morgan Browne 12,541,907 112,539 Shares
John French, II 12,541,777 112,669 Shares
Walter M. Lovenberg 12,542,007 112,439 Shares
Walter M. Miller 12,540,107 114,339 Shares
Gary Takata 12,521,277 133,169 Shares
John P. White 12,526,926 127,520 Shares
</TABLE>
In addition, the following matters were voted upon: (1) the appointment of KPMG
Peat Marwick LLP as auditors for fiscal year ended September 30, 1996 was
ratified (12,582,930 shares voted in favor, 17,480 shares against and 54,036
shares abstained); (2) a proposal to amend the Company's 1993 Incentive and
Non-Qualified Stock Option Plan was approved (9,923,043 shares voted in favor,
602,892 shares against, and 74,752 shares abstained); (3) a proposal to adopt
the 1995 Employee Stock Purchase Plan was approved (10,268,725 shares voted in
favor, 110,148 shares against, and 85,367 shares abstained); (4) a proposal to
adopt the Non-Employee Directors' Stock Purchase Plan was approved (9,818,096
shares voted in favor, 564,642 shares against, and 81,502 shares abstained).
ITEM 5. OTHER INFORMATION.
FORMATION OF ANADERM RESEARCH CORP.
In connection with the formation of Anaderm Research Corp. ("Anaderm"), a
Stockholders' Agreement dated April 23, 1996 (the "Stockholders' Agreement")
was entered into by Oncogene Science, Inc. (the "Company"), Pfizer Inc.
("Pfizer"), New York University ("NYU") and certain individual members of the
faculty of NYU (the "Faculty Members"). Andem will focus on the discovery and
development of new compounds for use in humans for the prevention or treatment
baldness and wrinkles and for the control of skin and hair pigmentation.
Anaderm has issued common stock to
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<PAGE> 13
Pfizer and the Company and options to purchase common stock to NYU and the
Faculty Members. If NYU and the Faculty Members exercise their options fully,
then Pfizer will hold 82%, the Company will hold 14%, and NYU and the Faculty
Members collectively will hold 4%, of Anaderm's common stock. Pfizer's shares of
Anaderm's common stock have been issued in exchange for a cash contribution and
cash commitments. In exchange for its 14% of the outstanding shares of Anaderm
common stock, the Company will provide formatting for high-throughput screens
and will conduct compound screening for 18 months at its own expense under a
Collaborative Research Agreement dated April 23, 1996 (the "Collaborative
Research Agreement") among the Company, Anaderm and Pfizer, which is discussed
below. Anaderm has granted the stock options to NYU and the Faculty Members as
partial consideration for NYU entering into a separate research agreement with
Pfizer and Anaderm. The Stockholders' Agreement also provides for the mutual
management of Anaderm by the Company and Pfizer, as well as certain
restrictions on the transfer of Anaderm's common stock and Anaderm's repurchase
of the shares of its common stock upon the occurrence of certain events. Under
this agreement, the Scientific Advisory Board of Anaderm, composed of
appointees of the Company, Pfizer and Anaderm will prepare a written plan
approved by the Anaderm Board of Directors that describes the research to be
carried out in the collaborative research program for each annual period.
The term of the Collaborative Research Agreement is three years. During the
initial phase of the agreement (the first 18 months) the Company is required to
provide at its own cost formatting for high throughput compound screens and
perform screening of its own compounds and those compounds provided by Pfizer.
Upon the termination of the initial phase, the Board of Directors of Anaderm
will make a determination as to whether the initial phase was successfully
completed. If the board determines that the initial phase was unsuccessful, the
collaborative Research Agreement will then terminate. If the Anaderm Board of
Directors, with Pfizer's approval, determines the initial phase was successful,
then the funded phase will commence and will continue for the term of the
Collaborative Research Agreement. During this phase, Anaderm will make
payments to the Company equal to its research costs, including overhead, plus
10%.
Subject to a right of first refusal granted to Pfizer and to any rights of
third parties, Anaderm has the right to develop and market any compounds that
are invented or for which a new use is invented for the prevention or treatment
of baldness and wrinkles and for the control of hair and skin pigmentation.
Anaderm also has the right to develop for its own use or to license to third
parties other than NYU, human therapeutic products for certain proliferative
and inflammatory disorders of the skin. The Company and Pfizer will assign to
Anaderm their worldwide rights in any patentable invention based on non-Pfizer
compounds that is made in the course of Anaderm's participation in the research
program. Furthermore, the Company will assign to Pfizer its worldwide rights in
any patentable invention based on Pfizer compounds and made in the course of
its participation in the research program.
Anaderm or Pfizer will pay royalties to the Company on the sales of products
resulting from this collaboration. Under the agreement, Anaderm will have the
right to prosecute and maintain all patents on research program inventions that
were made by any of the parties to the agreement in the course of their
participation in the program. During the term of the Collaborative Research
Agreement, the Company is prohibited from conducting or sponsoring any research
related to the purpose of the research program outside of this collaboration
without the prior unanimous written consent of the Anaderm Board of Directors.
COLLABORATION WITH BIOCHEM PHARMA (INTERNATIONAL) INC.
Effective as of May 1, 1996, the Company entered into a Collaborative Research,
Development and Commercialization Agreement with BioChem Pharma
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<PAGE> 14
(International) Inc. ("BioChem Pharma"). Under this agreement, the parties will
seek to discover and develop antiviral drugs for the treatment of Hepatitis C
virus and HIV, although the focus of the collaborative efforts may change at
the discretion of a joint steering committee. This agreement provides that the
Company and BioChem Pharma will jointly commit resources to the collaborative
program. The Company and BioChem Pharma will share equally the
commercialization rights in the U.S. and Europe for any product resulting from
the collaboration. BioChem Pharma will exclusively own commercialization rights
in Canada. The agreement is for a term of five years, with automatic successive
one-year renewal periods thereafter. After May 1, 1999, however, either party
may terminate the agreement by giving the other party six-months prior written
notice. The agreement is also subject to early termination in the event of
certain defaults by either party.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS.
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, as amended (1)
*10.1 Collaborative Research Agreement dated April 1, 1996, between
the Company and Pfizer Inc.
*10.2 License Agreement dated April 1, 1996 between the Company and
Pfizer Inc.
*10.3 Stockholders' Agreement dated April 23, 1996 among Anaderm
Research Corp., the Company, Pfizer Inc., New York University
and certain individuals
*10.4 Collaborative Research Agreement dated April 23, 1996 among
the Company, Pfizer Inc. and Anaderm Research Corp.
10.5 Registration Rights Agreement dated April 11, 1996 among the
Company and the former stockholders of MYCOsearch, Inc. and
their designees
10.6 Form of Warrants issued by the Company to the former
stockholders of MYCOsearch, Inc. and their designees covering
an aggregate of 100,000 shares of common stock
10.7 Employment Agreement dated April 11, 1996 between the Company
and Dr. Barry Katz
27 Financial Data Schedule
------------------
* Portions of this exhibit have been redacted and are subject
of a confidential treatment request filed with the Secretary
of the Securities and Exchange Commission pursuant to Rule
24b-2 under the Securities Exchange Act of 1934, as amended.
(1) Included as an exhibit to the Company's registration
14
<PAGE> 15
statement on Form S-3 (File No. 333-937) initially filed on
February 14, 1996, and incorporated herein by reference.
(b) REPORTS ON FORM 8-K.
The Company filed a Current Report on Form 8-K on April 26, 1996, and amended
such report by filing a Form 8-K/A on May 10, 1996. The earliest event covered
by such report occurred on April 1, 1996. The items included in this report, as
amended, consisted of:
Item 2. Acquisition of Assets (describing the
acquisition of MYCOsearch, Inc.)
Item 3. Other Events
(a) Completion of Public Offering
(b) Renewal of Pfizer Collaboration
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
(b) Pro Forma Financial Information
(c) Exhibits
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ONCOGENE SCIENCE, INC.
(Registrant)
Date May 14, 1996 /s/ GARY E. FRASHIER
------------------- ----------------------------------------
Gary E. Frashier
President and
Chief Executive Officer
Date May 14, 1996 /s/ ROBERT L. VAN NOSTRAND
------------------- ----------------------------------------
Robert L. Van Nostrand
Vice President
Finance & Administration
16
<PAGE> 17
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, as amended (1)
*10.1 Collaborative research Agreement dated April 1, 1996 between the
Company and Pfizer Inc.
*10.2 License Agreement dated April 1, 1996 between the Company and
Pfizer Inc.
*10.3 Stockholders' Agreement dated April 23, 1996 among Anaderm
Research Corp., the Company, Pfizer Inc., New York University
and certain individuals
*10.4 Collaborative Research Agreement dated April 23, 1996 among the
Company, Pfizer Inc. and Anaderm Research Corp.
10.5 Registration Rights Agreement dated April 11, 1996 among the
Company and the former stockholders of MYCOsearch, Inc. and
their designees
10.6 Form of Warrants issued by the Company to the former
stockholders of MYCOsearch, Inc. and their designees covering an
aggregate of 100,000 shares of common stock
10.7 Employment Agreement dated April 11, 1996 between the Company
and Dr. Barry Katz
27 Financial Data Schedule
------------------
* Portions of this exhibit have been redacted and are subject to a
confidential treatment request filed with the Secretary of the
Securities and Exchange Commission pursuant to Rule 24b-2 under
the Securities Exchange Act of 1934, as amended.
(1) Included as an exhibit to the company's registration statement
on Form S-3 (File No. 333-937) initially filed on February 14,
1996, and incorporated herein by reference.
17
<PAGE> 1
EXHIBIT 10.1
- -----------------------------------------------------------------------------
Portions of this Exhibit 10.1 have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
- -----------------------------------------------------------------------------
<PAGE> 2
EXHIBIT 10.1
COLLABORATIVE RESEARCH AGREEMENT
This COLLABORATIVE RESEARCH AGREEMENT is entered into as of April 1,
1996 by and between Pfizer Inc ("Pfizer"), a Delaware corporation, having an
office at 235 East 42nd Street, New York, New York 10017, and Oncogene Science,
Inc. ("OSI"), a Delaware corporation, having an office at 106 Charles Lindbergh
Boulevard, Uniondale, New York 11553.
WHEREAS, OSI was organized to develop, produce and market therapeutic
and diagnostic products for, among other things, the early detection, monitoring
and treatment of human disease; and
WHEREAS, Pfizer has the capability to undertake research for the
discovery and evaluation of agents for treatment of disease and also the
capability for clinical analysis, manufacturing and marketing of such agents;
and
WHEREAS, Pfizer and OSI entered into a Collaborative Research Agreement
effective April 1, 1986 (the "1986 Research Agreement"); and renewed and
modified it on April 1, 1991; and
WHEREAS, Pfizer and OSI wish to continue to pursue the research
performed under the 1986 and 1991 Research Agreements;
NOW, THEREFORE, the parties agree as follows:
1. Definitions
Whenever used in this Agreement, the terms defined in this Section 1
shall have the meanings specified.
1.1 "Affiliate" means any corporation or other legal entity owning,
directly or indirectly, fifty percent or more of the voting capital shares or
similar voting securities of Pfizer or OSI; any corporation or other legal
entity fifty percent or more of the voting capital shares or similar voting
rights of which is owned, directly or indirectly, by Pfizer or OSI or any
corporation or other legal entity fifty percent or more of the voting capital
shares or similar voting rights of which is owned, directly or indirectly, by a
corporation or other legal entity which owns, directly or indirectly, fifty
percent or more of the voting capital shares or similar voting securities of
Pfizer or OSI.
<PAGE> 3
1.2 "Annual Commitment" means the maximum amount to be paid to OSI
by Pfizer to fund the Sponsored Research Program for any Commitment Year.
1.3 "Allocated Overhead" means the amount of overhead, including
general and administrative costs, determined in accordance with generally
accepted accounting principles, incurred by OSI and allocated to the Sponsored
Research Program in the same proportion that the total man-hours of work
performed in the Sponsored Research Program bears to the total man-hours of work
performed in all OSI research programs, or such other customary allocation basis
that may be agreed in writing between the parties.
1.4 "Annual Research Plan" means the written plan describing the
annual research and budgets in the area to be carried out during each Commitment
Year by Pfizer and OSI pursuant to this Agreement, including both the Annual
Sponsored Research Plan to be carried out by OSI and the specific Projects,
timetables and technical goals to be pursued by Pfizer and OSI.
1.5 "Annual Sponsored Research Plan" means the written plan
describing the research in the Area to be carried out during each Commitment
Year by OSI pursuant to this Agreement, including the specific Projects,
timetables and technical goals to be pursued by OSI.
1.6 "Research Program" is the collaborative research program in the
Area conducted by Pfizer and OSI.
1.7 "Sponsored Research Program" is that part of the Research
Program that is to be carried out by OSI.
1.8 "Effective Date" is April 1, 1996.
1.9 "Project" means each of those projects set forth in the table
of contents of the Annual Research Plans described in this Agreement.
1.10 "Contract Period" means the period beginning on the Effective
Date and ending on the date on which this Agreement terminates.
1.11 "Commitment Year" means a twelve-month period terminating on
each anniversary of the Effective Date.
1.12 "Area" means research as described in each Annual Research Plan
and Annual Sponsored Research Plan adopted pursuant to this Agreement or the
1986 or 1991
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<PAGE> 4
Research Agreements directed to the treatment and diagnosis of cancer or any
other indication identified in the course of that research.
1.13 "Technology" means and includes all technology and technical
information that pertain to the development of human therapeutic and diagnostic
products, including all laboratory notebooks, research plans, inventions,
cultures, strains, vectors, genes and gene fragments and their sequences, cell
lines, hybridoma cell line, monoclonal and polyclonal antibodies, proteins and
protein fragments, non-protein chemical structures and methods for synthesis,
structure-activity relationships, computer models of chemical structures,
computer software, assay methodology, processes, materials and methods for
production, recovery and purification of nature products, formulas, plans,
specifications, characteristics, equipment and equipment designs, marketing
surveys and plans, business plans, know-how, experience and trade secrets.
1.14 "OSI Technology" means Technology that is or was:
(a) developed by employees, of or consultants to, OSI alone or
jointly with third parties other than Pfizer prior to the Effective Date of the
1986 Research Agreement or in the course of activities not described in an
Annual Research Plan adopted pursuant to this Research Agreement or the 1986 and
1991 Research Agreements; or
(b) acquired by purchase, license, assignment or other means
from third parties by OSI prior to the Effective Date of the 1986 Research
Agreement or since that date that would not be otherwise part of Joint
Technology.
1.15 "Pfizer Technology" means all Technology outside the Area
developed independently or acquired by Pfizer.
1.16 "Joint Technology" means Technology in the Area that is or was:
(a) developed by employees of or consultants to Pfizer or OSI
solely or jointly with each other since April 1, 1986; or
(b) acquired by purchase, license, assignment or other means
from third parties by OSI or Pfizer since April 1, 1986; provided, however, that
candidates acquired by Pfizer by license or otherwise pursuant to Section
2.1.3(b) shall be Pfizer's property solely.
-3-
<PAGE> 5
1.17 "OSI Confidential Information" means all information about any
element of the OSI or Joint Technology which is disclosed by OSI to Pfizer and
designated "Confidential" in writing by OSI at the time of disclosure to Pfizer
to the extent that such information as of the date of disclosure to Pfizer is
not (i) known to Pfizer other than by virtue of a prior confidential disclosure
to Pfizer by OSI or (ii) disclosed in the published literature, or otherwise
generally known to the public, or (iii) obtained from a third party free from
any obligation of secrecy; provided, however, that such third party has no
obligation of confidentiality to Pfizer.
1.18 "Pfizer Confidential Information" means all information about
any element of Pfizer or Joint Technology which is disclosed by Pfizer to OSI
and designated "Confidential" in writing by Pfizer at the time of disclosure to
OSI to the extent that such information as of the date of disclosure to OSI is
not (i) known to OSI other than by virtue of a prior confidential to OSI by
Pfizer or (ii) disclosed in the published literature, or otherwise generally
known to the public, or (iii) obtained from a third party free from any
obligation of secrecy; provided, however, that such third party has no
obligation of confidentiality to OSI.
1.19 "Patent Rights" means and includes OSI Patent Rights and all
patentable inventions derived from Joint Technology, including all applications
for letters patent, whether domestic or foreign, claiming such patentable
inventions, including all continuations, continuations-in-part, divisions,
renewals and patents of addition thereof, all letters patent granted thereon,
and all reissues and extensions thereof.
1.20 (a) "OSI Patent Rights" shall have the same meaning as that set
forth in Section 15(a) of Exhibit I to the 1986 Research Agreement. Patent
applications and patents relating to transcriptional modulation of gene
expression are specifically excluded from this definition. (b) "Pfizer Patent
Rights" shall have the same meaning as that set forth in Section 15(a) of
Exhibit I to the 1986 Research Agreement. Patent applications and patents
relating to transcriptional modulation of gene expression are specifically
excluded from this definition.
1.21 "Valid Claim" means a claim within Patent Rights so long as
such claim shall not have been disclaimed by both Pfizer and OSI or shall not
have been held
-4-
<PAGE> 6
invalid in a final decision rendered by a tribunal of competent jurisdiction
from which no appeal has been or can be taken.
1.22 "Human Diagnostic Product" means any product within the Area
useful for the identification or quantification of the propensity toward or
actual existence of any cancerous state in a human patient or any other human
diagnostic utility identified in the course of research within the area.
1.23 "Human Therapeutic Product" means any product within the Area
for the management of any cancerous or pre-cancerous state in a human patient or
any other human therapeutic indication identified in the course of research
within the Area.
1.24 "Licensed Human Diagnostic Product" means a Human Diagnostic
Product that employs Patent Rights or Joint Technology in its manufacture, use
or sale.
1.25 "Licensed Human Therapeutic Product" means a Human Therapeutic
Product that employs Patent Rights or Joint Technology in its manufacture, use
or sale.
1.26 "Event of Termination" has the meaning set forth in Section
9.3.
1.27 "Funding Payments" has the meaning set forth in Section 3.
1.28 "Person" means any individual, estate, trust, partnership,
joint venture, association, firm, corporation, company, or other entity.
1.29 "Research Committee" has the meaning specified in Section 2.2.
2. Collaborative Research Program
2.1 Collaborative Research Program
2.1.1 Purpose. OSI and Pfizer shall conduct a collaborative
research program in the Area (the "Research Program") throughout the Contract
Period. Technology in the Area developed in the Research Program will become
part of the Joint Technology. The Research Program shall include, as a
component, a research program that shall be pursued by OSI and that shall be
funded by Pfizer throughout the Contract Period (the "Sponsored Research
Program"). The objectives of the Research Program are to discover Human
Therapeutic and Diagnostic Products.
2.1.2 Annual Research Plan. The Annual Research Plan for the
first Commitment Year is described in the attached Exhibit I. For each
Commitment Year after the first Commitment Year, the Annual Research Plan, shall
be prepared by the Research
-5-
<PAGE> 7
Commitment for submission to, and approval by Pfizer and OSI no later than
ninety (90) days before the end of the prior Commitment Year. If Pfizer and OSI
cannot agree on the Annual Research Plan or Annual Sponsored Research Plan,
Pfizer shall determine its content. The Annual Research Plan and the Annual
Sponsored Research Plan for each Commitment Year shall be appended to and made
part of this Agreement.
2.1.3 Exclusivity.
(a) OSI agrees that during the Contract Period neither
OSI nor any of its Affiliates shall conduct research itself or sponsor any other
research, or engage in any research sponsored by any Person not a party to the
Agreement, if the objectives of such research are the discovery and development
of novel Human Therapeutic Products; provided, however, that, if OSI becomes
aware during the Contract Period of an opportunity to sponsor other research
having any of the objectives of the Research Program or to engage in such
research sponsored by a Person that is not a party to this Agreement, it shall
promptly notify Pfizer of such opportunity. Pfizer and OSI shall then negotiate
in good faith for a period of one hundred twenty (120) days an agreement by
which such opportunity can be incorporated into the Research Program or
otherwise used to further the purposes of the Research Program to their mutual
advantage. If at the end of the one hundred twenty (120) day period, the parties
have not reached agreement, OSI shall be free to pursue such opportunity with a
third party without further obligation to Pfizer.
(b) Pfizer agrees that during the Contract Period neither
Pfizer nor any of its Affiliates shall sponsor any other research, or engage in
any research sponsored by any Person not a party to this Agreement, if the
objectives of such research are the discovery of novel Human Therapeutic and
Diagnostic Products; provided, however, that, if Pfizer becomes aware during the
Contract Period of an opportunity to sponsor other research having any of the
objectives of the Research Program or to engage in such research sponsored by a
Person that is not a party to this Agreement, it shall promptly notify OSI of
such opportunity. Pfizer and OSI shall then negotiate in good faith for period
of one hundred twenty (120) days an agreement by which such opportunity can be
incorporated into the Research Program or otherwise used to further the purposes
of the Research Program to their mutual advantage. If at the end of the one
hundred twenty (120) day period, the parties have not reached
-6-
<PAGE> 8
agreement, Pfizer shall be free to pursue such opportunity with a third party
without further obligation to OSI. Nothing in this Section shall prevent Pfizer
from engaging in such research by itself or acquiring candidates for development
by license or otherwise.
2.2 Research Committee
2.2.1 Purpose. The research committee established in the 1986
Research Agreement (the "Research Committee") shall be continued by Pfizer and
OSI:
(a) to review and evaluate progress under each Annual
Research Plan;
(b) to prepare the Annual Research Plan and for each
Commitment Year; and
(c) to coordinate and monitor publication of research
results obtained from the exchange of information and materials that relate to
the Research Program.
2.2.2 Membership. Pfizer and OSI each shall appoint, in its sole
discretion, four members to the Research Committee. Substitutes may be appointed
at any time. The members initially shall be:
Appointees: ***
***
***
***
***
Appointees: ***
***
***
***
***
2.2.3 Chair. The Research Committee shall be chaired by two
co-chairpersons, one appointed by Pfizer and the other appointed by OSI.
2.2.4 Meetings. The Research Committee shall meet at least
quarterly, at places and on dates selected by each party in turn.
Representatives of Pfizer or OSI or both,
*** These portions deleted pursuant to a request for confidential treatment.
-7-
<PAGE> 9
in addition to members of the Research Committee, may attend such meetings at
the invitation of both parties.
2.2.5 Minutes. The Research Committee shall keep accurate
minutes of its deliberations which record all proposed decisions and all actions
recommended or taken. The minutes shall be delivered to all Research Committee
members within five working days after each meeting. The party hosting the
meeting shall be responsible for the preparation of the minutes. Draft minutes
shall be edited by the co-chairpersons and shall be issued in final form only
with their approval and agreement.
2.2.6 Decisions. Subject to the provisions of 2.1.2, all
technical decisions of the Research Committee shall be made by majority of the
members.
2.2.7 Expenses. Pfizer and OSI shall each bear all expenses of
their respective members related to the participation on the Research Committee.
2.3 Reports and Materials
2.3.1 Reports. During the Contract Period, Pfizer and OSI each
shall furnish to the Research Committee:
(a) summary reports within fifteen (15) days after the end
of each month, commencing on the Effective Date, describing its progress under
the Annual Research Plan; and
(b) comprehensive written reports within thirty (30) days
after each Research Committee Meeting, describing in detail the work
accomplished by it under the Annual Research Plan during the Commitment Year and
discussing and evaluating the results of such work.
2.3.2 Materials. OSI and Pfizer shall, during the Contract
Period as a matter of course as described in the Annual Research Plan or upon
each other's oral or written request, furnish to each other samples of
biochemical, biological or synthetic chemical materials which are part of the
Joint Technology and which are necessary for each party to carry out its
responsibilities under the Annual Research Plan. To the extent that the
quantities of materials requested by either party exceed the quantities set
forth in the Annual Research Plan, the requesting party shall reimburse the
other party for the reasonable costs of such materials if they are furnished.
-8-
<PAGE> 10
2.4 Laboratory Facilities and Personnel. OSI shall provide suitable
laboratory facilities, equipment and personnel for the work to be done by OSI in
carrying out the Annual Sponsored Research Plan.
2.5 Diligent Efforts. Pfizer and OSI each shall use reasonably
diligent efforts to achieve the objectives of the Research Program. OSI will use
reasonably diligent efforts to achieve the objectives listed in Exhibit I and
Pfizer will use reasonably diligent efforts to assist OSI in the pursuit of
those objectives. To achieve the objections of the Research Program, Pfizer will
specifically use diligent efforts:
(a) to advance the pharmacological assessment of materials in
the Area identified by OSI or Pfizer in order to select those worthy of further
investigation;
(b) to determine the chemical structure of the selected
materials and to make related compounds to determine the relationship between
structure and activity and to identify potential development candidates;
(c) to select development candidates;
(d) to assess safety and efficacy of the selected development
candidates in animals and in human patients under conditions designed to yield
data suitable for inclusion in approval applications to be submitted to the U.S.
Food and Drug Administration; and
(e) to develop manufacturing methods and pharmaceutical
formulations for those selected candidates.
3. Funding of the Sponsored Research Program.
3.1 The Annual Commitment for each Commitment Year is as follows:
<TABLE>
<CAPTION>
Commitment Year Annual Commitment
--------------- -----------------
<S> <C>
1 $3,550,000.00
2 3,656,000.00
3 3,766,000.00
4 3,879,000.00
5 3,995,000.00
</TABLE>
These payments are intended to cover the expenses for 16.5 OSI man-years.
3.2 Payments by Pfizer to cover OSI's total, actual research costs,
plus Allocated Overhead, plus ten percent (10%) of the sum of the actual
research costs and the
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<PAGE> 11
Allocated Overhead (the "Funding Payments") shall not exceed the annual
Commitment in any Commitment Year.
3.2.1 All Funding Payments shall be made quarterly in advance
for work scheduled to be performed by OSI during any three (3) month period,
against OSI's invoice for such three (3) month period. Adjustments as necessary
to reflect the work actually performed by OSI shall be made at the end of each
three (3) month period and shall be reflected in OSI's invoice for the next
three (3) month period.
3.2.2 The amount of the Funding Payment for each quarter shall
be based on the work in progress pursuant to the applicable Annual Sponsored
Research Plan and the associated annual budget; provided, however, that the
aggregate amount of Funding Payments made in any Commitment Year shall not
exceed the Annual Commitment for such Commitment Year.
3.2.3 Each Funding Payment shall be paid on the first day of the
quarter or ten (10) days after receipt of invoice, whichever is later.
3.2.4 OSI shall keep for three (3) years from the expiration of
this Agreement complete and accurate records of its expenditures of Funding
Payments received by it. The records shall conform to good accounting principles
as applied to a similar company similarly situated. Pfizer shall have the right
at its own expense during the term of this Agreement and during the subsequent
three-year period to appoint an independent certified public accountant
reasonably acceptable to OSI to inspect said records to verify the accuracy of
such expenditures, pursuant to each Annual Sponsored Research Plan. OSI shall
make its records available for inspection by the independent certified public
accountant during regular business hours at the place or places where such
records are customarily kept, upon reasonable notice from Pfizer to the extent
reasonably necessary to verify the accuracy of the expenditures and required
reports. This right of inspection shall not be exercised more than once in any
calendar year and not more than once with respect to records covering any
specific period of time. Pfizer agrees to hold in strict confidence all
information concerning such expenditures, other than their total amounts, and
all information learned in the course of any audit or inspection, except to the
extent that it is necessary for Pfizer to reveal the information in order to
enforce any rights it may have pursuant to this Agreement or if
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<PAGE> 12
disclosure is required by law. The failure of Pfizer to request verification of
any expenditures before or during the three-year period shall be considered
acceptance of the accuracy of such expenditures, and OSI shall have no
obligation to maintain any records pertaining to such report or statement beyond
the three-year period.
4. Treatment of Confidential Information.
4.1 Confidentiality.
4.1.1 Pfizer and OSI recognize that the other's Confidential
Information constitutes highly valuable proprietary, confidential information.
Subject to the terms and conditions of the License Agreement, the disclosure
obligations set forth in Section 4.3 and 4.4 and publication rights set forth in
Section 4.2, Pfizer and OSI each agree that during the term of this Agreement
and for five (5) years thereafter, they will keep confidential, and will cause
their Affiliates to keep confidential, all Confidential Information that is
disclosed to them or to any of their Affiliates pursuant to this Agreement.
Neither Pfizer nor OSI nor any of their Affiliates shall use such Confidential
Information except as expressly permitted in this Agreement.
4.1.2 Pfizer and OSI acknowledge that the Pfizer and OSI
Confidential Information is highly valuable, proprietary, confidential
information, and agree that any disclosure of Confidential Information to any
officer, employee or agent of the other or of any of its Affiliates shall be
made only if and to the extent necessary to carry out its responsibilities under
this Agreement and shall be limited to the maximum extent possible consistent
with such responsibilities. They agree not to disclose the other's Confidential
Information to any third parties under any circumstance without written
permission. Both parties shall take such action, and shall cause its Affiliates
to take such action, to preserve the confidentiality of each other's
Confidential Information as they would customarily take to preserve the
confidentiality of their own confidential information. Each party, upon the
other's request, will return all the Confidential Information disclosed pursuant
to this Agreement including all copies and extracts of documents within sixty
(60) days of the request after the termination of this Agreement.
-11-
<PAGE> 13
4.1.3 OSI represents that all of its employees participating in
the Research Program who shall have access to Joint Technology and Pfizer
Confidential Information are bound, by agreement to maintain such information in
confidence. Consultants will be similarly bound.
4.2 Publication. Section 4.1 to the contrary notwithstanding, the
results obtained in the course of the Research Program may be submitted for
publication following scientific review by the Research Committee and subsequent
approval by OSI's and Pfizer's managements. After receipt of the proposed
publication by both Pfizer's and OSI's managements, written approval or
disapproval shall be provided within 30 days for a manuscript, within 14 days
for an abstract for presentation at, or inclusion in the proceedings of, a
scientific meeting, and within 14 days for a transcript of an oral presentation
to be given at a scientific meeting.
4.3 Publicity. Except as required by law, neither party may disclose
the existence of this Agreement nor the research described in it except with the
written consent of the other party, which consent shall not be unreasonably
withheld.
4.4 Disclosure of Inventions. Each party shall promptly inform the
other about all inventions in the Area that are conceived, made or developed in
the course of carrying out the Research Program by employees of, or consultants
to, either of them solely, or jointly with employees of, or consultants to the
other. This Agreement shall not be construed to obligate either party to
disclose to the other any invention which is not part of Joint Technology.
4.5 Restrictions of Transferring Materials. Pfizer and OSI recognize
that the biological and biochemical materials which are part of OSI Technology,
Pfizer Technology, or Joint Technology, represent valuable commercial assets.
Therefore, throughout the Contract Period and for five (5) years thereafter, OSI
and Pfizer agree not to transfer to any third party any such materials which
constitute Technology owned solely by the other party. Additionally, throughout
the Contract Period and for six (6) months thereafter, OSI and Pfizer agree not
to transfer to any third party any materials which are part of Joint Technology,
unless prior consent for any such transfer is obtained from the other, which
consent shall not be unreasonably withheld, and unless such third party agrees
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<PAGE> 14
as a condition of any such transfer not to transfer the material further and to
use the material only for research purposes not directed toward the development
of Human Therapeutic Products. The provisions of this Section 4.5 specifically
do not apply to (a) transfers to a diagnostic partner(s) of OSI, pursuant to
agreements between OSI and diagnostic partner(s), for purposes other than
developing Human Therapeutic Products, of materials which are part of OSI
Technology or Joint Technology, or (b) to limit Pfizer's rights under Section
2.1.3.
5. Intellectual Property Rights. The following provisions relate to
rights in the intellectual property developed by OSI or Pfizer, or both, during
the course of carrying out the Research Program:
5.1 Ownership. All Patent Rights shall be owned jointly by OSI and
Pfizer.
5.2 Grants of Research Licenses. OSI and Pfizer each grants to the
other a nonexclusive, irrevocable, worldwide, royalty-free, perpetual license,
including the right to grant sublicenses to Affiliates, to use its Confidential
Information, Technology and Patent Rights for all research purposes other than
the sale or manufacture for sale of products or processes.
5.3 Grants or Other Licenses. Pfizer and OSI grant to each other
certain rights in Joint Technology and Joint Patents as set forth in the License
Agreement of December 14, 1990 between Pfizer and OSI.
6. Provisions Concerning the Filing, Prosecution and Maintenance of
Patent Rights. The following provisions relate to the filing, prosecution and
maintenance of OSI Patent Rights, Joint Patent Rights, and Pfizer Patent Rights
during the term of this Agreement:
6.1 Filing, Prosecution and Maintenance. Except for Patent Rights
covering compositions of matter, methods of making them, formulating them or
using them in the treatment of diseases, OSI shall have the exclusive right and
obligation:
(a) to file applications for letters patent on any patentable
invention included in OSI Patent Rights or in Joint Patent Rights; provided,
however, that OSI shall consult with Pfizer regarding countries in which such
patent applications should be filed and shall file patent applications in those
countries where Pfizer requests that OSI file; and further
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provided, that OSI, at its option and expense, may file in countries where
Pfizer does not request that OSI file;
(b) to prosecute all pending and new patent applications
included within OSI Patent Rights or Joint Patent Rights and to respond to
oppositions filed by third parties against the grant of letters patent for such
applications; and
(c) to maintain in force any letters patent included in OSI
Patent Rights or Joint patent included in OSI Patent Rights or Joint Patent
Rights by duly filing all necessary papers and paying any fees required by the
patent laws of the particular country in which such letters patent were granted.
OSI shall notify Pfizer in a timely manner of any decision to
abandon a pending patent application or an issued patent included in OSI Patent
Rights or Joint Patent Rights. Thereafter, Pfizer shall have the option, at its
expense, of continuing to prosecute any such pending patent application or of
keeping the issued patent in force.
6.2 OSI shall provide to Pfizer copies of all patent applications
prior to filing, for the purpose of obtaining substantive comment of Pfizer
patent counsel. OSI shall also provide to Pfizer copies of all documents
relating to prosecution of all patent applications in a timely manner. OSI shall
provide to Pfizer every six (6) months a report detailing the status of all
patent applications that are part of OSI Patent Rights or of Joint Patent
Rights. Pfizer shall provide to OSI every six (6) months a report detailing the
status of all patent applications that are a part of Pfizer Patent Rights.
6.3 Reimbursement of Costs for Filing, Prosecuting and Maintaining.
Pfizer shall reimburse OSI for the costs of filing, prosecuting and maintaining
patent applications and patents in countries where Pfizer requests that patent
applications be filed, prosecuted and maintained, upon receipt of invoices from
OSI. Such reimbursement shall be in addition to Funding Payments. However,
Pfizer may, upon sixty (60) days advance written notice, discontinue reimbursing
OSI for the costs of filing, prosecuting or maintaining any patent application
or patent in any country. OSI shall pay all costs in those countries in which
Pfizer does not request that OSI file, prosecute or maintain patent applications
and patents, but in which OSI, at its option, elects to do so.
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<PAGE> 16
6.4 With respect to Patent Rights covering compositions of matter,
methods of making them, formulating them or using them in the treatment of
diseases, Pfizer shall have the exclusive right and obligation:
(a) to file applications for letters patent on any patentable
invention included in Pfizer Patent Rights or in Joint Patent Rights; provided,
however, that Pfizer shall consult with OSI regarding countries in which such
patent applications should be filed and shall file patent applications in those
countries where OSI requests that Pfizer file; and further provided, that
Pfizer, at its option and expense, may file in countries where OSI does not
request that Pfizer file;
(b) to prosecute all pending and new patent applications
included within Pfizer Patent Rights or Joint Patent Rights and to respond to
oppositions filed by third parties against the grant of letters patent for such
applications; and
(c) to maintain in force any letters patent included in Pfizer
Patent Rights or Joint patent included in Pfizer Patent Rights or Joint Patent
Rights by duly filing all necessary papers and paying any fees required by the
patent laws of the particular country in which such letters patent were granted.
Pfizer shall notify OSI in a timely manner of any decision to
abandon a pending patent application or an issued patent included in Pfizer
Patent Rights or Joint Patent Rights. Thereafter, OSI shall have the option, at
its expense, of continuing to prosecute any such pending patent application or
of keeping the issued patent in force.
6.5 Pfizer shall provide to OSI copies of all patent applications
prior to filing, for the purpose of obtaining substantive comment of OSI patent
counsel. Pfizer shall also provide to OSI copies of all documents relating to
prosecution of all patent applications in a timely manner. Pfizer shall provide
to OSI every six (6) months a report detailing the status of all patent
applications that are part of Pfizer Patent Rights or of Joint Patent Rights.
OSI shall provide to Pfizer every six (6) months a report detailing the status
of all patent applications that are part of OSI Patent Rights.
7. Other Rights of the Parties.
7.1 Research Outside the Area. During the Contract Period:
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(a) Neither OSI nor Pfizer shall carry out research within the
Area with any third party.
(b) OSI may carry out research, related to treatment or cancer
outside the Area with third parties, and may acquire from third parties such
products for such treatment; provided, however, that such research is supported,
or such products are acquired, exclusively with OSI and Pfizer funds, and not
with funds from any other source, unless Pfizer gives its prior written consent
for such research support or product acquisition; and, further provided, that
any such product which results from research support or product acquisition
shall be included in Joint Technology.
7.2 Other OSI Ventures. Outside the Area and with respect to
diagnostics, OSI shall have the right to apply for, and receive grants or
contracts from, public and private sources, including without limitation, the
National Institutes of Health and the National Science Foundation. Outside the
Area, OSI shall also have the right to enter into co-venture arrangements,
whether written or oral, with third parties to develop any product including,
without limitation, cancer diagnostic products.
7.3 Acquisition of Rights from Third Parties. During the Contract
Period, OSI and Pfizer shall promptly notify each other in writing of any and
all opportunities to acquire in any manner from third parties, technology or
patents which may be useful in, or may relate to the Research Program. OSI and
Pfizer shall decide if such rights should be acquired and, if so, whether by OSI
or Pfizer. If acquired, such rights shall become part of Joint Technology.
7.4 No Rights to Products Outside the Area. Pfizer acknowledges that
OSI is granting to Pfizer pursuant to this Agreement no rights to products other
than those within the Area.
7.5 Board of Director's Seat. During the Contract Period, OSI shall
use its best efforts to have elected to the Board of Directors of OSI, a
representative selected by Pfizer and acceptable to OSI, if Pfizer elects to do
so.
8. Other Agreements. Concurrently with the execution of this Agreement,
OSI and Pfizer shall enter into a License Agreement which will be appended to
and made part of this Agreement. This Agreement, the License Agreement and the
1986 and 1991 Research
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<PAGE> 18
Agreements, but not Exhibits V through IV, inclusive, of that Agreement which
are superseded, are the sole agreements with respect to the subject matter. If
there are any conflicts between the provisions of this Agreement and the 1986
and 1991 Research Agreements, the provisions of this Agreement shall prevail.
9. Term, Extension, Termination and Disengagement.
9.1 Term. Unless sooner terminated or extended, this Agreement shall
expire on April 1, 2001.
9.2 Extension. Pfizer, at least six (6) months prior to the end of
the term, shall notify OSI in writing that it desires to extend the Sponsored
Research Program. If OSI is willing to extend the Sponsored Research Program on
mutually acceptable terms, OSI must so notify Pfizer within three (3) months
after receipt of Pfizer's notice. Pfizer and OSI shall thereafter promptly
negotiate in good faith the terms of any extension to this Agreement.
9.3 Events of Termination. The following events shall constitute
events of termination ("Events of Termination"):
(a) Any representation or warranty by OSI or Pfizer, or any of
its officers, under or in connection with this Agreement shall prove to have
been incorrect in any material respect when made.
(b) OSI or Pfizer shall fail in any material respect to perform
or observe any term, covenant or understanding contained in this Agreement or in
any of the other documents or instruments delivered pursuant to, or concurrently
with, this Agreement, and any such failure shall remain unremedied for thirty
(30) days after written notice to the filing party.
9.4 Termination.
9.4.1 Upon the occurrence of any Event of Termination, the party
not responsible may, by notice to the other party, terminate this Agreement.
9.4.2 If Pfizer terminates this Agreement pursuant to Section
9.4.1, the License Agreement shall continue according to its terms. If OSI
terminates this agreement pursuant to Section 9.4.1, the License Agreement shall
also terminate.
9.5 Termination by Pfizer. Between July 1 and September 30, 1998,
Pfizer may terminate this Agreement, with or without cause, effective March 31,
1999. Between
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July 1 and September 30, 1999, Pfizer may terminate this Agreement, with or
without cause, effective March 31, 2000. Upon receipt of such notice, OSI may,
at its sole option, terminate all work under the Annual Research Plan unless
otherwise agreed with Pfizer. If Pfizer terminates this Agreement pursuant to
this Section, it will make the Funding Payments which would otherwise have been
due for such six-month period and will retain all rights set forth in the
License Agreement subject to the requirements of Section 2.6 of that Agreement.
9.6 Termination of this Agreement by either party, with or without
cause, will not terminate the licenses granted pursuant to Section 5.2.
10. Representations and Warranties. OSI and Pfizer each represents and
warrants as follows:
10.1 It is a corporation duly organized, validly existing and is in
good standing under the laws of the State of Delaware, is qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
in which the conduct of its business or the ownership of its properties requires
such qualification and has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform this Agreement.
10.2 The execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary corporate action and do not
and will not (a) require any consent or approval of its stockholders, (b)
violate any provision or any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it or any provision of its charter or by-laws or (c) result in
a breach of or constitute a default under any material agreement, mortgage,
lease, license, permit or other instrument or obligation to which it is a party
or by which it or its properties may be bound or affected.
10.3 This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and conditions, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws, from time to time in effect,
affecting creditor's rights generally.
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<PAGE> 20
10.4 It is not under any obligation to any Person, contractual or
otherwise, that is conflicting or inconsistent in any respect with the terms of
this Agreement or that would impede the diligent and complete fulfillment of its
obligations.
10.5 It has good and marketable title to or valid leases or
licenses for, all of its properties, rights and assets necessary for the
fulfillment of its responsibilities and the Research Program, subject to no
claim of any third party other than the relevant lessors or licensors.
11. Covenants of OSI.
11.1 Affirmative Covenants of OSI Other Than Reporting,
Requirements. Throughout the Contract Period, OSI shall:
11.1.1 maintain and preserve its corporate existence, rights,
franchises and privileges in the jurisdiction of its incorporation, and qualify
and remain qualified as a foreign corporation in good standing in each
jurisdiction in which such qualification is from time to time necessary or
desirable in view of its business and operations or the ownership of its
properties.
11.1.2 comply in all material respects with the requirements
of all applicable laws, rules, regulations and orders of any government
authority to the extent necessary to conduct the Sponsored Research Program.
12. Dispute Resolution.
12.1 Any dispute which cannot be resolved by discussion between the
parties under this Agreement shall be resolved by binding arbitration in the
manner described in this Section.
12.2 If a party intends to begin arbitration to resolve a dispute,
such party shall provide written notice to the other party of such intention.
Within ten (10) business days following receipt of such notice three arbitrators
shall be selected by the following process:
(a) Each party shall designate one individual, not an
employee, director, or shareholder of the party or of any Affiliate of
sublicensee of the party to serve as an arbitrator.
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(b) These arbitrators shall select a third individual, who
shall be an attorney, to serve as the third arbitrator and to preside in
resolution of the dispute. The third arbitrator shall not be an employee,
director or shareholder of either party or of an Affiliate or sublicensee of
either party.
12.3 Within five (5) business days after selection, the arbitrators
shall meet with the parties at which time the parties shall present, in writing,
the issues to be resolved and a proposed ruling on each issue. The writing shall
be served on the other party and limited to no more than fifty (50) pages.
12.4 The following general provisions shall apply to the
arbitration proceeding:
(a) No later than thirty (30) days after the appointment of
the third arbitrator, the arbitrators shall set a date for a hearing to resolve
each of the issues identified by the parties. The hearing shall take place no
later than two hundred seventy (270) days from the original notice to arbitrate.
(b) Prior to the hearing, the arbitrators shall permit the
taking of not more than two (2) depositions by each party, and shall permit,
subject to the provisions of a mutually agreeable protective order, the
production of only those documents immediately and directly bearing on the issue
or issues subject to arbitration and only to the extent necessary for the
convenience and use of the arbitrators, and shall not require to permit any
other discovery by any means, including, but not limited to, depositions,
interrogatories or additional production of documents.
(c) Each party may submit a written brief or memorandum in
support of its position which may be no more than fifty (50) pages. Each party
shall be entitled to no more than five (5) hours time to present testimony or
documentary evidence at the hearing. Such time limitation shall include any
direct, cross or rebuttal testimony, but such time limitation shall only be
charged against the party conducting such direct, cross or rebuttal testimony.
It shall be the responsibility of the arbitrators to determine whether the
parties have had the five (5) hours to which they are entitled.
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(d) Each party shall have the right to be represented by
counsel. The arbitrators shall have sole discretion with regard to the
admissibility of evidence. Admissibility will be decided by two-thirds vote.
(e) Within fifteen (15) days of the conclusion of the hearing,
each party must submit proposed findings to the arbitrators.
12.5 The arbitrators shall rule on each disputed issue within
thirty (30) days following the completion of the testimony of both parties. Such
ruling shall adopt in their entirety the proposed findings of one of the parties
on each disputed issue. Each issue shall be resolved upon two-thirds vote of the
arbitrators.
12.6 Arbitration shall take place in New York, New York. All
hearing costs shall be shared equally between the parties.
12.7 The arbitrations shall be paid reasonable fees plus expenses,
which fees and expenses shall be shared equally by the parties.
12.8 The decision of the arbitrators shall be enforceable in any
court of competent jurisdiction.
13. Notices. All notices shall be mailed via certified mail, return
receipt requested, or courier addressed as follows, or to such other address as
may be designated from time to time:
If to Pfizer: To Pfizer at its address as set forth at the
beginning of the Agreement
Attention: President, Central Research
with copy to: Office of the General Counsel
If to OSI: To OSI at its address as set forth at the
beginning of this Agreement
Attention: Chief Executive Officer
Notices shall be deemed given as of the date of receipt.
14. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York.
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15. Miscellaneous.
15.1 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective legal representatives,
successors and permitted assigns.
15.2 Headings. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement.
15.3 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original.
15.4 Amendment, Waiver, etc. This Agreement may be amended,
modified, superseded or canceled, and any of the terms may be waived, only by a
written instrument executed by each party or, in the case of waiver, by the
party or parties waiving compliance. The delay or failure of any party at any
time or times to require performance of any provision shall in no manner affect
the rights at a later time to enforce the same.
15.5 No Third Party Beneficiaries. No Person not a party to this
Agreement, including any employee of any party to this Agreement, shall have or
acquire any rights by reason of this Agreement. Nothing contained in this
Agreement shall be deemed to constitute the parties partners with each other or
any Person.
15.6 Assignment and Successors. This Agreement may not be assigned
by either party, except that Pfizer may assign this Agreement and the rights and
interests of Pfizer, in whole or in part, to any of its Affiliates, any
purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of Pfizer with or into
such corporation.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
PFIZER INC
By: /s/ GEORGE M. MILNE
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Title: Vice President
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ONCOGENE SCIENCE, INC.
By: /s/ GARY E. FRASHIER
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Title: Chief Executive Officer
------------------------
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Research Plan for the Pfizer-Oncogene Science, Inc. Collaborative Agreement
March 1996
Index
<TABLE>
<CAPTION>
Pages
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<S> <C>
Executive Summary 2 - 3
Key Oncogene Science Contributions 1991 - present 4 - 5
Research Plan 1996 and Beyond 6 - 8
Mission Statement
Current Targets: OSI as Major Contributor
Targets in the Queue: The Future
Technology Acquisition 8 - 9
Networking in Molecular Oncology 9 - 10
</TABLE>
<PAGE> 26
EXECUTIVE SUMMARY-- A VIEW OF THE COLLABORATION
The major objective of the Pfizer cancer program is to exploit new
target opportunities for drug discovery, and progress well-differentiated drugs
to their ultimate utilization as safer, more effective therapies for malignant
diseases. Our collaborators at Oncogene Science, Inc. (OSI) play a vital role in
this mission by developing and executing assays for HTS. Beyond this they
provide, across all aspects of our cancer effort, creativity, critical
intellectual input, important research tools and access to emerging
technologies. They have also proven to be an important conduit to the world's
experts in Molecular Oncology. In total, this collaboration represents an
important and, in the current competitive climate, a virtually irreplaceable
resource for the cancer discovery effort at Central Research.
New information on the molecular mechanisms that result in the
malignant progression of normal somatic cells continues to accumulate at a rapid
pace. These findings provide a steady stream of exciting opportunities for the
discovery of novel mechanism-based cancer therapeutants with enhanced efficacy
and tolerability. In the process of evaluating potential new targets, our
collaboration with Oncogene Science has been guided by three principles: ***
Currently, there is a queue of *** targets being pursued or under
consideration for inclusion in the cancer discovery program (see following
Research Plan). These targets are reviewed in a comprehensive manner twice a
year in alternating Quarterly Program Review Meetings; selected targets are
nominated for progression and new opportunities are discussed. This process is
supplemented by periodic (one per each 18 months) Strategic Retreats, in which
the views and experiences of outside consultants are also accessed. Our recent
experience has shown that *** new target opportunities can be prosecuted each
year on the basis of the criteria that we have established.
Oncogene Science's role is to collaborate in the identification of the
most promising of the new targets, to develop and run primary HTS, and to
develop secondary assays for the evaluation and prioritization of lead compounds
by the Pfizer cancer group. It
*** These portions deleted pursuant to a request for confidential treatment.
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is anticipated that the current staffing level *** will provide resources
adequate for continuation of a program of this scope. The rate at which new
opportunities can be prosecuted has been accelerated significantly this year by
the transfer to OSI of the entire Pfizer file of compounds in a compressed
format. The quantity of the data generated, and the quality of the tactics to
which they are applied, are almost certain to increase significantly; OSI has
already completed a limited number of screens in approximately 8 - 10 weeks per
2 target. We believe that the quality of the decisions that are based on those
data will continue to improve, in that an entire view can be taken of the best
of the leads against a given target before additional resources are utilized. At
no other time since the inception of the collaboration is the OSI resource being
applied in a manner which so minimizes risk while clearly optimizing chances for
success.
While the scope and focus of the collaboration continues to evolve, OSI
has already made very significant and tangible contributions to Pfizer. First
and foremost, OSI was a major force in the discovery and progression of our ***
receptor inhibitor leads, which culminated in the nomination of ***. Included
among these contributions were the development and execution of the cell-based
HTS which identified the lead compounds, primary screening (336,000 compounds)
and testing of all hits for cell-based potency and cytotoxicity, development of
the in vitro *** assay used to validate the hits from the cell-based HTS,
development and execution of a cell-based assay for testing selectivity against
three other *** (selective inhibition of ***), generation of purified *** that
were used to assess biochemical selectivity of lead compounds, and
identification and co-development of an assay for measuring tumor *** levels in
vivo. Specific discovery contributions in other areas have also been significant
(see following section).
Another dimension provided by OSI is an ongoing pursuit of new
technology to improve the process through which we identify novel compounds.
They continue to provide access to novel methodologies and technologies which
enable the prosecution of specific targets. Included among the more recent
initiatives is access to ***, a small
*** These portions deleted pursuant to a request for confidential treatment.
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company which has developed novel *** technologies for the identification of
novel cancer targets (see Technology Acquisition). Beyond this, OSI has brought
to the collaboration their network of experts in the field of Molecular
Oncology. Many of these individuals continue to be a source of new ideas and
critical perspective as target opportunities become fully-manned discovery
projects. While this contribution is somewhat more difficult to quantitate, this
may represent one of the more important aspects that OSI brings to the
collaboration.
In a therapeutic area as dynamic and as competitive as oncology, OSI
plays a unique and important role by providing an informed perspective and
access to expertise and technology, as well as the manpower required to widely
prosecute compelling discovery opportunities. Continuation of this collaboration
is recommended with significant enthusiasm.
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 29
KEY OSI CONTRIBUTIONS TO THE PFIZER CANCER PROGRAM
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<PAGE> 1
EXHIBIT 10.2
- -----------------------------------------------------------------------------
Portions of this Exhibit 10.2 have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
- -----------------------------------------------------------------------------
<PAGE> 2
EXHIBIT 10.2
LICENSE AGREEMENT
This LICENSE AGREEMENT is entered into as of ______________ (the
"Effective Date") by and between PFIZER INC ("Pfizer"), a Delaware corporation,
having an office at 235 East 42nd Street, New York, New York 10017 and ONCOGENE
SCIENCE, INC. ("OSI"), a Delaware corporation, having an office at 106 Charles
Lindbergh Boulevard, Uniondale, New York 11553.
In consideration of the mutual covenants and promises set forth in
this Agreement, the parties agree as follows:
1. Definitions.
The capitalized terms used in this Agreement shall have the meanings
specified for such terms in this Section 1 and in Section 1 of the Collaborative
Research Agreement.
1.1 "Collaborative Research Agreement" means the Collaborative Research
Agreements between Pfizer and OSI effective April 1, 1991 and April 1, 1996.
1.2 "Net Sales" means the gross amount invoiced by Pfizer or any
sublicensee of Pfizer for arm's-length sales to a third party or parties of
Licensed Human Therapeutic Products, after deducting, normal and customary trade
discounts actually allowed, returns, credits, taxes the legal incidence of which
is on the purchaser and separately shown on Pfizer's or any sublicensee of
Pfizer's invoices and transportation, insurance and postage charges, if prepaid
by Pfizer or any sublicensee of Pfizer and billed on Pfizer's or any sublicensee
of Pfizer's invoices as a separate item.
2. Grant of Licenses.
2.1 License Granted to Pfizer under the Patent Rights.
OSI grants to Pfizer the exclusive, worldwide license,
including the right to grant sublicenses, to make, use and sell Human
Therapeutic Products under all OSI's right, title and interest in the Patent
Rights.
2.2 License Granted to Pfizer under the Joint Technology.
OSI grants to Pfizer the exclusive worldwide license, including the
right to grant sublicenses, to make, use and sell Human Therapeutic Products,
under all OSI's right, title and interest in the Joint Technology.
<PAGE> 3
2.3 Licenses Granted to OSI under the Patents and Joint Technology.
Sections 2.1 and 2.2 to the contrary notwithstanding:
2.3.1 Pfizer grants to OSI the exclusive, perpetual, royalty free
license, including the right to grant sublicenses, to make use and sell Human
Diagnostic Products and products sold exclusively for research purposes under
all Pfizer's right, title and interest in the Patent Rights and Joint
Technology.
2.4 Term of License Grants and Payment of Royalties.
2.4.1 The term of the grant set forth in Section 2.1 shall commence
on the Effective Date and shall terminate on the date of the last to expire of
the Patent Rights.
2.4.2 The term of the grant set forth in Section 2.2 shall commence
on the Effective Date and shall run perpetually except in those countries of the
world in which such term is limited by law.
2.5 Paid-Up License.
Pfizer shall have a paid-up license permitting royalty-free
manufacture, use and sale of each Licensed Human Therapeutic Product in each
country after the expiration of Pfizer's last obligation to pay royalties on Net
Sales of each such Licensed Human Therapeutic Product in each such country.
2.6 Pfizer Obligations
2.6.1 Pfizer shall use reasonably diligent efforts to exploit
Licensed Human Therapeutic Products commercially. This requirement shall be
deemed satisfied:
(a) with respect to all Projects within the Annual Research
Plan, if OSI is receiving Funding Payments at a rate of no less that
seventy-five percent (75%) of those amounts set forth in Section 3.1 of the
Collaborative Research Agreement; or
(b) with respect to any specific Project within an Annual
Research Plan, if OSI is receiving Funding Payments at a rate of one hundred
percent (100%) of budget for that specific Project; or
(c) with respect to any specific Project within an Annual
Research Plan, if Pfizer is developing any Human Therapeutic Product for cancer
or any other therapeutic indication identification in the course of executing
that part of the Annual Research Plan covering that specific Project. Such
development will be shown by semi-
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<PAGE> 4
annual reports which demonstrate that Pfizer has an open or complete Request for
Development ("RFD") and, in the case of a completed RFD, the Human Therapeutic
Product remains an active candidate for an Investigative New Drug application
with the US Food & Drug Administration or foreign equivalent.
2.6.2 If Pfizer ceases to exercise diligence with respect to a
specific Project, Pfizer shall, at OSI's request, grant OSI the rights necessary
to develop at least one Licensed Human Therapeutic Product identified in the
course of executing that part of the Annual Research Plan covering that specific
Project. OSI may develop such Licensed Human Therapeutic Products itself or with
third parties on the same terms and conditions, including the payment of
royalties to Pfizer, as otherwise would have been applied to Pfizer.
2.6.3 If Pfizer grants a sublicense pursuant to Section 2, Pfizer
shall guarantee that any sublicensee fulfills all of Pfizer's obligations under
this Agreement.
2.7 Rights to Product Improvements.
For a period of five (5) years from the termination of the
Collaborative License Agreement, Pfizer shall acquire an exclusive,
(nonexclusive in the countries of the world in which this Section might
otherwise be deemed to violate restrictive trade practices laws) worldwide,
royalty-free license to any product improvements made by OSI to any Licensed
Human Therapeutic Products, but only to the extent necessary to guarantee that
Pfizer can fully enjoy all the rights granted to it pursuant to Section 2.
Pfizer shall reimburse OSI for its reasonable costs of making such product
improvements. OSI shall promptly and fully notify Pfizer of any such product
improvements made by OSI, including costs. All such improvements shall be
included within the scope of this Agreement.
2.8 Technical Assistance.
OSI shall provide to Pfizer or any sublicensee of Pfizer, at
Pfizer's request and expense, any assistance reasonably necessary to enable
Pfizer or such sublicensee to manufacture, use or sell each Licensed Human
Therapeutic Product and to enjoy fully all the rights granted to Pfizer pursuant
to this Agreement.
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<PAGE> 5
3. Royalties, Payments of Royalties, Accounting for Royalties, Records.
3.1 Patent Rights.
Pfizer shall pay OSI a royalty based on the Net Sales of each
Licensed Human Therapeutic Product, the manufacture, use or sale of which would
infringe a Valid Claim within Patent Rights if such manufacture, use or sale
were by an unlicensed third party. Such royalty shall be paid in each country of
the world from the date of first commercial sale of such Licensed Human
Therapeutic Product in each such country until the expiration of the last
applicable patent to expire with respect to each such country.
3.2 Joint Technology.
Pfizer shall pay OSI a royalty based on the Net Sales of each
Licensed Human Therapeutic Product, the manufacture, use or sale of which would
not infringe a Valid Claim within Patent Rights if such manufacture, use or sale
were by an unlicensed third party, but which employs Joint Technology. Such
royalty to be paid in each country of the world for ten (10) years from the date
of first commercial sale of such Licensed Human Therapeutic Product in each such
country, except that in the case of countries signatory to the Treaty of Rome
said obligation to pay royalties shall terminate on the earlier of the
termination of said ten (10) year period or the date on which Joint Technology
enters the public domain.
3.3 Royalty Rates - Patent Rights.
Pfizer shall pay OSI a royalty for each Human Therapeutic Product
licensed under Section 2.1 of *** percent *** of Net Sales of each Product in
which the active ingredient is a synthetic compound.
3.4 Royalty Rate - Joint Technology.
Pfizer shall pay OSI a royalty of *** percent *** of Net Sales of
each Human Therapeutic Product licensed under Section 2.2 of this Agreement.
3.5 Single Royalty.
The parties acknowledge that only one royalty rate, the highest one
applicable, under Section 3.3 or Section 3.4 will be applicable to Net Sales of
each Licensed Human Therapeutic Product.
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 6
3.6 Payment Dates.
Royalties shall be paid by Pfizer on Net Sales within ninety (90)
days after the end of each calendar quarter in which such Net Sales are made.
Such payments shall be accompanied by a statement showing the Net Sales of each
Licensed Human Therapeutic Product by Pfizer in each country, the applicable
royalty rate for such Licensed Human Therapeutic Product, and a calculation of
the amount of royalty due.
3.7 Accounting.
The Net Sales used for computing the royalties payable to OSI by
Pfizer shall be computed and paid in dollars. For purposes of determining the
amount of royalties due, the amount of Net Sales in any foreign currency shall
be computed by (a) converting such amount into dollars at the prevailing
commercial rate of exchange for purchasing dollars with such foreign currency as
quoted by Citibank in New York on the last business day of the calendar quarter
for which the relevant royalty payment is to be made by Pfizer and (b) deducting
the amount of any tax, duty, charge, commission, discount or other fee payable
in respect of such conversion into, and remittance of, dollars.
3.8 Records.
Pfizer shall keep for three (3) years from the date of each payment
of royalties complete and accurate records of sales by Pfizer of each Licensed
Human Therapeutic Product in sufficient detail to allow the accruing royalties
to be determined accurately. OSI shall have the right for a period of three (3)
years after receiving any report or statement with respect to royalties due and
payable to appoint at its expense an independent certified public accountant
reasonably acceptable to Pfizer to inspect the relevant records of Pfizer to
verify such report or statement. Pfizer shall make its records available for
inspection by such independent certified public accountant during regular
business hours at such place or places where such records are customarily kept,
upon reasonable notice from OSI, to the extent reasonably necessary to verify
the accuracy of the reports and payments. Such inspection right shall not be
exercised more than once in any calendar year nor more than once with respect to
sales in any given period. OSI agrees to hold in strict confidence all
information concerning royalty payments and reports, and all information learned
in the course of any audit or inspection, except to the extent necessary for OSI
to reveal such information in order
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<PAGE> 7
to enforce its rights under this Agreement or disclosure is required by law. The
failure of OSI to request verification of any report or statement during said
three-year period shall be considered acceptance of the accuracy of such report,
and Pfizer shall have no obligation to maintain records pertaining to such
report or statement beyond said three-year period. The results of the inspection
shall be binding on both parties.
4. Legal Action.
4.1 Actual or Threatened Disclosure or Infringement.
When information comes to the attention of Pfizer to the effect
that any Patent Rights or Joint Technology relating to a Licensed Human
Therapeutic have been or are threatened to be unlawfully disclosed or that any
of the exclusive rights granted by this Agreement has been or is threatened to
be unlawfully infringed, Pfizer shall have the right at its expense to take such
action as it may deem necessary to prosecute or prevent such unlawful disclosure
or infringement, including the right to bring or defend any suit, action or
proceeding involving any such disclosure or infringement. Pfizer shall notify
OSI promptly of the receipt of any such information and of the commencement of
any such suit, action or proceeding. If Pfizer determines that it is necessary
or desirable for OSI to join any such suit, action or proceeding, OSI shall
execute all papers and perform such other acts as may be reasonably required to
permit Pfizer to act in OSI's name. In the event that Pfizer brings a suit, it
shall have the right first to reimburse itself out of any sums recovered in such
suit or in its settlement for all reasonable costs and expenses of every kind
and character, including reasonable attorney's fees, involved in the prosecution
of any suit, and twenty-five percent (25%) of any funds that shall remain from
said recovery shall be distributed to OSI and the balance of such funds shall be
retained by Pfizer. If Pfizer does not, within one hundred twenty (120) days
after giving notice to OSI of the above-described information, notify OSI of
Pfizer's intent to bring suit against any infringer, OSI shall have the right to
bring suit for such alleged infringement, but it shall not be obligated to do
so, and may join Pfizer as party plaintiff, if appropriate, in which event OSI
shall hold Pfizer free, clear and harmless from any and all costs and expenses
of such litigation, including attorney's fees, and any sums recovered in any
such suit or in its settlement shall belong to OSI. However, twenty-five percent
(25%) of any such sums received by OSI, after deduction of the costs and
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<PAGE> 8
expenses of litigation, including attorney's fees paid, shall be paid to Pfizer.
Each party shall always have the right to be represented by counsel of its own
selection and at its own expense in any suit instituted by the other for
infringement, under the terms of this Section. If Pfizer lacks standing to bring
any such suit, action or proceeding, then OSI shall do so at the request of
Pfizer and at Pfizer's expense.
4.2 Defense or Infringement Claims.
OSI will cooperate with Pfizer at Pfizer's expense in the defense
of any suit, action or proceeding against Pfizer or any sublicensee of Pfizer
alleging the infringement of the intellectual property rights of a third party
by reason of the use of Patent Rights or Joint Technology in the manufacture,
use or sale of the Licensed Human Therapeutic Products. Pfizer shall give OSI
prompt written notice of the commencement of any such suit, action or proceeding
or claim of infringement and will furnish OSI a copy of each communication
relating to the alleged infringement. OSI shall give to Pfizer all authority
(including the right to exclusive control of the defense of any such suit,
action or proceeding and the exclusive right to compromise, litigate, settle or
otherwise dispose of any such suit, action or proceeding), information and
assistance necessary to defend or settle any such suit, action or proceeding. If
the parties agree that OSI should institute or join any suit, action or
proceeding pursuant to this Section, Pfizer may join OSI as a defendant if
necessary or desirable, and OSI shall execute all documents and take all other
actions, including giving testimony, which may reasonably be required in
connection with the prosecution of such suit, action or proceeding.
4.3 Hold Harmless.
OSI agrees to defend, protect, indemnify and hold harmless Pfizer
and any sublicensee of Pfizer, from and against any loss or expense arising from
any proven claim of a third party that it has been granted rights by OSI that
Pfizer or any sublicensee of Pfizer in exercising their rights granted to Pfizer
by OSI pursuant to this Agreement, has infringed upon such rights granted to
such third party by OSI. Pfizer agrees to defend, protect, indemnify and hold
harmless OSI from and against any liability, claim, loss, cost or expense
arising from any claim for product liability based upon Pfizer's manufacture,
use or sale of any Licensed Human Therapeutic Product.
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<PAGE> 9
4.4 Third Party Licenses.
If the manufacture, use or sale by Pfizer of a Licensed Human
Therapeutic Product in any country would, in the opinion of both Pfizer and OSI,
infringe a patent owned by a third party, Pfizer and OSI shall attempt to obtain
a license under such patent. If Pfizer obtains a license under such patent,
fifty percent (50%) of any payments made by Pfizer to such third party shall be
deductible from royalty payments due from Pfizer to OSI pursuant to this
Agreement; provided, however, that in no event shall royalties payable to OSI be
reduced by more that twenty-five percent (25%) as a result of all such
deductions. All such computations, payments, and adjustments shall be on a
country by country and patent by patent basis. If OSI is of the opinion that
such manufacture, use or sale would not infringe such patent owned by a third
party, OSI may, at its direction, bring suit against such third party seeking a
declaration that such patent is invalid or not infringed by Pfizer's
manufacture, use or sale of Licensed Human Therapeutic Product involved, or may
bring opposition, nullity or other proceedings against such patent, as
appropriate. If OSI is successful in such suit, Pfizer shall continue to pay
royalties in such country as provided in Section 3. If OSI does not bring such
suit or is unsuccessful in such suit, it shall join Pfizer in an attempt to
obtain a license under such patent, and fifty percent (50%) of any payments made
by Pfizer to such third party for such license shall be deductible from royalty
payments due from Pfizer to OSI as to that patent and that country pursuant to
this Agreement.
5. Representation and Warranty.
OSI and Pfizer represent and warrant to each other that they have the
right to grant to each other the licenses granted to them pursuant to this
Agreement, and that the licenses so granted do not conflict with or violate the
terms of any agreement between either of them and any third party.
6. Additional Terms. The following terms of the Collaborative Research
Agreement are incorporated into this Agreement as if set forth verbatim:
(a) Sections 9.3, 9.4 and 9.6.
(b) Section 4.1 through 4.3, inclusive.
(c) Section 6. Provisions Concerning the Filing Prosecution and
Maintenance of Patent Rights.
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<PAGE> 10
(d) Section 12. Dispute Resolution.
(e) Section 13. Notices.
(f) Section 14. Governing Law.
(g) Section 15. Miscellaneous.
IN WITNESS WHEREOF, the parties have caused this agreement to be
executed by their duly authorized representative.
PFIZER INC
By: /s/ GEORGE M. MILNE
---------------------------
Title: Vice President
------------------------
ONCOGENE SCIENCE, INC.
By: /s/ GARY E. FRASHIER
---------------------------
Title: Chief Executive Officer
------------------------
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<PAGE> 1
EXHIBIT 10.3
- -----------------------------------------------------------------------------
Portions of this Exhibit 10.3 have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
- -----------------------------------------------------------------------------
<PAGE> 2
EXHIBIT 10.3
STOCKHOLDERS' AGREEMENT
THIS STOCKHOLDERS' AGREEMENT made the 23rd day of April 1996, among
ANADERM RESEARCH CORP., a Delaware corporation, having its principal place of
business at 235 East 42nd Street, New York, New York 10017 (the "Company"),
PFIZER INC., a Delaware corporation, having its principal place of business at
235 East 42nd Street, New York, New York 10017 ("Pfizer"), ONCOGENE SCIENCE,
INC., a Delaware corporation, having its principal place of business at 106
Charles Lindbergh Boulevard, Uniondale, New York 11553 ("OSI"), NEW YORK
UNIVERSITY, a New York corporation, having a principal place of business at 550
First Avenue, New York, New York 10016 ("NYU"),***, each having a business
address at New York University Medical Center, 550 First Avenue, New York, New
York 10016 (*** collectively referred to herein as the "NYU Faculty Members").
Pfizer, OSI, NYU and the NYU Faculty Members shall collectively be referred to
herein as the "Stockholders".
WHEREAS, the Company was organized to discover, develop and market
pharmaceutical products for the treatment of baldness and wrinkles, and for the
control of skin and hair pigmentation; and
WHEREAS, Pfizer and OSI have each agreed to make certain contributions
to the Company in consideration for 164 and 28 shares, respectively, of Common
Stock, $.01 par value per share of the Company (the "Common Stock"),
representing 82% and 14%, respectively, of the
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 3
shares of Common Stock outstanding if all of the shares issued pursuant
to the Stock Option Agreement referred to below are issued; and
WHEREAS, NYU is willing to enter into the NYU Research Agreement (as
hereinafter defined) and the Company, in partial consideration for NYU entering
into the NYU Research Agreement, has agreed to grant stock options, pursuant to
a Stock Option Agreement, covering, as to NYU 2% of the Company's Common Stock,
and as to each of ***, 0.5% of the Company's Common Stock, with such
percentages, in each case, to be determined assuming full exercise of all
authorized stock options and full conversion of all authorized convertible
securities; and
WHEREAS, the parties to this Agreement believe it is in their mutual
best interest to provide for continuity and harmony in the management and the
policies of the Company; and
WHEREAS, the parties hereto are entering into this Agreement for the
mutual purpose of (a) providing for the management of the Company, (b) providing
for certain restrictions on transfer of the Common Stock, and (c) providing for
the Company's repurchase of shares of Common Stock upon the occurrence of
certain events.
NOW, THEREFORE, in consideration of the agreements and covenants
contained herein and for other valuable consideration, receipt of which is
hereby acknowledged, it is mutually agreed and covenanted by and among the
parties to this Agreement as follows:
ARTICLE I - DEFINITIONS
As used in this Agreement or any of the Schedules or Exhibits hereto,
the following terms have the meanings indicated. All capitalized terms used but
not defined herein shall have the same meanings ascribed to them, respectively,
in the Research Agreements, as such may be amended from time to time.
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 4
1.1 "Affiliate" means any corporation or other legal entity owning,
directly or indirectly, 50% or more of the voting capital shares or similar
voting securities of the Company, OSI or Pfizer, or any corporation or other
legal entity 50% or more of the voting capital shares or similar voting rights
of which is owned, directly or indirectly, by the Company, OSI or Pfizer.
However, a foreign corporation or other legal entity shall be considered an
Affiliate of the Company, OSI or Pfizer, if the Company, OSI or Pfizer,
respectively, owns the maximum amount of voting securities of such corporation
or entity that a U. S. company is permitted to own under the laws of the
applicable foreign country and such maximum amount is at least 40%.
1.2 "Anaderm Royalty" shall have the meaning given to such term in
Section 7.3 hereof.
1.3 "Annual Research Budget" means the research budget prepared
annually by the SAB setting forth the funding requirements of the Research
Program.
1.4 "Dermatology Indications" shall have the meaning given to such term
in the Research Agreements.
1.5 "Fair Value" means the price per share of Common Stock determined
by an independent appraiser selected by the American Arbitration Association in
the City of New York. In determining Fair Value, the independent appraiser shall
***. The appraiser may obtain and rely on information provided by any source or
sources reasonably believed by it to be accurate and all valuations by the
appraiser shall be final and conclusive on the parties hereto.
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 5
1.6 "Involuntary Transfer" means any involuntary sale, transfer,
encumbrance or other disposition by, or in which, any Stockholder is deprived or
divested of any right, title or interest in or to its shares of Common Stock,
including, without limitation, any transfer in connection with a divorce, death,
bankruptcy (whether voluntary or involuntary), reorganization, insolvency or
similar proceeding, distraint, levy, attachment, execution or other involuntary
event of any nature whatsoever.
1.7 "Lead Compound" shall have the meaning given to such term in the
Research Agreements.
1.8 "New Use" shall have the meaning given to such term in the
Research Agreements.
1.9 "NYU Research Agreement" means the Research and Licensing
Agreement, of even date herewith, between the Company and NYU.
1.10 "Options" means the options to purchase up to that number of
shares of Common Stock as would represent, after their issuance, 4% of the then
outstanding shares of Common Stock pursuant to the Stock Option Agreement.
1.11 "OSI Research Agreement" means the Collaborative Research
Agreement, of even date herewith, among the Company, OSI and Pfizer.
1.12 "Permitted Transferee" shall have the meaning given to such term
in Section 3.4.
1.13 "Pfizer Compound File" means the compounds maintained by Pfizer's
Central Research Division.
1.14 "Research Agreements" means the OSI Research Agreement and the NYU
Research Agreement.
1.15 "SAB" means the Scientific Advisory Board of the Company appointed
by the Board of Directors to advise the Company on matters related to the
Research Program.
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<PAGE> 6
1.16 "Stock Option Agreement" means the agreement, of even date
herewith, between the Company on the one hand, and NYU and the NYU Faculty
Members on the other hand, pursuant to which the Company grants NYU and the NYU
Faculty Members options to acquire up to that number of shares of Common Stock
as would represent, after their issuance, 4% of the shares of the then
outstanding Common Stock, of which NYU is granted options to acquire up to 2.0%
of such Common Stock, and *** are each granted options to acquire up to 0.5%
of such Common Stock.
1.17 "Valid Claim" shall have the meaning given to such term in either
of the Research Agreements, as applicable.
ARTICLE II - CAPITAL CONTRIBUTIONS
2.1 Capital Contributions. The Stockholders shall make the following
capital contributions to the Company:
(a) Capital Contribution by Pfizer Upon Execution of this
Stockholders' Agreement. Upon execution of this Agreement and in consideration
of the issuance of 164 shares of Common Stock to Pfizer, Pfizer shall make an
initial capital contribution to the Company of $ *** in cash for use as follows:
(i) *** to be paid by the Company to NYU on the date of this
Agreement under Section 3.6 of the NYU Research Agreement;
(ii) *** to be paid by the Company to NYU on the date of this
Agreement under Section 3.7 of the NYU Research Agreement;
(iii) an aggregate of *** to be paid by the Company to the NYU
Faculty Members on the date of this Agreement pursuant to the four Exclusive
Consultantship Agreements of even date herewith between the Company and each of
the NYU Faculty Members; and
(iv) *** to be used as working capital.
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 7
(b) Capital Contribution by OSI. In consideration of the issuance
of 28 shares of Common Stock of the Company to OSI, OSI shall contribute to the
Company (i) the formatting for high-throughput screens, (ii) a commitment to
provide up to eighteen (18) months of screening at OSI's expense, (iii) access
to OSI's fermentation product files, (iv) any Technology internally developed or
externally acquired relating to the Field, and (v) cash equal to $0.28.
(c) Additional Capital Contributions by Pfizer.
(i) Within 12 months following the date of this Agreement,
Pfizer shall make an additional capital contribution to the Company of *** in
cash, to supplement the contribution referred to in Section 2.1(a) hereof. This
additional capital contribution shall be used as working capital.
(ii) During the three-year period beginning the date of this
Agreement, provided the Company owes each of the five payments of *** that may
be due to NYU under Section 3.6 of the NYU Research Agreement, Pfizer shall make
such additional capital contributions to the Company in cash as are necessary to
fund such payments.
(iii) During the Funded Phase (as defined in the OSI Research
Agreement), if any, Pfizer shall make such additional capital contributions to
the Company in cash as are necessary to fund the payments due to OSI pursuant to
the last sentence of Article 3 of the OSI Research Agreement; provided, however,
that the aggregate amount Pfizer is obligated to contribute under this Section
2(c)(iii) shall not exceed ***.
(iv) None of the capital contributions provided for in this
Section 2.1(c) shall entitle Pfizer to the issuance of any additional shares of
stock.
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 8
(d) Other Capital Contributions. In addition to the capital
contributions provided for in Section 2.1(a) through (c), additional
contributions may be made to the capital of the Company in accordance with the
General Corporation Law of the State of Delaware, subject to the provisions of
Section 6.1 hereof.
(e) Other Support by Pfizer for the Company. To support the
Company's research activities and subject to Section 2.3 hereof, Pfizer agrees
to permit the Company to use without any additional consideration certain
compounds from the Pfizer Compound File as it exists from time to time, solely
for screening purposes in connection with the Research Program. In addition,
Pfizer shall make available to the Company without any additional consideration
certain services of Pfizer employees for a period of 18 months.
2.2 Options. (a) In partial consideration of NYU executing and
delivering the NYU Research Agreement, which execution and delivery shall occur
simultaneously with the execution of this Agreement, the Company shall grant
stock options, in the form set forth in the Stock Option Agreement (the
"Options"), covering, as to NYU, the number of shares which, when issued, shall
constitute 2.0% of the Company's Common Stock (after giving effect to the
exercise of all outstanding options and warrants and the conversion of all
convertible securities), and as to each of [ ], the number of shares which, when
issued, shall constitute 0.5% of the Company's Common Stock (after giving effect
to the exercise of all outstanding options and warrants and the conversion of
all convertible securities). The Options shall be exercised in accordance the
Stock Option Agreement and are exercisable at any time during the six-month
period following their issuance, subject to the terms of the Stock Option
Agreement.
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<PAGE> 9
(b) Unless and until each shall exercise his or its Option under
the Stock Option Agreement, neither NYU nor any NYU Faculty Member,
respectively, shall be bound by any of the provisions of this Agreement. Upon
the exercise of any Option by NYU or any NYU Faculty Member, all rights,
benefits and obligations with respect to the party so exercising his or its
Option as a Stockholder hereunder shall automatically, without any further
action on his or its part or any other party hereto, become effective and
binding.
2.3 The Pfizer Compound File. Pfizer shall make available to the
Company compounds from the Pfizer Compound File, pursuant to Section 2.1(e),
provided that the selection of compounds for use in screening satisfies the
Company's research goals and is consistent with Pfizer corporate policy. Pfizer
shall not be obligated to make available to the Company for any purpose any
Pfizer compound that has been designated a clinical candidate or a backup to a
clinical candidate.
ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES
3.1 Shares Subject to Agreement. Each of the Stockholders hereby agrees
that all shares of Common Stock acquired on the date hereof or at any time
hereafter by such Stockholder shall be subject to the provisions set forth in
this Agreement.
3.2 Outstanding Shares. For purposes of this Agreement, unless
otherwise indicated, any reference to shares of Common Stock outstanding shall
not include shares of Common Stock underlying unexercised options, warrants,
rights or convertible securities of the Company (unless such reference states
that such amount is determined after giving effect to such exercise or
conversion, until such options, warrants or rights have been duly exercised or
convertible securities duly converted.
3.3 General Restriction on Transfer. Each Stockholder hereby agrees not
to sell, assign, hypothecate, transfer, pledge, encumber, give
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<PAGE> 10
away, or otherwise dispose of any shares of Common Stock that such Stockholder
acquires on the date hereof or at any time hereafter except pursuant to and in
compliance with the terms and conditions of this Agreement. The Company hereby
agrees that it will not transfer or recognize any transfer of Common Stock
except in compliance with the terms of this Agreement. All certificates
representing shares of Common Stock of the Company shall be legended in
accordance with Article IX hereof.
3.4 Permitted Transfers. Notwithstanding any provision to the contrary
in this Article III, any Stockholder may, upon prior notice thereof to the
Company, transfer title to its shares of Common Stock to (i) a trust established
by such Stockholder, if the sole beneficiaries of such trust are the
Stockholder, the Stockholder's spouse or the Stockholder's children, or (ii) an
Affiliate of such Stockholder (each a "Permitted Transferee"), if such Permitted
Transferee executes an instrument satisfactory to the Company agreeing to be
bound by the terms and provisions of this Agreement.
ARTICLE IV - CORPORATE GOVERNANCE
4.1 Board of Directors. In accordance with the By-Laws of the Company
and Section 141 of the General Corporation Law of the State of Delaware, the
Board of Directors shall be responsible for the governance of the Company. The
initial Board of Directors shall consist of *** as provided in Section 4.3.
Thereafter, the number of directors may be increased or decreased as provided in
the By-Laws.
4.2 Nomination and Election of Directors. As long as Pfizer owns a
majority of the outstanding shares of Common Stock, the Stockholders agree that
Pfizer shall have the right to nominate a majority of the members of the Board
of Directors, and OSI shall have the right to nominate the remaining members of
the Board of Directors. Pfizer and OSI
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 11
each hereby agree to vote their respective shares of Common Stock for the
election of the nominees of Pfizer and OSI in accordance with this Section 4.2.
4.3 Initial Board of Directors. The Stockholders hereby agree that on
the date hereof the Board of Directors of the Company shall consist of the
following four persons, each of whom is nominated by the Stockholder set forth
opposite such director's name:
<TABLE>
<CAPTION>
Name of Director Nominated by:
---------------- -------------
<S> <C>
*** Pfizer
*** Pfizer
*** Pfizer
*** OSI
</TABLE>
4.4 Initial Officers of the Company. The Stockholders acknowledge that
the Board of Directors of the Company has elected, in accordance with the
By-Laws, the following persons as officers of the Company in the positions set
forth opposite their respective names:
<TABLE>
<CAPTION>
Name Office
---- ------
<S> <C>
*** President
*** Vice President
*** Secretary
*** Treasurer
*** Assistant Treasurer
*** Assistant Secretary
*** Assistant Secretary
</TABLE>
4.5 Quorum of the Board. No action shall be taken at any meeting of the
Board of Directors of the Company, unless at least a majority of the entire
Board shall be present. For purposes of a quorum, any director may be present at
any meeting in person, by means of telephone or similar communications equipment
by means of which each person
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 12
participating in the meeting can hear and speak to each other or, to the extent
permitted by applicable law, by proxy.
4.6 Action by the Board of Directors. If a quorum exists, any action
taken by the Board of Directors shall be authorized by the affirmative vote of a
majority of those members of Board of Directors present at the meeting;
provided, however, that the affirmative vote of three quarters of the members of
the Board of Directors is required to take the following actions:
(i) to authorize, issue or enter into any agreement providing for
the issuance (contingent or otherwise) of any equity securities or any notes or
debt securities containing equity features (including, without limitation, any
notes or debt securities convertible into or exchangeable for equity
securities);
(ii) to directly or indirectly redeem, purchase or otherwise
acquire, any of the Company's equity securities;
(iii) to make any amendments, modifications or changes to the
Certificate of Incorporation or By-Laws of the Company, the OSI Research
Agreement, the NYU Research Agreement, the Annual Research Plan or the Annual
Research Budget;
(iv) to make any changes to the members of the Scientific Advisory
Board;
(v) to hire, fire and determine the amount of compensation paid to
Officers of the Company;
(vi) to sell, lease or otherwise dispose of more than 25% of the
Company's assets in any transaction or series of transactions;
(vii) to merge or consolidate with any person or entity;
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<PAGE> 13
(viii) to create, incur, assume or suffer to exist any indebtedness
exceeding in the aggregate $10,000 outstanding at any time; or
(ix) to make any capital expenditures exceeding $10,000 with
respect to any single capital expenditure or $250,000 in the aggregate during
any twelve-month period.
4.7 Quorum of Stockholders. No action shall be taken at any meeting of
stockholders of the Company unless at least a majority of the holders of the
outstanding shares of Common Stock entitled to vote are present in person or by
proxy.
4.8 Action by Stockholder. If a quorum exists, any corporate action
taken, except as otherwise set forth herein and except as may be required by
law, shall be authorized by the affirmative vote of a majority of the votes cast
at a meeting of stockholders by the holders of shares of Common Stock entitled
to vote thereon.
ARTICLE V - DISPOSITION OF SHARES
5.1 Right of First Refusal.
(a) If NYU or any NYU Faculty Member (the "NYU Seller") desires to
sell, transfer or otherwise dispose of any or all of his or its shares of Common
Stock, such NYU Seller may offer to sell such shares (the "Offered Shares") to
an unaffiliated third party for all cash payable at the closing of such sale,
subject to the Company's rights as hereinafter set forth, or offer to sell such
Offered Shares to the Company directly. The NYU Seller shall give written notice
thereof (an "Offering Notice") to the Company, with a copy to each of the other
Stockholders, which Offering Notice shall state or contain (i) the name of such
NYU Stockholder, (ii) the number of Offered Shares, (iii) the name, address and
the amount of cash proposed to be paid by a prospective purchaser pursuant to a
bona fide offer (the "Offer Price"), if any, and
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<PAGE> 14
all the other terms and conditions relating to such bona fide offer. The
delivery by any NYU Seller of an Offering Notice shall constitute a binding
offer by the NYU Seller to sell to the Company, and the Company shall thereupon
have the right, but not the obligation, to purchase any or all, of the Offered
Shares at the Offer Price, if any, or if there is no Offer Price at the Fair
Value (the applicable price being herein referred to as the "Purchase Price");
provided, however, that such Purchase Price shall be paid in accordance with
Section 5.1(g) hereof. Within thirty (30) days after the Company's receipt of
the Offering Notice, the Company shall notify the NYU Seller in writing of its
acceptance or rejection of the offer to purchase the Offered Shares.
(b) In the event that the Company elects to purchase all of the
Offered Shares, the closing shall take place in accordance with Section 6.1(g)
hereof.
(c) In the event that the Company rejects the offer to purchase the
Offered Shares from the NYU Seller or elects to purchase fewer than all of the
Offered Shares, the NYU Seller shall deliver written notice thereof (the "Second
Notice") to each of the other Stockholders with a copy to the Company, within
ten (10) days after the NYU Seller's receipt of the Company's response to its
offer. The Second Notice shall state or contain (i) the number of Offered
Shares, (ii) the number of Offered Shares which the Company has subscribed for,
if any, (iii) the number of Offered Shares available for sale to the other
Stockholders, (iv) the name, address and the Offer Price proposed to be paid by
the prospective purchaser. The delivery by any NYU Seller of a Second Notice
shall constitute a binding offer by the NYU Seller to sell to the Company and
the other Stockholders, and the Company and the other Stockholders shall
thereupon have the right, but not the obligation, to purchase in the aggregate,
all, but not less than all, of the Offered
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<PAGE> 15
Shares at the Purchase Price; provided, however, that such Purchase Price shall
be paid in accordance with Section 5.1(g) hereof.
(d) Any Stockholder (other than the NYU Seller) electing to
purchase Offered Shares shall deliver to the NYU Seller, with a copy to the
Company, within twenty (20) days after the Second Notice is sent to the
Stockholders (the "Acceptance Period"), a notice (an "Acceptance Notice") of
such Stockholder's election stating the maximum number of Offered Shares which
such Stockholder desires to purchase (such Stockholder's "Elected Share
Number"). The giving of such Acceptance Notice shall irrevocably commit the
Stockholder giving such notice (an "Electing Stockholder") to purchase the
Elected Share Number (or any lesser number thereof as may be determined as
hereinafter provided).
(e) In the event the Company, together with the Electing
Stockholders, have not elected to purchase, in the aggregate, all of the Offered
Shares, then the NYU Seller may sell the Offered Shares to the prospective
purchaser at the Offer Price for cash consideration payable at closing and on
the other terms and conditions specified in the Offering Notice, and such sale
shall take place within sixty (60) days after the expiration of the Acceptance
Period; provided, however, that such prospective purchaser shall execute an
instrument satisfactory to the Company agreeing to be bound by the terms and
provisions of this Agreement. References herein to Stockholders and to shares of
Common Stock held or owned by any Stockholder shall be deemed to include any
such prospective purchaser that purchases Common Stock hereunder and such shares
held or owned by such prospective purchaser, respectively. If such sale has not
taken place within sixty (60) days following the expiration of the Acceptance
Period, all the provisions contained in this Agreement shall again be in effect
with respect to such Offered Shares.
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<PAGE> 16
(f) If all of the Offered Shares offered to the Stockholders have
been fully subscribed for by the Company and the Electing Stockholders pursuant
to Section 5.1(e), then the Company shall send to the NYU Seller, within five
days after the expiration of the Acceptance Period, a written notice to such
effect and shall include in such notice the name of each Electing Stockholder,
the number of such Offered Shares allocated to such Electing Stockholder and the
Company for purchase and the closing date of the purchase and sale of the
Offered Shares. In the event the Offered Shares available to the Electing
Stockholders are oversubscribed for, the number of Offered Shares each Electing
Stockholder shall be allocated shall be determined pro rata based on the
percentage that each Electing Stockholder's shares of Common Stock bears to the
total outstanding shares of Common Stock.
(g) In the event that the Company and/or the Electing Stockholders,
as the case may be, elect to purchase all of the Offered Shares under this
Section 5.1, the closing of the purchase and sale of the Offered Shares shall
take place at the principal executive offices of the Company within thirty (30)
days following the date the notice to such effect is given by the Company to the
NYU Seller pursuant to Sections 5.1(a), 5.1(c) or 5.1(f) (whichever is
applicable), or at such other place, on such other date, or both, as the NYU
Seller, the Company and the Electing Stockholders, as applicable, may agree upon
in writing. The Purchase Price payable by the Electing Stockholders and/or the
Company hereunder shall be paid either (i) in full by cash or certified check at
the closing of such purchase, or (ii) one-third of the Purchase Price shall be
paid in cash or by certified check at the closing; and the balance of the Offer
Price shall be payable on the first and second anniversaries of such closing in
two equal annual installments, together with interest from the closing
calculated on the amount of such
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<PAGE> 17
installment at the prime rate, as in effect from time to time during the period
prior to the payment of such installment, as published by Citibank N.A.
5.2 Involuntary Transfers. If any Involuntary Transfer of Common Stock
takes place, the following procedures shall apply:
(a) Any Stockholder deprived or divested of any shares of Common
Stock by Involuntary Transfer (the "Transferor") shall promptly give written
notice thereof in reasonable detail to the Company. Any person or entity that
takes or proposes to take any ownership interest in such shares of Common Stock
(the "Transferred Shares") as a result of such Involuntary Transfer (the
"Transferee") shall hold such interest subject to the rights of the Company as
set forth in Section 5.2(b).
(b) For a period of 180 days following the earlier to occur of
receipt of the notice referred to in Section 5.2(a) or discovery of any
Involuntary Transfer, the Company may purchase the Transferred Shares in
accordance with Section 5.2(c), subject to the terms set forth herein. If the
Company elects to purchase the Transferred Shares, the Company shall notify the
Transferee of its rights hereunder and specify the number of Transferred Shares
to be purchased.
(c) The closing for any sale of Transferred Shares to the Company
shall take place at the Company's principal executive office not later than
sixty (60) days after the Transferee receives the notice referred to in Section
5.2(b). The purchase price payable by the Company for any Transferred Shares
purchased hereunder shall be the Fair Value of such Transferred Shares.
(d) In the event that the Company does not purchase all or any of
the Transferred Shares pursuant to Section 5.2, the Transferee shall take and
hold all rights and interests in any Transferred Shares that are not so
purchased subject to the terms of this Agreement.
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<PAGE> 18
5.3 Put and Call Rights.
(a) On the terms and subject to the conditions set forth in Section
5.3, at any time subsequent to the fourth anniversary of the date hereof, NYU
and each of the NYU Faculty Members may require the Company to purchase all but
not less than all of the shares of Common Stock held by each such Stockholder at
a price equal to the Fair Value of such shares (the "Put Right"), subject to the
limitations set forth in Section 12.1.
(b) On the terms and subject to the conditions set forth in this
Section 5.3, at any time subsequent to the sixth anniversary of the date hereof,
the Company may require NYU or any NYU Faculty Member to sell to the Company all
but not less than all of the shares of Common Stock held by such Stockholder at
a price equal to the Fair Value of such shares (the "Call Right").
(c) NYU or any NYU Faculty Member may exercise the Put Right by
delivering to the Company written notice setting forth the number of shares of
Common Stock held by such Stockholder. The Company may exercise the Call Right
with respect to NYU or any NYU Faculty Member by delivering to such Stockholder
written notice setting forth the terms of the proposed purchase of Common Stock.
(d) Unless otherwise agreed to by the Company and the selling
Stockholder, the closing of any purchase of Common Stock pursuant to the
exercise of any Put Right or any Call Right hereunder shall take place at the
principal executive offices of the Company within sixty (60) days after the
delivery of the notice referred to in Section 5.3(c). The Company shall pay the
Fair Value of such shares either (i) in full by cash or certified check at the
closing, or (ii) one-third of the total amount due shall be paid in cash or by
certified check at the closing, and the balance of the amount due shall be
payable on the first and
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<PAGE> 19
second anniversaries of such closing in two equal installments, together with
interest on the amount of such installments from the date of closing calculated
at the prime rate, as in effect from time to time during the period prior to the
payment of such installment, as published by Citibank, N.A.
5.4 Tag Along Rights.
(a) In the event that one or more Stockholders propose to sell or
otherwise dispose of shares representing more than fifty percent of the
outstanding shares of Common Stock then outstanding (the "Majority
Stockholders") in one or a series of transactions to any third party (other than
a Permitted Transferee), such Majority Stockholders shall not consummate or
enter into any agreement to consummate such sale unless such third party
purchaser offers to purchase from each other Stockholder the number of shares of
such other Stockholder's Common Stock as determined in accordance with Section
5.4(b) at the same price and on the same other terms as such purchaser offered
to purchase such shares from the Majority Stockholders ("Tag Along Rights"). Any
Stockholder proposing to sell or otherwise dispose of its Common Stock to a
third party purchaser pursuant to Section 5.4 shall agree, and be able, to
transfer to such purchaser good and marketable title to the shares that such
Stockholder proposes to sell, free and clear of all liens, claims and
encumbrances.
(b) The maximum number of shares of Common Stock that any
Stockholder may require any third party to purchase pursuant to Section 5.4(a)
shall be the total number of shares of Common Stock owned by each such
Stockholder multiplied by the percentage that the total number of shares of
Common Stock to be purchased by the third party bears to the total number of
outstanding shares of Common Stock.
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<PAGE> 20
(c) Prior to any sale under Section 5.4(a), the Majority
Stockholders shall notify the Company and each of the other Stockholders in
writing of such proposed sale, setting forth (i) the number of shares of Common
Stock that such Stockholder proposes to sell, (ii) the name and address of the
third party purchaser; and (iii) the amount of consideration (including the
value of any non-cash consideration) offered by the third party purchaser.
Within ten (10) days after receiving the foregoing notice, any Stockholder may
elect to exercise its Tag Along Rights by delivering written notice to the
Majority Stockholders of such Stockholder's election to purchase the shares of
Common Stock offered for sale pursuant to Section 5.4. If none of the
Stockholders so notifies the Majority Stockholders within the foregoing ten (10)
day period, then the Majority Stockholders shall have the right to effect the
proposed sale of such shares for a period of sixty (60) days thereafter on
substantially the same terms and conditions as such shares were offered to the
other Stockholders.
5.5 Take Along Right.
(a) If Pfizer and OSI (together, the "Control Group") approve any
sale of the Company by merger, consolidation, sale of the Company's assets, sale
of Common Stock or otherwise, to any person other than a member of the Control
Group or an Affiliate of a member of the Control Group, each of the other
Stockholders hereby agree to consent to, vote for and raise no objections
against, such sale. If such sale is structured as a sale of all of the
outstanding Common Stock, each other Stockholder hereby agrees to sell all of
its shares of Common Stock on the terms approved by the Control Group and to
take all reasonable actions requested by the Control Group or the purchaser in
connection with the consummation of any such sale ("Take Along Right"). As
consideration for the sale of such Stockholders' shares of Common Stock,
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<PAGE> 21
each Stockholder will receive for each share of Common Stock cash and the fair
market value of any non-cash consideration in the same amount as the Control
Group receives for the sale of each share of Common Stock.
(b) If the closing of any sale of Common Stock pursuant to Section
5.5(a) has not been effected within 180 days after the Control Group first
approves of such sale, the obligation of any Stockholder to participate in such
sale shall terminate and the provisions of Section 5.5 shall be reinstated.
(c) Nothing contained in Section 5.5 shall obligate the Control
Group to consummate any sale or the Company hereunder, and any such sale may be
abandoned by the Control Group at any time. If any such proposed sale is
abandoned, the Control Group shall promptly send written notice thereof to each
of the other Stockholders.
ARTICLE VI - PREEMPTIVE RIGHTS
6.1 Preemptive Rights.
(a) After the date hereof, the Company shall not issue any
additional shares of Common Stock ("New Shares") to any person or entity (the
"New Stockholder") (except for Common Stock issued upon the exercise of the
Options granted under the Stock Option Agreement) unless the Company grants to
all Stockholders the right to subscribe for and purchase the same aggregate
number of additional shares of Common Stock (the "Preemptive Shares") as the
number of New Shares, at the same price and upon the same terms as the New
Shares are being offered. The Company shall determine the number of Preemptive
Shares to be offered to each Stockholder by multiplying the total number of
Preemptive Shares by the percentage that each such Stockholder's shares of
Common Stock bears to the total number of shares of Common Stock outstanding
immediately prior to the issuance of New Shares and Preemptive Shares hereunder.
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<PAGE> 22
Notwithstanding the foregoing, there shall be no preemptive rights by reason of
any underwritten public offering.
(b) Prior to the issuance of any New Shares pursuant to Section
6.1, the Company shall give each Stockholder written notice setting forth the
terms upon which such Stockholder may purchase Preemptive Shares hereunder.
(c) After receiving the notice described in Section 6.1(b), any
Stockholder may exercise its preemptive rights hereunder by replying in writing
within twenty (20) days after the date of such notice that such Stockholder
agrees to purchase the Preemptive Shares offered pursuant to Section 6.1. Each
Stockholder may exercise preemptive rights with respect to all, but not less
than all, of the Preemptive Shares which such Stockholder has the right to
purchase pursuant to Section 6.1.
(d) If any Stockholder fails to reply in accordance with Section
6.1(c), the Company shall have ninety (90) days thereafter to consummate the
sale of Common Stock to a New Stockholder pursuant to Section 6.1. If the
Company has not consummated such sale within such ninety (90) day period, the
Company may not sell shares of common stock subsequently to any New Stockholder
without first offering the Stockholders preemptive rights with respect to such
shares in the manner provided for in Section 6.1.
(e) If the offering price for any New Shares consists of any
consideration other than cash, then the price at which the Stockholders shall be
offered preemptive rights hereunder with respect to any Preemptive Shares shall
be determined by an independent appraiser selected by the Company. Any
Stockholder purchasing Preemptive Shares hereunder shall pay the purchase price
therefor to the Company in cash; provided, however, that after obtaining the
consent of the Board of Directors of the Company, OSI may give consideration
other than cash if
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<PAGE> 23
the value of such non-cash consideration is determined by such independent
appraiser to be at least equal to the amount of consideration proposed to be
paid by the New Stockholder for the New Shares hereunder.
ARTICLE VII - DEVELOPMENT OF A LEAD COMPOUND
7.1 Pfizer's Right of First Refusal for Initial Development. (a) If the
SAB makes a preliminary assessment that any compound that was invented, or for
which a New Use was invented, by any person in the course of such person's
participation in the Research Program is or may be effective in treating any
indication in the Field or the Dermatology Indications, such compound shall be
considered a Lead Compound and the Company shall promptly present such compound
or New Use to Pfizer. Within sixty (60) days of such presentation, Pfizer may
notify the Company in writing of Pfizer's election to (i) make an additional
capital contribution to the Company to enable the Company to further develop
such Lead Compound or New Use, or (ii) negotiate the terms pursuant to which
Pfizer may collaborate with the Company in the development of such Lead Compound
or New Use, or obtain all of the Company's rights and interests in such Lead
Compound or New Use. Any rights acquired by Pfizer from the Company hereunder
with respect to any Lead Compound are subject to the royalty fees payable to OSI
and NYU under the Research Agreements and the royalty fees payable to the
Company under Section 8.3 hereof.
(b) If Pfizer makes any additional capital contribution to the
Company pursuant to Section 7.1(a)(i), any additional shares of Common Stock
issued in exchange therefor are subject to the preemptive rights
provisions of Section 6.1.
(c) If Pfizer elects not to exercise its right of first refusal
pursuant to Section 7.1(a), or if Pfizer fails to pursue diligently the
development of any Lead Compound or New Use with respect to which it has
obtained rights under Section 7.1(a)(ii), which
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<PAGE> 24
determination shall be made by the Board of Directors of the Company, then the
Company may further develop and market such Lead Compound or New Use
independently, or the Company may enter into licensing, joint venture or other
arrangements with third parties to facilitate such development.
7.2 Pfizer's Right of First Refusal for Further Development. (a) If any
Lead Compound or New Use developed by the Company with respect to which Pfizer
has made a capital contribution pursuant to Section 7.1(a)(i) reaches the stage
where the Company has decided to submit an application to the Food and Drug
Administration for designation of such Lead Compound or New Use as an
Investigational New Drug, or to pursue clinical testing of such Lead Compound or
New Use in humans, the Company shall present such Lead Compound or New Use to
Pfizer. Within sixty (60) days of such presentation, Pfizer shall notify the
Company in writing if Pfizer elects to negotiate the terms under which it may
obtain the Company's rights and interest in such Lead Compound or New Use. Any
such rights acquired by Pfizer are subject to the royalty fees payable to OSI
and NYU under the Research Agreements and the royalty fees payable to the
Company under Article 7.3 hereof.
(b) If Pfizer elects not to exercise its right of first refusal
pursuant to Section 7.2(a), then the Company may further develop and market such
Lead Compound or New Use independently, or by entering into licensing, joint
venture or other arrangements with third parties to facilitate such development.
7.3 Development by Pfizer. (a) If Pfizer acquires rights in any Lead
Compound pursuant to Section 7.1 or 7.2 hereof, Pfizer shall pay to the Company
a royalty equal to *** percent *** of the net sales of any Human Therapeutic
Product based on such Lead Compound (the "Anaderm Royalty"). The Anaderm Royalty
shall be in addition to, and not in lieu of, any royalties or other payments
that may be due to NYU or OSI
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 25
under the Research Agreements. The Anaderm Royalty shall be paid to the Company,
notwithstanding the termination provisions of Article 11 of this Agreement, for
a period of ten years beginning with the first commercial sale of such Human
Therapeutic Product in any country, unless at the end of such ten year period
there exists in that country a Valid Claim of an issued patent to such Human
Therapeutic Product, a compound or composition contained therein, a method or
process employed in making such Human Therapeutic Product, or a method of use
for which such Human Therapeutic Product is being marketed in that country, in
which case Pfizer shall continue to pay the Anaderm Royalty to the Company
during the period in which any such claim exists in that country.
(b) If Pfizer decides to negotiate an agreement with a third party
pursuant to which Pfizer would grant such third party a license under Pfizer's
rights in any Lead Compound or Human Therapeutic Product, which rights Pfizer
acquired from the Company pursuant to its Rights of First Refusal under Section
7.1 or 7.2 hereof, and Pfizer determines that payment of the Anaderm Royalty
would render the proposed licensing arrangement commercially unfeasible to
Pfizer, then Pfizer may negotiate with the Company in good faith to determine
the amount of royalties or other compensation that the Company will receive in
lieu of the Anaderm Royalty from such arrangement.
7.4 Development by Anaderm. In the event that Pfizer elects not to
exercise its Rights of First Refusal with respect to any Lead Compound or New
Use pursuant to Section 7.1 or 7.2 hereof and the Company decides to license
such Lead Compound or New Use to a third party, any payments received in
connection with such license arrangement, less any associated expenses, shall be
paid *** to the Company, *** to OSI under the OSI Research Agreement, *** to NYU
under the NYU Research Agreement, and *** to Pfizer.
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 26
ARTICLE VIII - SCIENTIFIC ADVISORY BOARD
8.1 Responsibility of Scientific Advisory Board. The Company shall
establish a Scientific Advisory Board (the "SAB") in accordance with the
provisions hereof. The SAB shall have the following major responsibilities: (i)
to prepare the Annual Research Plan and the Annual Research Budget for the
approval of the Board of Directors, (ii) to make recommendations to the Board of
Directors regarding the selection, development and transfer of screens and the
selection of Lead Compounds, (iii) monitor competitive developments, (iv)
evaluate licensing opportunities, and (v) to perform such other duties as the
Board of Directors shall deem advisable.
8.2 Composition of SAB. (a) The SAB shall consist of three persons
designated by Pfizer, three persons designated by OSI, and such other persons as
may be appointed by the Company from time to time.
(b) The members of the SAB designated by Pfizer and OSI shall be
appointed for an initial term of two (2) years, and the NYU Faculty Members
shall be appointed for an initial term of two (2) years. After the expiration of
each SAB member's initial term, each person selected then to be a member of the
SAB shall be appointed for a term of two (2) years. The parties hereto hereby
agree that the initial members of the SAB and the date of the expiration of
their respective terms shall be as follows:
<TABLE>
<CAPTION>
Expiration of
Name Initial Term Designated By:
- ---- ------------- --------------
<S> <C> <C>
*** March 1998 Pfizer
*** March 1998 Pfizer
*** March 1998 Pfizer
*** March 1998 OSI
*** March 1998 OSI
*** March 1998 OSI
*** March 1998 Company
*** March 1998 Company
*** March 1998 Company
*** March 1998 Company
</TABLE>
*** These portions deleted pursuant to a request for confidential treatment.
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<PAGE> 27
(c) Members of the SAB shall be appointed by the Board of Directors
of the Company; provided, however, that each of Pfizer and OSI shall first
approve the appointment of any person as their respective designee on the SAB. A
Pfizer designee shall serve as chairman of the SAB, and an OSI designee shall
serve as co-chair of the SAB.
8.3 Meetings of the SAB. Meetings of the SAB shall be held on a
bi-monthly basis or more frequently as the Board of Directors of the Company
deems necessary at places and on dates selected by the Chairman and the
Co-Chairman.
8.4 Minutes of SAB. The SAB shall designate one of its members to
prepare the minutes of each meeting. Minutes of each meeting of the SAB shall be
distributed to each member of the SAB and to the Board of Directors of the
Company within ten (10) business days after each meeting.
8.5 Action by the SAB. All actions taken by the SAB shall be approved
by majority vote of all members of the SAB, subject to approval of the Board of
Directors of the Company.
8.6 Reports. The SAB, OSI and Pfizer shall each provide the following
to the Board of Directors of the Company:
(a) summary reports within fifteen (15) days after the end of each
quarter, commencing on March 31, describing its progress under the Annual
Research Plan;
(b) comprehensive written reports within thirty (30) days after the
end of each fiscal year, describing in detail the work each has accomplished
under the Annual Research Plan during such fiscal year and evaluating the
results of such work.
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<PAGE> 28
ARTICLE IX - LEGENDING OF SECURITIES
9.1 Legends. Each certificate representing shares of Common Stock
shall bear a legend in substantially the form set forth below:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM."
"THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO THE TERMS AND
CONDITIONS OF AN AGREEMENT, DATED APRIL 23, 1996, AMONG THE COMPANY AND
THE STOCKHOLDERS OF THE COMPANY SPECIFIED THEREIN, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL EXECUTIVE OFFICE OF THE COMPANY.
THE SALE, TRANSFER OR OTHER DISPOSITION OF THESE SECURITIES IS SUBJECT
TO THE TERMS OF SUCH AGREEMENT. SUCH AGREEMENT ALSO CONTAINS PROVISIONS
RELATING TO THE COMPOSITION OF THE BOARD OF DIRECTORS OF THE COMPANY
AND THE EXERCISE OF VOTING RIGHTS OF THE HOLDERS OF THE SECURITIES
REPRESENTED HEREBY."
ARTICLE X - TERMINATION
10.1 Termination. This Agreement shall terminate upon the earlier to
occur of (i) the date upon which the parties then bound by this Agreement
consent in writing to terminate this Agreement; (ii) the date as of which there
remains only one Stockholder of the Company; and (iii) the dissolution or
liquidation of the Company.
ARTICLE XI - REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
11.1 Representations and Warranties of Each Stockholder. Each
Stockholder represents and warrants to the other parties, solely with respect to
itself, that:
(a) If such Stockholder is a corporation, partnership or trust,
(i) such party is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization; (ii) such party has all
requisite corporate, partnership or trust power and authority to execute,
deliver and perform this Agreement; and (iii) such party has taken all
corporate, partnership or trust action required to duly authorize such
execution, delivery and performance.
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<PAGE> 29
(b) If such Stockholder is a natural person, he or she has full
legal capacity, right, power and authority to execute, deliver and perform this
Agreement.
(c) This Agreement has been duly executed and delivered by such
Stockholder and constitutes a binding obligation of such Stockholder enforceable
in accordance with its terms, except insofar as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditor's rights generally, or by principles governing the
availability of equitable remedies.
(d) Neither the execution, delivery or performance by such
Stockholder of this Agreement, nor the consummation by such Stockholder of the
transactions contemplated hereby, does or will (with the giving of notice or the
passage of time or both) conflict in any material respect with, or constitute a
material default under, (i) if such party is a corporation, partnership or other
entity, the Certificate of Incorporation, Bylaws, partnership agreement or other
organizational or governing documents of such party, (ii) any judgment to or by
which such party is or may be subject, bound or affected, or (iii) any
applicable law or obligation to which such Stockholder is bound.
(e) No judgment has been issued, and no action or proceeding has
been instituted or, to the knowledge of such Stockholder, threatened, against or
otherwise involving such Stockholder, (i) to set aside or modify any
authorization of the execution, delivery and performance by such Stockholder of
this Agreement, (ii) to enjoin or prevent the execution, delivery or performance
by such Stockholder of this Agreement, or (iii) seeking damages in connection
with the execution, delivery or performance by such Stockholder of this
Agreement.
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<PAGE> 30
ARTICLE XII - INSUFFICIENT SURPLUS AND INSOLVENCY
12.1 Notwithstanding anything contained herein to the contrary, the
Company shall not be obligated to purchase, redeem, receive, take or otherwise
acquire shares of Common Stock of a selling Stockholder if the capital of the
Company is impaired or would become impaired thereby. If the Company's capital
is or would become impaired by purchasing the Common Stock of the selling
Stockholder, the Company shall notify all of the Stockholders in writing of such
impairment, and indicate that the Company is precluded from making such
purchase. Upon receiving such notices, the Company's remaining Stockholders
shall be deemed to have been offered the shares of the selling Stockholder on
the same terms as such shares would have been offered to the Company. Any
Stockholder may purchase such shares by paying the purchase price therefor
within thirty (30) days after receiving the foregoing notice from the Company.
The selling Stockholder shall retain all right, title and interest in and to any
shares of Common Stock that are not purchased by the other Stockholders.
ARTICLE XIII - MISCELLANEOUS
13.1 Notices. All notices, requests, consents, demands, elections and
other communications required or permitted hereunder shall be in writing and
shall be given to the intended recipient at the following address:
if to the Company:
Anaderm Research Corp.
235 East 42nd Street
New York, NY 10017-5755
Att: ***
Tel: 212-573-3770
Fax: 212-808-6495
*** These portions deleted pursuant to a request for confidential treatment.
- 29 -
<PAGE> 31
with copies to:
Pfizer Inc.
235 East 42nd Street
New York, NY 10017-5755
Att: Office of General Counsel
Tel: 212-573-3637
Fax: 212-573-1445
Squadron, Ellenoff, Plesent & Sheinfeld
551 Fifth Avenue
New York, NY 10176
Att: ***
Tel: 212-476-8364
Fax: 212-697-6686
If to Pfizer:
Pfizer Inc
235 East 42nd Street
New York, NY 10017-5755
Att: Office of General Counsel
Tel: 212-573-3637
Fax: 212-573-1445
If to OSI:
Oncogene Science, Inc.
106 Charles Lindbergh Blvd.
Uniondale, NY 11553
Att: ***
Tel: 516-222-0023
Fax: 516-745-6429
If to NYU:
NYU Medical Center
550 First Avenue
New York, NY 10016
Att: ***
Tel: 212-263-8191
Fax: 212-263-8189
with a copy to:
***
NYU Medical Center
550 First Avenue, MSB 153
New York, NY 10016
Tel: 212-263-7921
Fax: 212-545-8846
*** These portions deleted pursuant to a request for confidential treatment.
- 30 -
<PAGE> 32
If to ***:
***
c/o NYU Medical Center
550 First Avenue
New York, NY 10016
Tel: 212-263-8191
Fax: 212-263-8189
If to ***:
***
c/o NYU Medical Center
550 First Avenue
New York, NY 10016
Tel: 212-263-8191
Fax: 212-263-8189
If to ***:
***
c/o NYU Medical Center
550 First Avenue
New York, NY 10016
Tel: 212-263-8191
Fax: 212-263-8189
If to ***:
***
c/o NYU Medical Center
550 First Avenue
New York, NY 10016
Tel: 212-263-8191
Fax: 212-263-8189
Any such notice, request, consent, demand, election or other
communication shall be deemed to have been duly given if personally delivered or
sent by registered or certified mail, return receipt requested, by Federal
Express, Express Mail or similar overnight delivery service or by telegram,
telex or facsimile transmission confirmed by letter, and will be deemed given,
unless earlier received (i) if sent by certified or registered mail, return
receipt requested, five calendar days after being deposited in the United States
mail, postage prepaid; (ii) if sent by overnight delivery service for next
business day delivery, the next business day after being entrusted to such
service, with delivery charges prepaid or charged to the sender's account; (iii)
*** These portions deleted pursuant to a request for confidential treatment.
- 31 -
<PAGE> 33
if sent by telegram or telex or facsimile transmission, on the date sent,
provided confirmatory notice is sent by any other method specified in clause
(i), (ii) or (iv); and (iv) if delivered by hand, on the date of delivery.
13.2 Entire Agreement. This Agreement, together with the Exhibits
hereto, the Research Agreements, and the Stock Option Agreement constitute the
entire understanding among the parties hereto relating to the subject matter
hereof. This Agreement may not be amended except by a writing signed by all
parties hereto. No discharge, or waiver, in whole or in part, of any of its
provisions shall be valid, unless in writing, signed by the party against whom
the same is sought to be enforced. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their legal successors, the
latter being deemed to include, without limitation, all executors,
administrators, receivers, committees, other personal representatives,
transferees of interest pursuant hereto, and all other legal successors, and
shall, in addition, be binding upon all persons who, whether in breach of this
Agreement or otherwise, have or claim an interest in the shares of the Company
or are in possession of a certificate representing shares in the Company, or any
other evidence of an interest in the shares of the Company.
13.3 Governing Law. This Agreement shall be governed by, and
interpreted and construed in accordance with, the laws of the State of New York,
without regard to its conflict of law provisions.
- 32 -
<PAGE> 34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ANADERM RESEARCH CORP.
By: /s/ NICHOLAS BACOPOULOS
------------------------------
Name: Nicholas Bacopoulos
Title: President
PFIZER INC.
By: /s/ PAUL S. MILLER
------------------------------
Name: Paul S. Miller
Title: Senior Vice President
& General Counsel
ONCOGENE SCIENCE, INC.
By: /s/ GARY E. FRASHIER
------------------------------
Name: Gary E. Frashier
Title: Chief Executive Officer
NEW YORK UNIVERSITY
By: /s/ ISAAC KOHLBERG
------------------------------
Name: Isaac Kohlberg
Title: Vice President for
Industrial Liason
/s/ ***
----------------------------------
***
/s/ ***
----------------------------------
***
/s/ ***
----------------------------------
***
/s/ ***
----------------------------------
***
*** These portions deleted pursuant to a request for confidential treatment.
- 33 -
<PAGE> 35
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I - DEFINITIONS
ARTICLE II - CAPITAL CONTRIBUTIONS
2.1 Capital Contributions.............................................. - 5 -
2.2 Options............................................................ - 7 -
2.3 The Pfizer Compound File........................................... - 8 -
ARTICLE III - APPLICABILITY; RESTRICTIONS ON TRANSFER OF SHARES
3.1 Shares Subject to Agreement........................................ - 8 -
3.2 Outstanding Shares................................................. - 8 -
3.3 General Restriction on Transfer.................................... - 8 -
3.4 Permitted Transfers................................................ - 9 -
ARTICLE IV - CORPORATE GOVERNANCE
4.1 Board of Directors................................................. - 9 -
4.2 Nomination and Election of Directors............................... - 9 -
4.3 Initial Board of Directors......................................... - 10 -
4.4 Initial Officers of the Company........................... - 10 -
4.5 Quorum of the Board....................................... - 10 -
4.6 Action by the Board of Directors................................... - 11 -
4.7 Quorum of Stockholders............................................. - 12 -
4.8 Action by Stockholder.............................................. - 12 -
ARTICLE V - DISPOSITION OF SHARES
5.1 Right of First Refusal............................................. - 12 -
5.2 Involuntary Transfers.............................................. - 16 -
5.3 Put and Call Rights................................................ - 17 -
5.4 Tag Along Rights................................................... - 18 -
5.5 Take Along Right................................................... - 19 -
ARTICLE VI - PREEMPTIVE RIGHTS
6.1 Preemptive Rights.................................................. - 20 -
ARTICLE VII - DEVELOPMENT OF A LEAD COMPOUND
7.1 Pfizer's Right of First Refusal for Initial
Development........................................................ - 22 -
7.2 Pfizer's Right of First Refusal for Further
Development........................................................ - 23 -
7.3 Development by Pfizer.............................................. - 23 -
7.4 Development by Anaderm............................................. - 24 -
ARTICLE VIII - SCIENTIFIC ADVISORY BOARD
8.1 Responsibility of Scientific Advisory Board........................ - 25 -
8.2 Composition of SAB................................................. - 25 -
8.3 Meetings of the SAB................................................ - 26 -
8.4 Minutes of SAB..................................................... - 26 -
8.5 Action by the SAB.................................................. - 26 -
8.6 Reports............................................................ - 26 -
ARTICLE IX - LEGENDING OF SECURITIES
9.1 Legends............................................................ - 27 -
</TABLE>
<PAGE> 36
<TABLE>
<S> <C> <C>
ARTICLE X - TERMINATION
10.1 Termination........................................................ - 27 -
ARTICLE XI - REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
11.1 Representations and Warranties of Each Stockholder................. - 27 -
ARTICLE XII - INSUFFICIENT SURPLUS AND INSOLVENCY
ARTICLE XIII - MISCELLANEOUS
13.1 Notices............................................................ - 29 -
13.2 Entire Agreement................................................... - 32 -
13.3 Governing Law...................................................... - 32 -
</TABLE>
<PAGE> 1
EXHIBIT 10.4
- -----------------------------------------------------------------------------
Portions of this Exhibit 10.4 have been redacted and are the subject of a
confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
- -----------------------------------------------------------------------------
<PAGE> 2
EXHIBIT 10.4
COLLABORATIVE RESEARCH AGREEMENT
This COLLABORATIVE RESEARCH AGREEMENT (this "Agreement") is entered
into as of April 23, 1996 by and among PFIZER INC ("Pfizer"), a Delaware
corporation, having its principal place of business at 235 East 42nd Street, New
York, New York 10017, ONCOGENE SCIENCE, INC. ("OSI"), a Delaware corporation,
having its principal place of business at 106 Charles Lindbergh Blvd.,
Uniondale, New York 11553, and ANADERM RESEARCH CORP. ("Anaderm"), a Delaware
corporation, having its principal place of business at 235 East 42nd Street, New
York, New York 10017.
W I T N E S S E T H:
WHEREAS, Anaderm was organized to discover, produce, purchase and
market new compounds or new uses for known compounds for use in humans for the
prevention or treatment of baldness and wrinkles and for the control of skin and
hair pigmentation; and
WHEREAS, OSI has developed proprietary gene transcription and gene
expression modulation technology and high throughput screening systems which may
be used to identify and develop novel transcription-based drugs; and
WHEREAS, Pfizer has the capacity to undertake research for the
discovery and evaluation of compounds for use in humans for the prevention or
treatment of baldness and wrinkles and for the control of hair and skin
pigmentation and also has the capability for clinical evaluation, manufacturing
and marketing of such compounds; and
WHEREAS, Anaderm, OSI and Pfizer wish to enter into a research
collaboration, in which New York University will also be a participant, to
identify and develop compounds for use in humans for the prevention or treatment
of baldness and wrinkles and for the control of hair and skin pigmentation.
<PAGE> 3
-2-
NOW, THEREFORE, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
Whenever used in this Agreement, the terms defined in this
article (ARTICLE 1) shall have the meanings specified.
1.1 "Affiliate" means any corporation or other legal entity
owning, directly or indirectly, 50% or more of the voting capital shares or
similar voting securities of Anaderm, OSI or Pfizer; or any corporation or other
legal entity 50% or more of the voting capital shares or similar voting rights
of which is owned, directly or indirectly, by Anaderm, OSI or Pfizer. However, a
foreign corporation or other legal entity shall be considered an Affiliate of
Anaderm, OSI or Pfizer, if Anaderm, OSI or Pfizer, respectively, owns the
maximum amount of voting securities of such corporation or entity that a U.S.
company is permitted to own under the laws of the applicable foreign country and
such maximum amount is at least forty percent.
1.2 "Allocated Overhead" shall mean the amount of overhead,
including general and administrative costs, determined in accordance with
generally accepted accounting principles, incurred by OSI and allocated to the
Research Program in the same proportion that the total man-hours of work
performed by OSI in the Research Program bears to the total number of man-hours
of work performed in all OSI research programs, or shall be determined according
to another customary allocation basis that is agreed upon in writing between the
parties.
1.3 "Anaderm Confidential Information" means all information
about any element of Anaderm Technology which is disclosed by Anaderm to OSI or
Pfizer, orally or in writing, and designated "Confidential" in writing by
Anaderm no later than 30 days after the time of disclosure to OSI or Pfizer, to
the extent that such information as of the date of
<PAGE> 4
-3-
disclosure to OSI or Pfizer is not (i) known to the recipient (i.e., OSI or
Pfizer) other than by virtue of a prior confidential disclosure to the recipient
by Anaderm, or (ii) disclosed in the published literature, or otherwise
generally known to the public, or (iii) obtained by the recipient from a Third
Party free from any obligation of secrecy to Anaderm. "Anaderm Confidential
Information" shall include, without limitation and subject to the foregoing
exceptions (i) through (iii), any agreements between Anaderm and Third Parties
and any information contained in such agreements that Anaderm provides to OSI.
1.4 "Anaderm Patent Rights" means Anaderm's rights in all
Inventions within Anaderm Technology, including the worldwide rights in all
applications for letters patent on Inventions that are encompassed within
Anaderm Technology, including all continuations, continuations-in- part,
divisionals, renewals and patents of addition thereof, all letters patent
granted thereon, and all reissues, Supplementary Protection Certificates and
extensions thereof. "Anaderm Patent Rights" includes any rights in Inventions
that are acquired by Anaderm pursuant to Article 6 of this Agreement.
1.5 "Anaderm Technology" means all Technology that pertains
to the Field or to the Dermatology Indications, that is developed or created by
employees of, or consultants to Anaderm, alone or jointly with or one or more
Third Parties or with Pfizer or OSI, or that is acquired by Anaderm by purchase,
license, assignment or other means from one or more Third Parties or from Pfizer
or OSI.
1.6 "Annual Research Plan" means the written plan that
describes the research to be carried out in the Research Program during each
annual period, and which shall be prepared by Anaderm's SAB and
<PAGE> 5
-4-
approved by the Board of Directors of Anaderm, in accordance with Articles IV
and IX of the Stockholders' Agreement.
1.7 "Class 1 Compound" means any compound that is invented,
or for which a New Use is invented, pertaining to the Field or the Dermatology
Indications, by one or more persons in the course of participating in the
Research Program as an employee or otherwise on behalf of (e.g., as a consultant
for or student of) Anaderm, OSI, Pfizer or NYU. "New Use", as used throughout
this Agreement, means new therapeutic indications for known compounds, new
compositions containing known compounds and new methods of administering known
compounds, and includes, e.g., combination therapies involving the
administration of two or more known therapeutically active compounds or new
compositions containing one or more known therapeutically active compounds.
1.8 "Class 2 Compound" means any compound that is invented,
or for which a New Use is invented, pertaining to the Field or the Dermatology
Indications, by one or more persons in the course of participating in the
Research Program, as an employee or otherwise on behalf of (e.g., as a
consultant for or a student of) Anaderm, OSI, Pfizer or NYU, and in which an
entity other than OSI, Pfizer, Anaderm or NYU has the right to receive a royalty
if such compound or New Use is commercialized, for example, a New Use for a
compound that is discovered using screens owned by an entity other than Anaderm,
Pfizer, OSI or NYU.
1.9 "Class 3 Compound" means any compound pertaining to the
Field or the Dermatology Indications, that is invented or for which a New Use is
invented by an entity other than Pfizer, OSI, Anaderm or NYU, and of which
Anaderm becomes aware. Class 3 Compounds also include compounds invented by
Third Parties outside the Research Program and licensed to Pfizer or Anaderm,
compounds invented by a business acquired by Pfizer
<PAGE> 6
-5-
or an Affiliate of Pfizer after the Effective Date, and Pfizer compounds
***.
1.10 "Contract Period" means the period beginning on the
Effective Date and ending on the earlier of three years from the Effective Date
or upon the unsuccessful completion of the Initial Phase pursuant to Article 3.
1.11 "Dermatology Indications" means proliferative and
inflammatory disorders of the skin such as acne, psoriasis, itching and eczema.
1.12 "Effective Date" means April 23, 1996.
1.13 "Field" means the (a) stimulation or control of hair
growth, (b) prevention or reversal of wrinkling of the skin, or (c) alteration
of skin or hair pigmentation, in each case in human subjects. Technology, as
defined herein, shall be considered to "pertain to the Field" if either: (a) it
is a compound having activity within the Field; (b) it is a New Use for a
compound having activity within the Field; or (c) it is useful for discovering
compounds within the Field.
1.14 "Funded Phase" shall have the meaning set forth in
Article 3 of this Agreement.
1.15 "Human Therapeutic Product" means any Rx or OTC Drug
Product for an indication within the Field or the Dermatology Indications. "Drug
Product", as used herein, means a product that contains one or more
therapeutically active compounds or that relates to a method of administering or
using one or more therapeutically active compounds. "Human Therapeutic Product"
does not include Rx or OTC veterinary Drug Products.
1.16 "Human Therapeutic Product based on a Class 1 Compound"
means a Human Therapeutic Product: (a) that contains or relates to a
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 7
-6-
method of administering or using a Class 1 Compound; and (b) in which no Third
Party other than NYU has a right to receive a royalty if such Human Therapeutic
Product is commercialized. Thus, the parties intend to exclude from this
definition any Human Therapeutic Product based on a Class 2 Compound, as defined
below in Section 1.17.
1.17 "Human Therapeutic Product based on a Class 2 Compound"
means a Human Therapeutic Product that contains or relates to a method of
administering or using a Class 2 Compound.
1.18 "Human Therapeutic Product based on a Class 3 Compound"
means a Human Therapeutic Product that contains or relates to a method of
administering or using a Class 3 Compound.
1.19 "Initial Phase" shall have the meaning set forth in
Article 3 of this Agreement.
1.20 "Invention" means an invention (i.e., a conception and
actual or constructive reduction to practice of an idea) that is deemed
patentable by a party to this Agreement.
1.21 "Lead Compound" means a Class 1 or Class 2 Compound
that has been preliminarily assessed by the SAB of Anaderm to be effective or
potentially effective, or to be a compound for which a New Use is effective or
potentially effective, in treating an indication within the Field or the
Dermatology Indications.
1.22 "Net Sales" means the gross sales by Anaderm or Pfizer
or an Affiliate or Co-developer of Anaderm or Pfizer, or by a licensee or
sublicensee of Pfizer, for arm's-length sales to a Third Party or Third Parties,
excluding NYU, of Human Therapeutic Products, less transportation expenses,
normal returns and allowances (actually paid or allowed), rebates, customary
discounts and sales or other taxes based on the sales prices, but not including
taxes assessed against
<PAGE> 8
-7-
income derived from such sales. The term "Co-developer" refers to a Person that,
pursuant to an agreement with Pfizer or Anaderm, shares with Pfizer or Anaderm,
respectively, the right to market a Human Therapeutic Product based on a Class 1
or Class 2 Compound.
1.23 "NYU" means New York University, having a principal
place of business at 550 First Avenue, New York, New York 10016.
1.24 "NYU Agreement" means the Research and Collaboration
Agreement between Anaderm, NYU and Pfizer having an effective date of April 23,
1994.
1.25 "OSI Confidential Information" means all information
about any element of OSI Technology which is disclosed by OSI to Anaderm or
Pfizer, orally or in writing, and designated "Confidential" in writing by OSI no
later than 30 days after the time of disclosure to Anaderm or Pfizer to the
extent that such information as of the date of disclosure to Anaderm or Pfizer
is not (i) known to the recipient (i.e., Anaderm or Pfizer) other than by virtue
of a prior confidential disclosure to the recipient by OSI, or (ii) disclosed in
the published literature, or otherwise generally known to the public, or (iii)
obtained by the recipient from a Third Party free from any obligation of secrecy
to OSI.
1.26 "OSI Patent Rights" means OSI's rights in all
Inventions within OSI Technology, including the worldwide rights in all
applications for letters patent on Inventions that are encompassed within OSI
Technology, including all continuations, continuations-in-part, divisions,
renewals and patents of addition thereof, all letters patent granted thereon,
and all reissues, Supplementary Protection Certificates and extensions thereof.
"OSI Patent Rights" includes any rights in Inventions that are acquired by OSI
pursuant to Article 6 of this Agreement.
<PAGE> 9
-8-
1.27 "OSI Technology" means all Technology that pertains to
the Field or to the Dermatology Indications, including Technology that relates
to transcriptional modulation of gene expression of the gene encoding a target,
including all improvements thereto and the use of such Technology to develop
transcription-based drugs, that is or was developed by employees of or
consultants to OSI, alone or jointly with one or more Third Parties or with
Anaderm or Pfizer, or that is or was acquired by OSI by purchase, license,
assignment or other means from one or more Third Parties or from Anaderm or
Pfizer.
1.28 "OTC" means drugs sold over-the-counter without
prescription.
1.29 "Person" means any individual, estate, trust,
partnership, joint venture, association, firm, corporation, company, or other
entity.
1.30 "Pfizer Confidential Information" means all information
about any element of Pfizer Technology which is disclosed by Pfizer to OSI or
Anaderm, orally or in writing, and designated "Confidential" in writing by
Pfizer no later than 30 days after the time of disclosure to OSI or Anaderm to
the extent that such information as of the date of disclosure to OSI or Anaderm
is not (i) known to the recipient (i.e., OSI or Anaderm) other than by virtue of
a prior confidential disclosure to the recipient by Pfizer, or (ii) disclosed in
the published literature, or otherwise generally known to the public, or (iii)
obtained by the recipient from a Third Party free from any obligation of secrecy
to Pfizer. "Pfizer Confidential Information" shall include, without limitation
and subject to the foregoing exceptions (i) through (iii), any agreements
between Pfizer and Third Parties and any information contained in such
agreements that Pfizer provides to OSI.
<PAGE> 10
-9-
1.31 "Pfizer Patent Rights" means the rights of Pfizer and
its Affiliates in all Inventions within Pfizer Technology, including worldwide
rights in all applications for letters patent on Inventions that are encompassed
within Pfizer Technology, including all continuations, continuations-in-part,
divisions, renewals and patents of addition thereof, all letters patent granted
thereon, and all reissues and extensions thereof. "Pfizer Patent Rights"
includes any rights in Inventions that are acquired by Pfizer or any of its
Affiliates pursuant to Article 6 of this Agreement.
1.32 "Pfizer's Rights of First Refusal" means "Pfizer's
Right of First Refusal for Initial Development" and "Pfizer's Right of First
Refusal for Further Development", as these terms are defined in Article VIII of
the Stockholders' Agreement.
1.33 "Pfizer Technology" means all Technology that pertains
to the Field that is or was a developed by employees of, or consultants to
Pfizer, alone or jointly with one or more Third Parties or with OSI or Anaderm,
or that is or was acquired by Pfizer by purchase, license, assignment or other
means from one or more Third Parties or from OSI or Anaderm, excluding
Technology acquired by Pfizer pursuant to its acquisition of an entity or
business that relates to, in whole or in part, or incorporates the discovery,
development, purchase or marketing of one or more Drug Products for an
indication within the Field or the Dermatology Indications.
1.34 "Research Program" means the collaborative research
program that is to be conducted by Anaderm, NYU, Pfizer and OSI pursuant to
Article 2 of this Agreement and the Stockholders' Agreement.
1.35 "Rights in an Invention" or "rights in an Invention"
means all proprietary rights in an Invention worldwide, including the
<PAGE> 11
-10-
worldwide rights in all patent applications for letters patent on such
Invention, including all continuations, continuations-in-part, divisionals,
renewals and patents of addition thereof and all letters patent granted thereon
and all reissues and extensions thereof.
1.36 "Rx" means a prescription drug.
1.37 "SAB" means the Scientific Advisory Board of Anaderm.
1.38 "Stockholders' Agreement" means the Stockholders
Agreement among Anaderm, Pfizer, OSI, New York University, ***, having an
effective date of April 23, 1996.
1.39 "Technology" means and includes all technology and
technical information that pertains to the discovery or development of
pharmacologically active compounds or Rx and OTC products for use in humans,
including all laboratory notebooks, research plans, inventions, cultures,
strains, vectors, genes and gene fragments and their sequences, cell lines,
hybridoma cell lines, monoclonal and polyclonal antibodies, proteins and protein
fragments, non-protein chemical structures and methods for synthesis,
structure-activity relationships, computer models of chemical structures,
computer software, assay methodology, processes, materials and methods for
production, recovery and purification of natural products, formulas, plans,
specifications, characteristics and equipment designs, but does not mean and
does not include nontechnical information such as marketing plans that relate
solely to marketing or finance.
1.40 "Territory" means all the countries of the world.
1.41 "Therapeutically Active Compound" means a compound that
exhibits a biological or pharmacological activity.
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 12
-11-
1.42 "Third Party" means a party other than Pfizer, Anaderm
or OSI.
1.43 "Valid Claim" means a claim of an issued patent within
OSI Patent Rights, Pfizer Patent Rights or Anaderm Patent Rights, including
patents in which OSI, Pfizer or Anaderm, respectively, has rights as a licensee
pursuant to Article 6 of this Agreement, so long as such claim shall not have
been disclaimed by the owner or owners of such patent, and shall not have been
held invalid in a final decision rendered by a tribunal of competent
jurisdiction from which no appeal has been or can be taken.
ARTICLE 2 - THE RESEARCH PROGRAM
2.1 Purpose. Anaderm has been formed to conduct a
collaborative research program among Pfizer, OSI and NYU to discover, develop,
produce, purchase and market new compounds or New Uses for known compounds for
human use within the Field or the Dermatology Indications (the "Research
Program") throughout the Contract Period.
2.2 Rights of Anaderm.
2.2.1 Class 1 and Class 2 Compounds. Subject to
Pfizer's Rights of First Refusal and to any rights of Third Parties, as referred
to in Section 1.8 of this Agreement, Anaderm shall have, with respect to Lead
Compounds, the development, marketing and other rights set forth in Section
7.1(c) of the Stockholders' Agreement.
2.2.2 Certain Discoveries Outside the Field. Subject
to Pfizer's Rights of First Refusal and to any rights of Third Parties, as
referred to in Section 1.8 of this Agreement, Anaderm shall have the right to
develop, for its own use or to license to Third Parties other than NYU, Human
Therapeutic Products that are based on one or more Class 1 or Class 2 Compounds
for the following indications outside the Field:
<PAGE> 13
-12-
proliferative and inflammatory disorders of the skin such as acne, psoriasis,
itching and eczema (the "Dermatology Indications").
2.2.3 Class 3 Compounds. Anaderm shall have the
right to bring to the attention of Pfizer opportunities to license in rights in
Human Therapeutic Products that are based on Class 3 Compounds. If Anaderm is
able to demonstrate to Pfizer the commercial value of any such products, Anaderm
may negotiate a compensation arrangement with Pfizer. Anaderm shall not license
in rights in a Human Therapeutic Product based on a Class 3 Compound without
Pfizer's approval.
2.3 Restrictions as to OSI and Anaderm.
2.3.1 Other Cosmeceutical Business. In the event
that Anaderm participates in, either through equity ownership, collaborative
arrangement, license or otherwise, or financially benefits from, through
royalties, finder's fees or otherwise, any acquisition by Pfizer during the
Contract Period of an entity or business that relates to, in whole or in part,
or incorporates the discovery, development, purchase or marketing of one or more
Drug Products for indications within the Field or the Dermatology Indications,
OSI shall not receive royalties from the sales of any Human Therapeutic Product
that was developed by such entity or business or any Human Therapeutic Product
that contains or relates to a method of administering or using a compound that
was invented or developed, or for which a New Use was invented or developed by
such entity or business.
2.3.2 Pfizer Discoveries. ***
***
***
***
***
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 14
-13-
***
***
***
***
***
***
***
***
***
***
2.4 Rights of Pfizer.
2.5.1 Inventions Based on Pfizer Compounds. As
provided for more specifically in Article 6 of this Agreement, Pfizer shall own
all Inventions made in the course of conducting the Research Program that are
either compounds owned by Pfizer or compositions containing one or more such
compounds or methods of administering, making or using one or more such
compounds. A compound shall be considered to be owned by Pfizer, Anaderm or OSI,
throughout this Agreement, if such compound was provided to a participant in the
Research Program by Pfizer, Anaderm or OSI, respectively, for use in conducting
the Research Program, or if Pfizer, Anaderm or OSI, respectively, has rights in
such compound in the United States under the patent laws (i.e., if such compound
is an Invention that is owned, in whole or in part, by such party or is claimed
in a patent application or patent that is owned, in whole or in part, by such
party) or the laws governing the protection of trade secrets and confidential
business information.
2.4.2 Dermatological Discoveries. Notwithstanding
the provisions of Section 2.2.2 hereof, Pfizer shall have the right during
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 15
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the Contract Period to perform or sponsor research in the area of the
Dermatology Indications.
2.4.3 Other Pfizer Business. This Agreement shall in
no way restrict the operations of, interfere with, impede or otherwise adversely
influence Pfizer's current business, including, without limitation, the
operations of its divisions, subsidiaries and Affiliates, or any business or
operations acquired or undertaken by Pfizer during the Contract Period.
2.4.4 Pfizer Discoveries. Subject to the provisions
of Section 2.4.4 hereof, Pfizer shall have the sole rights to any compounds,
Technologies or Inventions pertaining to the Field (which may or may not also be
used to treat indications outside of the Field) that are invented, developed or
discovered by Pfizer, solely or jointly with a Third Party, in the course of its
research or other activities outside of the Field and outside of the Research
Program. Such compounds, Technologies and Inventions may be developed and
exploited by Pfizer in its sole discretion without the need for permission by
Anaderm and without benefit to Anaderm.
2.5 Restrictions as to Pfizer. ***
***
***
***
ARTICLE 3 - PHASES OF AGREEMENT
The Initial Phase of this Agreement shall commence on the date
hereof and shall continue until 18 months from the date hereof. Upon the
conclusion of the Initial Phase, the Board of Directors of Anaderm shall make a
determination as to whether the Initial Phase was successfully completed. Such
determination shall be made by an affirmative vote of
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 16
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all of the members of the Board of Directors of Anaderm and shall be subject to
the approval of Pfizer. If the Board determines that the Initial Phase was
unsuccessful, this Agreement shall terminate forthwith. During the Initial
Phase, OSI shall provide formatting for high throughput screens pertaining to
the Field and the Dermatology Indications and shall perform screening of
compounds from its fermentation file and compounds provided to it by Pfizer in
accordance with the Stockholders Agreement. If the Board, with the approval of
Pfizer, determines that the Initial Phase was successful, the Funded Phase of
this Agreement shall commence and shall continue for the duration of the
Contract Period. During the Funded Phase, Anaderm shall pay OSI its actual
research costs, plus Allocated Overhead, plus 10% of the sum of the actual
research costs and the Allocated Overhead.
ARTICLE 4 - ROYALTIES
4.1 OSI Royalty Rate. In consideration for fulfilling its
obligations under this Agreement, Anaderm or Pfizer shall pay to OSI a royalty
of *** percent *** of Net Sales (the "OSI Royalty") of any Human Therapeutic
Product based on a Class 1 Compound or, subject to the provisions of Section 4.2
of this Agreement, a Class 2 Compound, that is marketed by Anaderm, Pfizer, an
Affiliate or Co-developer of Anaderm or Pfizer or a licensee or sublicensee of
Pfizer, respectively, pursuant to Article VII of the Stockholders' Agreement.
The OSI Royalty shall be paid to OSI, on a product by product, country by
country basis, notwithstanding the termination provisions of Article 10 of this
Agreement, for a period of ten years beginning with the first commercial sale of
any such Human Therapeutic Product in a particular country, unless at the end of
such ten year period there exists in that country a Valid Claim to either such
Human Therapeutic Product or a compound or
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 17
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composition contained in it, or a method or process employed in making it, or to
a method of use for which such Human Therapeutic Product is being marketed in
that country, in which case the OSI Royalty shall continue to be paid during the
period in which any such Valid Claim exists in that country.
4.2 Limitations. In the event that Anaderm, Pfizer, an
Affiliate or Co-developer of Anaderm or Pfizer, or a licensee or sublicensee of
Pfizer markets a Human Therapeutic Product based on a Class 2 Compound, and such
compound is subject to a royalty encumbrance with respect to a Third Party other
than NYU, the OSI Royalty, in lieu of the *** referred to in Section 4.1, shall
be equal to *** percent *** of Net Sales of Human Therapeutic Products based on
such Class 2 Compound, where *** and *** is equal to the total percentage of Net
Sales that is owed to one or more such Third Parties (i.e., the total royalty
encumbrance).
4.3 Licensing by Anaderm. In the event that Pfizer elects
not to exercise Pfizer's Rights of First Refusal and Anaderm determines to
license a Class 1 or Class 2 Compound to a Third Party other than NYU rather
than exploit it, OSI shall receive *** of any payments received by Anaderm
under such license arrangements in lieu of the OSI Royalty.
4.4 Licensing by Pfizer. If Pfizer decides to negotiate an
agreement with a Third Party pursuant to which Pfizer would grant such Third
Party a license under Pfizer's rights in a Lead Compound or Human Therapeutic
Product, which rights Pfizer acquired from Anaderm pursuant to its Rights of
First Refusal, for the purposes of developing a Lead Compound and developing and
marketing a Human Therapeutic Product, and Pfizer determines that payment of the
OSI Royalty, as defined in Sections 4.1 and 4.2 of this Agreement, would render
the proposed licensing
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 18
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arrangement commercially unfeasible to Pfizer, then Pfizer shall negotiate with
OSI in good faith to determine the amount of royalties or other compensation
that OSI will receive from such arrangement.
4.5 Notification to OSI of Third Party Licenses. Anaderm
or Pfizer shall notify OSI in writing of the following within sixty (60) days of
the granting by Anaderm or Pfizer or any of their Affiliates, respectively, of a
license to a Third Party (including but not limited to a Co-developer) under
Anaderm's, Pfizer's or such Affiliate's rights in a Lead Compound or Human
Therapeutic Product: (a) the name of the party or Affiliate that has granted the
license; (b) the name of the licensee or Co-developer (or sublicensee, as the
case may be); (c) the names of any Lead Compounds and Human Therapeutic Products
in which rights were licensed; and (d) the royalty to be paid pursuant to the
license.
4.6 Royalty Exclusion. OSI shall not receive any royalty
from sales of Human Therapeutic Products based on Class 3 Compounds.
4.7 Payment Dates. Royalties due to OSI shall be paid by
Anaderm or Pfizer on Net Sales within sixty days after the end of each calendar
quarter in which such Net Sales are made. Such payments shall be accompanied by
a statement showing the Net Sales of each Human Therapeutic Product on which
such payment is based and a calculation of the amount of royalties due. Payments
due to OSI pursuant to Section 4.3 of this Agreement shall be paid by Anaderm
within sixty (60) days after receipt by Anaderm of the payment from a Third
Party upon which the payment due OSI is based. Anaderm and Pfizer shall use
their reasonable best efforts to obtain royalty payments due to them or their
Affiliates based on Net Sales of Human Therapeutic Products by their
Co-developers (and, in the case of Pfizer, its licensees and sublicensees).
<PAGE> 19
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4.8 Accounting. No royalties on Net Sales shall be payable
on sales transactions between or among Anaderm and its Affiliates or Pfizer and
its Affiliates; the final vendee sale to a Third Party (other than NYU) alone
shall be used for the purpose of determining the royalty payments due hereunder.
The Human Therapeutic Product subject to royalty payment shall be deemed sold
when invoiced, or if not invoiced, when the same shall be shipped or delivered
to the third party. All taxes, assessments and fees of any nature levied or
incurred on account of any payments accruing under this Agreement, by national,
state or local governments, will be assumed and paid by Anaderm or Pfizer,
depending on which party is marketing the Human Therapeutic Product, and, in the
case of payments accruing under Section 4.3 of this Agreement, by Anaderm,
except taxes levied thereon as income to OSI, and, if such taxes are required to
be withheld by Anaderm or Pfizer, they will be deducted from such payments due
to OSI and will be paid by Anaderm or Pfizer, respectively, for the account of
OSI, and a receipt therefor secured and sent to OSI.
4.9 Records. Anaderm or Pfizer, depending on which party is
marketing the Human Therapeutic Product, shall keep for three years from the
date of each payment of royalties complete and accurate records of sales by
Anaderm or Pfizer or an Affiliate of Anaderm or Pfizer, respectively, of each
Human Therapeutic Product in sufficient detail to allow the accruing royalties
to be determined accurately. OSI shall have the right for a period of three
years after receiving any report or statement with respect to royalties due and
payable to appoint, at its expense, an independent certified public accountant
reasonably acceptable to Anaderm or Pfizer, respectively, to inspect the
relevant records of Anaderm or Pfizer, respectively, to verify such report or
statement.
<PAGE> 20
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Anaderm or Pfizer, respectively, shall make its records available for inspection
by such independent certified public accountant during regular business hours at
such place or places where such records are customarily kept, upon reasonable
notice from OSI, to the extent reasonably necessary to verify the accuracy of
the reports and payments. With respect to each of Anaderm, Pfizer and OSI, such
inspection right shall not be exercised more than once in any calendar year nor
more than once with respect to sales in any given period. Anaderm or Pfizer,
respectively, shall use its reasonable best efforts to make available to OSI the
information, records and reports referred to in this Section (Section 4.6) that
relate to sales by a licensee, sublicensee or Co-developer of such party. OSI
agrees to hold in strict confidence all information concerning royalty payments
and reports, and all information learned in the course of any audit or
inspection, except to the extent it is necessary for OSI to reveal such
information in order to enforce its rights under this Agreement or if disclosure
is required by law. The failure of OSI to request verification of any report or
statement during said three-year period shall be considered acceptance of the
accuracy of such report, and Anaderm shall have no obligation to maintain
records pertaining to such report or statement beyond said three-year period.
The results of the inspection shall be binding on all parties.
ARTICLE 5 - TREATMENT OF CONFIDENTIAL INFORMATION
5.1 Confidentiality.
5.1.1 Each of Pfizer, OSI and Anaderm recognize that
the other parties' Confidential Information constitutes highly valuable
proprietary, confidential information. Each of Pfizer, OSI and Anaderm agree
that during the Contract Period and for five years thereafter, they will keep
confidential all Confidential Information that is disclosed to
<PAGE> 21
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them or to any of their Affiliates pursuant to this Agreement. Neither Pfizer,
OSI or Anaderm nor any of their Affiliates shall use the Confidential
Information of any other party, during the Contract Period and for five years
thereafter, in any manner or for any purpose other than as necessary to fulfill
their responsibilities under this Agreement, which includes the disclosure, in
patent applications on Inventions made in the course of conducting the Research
Program, of information that is sufficient under the applicable law to support
the patentability of such Inventions. In addition, Pfizer and Anaderm may
disclose such Confidential Information to government agencies to the extent
necessary or desirable to secure governmental approval for development, clinical
testing or marketing of Lead Compounds or Human Therapeutic Products based on
Class 1 or Class 2 Compounds, and, with respect to clinical testing of the same,
to preclinical and clinical investigators where necessary or desirable to the
extent normal and usual in the custom of the trade and under a secrecy agreement
with essentially the same confidentiality provisions as those contained herein.
5.1.2 Each of Pfizer, OSI and Anaderm acknowledge
that the Pfizer Confidential Information, OSI Confidential Information and
Anaderm Confidential Information is highly valuable, proprietary, confidential
information, and agree that any disclosure of Confidential Information to any
officer, employee or agent of the others or of any of their respective
Affiliates shall be made only to the extent necessary to carry out their
respective responsibilities under this Agreement and shall be limited to the
maximum extent possible that is consistent with such responsibilities. Each
party agrees not to disclose the others' Confidential Information to any Third
Party during the Contract Period and for five (5) years thereafter, under any
circumstances without
<PAGE> 22
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written permission. Each party shall take such action, and shall cause its
Affiliates to take such action, to preserve the confidentiality of the others'
Confidential Information as it would customarily take to preserve the
confidentiality of its own confidential information. Each party, upon the
others' request, will return all the Confidential Information disclosed to it
pursuant to this Agreement, including all copies and extracts of documents
within 60 days of the request after the termination of this Agreement.
5.1.3 Each of Pfizer, OSI and Anaderm represents
that all of their respective employees and all other persons (e.g., consultants)
participating in the Research Program on their respective behalves who will have
access to Pfizer Confidential Information, OSI Confidential Information or
Anaderm Confidential Information will be bound, for a period beginning not later
than commencement of their participation in the Research Program and ending five
(5) years after termination of the Contract Period, by agreements to maintain
such information in confidence.
5.2 Publication. Except as required to pursue patent
protection, the parties hereto agree not to publish the results obtained in the
course of the Research Program without the prior written approval of the SAB and
Board of Directors of Anaderm. After receipt of any proposed publication by both
the SAB and Board of Directors of Anaderm, written approval or disapproval shall
be provided within thirty (30) days for a manuscript, within thirty (30) days
for an abstract for presentation at, or inclusion in the proceedings of a
scientific meeting, and within thirty (30) days for a transcript of an oral
presentation to be given at a scientific meeting. Approval decisions shall be
made in
<PAGE> 23
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accordance with Pfizer's corporate policy regarding publications and shall not
be unreasonably withheld.
5.3 Disclosure of Inventions. Each party shall promptly
inform the others about any Invention within the Field or the Dermatology
Indications, that is conceived or reduced to practice, in whole or in part, in
the course of carrying out the Research Program by their respective employees or
other parties participating in the Research Program on their respective
behalves. Each party shall also promptly inform Pfizer or OSI about any
Invention outside the Field and outside the Dermatology Indications, if such
Invention is based on a compound owned by OSI or Pfizer, respectively, (i.e.,
any Invention that relates to such a compound or to a composition containing
such a compound, or to a method of making, administering or using such a
compound). This Agreement shall not be construed to obligate any party to
disclose to the other parties any other Inventions outside of the Field and
outside the Dermatology Indications.
ARTICLE 6 - INTELLECTUAL PROPERTY RIGHTS
6.1 Grant of Technology Licenses. All grants of licenses in
Technology under this section (Section 6.1) are subject to the provisions of
Sections 6.2 and 6.3 of this Agreement, which relate to the transfer of rights
in Inventions.
6.1.1 License in OSI Technology. OSI grants
Anaderm, NYU and Pfizer and its Affiliates an exclusive license in the
Territory, during the Contract Period and without the right to sublicense, under
OSI's rights in OSI Technology, including that which is acquired by OSI from
Third Parties during the Contract Period, and any compounds that OSI owns and
makes available to the Research Program. This license is solely for the purpose
of conducting the Research Program
<PAGE> 24
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in accordance with the terms of Article 2 of this Agreement and is subject to
OSI's retention of rights of equivalent scope for itself solely for use in
conducting the Research Program. Upon expiration of the Contract Period, such
license will become nonexclusive and solely for the purpose of developing and
marketing Lead Compounds and Human Therapeutic Products, and such nonexclusive
license shall not expire in any country, notwithstanding the termination
provisions of Article 10 of the Agreement, prior to 10 years from the date of
the first commercial sale in that country of a Human Therapeutic Product the
manufacture, use or sale of which by a Third Party would infringe a Valid Claim
to any Invention within Anaderm Patent Rights or Pfizer Patent Rights, and, if
at the end of such ten year period a Valid Claim to any such Invention exists in
such country, the term of the license shall continue until no such Valid Claim
exists in that country.
6.1.2 License in Anaderm Technology. Anaderm grants
OSI and Pfizer and its Affiliates an exclusive license in the Territory, during
the Contract Period and without the right to sublicense, under Anaderm's rights
in Anaderm Technology, including that which is acquired by Anaderm from Third
Parties during the Contract Period. This license is solely for the purpose of
conducting the Research Program in accordance with the terms of Article 2 of
this Agreement and is subject to Anaderm's retention of rights of equivalent
scope for itself solely for use in conducting the Research Program. Upon
expiration of the Contract Period, such license, as to Pfizer and its
Affiliates, will become nonexclusive and solely for the purposes of developing
and marketing Lead Compounds and Human Therapeutic Products, and shall not
expire in any country, notwithstanding the termination provisions of Article 10
of the Agreement, prior to 10 years from the date of the first
<PAGE> 25
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commercial sale in that country of a Human Therapeutic Product the manufacture,
use or sale of which by a Third Party would infringe a Valid Claim to Invention
within Pfizer Patent Rights or Anaderm Patent Rights, and, if at the end of such
ten year period a Valid Claim to such Invention exists in such country, the term
of the license shall continue until no such Valid Claim exists in that country.
6.1.3 License in Pfizer Compounds. Pfizer grants
Anaderm and OSI an exclusive license, without the right to sublicense, in the
Territory, during the Contract Period, to use, solely for the purpose of
screening such compounds for indications within the Field in the course of
conducting the Research Program, any compounds that Pfizer owns and makes
available for use in the Research Program pursuant to Sections 2.1 and 2.3 of
the Stockholders' Agreement. Pfizer grants Anaderm and OSI a nonexclusive
license, without the right to sublicense, in the Territory, during the Contract
Period, to use any such Pfizer compounds solely for the purpose of screening
such compounds for indications within the Dermatology Indications in the course
of conducting the Research Program.
6.2 Rights in Inventions Within the Field or The
Dermatology Indications.
6.2.1 Subject only to the provisions of Section
6.2.2 below, OSI shall assign to Anaderm its worldwide rights in any Invention
within the Field or the Dermatology Indications that is made in the course of
its participation in the Research Program and that relates to a Therapeutically
Active Compound, a composition containing a Therapeutically Active Compound, or
a New Use for a Therapeutically Active Compound. Pfizer shall do the same,
except with respect to Inventions based on Pfizer compounds. Subject to the
provisions of
<PAGE> 26
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Section 6.2.2 below, OSI and Pfizer grant Anaderm an exclusive license in the
Territory, including the right to sublicense, under their rights in all
Inventions within the Field or the Dermatology Indications, that are made in the
course of their participation in the Research Program and that do not relate to
a Therapeutically Active Compound, a composition containing a Therapeutically
Active Compound or a New Use for a Therapeutically Active Compound, to use such
Inventions for the purposes of conducting the Research Program and developing
and marketing Lead Compounds and Human Therapeutic Products. The term of such
exclusive licenses shall not expire in any country, with respect to any
particular Invention, notwithstanding the termination provisions of Article 10
of the Agreement, prior to 10 years from the date of the first commercial sale
in that country of a Human Therapeutic Product the manufacture, use or sale of
which by a Third Party would infringe a Valid Claim to such Invention, and, if
at the end of such ten year period a Valid Claim to such Invention exists in
such country, the term of the license shall continue until no such Valid Claim
exists in that country. The foregoing grants of exclusive licenses to Anaderm by
OSI and Pfizer are also subject, during the Contract Period, to OSI's and
Pfizer's retention of rights of equivalent scope for themselves, for use solely
in conducting the Research Program.
6.2.2 OSI shall assign to Pfizer its worldwide
rights in any Invention that is made in the course of its participation in the
Research Program and that relates to compound owned by Pfizer, a composition
containing such a compound or a New Use for such a compound. Pfizer grants
Anaderm an exclusive license in the Territory, including the right to sublicense
without restriction, under its rights in any Inventions pertaining to the Field
or the Dermatology Indications that
<PAGE> 27
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are assigned to it pursuant to this section, for the purposes of conducting the
Research Program and developing and marketing Lead Compounds and Human
Therapeutic Products. Such exclusive license is subject, during the Contract
Period, to Pfizer's retention of rights of equivalent scope, solely for the
purpose of conducting the Research Program. The term of such exclusive license
shall not expire in any country, notwithstanding the termination provisions of
Article 10 of the Agreement, prior to 10 years from the date of the first
commercial sale in that country of a Human Therapeutic Product the manufacture,
use or sale of which by a Third Party would infringe a Valid Claim to any such
Invention, and, if at the end of such ten year period a Valid Claim to such
Invention exists in such country, the term of the exclusive license shall
continue until no such Valid Claim exists in that country.
6.3 Rights in Inventions Outside the Field and The
Dermatology Indications. Neither OSI, Anaderm nor Pfizer shall be obligated to
assign or license their rights in any Invention made in the course of conducting
the Research Program, where such Invention does not relate to the Field or to
the Dermatology Indications, or to a compound owned by Pfizer, OSI or Anaderm, a
composition containing such a compound or a method of making, using or
administering such a compound.
6.4 Actual or Threatened Infringement. When information
comes to the attention of OSI, Anaderm or Pfizer to the effect that any patent
in which a party to this Agreement owns rights (either pursuant to this
Agreement or otherwise) and which claims either (a) a Human Therapeutic Product
based on a Class 1 or Class 2 Compound that is being developed or marketed by
Anaderm or Pfizer or an Affiliate of Pfizer (excluding Anaderm) or (b) a
compound or composition contained in such a Human Therapeutic Product, or (c) a
Class 1 or Class 2 compound being
<PAGE> 28
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developed by Anaderm or Pfizer or an Affiliate of Pfizer as a Lead Compound
pursuant to Article VIII of the Stockholders' Agreement or for which a New Use,
as defined in Section 1.6 of this Agreement, is being developed by Anaderm or
Pfizer or an Affiliate of Pfizer (excluding Anaderm), has been or is threatened
to be unlawfully infringed, the party that becomes aware of such information
shall promptly bring it to the attention of the other parties to this Agreement.
Pfizer, or an Affiliate of Pfizer (excluding Anaderm), within 90 days after all
parties have been made aware of such information, regardless of which party is
developing or marketing the compound or product to which the allegedly infringed
patent relates, shall have the right, but not the obligation, at its own risk
and expense and using counsel of its choice, to take such action as it may deem
necessary to prosecute or prevent such unlawful infringement and to notify the
parties to this Agreement of the commencement of any suit, action, proceeding or
assertion of infringement that it initiates. Neither Pfizer nor any of its
Affiliates, however, shall be obligated to inform OSI or Anaderm prior to taking
any such action if delaying such action would prejudice its right to obtain the
relief sought, for example, where such action is a motion for a temporary
restraining order or a claim of patent infringement based on the filing of an
ANDA by a generic drug company. If, however, Pfizer decides not to take action
in either of the two foregoing situations, it shall notify OSI in a timely
fashion so as to allow OSI to take such action if it chooses to do so. Pfizer
shall furnish Anaderm with a copy of each nonprivileged material communication
relating to the alleged infringement. If Pfizer or the relevant Affiliate of
Pfizer, as the case may be, determines that it is necessary or desirable for
either Anaderm or OSI to join any such suit, action or proceeding, then Anaderm
or OSI
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shall, at Pfizer's expense, execute all papers and perform such other acts as
may be reasonably required to permit Pfizer or the relevant Affiliate of Pfizer
to act in their respective names, or to join them, respectively, as parties, if
required by law, in which event Pfizer shall hold the party or parties requested
to be joined free, clear and harmless from any and all costs and expenses of
such suit, action or proceeding, including attorney's fees. If Pfizer or one of
its Affiliates brings a suit in accordance with the above terms, it shall have
the right first to reimburse itself out of any sums recovered in such suit or in
its settlement for all reasonable costs and expenses of every kind and
character, including reasonable attorney's fees, involved in the prosecution of
any suit, and fifty percent (50%) of any funds that shall remain from said
recovery shall be distributed to the parties receiving royalties on the Net
Sales of the Human Therapeutic Product to which the infringed claim or claims
relate, in amounts proportional to the relative amounts of their respective
royalties, and the remaining fifty (50%) percent shall belong, respectively, to
Pfizer or the Affiliate of Pfizer that brought the suit. If, within ninety (90)
days after Pfizer or an Affiliate of Pfizer other than Anaderm gives notice to
Anaderm or OSI of the information relating to the alleged infringement or
receiving notice of such information from Anaderm or OSI, neither Pfizer nor any
of its Affiliates notifies Anaderm and OSI of its intent to bring suit or take
other action against an alleged infringer, Anaderm shall have the right, but not
the obligation, to bring suit or take other action against such alleged
infringer, and may through joinder add Pfizer, an Affiliate of Pfizer or OSI as
a party, if appropriate, in which case Anaderm shall hold the party or parties
so joined free, clear and harmless from any and all costs and expenses of such
litigation, including attorney's fees, and
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any sums recovered in any such suit or in its settlement shall belong to
Anaderm; provided, however, that fifty percent (50%) of any such sums recovered
in such suit, after deduction of the costs and expenses of litigation, including
attorney's fees paid, shall be distributed to the parties receiving royalties on
the Net Sales of the Human Therapeutic Product to which the allegedly infringed
claim or claims relate, in amounts proportional to the relative amounts of their
respective royalties, and the remaining fifty percent (50%) shall belong to
Anaderm. All parties to this Agreement agree to cooperate with and lend
assistance, as appropriately requested or required by law, to any party that
initiates a lawsuit or other action against an alleged infringer pursuant to
this section. Each party shall have the right to be represented by counsel of
its own selection and at its own expense in any suit instituted by the other
under the terms of this section. If either Anaderm or Pfizer lacks standing to
bring any such suit, action or proceeding, then the other shall do so at the
request and expense of the requesting party. The obligations of all parties
under this section shall remain in effect, notwithstanding the termination
provisions of Article 10 of this Agreement, until the statute of limitations
applicable to every action that could be taken pursuant to this section to hold
the allegedly infringing party accountable under the law has expired and until
every such pending action has been resolved by a decision rendered by a tribunal
of competent jurisdiction from which no appeal has been or can be taken.
6.5 Response to Infringement Claims. The parties to this
Agreement agree to cooperate with any one or both of the other such parties in
defense of any suit, action or proceeding against any such party or any
Affiliate or sublicensee of any such party alleging the
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infringement of the intellectual property rights of a Third Party other than NYU
by reason of the manufacture, use or sale of a Therapeutic Product based on a
Class 1 or Class 2 compound. The cooperation and involvement of all three
parties in defense of any such lawsuit shall be at the expense of the party that
is developing and/or marketing the Therapeutic Product or compound the
manufacture, use or sale of which gave rise to the claim of infringement (the
"developing/marketing party"). However, the developing/marketing party shall not
be responsible for paying any costs or fees or expenses associated with the
involvement of another party in any such lawsuit if the allegedly infringing
activities that gave rise to the lawsuit resulted from the negligence or breach
a warranty in this Agreement or the Stockholders' Agreement of such other party.
Any party to this Agreement against which such a lawsuit, action, proceeding or
claim of infringement is brought shall give the other parties prompt written
notice of it and shall furnish the other parties with a copy of each
nonprivileged material communication relating to the alleged infringement. In
consideration of the developing/marketing party's provision of costs, fees and
expenses for the defense of any other party joined in such a lawsuit or other
legal proceeding, and the developing/marketing party's agreement which it hereby
gives to the other parties to indemnify and hold them and their directors,
officers, employees and agents harmless with respect to all damages assessed
against them and arising out of such action, all parties hereby grant to Pfizer
or Anaderm, whichever is the developing/marketing party, all authority
(including the right to exclusive control of the defense of any such suit,
action or proceeding and the exclusive right to compromise, litigate, settle or
otherwise dispose of any such suit, action or proceeding), and agree to provide
Pfizer or Anaderm,
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respectively, with all information and assistance necessary to defend or settle
any such suit, action or proceeding, except that any such compromise,
litigation, settlement, or other disposition shall not include an admission of
fault on the part of any such other party or require any such other party to
incur any obligation or liability or take or refrain from taking any action
except as otherwise obligated hereunder without such party's advance written
consent. The obligations of all parties under this section shall remain in
effect, notwithstanding the termination provisions of Article 10 of this
Agreement, until the statute of limitations applicable to every action that
could be taken pursuant to this section to hold the allegedly infringing party
accountable under the law has expired and until every such pending action has
been resolved by a decision rendered by a tribunal of competent jurisdiction
from which no appeal has been or can be taken.
6.6 Filing, Prosecution and Maintenance of Patent Rights.
6.6.1 Anaderm shall have the right, at its expense
and using counsel of its choice, to prepare, file and prosecute patent
applications and to maintain and apply for extensions, Supplementary Protection
Certificates and reissues of patents worldwide on Inventions within the Field or
the Dermatology Indications, that were made by any of the parties in the course
of their participation in the Research Program and that relate to either a
therapeutically active compound, a composition containing a therapeutically
active compound or a New Use for a therapeutically active compound, as well as
on any Inventions in which it has rights as an owner/assignee pursuant to
Article 6 of this Agreement. Pfizer and OSI hereby grant Anaderm the authority
to perform the above patent related tasks with respect to such Inventions in
which they, respectively, have rights as an owner/assignee pursuant to Article
<PAGE> 33
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6 of this Agreement and agree to execute any and all forms required to be
submitted in the various patent offices worldwide to render such transfer of
authority effective in all countries in which patent protection will be sought.
6.6.2 Anaderm shall perform or have performed on its
behalf the patent related tasks that it is obligated to perform under Sections
6.6.1 above diligently, and shall provide copies of any documents related to the
performance of such tasks to any other party to this Agreement that requests
them.
6.6.3 The rights and obligations under this section
(Section 6.6) shall not expire, notwithstanding the termination provisions of
Article 10, with respect to a particular Invention, until all licenses of rights
in such Invention pursuant to this Agreement have expired.
ARTICLE 7 - ACQUISITION OF RIGHTS FROM THIRD PARTIES.
During the Contract Period, each of OSI, Pfizer and Anaderm shall
promptly notify each other in writing of any and all opportunities of which they
are aware to acquire in any manner from Third Parties, Technology or patents
which may be useful in, or may relate to, the Research Program. Anaderm shall
decide if such rights shall be acquired. Anaderm shall use its best efforts to
locate, and acquire rights to, Technology within and ancillary to the Field.
ARTICLE 8 - EXCLUSIVITY
8.1 During the Contract Period, OSI shall not conduct drug
discovery research itself or sponsor any research other than research conducted
pursuant to the Research Program, as defined in this Agreement, if such research
pertains to the Field or to the Dermatology Indications; provided, however, that
OSI may sponsor or engage in such research with
<PAGE> 34
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the prior written consent of all of the members of the Board of Directors of
Anaderm. Research conducted by OSI outside of the Field and outside the
Dermatology Indications, which results in a serendipitous discovery of a
compound within the Field or the Dermatology Indications, shall not be
considered a breach of this exclusivity provision. OSI may, however, conduct its
own research in all areas outside the Field, without restriction, with the
exception of the Dermatology Indications.
8.2 During the Contract Period, ***
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ARTICLE 9 - DEVELOPMENT OF CLASS 1 AND CLASS COMPOUNDS
9.1 Best Efforts. Anaderm or Pfizer shall use its
reasonable best efforts, within the confines of their respective corporate
policies and commercial interests, to commercialize any Human Therapeutic
Product based on a Class 1 or Class 2 Compound for which Anaderm or Pfizer,
respectively, has the exclusive right to develop.
9.2 Status Reports. Anaderm or Pfizer, depending on which
party is developing a particular Lead Compound or Human Therapeutic Product,
shall provide to OSI with a written report of the status of the development of
such Compound or Product. Such reports shall be provided annually, beginning one
year after the filing of an IND application for
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 35
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such Compound or Product and continuing until either development of such
Compound or Product has been discontinued or there has been a commercial sale of
such Product in the United States. Anaderm or Pfizer, respectively, shall also
notify OSI in writing within sixty (60) days of abandoning development of any
such Compound or Product.
ARTICLE 10 - TERMINATION
10.1 Term. Unless sooner terminated due to the unsuccessful
completion of the Initial Phase, this Agreement shall have an initial term of
three years from the Effective Date.
10.2 Renewal. This Agreement shall be automatically renewed
for additional one-year periods unless terminated upon 90 days' prior written
notice by one of the parties hereto to each of the other parties.
10.3 Termination for Cause. At any time prior to expiration
of this Agreement, any party may terminate this Agreement forthwith for cause,
as "cause" is described below, by giving written notice to the other party.
Cause for termination by one party of this Agreement shall be deemed to exist if
any other party materially breaches or defaults in the performance or observance
of any of the provisions of this Agreement and such material breach or default
is not cured within sixty (60) days after the giving of notice by the party
specifying such material breach or default, or if either NYU, Pfizer or Anaderm
discontinues its business or becomes insolvent or bankrupt, or if any
representation or warranty by NYU, Pfizer or Anaderm, or any of its officers,
under or in connection with this Agreement shall prove to have been incorrect in
any material respect when made.
10.4 Termination by a Party. Upon the occurrence of a cause
for termination, any party not responsible may, by notice to the other parties,
terminate this Agreement. Such termination will become
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effective immediately following a 30 day period during which the failing party
failed to remedy the failure that gave rise to the notice of termination.
10.5 Provisions that Survive Termination. The following
provisions of this Agreement will survive termination pursuant to this article
(Article 10) and will remain in force for the period specified in the sections
of the Agreement in which they appear:
(a) all of Article 4, relating to the payment of
royalties;
(b) the confidentiality obligations set forth in
Sections 5.1.1 - 5.1.3.
(c) the grant of exclusive and nonexclusive licenses
pursuant to Article 6;
(d) the obligations of all parties with respect to
patent infringement matters pursuant to Sections 6.4 and 6.5; and
(e) the rights and obligations of all parties with
respect to the filing, prosecution and maintenance of patent rights
pursuant to Section 6.6;
(f) the obligations of Pfizer and Anaderm to provide
notices or status reports to OSI pursuant to Section 9.2;
(g) the indemnification provisions of Article 11; and
(h) the choice of governing law pursuant to Section
13.2.
ARTICLE 11 - INDEMNIFICATION BY ANADERM OR PFIZER
***
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<PAGE> 37
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*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 38
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ARTICLE 12 - REPRESENTATIONS, WARRANTIES AND COVENANTS
OSI, Pfizer and Anaderm each represents, warrants and
covenants as follows:
12.1 It is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
is qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification and has all requisite power and
authority, corporate or otherwise, to conduct its business as now being
conducted, to own, lease and operate its properties and to execute, deliver and
perform this Agreement.
12.2 The execution, delivery and performance by it of this
Agreement have been duly authorized by all necessary corporate action and do not
and will not (a) require any consent or approval of its stockholders, (b)
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it or any provision of its charter or by-laws or (c) result in
a breach of or constitute a default under any material agreement, mortgage,
lease, license, permit or other instrument or obligation to which it is a party
or by which it or its properties may be bound or affected.
12.3 This Agreement is a legal, valid and binding obligation
of it and is enforceable against it in accordance with its terms and conditions,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws, from time to time in
effect, affecting creditor's rights generally.
12.4 It is not presently under and it will not incur in the
future any obligation to any Person, contractual or otherwise, that is
<PAGE> 39
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conflicting or inconsistent in any respect with the terms of this Agreement or
that would impede the diligent and complete fulfillment of its obligations under
this Agreement.
12.5 It has good and marketable title to or valid leases or
licenses for, all of its properties, rights and assets necessary for the
fulfillment of its responsibilities and the Research Program, subject to no
claim of any third party other than the relevant lessors or licensors.
12.6 It shall use its diligent efforts to perform its
obligations under the Annual Research Plan.
12.7 OSI, Pfizer and Anaderm represent that their respective
employees that will participate in the Research Program and all other parties
that will participate in the Research Program on their behalf pursuant to this
Agreement will have a contractual obligation throughout the course of their
participation in the Research Program to assign to OSI, Pfizer, or Anaderm,
respectively, their rights in any Inventions made in the course of their
participation in the Research Program.
ARTICLE 13 - MISCELLANEOUS
13.1 Notices. All notices shall be mailed via certified
mail, return receipt requested, or courier, addressed as follows, or to such
other address as may be designated from time to time:
If to Pfizer: To Pfizer at its address as set forth at the
beginning of this Agreement
Attention: ***
Senior Vice President and
General Counsel, Pfizer Inc.
235 East 42nd Street, 21st Fl.
New York, N.Y. 10017-5755
If to OSI: To OSI at its address as set forth at the
beginning of this Agreement
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 40
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Attention: ***
Chief Executive Officer,
Oncogene Science Inc.,
106 Charles Lindergh Blvd.,
Uniondale, New York 11553
If to Anaderm: To Anaderm at its address as set forth at the
beginning of this Agreement
Attention: ***
President, Anaderm Research Corp.
235 East 42nd Street., 13th Fl.
New York, N.Y. 10017-5755
cc: ***
Senior Vice President and
General Counsel, Pfizer Inc.
235 East 42nd Street, 21st Fl.
New York, N.Y. 10017-5755
Notices shall be deemed given as of the date of receipt.
13.2. Governing Law. This Agreement shall be construed in accordance
with the laws of the State of New York.
13.3 Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties and their respective legal representatives,
successors and permitted assigns.
13.4 Publicity. Except as required by law, no party hereto may
disclose the existence of this Agreement or any of Anaderm's activities without
the prior written approval of the Board of Directors of Anaderm.
13.5 Headings. Paragraph headings are inserted for convenience of
reference only and do not form a part of this Agreement.
13.6 Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original.
13.7 Amendment; Waiver; etc. This Agreement may be amended,
modified, superseded or canceled, and any of the terms may be waived, only by a
written instrument executed by each party or, in the case of
*** These portions deleted pursuant to a request for confidential treatment.
<PAGE> 41
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waiver, by the party or parties waiving compliance. The delay or failure of any
party at any time or times to require performance of any provision, except as
otherwise specifically provided in this Agreement, shall in no manner affect its
rights at a later time to enforce the same.
13.8 Third Party Beneficiaries. NYU is an intended third party
beneficiary to this Agreement solely to the extent that it is granted certain
rights in intellectual property pursuant to Article 6. No other Person not a
party to this Agreement, including any employee of any party to this Agreement,
shall have or acquire any rights by reason of this Agreement. Nothing contained
in this Agreement shall be deemed to constitute the parties partners with each
other or any Person.
13.9 Assignment and Successors. This Agreement may not be assigned
by either party, in whole or in part, except to an Affiliate, to a purchaser of
all or substantially all of its assets or to any successor corporation resulting
from any merger or consolidation with or into such corporation.
13.10 Force Majeure. The parties to this Agreement shall be excused
from any required performance to the extent that, and for so long as such
performance is rendered impossible or unfeasible due to any catastrophes or
other major event beyond their reasonable control, including, without
limitation, war, riot, insurrection, laws, proclamations, edicts, ordinances,
regulations, strikes, lock-outs, other serious labor disputes, floods, fires,
explosions or other natural disasters. When such events have abated, the
parties' respective obligations and rights shall resume.
<PAGE> 42
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
ANADERM RESEARCH CORP.
By /s/ NICHOLAS BACOPOULOS
-------------------------------------
Title President
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ONCOGENE SCIENCE, INC.
By /s/ GARY E. FRASHIER
-------------------------------------
Title Chief Executive Officer
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PFIZER INC
By /s/ PAUL S. MILLER
-------------------------------------
Title Senior Vice President and
----------------------------------
General Counsel
<PAGE> 1
EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
AGREEMENT dated April 11, 1996 among Barry Katz, an individual residing
at 5609 Cascade Drive, Chapel Hill, North Carolina 27514 ("Katz"), Barry S.
Roberts, an individual residing at 207 Stagecoach Road, Chapel Hill, North
Carolina 27514 ("Roberts"), John McLaughlin, an individual residing at 901
Smyrna Drive, Whiteville, North Carolina 28472 ("McLaughlin"), Cedric Pearce, an
individual residing at 102 Springhill Forest Road, Chapel Hill, North Carolina
27516 ("Pearce"), Robert Capon, an individual residing at 322 Burlage Circle,
Chapel Hill, North Carolina 27514 ("Capon"), Steven Winegar, an individual
residing at 3410 Cambridge Road, Durham, North Carolina 27707 ("Winegar" and
together with Katz, Roberts, McLaughlin, Pearce and Capon, the "Shareholders"),
and Oncogene Science, Inc., a Delaware corporation with its principal office
located at 106 Charles Lindbergh Boulevard, Uniondale, New York 11553 (the
"Company").
W I T N E S S E T H:
WHEREAS, concurrently herewith the Company and Katz, Roberts,
McLaughlin and Pearce are entering into an Agreement and Plan of Merger (the
"Merger Agreement") whereby MYCOsearch, Inc. ("MYCOsearch"), a North Carolina
corporation which is wholly-owned by Katz, Roberts, McLaughlin and Pearce,
collectively, is merging into MYCOsearch Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of the Company (the "Merger"); and
WHEREAS, pursuant to the terms of the Merger, each share of MYCOsearch
outstanding on the date hereof is being exchanged for a certain number of shares
of the Company (the "OSI Shares") and warrants ("Warrants") to purchase
additional shares of the Company (the "Warrant Shares" and together with the OSI
Shares, the "Shares"); and
<PAGE> 2
WHEREAS, Capon and Winegar are receiving a certain number of OSI Shares
and Warrants as compensation for their services to MYCOsearch in connection with
the Merger; and
WHEREAS, the Shareholders desire to have certain registration rights
for the Shares under the securities laws, and the Company desires that the
Shareholders have such registration rights.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the parties hereby agree
as follows:
1. Registration of the Shares. Upon the execution of the Merger
Agreement, the Company shall file with the Securities and Exchange Commission
(the "Commission") a registration statement on Form S-3, or other appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"),
covering the Shares (the "Registration Statement") and diligently seek, through
its officers, directors, auditors and counsel, to have such Registration
Statement declared effective by the Commission to permit the sale of such
securities by the Shareholders, subject to Paragraph 2 hereof, through the
facilities of all appropriate securities exchanges and the over-the-counter
market. Any and all expenses relating to the registration of the Shares and the
other matters set forth in this Registration Rights Agreement shall be borne by
the Company and the Company shall be responsible for any and all costs, fees and
expenses incurred by any Shareholder in connection with the registration of the
Shares and reasonable ordinary costs, fees and expenses incurred by any
Shareholder in connection with the sale of the Shares (other than
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<PAGE> 3
underwriting discounts and commissions, if any). In connection with the
registration of the Shares:
(a) The Company will use its best efforts to register and
qualify the Shares covered by the Registration Statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Shareholders for the distribution of such securities;
(b) The Company shall keep the Registration Statement and any
registration or qualification contemplated by this Registration Rights Agreement
effective until the earlier of (i) the sale by all of the Shareholders of all of
the Shares, and (ii) the fourth anniversary of the date hereof; provided,
however, that if at the end of such four-year period, any Shareholder may be
deemed to be an "Affiliate" of the Company, the Company shall keep such
Registration Statement in effect until the earlier of the date such Shareholder
has sold all his Shares and the date which, in the opinion of counsel to the
Company and such Shareholder's counsel, is 90 days after such Shareholder is no
longer deemed to be an Affiliate of the Company. For purposes of this Agreement,
an "Affiliate" is defined as an entity controlling, controlled by, or under
common control with, a party;
(c) The Company shall furnish promptly to each Shareholder such
number of copies of the Registration Statement and each amendment or supplement
thereto, such number of copies of each preliminary and final prospectus
contained in the Registration Statement, and each amendment or supplement
thereto, all of which conform with the requirements of the Securities Act and
the rules and regulations thereunder, and such other documents as any such
Shareholder from time to time may reasonably request;
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<PAGE> 4
(d) The Company shall prepare and file with the Commission and
the applicable securities and Blue Sky authorities such amendments and
supplements (including post-effective amendments), to the Registration Statement
and any related prospectus, applications and documents as may be necessary or
appropriate to permit the continuous sale of the Shares, shall use its best
efforts to have any such post-effective amendments declared effective as
promptly as practicable; and shall notify the Shareholders promptly when any
such post-effective amendment has become effective. The Company shall notify the
Shareholders, at any time when a prospectus relating to the Shares covered by
the Registration Statement is required to be delivered under the Securities Act,
of the occurrence of any event as a result of which the prospectus included in
the Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing. The Company shall promptly amend or supplement the
Registration Statement and the related prospectus to correct any such untrue
statement or omission;
(e) The Company agrees to indemnify and hold harmless each of
the Shareholders, their respective agents and counsel, and each person, if any,
who controls any such person within the meaning of Section 15 of the Securities
Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") from and against any and all loss, liability, charge, claim,
damage, and expense whatsoever (which shall include, for all purposes of this
Registration Rights Agreement, without limitation, attorneys' fees and any and
all expenses whatsoever incurred in investigating, preparing, or defending
against any litigation, commenced or threatened, or any claim whatsoever, and
any and all amounts
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<PAGE> 5
paid in settlement of any claim or litigation), as and when incurred, arising
out of, based upon, or in connection with any untrue statement or alleged untrue
statement of a material fact contained (i) in any registration statement,
preliminary prospectus, or final prospectus (as from time to time amended and
supplemented), or any amendment or supplement thereto, relating to the sale of
any of the Shares, or (ii) in any application or other document or communication
(in this Registration Rights Agreement collectively called an "application")
executed by or on behalf of the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
register or qualify the Shares under the securities or Blue Sky laws thereof or
filed with the Commission or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company with respect to such Shareholder by or on behalf of such
Shareholder expressly for inclusion in any registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, as the case may be;
(f) If any action is brought against any Shareholder or any of
his agents or counsel, or any controlling persons of such person (an
"indemnified party") in respect of which indemnity may be sought against the
Company pursuant to the foregoing section, such indemnified party or parties
shall promptly notify the Company in writing of the institution of such action
and the Company shall promptly assume the defense of such action, including the
employment of counsel and payment of expenses. Such indemnified party or parties
shall have the right to employ his or their
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<PAGE> 6
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such indemnified party or parties unless the employment of
such counsel shall have been authorized in writing by the Company in connection
with the defense of such action or such indemnified party or parties shall have
reasonably concluded that there may be one or more legal defenses available to
him or them or to other indemnified parties which are different from or
additional to those available to the Company, in any of which events such fees
and expenses shall be borne by the Company and the Company shall not have the
right to direct the defense of such action on behalf of the indemnified party or
parties. Anything in this Registration Rights Agreement to the contrary
notwithstanding, the Company shall not be liable for any settlement of any such
claim or action effected without its written consent, which shall not be
unreasonably withheld. The Company shall not, without the prior written consent
of each indemnified party that is not released as described in this sentence,
settle or compromise any action, or permit a default or consent to the entry of
judgment in or otherwise seek to terminate any pending or threatened action, in
respect of which indemnity may be sought hereunder (whether or not any
indemnified party is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. The Company agrees promptly
to notify the Shareholders of the commencement of any litigation or proceedings
against the Company or any of its officers or directors in connection with the
sale of the Shares or any preliminary prospectus, prospectus, registration
statement, or amendment or supplement thereto, or any application relating to
any sale of any Shares;
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<PAGE> 7
(g) The Shareholders agree to jointly and severally indemnify
and hold harmless the Company, each director of the Company, each officer of the
Company who shall have signed any registration statement covering Shares held by
such Shareholder, each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, and its or their respective counsel, to the same extent as the foregoing
indemnity from the Company to such Shareholder in this Registration Rights
Agreement, but only with respect to statements or omissions, if any, made in any
registration statement, preliminary prospectus, or final prospectus (as from
time to time amended and supplemented), or any amendment or supplement thereto,
or in any application, in reliance upon and in conformity with written
information furnished to the Company with respect to such Shareholder by or on
behalf of such Shareholder expressly for inclusion in any such registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be. If any action
shall be brought against the Company or any other person so indemnified based on
any such registration statement, preliminary prospectus, or final prospectus, or
any amendment or supplement thereto, or in any application, and in respect of
which indemnity may be sought against such Shareholder pursuant to this
Registration Rights Agreement, such Shareholder shall have the rights and duties
given to the Company, and the Company and each other person so indemnified shall
have the rights and duties given to the indemnified parties, by the provisions
of this Registration Rights Agreement;
(h) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to this
Registration Rights Agreement (subject to the limitations thereof) but it
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<PAGE> 8
is found in a final judicial determination, not subject to further appeal, that
such indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case, or (ii) any
indemnified or indemnifying party seeks contribution under the Securities Act,
the Exchange Act or otherwise, then the Company (including for this purpose any
contribution made by or on behalf of any director of the Company, any officer of
the Company who signed any such registration statement, any controlling person
of the Company, and its or their respective counsel), as one entity, and the
Shareholders included in such registration in the aggregate (including for this
purpose any contribution by or on behalf of an indemnified party), as a second
entity, shall contribute to the losses, liabilities, claims, damages, and
expenses whatsoever to which any of them may be subject, on the basis of
relevant equitable considerations such as the relative fault of the Company and
such Shareholder in connection with the facts which resulted in such losses,
liabilities, claims, damages, and expenses. The relative fault, in the case of
an untrue statement, alleged untrue statement, omission, or alleged omission,
shall be determined by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to information supplied by the
Company or by such Shareholder, and the parties' relative intent, knowledge,
access to information, and opportunity to correct or prevent such statement,
alleged statement, omission, or alleged omission. The Company and such
Shareholder agree that it would be unjust and inequitable if the respective
obligations of the Company and such Shareholder for contribution were determined
by pro rata or per capita allocation of the aggregate losses, liabilities,
claims, damages, and expenses (even if such Shareholder and the other
indemnified parties were treated as one entity for such purpose) or by any
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<PAGE> 9
other method of allocation that does not reflect the equitable considerations
referred to in this Registration Rights Agreement. In no case shall any
Shareholder be responsible for a portion of the contribution obligation imposed
on all Shareholders in excess of its pro rata share based on the number of
shares of the Common Stock of the Company owned by it and included in such
registration as compared to the number of shares of the Common Stock of the
Company owned by all Shareholders and included in such registration. No person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Registration
Rights Agreement, each person, if any, who controls any Shareholder within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
and each agent and counsel of each such Shareholder or control person shall have
the same rights to contribution as such Shareholder or control person and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the Company
who shall have signed any such registration statement, each director of the
Company, and its or their respective counsel shall have the same rights to
contribution as the Company, subject in each case to the provisions of this
Registration Rights Agreement. Anything in this Registration Rights Agreement to
the contrary notwithstanding, no party shall be liable for contribution with
respect to the settlement of any claim or action effected without its written
consent, which shall not be unreasonably withhold. The Company shall not,
without the prior written consent of each indemnified party that is not released
as described in this sentence, settle or compromise any action, or permit a
default or consent to the
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<PAGE> 10
entry of judgment in or otherwise seek to terminate any pending or threatened
action, in respect of which indemnity may be sought hereunder (whether or not
any indemnified party is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each indemnified
party from all liability in respect of such action. This Registration Rights
Agreement is intended to supersede any right to contribution under the
Securities Act, the Exchange Act or otherwise;
(i) The Company shall notify the Shareholders of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose.
The Company will make all reasonable efforts to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof at the
earliest possible time;
(j) The Company shall cause the Shares to be listed on the
Nasdaq National Market and on any national securities exchange on which the
Common Stock of the Company is or may in the future become listed for trading;
(k) The Company shall take all other actions as may be
reasonably necessary to expedite and facilitate the disposition by the
Shareholders of the Shares pursuant to the Registration Statement;
(l) For so long as the Shares are outstanding, the Company
shall file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(m) So long as any Shareholder owns any Shares, the Company
shall furnish to such Shareholder (i) forthwith upon written request, a written
statement by the Company that the Company has complied with the
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<PAGE> 11
reporting requirements of the Securities Act and the Exchange Act, (ii) a copy
of its most recent annual or quarterly report to its shareholders, and (iii) a
copy of each report and other document filed by the Company with the Commission
pursuant to the Securities Act or Exchange Act.
2. Restrictions as to Sale of OSI Shares. Upon the effectiveness of
the Registration Statement (the "Effective Date"), each Shareholder may sell up
to 50% of the OSI Shares owned by him without restriction. With regard to the
remaining 50% of the OSI Shares owned by each Shareholder (the "Remaining
Shares"), each Shareholder may sell up to 10% of the Remaining Shares without
restriction at the end of each of the 10 successive months following the
Effective Date, commencing with the first full month following the Effective
Date.
3. Miscellaneous.
(a) Any notice required to be given hereunder shall be
sufficient if in writing and sent by facsimile transmission and by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested), addressed as follows:
If to the Shareholders, to:
Barry Katz
c/o MYCOsearch, Inc.
4905 Pine Cone Drive, Suite 5
Durham, NC 27707
If to the Company, to
Oncogene Science, Inc.
106 Charles Lindbergh Blvd.
Uniondale, NY 11553
Attention: Colin Goddard
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
- 11 -
<PAGE> 12
(b) This Registration Rights Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Registration Rights Agreement on the date first above written.
ONCOGENE SCIENCE, INC.
By: /s/ COLIN GODDARD
-------------------------------
Name: Colin Goddard
Title: VP, Pharmaceutical
Operations
/s/ BARRY KATZ
------------------------------------
Barry Katz
/s/ BARRY S. ROBERTS
------------------------------------
Barry S. Roberts
/s/ JOHN McLAUGHLIN
------------------------------------
John McLaughlin
/s/ CEDRIC PEARCE
------------------------------------
Cedric Pearce
/s/ ROBERT CAPON
------------------------------------
Robert Capon
/s/ STEVEN WINEGAR
------------------------------------
Steven Winegar
- 12 -
<PAGE> 1
EXHIBIT 10.6
Warrant No.
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON
EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE
TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS
EFFECTIVE UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED,OR TRANSFERRED IN THE MANNER
CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
APPLICABLE STATE SECURITIES LAWS.
VOID BEFORE APRIL 11, 1998 AND AFTER 5:00 P.M. NEW YORK TIME,
ON APRIL 11, 2001
ONCOGENE SCIENCE, INC.
Warrant to Purchase Shares of Common Stock
________ Shares
THIS CERTIFIES that, for good and valuable consideration received
______________ (the "Holder"), is entitled to subscribe for and purchase from
Oncogene Science, Inc., a Delaware corporation (the "Company"), upon the terms
and conditions set forth herein, at any time or from time to time after April
11, 1998 and before 5:00 P.M. New York City time on April 11, 2001 (the
"Exercise Period"), all or any portion of ___________ shares of common stock of
the Company, par value $0.01 per share ("Common Stock"), subject to adjustment
as provided herein (the "Warrant Shares"), at a price of $9.319 per share,
subject to adjustment as provided herein (the "Exercise Price"). Notwithstanding
the foregoing, upon a "change of control" of the Company at any time prior to
April 11, 1998, this Warrant shall be immediately exercisable. For purposes of
this Warrant, "change of control" shall mean (i) a transfer of shares of capital
stock of the Company to a third party, as a result of which transfer such third
party obtains the right to elect a majority of the Board of Directors of the
Company, or (ii) a sale or other disposition (whether effected by a merger,
consolidation or otherwise) of all or substantially all of the outstanding
capital stock of the Company or all or substantially all of the assets of the
Company. The Warrant Shares are entitled to the registration rights set forth in
that certain Registration
<PAGE> 2
Rights Agreement dated April 11, 1996 among Barry Katz, Barry S. Roberts, John
McLaughlin, Cedric Pearce, Robert Capon, Steven Winegar and the Company.
1. Method of Exercise. (a) This Warrant may be exercised at any time
during the Exercise Period, as to the whole or any lesser number of Warrant
Shares, by the surrender of this Warrant (with the election at the end hereof
duly executed) to the Company at its office at 106 Charles Lindbergh Boulevard,
Uniondale, New York 11553-3649 or at such other place as may be designated in
writing by the Company, together with a certified or bank cashier's check
payable to the order of the Company in an amount equal to the Exercise Price
multiplied by the number of Warrant Shares for which this Warrant is being
exercised.
(b) Upon any exercise of this Warrant, in lieu of any
fractional Warrant Shares to which the Holder shall be entitled, the Company
shall pay to the Holder cash in accordance with the provisions of Section 5(d)
hereof.
2. Issuance of Certificates. Upon each exercise of the Holder's
rights to purchase Warrant Shares, the Holder shall be deemed to be the holder
of record of the Warrant Shares issuable upon such exercise, notwithstanding
that the transfer books of the Company shall then be closed or certificates
representing such Warrant Shares shall not then have been actually delivered to
the Holder. As soon as practicable after each such exercise of this Warrant, the
Company shall issue and deliver to the Holder a certificate or certificates for
the Warrant Shares issuable upon such exercise, registered in the name of the
Holder or its designee. If this Warrant should be exercised in part only, upon
surrender of this Warrant for cancellation, the Company shall execute and
deliver a new Warrant evidencing the right of the Holder to purchase the balance
of the Warrant Shares (or portions thereof) subject to purchase hereunder.
3. Recording of Transfer. Any warrants issued upon the transfer or
exercise in part of this Warrant shall be numbered and shall be registered in a
Warrant Register as they are issued. The Company shall be entitled to treat the
registered holder of any Warrant on the Warrant Register as the owner in fact
thereof for all purposes and shall not be bound to recognize any equitable or
other claim to or interest in such Warrant on the part of any other person, and
shall not be liable for any registration or transfer of Warrants which are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary unless made with the actual knowledge that a fiduciary or nominee is
committing a breach of trust in requesting such registration or transfer, or
with the knowledge of such facts that its participation therein amounts to bad
faith. This Warrant shall be transferable only on the books of the Company upon
delivery thereof duly endorsed by the Holder or by his or its duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment or authority to transfer. In all cases of transfer by an attorney,
executor, administrator, guardian or other legal representative, duly
authenticated evidence of his or its authority shall be produced. Upon any
registration of transfer, the Company shall deliver a new warrant or warrants to
the person entitled thereto. This Warrant may be exchanged, at the option of the
Holder hereof, for another warrant, or other warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Warrant Shares (or portions thereof), upon surrender
to the
-2-
<PAGE> 3
Company or its duly authorized agent. Notwithstanding the foregoing, the Company
shall have no obligation to cause this Warrant to be transferred on its books to
any person if, in the written opinion of counsel to the Company, such transfer
does not comply with the provisions of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations thereunder.
4. Reservation of Shares of Common Stock. The Company shall at all
times reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of providing for the exercise of the
Warrants, such number of shares of Common Stock as shall, from time to time, be
sufficient therefor. The Company covenants that all shares of Common Stock
issuable upon exercise of this Warrant, upon receipt by the Company of the full
payment therefor, shall be validly issued, fully paid, nonassessable and free of
preemptive rights.
5. Exercise Price Adjustments. Subject to the provisions of this
Section 5, the Exercise Price in effect from time to time shall be subject to
adjustment, as follows:
(a) In case the Company shall at any time after the date hereof
(i) declare a dividend or make a distribution on the outstanding shares of
Common Stock payable in shares of its capital stock, (ii) subdivide the
outstanding shares of Common Stock, (iii) combine the outstanding shares of
Common Stock into a smaller number of shares of Common Stock, or (iv) issue any
shares of Common Stock by reclassification of shares of Common Stock, other than
a change in par value, or from par value to no par value, or from no par value
to par value, but including any such reclassification in connection with the
consolidation or merger of the Company with or into another corporation
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then, in each case,
the Exercise Price in effect at the time of the record date of such dividend or
distribution or of the effective date of such subdivision, combination, or
reclassification shall be adjusted so that it shall equal the price determined
by multiplying the Exercise Price by a fraction, the numerator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
action and the denominator of which shall be the number of shares of Common
Stock outstanding after giving effect to such action. Such adjustment shall be
made successively whenever any event listed above shall occur.
(b) In case the Company shall distribute to all holders of
shares of Common Stock (including any such distribution made to the stockholders
of the Company in connection with a consolidation or merger in which the Company
is the surviving or continuing corporation) evidences of its indebtedness, cash,
or assets (other than distributions and dividends payable in shares of Common
Stock), or rights, options, or warrants to subscribe for or purchase shares of
Common Stock or securities convertible into or exchangeable for shares of Common
Stock, then, in each case, the Exercise Price shall be adjusted by multiplying
the Exercise Price in effect immediately prior to the record date for the
determination of stockholders entitled to receive such distribution by a
fraction, the numerator of which shall be the Current Market Price (as
determined pursuant to Section 5(e) hereof) per share of Common Stock on such
record date, less the fair market value (as determined in good faith by the
board of directors of the Company, whose determination shall be conclusive
absent manifest error) of the portion of the evidences
-3-
<PAGE> 4
of indebtedness or assets so to be distributed, or of such rights, options, or
warrants or convertible or exchangeable securities, or the amount of such cash,
applicable to one share of Common Stock, and the denominator of which shall be
such Current Market Price per share of Common Stock. Such adjustment shall
become effective at the close of business on such record date.
(c) Whenever there shall be an adjustment as provided in
this Section 5, the Company shall, within 15 days thereafter, cause written
notice thereof to be sent by registered mail, postage prepaid, to the Holder, at
its address as it shall appear in the Warrant Register, which notice shall be
accompanied by an officer's certificate setting forth the number of Warrant
Shares issuable hereunder and the Exercise Price thereof after such adjustment
and setting forth a brief statement of the facts requiring such adjustment and
the computation thereof, which officer's certificate shall be conclusive
evidence of the correctness of any such adjustment absent manifest error.
(d) The Company shall not be required to issue fractions of
shares of Common Stock or other shares of the Company upon the exercise of this
Warrant. If any fraction of a share of Common Stock would be issuable upon the
exercise of this Warrant (or specified portions thereof), the Company may issue
a whole share in lieu of such fraction or the Company may purchase such fraction
for an amount in cash equal to the same fraction of the Current Market Price of
such shares of Common Stock on the date of exercise of this Warrant.
(e) For the purposes of the various provisions of this
Warrant, the Current Market Price per share of Common Stock on any date shall be
deemed to be the average of the daily closing prices for the thirty (30)
consecutive trading days immediately preceding the date in question. The closing
price for each day shall be the last reported sales price or, in case no such
reported sale takes place on such day, the closing bid price, in either case on
the principal national securities exchange on which the Common Stock is listed
or admitted to trading or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the highest reported bid price for
the Common Stock as furnished by the National Association of Securities Dealers,
Inc. through NASDAQ or a similar organization if NASDAQ is no longer reporting
such information. If on any such date the Common Stock is not listed or admitted
to trading on any national securities exchange and is not quoted by NASDAQ or
any similar organization, the fair value of a share of Common Stock on such
date, as determined in good faith by the Board of Directors of the Company,
whose determination shall be conclusive absent manifest error, shall be used.
(f) No adjustment in the Exercise Price shall be required
if such adjustment is less than $0.05; provided, however, that any adjustments
which by reason of this Section 5 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 5 shall be made to the nearest cent or to the nearest
thousandth of a share, as the case may be.
-4-
<PAGE> 5
(g) Upon each adjustment of the Exercise Price as a result
of the calculations made in this Section 5, the Warrants shall thereafter
evidence the right to purchase, at the adjusted Exercise Price, that number of
shares of Common Stock (calculated to the nearest hundredth) obtained by
dividing (i) the product obtained by multiplying the number of shares of Common
Stock purchasable upon exercise of the Warrants prior to adjustment of the
number of shares of Common Stock by the Exercise Price in effect prior to
adjustment of the Exercise Price by (ii) the Exercise Price in effect after such
adjustment of the Exercise Price.
(h) Whenever the Exercise Price is adjusted as provided in
this Section 5, the Company will promptly obtain a certificate of a firm of
independent public accountants of recognized standing selected by the Board of
Directors of the Company (which may be the regular auditors of the Company)
setting forth the Exercise Price as so adjusted and a brief statement of the
facts accounting for such adjustment, and will make available a brief summary
thereof to the holder of this Warrant, at its address listed on the register
maintained for that purpose (which summary may be included in any notice of
adjustment required by Section 5(c) hereof).
6. Consolidations and Mergers. (a) In case of any consolidation with
or merger of the Company with or into another corporation (other than a merger
or consolidation in which the Company is the surviving or continuing corporation
and which does not result in any reclassification of the outstanding shares of
Common Stock or the conversion of such outstanding shares of Common Stock into
shares of other stock or other securities or property), or in case of any sale,
lease or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety (such
actions being hereinafter collectively referred to as "Reorganizations"), there
shall thereafter be deliverable upon exercise of this Warrant (in lieu of the
number of shares of Common Stock theretofore deliverable) the kind and amount of
shares of stock or other securities, cash or other property which would
otherwise have been deliverable to a holder of the number of shares of Common
Stock upon the exercise of this Warrant upon such Reorganization if this Warrant
had been exercised in full immediately prior to such Reorganization. In case of
any Reorganization, appropriate adjustment, as determined in good faith by the
Board of Directors of the Company, shall be made in the application of the
provisions herein set forth with respect to the rights and interests of the
Holder so that the provisions set forth herein shall thereafter be applicable,
as nearly as possible, in relation to any shares or other property thereafter
deliverable upon exercise of this Warrant. Any such adjustment shall be made by
and set forth in a supplemental agreement between the Company, or any successor
thereto, and the Holder and shall for all purposes hereof conclusively be deemed
to be an appropriate adjustment. The Company shall not effect any such
Reorganization unless upon or prior to the consummation thereof the successor
corporation, or if the Company shall be the surviving corporation in any such
Reorganization and is not the issuer of the shares of stock or other securities
or property to be delivered to holders of shares of Common Stock outstanding at
the effective time thereof, then such issuer, shall assume by written instrument
the obligation to deliver to the Holder such shares of stock, securities, cash
or other property as the Holder shall be entitled to purchase in accordance with
the foregoing provisions.
-5-
<PAGE> 6
(b) In case of any reclassification or change of the shares of
Common Stock issuable upon exercise of this Warrant (other than a change in par
value or from no par value to a specified par value, or as a result of a
subdivision or combination, but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified par
value, or as a result of a subdivision or combination, but including any change
in the shares into two or more classes or series of shares), the Holder shall
have the right thereafter to receive upon exercise of this Warrant solely the
kind and amount of shares of stock and other securities, property, cash or any
combination thereof receivable upon such reclassification, change, consolidation
or merger by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such reclassification,
change, consolidation or merger. Thereafter, appropriate provision shall be made
for adjustments which shall be as nearly equivalent as practicable to the
adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly
apply to successive reclassifications and changes of shares of Common Stock and
to successive consolidations, mergers, sales, leases, or conveyances.
7. Notice of Certain Events. In case at any time any of the
following occur:
(a) The Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to receive a dividend
or distribution payable otherwise than in cash, or a cash dividend or
distribution payable otherwise than out of current or retained earnings, as
indicated by the accounting treatment of such dividend or distribution on the
books of the Company; or
(b) The Company shall offer to all the holders of its shares
of Common Stock any additional shares of capital stock of the Company or
securities convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
(c) The Company shall take any action to effect any
reclassification or change of outstanding shares of Common Stock or any
consolidation, merger, sale, lease or conveyance of property, described in
Section 6; or
(d) The Company shall take any action to effect any
liquidation, dissolution or winding-up of the Company or a sale of all or
substantially all of its property, assets and business;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the
-6-
<PAGE> 7
Warrant Register, mailed at least fifteen (15) days prior to (i) the date as of
which the holders of record of shares of Common Stock to be entitled to receive
any such dividend, distribution, rights, warrants or other securities are to be
determined, (ii) the date on which any such offer to holders of shares of Common
Stock is made, or (iii) the date on which any such reclassification, change of
outstanding shares of Common Stock, consolidation, merger, sale, lease,
conveyance of property, liquidation, dissolution or winding-up is expected to
become effective and the date as of which it is expected that holders of record
of shares of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution or winding-up.
8. Legend. The certificate or certificates evidencing the Warrant
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN NOT
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES
NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED
OR OTHERWISE TRANSFERRED UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT THERETO IS EFFECTIVE UNDER THE ACT AND ANY APPLICABLE
STATE SECURITIES LAWS, OR (2) THE COMPANY RECEIVES AN OPINION OF
COUNSEL TO THE HOLDER OF SUCH SECURITIES, WHICH COUNSEL AND
OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR TRANSFERRED
IN THE MANNER CONTEMPLATED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.
9. Replacement of Warrants. Upon receipt of evidence satisfactory to
the Company of the loss, theft, destruction or mutilation of any Warrant (and
upon surrender of any Warrant if mutilated), and upon reimbursement of the
Company's reasonable incidental expenses, the Company shall execute and deliver
to the Holder thereof a new Warrant of like date, tenor and denomination.
10. No Rights as Stockholder. The Holder of any Warrant shall not
have, solely on account of such status, any rights of a stockholder of the
Company, either at law or in equity, or to any notice of meetings of
stockholders or of any other proceedings of the Company, except as provided in
this Warrant.
-7-
<PAGE> 8
11. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
duly made when delivered, or mailed by registered or certified mail, return
receipt requested:
(a) If to the registered Holder of this Warrant, to the address
of such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth on the first
page of this Warrant or to such other address as the Company may designate by
notice to the Holder.
12. Successors. All the covenants, agreements, representations and
warranties contained in this Warrant shall bind the parties hereto and their
respective heirs, executors, administrators, distributees, successors and
assigns.
13. Headings. The Article and Section headings in this Warrant are
inserted for purposes of convenience only and shall have no substantive effect.
14. Governing Law. This Warrant shall be construed in accordance
with the laws of the State of New York applicable to contracts made and
performed within such State, without regard to principles of conflicts of law.
15. Modification of Agreement. This Warrant shall not otherwise be
modified, supplemented or amended in any respect unless such modification,
supplement or amendment is in writing and signed by the Company and the Holder
of this Warrant and Holders of any portion of the Warrant subsequently assigned
or transferred in accordance with the terms of this Warrant.
16. Consent to Jurisdiction. The Company and the Holder irrevocably
consent to the jurisdiction of the courts of the State of New York and of any
federal court located in such State in connection with any action or proceeding
arising out of or relating to this Warrant, any
-8-
<PAGE> 9
document or instrument delivered pursuant to, in connection with or
simultaneously with this Warrant, or a breach of this Warrant or any such
document or instrument.
IN WITNESS WHEREOF, the undersigned has executed this instrument as of
the date set forth below.
Dated: April 11, 1996
ONCOGENE SCIENCE, INC.
By: /s/ COLIN GODDARD
-------------------------------------
Name: Colin Goddard
--------------------------------
Title: VP, Pharmaceutical Operations
-------------------------------
-9-
<PAGE> 10
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to
transfer the attached Warrant.)
FOR VALUE RECEIVED, hereby sells, assigns, and
transfers unto , having an address at
, the attached Warrant to the extent of the right to
purchase shares of Common Stock of $0.01 par value per share, of
Oncogene Science, Inc. (the "Company"), together with all right, title, and
interest therein, and does hereby irrevocably constitute and appoint
as attorney to transfer such Warrant on the books of the Company,
with full power of substitution.
Dated: , 199
--------------- -
-------------------------------
Print name of holder of Warrant
By:
------------------------------
Name:
Title:
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatsoever.
<PAGE> 11
To:
The undersigned hereby exercises its rights to purchase
Warrant Shares covered by the within Warrant and tenders payment
herewith in the amount of $ in accordance with the terms thereof,
and requests that certificates for such securities be issued in the name of, and
delivered to:
(Print Name, Address and Social Security
or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.
Dated: Name:
-------------------- -----------------------------------------
(Print)
-----------------------------------
(Signature)
(Signature must conform to the name
of the Warrant Holder specified on
the face of the Warrant)
Address:
<PAGE> 1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of April 11, 1996 between ONCOGENE
SCIENCE, INC., a Delaware corporation having a place of business at 106 Charles
Lindbergh Boulevard, Uniondale, New York 11553 (the "Company"), and DR. BARRY
KATZ, who resides at 5609 Cascade Drive, Chapel Hill, North Carolina ("Dr.
Katz").
W I T N E S S E T H:
WHEREAS, concurrently with the execution hereof, MYCOsearch, Inc., a
North Carolina corporation, is merging into Mycosearch Acquisition Corp.
("MYCOsearch"), a wholly-owned subsidiary of the Company; and
WHEREAS, prior to and up to the date hereof Dr. Katz was employed
by MYCOsearch, Inc.; and
WHEREAS, the Company desires to engage Dr. Katz to perform services for
the Company and any subsidiary or affiliate of the Company, and Dr. Katz desires
to perform such services, on the terms and conditions hereinafter set forth.
NOW, THEREFORE, the Company and Dr. Katz, in consideration of the
mutual promises contained herein and other good and valuable consideration, the
receipt, adequacy and sufficiency of which are hereby acknowledged, hereby agree
as follows:
1. Term. The Company hereby employs Dr. Katz, and Dr. Katz hereby
accepts such employment, upon the terms and conditions hereinafter set forth.
Dr. Katz shall perform the duties required of him hereunder during the period
commencing on the date hereof and ending on the third anniversary of the date
hereof, provided, however, that on April 11, 1999, and on each April 11
thereafter, such period shall be automatically extended by one additional year
unless at least 180 days prior to any such April 11 either party shall deliver
to the other written notice that such
<PAGE> 2
period will not be extended, in which case this Agreement will terminate upon
the expiration of the existing term of this Agreement, including any previous
extension. The period during which Dr. Katz shall perform the services required
of him hereunder (as same may be extended as provided in this Paragraph 1 or
reduced as hereinafter provided) is hereinafter referred to as the "Employment
Period."
2. Duties.
(a) Subject to the terms and conditions of this Agreement, Dr.
Katz shall serve, at the pleasure of the Chief Executive Officer of the Company,
as Divisional Vice-President for Microbial Discovery for the Company. Dr. Katz
shall report directly to, and shall be supervised by, the Vice-President,
Pharmaceutical Operations of the Company. Dr. Katz shall also serve in such
offices of any subsidiary or affiliate of the Company in accordance with the
directions of the Board of Directors of the Company. In his capacity as
Divisional Vice-President for Microbial Discovery for the Company, Dr. Katz
shall perform for the Company, and any subsidiary or affiliate of the Company,
such duties generally associated with such position as well as such other duties
consistent with such positions as may be reasonably prescribed from time to time
by the President of the Company.
(b) Dr. Katz agrees to devote his full time to the performance
of his duties hereunder, subject to the provisions of Paragraph 10(a) hereof.
(c) Dr. Katz agrees not to become involved in any personal
investment or business matters which may detract from the performance of his
duties or otherwise adversely affect the Company or any subsidiary or affiliate
of the Company; provided, however, that Dr. Katz may remain as an investor,
directly or indirectly, in Avid Therapeutics Incorporated,
- 2 -
<PAGE> 3
NHC Laboratories, Inc. ("NHC"), or any successor entities thereto, and may serve
as a director, consultant or advisor to NHC.
3. Place of Performance. In connection with his employment by the
Company, Dr. Katz shall be based at the offices of the Company's subsidiary,
MYCOsearch, but shall also be available to travel, consistent with past
practice, at such times and to such places as may be reasonably necessary in
connection with the performance of his duties hereunder. In addition, the
Company may not require Dr. Katz to relocate from the Raleigh/Durham, North
Carolina area without his consent.
4. Compensation.
(a) Base Salary. During the Employment Period, Dr. Katz shall
receive a minimum base salary at the annual rate of $125,000 plus such other
amounts, if any, as the Board of Directors of the Company, in its sole
discretion, may from time to time determine. Dr. Katz's base salary shall be
reviewed annually, provided, however, that in no event shall Dr. Katz's base
salary be reduced below an annual rate of $125,000. Dr. Katz's salary shall be
payable in bi-weekly installments or at such other frequency as the Company may
from time to time determine for its senior managers as a group.
(b) Incentive Compensation Plan. In addition to his base
salary, Dr. Katz will participate in the discretionary Management Incentive
Compensation Plan which is approved annually by the Board of Directors for so
long as such plan, or any successor plan thereto, is in effect. The parties
hereby acknowledge that the Board of Directors of the Company, in approving the
terms of this Agreement, has also agreed to award Dr. Katz a performance bonus
of not less than $20,000 for the first 12 months hereunder, such bonus to be
paid on or about December 31, 1996.
- 3 -
<PAGE> 4
5. Stock Options. Dr. Katz shall be eligible to receive stock
options as the Board of Directors of the Company, or the Stock Option Committee
of the Board of Directors, as the case may be, shall determine in its sole
discretion.
6. Expenses. During the Employment Period, Dr. Katz shall be
entitled to reimbursement for all reasonable out-of-pocket expenses incurred in
performing services hereunder within the limits of authority which may be
established from time to time by the Board of Directors, provided that Dr. Katz
properly accounts for such expenses in accordance with Company policy.
7. Employee Benefits.
(a) Vacation. Dr. Katz shall be entitled to 22 days paid
vacation per calendar year which may be taken at such time or times as Dr. Katz
may elect, subject to the reasonable needs of the Company's business. Dr. Katz
shall also be entitled to all paid holidays given by the Company to its senior
managers.
(b) Other Benefits. Dr. Katz shall be entitled to participate
in such term life insurance, basic medical, major medical, dental and other
employee benefit plans established by the Company from time to time and
generally made available to employees at levels similar to Dr. Katz's for which
he meets the eligibility requirements, subject to the terms of such plans.
8. Termination.
(a) The Company may terminate this Agreement at any time and
for any reason whatsoever (or for no reason), by giving not less than 30 days'
prior written notice to Dr. Katz. In the event this Agreement is terminated by
the Company other than for a reason set forth in Paragraph 8(b) hereof, (i) Dr.
Katz shall be entitled to receive his base salary and
- 4 -
<PAGE> 5
all benefits at the rate in effect on the date notice of termination is given
(the "Notice Date") through the effective date of such termination (the
"Termination Date") and any bonus payment granted through such date which has
not yet been paid and (ii) Dr. Katz shall continue to receive his base salary
and all benefits at the rate in effect on the Notice Date (A) for the twelve
months immediately succeeding the Termination Date if such termination takes
place before the second anniversary of the effective date of this Agreement, (B)
for six months immediately succeeding the Termination Date if such termination
occurs after the second anniversary of the effective date of this Agreement.
(b) Notwithstanding anything herein contained to the contrary,
if after the date hereof and prior to the end of the Employment Period: (i)
either (A) Dr. Katz shall be physically or mentally incapacitated or disabled or
otherwise unable fully to discharge his duties hereunder ("Disabled") for a
period of 120 consecutive days or for an aggregate of 120 days within any period
of twelve consecutive months, (B) Dr. Katz shall be convicted of a felony or
other crime involving moral turpitude, (C) Dr. Katz shall commit any act or omit
to take any action in bad faith and to the detriment of the Company or any
subsidiary or affiliate of the Company, or (D) Dr. Katz shall breach any
material term of this Agreement and fail to correct or take reasonable steps to
correct such breach within 30 days after receiving written notice of the same
from the chief executive officer of the Company and an opportunity to discuss
any such breach with the chief executive office of the Company, then, and in
each such case, the Company shall have the right to give notice of termination
of Dr. Katz's services hereunder as of a date to be specified in such notice
(which date may be the date such notice is given), and this Agreement shall
terminate on the date so specified; or (ii) Dr. Katz shall
- 5 -
<PAGE> 6
die, then this Agreement shall terminate on the date of Dr. Katz's death. If
this Agreement is terminated by the Company for any of the reasons set forth in
this paragraph 8(b), Dr. Katz or his estate, as the case may be, shall be
entitled to receive his base salary at the rate in effect on the date notice of
termination is given or the date of Dr. Katz's death, as the case may be, to the
date on which termination shall take effect and any bonus payment granted
through such date which has not been paid; provided, however, that if Dr. Katz
is disabled, the amount payable to Dr. Katz pursuant to this Paragraph 8(b)
shall be reduced by an amount equal to the amounts, if any, to which he is
entitled with respect to such period pursuant to any insurance or other plan
established by the Company in which he is a participant.
(c) In the event that the duties or responsibilities of Dr.
Katz hereunder shall be materially modified without the express written consent
of Dr. Katz, Dr. Katz shall have the right, but not the obligation, to terminate
this Agreement immediately and the Company shall be required to pay his base
salary, bonus and all benefits at the rate and for the period set forth in
Paragraph 8(a) hereof.
9. Confidentiality.
(a) Beginning on the date hereof, and at any time hereafter,
Dr. Katz shall treat as confidential any proprietary, confidential or secret
information relating to the business or interests of the Company or any
subsidiary or affiliate of the Company, including, without limitation, the
organizational structure, operations, business plans or technical projects of
the Company or any subsidiary or affiliate of the Company, and any research data
or results, know how, inventions, trade secrets, contracts, customer lists,
process or other work products developed by or for the Company or any subsidiary
or affiliate of the
- 6 -
<PAGE> 7
Company, whether on the premises of the Company or elsewhere ("Confidential
Information"). Dr. Katz shall not disclose, utilize or make accessible in any
manner or in any form any Confidential Information other than in connection with
performing the services required of him under this Agreement, without the prior
written consent of the Company. Notwithstanding the foregoing, the provisions of
this Paragraph 9(a) shall not apply to any proprietary, confidential or secret
information or other research data or results, inventions, trade secrets,
customer lists or work products which are (i) publicly known under circumstances
involving no breach of this Agreement, (ii) required by law to be disclosed by
Dr. Katz, or (iii) lawfully and in good faith made available to Dr. Katz by a
third party under no obligation of confidentiality with respect thereto.
(b) Dr. Katz hereby agrees that any and all information,
inventions and discoveries, whether or not patentable, that he conceives and/or
creates during the Employment Period and any extensions thereof, and which are a
direct or indirect result of work performed hereunder, shall be the sole and
exclusive property of the Company. Dr. Katz hereby assigns to the Company any
and all right, title and interest which he has or may acquire in the same. Dr.
Katz further agrees that he will promptly execute any and all applications,
assignments or other instruments which an officer of the Company or the Board of
Directors of the Company shall reasonably deem necessary or useful in order to
apply for and obtain Letters Patent in the United States and all foreign
countries for said information, inventions and discoveries and in order to
assign and convey to the Company the sole and exclusive right, title and
interest in and to said information, inventions, discoveries, patent
applications and patents thereon. The Company will bear the cost of preparation
of all such patent applications and assignments, and the cost of prosecution of
all such
- 7 -
<PAGE> 8
patent applications in the United States patent office and in the patent offices
of foreign countries.
(c) All documents, records, apparatus, equipment and other
physical property furnished to Dr. Katz by the Company or produced by Dr. Katz
or others in connection with his employment shall be and remain the sole
property of the Company. Dr. Katz will return and deliver such property to the
Company as and when requested by the Company.
(d) Dr. Katz agrees that the provisions of this Paragraph 9
shall survive the termination of his employment and of this Agreement.
10. Non-Competition.
(a) Dr. Katz agrees that, during the period he is employed by
the Company or any subsidiary or affiliate of the Company, under this Agreement
or otherwise, except as expressly permitted herein, he will not engage in, or
otherwise directly or indirectly be employed by, or act as a consultant, advisor
or lender to, or be a director, officer, employee, stockholder, owner or partner
of, any other business or organization, whether or not such business or
organization now is or shall then be competing with the Company or any parent,
subsidiary or affiliate of the Company; provided, however, that Dr. Katz shall
not be prohibited either from managing his own personal investments on his own
personal time, so long as, subject to the final paragraph of this subparagraph
10(a), such activities do not (i) involve a business or organization which
competes with the Company or any subsidiary or affiliate of the Company, (ii)
interfere or conflict with the performance of his duties as an employee of the
Company or any subsidiary or affiliate of the Company, (iii) otherwise result in
a breach of any of the provisions of this Agreement.
Dr. Katz further agrees that (y) if his employment with the
Company is terminated by the Company pursuant to Paragraphs 8(a) or
- 8 -
<PAGE> 9
8(b)(i) hereof, or (z) Dr. Katz resigns or otherwise continually fails or
unreasonably refuses to perform the services required of him under this
Agreement other than as a result of a breach of this Agreement by the Company
(which breach is not cured within thirty (30) days after receiving notice
thereof), then during the two-year period commencing on the date he ceases to be
employed by any of the Company or any subsidiary or affiliate of the Company,
under this Agreement or otherwise, Dr. Katz shall not directly or indirectly
compete with or be engaged in the same business as the Company or any subsidiary
or affiliate of the Company, or be employed by, or act as consultant, advisor or
lender to, or be a director, officer, employee, stockholder, owner or partner
of, any business or organization which, at the time of such cessation, directly
or indirectly competes with or is engaged in the same business as the Company or
any subsidiary or affiliate of the Company including, without limitation, the
discovery, collection or sale of fungi or other similar natural products or the
development, production or sale of any product relating to the diagnosis or
treatment of human cancer, or the discovery of drugs which function through gene
transcription or gene expression; provided, however, that if Dr. Katz's
employment with the Company is terminated pursuant to Paragraphs 8(a) or
8(b)(i)(A) hereof, Dr. Katz's obligations pursuant to this sentence shall
continue only so long as the Company pays Dr. Katz compensation at the same rate
compensation was being paid to him pursuant to Paragraph 4 of this Agreement at
the time of such termination.
Notwithstanding anything contained herein to the contrary, the
provisions of this Paragraph 10(a) will not be deemed breached merely because
(A) Dr. Katz owns not more than 1% of the outstanding common stock of a
corporation if, at the time of its acquisition by Dr. Katz, such
- 9 -
<PAGE> 10
stock is listed on a national securities exchange, is reported on NASDAQ, or is
regularly traded in the over-the-counter market by a member of a national
securities exchange or (B) Dr. Katz remains an investor, directly or indirectly,
in Avid Therapeutics Incorporated, NHC or any successor entities thereto, or
serves as a director, consultant or adviser of NHC.
(b) Dr. Katz agrees that for a period of two years from the
termination of this Agreement he will not, directly or indirectly, employ or
solicit the employment or engagement by others of any employees of, or
consultants hired by, the Company, or any subsidiary or affiliate of the
Company, without the prior written consent of the Company, unless such person
ceased to be employed or engaged by the Company or its subsidiary or affiliate
at least four (4) months prior to the solicitation.
(c) The obligations of Dr. Katz pursuant to this Paragraph 10
shall survive the termination of this Agreement,
11. Equitable Relief. Dr. Katz acknowledges that the restrictions
contained in Paragraphs 9 and 10 of this Agreement are reasonable in view of the
nature of the business in which the Company is engaged and the knowledge he will
obtain concerning the Company's business (and the business of any subsidiary or
affiliate of the Company), and that any breach of his obligations under
Paragraphs 9 and 10 hereof will cause the Company irreparable harm for which the
Company will have no adequate remedy at law. As a result, the Company shall be
entitled to the issuance by a court of competent jurisdiction of an injunction,
restraining order or other equitable relief in favor of itself restraining Dr.
Katz from committing or continuing any such violation, and Dr. Katz consents to
such an injunction, restraining order or other equitable relief. Any right to
obtain an injunction, restraining order or other equitable relief hereunder will
not be deemed a waiver of any right to assert any other
- 10 -
<PAGE> 11
remedy the Company may have under this Agreement or otherwise at law or
in equity.
12. Representations and Warranties. Dr. Katz represents and warrants
to the Company that (i) he is under no contractual or other restriction or
obligation which is inconsistent with the execution of this Agreement, the
performance of his duties hereunder or the other rights of the Company and any
subsidiary or affiliate of the Company hereunder, and (ii) he is under no
physical or mental disability that would hinder the performance by him of his
duties under this Agreement.
13. Assignment. Under no circumstances shall Dr. Katz assign, pledge
or otherwise dispose of any of his rights or obligations under this Agreement,
and any such attempted assignment, pledge or disposition shall be void and
shall, at the Company's option, relieve the Company of all its obligations under
this Agreement. The Company may assign any of its rights or obligations under
this Agreement to any parent, subsidiary, affiliate or successor, but shall
remain liable in the case of any assignment to a parent or subsidiary.
14. Entire Agreement. This Agreement represents the entire agreement
between the Company and Dr. Katz with respect to the subject matter hereof and
there have been no oral or other agreements of any kind whatsoever as a
condition precedent or inducement to the signing of this Agreement or otherwise
concerning this Agreement or the subject matter hereof.
15. Waivers. Any waiver of any breach of any terms or conditions of
this Agreement shall not operate as a waiver of any other breach of such terms
or conditions or any other term or condition, nor shall any failure to enforce
any provision hereof on any one occasion operate as a waiver of such provision
or of any other provision hereof or a waiver of
- 11 -
<PAGE> 12
the right to enforce such provision or any other provision on any subsequent
occasion.
16. Amendments. This Agreement may not be amended, nor shall any
waiver, change, modification, consent or discharge be effected, except by an
instrument in writing executed by or on behalf of the party against whom
enforcement of any such amendment, waiver, change, modification, consent or
discharge is sought.
17. Severability.
(a) any provision of this Agreement shall be held or deemed
to be invalid, inoperative or unenforceable as written, it shall be construed,
to the greatest extent possible, in a manner which shall render it valid and
enforceable and any limitation on the scope or duration of any such provision
necessary to make it valid and enforceable shall be deemed to be part thereof.
(b) any provision of this Agreement shall be held or deemed
to be invalid, inoperative or unenforceable as applied to any particular case in
any jurisdiction or jurisdictions, or in all jurisdictions or in all cases,
because of the conflict or any provision with any constitution or statute or
rule of public policy or for any other reason, such circumstance shall not have
the effect of rendering the provision or provisions in question invalid,
inoperative or unenforceable in any other jurisdiction or in any other case or
circumstance or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to the extent that such other provisions
are not themselves actually in conflict with such constitution, statute or rule
of public policy, but this Agreement shall be reformed and construed in any such
jurisdiction or case as if such invalid, inoperative or unenforceable provision
had never been contained herein, and such
- 12 -
<PAGE> 13
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
18. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York.
19. Notices. Any notice or other communication required or permitted
by this Agreement shall be in writing and personally delivered or mailed by
certified mail, return receipt requested, addressed to the parties at their
addresses set forth above, or to such other addresses as one party may specify
to the other party, from time to time, in writing. Any notice or other
communication given by certified mail shall be deemed given at the time of
certification thereof, except for a notice changing a party's address which
shall be deemed given at the time of receipt thereof.
20. Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
ONCOGENE SCIENCE, INC.
By: /s/ COLIN GODDARD
------------------------------------
/s/ BARRY KATZ
------------------------------------------
Dr. Barry Katz
- 13 -
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<PERIOD-START> JAN-01-1996
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<SECURITIES> 20,013,287
<RECEIVABLES> 3,217,030
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