<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, 1997
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------- ---------------------
Commission file number 0-15190
----------------------------------------------------------
ONCOGENE SCIENCE, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 13-3159796
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(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 April 30, 1997 the registrant had outstanding 21,293,597 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 3-7
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1997
and September 30, 1996 3
Consolidated Statements of Operations
- Three months ended March 31, 1997 and 1996 4
Consolidated Statements of Operations
- Six months ended March 31, 1997 and 1996 5
Consolidated Statements of Cash Flows
- Six months ended March 31, 1997 and 1996 6-7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
PART II - OTHER INFORMATION 11-14
SIGNATURES 15
EXHIBIT INDEX 16
</TABLE>
* * * *
<PAGE> 3
PART I. FINANCIAL INFORMATION - UNAUDITED
ITEM 1. FINANCIAL STATEMENTS
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
Assets 1997 1996
------------- -------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 8,660,409 $ 13,409,866
Short-term investments 27,331,322 34,132,879
Receivables, including
trade receivables of $333,718 and
$215,201 at March 31,1997 and
September 30, 1996, respectively 1,634,092 2,031,950
Interest receivable 403,309 480,050
Grants receivable 242,638 331,014
Prepaid expenses and other 841,011 623,827
------------- -------------
Total current assets 39,112,781 51,009,586
------------- -------------
Property, equipment and leasehold
improvements - net 6,738,644 6,495,112
Compound library assets - net 6,997,829 5,048,584
Loans to officers and employees 37,342 37,342
Other assets 939,333 300,949
Intangible assets - net 9,915,112 10,645,481
------------- -------------
$ 63,741,041 $ 73,537,054
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 2,559,602 $ 3,686,638
Current portion of unearned revenue 1,033,819 141,541
------------- -------------
Total current liabilities 3,593,421 3,828,179
------------- -------------
Other liabilities:
Long-term portion of unearned revenue 75,835 104,497
Loan payable 198,104 83,244
Deferred acquisition costs 610,735 590,675
Accrued postretirement benefits cost 705,396 643,500
------------- -------------
Total liabilities 5,183,491 5,250,095
------------- -------------
Stockholders' equity:
Common stock, $.01 par value;
50,000,000 shares authorized,
21,293,597 and 22,175,214
issued and outstanding at
March 31, 1997 and
September 30, 1996, respectively 221,914 221,752
Additional paid-in capital 104,467,797 104,347,231
Treasury stock (6,284,866) -
Accumulated deficit (39,756,615) (36,071,476)
Cumulative translation adjustments (51,480) (5,355)
Unrealized holding loss on
short-term investments (39,200) (205,193)
------------- -------------
Total stockholders' equity 58,557,550 68,286,959
------------- -------------
Commitments and contingencies
$ 63,741,041 $ 73,537,054
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
Revenues: 1997 1996
------------ ------------
<S> <C> <C>
Collaborative program revenues,
principally from related parties $ 4,647,481 $ 2,298,649
Other research revenue 519,974 247,564
------------ ------------
5,167,455 2,546,213
------------ ------------
Expenses:
Research and development 4,469,910 3,231,892
Selling, general and administrative 1,817,517 1,361,539
Amortization of intangibles 365,187 363,188
------------ ------------
6,652,614 4,956,619
------------ ------------
Loss from operations (1,485,159) (2,410,406)
Other income(expense):
Net investment income 533,528 390,540
Other (37,053) 26,116
------------ ------------
Net loss $ (988,684) $ (1,993,750)
============ ============
Weighted average number of shares
of common stock outstanding 22,090,652 18,016,251
============ ============
Net loss per weighted share of
common stock outstanding $ (.04) $ (.11)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
---------------------------------
Revenues: 1997 1996
------------ ------------
<S> <C> <C>
Collaborative program revenues,
principally from related parties $ 6,480,663 $ 4,286,107
Other research revenue 1,001,581 536,354
------------ ------------
7,482,244 4,822,461
------------ ------------
Expenses:
Research and development 7,944,243 5,915,154
Selling, general and administrative 3,586,376 2,714,941
Amortization of intangibles 730,369 726,377
------------ ------------
12,260,988 9,356,472
------------ ------------
Loss from operations (4,778,744) (4,534,011)
Other income (expense):
Net investment income 1,136,986 755,065
Other (43,381) 14,602
------------ ------------
Net loss $ (3,685,139) $ (3,764,344)
============ ============
Weighted average number of shares
of common stock outstanding 22,083,730 17,745,190
============ ============
Net loss per weighted share of
common stock outstanding $ (.17) $ (.21)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
--------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(3,685,139) $(3,764,344)
Adjustments to reconcile net loss
to net cash used by operating activities:
Gain (loss) on sale of investments 16,776 (61,276)
Depreciation and amortization 1,294,388 665,312
Amortization of intangibles 730,369 726,377
Foreign exchange (gain) loss (46,125) 15,449
Changes in assets and liabilities:
Receivables 397,858 (1,809,041)
Interest receivable 76,741 (186,502)
Grants receivable 88,376 217,491
Prepaid expenses and other (217,184) (168,315)
Other receivables - (332,112)
Other assets (638,384) (55,169)
Accounts payable
and accrued expenses (1,127,036) (1,037,745)
Unearned revenue 863,616 (87,163)
Accrued postretirement
benefits cost 61,896 67,815
----------- -----------
Net cash used by
operating activities $(2,183,848) $(5,809,223)
----------- -----------
</TABLE>
continued
<PAGE> 7
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
---------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from investing activities:
Additions to short-term
investments $ (3,920,205) $(22,564,209)
Maturities and sales of short-term
investments 10,870,979 11,286,155
Additions to property,
equipment and leasehold
improvements (987,165) (385,548)
Net change in loans to officers
and employees - 173
------------ ------------
Net cash provided by (used in)
investing activities 5,963,609 (11,663,429)
------------ ------------
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 85,862 323,183
Net proceeds from loans payable 114,860 -
Other 20,060 -
Purchase of treasury stock (8,750,000) -
------------ ------------
Net cash (used in) provided by
financing activities (8,529,218) 28,318,891
Net (decrease) increase in cash
and cash equivalents (4,749,457) 10,846,239
Cash and cash equivalents at
beginning of period 13,409,866 17,919,609
------------ ------------
Cash and cash equivalents
at end of period $ 8,660,409 $ 28,765,848
============ ============
Non-cash transactions:
Issuance of treasury stock for
acquisition of license to the Dow
compound library $ 2,500,000 -
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 8
ONCOGENE SCIENCE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly Oncogene Science, Inc.'s (the "Company")
financial position as of March 31, 1997 and September 30, 1996, its results of
operations for the three and six months ended March 31, 1997 and 1996 and its
cash flows for the six months ended March 31, 1997 and 1996. 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 1996 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,
1997 and 1996 since their inclusion would be anti-dilutive.
(2) Treasury Stock
On February 18, 1997, the Company repurchased all 1.25 million shares of the
Company's common stock held by Becton, Dickinson and Company ("Becton") for an
aggregate price of $8.75 million. The Company's collaborative research agreement
with Becton had ended on its scheduled expiration date of September 30, 1996.
(3) Compound Library License
On March 18, 1997, the Company entered into a license agreement with The Dow
Chemical Company ("Dow") giving the Company exclusive worldwide rights to use
more than 140,000 compounds for screening and potential development of small
molecule drugs and cosmeceuticals. The initial payment for the license was
approximately 350,000 shares of the Company's common stock. Dow is also entitled
to royalty payments from any new drug products that may result from the
screening of the compound library. The common stock issued to Dow was from the
shares held in treasury as a result of the Becton repurchase. The Company will
amortize the license agreement cost on a straight-line basis over a five-year
period, which represents the estimated period over which the compounds will be
used in the Company's research and development efforts.
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED MARCH 31, 1997 AND 1996
REVENUES
Revenues for the three and six months ended March 31, 1997 were approximately
$5.2 million and $7.5 million, respectively, representing increases of $2.6
million and $2.7 million or 103% and 55%, respectively, compared to revenues of
$2.5 million and $4.8 million, respectively, reported for the three and six
months ended March 31, 1996. Collaborative program revenues increased
approximately $2.3 million and $2.2 million or 102% and 51%, respectively. This
was largely due to three new collaborative research and license agreements with:
(1) Hoechst Marion Roussel, Inc. ("HMRI"), to develop orally active, small
molecule drugs for the treatment of chronic anemia;(2)Sankyo Company,
Ltd.("Sankyo") of Japan to discover and develop novel pharmaceutical products to
treat influenza; and (3) Bayer Corporation ("Bayer") for the continuing
development of serum-based cancer diagnostics. Included in these revenues was a
$1.0 million initiation fee from HMRI in connection with the chronic anemia
program. The increase in revenues was partially offset by a decrease in revenues
related to the completion on December 31, 1996 of the funded discovery phase of
the Company's collaborative program with Wyeth-Ayerst Laboratories relating to
the discovery and development of drugs for the treatment of diabetes and
osteoporosis. Other research revenues, representing primarily government grants
and service revenue from the pharmaceutical division of the Company's Aston
Molecules Ltd. ("Aston") subsidiary, increased approximately $272,000 and
$465,000, respectively. The increases were due primarily to the inclusion of the
service revenues of Aston, which the Company acquired in September 1996. Aston's
service business is supplemental to the Company's internal medicinal chemistry
operations.
EXPENSES
The Company's operating expenses increased by approximately $1.7 million and
$2.9 million or 34% and 31%, respectively, for the three and six months ended
March 31, 1997, compared to the three and six months ended March 31, 1996.
Research and development expenses increased approximately $1.2 million and $2.0
million or 38% and 34%, respectively. This increase was attributable to the
expansion of the Company's joint venture with BioChem Pharma (International)
Inc. ("BioChem Pharma") and the new collaborative agreements with Sankyo and
HMRI. Additional expenses were also associated with the expansion of the
Company's natural products discovery and medicinal chemistry operations at its
MYCOsearch, Inc. ("MYCOsearch") and Aston subsidiaries as well as amortization
expense on MYCOsearch's library of fungal cultures. The Company acquired
MYCOsearch in April 1996. Selling, general and administrative expenses increased
approximately $456,000 and $871,000, respectively. These increases were
primarily related to the expenses associated with the Company's recent corporate
development activities and the general and administrative costs associated with
the Company's recently acquired subsidiaries.
OTHER INCOME AND EXPENSE
Investment income increased approximately $143,000 and $382,000 or 37% and 51%,
respectively, for the three and six months ended March 31, 1997 compared to the
three and six months ended March 31, 1996. This increase was largely due to the
investment of the proceeds of approximately $30.3 million from the Company's
public sale of common stock in April 1996.
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, working capital (representing primarily cash, cash equivalent
and short-term investments) aggregated approximately $35.5 million. In April
1996, the Company completed a public offering of its common stock as well as the
sale of 500,000 shares of common stock to BioChem Pharma that provided total net
proceeds of approximately $30.3 million. In February 1997, the Company
repurchased 1.25 million shares of its common stock from Becton for an aggregate
price of $8.75 million in connection with the expiration of the Company's cancer
diagnostics collaboration with Becton at the end of fiscal 1996.
The Company is dependent upon collaborative research revenues, government
research grants, interest income and cash balances, and will remain so until
products developed from its technology are successfully commercialized.
The Company and HMRI have jointly announced an agreement in principle to
continue under one overall agreement as opposed to the separate collaborative
programs previously formed between the Company and each of Hoechst AG
("Hoechst"), Hoechst Roussel Pharmaceuticals, Inc. ("HRPI") and Marion Merrell
Dow Inc. ("MMDI"). During 1995, the pharmaceutical operations of Hoechst, HRPI
and MMDI were consolidated into HMRI, and HMRI is conducting a review of all its
research and development programs. In accordance with the agreement in
principle, HMRI is expected to provide up to $12.5 million in research funding
for five years. HMRI and the Company have not yet executed a new definitive
overall agreement.
The Company commenced a serum-based cancer diagnostic products research
collaboration with Bayer in January 1997. Bayer will provide annual research
funding of $1.5 million for the first two years of this five-year program and
$1.0 million for each subsequent year.
The Company believes that with the funding from its collaborative research
programs (assuming no milestone payments or royalties), government research
grants, interest income, and cash balances, its financial resources are adequate
for its operations for approximately the next four years based on its current
business plan. 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 platform, including
possible joint ventures, collaborations and acquisitions, potential milestone
payments, and the time and expense required to obtain governmental approval of
products, some of which factors are beyond the Company's control. In the absence
of obtaining milestone payments, additional ventures, collaborations or
acquisitions, the Company expects to continue its current level of 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 existing co-ventures with pharmaceutical companies. Examples of
such ventures include the formation of Anaderm Research Corporation in April
1996 with Pfizer Inc. and New York University, the Company's co-venture with
BioChem Pharma, which commenced in May 1996, and the Company's co-venture with
Sepracor, Inc. ("Sepracor"), which commenced in March 1997. Generally the
Company expects to commit greater resources to such programs in exchange for
greater commercialization rights, as compared to its traditional collaborative
research programs in which the Company receives research funding and royalties
on sales of commercialized products. There can be no assurance that scheduled
payments will be made by third parties, that current agreements will not be
canceled, that government research grants will continue to be received at
current levels, that milestone payments will be
<PAGE> 11
made, 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 on acceptable terms, if at all. Failure to
obtain additional funds when required would have a material adverse effect on
the Company's business, financial condition and results of operations.
FORWARD LOOKING STATEMENTS
A number of the matters and subject areas discussed in this report that are not
historical or factual deal with potential future circumstances and developments.
The discussion of such matters and subject areas is qualified by the inherent
risks and uncertainties surrounding future expectations generally, and such
discussion may materially differ from the Company's actual future experience
involving any one or more of such matters and subject areas. An example of this
is the discussion in this Item 2 of Part I describing the Company's expectations
with regard to the consolidation of its collaborative research programs with
HMRI. Factors that may arise in the future that prevent the execution of a
definitive overall agreement with HMRI include possible technological
developments by competitors that render the compounds being pursued by HMRI and
the Company less commercially viable, shifts in strategic direction on the part
of HMRI that would de-emphasize the therapeutic areas or technologies in which
the Company is involved, and negative results in the Company's current programs
with HMRI. The forward looking statements described above, as well as all other
discussions contained herein that may deal with potential future circumstances
and developments, are also subject generally to other risks and uncertainties
that are described from time to time in the Company's reports and registration
statements filed with the Securities and Exchange Commission.
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 19, 1997. The
following nine directors were elected:
<TABLE>
<CAPTION>
Name For Withholding Authority
---- --- ---------------------
<S> <C> <C>
1. Edwin A. Gee, Ph.D. 19,332,190 shares 228,225 shares
2. Gary E. Frashier 19,334,260 shares 226,155 shares
3. Steve M. Peltzman 19,334,060 shares 226,355 shares
4. G. Morgan Browne 19,334,260 shares 226,155 shares
5. John H. French, II 19,333,860 shares 226,555 shares
6. Daryl K. Granner, MD 19,334,260 shares 226,155 shares
7. Walter M. Lovenberg, Ph.D. 19,334,260 shares 226,155 shares
8. Gary Takata 19,334,130 shares 226,285 shares
9. John P. White 19,333,560 shares 226,855 shares
</TABLE>
<PAGE> 12
In addition, the following matters were voted upon: (1) the appointment of KPMG
Peat Marwick LLP as auditors for fiscal year ended September 30, 1997 was
ratified (19,493,970 shares voted in favor, 35,570 shares voted against and
30,875 shares abstained); and (2) a proposal to adopt the Company's 1997
Incentive and Non-Qualified Stock Option Plan was approved (11,444,552 shares
voted in favor, 2,406,421 shares voted against, 98,830 shares abstained and
there were 5,610,612 broker non-votes).
ITEM 5. OTHER INFORMATION
COLLABORATION WITH HOECHST MARION ROUSSEL, INC.
Effective as of January 1, 1997, the Company entered into a Collaborative
Research and License Agreement with HMRI to develop orally active, small
molecule inducers of erythropoietin gene expression for the treatment of anemia
due to chronic renal failure and anemia associated with chemotherapy for AIDS
and cancer. The collaboration is focused on the preclinical and clinical
development of lead compounds previously discovered by the Company from its
natural products and combinatorial chemistry libraries and from HMRI's compound
library.
Under the terms of the agreement, a research committee, with equal
representation from the Company and HMRI, prepares and approves research plans
and reviews and evaluates progress under the plans. Both the Company and HMRI
are contributing medicinal chemistry and preclinical optimization teams under
the agreement. HMRI has the exclusive right to conduct preclinical and clinical
development of drug candidates emerging from the program. The Company may
receive from HMRI up to $30 million in research funding, milestone payments and
success fees depending on HMRI's clinical success.
The Company has granted to HMRI exclusive, worldwide licenses to, among other
things, use, manufacture and sell products resulting from the collaboration. In
exchange for these licenses, HMRI will pay the Company royalties on the sales by
HMRI of any products resulting from the collaboration. The duration of the
licenses is coextensive with the lives of the patents related to the licensed
compounds. The Company and HMRI have mutually exclusive rights and obligations
to prosecute and maintain patent rights related to specified areas of the
research under the agreement.
Generally, the Company and HMRI are prohibited during the term of the
collaboration from pursuing or sponsoring research and development of compounds
and products in the target area other than pursuant to the agreement without the
approval of the research committee. The term of the agreement is segmented into
three periods: (1) an option period which terminates on March 31, 1998; (2) a
contract period term which continues until March 31, 2000; and (3) a development
phase which commences March 31, 1998 for as long as HMRI continues development
activities. During the option period, the agreement may be terminated by mutual
written agreement of the parties. If HMRI elects not to participate in the
contract period term or discontinues participation during the contract period
term or development phase, it will offer the Company and the Company may accept
the license rights to develop and commercialize the compounds and products of
the collaboration, subject to payment of royalties by the Company to HMRI. The
agreement is also subject to early termination in the event of certain defaults
by the parties.
<PAGE> 13
COLLABORATION WITH SANKYO COMPANY, LTD.
Effective as of February 12, 1997, the Company entered into a Collaborative
Research and License Agreement with Sankyo to be conducted in partnership with
MRC Collaborative Center ("MRC CC"), London, U.K. The collaboration is focused
on discovering and developing novel pharmaceutical products to treat influenza.
Under the terms of the agreement, a research committee will be formed consisting
of three representatives from Sankyo, two representatives from the Company and
one representative from MRC CC. The committee will monitor the progress of the
research program and direct the objectives, tasks and required activities of the
collaboration. The Company is responsible for conducting research as directed by
the research committee, including, without limitation, compound screening, in
exchange for research funding from Sankyo. Sankyo has the responsibility and the
exclusive right to conduct preclinical and clinical development of all candidate
compounds in exchange for milestone payments to the Company.
The Company and MRC CC have granted to Sankyo exclusive, worldwide licenses to,
among other things, use, manufacture and sell all products resulting from the
collaboration. In exchange for these licenses, Sankyo will pay to the Company
and MRC CC license fees and royalties on product sales. The duration of the
licenses is coextensive with the lives of the patents related to the licensed
compound. If Sankyo discontinues development of all candidate compounds, the
Company will have the sole and exclusive right to develop, use, manufacture and
sell all products resulting from the collaboration, and it will pay royalties to
Sankyo. Each of the parties has rights and obligations to prosecute and maintain
patent rights related to specified areas of the research under the agreement.
Generally, the Company, Sankyo and MRC CC are prohibited during the term of the
contract from pursuing or sponsoring research and development of compounds and
products in the anti-influenza area other than pursuant to the agreement. The
agreement is for a term of three years, with the option to extend for an
additional one or two year period upon conditions and terms acceptable to the
Company, Sankyo and MRC CC. The agreement is subject to early termination in the
event of certain defaults by the parties.
CO-VENTURE WITH SEPRACOR, INC.
On March 7, 1997, the Company entered into a Collaborative Research, Development
and Commercialization Agreement with Sepracor. Under this agreement, the parties
will seek to discover and develop certain anti-infective agents and
anti-inflammatory agents. A joint steering committee consisting of equal
representation from each of the parties will manage all aspects of the research
program. The Company and Sepracor will commit equal resources to the program,
including, among other things, access to all their respective compound libraries
and dedicated teams of research scientists. Generally, the parties will share
equally the commercialization rights throughout the world of products derived
from the program and will share equally the profits from sale of such products,
except that in the case of drugs that target two specified microbes, Sepracor
will receive 75% of such profits. The agreement is for a term of three years,
with automatic successive one-year renewal terms thereafter (subject to the
right of either party to terminate the agreement at the end of each term). The
agreement is subject to early termination in the event of specified defaults by
either party. The Company and Sepracor are prohibited from conducting
independently any research within the scope of the co-venture without the
consent of the joint steering committee.
<PAGE> 14
LICENSE AGREEMENT WITH THE DOW CHEMICAL COMPANY
On March 18, 1997, the Company entered into a License Agreement with Dow
pursuant to which the Company acquired exclusive worldwide rights with respect
to Dow's library of more than 140,000 compounds for the purposes of discovery
and development of small molecular weight pharmaceuticals and cosmeceuticals.
The duration of this license is coextensive with the life of the last to expire
of the patents related to the licensed compounds (or 20 years if no patents are
filed). In exchange for these rights, the Company issued to Dow approximately
350,000 shares of common stock and will pay royalties to Dow on sales of
products derived from the licensed compounds, if any.
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 EPO Collaborative Research and
License Agreement, dated as of
January 1, 1997 between the Company
and Hoechst Marion Roussel, Inc.
*10.2 Collaborative Research, Development, and License
Agreement dated as of February 12, 1997 by and among
the Company, Sankyo Company, Ltd., and MRC
Collaborative Center.
*10.3 Collaborative Research, Development
and Commercialization Agreement
dated as of March 7, 1997 between
the Company and Sepracor, Inc.
*10.4 License Agreement dated as of March
18, 1997 between the Company and The
Dow Chemical Company.
27 Financial Data Schedule
------------------------
* Portions of this exhibit have been redacted
and are the 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 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.
Not Applicable.
<PAGE> 15
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 15, 1997 /s/ Gary E. Frashier
------------ --------------------------
Gary E. Frashier
Chief Executive Officer
Date May 15, 1997 /s/ Robert L. Van Nostrand
------------- --------------------------
Robert L. Van Nostrand
Vice President and
Chief Financial Officer
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
3.1 Certificate of Incorporation, as amended (1)
3.2 By-Laws, as amended (1)
*10.1 EPO Collaborative Research and License agreement, dated as of
January 1, 1997 between the Company and Hoechst Marion
Roussel, Inc.
*10.2 Collaborative Research, Development, and License
Agreement dated as of February 12, 1997 by and among
the Company, Sankyo Company, Ltd., and MRC
Collaborative Center.
*10.3 Collaborative Research, Development and
Commercialization Agreement dated as of March 7, 1997
between the Company and Sepracor, Inc.
*10.4 License Agreement dated as of March 18, 1997 between
the Company and The Dow Chemical Company.
27 Financial Data Schedule
</TABLE>
------------------
* 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.
<PAGE> 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
================================================================================
EPO COLLABORATIVE
RESEARCH AND LICENSE AGREEMENT
BY AND BETWEEN
HOECHST MARION ROUSSEL, INC.
AND
ONCOGENE SCIENCE, INC.
EFFECTIVE AS OF JANUARY 1, 1997
================================================================================
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
1. Definitions ...................................................................... 2
1.1 "Affiliate" ...................................................................... 2
1.2 "Allocated Overhead" ............................................................. 3
1.3 "Compound" ....................................................................... 3
1.4 "Confidential Information" ....................................................... 3
1.5 "Contract Period" ................................................................ 3
1.6 "Contract Period Research Plan" .................................................. 3
1.7 "Contract Period Research Program" ............................................... 4
1.8 "Development Phase" .............................................................. 4
1.9 "Development Phase Plan" ......................................................... 4
1.10 "Development Phase Program" ...................................................... 4
1.11 "Effective Date" ................................................................. 4
1.12 "EPO" ............................................................................ 4
1.13 "Event of Default" ............................................................... 4
1.14 "FDA" ............................................................................ 4
1.15 "Funding Payments" ............................................................... 4
1.16 "HMRI Compound" .................................................................. 5
1.17 "HMRI Confidential Information" .................................................. 5
1.18 "HMRI Improvements" .............................................................. 5
1.19 "HMRI Patents" ................................................................... 5
1.20 "HMRI Product" ................................................................... 5
1.21 "HMRI Technology" ................................................................ 6
1.22 "Improvements" ................................................................... 6
1.23 "Joint Improvements" ............................................................. 7
1.24 "Joint Patent" ................................................................... 7
1.25 "Materials" ...................................................................... 7
1.26 "NDA" ............................................................................ 7
1.27 "Net Sales" ...................................................................... 7
1.28 "Option Period" .................................................................. 9
1.29 "Option Period Research Plan" .................................................... 9
1.30 "Option Period Research Program" ................................................. 9
1.31 "OSI Compound" ................................................................... 9
1.32 "OSI Confidential Information" ................................................... 9
1.33 "OSI Improvements" ............................................................... 10
1.34 "OSI Patents" .................................................................... 10
1.35 "OSI Product" .................................................................... 10
1.36 "OSI Technology" ................................................................. 10
1.37 "Products" ....................................................................... 11
1.38 "Research Management Committee" .................................................. 11
1.39 "Research Plans" ................................................................. 11
1.40 "Research Programs" .............................................................. 11
</TABLE>
<PAGE> 4
<TABLE>
<S> <C> <C>
1.41 "Target" ................................................................ 11
1.42 "Technology" ............................................................ 11
1.43 "Third Party" ........................................................... 12
1.44 "Valid Claim" ........................................................... 12
2. Collaborative Research Programs and Development Phase Program .................... 12
2.1 Research Plans and Development Phase Plan ............................... 12
2.2 Exclusivity ............................................................. 14
2.3 Research Management Committee ........................................... 16
2.4 Reports and Materials ................................................... 18
2.5 Laboratory Facilities and Personnel ..................................... 19
2.6 Diligent Efforts ........................................................ 19
3. Funding of the Research Program .................................................. 20
3.1 Option Period Funding ................................................... 20
3.2 Contract Period Funding ................................................. 21
3.3 Milestone Payments ...................................................... 24
3.4 Success Fees ............................................................ 25
4. Treatment of Confidential Information ............................................ 26
4.1 Confidentiality ......................................................... 26
4.2 Publication ............................................................. 27
4.3 Publicity ............................................................... 28
4.4 Disclosure of Inventions 28
4.5 Restrictions on Transferring Materials .................................. 28
4.6 Permitted Use of Confidential Information ............................... 29
5. Licenses and Royalties ........................................................... 30
5.1 Grant of Licenses ....................................................... 30
5.2 Paid-Up License ......................................................... 32
5.3 Obligations ............................................................. 32
5.4 Sublicenses ............................................................. 32
5.5 Ownership of Improvements ............................................... 33
5.6 Rights to Product Improvements .......................................... 34
5.7 Technical Assistance .................................................... 35
5.8 Royalties, Payments of Royalties, Accounting for Royalties, Records ..... 35
6. Provisions Concerning the Filing, Prosecution and Maintenance of Patent
Rights ........................................................................... 43
6.1 OSI Filing, Prosecution and Maintenance ................................. 43
6.2 HMRI Filing, Prosecution and Maintenance ................................ 44
6.3 Joint Filing, Prosecution and Maintenance ............................... 45
6.4 Reimbursement of Expenses ............................................... 47
6.5 Patent Extensions ....................................................... 48
6.6 Legal Action ............................................................ 48
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
7. Acquisition of Rights from Third Parties ......................................... 52
8. Term, Termination and Disengagement .............................................. 53
8.1 Term .................................................................... 53
8.2 Termination of the Agreement During the Option Period ................... 54
8.3 Termination of Research Funding ......................................... 54
8.4 Termination Upon an Event of Default .................................... 55
8.5 Change of Control ....................................................... 57
8.6 Survival ................................................................ 58
9. Representations and Warranties ................................................... 58
9.1 Status .................................................................. 58
9.2 Authority ............................................................... 58
9.3 Binding Obligation ...................................................... 59
9.4 No Conflicting Obligations .............................................. 59
9.5 Good Title .............................................................. 59
9.6 Right to Grant Licenses ................................................. 59
10. Covenants of OSI ................................................................. 60
10.1 Affirmative Covenants of OSI Other Than Reporting Requirements .......... 60
11. Dispute Resolution ............................................................... 60
11.1 Mediation Committee ..................................................... 60
11.2 Non-Arbitrable Issues ................................................... 61
11.3 Scope of Arbitration .................................................... 61
11.4 Arbitration Panel ....................................................... 61
11.5 Designation of Rules, Situs, Governing Law .............................. 62
11.6 Procedure ............................................................... 63
11.7 Authority of Arbitrators ................................................ 66
11.8 Awards .................................................................. 66
12. Notices .......................................................................... 67
13. Governing Law .................................................................... 67
14. Miscellaneous .................................................................... 68
14.1 Binding Effect .......................................................... 68
14.2 Headings ................................................................ 68
14.3 Counterparts ............................................................ 68
14.4 Amendment; Waiver; etc. ................................................. 68
14.5 No Third Party Beneficiaries ............................................ 68
14.6 Assignment and Successors ............................................... 68
14.7 Compliance with Antitrust/Competition Law ............................... 69
EXHIBIT A OPTION PERIOD RESEARCH PLAN ..................................................... 71
</TABLE>
iv
<PAGE> 6
EPO COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
This EPO COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the
"Agreement") effective as of January 1, 1997, by and between HOECHST MARION
ROUSSEL, INC. ("HMRI"), a Delaware corporation, with offices at Route 202-206,
P.O. Box 6800, Bridgewater, New Jersey 08807-0800, and ONCOGENE SCIENCE, INC.
("OSI"), a Delaware corporation, with its principal office at 106 Charles
Lindbergh Boulevard, Uniondale, New York 11553.
WHEREAS, OSI has certain proprietary technology for
identifying the effect of compounds on genes and gene products which is useful
in the process of developing products for the treatment of human diseases, and
in particular has discovered compounds from both the OSI and HMRI libraries
which induce expression of the EPO gene directed to the Target;
WHEREAS, HMRI has the capability to undertake research for the
discovery and evaluation of agents for the treatment of disease and also the
capability for clinical development, manufacturing and marketing of such drugs,
including agents directed to the Target;
WHEREAS, the Agreement provides for an Option Period Research
Program, a Contract Period Research Program, a Development Phase, the grant of
licenses in certain events and other provisions which are applicable to some or
all of the periods and activities provided for in this Agreement; and
<PAGE> 7
WHEREAS, HMRI and OSI wish to collaborate in research and
development of orally active, small molecule inducers of EPO gene expression
from the Compounds discovered by OSI to increase the expression of EPO.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements contained in this Agreement and intending to
be legally bound, the parties agree as follows:
1. Definitions
Whenever used in this Agreement, the terms defined in this
Article 1 shall have the meanings specified.
1.1 "Affiliate" means any corporation or other legal
entity owning, directly or indirectly, more than fifty percent (50%) of the
voting capital shares or similar voting securities of HMRI or OSI; any
corporation or other legal entity more than fifty percent (50%) of the voting
capital shares or similar voting rights of which is owned, directly or
indirectly, by HMRI or OSI; or any corporation or other legal entity more than
fifty percent (50%) 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, more than fifty percent (50%) of the voting
capital shares or similar voting securities of HMRI or OSI. Notwithstanding the
foregoing, an Affiliate shall not be a corporation or other legal entity which
is not actually controlled by HMRI or its Affiliates, on the one hand (for
example, without limitation, Copley Pharmaceuticals, Inc. or its subsidiaries),
or OSI or its Affiliates, on the other hand.
-2-
<PAGE> 8
1.2 "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 Research Programs in the same proportion that the total person-hours of work
performed by OSI employees in the Research Programs bears to the total
person-hours of work performed by OSI employees in all OSI research programs, or
such other customary allocation basis or overhead recovery basis that may be
agreed in writing between the parties.
1.3 "Compound" means any compound or its derivatives
from OSI's library or HMRI's library so designated from time to time by the
Research Management Committee, including, without limitation: (a) ** and its
derivatives, a novel, patentable small molecule synthetic discovered from the
OSI library; (b) ** and its derivatives, a small molecule synthetic discovered
from the HMRI compound library; and (c) ** and its derivatives, a novel,
patentable small molecule natural product discovered from the OSI library.
1.4 "Confidential Information" means HMRI
Confidential Information and OSI Confidential Information, either separately or
collectively, as may be applicable.
1.5 "Contract Period" has the meaning set forth in
Section 8.1.2 hereof.
1.6 "Contract Period Research Plan" means the written
research plan to be carried out during the Contract Period by HMRI and OSI
pursuant to this Agreement as described in Section 2.1.3 hereof.
- -----------------------
** This portion redacted pursuant to a request for confidential treatment.
-3-
<PAGE> 9
1.7 "Contract Period Research Program" means the
collaborative research program conducted by HMRI and OSI during the Contract
Period pursuant to this Agreement as described in Section 2.1.3 hereof, with the
goals of studying the mechanism of action and conducting other research
necessary to profile a Compound, if such is deemed necessary by the parties.
1.8 "Development Phase" has the meaning set forth in
Section 8.1.3 hereof.
1.9 "Development Phase Plan" means the written plan
to be carried out during the Development Phase by HMRI pursuant to this
Agreement as described in Section 2.1.4 hereof.
1.10 "Development Phase Program" means the
development program conducted by HMRI during the Development Phase pursuant to
the Agreement as described in Section 2.1.4, with the goals of demonstrating
proof-of-principle in humans and developing Compounds into Products.
1.11 "Effective Date" means January 1, 1997.
1.12 "EPO" means the Erythropoietin protein.
1.13 "Event of Default" has the meaning set forth in
Section 8.4.1 hereof.
1.14 "FDA" means the United States Food and Drug
Administration.
1.15 "Funding Payments" has the meaning set forth in
Section 3.2 hereof.
-4-
<PAGE> 10
1.16 "HMRI Compound" means ** and its derivatives and
any other compound and its derivatives from HMRI's library so designated from
time to time by the Research Management Committee.
1.17 "HMRI Confidential Information" means all
information about any element of HMRI Technology which is disclosed by HMRI to
OSI and designated "Confidential" in writing at the time of such disclosure,
subject to the exceptions set forth in Section 4.6 hereof. The HMRI Confidential
Information shall also include all HMRI Improvements.
1.18 "HMRI Improvements" has the meaning set forth in
Section 5.5 hereof.
1.19 "HMRI Patents" means the patents and patent
applications owned or filed by HMRI, both foreign and domestic, arising in the
course of conducting the Research Programs or the Development Phase Program,
which relate to the research, development, manufacture, composition,
derivatives, use or sale of HMRI Compounds or HMRI Products, including, without
limitation, all substitutions, extensions, Supplementary Protection
Certificates, reissues, renewals, divisions, continuations, continuations in
part, utility models and certificates of invention thereof, all of which shall
be from time to time identified to the Research Management Committee.
1.20 "HMRI Product" means a product derived from the
Research Programs or the Development Phase Program containing a HMRI Compound
sold for the
- ---------------------
** This portion redacted pursuant to a request for confidential treatment.
-5-
<PAGE> 11
treatment or management of any disease state in a human patient or any other
human therapeutic indication, in each case directed to the Target.
1.21 "HMRI Technology" means Technology owned or
licensed as of the date hereof or acquired during the term of the Option Period,
the Contract Period or the Development Phase as set forth in Sections 8.1.1,
8.1.2 and 8.1.3 hereof by (i) HMRI or (ii) the pharmaceutical or biotechnology
business of any entity within the Hoechst AG pharmaceuticals group or any
successor thereof, that is useful for work on the Target and that is applicable
to the objectives of the Research Programs or the Development Phase Program, but
only to the extent that HMRI is legally entitled to disclose such acquired
Technology and use it in the Research Programs or the Development Phase Program.
1.22 "Improvements" means any and all inventions and
patents, discoveries, methods, ideas, works of authorship, know-how, show-how,
data, clinical and preclinical results, information, and any physical, chemical
or biological material, including any replication or any part of such material,
techniques and Technology, whether or not patentable or subject to other forms
of protection, which (i) are made, created, developed, written, conceived, or
reduced to practice, or which are licensed or otherwise acquired from Third
Parties (to the extent the agreeing party is legally enabled to disclose and use
the same in the Research Programs or the Development Phase Program), in the
course of, arising out of, or as a result of either party's research in the
course of conducting the Research Programs or the Development Phase Program, and
(ii) are related to the Target. Improvements include all rights relating to the
protection of trade secrets and confidential information, and any right
analogous
-6-
<PAGE> 12
to those set forth herein, which relate to, are embodied in or are appurtenant
to such discoveries, methods, ideas, etc.
1.23 "Joint Improvements" has the meaning set forth
in Section 5.5 hereof.
1.24 "Joint Patent" means the patents and patent
applications owned or filed jointly by HMRI and OSI, both foreign and domestic,
arising in the course of conducting the Research Programs or the Development
Phase Program, including patents and patent applications arising from Joint
Improvements, which relate to the research, development, manufacture,
composition, derivative, use or sale of HMRI Compounds or HMRI Products or OSI
Compounds or OSI Products and which are not HMRI Patents nor OSI Patents,
including, without limitation, all substitutions, extensions, Supplementary
Protection Certificates, reissues, renewals, divisions, continuations,
continuations in part, utility models and certificates of invention thereof, all
of which shall be from time to time identified to the Research Management
Committee.
1.25 "Materials" has the meaning set forth in Section
2.4.2 hereof.
1.26 "NDA" shall mean any and all applications (New
Drug Applications) submitted to the FDA under Sections 505, 507 or 512 of the
Food, Drug & Cosmetic Act and applicable regulations related to a Product,
including without limitation, full NDA's, "paper" NDA's and abbreviated NDA's
(ANDA's).
1.27 "Net Sales" shall mean the gross revenues from
the first sales of a Product by a party, its Affiliates and/or its sublicensees
to Third Parties, less deductions for:
-7-
<PAGE> 13
(a) standard transportation charges,
including insurance, consistent with custom in the industry;
(b) import, export, sales, use and excise
taxes, tariffs and duties paid or allowed by a selling party and any other
governmental charges imposed upon the production, importation, use or sale of a
Product;
(c) normal and customary quantity discounts
(including volume or formulary or other positioning discounts paid or credited
to any wholesaler, purchaser or Third Party payor or other contractee as a
result of a contractual arrangement specific to a Product), cash discounts
(including discounts for prompt payment), and customary trade promotional
allowances and credits, in the ordinary course of a party's, its Affiliates' or
its sublicensees' business;
(d) discounts (including retroactive price
reductions or a statutorily required reimbursement) mandated by or granted in
response to state, provincial or federal law or regulation;
(e) allowances or credits to customers on
account of recalls, rejection or return (including for spoiled, damaged and
outdated goods) in the ordinary course of business;
(f) rebates paid or credited to any
government or agency or any Third Party payor, administrator or contractee;
(g) wholesaler charge-backs allowed and
taken in amounts customary in the trade;
-8-
<PAGE> 14
(h) deductions for uncollectible accounts;
and
(i) broker's or agent's commissions.
The computation of Net Sales shall not include sales
between or among a party and its Affiliates or sublicensees, except where such
Affiliates or sublicensees are end users.
1.28 "Option Period" has the meaning set forth in
Section 8.1.1 hereof.
1.29 "Option Period Research Plan" means the written
research plan to be carried out during the Option Period by HMRI and OSI
pursuant to this Agreement as described in Section 2.1.1 hereof.
1.30 "Option Period Research Program" means the
collaborative research program to be carried out during the Option Period by
HMRI and OSI pursuant to this Agreement as described in Section 2.1.1 hereof
with the goal of identifying one or more clinical development candidates
directed to the Target.
1.31 "OSI Compound" means ** or ** and their
derivatives and any other compound and its derivatives from OSI's library so
designated from time to time by the Research Management Committee.
1.32 "OSI Confidential Information" means all
information about any element of OSI Technology which is disclosed by OSI to
HMRI, and designated "Confidential"
- -----------------------
** This portion redacted pursuant to a request for confidential treatment.
-9-
<PAGE> 15
in writing by OSI at the time of such disclosure, subject to the exceptions set
forth in Section 4.6 hereof. OSI Confidential Information shall also include all
OSI Improvements.
1.33 "OSI Improvements" has the meaning set forth in
Section 5.5 hereof.
1.34 "OSI Patents" means the patents and patent
applications owned or filed by OSI, both foreign and domestic, arising in the
course of conducting the Research Programs or the Development Phase Program,
which relate to the research, development, manufacture, composition,
derivatives, use or sale of OSI Compounds or OSI Products, including, without
limitation, all substitutions, extensions, Supplementary Protection
Certificates, reissues, renewals, divisions, continuations, continuations in
part, utility models and certificates of invention thereof, all of which shall
be from time to time identified to the Research Management Committee.
1.35 "OSI Product" means a product derived from the
Research Programs or the Development Phase Program containing an OSI Compound
sold for the treatment or management of any disease state in a human patient or
any other human therapeutic indication, in each case directed to the Target.
1.36 "OSI Technology" means Technology owned or
licensed as of the date hereof or acquired during the term of the Option Period,
the Contract Period or the Development Phase as set forth in Sections 8.1.1,
8.1.2 and 8.1.3 hereof by OSI or its Affiliates, that is useful for work on the
Target and that is applicable to the objectives of the Research Programs or the
Development Phase Program, but only to the extent that OSI is legally entitled
-10-
<PAGE> 16
to disclose such acquired Technology and use it in the Research Programs or the
Development Phase Program.
1.37 "Products" means the HMRI Products and the OSI
Products, collectively.
1.38 "Research Management Committee" has the meaning
specified in Section 2.3 hereof.
1.39 "Research Plans" means the Option Period
Research Plan and the Contract Period Research Plan, collectively.
1.40 "Research Programs" means the Option Period
Research Program and the Contract Period Research Program, collectively.
1.41 "Target" means ** .
1.42 "Technology" means and includes all tangible or
intangible know- how, trade secrets, inventions (whether or not patentable),
data, clinical and preclinical results and any physical, chemical or biological
material that pertain to the development of human therapeutic products,
including all laboratory notebooks, research plans, 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
- -----------------------
** This portion redacted pursuant to a request for confidential treatment.
-11-
<PAGE> 17
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 and experience.
1.43 "Third Party" means any individual, estate,
trust, partnership, joint venture, association, firm, corporation, company or
other entity, other than the parties hereto and their respective Affiliates and
predecessors.
1.44 "Valid Claim" means a claim of an issued patent
so long as such claim shall not have been disclaimed by both (i) HMRI and (ii)
OSI, or shall not have been held invalid or unenforceable in a final decision
rendered by a tribunal of competent jurisdiction from which no appeal has been
or can be taken.
2. Collaborative Research Programs and Development Phase
Program
2.1 Research Plans and Development Phase Plan.
2.1.1 The first two quarters of the Option
Period Research Program will be conducted pursuant to the Option Period Research
Plan annexed as Exhibit A. The third, fourth and fifth quarters of the Option
Period Research Program shall be conducted pursuant to a further Option Period
Research Plan prepared and approved by the Research Management Committee in
accordance with the funding stipulations set forth in Section 3.1 hereof and set
forth with the minutes of the Research Management Committee.
2.1.2 No later than forty-five (45) days
before the end of the Option Period, HMRI will notify OSI in writing whether
HMRI elects (a) to participate in the
-12-
<PAGE> 18
Contract Period Research Program and, accordingly, fund the Contract Period
Research Program in accordance with Section 3.2 hereof, and (b) to participate
in the Development Phase Program. If HMRI elects to participate in the Contract
Period Research Program and the Development Phase Program, the parties will
implement the Contract Period Research Plan and HMRI will implement the
Development Phase Plan following the completion of the Option Period Research
Program. As more fully set out in Sections 5.1.2 and 8.3, if HMRI (i) elects not
to participate in the Contract Period Research Program, (ii) commences
participation in the Contract Period Research Program and thereafter
discontinues such participation by ceasing funding of the Contract Period
Research Program in accordance with the provisions of Section 3.2 hereof, or
(iii) elects not to continue its participation in the Development Phase Program,
HMRI will offer OSI the license rights set forth in Section 5.1.2 hereof. If OSI
accepts such a license, OSI shall (x) notify HMRI in writing within forty-five
(45) days after receipt of (A) HMRI's notification of HMRI's election not to
participate in the Contract Period Research Program, or (B) HMRI's election not
to continue its participation in the Contract Period Research Program, or (C)
HMRI's election not to continue its participation in the Development Phase
Program, and (y) pay HMRI the licensing fees and royalties set forth in Sections
5.8.3 and 5.8.4 hereof. If OSI does not accept such a license, then the parties
shall use reasonable best efforts to license any Compounds and/or Product(s) to
a Third Party and to equally share the proceeds from such licenses.
2.1.3 The Contract Period Research Program
will be conducted pursuant to the Contract Period Research Plan. The Contract
Period Research Plan for the
-13-
<PAGE> 19
months following the expiration of the Option Period until December 31 of such
year shall be prepared and approved by the Research Management Committee and set
forth with the minutes of a meeting of the Research Management Committee, which
shall be held before the end of the Option Period. Thereafter, the Contract
Period Research Plan for each succeeding calendar quarter shall be prepared and
approved by the Research Management Committee at a meeting of the Research
Management Committee held prior to the end of the period referred to immediately
above and each succeeding quarter until the end of the Contract Period and shall
be set forth within the minutes of such meeting.
2.1.4 The Development Phase Program will be
conducted pursuant to the Development Phase Plan which shall be the sole
responsibility of HMRI to prepare during the Development Phase. All pre-clinical
and clinical development shall likewise be the sole responsibility of HMRI to be
carried out, with HMRI solely responsible for all costs related thereto. HMRI
shall furnish to OSI written status reports within thirty (30) days of July 1
and the end of each calendar year describing the work accomplished by HMRI under
the Development Phase Program during such period.
2.2 Exclusivity.
2.2.1 OSI agrees that during the Option
Period and, if HMRI elects to participate in the Contract Period Research
Program and the Development Phase Program, the Contract Period and the
Development Phase, neither OSI nor any of its Affiliates shall conduct research
itself, sponsor any other research, or engage in any research sponsored by any
Third Party if such research relates to the Target, unless agreed to and
confirmed in
-14-
<PAGE> 20
writing by the Research Management Committee. If OSI becomes aware during the
Option Period, the Contract Period or the Development Phase of an opportunity
which it desires to pursue to sponsor other research having any of the
objectives of the Research Programs or the Development Phase Program or to
engage in such research sponsored by a Third Party, it shall promptly notify
HMRI of such opportunity, and HMRI and OSI shall consider whether such
opportunity can be incorporated into the Research Programs or the Development
Phase Program or otherwise used to further the purposes of the Research Programs
or the Development Phase Program to their mutual advantage.
2.2.2 HMRI agrees that during the Option
Period and, if HMRI elects to participate in the Contract Period Research
Program and the Development Phase Program, the Contract Period and the
Development Phase, neither HMRI nor any of its Affiliates shall sponsor any
other research, or engage in any research involving any Third Party if such
research relates to the Target, unless agreed to and confirmed in writing by the
Research Management Committee. If HMRI becomes aware during the Option Period,
the Contract Period or the Development Phase of an opportunity which it desires
to pursue to sponsor other research having any of the objectives of the Research
Programs or the Development Phase Program or to engage in such research
involving a Third Party, it shall promptly notify OSI of such opportunity, and
HMRI and OSI shall consider whether such opportunity can be incorporated into
the Research Programs or the Development Phase Program or otherwise used to
further the purposes of the Research Programs or the Development Phase Program
to their mutual advantage.
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2.3 Research Management Committee.
2.3.1 The parties shall establish a Research
Management Committee, which shall exist so long as HMRI is funding the Research
Programs under this Agreement and which may co-exist with any other committees
which may be formed pursuant to Section 2.3.9 hereof, for the following purposes
and for any other purpose specifically set forth in this Agreement:
(a) to prepare and approve (i) the
Option Period Research Plan for the third, fourth and fifth quarters of the
Option Period and (ii) the Contract Period Research Plan for each calendar
quarter in advance of the beginning of such calendar quarter during the Contract
Period in accordance with the provisions of Section 2.1.3 hereof;
(b) to review and evaluate progress
under the Research Plans;
(c) to direct the implementation of
the Research Plans; and
(d) to modify the Research Plans as
appropriate, and to coordinate and monitor publication of research results
obtained from the exchange of information and materials that relate to the
Research Programs.
2.3.2 Membership. HMRI and OSI each shall
appoint, in its sole discretion, three members to the Research Management
Committee. Substitutes may be appointed at any time. The members initially shall
be:
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<TABLE>
<CAPTION>
HMRI Appointees OSI Appointees
<S> <C>
** **
</TABLE>
2.3.3 Co-Chairs. The Research Management
Committee shall be co-chaired by one of the members appointed by HMRI and by one
of the members appointed by OSI. The co-chairs shall together establish the
agenda for meetings and coordinate the Research Programs and follow-up actions.
2.3.4 Meetings. The Research Management
Committee shall meet at least four times per year, at places and on dates
selected by each party in turn. Representatives of HMRI or OSI or both, in
addition to members of the Research Management Committee, may attend such
meetings at the invitation of either party.
2.3.5 Minutes. The Research Management
Committee shall keep accurate minutes of its deliberations and shall record all
proposed decisions and all actions recommended or taken. The minutes shall be
delivered in draft form to all Research Management Committee members within ten
(10) 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-chairs and shall be issued in final form only with the co-chairs'
approval and agreement. The minutes shall include the approved Contract Period
Research Plan for the next succeeding calendar quarter and, from time to time as
provided for herein, reports on progress
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** This portion redacted pursuant to a request for confidential treatment.
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under the Option Period Research Plan or Contract Period Research Plan, as the
case may be, then in effect.
2.3.6 Decisions. All decisions or actions of
the Research Management Committee shall be made by majority of the members. In
the event of a tie vote of the Research Management Committee which cannot be
broken by the mutual agreement of the chairs, the dispute resolution provisions
of Section 11 hereof shall apply.
2.3.7 Expenses. HMRI and OSI shall each bear
all expenses of their respective members related to the participation on the
Research Management Committee.
2.3.8 Subcommittees. The Research Management
Committee shall have authority to appoint subcommittees (which may include
persons who are not members of the Research Management Committee) and delegate
to such subcommittees powers and duties determined by the Research Management
Committee.
2.3.9 Future Committees. During the term of
this Agreement, the parties will discuss the necessity for and composition of
other committees.
2.4 Reports and Materials.
2.4.1 Reports. During the Research Programs,
HMRI and OSI shall each furnish to the Research Management Committee:
(a) summary written reports within
fifteen (15) days after the end of each calendar quarter, commencing on the
Effective Date, describing its progress under the Research Programs; and
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(b) comprehensive written reports
within thirty (30) days after the end of each calendar year, describing in
detail the work accomplished by it under the Research Programs during the year
and discussing and evaluating the results of such work.
2.4.2 Materials. OSI and HMRI shall, during
the Option Period and the Contract Period, as a matter of course as described in
the Research Plans or upon the written request of a party, furnish to the
requesting party samples of biochemical, biological or synthetic chemical
materials ("Materials") which are part of the Joint Improvements, OSI Technology
or HMRI Technology, and which are necessary for such party to carry out its
responsibilities under the Research Plans.
2.5 Laboratory Facilities and Personnel. OSI and
HMRI shall each provide suitable laboratory facilities, equipment and personnel
for the work to be done by each of them diligently to carry out their respective
activities under the Research Programs. Initially, it is contemplated that OSI
will assign duties under the Research Plans to the full-time equivalent of (a)
five (5) chemists and (b) eight (8) biologists, and HMRI will assign duties
under the Research Plans to the full-time equivalent of (i) five (5) chemists
and (ii) four (4) pharmacologists or biologists.
2.6 Diligent Efforts. HMRI and OSI each shall use
commercially reasonable diligent efforts to achieve the objectives of the
Research Programs and the Development Phase Program. Specifically, to achieve
the objectives of the Research Programs and the Development Phase Program, HMRI
will use diligent and good faith efforts and standard
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procedures consistent with those used with HMRI's own internal compounds and
products of like potential and consistent with reasonable commercial judgment:
(a) to advance the pharmacological
assessment of the Compounds in order to select those worthy of further
investigation;
(b) to make derivatives related to
the Compounds to determine the relationship between structure and activity, and
to identify potential clinical development candidates;
(c) to select clinical 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 submission(s)
necessary to obtain market authorization; and
(e) to develop manufacturing methods
and pharmaceutical formulations for those selected candidates.
3. Funding of the Research Program.
3.1 Option Period Funding. During the Option Period,
HMRI shall pay OSI ** to implement OSI's portion of the Option Period Research
Plan. The Research Management Committee may determine, at its discretion, to
increase the payment to OSI during the Option Period from ** to an amount which
shall not exceed ** . HMRI shall make its payments to OSI during the Option
Period quarterly in advance on the first day of the calendar
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** This portion redacted pursuant to a request for confidential treatment.
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quarter, in an amount equal to ** of the total sum due OSI during the Option
Period. Within forty-five (45) days following the end of each such calendar
quarter, OSI shall submit to HMRI a statement setting forth the date, nature and
amount of the expenses incurred during such quarter.
3.2 Contract Period Funding. If HMRI elects to
participate in the Contract Period Research Program, HMRI shall pay OSI's total
actual research costs in carrying out the Contract Period Research Plan, plus
Allocated Overhead (the "Funding Payments"). The total amount of Funding
Payments shall not be less than ** in the first twelve (12) month period of the
Contract Period, nor less than ** in the second twelve (12) month period of the
Contract Period, unless, in each instance, the Research Management Committee,
which shall supervise the conduct of the research and the expenditure of the
funds, determines that such amounts cannot be effectively expended, in which
event the total amount of Funding Payments in either or both such twelve (12)
month periods may be less than the amounts stated above as determined by the
Research Management Committee.
3.2.1 Prior to the beginning of each calendar year
(or part thereof) during the Contract Period, the Research Management Committee
shall approve a budget which shall set forth the work to be accomplished during
each calendar quarter and the payment to be made. The budget so created will be
in form and detail as the Research Management Committee
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** This portion redacted pursuant to a request for confidential treatment.
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shall determine and shall be delivered to both parties in time to be included in
each party's internal budgeting process.
3.2.2 HMRI shall make prepayments to OSI of
the Funding Payments quarterly in advance for work scheduled to be performed by
OSI during any calendar quarter. The amounts of such prepayments shall be based
upon the budget described in Section 3.2.1 hereof. Adjustments as necessary to
reflect the work actually performed by OSI shall be made at the end of each
calendar quarter. Within thirty (30) days of the close of a calendar quarter,
OSI shall invoice HMRI for the amount actually spent by OSI during the calendar
quarter plus Allocated Overhead for such quarter. If actual expenditures plus
Allocated Overhead during such quarter are less than the prepayment (and in the
case of the first and second twelve (12) month periods of the Contract Period,
less than ** and ** respectively), OSI shall pay HMRI on the date of the invoice
the difference between the prepayment and the actual expenditures. If actual
expenditures as approved by the Research Management Committee exceed the
prepayment, HMRI shall pay OSI the difference within thirty (30) days of the
date of the invoice.
3.2.3 The amount of the Funding Payment for
each calendar quarter shall be based on the work in progress pursuant to the
Contract Period Research Plan and the associated annual budget.
3.2.4 OSI shall keep for three (3) years
from the expiration of this
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** This portion redacted pursuant to a request for confidential treatment.
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Agreement complete and accurate records of its expenditures of Funding Payments
received by it. The records shall conform to generally accepted accounting
principles as applied to a similar company similarly situated. HMRI shall have
the right at its own expense during the term of this Agreement and during the
subsequent three (3) year period to obtain from the independent certified public
accountant employed by OSI for public reporting purposes an audit of said
records to verify the accuracy of such expenditures, pursuant to the Contract
Period 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 HMRI, 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, unless a subsequent
inspection reveals discrepancies which may have also occurred during such prior
period of time. HMRI 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 HMRI to reveal the information in order to
enforce any rights it may have pursuant to this Agreement or if disclosure is
required by law. The failure of HMRI to request verification of any expenditures
before the expiration of the three (3) year period referred to above shall be
considered acceptance of the accuracy of the invoices for such expenditures, and
OSI shall have no obligation to maintain any records pertaining to such
expenditures beyond the three-year period. The results of the inspection shall
be binding on both parties. If the results
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of the audit indicate that HMRI overpaid OSI with respect to such expenditures,
OSI shall immediately pay to HMRI in cash the amount of such discrepancy.
3.2.5 The parties agree that all payments
made to OSI pursuant to Section 3.2 constitute contract research expenses under
Section 41 of the Internal Revenue Code of 1986.
3.2.6 The parties agree to use good faith
efforts to conduct the research contemplated under this Agreement efficiently so
as to minimize the expenditures made under this Agreement.
3.3 Milestone Payments.
3.3.1 Option Period Milestones. Subject to
the provisions of Section 5.8.11, on the date of execution of this Agreement,
HMRI will pay OSI ** as an initiation fee. Subject to the provisions of Section
5.8.11 hereof, upon first demonstration of a Compound having in vivo efficacy in
a rat model or in vitro efficacy in primary primates' liver or kidney cells with
respect to the Target, HMRI will pay OSI ** . For purposes of this Section
3.3.1, the Research Management Committee shall determine the efficacy criteria
for each of the in vivo milestone and the in vitro milestone.
3.3.2 Contract Period Milestones. Subject to
the provisions of Section 5.8.11, if HMRI elects to participate in the Contract
Period Research Program, at the
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** This portion redacted pursuant to a request for confidential treatment.
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commencement of the Contract Period, HMRI shall make a milestone payment to OSI
of an additional ** . If the Contract Period and/or Development Phase is
continuing, subject to the provisions of Section 5.8.11, upon initiation of
Phase III clinical trials, HMRI shall make an additional milestone payment to
OSI of ** . If the Contract Period and/or Development Phase is continuing,
subject to the provisions of Section 5.8.11 hereof, upon approval of an NDA by
the FDA or equivalent European marketing approval for any Product, HMRI shall
pay OSI an additional ** milestone fee.
3.3.3 Each milestone payment referred to in
Sections 3.3.1 and 3.3.2 is to be paid by HMRI only once even though there may
be more than one (1) agent, Compound, derivative, etc. which may be involved in
the Research Programs or Development Phase Program or submissions to/approvals
by the FDA. In addition, if HMRI elects to discontinue its participation in
either of the Research Programs, HMRI's obligations hereunder to make milestone
payments shall cease.
3.4 Success Fees. If HMRI should
commercialize the Products, upon cumulative Net Sales of HMRI, its Affiliates
and sublicensees of all Products reaching:
(a) ** in the aggregate worldwide, HMRI
shall pay OSI a one (1) time fee of ** ;
(b) ** in the aggregate worldwide, HMRI
shall pay OSI an additional one (1) time fee of ** ; and
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** This portion redacted pursuant to a request for confidential treatment.
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<PAGE> 31
(c) ** in the aggregate worldwide, HMRI
shall pay OSI an additional one (1) time fee of ** .
4. Treatment of Confidential Information
4.1 Confidentiality.
4.1.1 Subject to the disclosure obligations
set forth in Sections 4.3 and 4.4 hereof and publication rights set forth in
Section 4.2 hereof, (i) HMRI agrees that during the period of the Research
Programs and the Development Phase and for five (5) years following termination
of the Agreement, it will keep confidential, and will cause its Affiliates to
keep confidential, all OSI Confidential Information, and neither HMRI nor any of
its Affiliates shall use OSI Confidential Information except as expressly
permitted in this Agreement and (ii) OSI agrees that during the period of the
Research Programs and the Development Phase and for five (5) years following
termination of the Agreement, it will keep confidential, and will cause its
Affiliates to keep confidential, all HMRI Confidential Information, and neither
OSI nor any of its Affiliates shall use HMRI Confidential Information except as
expressly permitted in this Agreement.
4.1.2 HMRI and OSI acknowledge that the OSI
Confidential Information and HMRI Confidential Information is highly valuable,
proprietary, confidential information, and each party agrees that any disclosure
of the other party's Confidential Information to any officer, employee or agent
of such party or of any of its Affiliates shall be
- -----------------------
** This portion redacted pursuant to a request for confidential treatment.
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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. Subject to Section 4.6 hereof, each party agrees not
to disclose the other party's Confidential Information to any Third Parties
under any circumstance without written permission. Each party shall take such
action, and shall cause its Affiliates to take such action, to preserve the
confidentiality of each other party's Confidential Information as they would
customarily take to preserve the confidentiality of their own confidential
information.
4.1.3 Each party represents that all of its
employees participating in the Research Programs and the Development Phase
Program who shall have access to the other party's Confidential Information are
bound by agreement to maintain such information in confidence. Consultants will
be similarly bound.
4.2 Publication. Section 4.1 hereof to the contrary
notwithstanding, the results obtained in the course of the Research Programs or
the Development Phase Program may be submitted for publication following
scientific review by the Research Management Committee or any other committee
charged with such review and subsequent approval by OSI's and HMRI's
managements. After receipt of the proposed publication by HMRI's and OSI's
managements, written approval or disapproval shall be provided within thirty
(30) days for a manuscript, within fourteen (14) days for an abstract for
presentation at, or inclusion in the proceedings of, a scientific meeting, and
within fourteen (14) days for a transcript of an oral presentation to be given
at a scientific meeting. The contribution of each party shall be noted in all
publications or presentations by acknowledgement or coauthorship, whichever is
appropriate.
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4.3 Publicity. Except as required by law, no 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. Neither party will issue a press release with regard to
matters relating to this Agreement without the other party's consent, which
consent shall not be unreasonably withheld. The party desiring to make any such
public announcement or other disclosure shall provide the other party with a
written copy of the proposed announcement or disclosure in sufficient time prior
to the proposed public release to allow such other party to comment upon the
nature, text and timing of such announcement or disclosure prior to the proposed
public release.
4.4 Disclosure of Inventions. Each party shall
promptly inform the other party about all Improvements concerning the Target
that are conceived, made or developed in the course of carrying out the Research
Programs and the Development Phase by employees of, or consultants to, that
party solely or jointly with employees of, or consultants to, the other party.
This Agreement shall not be construed to obligate a party to disclose to the
other party any Improvements which do not concern the Target.
4.5 Restrictions on Transferring Materials. HMRI and
OSI recognize that the Materials which are part of OSI Technology, HMRI
Technology, or Joint Improvements represent valuable commercial assets.
Therefore, throughout the Option Period and, if HMRI elects to participate in
the Contract Period Research Program and the Development Phase Program, the
Contract Period and the Development Phase and for five (5) years after
termination of the Agreement (unless the other party consents thereto, which
consent shall not be
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unreasonably withheld), each of OSI and HMRI agree not to transfer to any Third
Party any such Materials which constitute Technology owned solely by the other
party to this Agreement. Additionally, throughout the Option Period and, if HMRI
elects to participate in the Contract Period Research Program and the
Development Phase Program, the Contract Period and the Development Phase and for
five (5) years following termination of the Agreement, OSI and HMRI agree not to
transfer to any Third Party any Materials which are part of the Joint
Improvements, unless prior consent for any such transfer is obtained from the
other party, which consent shall not be unreasonably withheld, and unless such
Third Party agrees as a condition of any such transfer not to transfer the
Materials further and to use the Materials only for research purposes not
directed toward the development of Compounds or Products.
4.6 Permitted Use of Confidential Information.
Nothing contained herein will in any way restrict or impair any party's right to
use, disclose or otherwise deal with any Confidential Information which:
(a) at the time of disclosure is properly in
the public domain or thereafter becomes part of the public domain by publication
or otherwise through no breach of this Agreement by the party receiving such
information;
(b) the party receiving such information can
establish by competent evidence that such information was properly in its
possession prior to the time of the disclosure;
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(c) is independently and properly made
available as a matter of right to the party receiving such information by a
Third Party who is not thereby in violation of a confidential relationship;
(d) is information which is required to be
included in patent applications filed under Article 6 or required to be provided
to a government agency in order for HMRI to obtain approvals to market Products,
or for OSI to make a Product for HMRI hereunder; provided, however, that HMRI
Confidential Information or OSI Confidential Information shall not be disclosed
in any such patent application or otherwise without the prior written consent of
HMRI or OSI, respectively, which consent shall not be unreasonably withheld;
(e) is information which is required to be
disclosed to customers, users and prescribers of a Product, or which is
reasonably necessary to disclose in connection with the ethical marketing of a
Product; provided, however, that no OSI Confidential Information or HMRI
Confidential Information will be so disclosed without the prior written consent
of OSI or HMRI, respectively, which consent will not be unreasonably withheld;
or
(f) is information required to be disclosed
by law or by a court order, in each of which cases the disclosing party shall
timely inform the other and use its best efforts to limit the disclosure and
maintain confidentiality to the extent possible and will permit the other party
to limit such disclosure.
5. Licenses and Royalties
5.1 Grant of Licenses.
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5.1.1 License to HMRI. OSI hereby grants to
HMRI a worldwide exclusive license, including the right to sublicense, under the
OSI Technology, the OSI Patents, the OSI Improvements, and OSI rights in the
Joint Improvements and Joint Patents to develop, make, have made, use, sell and
have sold Products, which license shall be exclusive (even as to OSI) (a) for so
long as HMRI is obligated to pay a royalty under Sections 5.8.1 or 5.8.2 and (b)
thereafter in accordance with Section 5.2 hereof. HMRI agrees that OSI shall be
identified on the packaging of all Products on which HMRI is obligated to pay
royalties, subject to legal and commercial requirements on a country-by-country
basis and in a manner in accordance with such legal and commercial requirements.
5.1.2 License to OSI. In the event that HMRI
(a) elects not to participate in the Contract Period Research Program, or (b)
discontinues its participation in the Contract Period Research Program prior to
the end of the Contract Period by ceasing funding of the Contract Period
Research Program in accordance with the provisions of Section 3.2 hereof, or (c)
elects not to continue its participation in the Development Phase Program, HMRI
will offer to OSI, and OSI may accept (in each case in accordance with Section
1.1.2 hereof), a worldwide non-exclusive license under the HMRI Technology, the
HMRI Patents, the HMRI Improvements and the HMRI rights in the Joint
Improvements and Joint Patents to develop, make, have made, use and sell
Products, and such license shall be exclusive, with the right to sublicense, to
the extent that it relates to HMRI Patents or Joint Patents having claims which
cover Compounds used in research and development as well as Products approved by
the FDA or equivalent authority outside the U.S. and (a) for so long as OSI is
obligated to pay a royalty
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under Section 5.8.3 or 5.8.4 hereof and (b) thereafter in accordance with
Section 5.2 hereof.
5.2 Paid-Up License. Provided that HMRI or OSI, as
the case may be, has satisfied all of its obligations to pay royalties hereunder
with respect to a particular Product, such party shall have a paid-up exclusive
royalty-free license to manufacture, have manufactured, use, sell and have sold
such Product in each country after the expiration of such party's last
obligation to pay royalties on its Net Sales of such Product in such country.
5.3 Obligations.
5.3.1 Either HMRI or OSI, as the case may
be, shall use commercially reasonably diligent efforts to exploit the Products
commercially. This requirement shall be deemed satisfied if such party uses
substantially the same degree of diligence it uses with respect to products of
similar commercial potential developed by such party outside of this Agreement.
5.3.2 If HMRI elects to discontinue
development of a Compound, it shall so notify OSI and shall offer in writing to
OSI the right of first refusal to license the Compound. OSI shall exercise such
right by notifying HMRI in writing, within ninety (90) days of receipt from HMRI
of the terms of such a license, of its intent to enter into such license. If OSI
fails to respond within such ninety (90) day period or determines within such
ninety (90) day period not to enter into such a license with HMRI, HMRI may
license such Compound to a Third Party.
5.4 Sublicenses. If either HMRI or OSI grants a
sublicense pursuant to Article 5, such party shall guarantee that any
sublicensee fulfills all of its obligations under
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this Agreement. In the event HMRI or OSI grants sublicenses under Article 5 to
others to make, have made, use, sell or have sold Compounds or Products, such
sublicenses shall include an obligation of the sublicensees to account for and
report all Net Sales of Compounds or Products on the same basis as if such sales
were Net Sales of Products by such party, and such party shall pay royalties to
the other party under this Agreement as if the Net Sales of the sublicensee were
Net Sales of the sublicensor.
5.5 Ownership of Improvements. In accordance with the
United States laws of inventorship, OSI and HMRI shall each own the entire
right, title and interest in and to any Improvements made or discovered solely
by its respective employees ("OSI Improvements," and "HMRI Improvements,"
respectively) and OSI and HMRI shall own jointly all Improvements made or
discovered jointly by their respective employees during the Research Programs or
the Development Phase Program ("Joint Improvements"). Each party represents and
agrees that all employees and other persons acting on its behalf in performing
its obligations under this Agreement shall be obligated to assign to such party
or as such party shall direct (to the extent the agreeing party is legally
enabled to disclose and use the same in the Research Programs and the
Development Phase Program), all Improvements made or developed by such employee
or other person. In the case of Joint Improvements, OSI and HMRI each agree to
undertake to enforce such obligations (to the extent the agreeing party is
legally enabled to disclose and use the same in the Research Programs and the
Development Phase Program) (including, where appropriate, by legal action)
considering, among other things, the commercial value of such Joint
Improvements. The foregoing "obligations to assign" shall not be deemed to
impose on either
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party an obligation with respect to future agreements with Third Parties
requiring the use or disclosure of technology obtained or developed pursuant to
such Third Party agreement in connection with this Agreement.
5.6 Rights to Product Improvements. For a period of
five (5) years from the termination of the Research Programs, provided that HMRI
shall have fully performed its obligations thereunder, HMRI shall be deemed to
have acquired an exclusive (non-exclusive 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 OSI Improvements to any Compounds
or Products. Thereafter, HMRI shall have the sole (i.e., exclusive except as to
use only by OSI), worldwide, royalty-free license to any OSI Improvements to any
Compounds or Products. OSI shall promptly and fully notify HMRI of any such OSI
Improvements. All such OSI Improvements shall be included within the scope of
this Agreement. In the event that HMRI (a) elects not to participate in the
Contract Period Research Program or (b) discontinues its participation in the
Contract Period Research Program prior to the end of the Contract Period by
ceasing funding of the Contract Period Research Program in accordance with the
provisions of Section 3.2 hereof, or (c) elects not to continue its
participation in the Development Phase Program, and OSI accepts the license
offered by HMRI upon any of the events listed above, for a period of five (5)
years from the date of acceptance of such license by OSI, OSI shall be deemed to
have acquired an exclusive (non-exclusive 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 HMRI Improvements to any Compounds
or Products. Thereafter,
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OSI shall have the sole (i.e., exclusive except as to use only by HMRI),
worldwide, royalty-free license to any HMRI Improvements to any Compounds or
Products. HMRI shall promptly and fully notify OSI of any such HMRI
Improvements. All such HMRI Improvements shall be included within the scope of
this Agreement.
5.7 Technical Assistance. HMRI or OSI, as the case
may be, shall provide to the other party or any Affiliate or sublicensee of the
other party, at the other party's request and expense, any assistance reasonably
necessary to enable the other party or such Affiliate or sublicensee to
manufacture, have manufactured, use, sell or have sold each Product and to enjoy
fully all the rights granted to the other party pursuant to this Agreement.
5.8 Royalties, Payments of Royalties, Accounting for
Royalties, Records.
5.8.1 License to HMRI - Royalties - Patented
Products. HMRI shall pay OSI a royalty at the rate of ** of the Net Sales by
HMRI, its Affiliates and sublicensees of each Product, the manufacture, use, or
sale of which is covered by a Valid Claim of an OSI Patent, an HMRI Patent, or a
Joint Patent, if any such OSI Patent, HMRI Patent or Joint Patent covers (a) the
active ingredient of a Product or (b) the use of the active ingredient in a
Product if such use is approved for marketing by the FDA or equivalent authority
outside the U.S., only if the OSI Patent, HMRI Patent or Joint Patent and the
approval are in the country where the marketing of such Product occurs. HMRI
shall continue to pay such royalty
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on Net Sales of each Product in each country so long as the manufacture, use
and/or sale of such Product would infringe on a Valid Claim of an OSI Patent,
HMRI Patent or a Joint Patent with respect to such Product in such country. The
obligation for HMRI to pay royalties in each such country shall cease at the
time such infringement no longer occurs.
5.8.2 License to HMRI - Royalties -
Technology. Only if royalties have never been payable pursuant to Section 5.8.1
hereof with regard to a Product in a particular country, HMRI shall pay OSI a
royalty at ** of the rate set forth in Section 5.8.1 hereof on the Net Sales by
HMRI, its Affiliates and sublicensees of each such Product which would not
infringe a Valid Claim of an OSI Patent, an HMRI Patent or a Joint Patent or
which may be covered by an OSI Patent, an HMRI Patent or a Joint Patent if such
OSI Patent, HMRI Patent or Joint Patent does not cause the royalty payment set
forth in Section 5.8.1 to apply to the sale of such Product. Such royalty shall
be paid in each country of the world for ten (10) years from the date of first
commercial sale of such Product in each such country, except that in the case of
countries that are member states of the European Union such obligation to pay
royalties shall terminate on the earlier of the termination of said ten (10)
year period or the date on which such Improvements enter the public domain.
5.8.3 License to OSI - Royalties - Patented
Products. If HMRI elects not to participate in the Contract Period Research
Program and/or the Development Phase Program and OSI accepts the grant of
license set forth in Section 5.1.2 hereof, OSI shall pay
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HMRI a royalty at the rate of ** of Net Sales by OSI, its Affiliates and
sublicensees of each Product, the manufacture, use, or sale of which is covered
by a Valid Claim of an OSI Patent, an HMRI Patent, or a Joint Patent, if any
such OSI Patent, HMRI Patent or Joint Patent covers (a) the active ingredient of
a Product or (b) the use of the active ingredient in a Product if such use is
approved for marketing by the FDA or equivalent authority outside the U.S., only
if the OSI Patent, HMRI Patent or Joint Patent and the approval are in the
country where the marketing of such Product occurs. If (a) HMRI commences
participation in the Contract Period Research Program and subsequently
discontinues its participation prior to the termination of the Contract Period
by ceasing funding of the Contract Period Research Program in accordance with
the provisions of Section 3.2 hereof or discontinues its participation in the
Development Phase Program, and (b) OSI accepts the grant of license set forth in
Section 5.1.2 hereof, OSI shall pay HMRI royalties at the following rates on the
Net Sales by OSI, its Affiliates and sublicensees of each Product, the
manufacture, use, or sale of which is covered by a Valid Claim of an OSI Patent,
an HMRI Patent, or a Joint Patent, if any such OSI Patent, HMRI Patent or Joint
Patent covers (a) the active ingredient of a Product or (b) the use of the
active ingredient in a Product if such use is approved for marketing by the FDA
or equivalent authority outside the U.S., only if the OSI Patent, HMRI Patent or
Joint Patent and the approval are in the country where the marketing of such
Product occurs:
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(i) ** if HMRI's discontinuance occurred
following commencement of the Contract Period but prior to commencement of Phase
I clinical trials with regard to such Product;
(ii) ** if HMRI's discontinuance occurred
after commencement of Phase I clinical trials with regard to such Product but
prior to commencement of Phase II clinical trials with regard to such Product;
(iii) ** if HMRI's discontinuance occurred
after commencement of Phase II clinical trials with regard to such Product but
prior to commencement of Phase III clinical trials with regard to such Product;
and
(iv) ** if HMRI's discontinuance occurred
after commencement of Phase III clinical trials with regard to such Product.
OSI shall continue to pay such royalty on
Net Sales of each Product in each country so long as the manufacture, use and/or
sale of such Product would infringe on a Valid Claim of an OSI Patent, HMRI
Patent or a Joint Patent with respect to such Product in such country. The
obligation for OSI to pay royalties in each such country shall cease at the time
such infringement no longer occurs..
5.8.4 License to OSI - Royalties -
Technology. Only if royalties have never been payable pursuant to Section 5.8.3
hereof with regard to a Product in a particular country, OSI shall pay HMRI a
royalty at ** of the rate set forth in Section 5.8.3 hereof on
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the Net Sales by OSI, its Affiliates and sublicensees of each such Product which
would not infringe a Valid Claim of an OSI Patent, an HMRI Patent or a Joint
Patent or which may be covered by an OSI Patent, an HMRI Patent or a Joint
Patent if such OSI Patent, HMRI Patent or Joint Patent does not cause the
royalty payment set forth in Section 5.8.3 to apply to the sale of such Product.
Such royalty shall be paid in each country of the world for ten (10) years from
the date of first commercial sale of such Product in each such country, except
that in the case of countries that are member states of the European Union such
obligation to pay royalties shall terminate on the earlier of the termination of
said ten (10) year period or the date on which such Improvements enter the
public domain.
5.8.5 License to OSI - Licensing Fee. In addition to
the royalties set forth in Sections 5.8.3 and 5.8.4 above, if OSI accepts the
grant of license set forth in Section 5.1.2 hereof, OSI shall pay HMRI at the
time of such acceptance a one (1) time ** licensing fee.
5.8.6 Third Party Royalties.
(a) For Technology used in the
Research Programs and/or the commercialization of any Product directed to the
Target, any royalty payable to any Third Party, including, without limitation,
royalties paid for licensed compounds (other than royalties arising out of OSI
Technology or HMRI Technology) and any lump sum payment made to a Third Party as
a license fee or otherwise shall be borne first (as between HMRI and OSI)
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by the party holding the license, under Section 5.1.1 or 5.1.2, to develop,
make, have made, use, sell and have sold Products, provided that an amount equal
to twenty-five percent (25%) of any such Third Party royalty or payment may be
offset against any royalties due to the party entitled to royalties under
Section 5.8.1, 5.8.2 , 5.8.3 or 5.8.4, as the case may be, but only to the
extent that the amount paid to such party is equal to or greater than fifty
percent (50%) of the total royalty that would otherwise be due to such party
under Section 5.8.1, 5.8.2, 5.8.3 or 5.8.4, as the case may be, for the relevant
period.
(b) Any royalty payable to any Third
Party arising out of OSI Technology or HMRI Technology shall be payable solely
by OSI or HMRI, respectively.
5.8.7 Payment Dates. Royalties shall be paid
by HMRI or OSI, as the case may be, 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 Product in
each country and a calculation of the amount of royalty due.
5.8.8 Accounting. The Net Sales used for
computing the royalties payable to OSI by HMRI, or to HMRI by OSI, as the case
may be, shall be computed and paid in U.S. Dollars. For purposes of determining
the amount of royalties due with respect to Net Sales in any foreign currency,
the amount shall be computed generally by converting the foreign currency amount
into U.S. Dollars using for each month's calculation the foreign currency
exchange rate on the last day of the preceding month or such other method as is
consistent with internal foreign currency translation procedures of the party
paying the royalties, as actually used by such party on a consistent basis in
preparing its audited financial statements.
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5.8.9 Records. HMRI or OSI, as the case may
be, shall keep for three (3) years from the date of each payment of royalties
complete and accurate records of Net Sales by such party, its Affiliates and
sublicensees of each Product in sufficient detail to allow the accruing
royalties to be determined accurately. The party to whom royalties are due 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 obtain at its expense
from the independent certified public accountant used by the other party for
public reporting an audit of the relevant records of the other party to verify
such report or statement. The party owing royalties 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 the other party, 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, unless a subsequent
inspection reveals discrepancies which may have also occurred during such
period. Such independent certified public accountant shall report to the party
to whom royalties are due only as to the accuracy of the Net Sales computation
and royalty payments. Such party 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
such party to reveal such information in order to enforce its rights under this
Agreement or disclosure is required by law. The failure of such party to request
verification of any report or statement during the three (3) year period shall
be considered acceptance of the accuracy of such report, and the party
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owing royalties shall have no obligation to maintain records pertaining to such
report or statement beyond the three (3) year period. The results of the
inspection shall be binding on both parties.
5.8.10 Withholding Taxes. All amounts owing
to a party entitled to royalties as specified in this Agreement shall be paid
net of all applicable taxes, fees, and other charges excluding only taxes on the
income of the party owing royalties. The party owing royalties will assist the
other party in minimizing the withholding tax applicable to any payment made by
the party owing royalties hereunder and in claiming tax refunds at the other
party's request.
5.8.11 Credit Against Royalty. HMRI shall
have as a credit against its royalty obligation of ** of the amounts of the
initiation fee and milestone payments set forth in Section 3.3 hereof up to a
maximum credit of ** .
5.8.12 Other Forms of Remuneration. If
either party receives compensation from sales of Products which includes lump
sum payments or payments in a manner other than one for which royalties based on
Net Sales would be the appropriate measure, such as compensation through a
co-marketing or joint venture arrangement, the parties will negotiate in good
faith an appropriate compensation arrangement by which the party which
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otherwise would be entitled to royalties will be remunerated for the licenses
granted in Section 5.1 hereof.
6. Provisions Concerning the Filing, Prosecution and
Maintenance of Patent Rights. The following provisions relate to the filing,
prosecution and maintenance of OSI Patents, patents involving Joint
Improvements, and HMRI Patents:
6.1 OSI Filing, Prosecution and Maintenance. OSI
shall have the exclusive right and obligation:
(a) to file applications for letters patent
on any patentable invention included in OSI Improvements, or in Joint
Improvements which relate to cell lines, cloning of cell lines and methodologies
for determining the effect of compounds on biochemical processes; provided,
however, that OSI shall provide to HMRI copies of all patent applications prior
to filing for the purpose of obtaining substantive comment of HMRI patent
counsel, consult with HMRI regarding countries in which such patent applications
should be filed, and shall file patent applications in those countries where
HMRI requests that OSI file; and further provided, that OSI, at its option and
expense, may file in countries where HMRI does not request that OSI file;
(b) to prosecute all pending and new patent
applications involving OSI Compounds or included within OSI Improvements, or
Joint Improvements which relate to cell lines, cloning of cell lines and
methodologies for determining effect of compounds on biochemical processes, and
to respond to oppositions filed by Third Parties against the grant of letters
patent for such applications, provided that OSI shall also provide to HMRI
copies of
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all documents relating to prosecution of all patent applications and/or
oppositions filed by Third Parties in a timely manner for the purpose of
obtaining substantive comment of HMRI patent counsel;
(c) to maintain in force any letters patent
included in OSI Patents 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;
(d) to notify HMRI in a timely manner of any
decision to abandon a pending patent application or an issued patent included in
OSI Patents. Thereafter, HMRI shall have the option, at its expense, of
continuing to prosecute any such pending patent application or of keeping the
issued patent in force; and
(e) to provide to HMRI every six (6) months
a report detailing the status of all patent applications that are part of OSI
Patents.
6.2 HMRI Filing, Prosecution and Maintenance. HMRI
shall have the exclusive right and obligation:
(a) to file applications for letters patent
on any patentable invention included in HMRI Improvements, or in Joint
Improvements which relate to new compounds and therapeutic uses or manufacturing
processes of known compounds; provided, however, that HMRI provide to OSI copies
of all patent applications prior to filing for the purpose of obtaining
substantive comment of OSI patent counsel, consult with OSI regarding countries
in which such patent applications should be filed, and shall file patent
applications in
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those countries where OSI requests that HMRI file; and further provided, that
HMRI, at its option and expense, may file in countries where OSI does not
request that HMRI file;
(b) to prosecute all pending and new patent
applications involving HMRI Compounds or included within HMRI Improvements, or
Joint Improvements which relate to new compounds and therapeutic uses or
manufacturing processes of known compounds, and to respond to oppositions filed
by Third Parties against the grant of letters patent for such applications;
provided that HMRI shall also provide to OSI copies of all documents relating to
prosecution of all patent applications and/or oppositions filed by Third Parties
in a timely manner for the purpose of obtaining substantive comment of OSI
patent counsel;
(c) to maintain in force any letters patent
included in HMRI Patents 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;
(d) to notify OSI in a timely manner of any
decision to abandon a pending patent application or an issued patent included in
HMRI Patents. 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; and
(e) to provide to OSI every six (6) months a
report detailing the status of all patent applications that are part of HMRI
Patents.
6.3 Joint Filing, Prosecution and Maintenance. OSI
and HMRI shall jointly have the right and obligation:
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(a) to file applications for letters patent
on any patentable invention which are not the subject of applications filed by
either OSI or HMRI pursuant to Section 6.1 or 6.2, and which arise in the course
of conducting the Research Programs or the Development Phase Program; and the
parties shall determine with respect to each such application the party
("Responsible Party") which shall have the primary responsibility as to such
application; provided, however, that the Responsible Party shall provide to the
other party copies of all patent applications prior to filing for the purpose of
obtaining substantive comment of the other party's patent counsel, consult with
the other party regarding countries in which such patent applications should be
filed, and shall file patent applications in those countries where the other
party requests that the Responsible Party file; and further provided, that the
Responsible Party, at its option and expense, may file in countries where the
other party does not request that the Responsible Party file;
(b) to prosecute all pending and new patent
applications involving Joint Improvements which are not the subject of
applications prosecuted pursuant to Sections 6.1 or 6.2, and to respond to
oppositions filed by Third Parties against the grant of letters patent for such
applications; provided that the Responsible Party shall also provide to the
other party copies of all documents relating to prosecution of all patent
applications and/or oppositions filed by Third Parties in a timely manner for
the purpose of obtaining substantive comment of the other party's patent
counsel;
(c) to maintain in force any letters patent
included in Joint Patents by duly filing all necessary papers and paying any
fees required by the patent laws of
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the particular country in which such letters patent were granted; and the
Responsible Party shall have primary responsibility to do so;
(d) to decide to abandon a pending patent
application or an issued patent included in Joint Patents; if the parties cannot
reach agreement on a decision to abandon a pending patent application or an
issued patent included in Joint Patents, the party opposing abandonment shall
have the option, at its expense, of continuing to prosecute any such pending
patent application or of keeping the issued patent in force, and the party
proposing abandonment shall assign to the other party its rights in such pending
patent application or issued patent; and
(e) to have the Responsible Party prepare
every six (6) months a report detailing the status of all patent applications
that are part of Joint Patents.
6.4 Reimbursement of Expenses.
6.4.1 HMRI will reimburse OSI for its
reasonable out-of-pocket costs incurred after the Effective Date to file,
prosecute, issue, maintain and extend patent applications and patents within the
OSI Patents or within those Joint Patents for which OSI is the Responsible Party
in countries in which HMRI has requested OSI to file that OSI would not have
otherwise filed.
6.4.2 OSI agrees to utilize the in-house
patent services and capabilities of HMRI wherever practicable. OSI will
reimburse HMRI for its reasonable out-of-pocket costs incurred after the
Effective Date to file, prosecute, issue, maintain and extend patent
applications and patents within HMRI Patents or within those Joint Patents for
which
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HMRI is the Responsible Party in countries in which OSI has requested HMRI to
file that HMRI would not have otherwise filed.
6.5 Patent Extensions. In the event any patent in the
Joint Patents, OSI Patents or HMRI Patents is eligible for extension or
Supplementary Protection Certificate, the Research Management Committee shall
determine for which patents, applications for extension shall be filed.
6.6 Legal Action.
6.6.1 Actual or Threatened Disclosure or
Infringement. When information comes to the attention of either HMRI or OSI to
the effect that an HMRI Patent, OSI Patent or Joint Patent or Joint Improvement
relating to a Compound or Product have been or are threatened to be unlawfully
disclosed or that any of the rights granted by this Agreement has been or is
threatened to be unlawfully infringed, such party shall notify the other party
in writing and HMRI 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. HMRI shall notify OSI
promptly of the receipt of any such information and of the commencement of any
such suit, action or proceeding. If HMRI 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 HMRI to act in OSI's name. In the event that HMRI 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,
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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
HMRI.
If HMRI does not, within one hundred twenty
(120) days after giving notice to OSI of the above-described information, notify
OSI of HMRI'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 cause HMRI to be joined as a party plaintiff, if appropriate,
in which event OSI shall hold HMRI 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 expenses of litigation, including attorney's fees paid, shall be
paid to HMRI. 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 HMRI lacks
standing to bring any such suit, action, or proceeding, then OSI shall do so at
the request of HMRI and at HMRI's expense.
6.6.2 Defense of Infringement Claims. If OSI
or HMRI, or any of their respective licensees or their customers, shall be sued
by a Third Party for infringement of a patent because of the research,
development, manufacture, use or sale of Products, the party which has been sued
shall promptly notify the other in writing of the institution of such suit. HMRI
shall have the right (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
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dispose of any such suit, action, or proceeding), but not the obligation, to
defend or settle any such suit, action, or proceeding and OSI shall furnish to
HMRI all necessary information and assistance in connection therewith. The
parties shall share the expenses (including the amount of any settlement, or any
final judgment finding infringement) of implementing the agreed defense on the
following basis:
(a) If the alleged infringement is due to
the use of OSI Technology, then the expenses shall be borne equally by HMRI and
OSI.
(b) Notwithstanding Section 6.6.2(a), if the
alleged infringement is due to the sale of a Product by either HMRI or OSI, as
the case may be, then the party making such sale shall bear seventy-five percent
(75%) of the expense and the other party (i.e., the party entitled to a royalty)
shall bear twenty-five percent (25%) of the expense; provided that the sole
obligation of the party entitled to a royalty will be paid in the form of a
fifty percent (50%) reduction during the pendency of the action (but not after
it has been concluded) in the royalty otherwise payable to such party or a fifty
percent (50%) credit against future royalties until such party's share of the
expenses of such suit are recovered. If such suit results in any award or
settlement paid in favor of HMRI or OSI, such amount shall be shared in the same
proportion as the expenses of such suit have been actually borne. The share of
the expenses of any suit of any party entitled to a royalty shall be limited to
the foregoing royalty reduction and if the royalty reduction and such party's
share of any award shall not be sufficient to cover its share of the expenses of
such suit, such party shall not be obligated to make up the shortfall. If it is
agreed that if one party shall conduct the defense, the other shall have the
right to be
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represented by advisory counsel of its own selection, at its own expense, and
shall cooperate fully in the defense of such suit and furnish to the other all
evidence and assistance in its control.
6.6.3 Hold Harmless. OSI agrees to defend,
protect, indemnify, and hold harmless HMRI and any sublicensee of HMRI, from and
against any loss or expense arising from any proven claim of a Third Party that
it has been granted rights by OSI, and that HMRI or any sublicensee of HMRI in
exercising their rights granted to HMRI by OSI pursuant to this Agreement, has
infringed upon such rights granted to such Third Party by OSI. If HMRI grants to
OSI a license hereunder, OSI agrees to defend, protect, indemnify and hold
harmless HMRI from and against any liability, claim, loss, cost or expense
arising from any claim for product liability based upon OSI's manufacture, use,
or sale of any Product, except to the extent such liability, claim, loss, or
expense also results from the negligence or willful misconduct of HMRI, its
employees and agents. If OSI grants to HMRI a license hereunder, HMRI 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 HMRI's manufacture, use, or sale of any Product except to
the extent such liability, claim, loss or expense also results from the
negligence or willful misconduct of OSI, its employees and agents.
6.6.4 Third Party Licenses. If HMRI and OSI
agree that the manufacture, use, or sale by HMRI or OSI, as the case may be, of
a Product in any country would infringe a patent owned by a Third Party, the
party holding the license under Section 5.1.1 or 5.1.2 to develop, make, have
made, use, sell and have sold such Product shall attempt to obtain a license
under such patent. If such party obtains a license under such patent, then fifty
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percent (50%) of any payments made by such party to such Third Party shall be
deductible from royalty payments due from such party to the party entitled to
royalties pursuant to this Agreement; provided, however, that in no event shall
royalties payable to the party entitled to royalties be reduced by more than
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 either HMRI or OSI is of the opinion that such
manufacture, use, or sale would not infringe such patent owned by a Third Party,
the party holding the license under Section 5.1.1 or 5.1.2 to develop, make,
have made, use, sell and have sold such Product may, at its election and
expense, bring suit against such Third Party seeking a declaration that such
patent is invalid or not infringed by such party's manufacture, use or sale of
such Product, or may bring opposition, nullity, or other proceedings against
such patent, as appropriate. If the party holding the license does not bring
such suit, or is successful in such suit, such party shall continue to pay
royalties in such country as provided in Article 5. If such party is
unsuccessful in such suit, it shall join the other party in an attempt to obtain
a license under such patent, and royalty payments made to such Third Party for
such license shall be as provided in this Section.
7. Acquisition of Rights from Third Parties. During the Option
Period, the Contract Period and the Development Phase, OSI and HMRI shall
promptly notify each other in writing of any and all opportunities to acquire in
any manner from Third Parties, technology
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or patents which may be useful in, or may relate to the Research Programs or the
Development Phase Program. The notifying party shall decide if such rights
should be acquired and, if so, whether it desires to make the acquisition or (if
agreeable to the other party) whether (a) the other party should make the
acquisition or (b) such acquisition should be made jointly. If acquired, such
rights shall be deemed part of the Technology of the party making the
acquisition or if jointly acquired, then part of Joint Improvements.
8. Term, Termination and Disengagement
8.1 Term.
8.1.1 Term of Option Period. The term of the
Option Period shall commence on the Effective Date and shall terminate on March
31, 1998, unless extended or sooner terminated by mutual written agreement of
the parties, or as otherwise provided in this Agreement.
8.1.2 Term of Contract Period. The term of
the Contract Period shall commence at the end of the Option Period upon notice
from HMRI to OSI pursuant to Section 2.1.2 hereof that HMRI elects to
participate in the Contract Period Research Program, and shall continue for
twenty-four (24) months, unless extended or sooner terminated by mutual written
agreement of the parties, or as otherwise provided in this Agreement.
8.1.3 Term of Development Phase. The
Development Phase of this Agreement shall commence at the end of the Option
Period upon notice from HMRI to OSI pursuant to Section 2.1.2 hereof that HMRI
elects to participate in the Development Phase Program (and, for a period of
time, may be coexistent with the Contract Period) and shall
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continue for as long as HMRI is continuing development activities with regard to
a Compound or Product. The Development Phase shall not commence if HMRI
unilaterally elects not to participate in the Contract Period Research Program.
8.1.4 Term of This Agreement. The term of
this Agreement shall continue until the expiration of the last obligation of
either party to pay royalties in a country.
8.2 Termination of the Agreement During the Option
Period. If, during the Option Period, HMRI and OSI determine by mutual written
agreement to discontinue activity under this Agreement, this Agreement shall
terminate, subject to Section 8.6 hereof, and the respective rights brought to
the collaboration by each party shall revert to such party and the parties shall
negotiate in good faith with respect to the division of any joint rights (i.e.,
Joint Improvements and Joint Patents) created under this Agreement.
8.3 Termination of Research Funding.
8.3.1 Termination of Research Funding by
HMRI at End of Option Period. If HMRI does not elect to participate in the
Contract Period Research Program at the end of the Option Period, HMRI will
offer to OSI a worldwide license as more fully set forth in Section 5.1.2
hereof. This Agreement shall thereupon terminate, subject to the provisions of
Section 8.6 hereof.
8.3.2 Termination of Research Funding by
HMRI During Contract Period. If, at the end of the Option Period, HMRI exercises
its option to participate in the Contract Period Research Program and,
thereafter, during the Contract Period, either discontinues its participation in
the Contract Period Research Program by ceasing funding of the
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Contract Period Research Program in accordance with the provisions of Section
3.2 hereof, or otherwise does not diligently continue its efforts to develop a
Compound or Product, OSI shall have the option to be granted a worldwide license
by HMRI on the terms set forth in Section 5.1.2 of this Agreement. The Contract
Period and this Agreement shall thereupon terminate, subject to the provisions
of Section 8.6 hereof. If HMRI does diligently continue its development efforts
throughout the Contract Period, this Agreement shall continue and HMRI shall be
granted the license provided for in Section 5.1.1 as set forth therein.
8.3.3 Termination by HMRI During Development
Phase. If, at the end of the Option Period, HMRI exercises its option to
participate in the Development Phase Program and, thereafter, during the
Development Phase, either discontinues its participation in the Development
Phase Program or otherwise does not diligently continue its efforts to develop a
Compound or Product, OSI shall have the option to be granted a worldwide license
by HMRI on the terms set forth in Section 5.1.2 of this Agreement. The
Development Phase and this Agreement shall thereupon terminate, subject to the
provisions of Section 8.6 hereof. If HMRI does diligently continue its
development efforts throughout the Development Phase, this Agreement shall
continue and HMRI shall be granted the license provided for in Section 5.1.1 as
set forth therein.
8.3.4 Termination Not Deemed a Breach. The
parties acknowledge that none of the activities of HMRI referred to in this
Section 8.3 shall be deemed to be a breach of this Agreement by HMRI.
8.4 Termination Upon an Event of Default.
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8.4.1 The following events shall constitute
events of default ("Events of Default"):
(a) Any material representation or
warranty by OSI or HMRI, or any of their officers, under or in connection with
this Agreement shall prove to have been incorrect in any material respect when
made.
(b) OSI or HMRI shall fail in any
material respect to perform or observe any material 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 failing party.
8.4.2 Upon the occurrence of an Event of
Default, the party not responsible may, by notice to the other party, terminate
this Agreement subject to compliance with the terms of Article 11 (Dispute
Resolution). If HMRI is the terminating party, at HMRI's option (a) the license
in Section 5.1.1 (if in effect at such time) and the obligation to pay royalties
as provided in Sections 5.8.1 and 5.8.2 shall continue or (b) the license in
Section 5.1.2 (if in effect at such time) and the obligation to pay royalties as
provided in Sections 5.8.3 and 5.8.4 shall continue, as the case may be. If OSI
is the terminating party, at OSI's option (i) the license in Section 5.1.1 (if
in effect at such time) and the obligation to pay royalties as provided in
Sections 5.8.1 and 5.8.2 shall continue or (ii) the license in Section 5.1.2 (if
in effect at such time) and the obligation to pay royalties provided in Sections
5.8.3 and 5.8.4 shall continue, as the case may be.
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8.5 Change of Control.
8.5.1 A "Change of Control" shall be deemed
to have occurred if, after the date of this Agreement, (i) any Third Party
acquires a majority of the shares of a party or acquires a right to control the
voting of a majority of shares of a party, (ii) any Third Party acquires
sufficient shares or the right to control the votes of sufficient shares to
enable such Third Party to elect a majority of the board of directors of a
party, or (iii) any Third Party acquires the power through share ownership or
otherwise to designate a majority of the board of directors of a party.
8.5.2 Upon a Change of Control during the
Option Period, the respective rights brought to the collaboration by each party
shall revert to such party and the parties shall negotiate in good faith with
respect to the division of any joint rights (i.e., Joint Improvements and Joint
Patents) created under this Agreement and this Agreement shall thereupon
terminate, subject to the provisions of Section 8.6 hereof.
8.5.3 Upon a Change of Control during the
Contract Period or the Development Phase, thereafter for a period of six (6)
months after such Change of Control, either party may terminate this Agreement
upon three (3) months' written notice to the other party. If HMRI is the
terminating party and such termination occurs prior to the expiration of the
Contract Period, OSI shall have the option to be granted a worldwide license by
HMRI on the terms set forth in Section 5.1.2 hereof. If OSI is the terminating
party or if HMRI is the terminating party and such termination occurs following
the expiration of the Contract Period, HMRI shall have the option to be granted
the license provided for in Section 5.1.1 hereof.
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8.6 Survival. Upon termination pursuant to Section
8.1.4 or 8.2 hereof, the following sections of this Agreement shall survive such
termination: Sections 1, 4, 12 and 13. Upon termination pursuant to Sections
8.3, 8.4 or 8.5 hereof, the following sections of this Agreement shall survive
such termination if OSI has (or exercises its option to obtain) a worldwide
license as provided in Section 5.1.2 hereof: Sections 1, 4, 5.1.2, 5.2, 5.3.1,
5.4, 5.5, 5.6, 5.7, 5.8.3, 5.8.4, 5.8.5, 5.8.6, 5.8.7, 5.8.8, 5.8.9, 5.8.10,
5.8.12, 6, 9.6, 11, 12, 13 and 14.7. Upon termination pursuant to Section 8.4 or
8.5 hereof, the following sections of this Agreement shall survive such
termination if HMRI has a worldwide license as provided in Section 5.1.1 hereof:
Sections 1, 4, 5.1.1, 5.2, 5.3.1, 5.4, 5.5, 5.6, 5.7, 5.8.1, 5.8.2, 5.8.6,
5.8.7, 5.8.8, 5.8.9, 5.8.10, 5.8.11, 5.8.12, 6, 9.6, 11, 12, 13 and 14.7. Upon
termination pursuant to Section 8.3, 8.4 or 8.5 if neither party has (or
exercises its option to obtain) a worldwide license as provided in Section 5.1
hereof, the following sections of this Agreement shall survive: 1, 2.1.2 (last
sentence), 4, 6, 12, 13 and 14.7.
9. Representations and Warranties. OSI and HMRI each
represents and warrants as follows:
9.1 Status. It is a corporation, validly existing and
in good standing under the laws of Delaware, 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.
9.2 Authority. 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
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(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.
9.3 Binding Obligation. 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.
9.4 No Conflicting Obligations. It is not under any
obligation to any Third Party, 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.
9.5 Good Title. 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 hereunder and the Research
Programs and the Development Phase Program, subject to no claim of any Third
Party other than the relevant lessors or licensors.
9.6 Right to Grant Licenses. It has the right to
grant to the other the licenses granted 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.
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10. Covenants of OSI
10.1 Affirmative Covenants of OSI Other Than
Reporting Requirements. From and after the Effective Date, OSI shall:
(a) 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.
(b) 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 Research Programs.
11. Dispute Resolution.
11.1 Mediation Committee. The Chief Executive Officer
of OSI and the Chief Scientific Officer of HMRI shall constitute the Mediation
Committee. In the event OSI or HMRI believes that the other has breached the
Agreement or failed to meet a condition or milestone required to be met, or a
dispute has arisen between the parties, the parties agree that, before any party
initiates arbitration proceedings pursuant to Section 11.6, it shall give the
other party notice and shall demand that the members of the Mediation Committee
attempt to resolve the matter amicably. If the Mediation Committee is unable to
resolve a matter via telephone, telefax or other written or oral contact within
five (5) days of submission of the matter to it, the Mediation Committee shall
meet in person, not later than fifteen (15) days following submission
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of the matter to it, at a mutually convenient place to attempt in good faith to
resolve the dispute. If the Mediation Committee is unable to resolve a dispute
on any matter other than those set forth in Section 11.2 herein, unless a
mutually acceptable extension is agreed upon by the Mediation Committee, either
side shall have the right, but not the obligation, to initiate arbitration
proceedings respecting the matter under review, in accordance with Section 11.6.
11.2 Non-Arbitrable Issues. Matters relating to
modification of the Research Programs and the Development Phase Program shall
not be submitted to arbitration.
11.3 Scope of Arbitration. The parties agree that all
disputes except those set forth in Section 11.2 above arising under this
Agreement shall be resolved by arbitration in accordance with the provisions of
this Article 11; provided, however, that during the period of arbitration on any
dispute the parties shall continue to fulfill their obligations as set forth in
this Agreement.
11.4 Arbitration Panel. The arbitration shall be held
before a panel of three (3) persons ("Arbitration Panel").
11.4.1 Selection. Within fifteen (15) days
of the appointment of the two initial arbitrators, the two arbitrators so
appointed shall appoint the third arbitrator, who shall be an attorney and shall
act as chair of the Arbitration Panel.
11.4.2 Qualifications. The two arbitrators
selected by the parties hereto shall have experience in the pharmaceutical
and/or biotechnology industry. None of the arbitrators shall be employed or
retained by or otherwise related to OSI or HMRI.
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11.4.3 Failure to Name. If a party fails to
name its arbitrator within thirty (30) days of the receipt of the Notice of
Arbitration, then the arbitrator already named shall immediately select the
second arbitrator. The two arbitrators so appointed shall appoint the third
arbitrator, who shall be an attorney and shall act as chair of the Arbitration
Panel.
11.4.4 Right to Select Replacement. In the
event that an arbitrator refuses or is otherwise unable to serve as such, the
party or the other arbitrator(s) as the case may be, who selected such
arbitrator shall have the right to select his/her replacement. Such replacement
shall be selected within fifteen (15) days of the refusal or inability by such
arbitrator to serve.
11.5 Designation of Rules, Situs, Governing Law.
11.5.1 Designation of Rules. The parties
agree that the arbitrators shall apply the Federal Rules of Evidence as they are
applied in cases tried to a court sitting without a jury; unless the parties
agree otherwise, the opinions of expert witnesses shall not be admissible. The
parties agree that discovery proceedings shall be limited to: (a) the dispute;
(b) depositions of those persons having direct knowledge of the dispute; and (c)
submission of all documents which relate to the dispute.
11.5.2 Situs. The arbitration hearing shall
be held in New York unless otherwise mutually agreed.
11.5.3 Governing Law. The arbitrators shall
interpret the Agreement in accordance with the laws of New York.
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11.6 Procedure.
11.6.1 Conciliation Period. No party shall
send a Notice of Arbitration in connection with a dispute under this Article 11
unless at least thirty (30) days prior to the date of such Notice of
Arbitration, such party shall have furnished to the other parties written notice
of its intent to send a Notice of Arbitration in connection with a dispute. Such
30-day period is referred to as the "Conciliation Period." During the
Conciliation Period, the parties shall attempt in good faith to settle the
dispute.
11.6.2 Notice of Arbitration. The party
seeking to institute arbitration ("Claimant") shall do so by sending the other
party ("Respondent") a written notice of arbitration ("Notice of Arbitration").
The Notice of Arbitration shall set forth in detail the nature of the dispute.
The Notice of Arbitration shall also designate the arbitrator appointed by the
Claimant and set forth a full Curriculum Vitae or resume showing that the
arbitrator meets the qualifications set forth in Section 11.4 2.
11.6.3 Response. Within thirty (30) days of
the Notice of Arbitration, the Respondent shall send the Claimant a written
Response including any counterclaims ("Response"). The Response shall also
designate the arbitrator appointed by the Respondent and set forth a full
Curriculum Vitae or resume showing that the arbitrator meets the qualifications
set forth in Section 11.4.2. If the Response sets forth a counterclaim, the
Claimant may, within fifteen (15) days of the receipt of the Response, deliver
to the Respondent and the arbitrators a Rejoinder ("Rejoinder") answering such
counterclaim.
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11.6.4 Discovery. Within sixty (60) days of
the date of the Response, each party shall submit to the other party and to the
arbitrators one (1) copy of all documents in the possession, custody or control
of the party or its Affiliates, which are relevant for a settlement of the
dispute set forth in the Notice of Arbitration, Response or Rejoinder. Within
forty-five (45) days of the date of the Response, each party shall submit to the
other party a list of all witnesses intended to be called at the hearing. Each
party shall use its best efforts to make available for deposition within thirty
(30) days after the delivery of the list of witnesses at each party's respective
location of its operations, all of its agents, employees, and Affiliates who
have direct knowledge of the dispute at such times and places that shall not
unreasonably disrupt the business of the other party. The Chair of the
Arbitration Panel shall determine all discovery disputes and may enforce a
decision by imposing appropriate sanctions on the non-complying party(s).
11.6.5 Record. A stenographic record of all
proceedings shall be made and oaths administered by a duly licensed and
qualified court reporter. The court reporter shall prepare five (5) copies of
the stenographic record of such proceeding and shall send one (1) copy to each
of the arbitrators and to each of the parties within seven (7) days of the
relevant proceeding under this Section.
11.6.6 Attendance at Hearing. Each party may
be represented by an attorney at all hearings before the Arbitration Panel. The
Arbitration Panel shall have the power to require the exclusion of any witness,
other than a party or other essential person, during the testimony of any other
witness. Unless the law provides to the contrary, the
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arbitration may proceed in the absence of any party or representative who, after
due notice, fails to be present or fails to obtain a postponement. An award
shall not be made solely on the default of a party; the Arbitration Panel shall
require the party who is present to submit such evidence as it may require for
the making of an award.
11.6.7 Postponement of Hearing. The
Arbitration Panel, for good cause shown, may postpone any hearing under any of
the following conditions: (i) upon the request of a party, (ii) upon its own
initiative, and (iii) upon mutual agreement by the parties.
11.6.8 Post-Hearing Filings. Any
post-hearing briefs shall be made by the parties to the Arbitration Panel and
the other party within fourteen (14) business days following the hearing. Each
party shall be afforded an opportunity to examine any post-hearing filings and
to provide a response to the Arbitration Panel within seven (7) business days of
the receipt of a post-hearing filing.
11.6.9 Award Opinion. The Arbitration Panel
shall issue an opinion with respect to any dispute and may formulate its own
remedy and need not select the position of either party. The arbitrators shall
issue a Final Decision within one (1) month from the final hearing on any
dispute. Such opinion shall be written in the form of "Findings of Fact" and
"Conclusions of Law," and shall include the reasons for a decision. A Final
Decision shall be binding on both parties and non-appealable.
11.6.10 Rehearing. The parties agree that a
rehearing shall only be allowed in the event that the Chair of the Arbitration
Panel is unable or unwilling to continue performance of the duties of an
arbitrator.
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11.6.11 Confidentiality. All arbitration
proceedings hereunder shall be conducted on a confidential basis. The parties
and the arbitrators shall not disclose or otherwise make public any information
revealed during the proceedings or any Final Decision which may result from the
proceedings.
11.6.12 Waiver. Any arbitration proceeding
hereunder must be instituted within two (2) years after the controversy or claim
arose. Failure to send a Notice of Arbitration within such two-year period shall
constitute an absolute bar to the institution of any proceedings respecting such
controversy or claim, and a waiver thereof.
11.7 Authority of Arbitrators.
11.7.1 Awards. The arbitrators shall have
the power to award money damages and equitable relief such as rescission,
specific performance and injunctive relief. The arbitrators shall not award
punitive or exemplary damages nor any damages based on a claim for tortious
conduct.
11.7.2 Modification of Article 11. The
Arbitration Panel shall not have the power to amend, change or alter any
provision of this Article 11 without the express written consent of all parties.
11.8 Awards.
11.8.1 Judgment. Judgment upon the award
rendered by the arbitrators shall be enforceable in any court of competent
jurisdiction. Each party agrees to submit to the personal jurisdiction of that
court for purposes of the enforcement of any such award.
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11.8.2 Fees and Expenses. All fees of the
arbitrators and the court stenographer shall be paid by the party who does not
prevail in the arbitration as determined by the arbitrators. In the event a
settlement occurs before the issuance of a Final Decision, the parties shall
unless otherwise agreed, each pay an equal portion of any fees of the
arbitrators and the court stenographer and the cost of any transcripts. All
other arbitration-related expenses shall be borne by the party incurring such
expenses.
12. Notices. All notices shall be mailed via certified mail,
return receipt requested, telecopy or courier addressed as follows, or to such
other address as may be designated from time to time:
If to HMRI: At its address as set forth at the beginning of
this Agreement.
Attention: Senior Vice President, Business
Development & Strategic Planning
Telecopy: (908) 231-3619
with copy to: Office of the General Counsel
Telecopy: (908) 231-2243
If to OSI: At its address as set forth at the beginning of
this Agreement
Telecopy:
Attention: Chief Executive Officer
Notices shall be deemed given as of the date of receipt.
13. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, except those laws relating to
choice of law or conflicts of law.
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14. Miscellaneous.
14.1 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.
14.2 Headings. Paragraph headings are inserted for
convenience of reference only and do not form a part of this Agreement.
14.3 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original.
14.4 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 cause 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.
14.5 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 Third Party.
14.6 Assignment and Successors. This Agreement may
not be assigned by either party, except that the parties may assign this
Agreement and their rights and interests, in whole or in part, to any of their
Affiliates, or any purchaser of all or substantially all of its assets or to any
successor corporation resulting from any merger or consolidation with or into
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such corporation, provided that such assignor shall remain primarily liable for
its obligations hereunder.
14.7 Compliance with Antitrust/Competition Law. The
parties acknowledge and undertake that they shall use commercially reasonable
efforts to comply with all applicable antitrust/competition laws which may
relate to this Agreement from time to time, including, without limitation,
requirements of the European Union pursuant to Article 85 of the Treaty of Rome.
Without limiting the generality of the foregoing:
(a) the parties shall cooperate in good
faith to notify this Agreement with the Commission of the European Union for
individual exemption from the application of Article 85 of the Treaty of Rome,
or otherwise undertake appropriate actions, upon the reasonable request of HMRI,
to ensure compliance with applicable European Union law, including, without
limitation, in the event that (i) the parties' production of the Products and
products which are considered by users to be equivalent in view of their
characteristics, price and intended use exceeds ten percent (10%) of the market
in the European Union or a substantial part thereof, or (ii) HMRI determines to
distribute products manufactured by Third Parties which are competitive with the
Products;
(b) in the event of the amendment or
substitution of Regulation 418/85 (19 December 1984, OJ 1985 L53/5) by the
European Union or any other relevant change in applicable European Union law, or
in the event that HMRI reasonably determines or is advised by legal counsel that
the provisions of this Agreement are not in compliance with applicable European
Union law or other applicable antitrust or competition laws, the parties shall
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negotiate in good faith to amend this Agreement pursuant to HMRI's reasonable
request to comply with applicable European Union law or such other laws; and
(c) each party and its Affiliates hereby
releases the other party and its Affiliates for any claim or liability arising
out of or related to the non-compliance of the provisions of this Agreement with
any applicable antitrust or competition law.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives.
HOECHST MARION ROUSSEL, INC.
By:________________________________________________
Name: Frank Douglas
Title: Executive Vice President
Research and Development
ONCOGENE SCIENCE, INC.
By:________________________________________________
Name: Robert Van Nostrand
Title: Vice President and Chief Financial Officer
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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
COLLABORATIVE RESEARCH, DEVELOPMENT, AND LICENSE AGREEMENT
This COLLABORATIVE RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT
("Agreement"), made as of February 12th, 1997, by and among SANKYO COMPANY,
LIMITED, a Japanese Corporation whose principal place of business is situated at
5-1, Nihonbashi-Honcho, 3-chome, Chuo-ku, Tokyo 103, Japan ("SANKYO"), MRC
COLLABORATIVE CENTRE whose principal place of business is situated at 1-3
Burtonhole Lane, Mill Hill, London NW7 1AD, England ("MRC CC"), and ONCOGENE
SCIENCE, INC., a Delaware corporation whose principal place of business is
situated at 106 Charles Lindbergh Boulevard, Uniondale, New York 11553, U.S.A.
("OSI").
WITNESSETH:
WHEREAS, OSI has certain proprietary technology for identifying the
effect of compounds on genes and gene products which is useful in the process of
developing products for the treatment of human diseases;
WHEREAS, MRC CC has expertise in the area of antiviral drug discovery
and, in particular, has developed the technology and skills (including animal
models), and has facilities to work with live viruses at containment levels 2
and 3, in order to discover and profile lead compounds; and
WHEREAS, SANKYO is a fully-integrated Japanese pharmaceutical company
which discovers, develops, manufactures, markets and sells pharmaceutical
products.
WHEREAS, SANKYO, MRC CC and OSI wish to collaborate in research to
identify and develop anti-influenza drugs.
<PAGE> 3
NOW, THEREFORE, in view of the forgoing premises which are hereby
incorporated as part of this Agreement and in consideration of the mutual
covenants herein contained, the parties agree as follows:
1. Definitions
The following terms as used in this Agreement shall have the meanings
set forth in this Article:
1.1 "Affiliate" means, in respect of a party hereto, any corporation or
other legal entity owning, directly or indirectly, fifty percent or
more of the voting capital shares or similar voting securities of said
party; 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 said party; 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 said party.
1.2 "Allocated Overhead" means the amount of overhead, including general
and administrative costs, determined in accordance with generally
accepted accounting principles, incurred by OSI or MRC CC, as the case
may be, and allocated to the Research Program in the same proportion
that the total man-hours of work performed in the Research Program
bears to the total man-hours of work performed in all OSI or MRC CC, as
the case may be, research programs, or
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such other customary allocation basis or overhead recovery basis that
may be agreed in writing between the parties.
1.3 "Approved Compound" means a Candidate Compound which satisfies the
Approved Compound Criteria and is designated as an Approved Compound by
the Research Committee pursuant to section 3.2.
1.4 "Approved Compound Criteria" means the detailed scientific and economic
criteria agreed upon by the Research Committee for determining whether
Compound is suitable for initiation of Phase I human clinical trials.
1.5 "Candidate Compound" means each Compound which the Research Committee
has determined satisfies the Candidate Compound Criteria and thus is
suitable for presentation to SANKYO for further preclinical studies.
1.6 "Candidate Compound Criteria" means the detailed scientific criteria
agreed upon by the Research Committee for determining whether a
Compound is suitable for initiation of further preclinical studies.
1.7 "Compound" means any compound or derivative thereof, the use of which
in connection with an Identified Target has been identified or
discovered in the course of conducting the Research Program.
1.8 "Confidential Information" means all information about any aspect of
MRC CC, OSI and SANKYO, as the case may be, which is disclosed by such
party (the "disclosing party") to another party (the "receiving party")
pursuant to this Agreement and designated "Confidential" in writing by
the disclosing party at the time of disclosure (or, if disclosed
orally, within ten (10) days thereafter) to the
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extent that such information as of the date of disclosure is not (i)
known to the other parties to this Agreement other than by virtue of a
prior or contemporaneous confidential disclosure by the disclosing
party or (ii) disclosed in the published literature, or otherwise
generally known to the public, or (iii) obtained from a third party
that has no obligation of confidentiality to the disclosing party in
respect of such information. Each party's Confidential Information
shall also include all Technology Improvements of such party.
1.9 "Contract Period" means the period for conducting the Research Program
defined in Article 2.6, unless earlier terminated as hereinafter set
forth in this Agreement, provided, however, such period shall not apply
to nor limit the term of the licenses granted SANKYO hereunder.
1.10 "Effective Date" means the date as of which this Agreement is made as
stated on page 1 hereof.
1.11 "Event of Termination" has the meaning set forth in Section 8.2.
1.12 "Field" means prevention and treatment of influenza and such other
disease targets in human patients as may be mutually agreed to by the
parties.
1.13 "Funding Payments" has the meaning set forth in Section 2.7.1.
1.14 "Identified Target" means a Target which has been the subject of
research carried out under the Research Program. The initial Identified
Targets are set forth in Schedule "A" and "B", as it may be modified
from time to time.
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1.15 "Internal Project Costing" shall mean OSI's or MRC CC's total actual
research costs, in carrying out the Research Program, plus Allocated
Overhead, plus Unallocated Overhead.
1.16 "Joint Technology Improvements" means Joint Technology Improvements as
defined in Section 1.33.
1.17 "License Agreement" means a license agreement as described in Section
3.4.1 with respect to an Approved Compound to be developed as a
Product.
1.18 "Materials" means the biochemical, biological or synthetic chemical
materials as described in section 2.10.4.
1.19 "MRC CC Technology" means Technology that is or was;
(a) developed by employees of or consultants to, MRC CC alone or
jointly with third parties, other than OSI or SANKYO, prior to the
Effective Date of this Agreement or in the course of activities not
related to the Research Program; or
(b) acquired by purchase, license, assignment or other means from third
parties by MRC CC prior to the Effective Date of this Agreement or
since that date that would not otherwise be part of Joint Technology
Improvements, but only to the extent that MRC CC is legally entitled to
disclose such acquired Technology and use it in the Research Program.
1.20 "Net Sales" means the actual gross sales amount of the Products sold by
SANKYO or any Affiliates or sublicensees of SANKYO to customers less
the following items;
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(a) Trade, cash and quantity discounts (including prime vendor rebates
actually allowed);
(b) Broker's or agent's commissions, if any, actually allowed or paid;
(c) Returns, allowances, free replacements and adjustments actually
granted customers;
(d) Freight insurance and other transportation costs;
(e) Taxes paid by SANKYO or any Affiliates or sublicensees of SANKYO in
association with the sale of the Products, tariffs, duties and other
similar governmental charge.
1.21 "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 SANKYO or MRC CC, prior to the Effective
Date of this Agreement or in the course of activities not related to
the Research Program; or
(b) acquired by purchase, license, assignment or other means from third
parties by OSI prior to the Effective Date of this Agreement or since
that date that would not otherwise be part of Joint Technology
Improvements, but only to the extent that OSI is legally entitled to
disclose such acquired Technology and use it in the Research Program.
1.22 "Patent Rights" means the patent and patent applications owned or filed
by MRC CC, OSI and SANKYO, as the case may be ("MRC CC Patent Rights",
"OSI Patent Rights", and "SANKYO Patent Rights"), or jointly owned or
filed by MRC CC, OSI and/or SANKYO ("Joint Patent Rights"), both
foreign and domestic,
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now existing (except in the case of SANKYO) or hereafter arising (i) in
the course of conducting the Research Program or (ii) from the use of
or derived from drug discovery Technology developed in the course of
conducting the Research Program, which relate to the research,
development, manufacture, or composition, of Compounds and derivatives
thereof, or the use or sale of Compounds or Products, including,
without limitation, all substitutions, extensions, Supplementary
Protection Certificates, reissues, renewals, divisions, continuations,
continuations in part, utility models and certificates of invention
thereof.
1.23 "Person" means any individual, estate, trust, partnership, joint
venture, association, firm, corporation, company, or other legal
entity.
1.24 "Product" means (i) any pharmaceutical finished dosage forms which
contains a Compound or Compounds and/or (ii) any compound or compounds
sold for the treatment or prevention of any Influenza disease state and
such other disease state and such other disease targets in human
patients as may be mutually agreed to by the parties that employs
Patent Rights, OSI Technology, MRC CC Technology, SANKYO Technology and
OSI Technology Improvements, MRC Technology Improvements, SANKYO
Technology Improvements or Joint Technology Improvements.
1.25 "Quarterly Expense Report" has the meaning set forth in Section 2.7.2
hereof.
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1.26 "Research Collaboration" means the research collaboration among OSI,
MRC CC and SANKYO to discover and evaluate the Compounds and to develop
Products to be commercialized in the Territory pursuant to this
Agreement.
1.27 "Research Committee" has the meaning set forth in Section 2.9.
1.28 "Research Program" means the collaborative research program conducted
by SANKYO, MRC CC and OSI under this Agreement.
1.29 "SANKYO Technology" means Technology that is or was:
(a) developed by employees of or consultants to SANKYO alone or
jointly with third parties, other than OSI or MRC CC, prior to the
Effective Date of this Agreement or in the course of activities not
related to the Research Program; or
(b) acquired by purchase, license, assignment or other means from
third parties by SANKYO prior to the Effective Date of this Agreement
or since that date that would not otherwise be part of Joint
Technology Improvements, but only to the extent that SANKYO is legally
entitled to disclose such acquired Technology and use it in the
Research Program.
1.30 "Semi-Annual Expense Report" has the meaning set forth in Section 2.7.2
hereof.
1.31 "Target" means the biochemical processes in humans related to human
disease associated with the genes, gene products, receptors, peptides
and proteins.
1.32 "Technology" means and includes all tangible or intangible know-how,
trade secrets, inventions (whether or not patentable), data, clinical
and preclinical. results and any physical, chemical or biological
materials that pertain to Identified Targets, including all laboratory
notebooks, research plans, cultures, strains,
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vectors, genes and gene fragments and their sequences, cell lines,
hybridoma cell lines, monoclonal and polygonal 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.
1.33 "Technology Improvements" mean any and all inventions, discoveries,
methods, ideas, works of authorship, know-how, show-how, data, clinical
and preclinical results, information, and any physical, chemical or
biological material, including any replication or any part of such
material, techniques and Technology, whether or not patentable or
subject to other forms of protection, which (i) are made, created,
developed, written, conceived, or reduced to practice, or which are
licensed or otherwise acquired from third parties (to the extent the
agreeing party is legally enabled to disclose and use the same in the
Research Program), in the course of, arising out of, derived from or as
a result of any party's research (a) in the course of conducting the
Research Program or (b) using drug discovery Technology developed in
the course of conducting the Research Program, and (ii) pertaining to
Identified Targets. Improvements includes all rights relating to the
protection of trade secrets and confidential information, and any right
analogues
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to those set forth herein, which relate to, are embodied in or are
appurtenant to such discoveries, methods, ideas, etc.
OSI, SANKYO and MRC CC shall each own the entire right, title, and
interest in and to any Technology Improvements made or discovered
solely by their respective employees (the "OSI Technology
Improvements," "SANKYO Technology Improvements" and "MRC CC Technology
Improvements") and shall own jointly all Technology Improvements made
or discovered jointly by employees of two or three of such parties (the
"Joint Technology Improvements"). Each party represents and agrees that
all employees and other persons acting on its behalf in performing its
obligations under this Agreement shall be obligated under a binding
written agreement to assign to such party or as such party shall
direct, all Technology Improvements made or developed by such employee
or other person. In the case of Joint Technology Improvements, OSI,
SANKYO and MRC CC agree to undertake to enforce such agreements
(including, where appropriate, by legal action) considering, among
other things, the commercial value of such Technology Improvements.
1.34 "Territory" means all countries throughout the world.
1.35 "Unallocated Overhead" those portions of overhead costs not allocated
to specific projects to be calculated at ten percent of the sum of the
actual research costs and the allocated overhead.
1.36 "Valid Claim" means a claim of an issued patent so long as such claim
shall not have been disclaimed by SANKYO, OSI and MRC CC, as the case
may be, or
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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.
2. Research Collaboration
2.1 Research Collaboration. The parties agree to undertake the Research
Collaboration pursuant to the terms of this Agreement.
2.2 OSI's Obligations. For purposes of the Research Collaboration, OSI
shall, in consultation with SANKYO, MRC CC and the Research Committee,
and in accordance with the research work plan and budget set forth on
Schedule "A" attached hereto, as updated and amended from time to time,
conduct the Research Program during the Contract Period. Upon SANKYO's
request, OSI shall transfer to SANKYO, free of charge, any and all
assay systems of screening elaborated by OSI under the Research Program
to have SANKYO perform its own screening tests for the Compounds
arising from SANKYO's library. OSI shall provide SANKYO with any
technical assistance, if necessary, to enable SANKYO to do such
screening tests effectively. OSI shall only be obligated to provide the
initial Materials, including necessary reagents, cell lines, clones and
antibodies as described in Schedule "C" (subject to amendment as
mutually agreed upon by the parties hereto), so as to enable SANKYO to
commence screening. Thereafter, SANKYO shall furnish such Materials at
its own expense. The rights granted hereunder shall not include any
rights to the robotics technology used herein.
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2.3 MRC CC's Obligations. For purposes of the Research
Collaboration, MRC CC shall, in consultation with SANKYO, OSI
and the Research Committee, and in accordance with the
research work plan and budget set forth on Schedule "B"
attached hereto, as updated and amended from time to time,
conduct the Research Program during the Contract Period. This
will include the evaluation of Compounds in cell cultures and
in animal models of infection.
2.4 Exploitation of Compounds.
2.4.1 SANKYO's Obligations. SANKYO shall contribute to the Research
Collaboration, among other things, (i) by participating in
screening Compounds arising from its own library, (ii) by
conducting extended medicinal chemistry of the Compounds
derived from OSI and SANKYO libraries, (iii) by evaluating
Compounds in useful and conventional animal models to select
possible Candidate Compounds and Approved Compounds, (iv) by
conducting such testing as may be required for initiation of
Phase I clinical trials of Approved Compounds, including but
not limited to physico-chemistry, pharmacology, toxicology,
ADME and other studies as required, and (v) by applying its
scientific and technical expertise to problems and issues
identified by the Research Committee relevant to the Research
Collaboration.
SANKYO shall use reasonably diligent efforts to exploit any
Approved Compound in respect of which it exercises its option
pursuant to Article 3.3. This requirement shall be deemed
satisfied if SANKYO uses the same degree of diligence it uses
with respect to products developed by SANKYO outside of this
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Agreement. If SANKYO elects to discontinue development of a
Compound pursuant to the Research Program, it shall so notify
OSI immediately. The parties shall discuss the possibility of
SANKYO licensing the Compound to OSI. SANKYO shall not license
such Compound to any other party on terms more favorable than
those offered to OSI.
2.4.2 Discontinuation of Development. If SANKYO discontinues
development of all Compounds pursuant to the Research Program
then SANKYO shall immediately notify OSI thereof and OSI shall
have the sole and exclusive right, subject to the payment of
royalties as set forth in this Article 2.4.2, to pursue
development of any and all Compounds, and to develop, make,
have made, use, and sell Products containing any Compound,
provided, however, this clause shall not apply to any Compound
which SANKYO has included in a sub-license to a third party
prior to its decision to discontinue development of all
Compounds.
No royalties, milestone payments or any other payments shall
be payable by OSI to the other parties hereto with respect to
such Compounds; provided, however, that (i) OSI shall pay to
SANKYO a royalty at the rate of ** of the Net Sales of OSI for
each Product derived from such Compound, the manufacture, use
or sale of which is covered by a Valid Claim of the Patent
Rights, which royalty OSI shall continue to pay in each
applicable country until the expiration of the last Valid
Claim under the Patent Rights applicable to such Product
expires in such
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country or (ii) OSI shall pay to SANKYO a royalty at the rate
of ** of the Net Sales of OSI for each Product derived from
such Compound which not covered by a Valid Claim under the
Patent Rights, which royalty OSI shall continue to pay in each
applicable country for ten (10) years from the date of first
commercial sale of such Product in each such country.
This Article 2.4.2 shall survive the expiration or prior
termination of this Agreement.
2.5 Mutual Obligations.
2.5.1 Evaluation and Information Exchange. OSI, MRC CC and SANKYO
shall cooperate in good faith in the evaluation of Compounds.
In the furtherance of such cooperation, OSI, MRC CC and SANKYO
shall, free of charge, exchange research, development,
pre-clinical, clinical, regulatory and other technical
information relating to the Research Collaboration and the
development of Products during the Contract Period. Written
quarterly scientific reports shall be prepared by all parties
within thirty (30) days after the end of each three (3) month
period during the term of the Research Collaboration. In
addition, joint technical meetings shall be held in accordance
with Section 2.9.2 hereof.
2.5.2 Exclusive Collaboration. During the Contract Period, OSI, MRC
CC and SANKYO agree that the Research Program shall be the
exclusive mechanism for research and development of Compounds
and Products in the anti-influenza area for commercialization
in the Territory.
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2.6 Contract Period. The Contract Period shall commence on the
Effective Date, and shall expire on the third anniversary of
this date, except as such term may be extended pursuant to
Section 2.8 hereof or terminated pursuant to Article 8.
2.7 Research Funding and Expense Reports.
2.7.1 Funding Payments by SANKYO. Subject to the terms and
conditions set forth herein, in pursuit of the Research
Collaboration, SANKYO agrees to bear the actual costs and
expenses (including applicable overhead costs) incurred by OSI
and MRC CC in order to conduct the anti-influenza research and
development work under the Research Collaboration up to an
aggregate of ** U.S. Dollars to OSI and ** U.K. pounds to MRC
CC over a three (3) year period, payable in quarterly
installments in accordance with the research work plan and
budget set forth on Schedule "A" and "B" attached hereto,
commencing with the first quarterly payment within (30) days
of the Effective Date. Each subsequent quarterly payment shall
be made by SANKYO not less than thirty (30) days prior to the
commencement of each calendar quarter during such three (3)
year period in accordance with the research work plan and
budget set forth on Schedule "A and B" attached hereto. All
quarterly payments to be made by SANKYO under this Section
shall be made by bank wire transfer in immediately available
funds to the receiving party's account as notified pursuant to
Article 10, unless the receiving party otherwise notifies
SANKYO in writing at least fourteen (14) days before such
payment is due.
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All payments due OSI shall be paid in United States Dollars,
all payments due MRC CC shall be paid in Pounds Sterling. If
any payment due hereunder is denominated or calculated in or
relation to any currency other than United States Dollars or
Pound Sterling, the exchange rate quoted by a major bank in
Tokyo from which SANKYO remits such payment to OSI and MRC CC
on the day of such remittance shall apply.
Notwithstanding any provision herein to the contrary, SANKYO
shall have no obligation to make any payment hereunder in the
event any of the other par-ties hereto are in material breach
of their obligations hereunder or have otherwise failed to
perform the Research Program.
2.7.2 Reports by OSI and MRC CC. Within forty-five (45) days after
the end of each calendar quarter during the Contract Period,
OSI and MRC CC shall each forward to SANKYO a written progress
report of estimated expenses (a "Quarterly Expense Report")
for the Research Collaboration. Each Quarterly Expense Report
shall include personnel time expended on the project sorted by
functional area and actual costs and Allocated Overhead and
Unallocated Overhead for that quarterly period. Within sixty
(60) days of the end of each six (6) month period within a
project year (ending on September 30 and March 31,
respectively, of each project year), OSI and MRC CC shall each
provide a more detailed report of project expenses (a
"Semi-Annual Expense Report") using OSI's and MRC CC's
Internal Project Costing system. Each Semi-Annual Expense
Report shall set forth OSI's and MRC CC's standard project
expense categories which
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currently include salaries and related employee benefits, cost
center expenses for direct project personnel, direct project
expenses (collected in a dedicated cost center), indirect
research expenses, allocations of support services (which
include facilities, information systems and other central
services), and allocations of corporate general and
administrative overhead. The Semi-Annual Expense Report shall
replace the Quarterly Expense Reports for the calendar
quarters ending on September 30 and March 31, respectively, of
each project year, and no Quarterly Expense Report shall be
required for such quarters. Upon the giving of fourteen (14)
days' prior written notice, a SANKYO designated independent
certified public accountant, at the expense of SANKYO, may
inspect the supporting documentation for any Quarterly Expense
Report and/or Semi-Annual Expense Report. Such inspection
shall take place at OSI's and MRC CC's corporate offices. One
(1) inspection may be requested per each six (6) month period
within a project year. The inspection for any semi-annual
period may be requested at any time within a period of one (1)
year following receipt of the Semi-Annual Expense Report by
SANKYO. However, if such inspection uncovers an understatement
or overstatement of five percent (5%) or greater due to an
error in the application of the OSI's and MRC CC's project
costing system or a material deficiency in other supporting
documentation, then SANKYO may request up to two (2)
additional inspections for review, and OSI or MRC CC, as the
case may be, shall reimburse SANKYO for the cost of said audit
and make good any understatement. In addition, OSI or MRC CC,
as the case may be,
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shall undertake appropriate steps to remedy the reoccurrence
of any such error or deficiency. The principles and procedures
established for OSI's and MRC CC's project cost system shall
be used to determine and calculate project expenses.
2.7.3 Additional Option. On SANKYO's request, OSI will use
commercially reasonable efforts to conduct mechanism of action
studies in the laboratory of Dr. ** and Drs. ** and ** at an
estimated cost of ** US Dollars ** .
On SANKYO's request, OSI will conduct high speed combinatorial
chemistry analoging on up to four (4) lead series emerging
from the screens at an estimated cost of ** US Dollars ** .
Three months notice will be required for the initiation of
chemistry resources.
2.8 Extension of the Contract Period. In the event that OSI, MRC
CC and SANKYO agree at any time prior to three (3) months
before the expiration of the initial Contract Period, the
Contract Period shall be extended for an additional one (1) or
two (2) years upon terms and conditions mutually acceptable to
OSI, MRC CC and SANKYO. Research funding to be borne by SANKYO
for this extended period shall not exceed an aggregate of **
US Dollars ** a year for the activities of OSI and MRC CC.
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2.9 Joint Collaborative Research Committee ("Research Committee").
2.9.1 Establishment of the Research Committee. A Joint Collaborative
Research Committee ("Research Committee") shall be established
to supervise and manage the Research Collaboration. The
Research Committee shall consist of six (6) members, with
three (3) designees from SANKYO, two (2) designees from OSI
and one (1) designee from MRC CC. In the event any member of
the Research Committee shall resign or be replaced, OSI or MRC
CC or SANKYO, as the case may be, may designate a replacement
and shall provide the other party with advance notice thereof.
The designated members may, where appropriate, be accompanied
by company scientists for the purpose of presenting the
results of the Research Program. OSI or MRC CC or SANKYO
reserve the right to designate one alternate member who may
attend any Research Committee meeting that the original
designate is unable to attend.
2.9.2 Research Committee Meetings/Tasks. The Research Committee
shall meet at least three (3) times per year during the
Contract Period and at least once during the year following
the completion or termination of the Contract Period. The
location of such meetings shall alternate among OSI's office
in Uniondale, MRC CC's office in London and SANKYO's offices
in Tokyo. Any additional meetings shall be at times and places
agreed to by OSI, MRC CC and SANKYO and may be conducted by
telephone, or in any other manner as the parties shall agree.
At its meetings, the Research Committee will discuss the
annual Research Program objectives, review and discuss patent
status, monitor progress of the
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Research Program, and discuss and direct objectives, tasks and
required activities of the Research Collaboration. The
Research Committee meetings shall also act as the initial
forum for any disputes which might arise under the Research
Collaboration. The Research Committee shall establish
Candidate Compound Criteria as well as Approved Compound
Criteria. The detailed minutes of all joint technical meetings
shall be distributed within thirty (30) days after such
meetings.
2.9.3 Chair. The Research Committee shall be chaired by one of the
members appointed by SANKYO. The co-chair shall be appointed
by OSI. The chair and co-chair shall work together to
establish the agenda for meetings and to coordinate the
Research Program and follow-up actions.
2.9.4 Voting. All decisions of the Research Committee shall be made
by majority vote of the members comprising OSI, MRC CC and
SANKYO. In the event of a tie vote the Chair shall have a
casting vote.
2.10 Records and Reports.
2.10.1 Record Keeping. OSI, MRC CC and SANKYO shall each maintain
records in sufficient detail and in good scientific manner
appropriate for patent purposes and as will properly reflect
all work done and results achieved in the performance of the
Research Program (including all data in the form required
under any applicable governmental regulations). OSI, MRC CC
and SANKYO shall each provide the other with the right to
inspect and copy such records to the extent reasonably
required for the performance of its obligations under this
Agreement;
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provided that each party shall maintain such records and the
information of the other contained therein in confidence in
accordance with Article 4 below and shall not use such records
or information except to the extent otherwise permitted by
this Agreement.
2.10.2 Quarterly Summary Reports. During the Research Program, each
party shall furnish to the Research Committee and the other
party summary reports within fifteen (15) days after the end
of each three (3) month period, commencing on the Effective
Date, describing its progress under the Research Program.
2.10.3 Annual Reports. At least thirty (30) days prior to each annual
Research Committee administrative meeting, each party shall
separately prepare and submit to the Research Committee and
the other party a concise written report which shall (i)
summarize the work on the Research Program performed in the
course of the past year; (ii) list the Compounds conceived,
synthesized or identified during the past year; (iii) identify
any Compounds that are being, or may be considered by the
Research Committee as Candidate Compounds and/or Approved
Compounds; (iv) briefly outline the work plan and budget for
the Research Program during the ongoing year; and (v) list the
Compounds to be synthesized and tested during the ongoing
year. The first Research Committee meeting of each contract
year will be the annual Research Committee administrative
meeting.
2.11 Materials. MRC CC, OSI and SANKYO shall, during the Contract
Period as a matter of course as directed by the Research
Committee or upon each other's oral or written request,
furnish to each other samples of biochemical, biological or
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synthetic chemical materials ("Materials") which are part of SANKYO
Technology, OSI Technology, MRC CC Technology, SANKYO Technology
Improvements, OSI Technology Improvements, MRC CC Technology
Improvements or Joint Technology Improvements and which are necessary
for each party to carry out its responsibilities under the Research
Program. To the extent that the quantities of Materials requested by
either party exceed the quantities set forth in Schedule "C", the
requesting party shall reimburse the other party for the reasonable
costs of such Materials if they are furnished and if reimbursement is
requested.
3. Technology Disclosure Fee, Identification and Development of Compounds
and Option to Develop
3.1 Technology Disclosure Fee. SANKYO shall pay to OSI a technology
disclosure fee of ** U.S. Dollars ** within thirty (30) days of the
Effective Date, which will be distributed between OSI and MRC CC as
they have agreed.
3.2 Identification of Compound(s) and Presentation to SANKYO of Candidate
Compounds. During the Contract Period, each party shall promptly inform
the Research Committee and other parties of each Compound arising from
the Research Program which it believes to be suitable for further
development as a Candidate Compound. In accordance with its
responsibilities under Section 2.9 hereof, the Research Committee shall
meet promptly after being so informed by OSI, MRC CC and/or SANKYO in
order to determine whether to designate such
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compound as a Candidate Compound. If the Research Committee votes to
designate such Compound as a Candidate Compound, then SANKYO shall
conduct, under the directions of the Research Committee, necessary
testing for this Candidate Compound in conformity with the Approved
Compound Criteria and report the results to the Research Committee and
other parties as to whether SANKYO believes such Candidate Compound is
suitable for consideration as an Approved Compound. In accordance with
its responsibilities under Section 2.9 hereof, the Research Committee
shall meet promptly after being so informed by SANKYO in order to
determine whether to designate such a Candidate Compound as an Approved
Compound. If SANKYO, OSI or MRC CC votes not to designate such a
Candidate Compound as an Approved Compound due to lack of experimental
data and the like then whichever party so votes shall provide a list of
reasonable experiments to be carried out by OSI, MRC CC and/or SANKYO
that can be completed within one (1) year of the date that the Research
Committee voted not to designate this Candidate Compound as an Approved
Compound. At the end of this one (1) year period or at such earlier
time as the designated experiments have been completed, the Research
Committee shall again consider whether to designate such a Candidate
Compound as an Approved Compound.
3.3 SANKYO Option to Develop Approved Compounds. SANKYO shall have the
exclusive option, exercisable within one hundred eighty (180) days
after the Research Committee designates a Compound as an Approved
Compound, to pursue development of such Approved Compound. SANKYO shall
exercise its
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option under this Section 3.3 by delivering to OSI and MRC CC
a written notice in accordance with Article 10 hereof stating
its election to develop the Approved Compound identified in
such notice. Sankyo's right to pursue development hereunder
shall not be limited to one Approved Compound but shall apply
to any and all Compounds qualifying or designated as an
Approved Compound.
3.4 License Agreement and Milestone Payments.
3.4.1 License Agreement. If SANKYO exercises its option in
accordance with Section 3.3 hereof, OSI, MRC CC and SANKYO may
enter into a more definitive License Agreement concerning
SANKYO's development of such Approved Compound and any
anti-influenza agents derived from the Research Collaboration.
The failure of the parties to execute a License Agreement
shall in no way limit or terminate the rights granted SANKYO
pursuant to Articles 3 and 5.
3.4.2 Contents of License Agreement. Any such License Agreement
entered into shall grant to SANKYO an exclusive license under
the Technology (excluding SANKYO Technology), Patent Rights
(excluding SANKYO Patent Rights) and/or Technology
Improvements (excluding SANKYO Technology Improvements), with
the right to sublicense, to develop, use and sell applicable
Products in the Territory. In the event of the granting of
such a sublicense, SANKYO guarantees the performance of the
sublicensees as the same obligations as SANKYO hereunder.
SANKYO's right and license to develop, use and sell any
Product shall be conditioned upon SANKYO fulfilling its
obligation to pay the milestone payments and royalties as set
forth herein.
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3.5 Milestone Payment.
SANKYO shall make each milestone payments (2/3 of which shall be for
the account of OSI and 1/3 for the account of MRC CC) as listed below
with respect to the first Approved Compound. So long as each such
payment is timely made by SANKYO to OSI and MRC CC, then SANKYO shall
maintain its exclusive rights to continue development of the Approved
Compound to the next stage, at which time SANKYO shall determine
whether to make the next payment to OSI and MRC CC and proceed to the
next stage of development. The parties agree that the below milestone
payments shall not be made by SANKYO to OSI and MRC CC for each
Approved Compound but be made only once for any one Approved Compound
which payment shall be deemed to satisfy such obligation for the entire
project, the aim of which is to develop and sell any anti-influenza
Products derived from the Research Collaboration herein.
(a) ** US Dollars ** within thirty (30) days after the date of
filing an IND or equivalent for the Approved Compound in any country.
(b) ** US Dollars ** within Ninety (90) days after the Phase II
clinical investigators' meeting provided SANKYO decides to initiate
Phase III clinical trials of the Approved Compound in any country. Such
decision by SANKYO to initiate Phase III clinical trials shall be made
within ninety (90) days after the end of Phase II clinical
investigator's meeting.
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(c) ** U.S. Dollars ** within thirty (30) days from the date of
the filing of an NDA or equivalent for the Approved Compound in any
country.
(d) ** U.S. Dollars ** within thirty (30) days after the date of
approval of an NDA or equivalent for the Approved Compound in any
country.
3.6 Substituted Compound in Lieu of Approved Compound. If at any time
during the development of an Approved Compound (pursuant to the terms
of the License Agreement) the parties must discontinue the development
of such Approved Compound due to (i) clinical trial results concerning
the safety or efficacy of such Approved Compound which are unacceptable
to the regulatory agency governing approval of such Compound for
commercial sale, or (ii) a determination is made that such Approved
Compound would or does infringe the patents rights of a third party,
then Sankyo shall have the rights to pursue development pursuant to
Section 3.3 with respect to one (1) or more substituted Compounds (the
"Substituted Compound") in lieu of the Approved Compound so abandoned
(the "Abandoned Compound"). The Substituted Compound must be a Compound
which is designated and presented by the Research Committee and
approved by SANKYO as an Approved Compound in accordance with Section
3.2 and 3.3 hereof. The milestone payments paid pursuant to Section 3.5
hereof with respect to the Abandoned Compound shall constitute
consideration for the rights granted
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** This portion redacted pursuant to a request for confidential treatment.
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by OSI, and MRC CC to SANKYO with respect to the Substituted Compound
substituted in lieu thereof, and no additional milestone payment by
SANKYO to OSI and MRC CC other than milestone payments which have not
been paid with respect to the Abandoned Compound shall be required in
consideration of such rights to the Substituted Compound granted by OSI
and MRC CC. In such event, the parties shall execute a new License
Agreement with respect to the Substituted Compound comprising
substantially the same terms and condition.
4. Treatment of Confidential Information.
4.1 Confidentiality.
4.1.1 MRC CC, SANKYO and OSI recognize that the other's Confidential
Information constitute highly valuable proprietary,
confidential information. Subject to the disclosure
obligations and publication rights set forth below, MRC CC,
SANKYO and OSI agree that they will keep confidential, and
will cause their Affiliates to keep confidential, all
Confidential Information of the other parties hereto. Nor
shall any of the parties hereto use any Confidential
Information of the other parties except as expressly permitted
in this Agreement.
4.1.2 Each of the parties hereto acknowledges that the Confidential
Information of the other parties is highly valuable,
proprietary, confidential information, and each party agrees
that disclosure of the other party's Confidential Information
to any officer, employee, agent 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
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responsibilities. Each party agrees not to disclose the
other's Confidential Information to any third party (other
than consultants) under any circumstance without written
permission. Each party shall take such action, and shall cause
its Affiliates to take such action, to preserve the
confidentiality of each other party's Confidential Information
as they would customarily take to preserve the confidentiality
of their own confidential information.
4.1.3 Each party represents that all of its employees participating
in the Research Program who shall have access to the other
party's Confidential Information are bound, by agreement to
maintain such information in confidence. Consultants shall 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, MRC CC's and SANKYO's managements. After
receipt of the proposed publication by both OSI's, MRC CC's and
SANKYO's managements, written approval or disapproval shall be provided
within thirty (30) days for a manuscript, within fourteen (14) days for
an abstract for presentation at, or inclusion in the proceedings of, a
scientific meeting, and within fourteen (14) days for a transcript of
an oral presentation to be given at a scientific meeting.
4.3 Publicity. Except as required by law, no 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.
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4.4 Disclosure of Technology Improvements. Each party shall promptly inform
the other parties about all Technology Improvements 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
Technology Improvement which does not arise under the Research Program.
4.5 Restrictions on Transferring Materials. MRC CC, SANKYO and OSI
recognize that the Materials which are part of SANKYO Technology, OSI
Technology, MRC CC Technology, SANKYO Technology Improvements, OSI
Technology Improvements, MRC CC Technology Improvements or Joint
Technology Improvements, represent valuable proprietary commercial
assets. Therefore, each party agrees not to transfer to any third party
any such Materials which constitute Technology or Confidential
Information owned in whole or in part by another party without the
prior written consent of such party.
4.6 Permitted Use of Confidential Information. Nothing contained herein
will in any way restrict or impair any party's right to use, disclose
or otherwise deal with any Confidential Information which:
(a) at the time of disclosure is properly in the public domain or
thereafter becomes part of the public domain by publication or
otherwise through no breach of this Agreement by the party receiving
such information;
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(b) the party receiving such information can establish by competent
evidence that such information was properly in its possession prior to
the time of the disclosure;
(c) is independently and properly made available as a matter of right
to the party receiving such information by a third party who is not
thereby in violation of a confidential relationship with a party, or an
Affiliate thereof, to this Agreement;
(d) is information which is required to be included in patent
applications filed under Article 6 or required to be provided to a
government agency in order for SANKYO to obtain approvals to market a
hereunder; provided, however, that no SANKYO, OSI or MRC CC
Confidential Information shall be disclosed in any such patent
application or otherwise without the prior written consent of the other
party which consent shall not be unreasonably withheld;
(e) is information which is required to be disclosed to customers,
users and prescribers of a Product or which is reasonably necessary to
disclose in connection with the ethical marketing of a Product;
provided, however, that no OSI Confidential Information will be so
disclosed without the prior written consent of OSI, which consent will
not be unreasonably withheld and no MRC CC Confidential Information
will be so disclosed without the written consent of MRC CC, which
consent will not be unreasonably withheld; or
(f) is information required to be disclosed by law or by a court order
in each of which cases the disclosing party shall timely inform the
other and use its best
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efforts to limit the disclosure and maintain confidentiality to the
extent possible and will permit the other party to limit such
disclosure.
5. License and Royalty.
5.1 Grant of Licenses. The parties hereby agree that subject to the terms
and conditions set forth herein SANKYO shall have the sole and
exclusive right to pursue development of any and all Compounds, and to
develop, make, have made, use, and sell Products containing any
Compound. In addition, OSI and MRC CC each respectively grant the
following rights:
(a) OSI hereby grants to SANKYO an irrevocable worldwide license,
including the right to sublicense, under the OSI Technology, the OSI
Patent Rights, the OSI Technology Improvements, and OSI rights in the
Joint Technology Improvements to pursue development of any and all
Approved Compounds and to develop, make, have made, use, and sell
Products, which license shall be exclusive for so long as SANKYO is
obligated to pay a royalty under Sections 5.7.1 or 5.7.2. SANKYO agrees
that OSI shall be identified on the packaging of all Products on which
SANKYO is obligated to pay royalties. This paragraph 5.1 shall not be
construed to grant SANKYO a license to use the OSI Patent Rights, OSI
Technology or OSI Technology Improvements except as they relate to the
Research Program and the Products.
(b) MRC CC hereby grants to SANKYO an irrevocable worldwide license,
including the right to sublicense, under the MRC CC Technology, the MRC
CC Patent Rights, the MRC CC Technology Improvements, and MRC CC's
rights in
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the Joint Technology Improvements to pursue development of all Approved
Compounds and to develop, make, have made, use, and sell Products,
which license shall be exclusive for so long as SANKYO is obligated to
pay a royalty under Sections 5.7.1 or 5.7.2. This paragraph 5.1 shall
not be construed to grant SANKYO a license to use the MRC CC Patent
Rights, MRC CC Technology or MRC CC Technology Improvements except as
they relate to the Research Program and the Products.
5.2 Grants of Research Licenses. OSI, MRC CC and SANKYO each grants to the
other a nonexclusive, irrevocable, worldwide, royalty-free, perpetual
license, including the right to grant sublicenses to Affiliates, to
make and use its Technology Improvements for all research purposes
other than the sale or manufacture for sale of products or processes.
5.3 Paid-Up License. With respect to each country, provided that SANKYO has
satisfied all of its then current obligations to pay royalties
hereunder, SANKYO shall have a paid-up license permitting the
royalty-free manufacture, use, and sale of each Product in such country
after the expiration of SANKYO's last obligation to pay royalties on
the NET SALES of such Product in such country.
5.4 Sublicenses. If SANKYO grants a sublicense pursuant to Section 5.1,
SANKYO shall guarantee that any such sublicensee shall fulfill all of
SANKYO's obligations under this Agreement. In the event SANKYO grants
sublicenses under Article 5 to another party to make, use, or sell
Products, such sublicenses shall include an obligation of the
sublicensees to account for and report all NET SALES of
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such Products on the same basis as if such sales were NET SALES of
Products by SANKYO, and SANKYO shall pay royalties to OSI and MRC CC
under this Agreement as if the NET SALES of the sublicensee were NET
SALES of the sublicensor.
5.5 Right to Product Improvements. SANKYO 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
or MRC CC in respect of any Products. OSI and MRC CC shall promptly and
fully notify SANKYO of any such product improvements made by OSI and
MRC CC, including costs. All such improvements shall be included within
the scope of this Agreement.
5.6 Technical Assistance. MRC CC and OSI shall provide SANKYO or any
Affiliate or sublicensee of SANKYO, at SANKYO's request and expense,
with any assistance reasonably necessary to enable SANKYO or such
Affiliate or sublicensee to manufacture, use, or sell any Product and
to enjoy fully all the rights granted to SANKYO pursuant to this
Agreement.
5.7 Royalties, Payment of Royalties, Accounting for Royalties, Records.
5.7.1 Patented Products. SANKYO shall pay a royalty at the rate of
** of the NET SALES of each Product (2/3 of which shall be for
the account of OSI and 1/3 of which shall be for the account
of MRC CC), the manufacture, use, or sale of
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** This portion redacted pursuant to a request for confidential treatment.
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which is covered by a Valid Claim of the Patent Rights. In the
event that OSI's contribution is limited to preparation of
assay systems for screening, the royalty rate payable from
SANKYO shall be ** of the NET SALES of each Product (2/3 of
which shall be for the account of OSI and 1/3 of which shall
be for the account of MRC CC). With respect to each Product,
SANKYO shall continue to pay such royalty on the sales of such
Product in each country until the expiration of the last Valid
Claim under the Patent Rights applicable to such Product
expires in such country.
5.7.2 Technology. SANKYO shall pay a royalty at the rate of ** of
the NET SALES of each Product (2/3 of which shall be for the
account of OSI and 1/3 of which shall be for the account of
MRC CC) which is not covered by a Valid Claim of the Patent
Rights. In the event that OSI's contribution is limited to
preparation of assay system for screening, the royalty rate
payable from SANKYO shall be ** of the Net Sales of each
Product (2/3 of which shall be for the account of OSI and 1/3
of which shall be for the account of MRC CC). Such royalty
shall be paid on the sales of each Product in each country of
the world for ten (10) years from the date of first commercial
sale of such Product in each such country, said obligation to
pay royalties shall terminate on the earlier of the
termination of said ten year period or the date on which such
Technology enters the public domain.
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** This portion redacted pursuant to a request for confidential treatment.
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<PAGE> 36
5.7.3 Third Party Royalty.
(a) Any royalty payable to any third party including but
not limited to royalties paid for licensed compounds (other
than royalties arising out of OSI Technology, MRC CC
Technology or SANKYO Technology), shall be borne first by
SANKYO, provided that an amount up to Fifty Percent (50%) of
any such third party royalty may be offset against any
royalties due OSI and MRC CC in any year under Section 5.7.1
or 5.7.2 but only to the extent that the amount paid to OSI or
MRC CC in any year is not less than Seventy-five Percent (75%)
of the total royalty that would otherwise be due to OSI or MRC
CC under Section 5.7.1 or 5.7.2 for the relevant period.
(b) Any royalty payable to any third party arising out of
OSI Technology, SANKYO Technology, or MRC CC Technology shall
be payable solely by OSI, SANKYO, or MRC CC, as the case may
be, respectively.
5.7.4 Payment Dates. Royalties shall be paid by SANKYO 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
Product by SANKYO in each country, the applicable royalty rate
for such Product, and a calculation of the amount of royalty
due.
5.7.5 Accounting. The royalties payable to OSI and MRC CC shall be
computed and paid in U.S. Dollars. For purposes of determining
the amount of royalties due with respect to NET SALES in any
foreign currency, the amount shall be computed generally by
converting the foreign currency amount into U.S. Dollars
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using for each month's calculation the foreign currency
exchange rate as published in the Wall Street Journal on the
date such royalty is paid or due, whichever is earlier.
5.7.6 Records. SANKYO shall keep for three (3) years from the date
of each payment of royalties complete and accurate records of
sales by SANKYO of each Product in sufficient detail to allow
the accruing royalties to be determined accurately. OSI (on
behalf of itself and MRC CC) 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 obtain at its
expense from the independent certified public accountant used
by SANKYO for public reporting an audit of the relevant
records of SANKYO to verify such report or statement. SANKYO
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 to
enforce its rights under this Agreement or when disclosure is
required by law. The failure of OSI to request verification of
any report or statement during said three (3) year period
shall be considered
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acceptance of the accuracy of such report, and SANKYO shall
have no obligation to maintain records pertaining to such
report or statement beyond said three (3) year period. The
results of the inspection shall be binding on both parties.
5.7.7 Withholding:
(a) Payments. All amounts payable under Section 2.7.1, 3.1
and 3.5 shall represent the actual proceeds to be received by
OSI and MRC CC after any applicable deductions have been made,
including without limitation any withholding taxes. OSI and
MRC CC agree to reasonably cooperate with SANKYO in obtaining
a refund of any withholding taxes paid by SANKYO with respect
to any payments to OSI and MRC CC hereunder. In the event that
OSI and MRC CC are successful in obtaining any refund of tax
withholding amounts paid by SANKYO under Sections 2.7.1, 3.1
and 3.5 of this Agreement, OSI and MRC CC agree to promptly
remit such refund amount to SANKYO.
(b) Royalty Payments. SANKYO may withhold from royalties
due to OSI and MRC CC under Sections 5.7.1 and 5.7.2 amounts
for payment of any withholding tax that is required by law to
be paid to any taxing authority with respect to such royalty
amounts due to OSI and MRC CC; provided, however, that in
regard to any such tax withholding SANKYO shall give OSI and
MRC CC such documents, and provide any other cooperation or
assistance on a reasonable basis, as may be necessary to
enable OSI and MRC CC to claim exemption therefrom to receive
a full refund of such withholding tax or claim a foreign tax
credit and shall upon
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OSI's and MRC CC's request give proper evidence from time to
time as to the payment of such tax.
5.8 Manufacturing Rights. SANKYO shall maintain all manufacturing rights to
Compounds and Products in the Territory. SANKYO shall also have the
right to transfer its right to manufacture, at its discretion, to its
Affiliates or any sublicensees of SANKYO.
6. Provisions Concerning the Filing, Prosecution and Maintenance of Patent
Rights. The following provisions relate to the filing, prosecution and
maintenance of MRC CC Patent Rights, OSI Patent Rights, Joint Patent
Rights, and SANKYO Patent Rights:
6.1 OSI Filing: Prosecution and Maintenance. OSI shall have the exclusive
right and obligation:
(a) to file applications, at its expense (subject to reimbursement as
herein after provided), for letters patent on any patentable invention
included in OSI Technology Improvements or in Joint Technology
Improvements which relate to cell lines, cloning of cell lines and
methodologies for determining the effect of compounds on biochemical
processes; provided, however, that OSI shall provide to MRC CC and
SANKYO copies of all patent applications prior to filing for the
purpose of obtaining the substantive comments of MRC CC and SANKYO
patent counsel and shall consult with MRC CC and SANKYO regarding
countries in which such patent applications should be filed and shall
file patent applications in those countries where MRC CC and SANKYO
requests that OSI file; and further
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provided, that OSI, at its option and expense, may file in countries
where MRC CC and SANKYO do not request that OSI file;
(b) to prosecute, at its expense (subject to reimbursement as
hereinafter provided), all pending and new patent applications included
within OSI Technology Improvements or Joint Technology Improvements
which relate to cell lines, cloning of cell lines and methodologies for
determining effect of compounds on biochemical processes and to respond
to oppositions filed by third parties against the grant of letters
patent for such applications, provided that OSI shall also provide to
MRC CC and SANKYO copies of all documents relating to the prosecution
of all patent applications in a timely manner for the purpose of
obtaining the substantive comments of MRC CC and SANKYO patent counsel;
(c) to maintain in force, at its expense (subject to reimbursement as
hereinafter provided), any letters patent included in OSI 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;
(d) to notify MRC CC and SANKYO in a timely manner of any decision to
abandon a pending patent application or an issued patent included in
OSI Patent Rights. Thereafter, MRC CC and SANKYO shall have the option,
at their expense, of continuing to prosecute any such pending patent
application or of keeping the issued patent in force; and
(e) to provide to MRC CC and SANKYO every six (6) months a report
detailing the status of all patent applications that are part of OSI
Patent Rights.
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<PAGE> 41
6.2 SANKYO Filing: Prosecution and Maintenance. SANKYO shall have the
exclusive right and obligation:
(a) to file applications, at its expense, subject to reimbursement as
hereinafter provided, for letters patent on any patentable invention
included in SANKYO Technology Improvements or in Joint Technology
Improvements which relate to new compounds and therapeutic uses or
manufacturing processes of known compounds; provided, however, that
SANKYO shall provide to MRC CC and OSI copies of all patent
applications prior to filing for the purpose of obtaining the
substantive comments of MRC CC and OSI patent counsel and shall consult
with MRC CC and OSI regarding countries in which such patent
applications should be filed and shall file patent applications in
those countries where MRC CC and OSI requests that SANKYO file; and
further provided, that SANKYO, at its option and expense, may file in
countries where OSI does not request that SANKYO file;
(b) to prosecute, at its expense, subject to reimbursement as
hereinafter provided, all pending and new patent applications included
within SANKYO Technology Improvements or Joint Technology Improvements
which relate to new compounds and therapeutic uses of known compounds
and to respond to oppositions fled by third parties against the grant
of letters patent for such applications; provided that SANKYO shall
also provide to MRC CC and OSI copies of all documents relating to the
prosecution of all patent applications in a
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timely manner for the purpose of obtaining the substantive comments of
MRC CC and OSI patent counsel;
(c) to maintain in force, at its expense, subject to reimbursement as
hereinafter provided, any letters patent included in SANKYO 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;
(d) to notify MRC CC and OSI in a timely manner of any decision to
abandon pending patent application or an issued patent included in
SANKYO Patent Rights. Thereafter, MRC CC and OSI shall have the option,
at their expense, of continuing to prosecute any such pending patent
application or of keeping the issued patent in force; and
(e) to provide to MRC CC and OSI every six (6) months a report
detailing the status of all patent applications that are part of SANKYO
Patent Rights.
6.3 MRC CC Filing: Prosecution and Maintenance. MRC CC shall have the
exclusive right and obligation:
(a) to file applications, at its expense, subject to reimbursement as
hereinafter provided, for letters patent on any patentable invention
included in MRC CC Technology Improvements or Joint Technology
Improvements which relate to cell culture models or animal models of
infection and methodologies for determining the effects or mechanism of
action of compounds on viral infection in living cells and animals;
provided, however, that MRC CC shall provide SANKYO and OSI with copies
of all patent applications prior to filing for the purpose of obtaining
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the substantive comments of SANKYO and OSI patent counsel and consult
with SANKYO and OSI regarding countries in which such patent
applications should be filed and shall file patent applications in
those countries where SANKYO and OSI requests that MRC CC file; and
further provided, that MRC CC, at its option and expense, may file in
countries where SANKYO and OSI do not request that MRC CC file;
(b) to prosecute, at its expense, subject to reimbursement as
hereinafter provided, all pending and new patent applications included
within MRC CC Technology Improvements or Joint Technology Improvements
which relate to cell culture models or animal models of infection and
methodologies for determining the effects or mechanism of action of
compounds on viral infection in living cells and animals; and to
respond to oppositions filed by third parties against the grant of
letters patent for such applications; provided that MRC CC shall also
provide to SANKYO and OSI copies of all documents relating to the
prosecution of all patent applications in a timely manner for the
purpose of obtaining the substantive comments of SANKYO and OSI patent
counsel;
(c) to maintain in force, at its expense, subject to reimbursement as
hereinafter provided, any letters patent included in MRC CC 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;
(d) to notify OSI and SANKYO in a timely manner of any decision to
abandon a pending patent application or an issued patent included in
MRC CC Patent
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Rights. Thereafter, OSI and SANKYO shall have the option, at their
expense, of continuing to prosecute any such pending patent application
or of keeping the issued patent in force; and
(e) to provide to OSI and SANKYO every six (6) months a report
detailing the status of all patent applications that are part of MRC CC
Patent Rights.
6.4 Reimbursement of Expenses. SANKYO will reimburse OSI and MRC CC for
their reasonable out-of-pocket costs incurred after the Effective Date
to file, prosecute, issue, maintain and extend patent applications and
Patent Rights within OSI Patent Rights and MRC CC Patent Rights in
countries in which SANKYO has requested OSI or MRC CC to file that OSI
or MRC CC would have not otherwise filed. OSI and MRC CC will reimburse
SANKYO for its reasonable out-of-pocket costs incurred after the
Effective Date to file, prosecute, issue, maintain and extend patent
applications and Patent Rights within the SANKYO Patent Rights in
countries which OSI and MRC CC has requested SANKYO to file that SANKYO
would not have otherwise filed.
6.5 Patent Extensions. In the event any patent in OSI Patent Rights, MRC CC
Patent Rights, SANKYO Patent Rights or Joint Patent Rights is eligible
for extension or Supplementary Protection Certificate, the Research
Committee shall determine for which Patent Rights, applications for
extension shall be filed.
6.6 Legal Action.
6.6.1 Actual or Threatened Disclosure or Infringement. When
information comes to the attention of SANKYO to the effect
that any Patent Rights or Joint Technology
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Improvements relating to a Product have been or are threatened
to be unlawfully disclosed or that any of the rights granted
by or created pursuant to this Agreement have been or are
threatened to be unlawfully infringed, SANKYO 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. SANKYO shall notify OSI and MRC CC promptly of
the receipt of any such information and of the commencement of
any such suit, action or proceeding. If SANKYO determines that
it is necessary or desirable for OSI or MRC CC to join any
such suit, action, or proceeding, OSI or MRC CC, as the case
may be, shall execute all papers and perform such other acts
as may be reasonably required to permit SANKYO to act in OSI's
or MRC CC's name. In the event that SANKYO brings a suit, it
shall have the right 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. If Sankyo does not, within one hundred twenty (120) days
after giving notice to OSI and MRC CC of the above-described
information, notify OSI or MRC CC, as the case may be, of
SANKYO's intent to bring suit against any infringer, OSI or
MRC CC shall have the right to bring suit for such alleged
infringement, but it shall not be obligated to do so, and may
cause SANKYO to be joined as a party plaintiff, if
appropriate, in which event OSI or MRC CC, as the case may be,
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shall hold SANKYO 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 or MRC CC, as the case may be.
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 SANKYO lacks standing to bring any such
suit, action, or proceeding, then OSI or MRC CC, as the case
may be, shall do so at the request of SANKYO and at SANKYO's
expense.
6.6.2 Defense of Infringement Claims. If OSI or MRC CC, as the case
may be, or SANKYO, any of their respective licensees or their
customers shall be sued by a third party for infringement of a
patent because of the research, development, manufacture, use
or sale of Products, the party which has been sued shall
promptly notify the other parties to this Agreement in writing
of the institution of such suit. OSI or MRC CC, as the case
may be, shall give to SANKYO 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 proceedings. The
parties shall share the expenses of implementing the agreed
defense on the following basis;
(a) If the alleged infringement is due to the use of OSI
Technology and/or OSI Technology Improvement, then the
expenses shall be borne by OSI.
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(b) If the alleged infringement is due to the use of
SANKYO Technology and/or SANKYO Technology Improvements, then
the expenses shall be borne by SANKYO.
(c) If the alleged infringement is due to the use of MRC
CC Technology and/or MRC CC Technology Improvements, then the
expenses shall be borne by MRC CC.
(d) If the alleged infringement is due to the use of Joint
Technology Improvements, then the expenses shall be borne by
equally among SANKYO, OSI and MRC CC.
6.6.3 Hold Harmless. OSI or MRC CC agree to defend, protect,
indemnify, and hold SANKYO and any sublicensee of SANKYO
harmless, from and against any liability, claim, loss, cost or
expense arising from any claim or suit by a third party to the
extent that such claim or suit is due to the exercise by
SANKYO of any rights granted hereunder by OSI or MRC CC
pursuant to OSI Patent Rights, OSI Technology, or OSI
Technology Improvements, or MRC CC Patent Rights, MRC CC
Technology, or MRC CC Technology Improvements, as the case may
be, infringing upon the patent or other intellectual property
rights of said third party. SANKYO agrees to defend, protect,
indemnify, and hold harmless OSI and MRC CC from and against
any liability, claim, loss, cost, or expense arising from any
claim or suit for product liability based upon SANKYO's
manufacture, use, or sale of any Product.
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<PAGE> 48
6.6.4 Third Party Licenses. If SANKYO and OSI and MRC CC agree the
manufacture, use, or sale by SANKYO of a Product in any
country would infringe a patent owned by a third party, SANKYO
and OSI and MRC CC shall attempt to obtain a license under
such patent. If SANKYO obtains a license under such patent,
any payments made by SANKYO to such third party shall be
deductible from royalty payments due from SANKYO to OSI and
MRC CC pursuant to Section 5.7.3 of this Agreement. All such
payments shall be on a country by country and patent by patent
basis. If either SANKYO, OSI or MRC CC is of the opinion that
such manufacture, use, or sale would not infringe such patent
owned by a third party, SANKYO may, at its election, bring
suit against such third party seeking a declaration that such
patent is invalid or not infringed by SANKYO's manufacture,
use or sale of the Product involved, or may bring opposition,
nullification, or other proceedings against such patent, as
appropriate. If SANKYO is successful in such suit, SANKYO
shall continue to pay royalties in such country as provided in
Article 5. If SANKYO does not bring such suit or is
unsuccessful in such suit, it shall join OSI or MRC CC, as the
case may be, in an attempt to obtain a license under such
patent, and royalty payments made by SANKYO to such third
party for such license shall be as hereinabove provided.
7. Other Rights of the Parties.
7.1 Other Rights of the Parties. Except as hereinabove provided, OSI and
MRC CC 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, the
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<PAGE> 49
American Cancer Society, and the National Science Foundation. Except as
hereinabove provided, OSI and MRC CC shall also have the right to enter
into coverture arrangements, whether written or oral, with third
parties to develop any product.
7.2 Acquisition of Rights from Third Parties. During the Contract Period,
OSI, MRC CC and SANKYO 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. The Research Committee shall decide if such rights
should be acquired and, if so, whether by OSI, SANKYO or MRC CC. If
acquired, such rights shall become part of Joint Technology
Improvements or Joint Patent Rights.
8. Term, Extension, Termination and Disengagement.
8.1 Term. Subject to the continuing rights and obligations set forth in
Articles 2.4, 2.8, 3, 4, 5 and 6, this Agreement and the parties
obligations pursuant to the Research Program shall expire at the end of
the Contract Period. It is further contemplated by the parties however
that a more definitive License Agreement superseding the license
granted herein will be executed by the parties prior to commencement of
clinical trials and/or the sale of any Product, such License Agreement
to be based on the license terms and conditions set forth herein.
Notwithstanding such intention, the parties further acknowledge that in
the event they fail to execute such additional License Agreement, the
license granted
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<PAGE> 50
SANKYO hereunder in respect of the Compounds and Products shall remain
in full force and effect according to its terms and conditions.
8.2 Events of Termination. The following events shall constitute events of
termination ("Events of Termination").
(a) Any material representation or warranty by OSI, MRC CC
or SANKYO, 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, MRC CC or SANKYO 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 failing party. In the event that a material failure on the
part of MRC CC shall have remained unremedied for thirty (30)
days of written notice by SANKYO to MRC CC as provided above
in this Article 8.2 (b) said event being deemed by SANKYO to
be a material breach of this Agreement, then SANKYO may, at
its sole discretion, permit OSI to cure said material breach
and in such event OSI shall be able to substitute itself for
MRC CC hereunder.
(c) The occurrence of a change of control of one of the
parties. A change of control shall be deemed to have occurred
if, after the Effective Date of this Agreement, (i) any Person
acquires a majority of the shares of a party or acquires a
right to control the voting of a majority of shares of a
party, (ii) any Person
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<PAGE> 51
acquires sufficient shares or the right to control the votes
of sufficient shares to enable such Person to elect a majority
of the board of directors of a party, or (iii) any Person
acquires the power through share ownership or otherwise to
designate a majority of the board of directors of a party.
8.3 Termination. Upon the occurrence of any Event of Termination, the party
not responsible may, by notice to the other party, terminate this
Agreement, but such termination shall not affect the obligation to pay
royalties hereunder or under the License Agreement contemplated hereby;
provided, however, that Article 2.4.2 shall survive any termination of
this Agreement hereunder.
9. Representations and Warranties.
OSI, SANKYO, MRC C and MRC CC each represents and warrants as follows:
9.1 It is a corporation duly organized, validly existing and is in good
standing under the laws of its place of incorporation, is qualified to
do business and is in good standing as a foreign cooperation 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 it is
now being conducted, to own, lease and operate its properties and to
execute, deliver and perform this Agreement.
9.2 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
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<PAGE> 52
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.
9.3 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.
9.4 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.
9.5 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.
9.6 OSI, MRC CC, and SANKYO each have the right to grant to each other the
licenses granted by them pursuant to this Agreement, and that the
licenses so granted do not conflict with or violate the terms of any
agreement between them and any third party.
9.7 OSI and MRC CC hereby covenant and agree to cooperate and take all
steps reasonable requested by SANKYO to register or otherwise perfect
in any country of the Territory any and all of the rights granted
SANKYO hereunder.
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<PAGE> 53
10. 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 SANKYO: To SANKYO at 2-58, Hiromachi, 1-chome,
Shinagawaku, Tokyo 140, Japan
Attention: Director, Biological Research
Laboratories
If to OSI: To OSI at its address as set forth at the beginning
of this Agreement
Attention: President
If to MRC CC: To MRC CC at its address as set forth at the
beginning of this Agreement
Attention: Commercial Director
Notices shall be deemed given as of the date of receipt.
11. Governing Law and Disputes.
This Agreement shall be construed in accordance with the laws of the
State of New York. Any disputes, controversies or difficulties which
may arise out of or in relation to this Agreement shall be settled
amicably between the parties. In the event the parties fail to do so,
such dispute, controversy, etc. shall be finally settled by arbitration
at the place of the defendant's domicile by the International Chamber
of Commerce ("ICC") pursuant to the arbitration rules of the ICC and by
arbitrators to be appointed according to said rules. The award in the
said arbitration shall be final and binding upon the parties.
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<PAGE> 54
12. Miscellaneous.
12.1 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and permitted
assigns.
12.2 Headings. Paragraph headings are inserted for convenience of reference
only and do not form a part of this Agreement.
12.3 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
12.4 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 cause 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 their rights at a later time to enforce the
same.
12.5 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 a partnership between the
parties or with any other Person.
12.6 Assignment and Successors. This Agreement may not be assigned by either
party, except that the parties may assign this Agreement and their
rights and interests, in whole or in part, to any of their Affiliates,
any 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, provided, however, in the
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<PAGE> 55
event an Affiliate to which this Agreement is assigned no longer is as
Affiliate as such term is defined herein, such assignment shall, at the
option of the other parties hereto, become null and void and revert
back to the assignor.
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<PAGE> 56
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives.
SANKYO COMPANY, LIMITED
By:_____________________________________
Yoshihiko Baba
Title: MANAGING DIRECTOR
ONCOGENE SCIENCE, INC.
By:_____________________________________
Title: Sr. Vice President, Drug
Discovery
MRC COLLABORATIVE CENTRE
By:_____________________________________
Title: COMMERCIAL DIRECTOR
WITNESS:
SUMMIT PHARMACEUTICALS
INTERNATIONAL CORP.
By:_____________________________
AKIKAZU TAMAI
Title: PRESIDENT & CEO
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<PAGE> 1
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
ONCOGENE SCIENCE, INC.
AND
SEPRACOR, INC.
MARCH 7, 1997
COLLABORATIVE RESEARCH, DEVELOPMENT
AND COMMERCIALIZATION AGREEMENT
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1
INTERPRETATION 2
1.1 Defined Terms ........................................................... 2
ARTICLE 2
RESEARCH PROGRAM 8
2.1 General ................................................................. 8
2.2 Scope ................................................................... 8
2.3 General Obligations of the Parties ...................................... 8
2.4 Joint Steering Committee ................................................ 9
2.4.1 Purpose .......................................................... 9
2.4.2 Expansion of Research Program .................................... 10
2.4.3 Composition ...................................................... 10
2.4.4 Voting ........................................................... 10
2.4.5 Chair ............................................................ 10
2.4.6 Meetings ......................................................... 10
2.4.7 Expenses ......................................................... 11
2.5 Joint Development Committee ............................................. 11
2.5.1 Purpose .......................................................... 11
2.5.2 Composition ...................................................... 11
2.5.3 Voting ........................................................... 11
2.5.4 Chair ............................................................ 11
2.5.5 Meetings ......................................................... 11
2.5.6 Reports .......................................................... 12
2.5.7 Expense .......................................................... 12
2.6 Reports ................................................................. 12
2.7 Laboratory Facilities ................................................... 12
2.8 Research Staff .......................................................... 12
2.9 Inspections ............................................................. 12
2.10 Patent and Confidential Information Agreements .......................... 13
2.11 Flexibility ............................................................. 13
2.12 Arrangements with Independent Third Parties ............................. 13
2.13 No Independent Research within the Scope of the Research Program ........ 13
2.14 Other Research Permitted ................................................ 13
2.15 Clinical Data ........................................................... 13
2.16 Lead Compounds .......................................................... 13
</TABLE>
i
<PAGE> 4
<TABLE>
<S> <C> <C>
ARTICLE 3
COSTS AND EXPENSES OF THE RESEARCH PROGRAM 14
3.1 Payment of Costs and Expenses ........................................... 14
ARTICLE 4
SECRET INFORMATION 14
4.1 General ................................................................. 14
4.2 Treatment of Secret Information ......................................... 14
4.3 Press Releases and Announcements ........................................ 15
4.4 Publications ............................................................ 15
ARTICLE 5
INTELLECTUAL PROPERTY RIGHTS 16
5.1 General ................................................................. 16
5.2 Research ................................................................ 16
5.3 Maintenance of Joint Patent Rights ...................................... 16
5.4 Infringement ............................................................ 17
5.5 Costs for Applying, Prosecuting and Maintaining ......................... 17
5.6 Disclosure of Inventions ................................................ 17
5.7 Ownership of Joint Intellectual Property ................................ 17
5.8 Copies of Patent Applications ........................................... 18
5.9 Other Patent Rights ..................................................... 18
5.10 Indemnification ......................................................... 19
ARTICLE 6
DEVELOPMENT AND COMMERCIALIZATION 19
6.1 Decision to Commercialize ............................................... 19
6.2 Commercialization Agreement ............................................. 19
6.3 Content of Commercialization Agreement .................................. 19
6.4 No Support .............................................................. 20
ARTICLE 7
OTHER RESEARCH VENTURES ETC. 21
7.1 Acquisition of Rights from Third Parties ................................ 21
</TABLE>
ii
<PAGE> 5
<TABLE>
<S> <C> <C>
ARTICLE 8
TERM, EXTENSION, TERMINATION AND DISENGAGEMENT 21
8.1 Term .................................................................... 21
8.2 Events of Termination ................................................... 21
ARTICLE 9
CONSEQUENCES OF TERMINATION 22
9.1 Licenses upon Termination ............................................... 22
9.2 Termination upon the Occurrence of an Event of Termination .............. 23
9.3 Survival of Obligations; Return of Confidential Information ............. 24
ARTICLE 10
REPRESENTATIONS AND WARRANTIES 24
ARTICLE 11
COVENANTS 25
11.1 Affirmative Covenants Other than Reporting Requirements 25
ARTICLE 12
DISPUTE RESOLUTION 25
ARTICLE 13
NOTICES 26
ARTICLE 14
MISCELLANEOUS 26
14.1 Binding Effect .......................................................... 26
14.2 Headings ................................................................ 26
14.3 Entire Agreement ........................................................ 26
14.4 Severability ............................................................ 27
14.5 Counterparts ............................................................ 27
14.6 Amendment, Waiver, etc .................................................. 27
14.7 Force Majeure ........................................................... 27
14.8 Independent Contractor .................................................. 27
14.9 Assignment and Successors ............................................... 27
14.10 Governing Law ........................................................... 28
</TABLE>
iii
<PAGE> 6
COLLABORATIVE RESEARCH, DEVELOPMENT
AND COMMERCIALIZATION AGREEMENT
BETWEEN: SEPRACOR INC., a corporation incorporated
under the laws of Delaware and having its
principal place of business at 111 Locke
Drive, Marlborough, Massachusetts
(hereinafter called "Sepracor").
AND: ONCOGENE SCIENCE, INC., a corporation
incorporated under the laws of Delaware and
having its principal place of business at
106 Charles Lindbergh Boulevard, Uniondale,
New York, 11553 (hereinafter called
"Oncogene").
AS OF: 7 March, 1997
WHEREAS Sepracor and its Affiliates possess technology in the area of synthesis
of libraries, including lead-seeking libraries and lead-optimizing libraries;
WHEREAS Oncogene and its Affiliates possess technology in the areas of assay
development, assay validation, high-throughput screening, in vitro assay
methodology, and chemical synthesis;
WHEREAS each of Sepracor and its Affiliates and Oncogene and its Affiliates is
currently conducting research in respect of anti-infective agents which target
certain illnesses and with respect to steroid chronic inflammatory targets
associated with certain illnesses;
WHEREAS Sepracor and its Affiliates, on the one hand, and Oncogene and its
Affiliates, on the other hand, have decided to collaborate and combine their
efforts in connection with the research, development and commercialization of
anti-infective agents which primarily target bacterial or fungal microbes, and
in connection with the research, development and commercialization of
anti-inflammatory agents that target steroid chronic inflammatory targets
represented by steroid receptors;
WHEREAS Sepracor and its Affiliates and Oncogene and its Affiliates are willing
to use their research facilities, scientists, research assistants, technicians
and other personnel to conduct their obligations under this Agreement.
<PAGE> 7
NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS:
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS. In this Agreement, unless the context or subject matter
is inconsistent therewith, the following terms and expressions shall
have the following meanings:
(a) "ACQUISITION" shall have the meaning ascribed thereto at
Section 8.2(e) hereof.
(b) "AFFILIATE" shall mean, with respect to any Person (including
a Party), any other Person which directly or indirectly
controls or is controlled by, or is under direct or indirect
common control with, such first mentioned Person or any Person
which is directly or indirectly controlled by a Person which
controls the first mentioned Person; for the purpose of this
definition, "CONTROL" shall mean, with respect to any Person
(including any Party), the ownership of more than 50% of the
voting shares or other voting equity of that Person. This
definition notwithstanding, neither Versicor nor BioSepra
shall be considered to be affiliates of Sepracor for the
purposes of this Agreement.
(c) "AGREEMENT" shall mean this collaborative research,
development and commercialization agreement and all
instruments supplemental hereto or in amendment or in
confirmation HEREOF; "HEREIN", "HEREOF", "HERETO", "HEREUNDER"
and similar expressions mean and refer to this Agreement and
not to any particular article, section, subsection or other
subdivision; "ARTICLE", "SECTION", SUBSECTION" or other
subdivision of this Agreement shall mean and refers to the
specific article, section, subsection or other said
subdivision of this Agreement.
(d) "COMMERCIAL PRODUCT" shall mean any and all products in Final
Pharmaceutical Form comprising Lead Compounds and any and all
formulations, mixtures or compositions thereof emanating from
the Research Program pursued pursuant to this Agreement, the
making or use of which embodies any of Sepracor Technology,
Oncogene Technology or Joint Technology and in respect of
which Sepracor and Oncogene each has rights to commercialize
pursuant to this Agreement or any other agreement executed
between the Parties in furtherance to this Agreement.
(e) "COMMERCIALIZATION AGREEMENT" shall have the meaning ascribed
thereto at Section 6.2 hereof.
2
<PAGE> 8
(f) "COMMITMENT YEAR" shall mean each calendar year during the
term of this Agreement and, in respect of the First Commitment
Year, the period commencing on the Effective Date and
terminating on December 31, 1997.
(g) "COMPOUND" shall mean any compound being evaluated in
connection with the Field by the Parties pursuant to the
Research Program or developed by Sepracor and Oncogene and/or
their respective Affiliates pursuant to the provisions of this
Agreement.
(h) "CONFIDENTIAL INFORMATION" shall mean Sepracor Confidential
Information or Oncogene Confidential Information, as the case
may be.
(i) "DEFICIENCY AMOUNT" shall have the meaning ascribed thereto at
Section 2.4.1 hereof.
(j) "DEVELOPMENT CANDIDATE" shall mean a Lead Compound which has
been designated by the Joint Steering Committee as a potential
Commercial Product and which should be the subject of a
Development Program.
(k) "DEVELOPMENT PROGRAM" shall mean the written development plan
to be approved by the Joint Steering Committee describing the
development and other obligations of each Party in respect of
the development of any Compound for pre-clinical and clinical
development, which plan shall be approved by the Joint
Steering Committee no later than ninety (90) days following
the declaration by the Joint Steering Committee that a Lead
Compound has been designated as a Development Candidate,
failing which the matter shall be referred to the President of
Sepracor and the Chief Executive Officer of Oncogene for
discussion and resolution.
(l) "EFFECTIVE DATE" shall mean the date first appearing above.
(m) "ELECTING PARTY" shall have the meaning ascribed thereto at
Section 9.1 hereof.
(n) "ELECTION NOTICE" shall have the meaning ascribed thereto at
Section 9.1 hereof.
(o) "EVENT OF TERMINATION" shall have the meaning ascribed thereto
at Section 8.2 hereof.
(p) "FDA" shall mean the United States Food and Drug
Administration.
(q) "FIELD" shall mean, unless otherwise determined by the Joint
Steering Committee pursuant to Section 2.2, research,
development, marketing,
3
<PAGE> 9
distribution, and sale of ** including, without limitation, **
and such other bacterial and fungal targets, particularly
resistant strains of such, designated on a target by target
basis by the Joint Steering Committee, and, research,
development, marketing, distribution, and sale of ** also as
designated by the Joint Steering Committee on a target by
target basis.
(r) "FINAL PHARMACEUTICAL FORM" shall mean any presentation of a
Commercial Product in any final packaged and labeled dosage
form suitable for sale to and use by an end user.
(s) "FULL DEVELOPMENT" shall mean the first of the two events
described at Section 6.2 to occur.
(t) "INDEMNIFIED PARTY" shall have the meaning ascribed thereto at
Section 5.10 hereof.
(u) "INDEMNIFYING PARTY" shall have the meaning ascribed thereto
at Section 5.10 hereof.
(v) "INDEPENDENT THIRD PARTY" shall mean any Person other than
Sepracor, Oncogene and/or any of their respective Affiliates.
(w) "INITIAL TERM" shall have the meaning ascribed thereto at
Section 8.1 hereof.
(x) "JOINT DEVELOPMENT COMMITTEE" or "JDC" shall have the meaning
ascribed thereto at Section 2.5 hereof.
(y) "JOINT STEERING COMMITTEE" or "JSC" shall have the meaning
ascribed thereto at Section 2.4 hereof.
(z) "JOINT TECHNOLOGY" shall mean and include all technology and
information including all inventions, chemical structures and
methods for synthesis, structure-activity relationships, assay
methodology, methods, processes, formulae, plans,
specifications, characteristics, equipment and equipment
designs, know how, trade secrets, discoveries, formulations
and biological, toxicological and clinical data that are
conceived jointly by employees or agents of, or consultants
to, Sepracor and Oncogene, or licensed in the Field jointly by
the Parties or on behalf of the Parties during the term of
this Agreement, such that Sepracor and Oncogene each own an
undivided interest therein.
- -----------------------
** This portion redacted pursuant to a request for confidential treatment.
4
<PAGE> 10
(aa) "LEAD COMPOUND" shall mean, subject to the provisions of
Section 2.16, any Compound designated as a Lead Compound by
the Joint Steering Committee and which has demonstrated such
properties of chemical structure, potency, mechanism of
action, selectivity and non-cytotoxicity as deemed necessary
by the JSC for such Compound to be a potential candidate for
chemical optimization studies.
(bb) "NET INVOICED SALES VALUE" shall mean the gross invoice price
charged for Commercial Products sold by Sepracor, Oncogene
and/or their respective Affiliates and sublicensees to
Independent Third Parties, less all allowances or credits
granted on such sales, including those in respect of rejected
or returned goods, recalls, transportation charge or
allowances, insurance charges, normal and customary quantity
and trade discounts (including managed care rebates), and
taxes or other governmental charges on, or measured by, the
sale, transportation, or use of Commercial Products, which
Sepracor, Oncogene and/or their respective Affiliates and
sublicensees have to pay or absorb on such sales.
(cc) "SALES" shall mean any Commercial Products sold in a
particular country by either Party and/or their respective
Affiliates and sublicensees to an Independent Third Party.
(dd) "NON-ELECTING PARTY" shall have the meaning ascribed thereto
at Section 9.1 hereof.
(ee) "NOTICE" shall have the meaning ascribed thereto at Section
9.1 hereof.
(ff) "NOTICE OF OPPORTUNITY" shall have the meaning ascribed
thereto at Section 9.1 hereof.
(gg) "NOTIFYING PARTY" shall have the meaning ascribed thereto at
Section 9.2 hereof.
(hh) "ONCOGENE CONFIDENTIAL INFORMATION" shall mean all
confidential information disclosed to Sepracor orally and
subsequently confirmed in writing as "CONFIDENTIAL" or
designated as "CONFIDENTIAL" by Oncogene or its Affiliates at
the time of disclosure to Sepracor, to the extent that such
information as of the date of disclosure to Sepracor is not
(i) demonstrably known to Sepracor other than by virtue of a
prior confidential disclosure to Sepracor by Oncogene or its
Affiliates, or (ii) disclosed in the published literature or
otherwise to the public through no fault of Sepracor, its
Affiliates, employees or consultants, or (iii) obtained from
an Independent Third Party having no obligation of
confidentiality to Oncogene or its Affiliates with respect to
such information.
5
<PAGE> 11
(ii) "ONCOGENE TECHNOLOGY" shall mean and include all technology
and technical information relating to a Compound, including
all inventions, chemical structures and methods for synthesis,
structure-activity relationships, assay methodology, methods,
processes, formulae, plans, specifications, characteristics,
equipment and equipment designs, know how, trade secrets,
discoveries, results, formulations and biological,
toxicological and clinical data and physical, chemical or
biological material that is conceived solely by employees or
agents of, or consultants to, Oncogene and/or its Affiliates,
prior to or during the term of this Agreement or acquired by
purchase, license, assignment or other means from third
parties prior to or during the term of this Agreement that is
not Joint Technology, but only to the extent that Oncogene or
its Affiliates is legally entitled to disclose such Technology
and technical information and use it in connection with the
performance by it of its obligations hereunder.
(jj) "PARTIES" shall mean Sepracor and Oncogene; and "PARTY" shall
mean any one of them.
(kk) "PATENT EXPENSES" shall mean all external fees and costs
incurred by a Party in financing the activities leading to a
Patent Right, including, without limitation, few and
reasonable attorneys' charges in connection with the
preparation filing, prosecution, maintenance and defense of
the Patent Rights and translation charges.
(ll) "PATENT RIGHTS" shall mean all patents and patent
applications, including any divisional, continuation,
continuation-in-part, reissue, renewal or extension thereof,
or substitute therefor, any registration or confirmation
thereof, relating to any Technology, Compounds or Commercial
Products, their methods of manufacture or uses of
intermediates therefor, or formulations thereof. "ONCOGENE
PATENT RIGHTS" shall mean Patent Rights claiming inventions
that are conceived solely by employees or consultants of
Oncogene or its Affiliates. "JOINT PATENT RIGHTS" shall mean
Patent Rights claiming inventions that are conceived solely by
employees, agents, or consultants of Oncogene and employees or
consultants of Sepracor and of their respective Affiliates.
"SEPRACOR PATENT RIGHTS" shall mean Patent Rights claiming
inventions that are conceived jointly by employees, agents, or
consultants of Sepracor or its Affiliates.
(mm) "PERSON" shall mean any individual, corporation, company,
cooperative, partnership, trust, unincorporated association or
any other entity which possesses a juridical personality,
including any governmental authorities or body of competent
jurisdiction; and pronouns when referring to a Person, shall
have a similar extended meaning.
6
<PAGE> 12
(nn) "PROGRAM REPRESENTATIVE" shall mean an employee of a Party
designated by such Party as its representative for
consultation and communication with the other Party. Any Party
may change its Program Representative at any time by written
notice given to the other Party or designate more than one
Program Representative provided that each of its
representatives shall be assigned different responsibilities.
(oo) "RENEWAL PERIOD" shall have the meaning ascribed thereto at
Section 8.1 hereof.
(pp) "RESEARCH PROGRAM" shall mean the written research plan
annexed hereto as Schedule A, as subsequently revised or
replaced by the Joint Steering Committee, which plan describes
the research and other obligations to be carried out during
each Commitment Year by each of Sepracor and Oncogene and
their Affiliates.
(qq) "SECRET INFORMATION" shall have the meaning ascribed thereto
at Section 4.1 hereof.
(rr) "SEPRACOR CONFIDENTIAL INFORMATION" shall mean all
confidential information disclosed to Oncogene orally and
subsequently confirmed in writing as "CONFIDENTIAL" or
designated as "CONFIDENTIAL" by Sepracor or its Affiliates at
the time of disclosure to Oncogene, to the extent that such
information as of the date of disclosure to Oncogene is not
(i) demonstrably known to Oncogene other than by virtue of a
prior confidential disclosure to Oncogene by Sepracor or its
Affiliates, or (ii) disclosed in the published literature or
otherwise to the public through no fault of Oncogene, its
Affiliates, employees or consultants, or (iii) obtained from
an Independent Third Party having no obligation of
confidentiality to Sepracor or its Affiliates with respect to
such information.
(ss) "SEPRACOR TECHNOLOGY" shall mean and include all technology
and technical information relating to a Compound, including
all inventions, chemical structures and methods for synthesis,
structure activity relationships, assay methodology, methods,
processes, formulae, plans, specifications, characteristics,
equipment and equipment designs, know how, trade secrets,
discoveries, results, formulations and biological,
toxicological and clinical data and physical, chemical or
biological material that is conceived solely by employees or
agents of, or consultants to, Sepracor and/or its Affiliates,
prior to or during the term of this Agreement or acquired by
purchase, license, assignment or other means from third
parties prior to or during the term of this Agreement that is
not Joint Technology, but only to the extent that Sepracor or
its Affiliates is legally entitled to disclose such Technology
and technical information and use it in connection with the
performance by it of its obligations hereunder.
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(tt) "SUBMITTED LICENSE" shall have the meaning ascribed thereto at
Section 9.1 hereof.
(uu) "TARGET" shall have the meaning ascribed thereto at Section
8.2 hereof.
(vv) "TECHNOLOGY" shall mean, collectively, Sepracor Technology,
Oncogene Technology and Joint Technology.
ARTICLE 2
RESEARCH PROGRAM
2.1 GENERAL. Subject to the terms and conditions of this Agreement, each of
Sepracor and Oncogene agrees, as of the Effective Date, to undertake
and to cause its Affiliates to undertake, the Research Program and, in
the Field, to collaborate in respect thereof.
2.2 SCOPE. The Research Program shall involve the identification, research
and development of Lead Compounds derived from Sepracor Technology,
Oncogene Technology and Joint Technology or which may be contained in
any compound library prepared by or on behalf of any Party or to which
the Parties and their Affiliates hereto have access to and the right to
use in connection with this Agreement in respect of the Field with the
goal of identifying Development Candidates among such Lead Compounds.
2.3 GENERAL OBLIGATIONS OF THE PARTIES. During the term of this Agreement,
the Parties hereto hereby agree to diligently pursue the following, and
to cause their respective Affiliates to diligently pursue the
following, to the extent that it is reasonably necessary to the purpose
of this Agreement and in accordance with the Research Program:
(a) Each of Sepracor and Oncogene and/or their respective
Affiliates has synthesized and isolated and/or shall continue
to synthesize and/or isolate Compounds for use within the
Field.
(b) Each of Sepracor and Oncogene and/or their respective
Affiliates shall provide the other Party with information
concerning, and, if required by the JDC, with samples of,
Compounds for use within the Field, including those which pass
primary screening in order that the other Party may
collaborate in the evaluation of potential activity as
antibacterial or anti-fungal agents.
(c) Each of Sepracor and Oncogene shall aid, and shall cause their
respective Affiliates to aid, the other Party in the
fulfillment of its obligations hereunder, provide structural
chemistry analysis and access to combinatorial chemistry
technology, and scale up potential Compounds for in vitro and
in vivo studies,
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and provide through in vitro and in vivo evaluations, toxicity
and mechanisms of action studies in order to select, as
promptly as possible, Lead Compounds for development.
(d) Each of Sepracor and Oncogene shall provide to the other Party
access, limited for use or access by such other Party in the
Field, to compound libraries made by it or on its behalf or to
which it has access and the right to use in connection with
the conduct of the Research Program.
(e) Each of Sepracor and Oncogene shall, and each shall cause its
Affiliates to, conduct research and development activities in
respect of targets identified by the JSC.
(f) Sepracor and Oncogene agree, on their behalf and on behalf of
their respective Affiliates, (i) to fulfill their respective
obligations under, and pursue the goals of, the Research
Program and (ii) to perform their responsibilities as outlined
in the Research Program or allocated to it by the Joint
Steering Committee.
(g) Each of Sepracor and Oncogene agrees to utilize laboratory
facilities and equipment and research staff in accordance with
the provisions hereof to fulfill its obligations hereunder and
to give effect to the intention of the Parties to collaborate
in the Field.
2.4 JOINT STEERING COMMITTEE.
2.4.1 PURPOSE. A steering committee (the "Joint Steering
Committee" or "JSC") is hereby established by
Sepracor and Oncogene, and will begin functioning
within fifteen (15) days of the date of this
Agreement, to manage all business and commercial
aspects between the Parties pursuant to this
Agreement (including financial planning, resource
allocation, prioritization, addition of new targets
within the Field), agree upon and assign
responsibilities (other than specific scientific
tasks) within the Research Program to each Party,
approve the annual budgets to be spent by each Party
during any Commitment Year and review and monitor
work conducted by the Joint Development Committee and
to process and approve technical and scientific
recommendations of the JDC. In particular, the JSC
will be responsible, throughout the term of this
Agreement, for (a) selecting targets and reviewing
the Research Program and revising it as necessary,
(b) for preparing, monitoring and revising on an
annual basis the budgets necessary for the
performance by the Parties of their obligations
pursuant to the Research Program and this Agreement,
(c) monitoring the fulfillment by each Party of its
obligations pursuant to this Agreement, (d)
designating any Compounds as Lead Compounds, (e)
determining the allocation between the Parties of
their resources in connection with the conduct of the
Research Program, (f) designating Development
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Candidates, (g) negotiating and soliciting, if
appropriate, third parties to collaborate for
purposes of conducting the Research Program, (h)
determining on an annual basis the amount, if any,
(the "Deficiency Amount") owed by one party to the
other in order that contributions of both Parties
during any Commitment Year referred to in Section 2.8
be approximately the same, and (i) determining the
GAAP rules and principles applicable for purposes of
the accounting and maintenance of books and records
by both Parties. Either Party may in committee
propose that the Parties commence development of a
promising Lead Compound.
2.4.2 EXPANSION OF RESEARCH PROGRAM. Save for the first
Commitment Year, in which case the Research Program
is defined as set out in Schedule A of this Agreement
and a general outline in respect of the other
Commitment Years, the JSC shall define the Research
Program in each Commitment Year and amend, if it
deems appropriate, the Field.
2.4.3 COMPOSITION. Sepracor and Oncogene each shall
appoint, in their sole discretion, three (3) members
to the JSC. Alternates or replacements of any Party
may be appointed by such Party at any time by notice
to the other Party.
Initially the members shall be:
for Sepracor:
for Oncogene:
2.4.4 VOTING. Each member of the JSC shall have one vote,
and decisions shall be made by unanimity. Where a
vote does not produce a unanimous decision, the
matters at issue shall be submitted to the President
of Sepracor and the Chief Executive Officer of
Oncogene for discussion and resolution.
2.4.5 CHAIR. A Chairperson shall be nominated alternatively
by Sepracor and Oncogene for one year terms, the
first term being served by a nominee appointed by
Oncogene.
2.4.6 MEETINGS. Meetings shall be convened four times each
year at times determined by the JSC . The JSC,
however, may unanimously agree to meet more or less
frequently. Representatives of Oncogene, Sepracor, or
both, in addition to members of the JSC, may attend
meetings but shall have no voting rights. Meetings
shall be held alternatively at each Party's
facilities. Minutes of each meeting shall be prepared
by a representative of the host party and distributed
to all members of the JSC within thirty (30) days
following any meeting.
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2.4.7 EXPENSES. The Parties will each bear their own
expenses and those expenses related to the
participation of their appointees to the JSC.
2.5 JOINT DEVELOPMENT COMMITTEE
2.5.1 PURPOSE. A "JOINT DEVELOPMENT COMMITTEE" (or "JDC")
shall be established by the JSC to (a) manage, agree
upon and assign specific responsibilities within the
Research Program and the Development Program to each
Party; (b) prepare and review the Research Program
and the Development Program, revising it as
necessary; (c) recommend to the JSC any Compound as
Lead Compounds; (d) recommend to the JSC any Lead
Compounds as Development Candidates; (e) participate
in all aspects of the planning and development work
carried out on any Development Candidate; (f)
determine the responsibilities of each Party in
seeking regulatory approvals; (g) manage and deal
with such other responsibilities which may, from time
to time, be delegated to it by the Joint Steering
Committee; and (h) review and discuss scientific
questions which may arise in connection with the
execution of the Research Program and scientific
inventions, breakthroughs or developments in the
Field made pursuant to the Research Program.
2.5.2 COMPOSITION. Sepracor and Oncogene each shall
appoint, in their sole discretion, three (3) members
to the JDC. Replacements of any Party may be
appointed by such Party at any time by notice to the
other Party.
2.5.3 VOTING. Each member of the Joint Development
Committee shall have one vote, and decisions shall be
made by unanimity, subject to approval by the Joint
Steering Committee. Where a vote does not produce a
unanimous decision, the matters at issue shall be
submitted to the JSC for discussion and resolution.
2.5.4 CHAIR. A Chairperson shall be nominated alternatively
by Sepracor and On-cogene for one year terms, the
first term being served by a nominee appointed by
Sepracor.
2.5.5 MEETINGS. Meetings of the JDC shall be held four
times each year at times determined unanimously by
the JDC. The JDC, however, may unanimously agree to
meet more or less frequently. Representatives of
Oncogene, Sepracor, or both, in addition to members
of the Joint Development Committee, may attend
meetings but shall have no voting rights. Meetings
shall be held alternatively at each Party's
facilities. Minutes of each meeting shall be prepared
by a representative of the host party and distributed
to all members of the JDC within fifteen (15) days
after each meeting.
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2.5.6 REPORTS. During the term of this Agreement, each
Party shall cause its contingent to the JDC to
prepare and submit to the Joint Steering Committee a
summary report within thirty (30) days following the
end of each calendar quarter, describing the work
accomplished and progress under the Research Program
during the preceding calendar quarter, discussing and
evaluating the results of such work, and recommending
any qualified Compounds to be designated as Lead
Compounds.
2.5.7 EXPENSE. The Parties will each bear their own
expenses and those expenses related to the
participation of their appointees on the Joint
Development Committee.
2.6 REPORTS. During the term of this Agreement, Sepracor and Oncogene each
shall provide to the JSC and to the other Party access to primary data
derived or used in connection with the performance by it of its
obligations hereunder and on a quarterly basis and no later than thirty
(30) days following the end of each Commitment Year, a statement of all
costs and expenses incurred by such Party and its Affiliates pursuant
to Section 3.1.
2.7 LABORATORY FACILITIES. Sepracor and Oncogene each agree to utilize, or
cause their respective Affiliates to utilize, suitable laboratory
facilities and equipment for carrying out its obligations under the
Research Program and this Agreement.
2.8 RESEARCH STAFF. Each of Sepracor and Oncogene shall, no later than
fifteen (15) days following commencement of JSC function under this
Agreement, appoint research teams comprised of such number of suitably
qualified scientists and other personnel as may be determined by the
JSC to be reasonably necessary in order to achieve the goals of the
Research Program and Development Program, it being understood that,
unless otherwise agreed in writing by the Parties, over the term of
this Agreement, (a) each Party shall have contributed, in terms of
out-of-pocket expenses incurred during the term of this Agreement by
the Parties and their Affiliates (including salaries and such other
costs and expenses referred to in Section 3.1 hereof), approximately
equally in connection with the performance of their obligations under
the Research Program and this Agreement, and (b) such contribution are
estimated to total up to approximately $12 million (or approximately up
to $6 million by each Party) for the initial three year period.
2.9 INSPECTIONS. Sepracor and Oncogene shall each have the right to arrange
for its employees, external consultants, and such other persons as it
may reasonably delegate, to visit the other Party at its offices and
laboratories and to discuss work under the Research Program and its
results in detail with the other Party's Program Representative, the
staff, and consultants of the other Party; provided that such visits
are during normal business hours, have been arranged on not less than
ten (10) business days notice and shall not unreasonably interrupt the
operations of the other Party.
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2.10 PATENT AND CONFIDENTIAL INFORMATION AGREEMENTS. Each of Sepracor and
Oncogene shall require all of its employees, all employees of its
Affiliates and all Independent Third Parties involved in, or associated
with the Research Program to have executed an agreement for the
assignment of inventions and for the protection of Secret Information
in such reasonable form as may from time to time be used by Sepracor
and Oncogene for such purpose.
2.11 FLEXIBILITY. In conducting its research and other obligations under
this Agreement, each of Sepracor and Oncogene shall have and maintain
sufficient flexibility to allow a shift in effort and emphasis within
the Research Program that will, in the opinion of the JSC, achieve the
best results in the attainment of the objectives of the Research and
Development Programs.
2.12 ARRANGEMENTS WITH INDEPENDENT THIRD PARTIES. Each of Sepracor and
Oncogene shall have the right to contract with its Affiliates and
Independent Third Parties for work, consulting services, or the
financing of the costs of its work or of its share of the costs of work
in connection with the Research Program General form agreements that
shall be used by each of the Parties for Independent Third Parties that
function as investigators or consultants are appended hereto and have
been approved for general use. Material deviations from these forms
will be subject to prior approval by the other party, which approval
shall not unreasonably be withheld and shall be decided within thirty
(30) days of receipt of a request for approval.
2.13 NO INDEPENDENT RESEARCH WITHIN THE SCOPE OF THE RESEARCH PROGRAM.
During the term of this Agreement, the Parties to this Agreement shall
not undertake independent research, either directly or indirectly
through any Affiliate or any other Person, in any area falling within
the Field or which competes with any Compound being developed pursuant
to this Agreement without the consent of the Joint Steering Committee.
2.14 OTHER RESEARCH PERMITTED. The Parties and their Affiliates have the
right to conduct research on Compounds and use its own Technology and
Joint Technology outside the Field alone or in collaboration with third
parties, notwithstanding their potential utility of such Compounds in
the Field.
2.15 CLINICAL DATA. All clinical data obtained from studies conducted
pursuant to the Research Program and the Development Program shall be
jointly owned by Sepracor and Oncogene and may be used by either Party
and its Affiliates outside the Field, it being understood that any such
Party shall not, in the course of such use or conduct, take or omit to
take any action which would cause prejudice to the other Party or to
the Research or Development Programs.
2.16 LEAD COMPOUNDS. Notwithstanding any provision of this Agreement, if a
Compound is not designated as a Development Candidate within two (2)
years following its designation by the JSC as a Lead Compound, such
Lead Compound shall cease to be
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considered a Compound within the meaning of this Agreement and neither
party shall have any continuing obligation to the other in respect of
development or commercialization thereof.
ARTICLE 3
COSTS AND EXPENSES OF THE RESEARCH PROGRAM
3.1 PAYMENT OF COSTS AND EXPENSES. Each Party shall be responsible for all
expenses and costs incurred by it and its employees, its Affiliates and
its consultants in the performance of such Party's obligations
hereunder, including, without limitation, in respect of Patent Expenses
relating to Joint Patent Rights for which it is responsible, salaries
of its employees, fees of its consultants, materials, equipment and
administrative expenses and travel costs of its employees, employees of
its Affiliates and consultants. Each party shall document such costs
and expenses in accordance with the methods to be established by the
JSC. In order that each party bears an equal share of such costs and
expenses, a Party shall reimburse the other Party the Deficiency Amount
within ninety (90) days from the end of any year.
ARTICLE 4
SECRET INFORMATION
4.1 GENERAL. Each of Sepracor and Oncogene recognizes that the other
Party's Confidential Information, Sepracor Technology, Oncogene
Technology, Joint Technology (collectively, the "Secret Information")
all constitute highly valuable proprietary
confidential information.
4.2 TREATMENT OF SECRET INFORMATION.
(a) Subject to the disclosure obligations set forth in this
Article 4, each of Sepracor and Oncogene agree that, during
the term of this Agreement, each Party will maintain, and
shall cause its Affiliates to maintain, the Secret Information
of the other in confidence and shall not disclose, divulge or
otherwise communicate such Secret Information to Independent
Third Parties (except those bound to secrecy pursuant to
Section 2.10 above), or use it for any purpose except pursuant
to, and in order to carry out the terms and objectives of this
Agreement. Notwithstanding any provision of this Agreement,
Sepracor and Oncogene hereby agree that they shall, together
with their Affiliates, be entitled to use, outside of the
Field, its own Confidential Information, its own Technology,
and its share of Joint Technology obtained during the term of
this Agreement.
(b) Each Party further agrees to exercise, and shall cause its
Affiliates to exercise, reasonable precautions to prevent and
restrain the unauthorized disclosure of
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such Secret Information by any of its directors, officers,
employees, consultants, subcontractors, sublicensees or agents
or those of its Affiliates.
(c) Each Party shall maintain, and shall cause its Affiliates to
maintain, the other Party's Confidential Information in
confidence. During the term of this Agreement and for a period
of ten (10) years thereafter each Party shall not disclose,
divulge or otherwise communicate the other Party's
Confidential Information to Independent Third Parties except
those bound by secrecy pursuant to Section 2.10 above or in
the event of an assignment by such Party of its rights
hereunder in accordance with the provisions hereof.
4.3 PRESS RELEASES AND ANNOUNCEMENTS.
(a) Neither Oncogene or Sepracor shall, and Oncogene and Sepracor
shall cause their Affiliates not to, issue any press release
or other public announcement relating to or disclosing any
Secret Information (other than its own Confidential
Information or its own Technology) without the prior written
consent of the other Party, except where such announcements or
press releases are required by law for the purposes of
securing the registration of, and or governmental approval to
market, in accordance with this Agreement, any Commercial
Products, or for the procurement of patent protection of a
Joint Patent Right. Notwithstanding the foregoing, each Party
shall have the right to disclose the existence of this
Agreement in any prospectus, offering memorandum or other
document or filing required by applicable securities laws or
other applicable law or regulation.
(b) Where a press release or public announcement is required by
law, the Party required to disclose Secret Information shall
inform the other Party and provide it with a copy of any such
press release or public announcement prior to release.
(c) Each of Sepracor and Oncogene shall inform the other Party of
any Secret Information which it is required to disclose.
4.4 PUBLICATIONS. Notwithstanding the provisions of Sections 4.1, 4.2 and
4.3, a Party or its Affiliates may submit the results obtained in the
course of the Research Program for publication subject to approval of
the JSC. The Parties further recognize, however, that the JSC's right
to approve or prohibit publication may be subject to the publication
rights of third party investigators as contemplated in Section 2.12
above.
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ARTICLE 5
INTELLECTUAL PROPERTY RIGHTS
5.1 GENERAL. The following provisions relate to inventions and know-how
conceived, directly or indirectly through Affiliates, by Sepracor or
Oncogene or Sepracor and Oncogene, jointly, during the course of
carrying out the Research Program.
5.2 RESEARCH. All Technology, information, data, discoveries and inventions
arising from programs of research carried out by Oncogene and its
Affiliates, on the one hand, or by Sepracor and its Affiliates, on the
other hand, and all intellectual property rights relating thereto shall
be the exclusive property of Oncogene or Sepracor and their Affiliates,
as the case may be.
5.3 MAINTENANCE OF JOINT PATENT RIGHTS. The JSC shall appoint either
Sepracor or Oncogene on a case by case basis as the party responsible
for taking all necessary actions to obtain, sustain and enforce patent
protection for Joint Patent Rights including, without derogation from
the foregoing:
(a) Filing applications for patents on any patentable inventions
included within Joint Patent Rights; provided that any Party
wishing to file such application shall inform the other Party
and the Joint Steering Committee regarding countries in which
such applications should be filed; the JSC shall determine
which countries where such applications shall be made;
(b) Prosecuting all pending and new patent applications included
within Joint Patent Rights and responding to opposition or any
other form of action for invalidity or revocation of Patent
Rights filed by Independent Third Parties against the grant of
patents for such applications;
(c) Maintaining in force any patents included within 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 patents were granted.
Each Party shall undertake to provide all necessary assistance to the
JSC and the other Party to achieve the objectives of this Section 5.3.
The responsible Party shall continue to prosecute and maintain all
relevant patent rights relating to Joint Technology within the Field in
full consultation with the JSC. Each Party shall keep the other Party
informed as to all developments with respect to Joint Patent Rights by
copying all documents and correspondence related to such protection and
maintenance.
If the JSC decides to abandon a patent application or an issued patent
included within Joint Patent Rights, any Party whose appointees on the
JSC shall have voted against such abandonment shall have the option, at
its expense, of continuing to prosecute any such patent application or
of keeping the issued patent in force. If a Party elects to
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file, at its own expense, patent applications in respect of Joint
Patent Rights in countries in which the JSC has elected not to file,
such Party shall have the unrestricted right to negotiate licenses with
Independent Third Parties in such nonelected countries or exploit it
directly.
5.4 INFRINGEMENT. Each Party shall promptly inform the other Party of any
suspected infringement of any Joint Patent Rights. During the term of
this Agreement, both Parties shall have the right to institute an
action for infringement of the Joint Patent Rights against such
Independent Third Party in accordance with the following:
(a) Both Parties shall institute suit jointly, the suit shall be
brought in both their names and the out-of-pocket costs
thereof shall be borne equally. Once accounting is made for
such equal bearing of costs any recovery or settlement
received by a Party in excess of the total, equally shared out
of pocket costs shall be shared equally. The JSC shall decide
upon the manner in which any Party shall exercise control over
such action. Any Party may, if it so desires, also be
represented by separate counsel of its own selection, the fees
for which counsel shall be paid by it.
(b) In the absence of agreement to institute a suit jointly, any
Party may institute suit, and, at its option, name the other
Party as a plaintiff. The Party instituting shall bear the
entire costs of such litigation, including defending any
counterclaims brought against the other Party and paying any
judgments rendered against the other Party, and shall be
entitled to retain the entire amount of any recovery or
settlement.
(c) Should either Party commence a suit under the provisions of
this Section 5.4 and thereafter elect to abandon such suit,
the abandoning Party shall give timely notice to the other
Party who may, if it so desires, continue prosecution of such
suit, provided that the sharing of expenses and any recovery
in such suit shall be as agreed upon between both Parties.
5.5 COSTS FOR APPLYING, PROSECUTING AND MAINTAINING. The costs of applying
for, prosecuting and maintaining patent applications and patents as
specified in Section 5.3 shall be borne equally by Sepracor and
Oncogene.
5.6 DISCLOSURE OF INVENTIONS. Each of Sepracor and Oncogene shall promptly
inform the other Party of all inventions and Joint Technology that are
conceived in the course of carrying out the Research Program by its
respective employees, agents, Affiliates or consultants, whether
invented solely or jointly with employees of or consultants to the
other Party.
5.7 OWNERSHIP OF JOINT INTELLECTUAL PROPERTY. Sepracor and Oncogene shall
jointly own the entire right, title and interest in all Technology,
patents, know how and other
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rights in any idea, design, invention, discovery, improvement or other
creation, including any Compound, method or apparatus conceived jointly
by employees, agents, or consultants Sepracor and employees, agents, or
consultants of Oncogene, in the course of the Research Program. The
commercial exploitation by Sepracor and Oncogene as joint owners of
their rights is subject to the provisions of Article 6 of this
Agreement.
5.8 COPIES OF PATENT APPLICATIONS. Each Party shall provide to the other
Party, as to those applications which it is filing, copies of all
patent applications for Joint Patent Rights prior to filing, for the
purpose of obtaining comments and advice from the other Party's patent
advisors and the other Party's approval to so file which approval shall
be provided within a reasonable time. Upon the other Party's approval,
such Party shall be free to file said patent applications. Such Party
shall also consult with the other Party on the prosecution of said
applications and provide to such Party copies of all substantive
documents relating to the prosecution of said applications. Such Party
shall provide to the other Party every six (6) months a report
detailing the status of all patent applications that are part of Joint
Patent Rights.
5.9 OTHER PATENT RIGHTS. Each Party shall be responsible at its sole
expense and discretion for taking all necessary actions to obtain,
sustain and enforce patent protection for its sole Patent Rights,
including the following:
(a) Filing applications for patents on any patentable inventions;
(b) Prosecuting all pending and new patent applications and
responding to opposition or any other form of action for
invalidity or revocation of Patent Rights filed by Independent
Third Parties against the grant of patents for such
application;
(c) Maintaining in force any patents by duly filing all necessary
papers and paying any fees required by the patent legislation
of the particular country in which such patents were granted.
In the event that a Party institutes suit to protect its own Patent
Rights against suspected infringement involving manufacture, use, or
sale of a Development Candidate or Commercial Product aside from a
Development Candidate or Commercial Product that targets ** or ** it
shall notify the other Party who shall have the option, to be exercised
in writing no later than thirty (30) days from receipt of the notice,
to elect to assume 50% of all expenses relating to such suit, including
attorneys' fees, in which case any recovery or settlement received by
the Party having instituted suit shall be shared equally by both
Parties. In the event that a Party
- -----------------------
** This portion redacted pursuant to a request for confidential treatment.
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institutes suit to protect its own Patent Rights against suspected
infringement involving anufacture, use, or sale of a Development
Candidate or Commercial Product that targets ** or ** it shall notify
the other Party who shall have the option, to be exercised in writing
no later than thirty (30) days from receipt of the notice, to elect to
assume 25% of all expenses relating to such suit in the case of
Oncogene's election, or 75% of all expenses relating to such suit in
the case of Sepracor's election, including attorneys' fees, in which
case any recovery or settlement received by the Party having instituted
suit shall be shared by the Parties in proportion to their share of
expenses.
The Party having instituted suit shall have the authority to make all
decisions concerning such suit, including without limitation, the right
to compromise the claim.
5.10 INDEMNIFICATION. Each Party (the "INDEMNIFYING PARTY") shall indemnify
the other Party, its directors, officers, employees and consultants
(the "INDEMNIFIED PARTY") from and against any and all claims, demands,
losses, liabilities, expenses or damages which the Indemnified Party
may suffer, pay or incur as a result of claims, demands or suits
against the Indemnified Party arising or alleged to arise by reason of
or in connection with any and all personal injury and property damage
caused or contributed to, in whole or in part, by the Indemnifying
Party's actions or infringement.
ARTICLE 6
DEVELOPMENT AND COMMERCIALIZATION
6.1 DECISION TO COMMERCIALIZE. The Joint Steering Committee has the
authority, following recommendation from the JDC, to determine that a
Lead Compound is suitable for development and therefore qualifies as a
Development Candidate. This authority of the JSC is governed by Section
2.4.
6.2 COMMERCIALIZATION AGREEMENT. Where a Compound has been designated as a
Development Candidate, the Parties shall enter into a commercialization
agreement (the "COMMERCIALIZATION AGREEMENT") for the development and
commercialization of that Compound as soon as possible after the first
to occur of the following events: (a) the decision to enter into a full
clinical development program as approved by the JSC, or (b) the
beginning of Phase III clinical studies, conducted to support the
application for marketing approval of the Development Candidate for an
indication.
6.3 CONTENT OF COMMERCIALIZATION AGREEMENT. The Commercialization Agreement
shall provide that the Parties shall both have commercialization rights
worldwide, and the parties intend to jointly exploit any Commercial
Products in the Field and share in the
- -----------------------
** This portion redacted pursuant to a request for confidential treatment.
19
<PAGE> 25
profits from such exploitation in the same proportion as they share in
the expenses incurred under this Agreement in developing such
Commercial Products. The mechanism for commercialization will be
negotiated between the Parties through good faith negotiations; it
shall take into account the respective contributions of the Parties
pursuant to Section 2.8, and profits should, unless otherwise agreed to
by the Parties, be essentially equally shared between the Parties,
except in the cases of Commercial Products within either of the two
classes of (a) ** and (b) ** where Sepracor will receive ** and
Oncogene ** of profits. The Parties agree that they shall both have
commercialization rights world wide. The Commercialization Agreement
shall provide that rights hereunder may be sublicensed to a third party
by mutual agreement of the Parties, and to any affiliate of a Party.
6.4 NO SUPPORT. If any Party's representatives on the JSC or JDC declines
to support the advancement of a Compound to a Lead Compound stage or a
Lead Compound to a development stage for reasons which may include, but
are not limited to, the proposed market being outside the scope of its
interest or being too small, and the other Party's representatives on
the JSC or JDC support the advancement of said Compound to a Lead
Compound stage or of a Lead Compound to a development stage with an
objective of commercialization of said Compound, then the JSC or JDC,
as the case may be, shall record a notice ("NOTICE OF OPPORTUNITY") in
the minutes of the meeting where the representatives express such
positions. For a period of sixty (60) days after the date of such
Notice of Opportunity the Parties shall negotiate in good faith to
resolve the issue in a mutually agreeable manner. If the Parties are
unable to resolve the issue, then, for a period of one hundred and
twenty (120) days thereafter, the Party having supported the
advancement of the Compound or the Lead Compound (the "NOTIFYING
PARTNER") shall have a first right to undertake worldwide development
and commercialization of such Compound or Lead Compound. Upon the
Notifying Party exercising such right, such Party shall be granted a
worldwide exclusive license from the other Party under all relevant
intellectual property which shall contain usual terms and conditions
for agreements of that type and provide for the payment by the
Notifying Party to the other Party of royalties of ** of Net Invoiced
Sales Value to be paid within thirty (30) days following the end of any
calendar quarter. If, at any time, a Party which has commenced
development on a Compound or a Lead Compound, halts such development,
then the other Party shall have the right to undertake development of
said Compound or Lead Compound, under the same mechanism and subject to
the same conditions as described in this Section 6.4.
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20
<PAGE> 26
ARTICLE 7
OTHER RESEARCH VENTURES ETC.
7.1 ACQUISITION OF RIGHTS FROM THIRD PARTIES. During the term of this
Agreement, Sepracor and Oncogene shall promptly notify the other in
writing of any and all opportunities to acquire from Independent Third
Parties, whether by license, assignment or otherwise, technology or
patents which may be useful in, or may relate to, the purposes of the
Research Program.
Sepracor and Oncogene shall work together in a manner mutually
agreeable and beneficial to secure third party technology or patents
which they have determined would be useful in or relate to the purpose
of the Research Program. Each Party shall (a) inform the other Party of
all third party technology or patents that may be useful or relate to
the Research Program, (b) solicit the other Party's participation and
approval in the formulation and implementation of a strategy for
securing such technology or patents and, (c) provide status reports on
the progress of such strategy.
ARTICLE 8
TERM, EXTENSION, TERMINATION AND DISENGAGEMENT
8.1 TERM. The initial term (the "INITIAL TERM") of this Agreement shall be
three (3) years, commencing on the Effective Date. Following the
expiration of the Initial Term, this Agreement shall be automatically
renewed for additional successive one-year periods (each, a "RENEWAL
PERIOD") unless either Party gives the other notice of its intent not
to renew one hundred and twenty (120) days prior to the expiration of
the Initial Term or any Renewal Period, as the case may be.
8.2 EVENTS OF TERMINATION. The following events shall constitute events of
termination (each an "EVENT OF TERMINATION"):
(a) Any representation or warranty by Sepracor or Oncogene in this
Agreement proves incorrect, or inaccurate, in any material
respect when made or deemed made as determined by an
independent arbitrator and the defaulting Party does not
remedy or cure such incorrect or inaccurate representation or
warranty within sixty (60) days following written notice from
the other Party of such breach.
(b) Sepracor or Oncogene fails to perform or observe any term of
this Agreement or Schedules thereto and such failure remains
unremedied for a period of sixty (60) days following written
notice thereof from the nondefaulting Party or such longer
period if the defaulting Party is diligently taking action to
remedy such failure.
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<PAGE> 27
(c) Sepracor or Oncogene makes an assignment for the benefit of
its creditors, becomes insolvent, files a petition in
bankruptcy, petitions or applies to any tribunal for the
appointment of a custodian, receiver or any trustee for it or
a substantial part of its assets, or commences any proceeding
under any bankruptcy, reorganization, arrangement,
readjustment of debt, dissolution or liquidation law or
statute of any jurisdiction, whether now or hereafter in
effect; or if there has been filed any such petition or
application against Sepracor or Oncogene, or any such
proceeding has been commenced against it, in which an order
for relief is entered or which remains undismissed for a
period of sixty (60) days or more; or Sepracor or Oncogene by
any act or omission indicates its consent to, approval of or
acquiescence in, any such petition, application or proceeding
or order for relief or the appointment of a custodian,
receiver or any trustee for it or any substantial part of any
of its properties, or is the subject of any such
custodianship, receivership or trusteeship that continues
undischarged for a period of sixty (60) days or more.
(d) Sepracor or Oncogene generally fails to pay its debts as such
debts become due.
(e) In respect of any Party, if a Person acquires (the
"Acquisition") shares of such Party (the "Target"), directly
or indirectly, which carry the right to cast, in the
aggregate, more than 50% of the votes for the election of
directors.
ARTICLE 9
CONSEQUENCES OF TERMINATION
9.1 LICENSES UPON TERMINATION. Before the expiration of a period of one
hundred and twenty (120) days following delivery of a notice pursuant
to Section 8.1, either Party (the "ELECTING PARTY") may, by written
notice (the "NOTICE") accompanied by a Submitted License (as defined
hereinafter) at its option offer to the other Party: (a) to have an
exclusive worldwide license for any or all of the Joint Patent Rights
or Joint Technology in accordance with the terms and conditions of an
agreement to be submitted by the Electing Party to the other Party (the
"SUBMITTED LICENSE"); or (b) to grant to the other Party (the
"NON-ELECTING PARTY") an exclusive worldwide license for such Joint
Patent Rights or Joint Technology in accordance with the Submitted
License.
The Non-Electing Party shall have the option to either (i) grant to the
Electing Party a worldwide exclusive license for such Joint Patent
Rights or Joint Technology in accordance with the terms and conditions
of the Submitted License, or (ii) to have an exclusive worldwide
license for such Joint Patent Rights or Joint Technology in accordance
with the terms of the Submitted License.
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<PAGE> 28
Such election may be made by the Non-Electing Party in writing,
addressed to the Electing Party (the "ELECTION NOTICE") within ninety
(90) days following receipt of the Notice, failing which he shall be
deemed to have elected to grant the Electing Party a license upon the
terms of the Submitted License. The Parties shall execute a license
based on the Submitted License within six (6) months following receipt
by the Electing Party of the Election Notice.
9.2 TERMINATION UPON THE OCCURRENCE OF AN EVENT OF TERMINATION. Upon the
occurrence of any Event of Termination set forth in Section 8.2 (a) -
(d), for a period of sixty (60) days from the date of the occurrence of
any Event of Termination, the Parties shall negotiate in good faith to
resolve the issue in a mutually agreeable manner, and if the Parties
are unable to resolve the issue, then the Party not responsible for
such Event of Termination may, by notice to the other Party, terminate
this Agreement. In the event of any termination by a Party (the
"NOTIFYING PARTY") pursuant to Section 8.2 (a) - (d), all Joint
Technology and Joint Patent Rights shall become the sole exclusive
property of the Notifying Party, and the other Party shall execute and
perform all transfers and assignments to the Notifying Party which are
required by law. Upon the occurrence of an Event of Termination set
forth in Section 8.2(e), the Party, the shares of which are not being
acquired (the "OTHER PARTY"), shall, within sixty (60) days of its
knowledge of such Event of Termination, choose one of the following
options:
(a) Continue the Agreement in full force and effect, in which
event the Target shall not be considered to be in default
hereunder;
(b) Terminate the Agreement and be granted an exclusive license by
the Target to all Joint Technology and Joint Patent Rights
pursuant to which the Other Party shall pay to the Target
royalties on Net Sales made by the Other Party and its
Affiliates in the amount of ** of Net Invoiced Sales Value for
Commercial Products which were not, at the time of
termination, in Full Development or ** of Net Invoiced Sales
Value for Commercial Products which were, at the time of
termination, in Full Development but for which a
Commercialization Agreement is not yet in effect; or
(c) Terminate the Agreement and grant an exclusive license to the
Target to all Joint Technology and Joint Patent Rights
pursuant to which the Target shall pay to the Other Party
royalties on Net Sales made by the Target and its Affiliates
in the amount of ** of Net Invoiced Sales Value for Commercial
Products which were not, at the time of termination, in Full
Development or ** of Net Invoiced Sales Value for Commercial
Products which were, at the time of termination, in Full
Development but for which a Commercialization Agreement is not
yet in effect.
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23
<PAGE> 29
9.3 SURVIVAL OF OBLIGATIONS; RETURN OF CONFIDENTIAL INFORMATION.
Notwithstanding any termination of this Agreement, the obligations of
the Parties with respect to the protection and nondisclosure of
Confidential Information, including those set forth in Article 4, shall
survive and continue to be enforceable. Upon any termination of this
Agreement, each Party shall promptly return to the other Party all of
that other Party's Confidential Information, and all copies thereof.
Sepracor and Oncogene acknowledge that after termination of this
Agreement each Party will be free to use its own Confidential
Information and Technology without restriction.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
Each of Sepracor and Oncogene represents and warrants as follows:
(a) GOOD STANDING. It is a corporation duly organized, validly
existing and is in good standing under the laws of its
jurisdiction of incorporation 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.
(b) PROPER AUTHORIZATION. The execution, delivery and performance
of this Agreement have been duly authorized by all necessary
corporate action and do not and will not (i) require any
consent or approval of its stockholders, (ii) violate any
provision of any law, rule, regulation, order, writ, judgment,
in- junction, decree, determination or award presently in
effect having applicability to it or any provision of its
charter or by-laws, or (iii) 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.
(c) BINDING AGREEMENT. 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 creditors' rights generally.
(d) ABSENCE OF CONFLICT. 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 hereunder.
(e) TITLE. Each of Sepracor and Oncogene for itself represents it
has good and marketable title to or valid leases or licenses
for, all of its properties, rights and assets, excluding
patent property, to be used in the fulfillment of its
24
<PAGE> 30
responsibilities under the Research Program, subject to no
claim of any third party other than the relevant lessors or
licensors.
ARTICLE 11
COVENANTS
11.1 AFFIRMATIVE COVENANTS OTHER THAN REPORTING REQUIREMENTS. Throughout the
term of this Agreement, each of Sepracor and Oncogene shall:
(a) 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
Research Program;
(b) Maintain and preserve all of its properties, rights and assets
to be used in the proper conduct of the Research Program in
good working order and condition in accordance with the
general practice of other companies of similar size and
character;
(c) Conduct all experiments related to the Research Program and
maintain all facilities used in connection therewith in
accordance with applicable research guidelines, and with all
applicable federal, state, and local environmental
requirements;
(d) Pay to the other Party, if any, any Deficiency Amount
determined by the JSC.
ARTICLE 12
DISPUTE RESOLUTION
Any and all disputes arising between the parties under this Agreement shall be
resolved using proceedings in the following order: (i) good faith negotiations
between executives of the parties having full authority to negotiate and resolve
the dispute; (ii) if such negotiations fail to bring about a resolution within
sixty days of notice of the dispute, non-binding mediation at a mutually
acceptable location in accordance with the rules of the Center for Public
Resources, with costs shared equally; (iii) the procedures of this Article 12
are exclusive; however, nothing in this Article 12 shall preclude either party
from taking any action necessary to preclude imminent and irreparable harm. If
such mediation fails, the matter of differences shall be determined by
arbitration. Arbitration shall be conducted under the Commercial Arbitration
Rules of the American Arbitration Association by one (1) person appointed by the
Parties or, if the Parties cannot agree within thirty (30) days following
notification by one Party that it wishes to refer a matter to arbitration, by
such person empowered by the American Arbitration Association to so appoint an
arbitrator. Arbitration shall take place in a location agreed to by the Parties,
or absent such agreement, chosen by the arbitrator. The decision of the
arbitrator shall be final and binding on both Parties. The fees and expenses of
the arbitrator shall be borne equally by the Parties.
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<PAGE> 31
ARTICLE 13
NOTICES
Any notice, statement, payment or other document required to be given hereunder
shall be in writing and shall be given either personally, by mailing the same,
postage prepaid, by certified or registered mail (return receipt requested), in
the absence of an actual or apprehended disruption of mail service or delivered
by telecopier addressed as follows, or to such other Addresses as may be
designated from time to time by notice given, in the manner provided in this
Article 13.
If to Sepracor: Sepracor Inc.
111 Locke Drive
Marlborough, Massachusetts 01451
Attention: Chief Executive Officer
Telecopier: (508) 460-8118
If to Oncogene: Oncogene Science, Inc.
106 Charles Lindbergh Blvd.
Uniondale, New York 11553-3649
Attention: Chief Executive Officer
Telecopier: (516) 745-6429
Notices given personally shall be deemed given as of the date delivered. Notices
given by telecopier shall be deemed given on the first business day following
the date of transmission. Mailed notices shall be deemed given on the fifth
business day following the date of such mailing.
ARTICLE 14
MISCELLANEOUS
14.1 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Parties hereto and their respective legal
representatives, successors and permitted as- signs.
14.2 HEADINGS. The headings contained in this Agreement are for convenience
of reference only and do not form a part of this Agreement, and no
construction or inference shall be derived therefrom.
14.3 ENTIRE AGREEMENT. This Agreement and the documents and other agreements
referred to herein or signed concurrently herewith set forth the entire
agreement and understanding of the Parties.
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<PAGE> 32
14.4 SEVERABILITY. In the event that any provision of this Agreement is held
by a court of competent jurisdiction to be unenforceable because it is
invalid or in conflict with any law of any relevant jurisdiction, the
validity of the remaining provisions shall be construed and enforced as
if the Agreement did not contain the particular provisions held to be
unenforceable.
14.5 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
14.6 AMENDMENT, WAIVER, ETC. This Agreement may be amended, modified,
superseded or canceled, and any of the terms hereof may be waived, only
by a written instrument executed by each Party hereto 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 hereof shall in no manner affect the rights at a later time
to enforce the same. No waiver by any Party of any condition or of the
breach of any term contained in this Agreement, whether by conduct or
otherwise, in any one or more instance, shall be deemed to be, or
construed as, a further or continuing waiver of any such condition or
of the breach of such term or any other term of this Agreement.
14.7 FORCE MAJEURE. In the event that either Party is prevented from or is
unable to perform any of its obligations under this Agreement due to
any act of God, fire, casualty, flood, war, strike, lockout, failure of
public utilities, injunction of any act, exercise, assertion or
requirement of governmental authority, including any governmental law,
order, or regulation permanently or temporarily prohibiting or reducing
the level of research and development work hereunder, epidemic,
destruction of production facilities, riots, insurrection, inability to
procure or use materials, labor, equipment, transportation or energy
sufficient to meet experimentation needs, or any other cause beyond the
reasonable control of the Party invoking this Article 14 if such Party
shall have used its best efforts to avoid such occurrence, such Party
shall give notice to the other Party in writing promptly, and thereupon
the affected Party's performance shall be excused and the time for
performance shall be extended for the period of delay or inability to
perform due to such occurrence.
14.8 INDEPENDENT CONTRACTOR. Nothing in this Agreement shall be construed as
constituting both Parties as partners or joint venturers with respect
to this Agreement. Both Parties are independent contractors under this
Agreement.
14.9 ASSIGNMENT AND SUCCESSORS. This Agreement and the rights and interests
hereunder may not be assigned by either Party in whole or in part
except to an Affiliate, a purchaser of all or substantially all of the
assets of a Party or to any successor corporation resulting from any
merger or consolidation of either Party with or into such corporation.
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<PAGE> 33
14.10 GOVERNING LAW. This Agreement shall be construed and interpreted in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
as a sealed instrument in their names by their properly and duly authorized
representatives as of the date first written above.
SEPRACOR INC.
By: /s/
----------------------------------------
Date: 3-4-97
--------------------------------------
ONCOGENE SCIENCE, INC.
By: /s/ Gary E. Frashier
----------------------------------------
Date: 3-7-97
----------------------------------------
28
<PAGE> 1
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
- --------------------------------------------------------------------------------
ONCOGENE SCIENCE, INC.
AND
THE DOW CHEMICAL COMPANY
- --------------------------------------------------------------------------------
LICENSE
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1 - DEFINITIONS................................................................................ 2
ARTICLE 2 - GRANT OF LICENSE........................................................................... 6
ARTICLE 3 - COMPOUND TRANSFER.......................................................................... 7
ARTICLE 4 - OSI DEVELOPMENT, OTHER ACTIVITY, DILIGENCE................................................. 9
ARTICLE 5 - PATENT RIGHTS.............................................................................. 10
ARTICLE 6 - PAYMENTS AND ROYALTIES..................................................................... 12
ARTICLE 7 - CONFIDENTIALITY............................................................................ 20
ARTICLE 8 - THIRD PARTY INFRINGEMENT CLAIMS............................................................ 23
ARTICLE 9 - PATENT ENFORCEMENT LITIGATION.............................................................. 24
ARTICLE 10 - U.S. EXPORT CONTROL AND GOVERNMENT LICENSES............................................... 25
ARTICLE 11 - PRODUCT LIABILITY AND INDEMNIFICATION..................................................... 26
ARTICLE 12 - WARRANTY, DISCLAIMER, GUARANTEE........................................................... 27
ARTICLE 13 - TERM AND TERMINATION...................................................................... 28
ARTICLE 14 - FORCE MAJEURE............................................................................. 30
ARTICLE 15 - CONSENTS.................................................................................. 31
ARTICLE 16 - NOTICES................................................................................... 31
ARTICLE 17 - DISPUTE RESOLUTION........................................................................ 33
ARTICLE 18 - ASSIGNMENT................................................................................ 34
ARTICLE 19 - MISCELLANEOUS PROVISIONS.................................................................. 34
EXHIBIT A - DowElanco/OSI Provisions
EXHIBIT B - Dow Patents
EXHIBIT C - OSI Patents
EXHIBIT D - Joint Patents
EXHIBIT E - Letter of Intent
EXHIBIT F - Private Placement Investment Representations
</TABLE>
<PAGE> 4
LICENSE AGREEMENT
THIS license agreement (hereinafter "License") is made between THE DOW
CHEMICAL COMPANY (hereinafter "DOW"), a corporation duly formed and existing
under the laws of the State of Delaware, having a place of business at 2030 Dow
Center, Midland, Michigan 48674, United States of America, and Oncogene Science,
Inc. (hereinafter "OSI"), a corporation duly formed and existing under the laws
of Delaware having a place of business at 106 Charles Lindbergh Blvd.,
Uniondale, NY 11553;
WITNESSETH:
WHEREAS, DOW possess an extensive compound library, including their
structures and other data; and
WHEREAS, DOW has proprietary rights in the compounds; and
WHEREAS, OSI desires to undertake the further evaluation of these
compounds and, if any compounds are found to be active in the pharmaceutical
area, then appropriate development and commercial exploitation of said
compounds; and
WHEREAS, OSI desires to obtain an exclusive, global license to these
compounds for specific pharmaceutical uses; and
WHEREAS, DOW is willing to grant said license.
NOW, THEREFORE, DOW and OSI, in consideration of the mutual covenants
contained herein, agree as follows:
<PAGE> 5
ARTICLE 1 - DEFINITIONS
When used in this License, the following terms shall have the meanings
set out below, unless the context requires otherwise. The singular shall be
interpreted as including the plural and vice versa, unless the context clearly
indicates otherwise.
1.1 "AFFILIATE" means a corporation or any other entity that at any time
during the term of this License directly or indirectly through one or
more intermediaries is CONTROLLED by the designated Party, but only for
so long as the relationship exists. A corporation or other entity shall
no longer be an AFFILIATE when through loss, divestment, dilution or
other reduction of a Party's ownership, the Party loses CONTROL of such
corporation or other entity.
1.2 "APPROVAL" means final approval by a REGULATORY AUTHORITY in any
country where applicable in the TERRITORY, for commercial marketing of
PRODUCT, including for example approval of final labeling and price
approval.
1.3 "COMPOUNDS" means DOW's K-list of compounds, including samples thereof,
including simple modifications appropriate to either a pro-drug form of
the active compound or as the active compound [e.g., changing its
charge by forming an anionic, neutral, or cationic form, or simple
amide or ester form, or solubility (such as its salt form), or pH
characteristics, or its bifunctional coordinate (e.g., isothiocyanate
or carboxylate) but excluding modifications which lead to novel
compounds with enhanced biological activity] and all chemical
structures thereof in data base format, in the physical possession of
DowElanco, which total at least 140,000, which included in that total
are any COMPOUNDS or COMPOUND DERIVATIVES in OSI's possession prior to
the EFFECTIVE DATE (except for any COMPOUNDS that may later be found to
belong to a third party which are deemed ab initio excluded from this
License), and may be further defined as follows:
1.3.1 "CATEGORY 1 COMPOUNDS" means COMPOUNDS which are within the
scope of the claims of a DOW composition, formulation or
method of use PATENT which has issued or issues during the
term of this License.
1.3.2 "CATEGORY 2 COMPOUNDS" means COMPOUND DERIVATIVES made by OSI
based upon CATEGORY 1 COMPOUNDS.
1.3.3 "CATEGORY 3 COMPOUNDS" means COMPOUNDS that are known to the
public (within the meaning of patent laws), but with respect
to which rights may belong to a third party, and which are not
within CATEGORY 1 COMPOUNDS.
2
<PAGE> 6
1.3.4 "CATEGORY 4 COMPOUNDS" means COMPOUNDS that are unknown to the
public (within the meaning of patent laws), and which are not
within CATEGORY 1 COMPOUNDS.
1.3.5 "CATEGORY 5 COMPOUNDS" means COMPOUND DERIVATIVES made by OSI
based upon CATEGORY 4 COMPOUNDS.
1.4 "COMPOUND DERIVATIVES" means COMPOUNDS that have been physically
modified by OSI, CONTRACTUAL COLLABORATORS or sublicensees in a manner
other than by simple modifications appropriate to either a pro-drug
form of the active compound or as the active compound from the sample
supplied by DOW.
1.5 "CONFIDENTIAL INFORMATION" means any information of either Party
regarding PATENTS, MANUFACTURE, TECHNOLOGY or PRODUCT, financial terms
of this License, and business development plans for a PRODUCT, and does
not include information excluded under Article 7.2.
1.6 "CONTRACTUAL COLLABORATORS" means a corporation or other entity with
which OSI collaborates in the FIELD.
1.7 "CONTROL" or "CONTROLLED" shall mean, in the case of a corporation,
ownership or control, directly or indirectly, of more than fifty
percent (50%) of the shares of stock entitled to vote for the election
of directors and, in the case of an entity other than a corporation,
ownership or control, directly or indirectly, of more than 50% of the
assets or the ability in the case of either a corporate or
non-corporate entity to direct the management and affairs of such
entity.
1.8 "DowElanco" means a partnership organized under the laws of the State
of Indiana and is an AFFILIATE of DOW as of the EFFECTIVE DATE.
1.9 "EFFECTIVE DATE" means the date of the last signature of the Parties to
this License.
1.10 "FDA" means the United States Food and Drug Administration or any
successor U.S. governmental agency performing similar functions.
1.11 "FIELD" means the use in humans of the COMPOUNDS or COMPOUND
DERIVATIVES by or on behalf of OSI for the development of small
molecular weight compounds as HUMAN THERAPEUTIC PRODUCTS or HUMAN
COSMECEUTICAL PRODUCTS. Notwithstanding the above, this FIELD shall NOT
include any agricultural uses as defined by the expected agreement
between DowElanco and OSI and that definition will be attached hereto
promptly after execution of that agreement and made a part hereof in
APPENDIX A.
3
<PAGE> 7
1.12 "GMPs" means the Good Manufacturing Practices as defined from time to
time in the United States Food, Drug and Cosmetics Act and related
regulations or any successor laws or regulations governing the
manufacture of the PRODUCT in the United States.
1.13 "HUMAN COSMECEUTICAL PRODUCTS" means any prescription product or any
product sold under a governmental approval containing COMPOUNDS or
COMPOUND DERIVATIVES for the treatment or management of any cosmetic
condition in a human, excluding use as a diagnostic agent, derived from
research conducted by or for OSI.
1.14 "HUMAN THERAPEUTIC PRODUCTS" means any PRODUCT containing one or more
COMPOUNDS or COMPOUND DERIVATIVES for the treatment or management of
any disease state in a human patient, excluding use as a diagnostic
agent, derived from research conducted by or for OSI.
1.15 "LETTER OF INTENT" means a letter of intent between DOW and OSI,
effective December 16, 1996, relevant to this License for COMPOUNDS, a
copy is attached hereto for reference as APPENDIX E.
1.16 "MANUFACTURE" means a process to make a COMPOUND or a COMPOUND
DERIVATIVE as a component for a PRODUCT, or as components intended for
a PRODUCT (e.g., any type of PRODUCT or COMPOUND or COMPOUND
DERIVATIVE) or instructions for preparing a PRODUCT.
1.17 "NET SALES" shall mean the amount invoiced on sales of PRODUCT by OSI
and its AFFILIATES to a THIRD PARTY, less the following deductions to
the extent included in the amounts invoiced:
(i) trade, cash or quantity discounts actually allowed
(including those granted under contractual
arrangements with HMOs and similar organizations),
granted from the invoiced amount and taken; and
(ii) amounts repaid or credited by reason of rejections,
defects or returns or because of retroactive price
reductions; and
(iii) insurance, shipping and handling, if included in the
amount invoiced; and
(iv) rebates paid pursuant to government regulations; and
(v) taxes or governmental charges for export/import fees
in the TERRITORY on the sales of PRODUCT to said
THIRD PARTY, if included in said invoiced amount,
whether denominated as value added
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taxes, sales taxes, or excise taxes, to the extent
included in said invoiced amount.
NET SALES shall not include sales between or among OSI and its
AFFILIATES.
1.18 "PATENTS" means all patent applications and patents, together with any
continuations, divisions, reissues, registrations, confirmations,
patents-of-addition, and extensions of the foregoing, which claims
cover the process or MANUFACTURE, use or sale of COMPOUND, COMPOUND
DERIVATIVE or PRODUCT in the TERRITORY.
1.18.1 "DOW PATENTS" means PATENTS in the FIELD which are owned,
licensed or controlled by DOW or which become owned, licensed
or controlled by DOW during the life of this License and shall
be listed in APPENDIX B, which shall be reviewed and updated
annually upon identification of a PRODUCT by OSI, to be
attached hereto and made a part hereof.
1.18.2 "OSI PATENTS" means PATENTS in the FIELD which are owned,
licensed or controlled by OSI or which become owned, licensed
or controlled by OSI during the life of this License and shall
be listed in APPENDIX C, which shall be reviewed and updated
annually upon identification of a PRODUCT by OSI, to be
attached hereto and made a part hereof.
1.18.3 "JOINT PATENTS" means those PATENTS in the FIELD which are
jointly owned by both DOW and OSI and shall be listed in
APPENDIX D, which shall be reviewed and updated annually upon
identification of a PRODUCT by OSI, to be attached hereto and
made a part hereof.
1.19 "PRODUCT" means a COMPOUND or COMPOUND DERIVATIVE, its composition or
formulation, in either its bulk form or in its finished dosage form,
for use in the FIELD.
1.20 "REGULATORY AUTHORITY" means the agency corresponding to the FDA of
each country in the TERRITORY.
1.21 "SAMPLING PERIOD" means eighteen (18) months from the EFFECTIVE DATE.
1.22 "TECHNOLOGY" means data for a lead COMPOUND (which has been identified
in writing by OSI to DOW), including for example toxicity, physical
properties, and process to make them.
1.23 "TERRITORY" means the world.
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1.24 "THIRD PARTY" means anyone, other than OSI, OSI's AFFILIATES or OSI's
CONTRACTUAL COLLABORATORS. Thus THIRD PARTY includes, without
limitation, physicians, hospitals, clinics, hospice facilities,
patients, distributors, marketing or distribution partners, and
sublicensees.
ARTICLE 2 - GRANT OF LICENSE
2.1 Grant of License - DOW hereby grants to OSI, and OSI hereby accepts:
2.1.1 an EXCLUSIVE license to use the COMPOUNDS to make, have made,
use, evaluate, screen, sell and have sold PRODUCT in the
TERRITORY for use in the FIELD, and an exclusive license under
the PATENTS when listed in APPENDICES B and D to make, have
made, use, evaluate, screen, sell and have sold PRODUCT in the
TERRITORY for use in the FIELD; this License being fully
exclusive, to the exclusion of DOW and its AFFILIATES, but
subject to Article 2.3, and effective for the duration of this
License; and
2.1.2 an EXCLUSIVE license to use the COMPOUND DERIVATIVES to make
or have made, use, evaluate, screen, sell and have sold in the
TERRITORY for use in the FIELD and an exclusive license under
the PATENTS when listed in APPENDIX D to make or have made,
use, evaluate, screen, sell and have sold PRODUCT in the
TERRITORY for use in the FIELD; and
2.1.3 subject to a right of first for refusal to DOW under Article
2.4, a NON-EXCLUSIVE right to MANUFACTURE for use in the FIELD
in the TERRITORY; and
2.1.4 a NON-EXCLUSIVE license for TECHNOLOGY, after a lead COMPOUND
has been designated to DOW in writing by OSI and DOW has
obtained any required internal technology release, but only if
the TECHNOLOGY is available to DOW and requested in writing by
OSI, necessary to MANUFACTURE PRODUCT for use in the FIELD in
the TERRITORY.
2.2 Sublicensing - The exclusive licenses under Article 2.1.1 and 2.1.2 to
OSI include the right to sublicense third parties and CONTRACTUAL
COLLABORATORS, whether or not AFFILIATES of OSI, including the right to
enter into distributor contracts. OSI will make and will be responsible
for all payments to DOW as a result of all activities and sales of
PRODUCT in the FIELD in the TERRITORY by such sublicensee, CONTRACTUAL
COLLABORATORS and AFFILIATES. OSI will also be responsible for the
observance by all sublicensees, CONTRACTUAL COLLABORATORS and
AFFILIATES of all applicable provisions of this License, and will use
its reasonable, good faith efforts to cause all sublicensees to observe
the covenants in this License (i.e., regarding confidentiality,
maintenance of records and reporting of NET SALES and royalty payments,
and exchanges of information). All
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such sublicenses shall be in writing. In the event that OSI cannot or
refuses to enforce its sublicense provisions, then DOW shall have the
right to enforce any such provisions for its own benefit.
2.3 Reservations and Grant Back - DOW reserves for itself and its
AFFILIATES the exclusive right to make, have made, use, sell, have
sold, export/import and license COMPOUNDS or PRODUCTS for use OUTSIDE
the FIELD in the TERRITORY, including the right to use the PATENTS
listed in APPENDICES B through D. OSI is aware that DowElanco may sell
COMPOUNDS for agricultural uses as defined in APPENDIX A under this
reservation.
2.4 Right of First Refusal to DOW - In the event that a COMPOUND or
COMPOUND DERIVATIVE is to be commercialized using a DOW commercial or
developed process in its manufacture and a manufacturing partner is
desired by OSI, other than a CONTRACTUAL COLLABORATOR, DOW is hereby
granted a right of first refusal to MANUFACTURE. It is understood that
DOW is not hereby obligated to MANUFACTURE. If DOW does MANUFACTURE,
then DOW agrees not to make PRODUCT for the FIELD for anyone other than
for or on behalf of OSI, and OSI and DOW shall negotiate the terms of
such agreement for MANUFACTURE using their good faith efforts.
2.5 TECHNOLOGY - If DOW does not exercise its right to MANUFACTURE under
Article 2.4, then at DOW's option either DOW shall (a) (i) negotiate a
license with OSI or its manufacturer using good faith efforts or (ii)
hold OSI harmless or (b) permit OSI to MANUFACTURE using processes of
its choice (i.e., other than those proprietary to DOW) but without any
hold harmless guarantee.
ARTICLE 3 - COMPOUND TRANSFER
3.1 DOW Obligations - DOW or its designee (e.g., DowElanco) shall provide
to OSI over the SAMPLING PERIOD at least a 5 mg sample of each COMPOUND
and its structure, including a new supply of the approximately 50,000
COMPOUNDS previously received by OSI. If less than 5 mg are available
of a given COMPOUND, then 2 mg are to be supplied and the reduced
amount noted with the shipment. DowElanco and OSI shall mutually agree
as to the timing of the shipment of these samples of COMPOUNDS. As of
the date of the LETTER OF INTENT, DOW estimates that at least 140,000
COMPOUNDS are available to OSI. On COMPOUNDS which become active leads
for the FIELD (as identified to DOW in writing by OSI), DOW shall share
with OSI, to the extent legally possible and acceptable to DOW for its
release and readily available, its TECHNOLOGY on any lead COMPOUND and
other relevant information, but in accord with DOW's policy and right
to MANUFACTURE under Article 2.4. Which COMPOUNDS are supplied to OSI
of the approximately 140,000 COMPOUNDS is solely at the discretion of
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DOW, but is intended to include all COMPOUNDS that meet appropriate
quantity, integrity of sample and structure, and ownership criteria.
3.2 Sample of COMPOUNDS Costs - DOW agrees to supply each available
COMPOUND that has reasonable sample integrity as determined by DOW (or
DowElanco) and as further mentioned in Article 3.1. OSI shall pay DOW
** Dollars for each sample, payable to DOW within thirty (30) days of
invoice for the shipped samples. If a further sample of 5 mg or less is
desired by OSI, then, if available in inventory without depletion of
that inventory (meaning at least 10 mg of the sample COMPOUND must be
retained in the inventory), then the sample shall be provided and that
cost shall also be ** per sample, paid to DOW. If re-supply of the
sample is necessary or the quantity desired of the sample is greater
than 5 mg, then refer to Article 3.3.
3.3 COMPOUND Re-Supply - If OSI desires more quantity of a given sample
COMPOUND from DOW than provided in the initial sampling under Article
3.2, then OSI shall consult with DOW with respect to the re-supply of
that COMPOUND, indicating the quantity required in writing. DOW shall
provide a written estimate of the cost to supply that amount of
COMPOUND and, if mutually agreeable, that cost shall be paid to DOW
within thirty (30) days from the receipt of invoice by OSI after OSI's
receipt of the sample. If OSI desires to make additional COMPOUND in
non-commercial quantities, not using GMP procedures, without using any
DOW process TECHNOLOGY, then OSI may do so. OSI can request the
synthetic route to make additional COMPOUND, and DOW may elect to
supply or not supply such synthetic route at DOW's sole discretion.
3.4 DowElanco Requirements - DOW shall receive a copy of the signed
agreement between DowElanco and OSI regarding the rights to receipt by
DowElanco of about 140,000 extracts from OSI for agrochemical purposes
(attached hereto as part of APPENDIX A). If APPENDIX A is not received
by DOW by July 1, 1997, the sample costs stated in Article 3.2 shall
change from ** per sample to ** per sample. DOW shall invoice any cost
difference for COMPOUND samples received by OSI by July 1, 1997,
whereupon the cost is fixed for further invoice of samples.
3.5 Control of COMPOUNDS - OSI shall maintain sole physical control of the
COMPOUNDS and COMPOUND DERIVATIVES. However, OSI may have PRODUCT sent
to THIRD PARTIES for usual trials and testing under an appropriate
agreement which includes confidentiality.
3.6 Prior samples of COMPOUNDS - OSI, as of the date of the LETTER OF
INTENT, has small microtiter plates of about 50,000 COMPOUNDS in its
possession. DOW
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** This portion redacted pursuant to a request for confidential treatment.
8
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represents that those COMPOUNDS are DOW's property and form a portion
of the total number COMPOUNDS to be supplied under Article 3.1. Any
information obtained by OSI's prior evaluation of these COMPOUNDS is
subject to the terms of this License.
ARTICLE 4 - OSI DEVELOPMENT, OTHER ACTIVITY, DILIGENCE
4.1 Development and Marketing Efforts for PRODUCT - OSI shall use
commercially reasonable, good faith efforts to carry out developmental
work on COMPOUNDS, COMPOUND DERIVATIVES and PRODUCTS as it believes
necessary and to file or cause others to file applications with the
REGULATORY AUTHORITIES as OSI deems necessary to enable
commercialization of PRODUCTS. For purposes of this License,
"commercially reasonable, good faith efforts" shall mean efforts
reasonably consistent with those efforts used by OSI with regard to its
developmental work and commercial activities for its own products, on
an overall basis, deemed to have similar commercial potential,
consistent with its business, research and development practices, and
applicable legal and regulatory requirements. For OSI to have been
deemed by DOW to have used their commercially reasonable, good faith
efforts, DOW expects that in the TERRITORY OSI should:
4.1.1 Employ the COMPOUNDS and COMPOUND DERIVATIVES in current and
future OSI proprietary drug discovery programs to the extent
that OSI's CONTRACTUAL COLLABORATORS permit it to do so;
4.1.2 Make the COMPOUNDS and COMPOUND DERIVATIVES available to
existing OSI pharmaceutical partners as sublicensees; and
4.1.3 Include the COMPOUNDS and COMPOUND DERIVATIVES as part of
OSI's portfolio of technology available to new pharmaceutical
partners as sublicensees.
4.2 Research Progress - OSI shall keep DOW informed of its PRODUCT
discovery efforts for commercialization of COMPOUNDS or COMPOUND
DERIVATIVES or PRODUCTS that show interest for use in the FIELD and
develop as active leads (not later than with the quarterly reports in
Articles 4.3 and 6.5).
4.3 Reports by OSI - Subject to Article 4.4, OSI shall report to DOW orally
on a calendar quarterly basis (such as by a meeting of respective
personnel) and annually in January on a written basis of the results
obtained on its use of the COMPOUNDS and COMPOUND DERIVATIVES,
including but not limited to: the utility of a possible PRODUCT, lead
COMPOUNDS and COMPOUND DERIVATIVES, and the classification under
Article 1.3 by CATEGORY of such possible PRODUCT (which such
classification shall be binding unless objected to by DOW in writing
within sixty (60) days from the date of the report); estimated market
size in the TERRITORY
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when developed; possible partners; and the identity of any sublicensee.
If any COMPOUND or COMPOUND DERIVATIVE has been submitted for APPROVAL
to a REGULATORY AUTHORITY or is APPROVED, DOW shall be notified
immediately, and OSI shall not wait until the required quarterly report
to so notify DOW.
4.4 Restricted Information - Neither Party shall be obligated to disclose
to the other any information that it is contractually or legally
prohibited from disclosing to the other. In the event such a
restriction applies, the affected Party will notify the other Party,
and the Parties will use their good faith efforts, including obtaining
necessary consents or permits, to accomplish disclosure of such
information by consent or lawful means.
4.5 Clinical and Preclinical Studies - OSI shall use its commercially
reasonable efforts to carry out such further studies of COMPOUNDS,
COMPOUND DERIVATIVES and PRODUCTS as it deems necessary or advisable to
develop a PRODUCT and in order to file such forms for APPROVAL with the
REGULATORY AUTHORITIES for commercialization in the TERRITORY.
4.6 OSI Responsibility - As between DOW and OSI, OSI shall be solely
responsible for the planning, design, expense and execution of all its
developmental work and commercialization with COMPOUNDS, COMPOUND
DERIVATIVES and PRODUCTS for the TERRITORY after the EFFECTIVE DATE.
4.7 Regulatory Costs - After the EFFECTIVE DATE all regulatory costs for
APPROVALS in the TERRITORY shall be borne by OSI.
4.8 Failure to Attain APPROVAL - If OSI fails to have any COMPOUND,
COMPOUND DERIVATIVE or PRODUCT attain APPROVAL (OSI and DOW are aware
that these COMPOUNDS are unknown for activity in the FIELD), then both
DOW and OSI accept the risk under this License that such a result could
occur. The provisions of Article 13 shall apply, particularly Article
13.2.
4.9 Future Research - Upon the EFFECTIVE DATE, OSI agrees that any research
conducted by DOW or its AFFILIATES on COMPOUNDS for use OUTSIDE the
FIELD need not be reported to OSI. Only if OSI requests that DOW make a
specific COMPOUND or COMPOUND DERIVATIVE, at OSI's expense and DOW
agrees, would that COMPOUND or COMPOUND DERIVATIVE then be included
within the terms of this License.
ARTICLE 5 - PATENT RIGHTS
5.1 DOW to Maintain DOW PATENTS - DOW shall be responsible at its own cost
and expense for prosecuting the patent applications in PATENTS listed
in APPENDIX B and
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for maintaining and extending the PATENTS listed on APPENDIX B. DOW
shall use good faith efforts to prosecute, issue and maintain all
PATENTS in APPENDIX B. DOW shall identify any PATENTS to be listed on
APPENDIX B when OSI identifies to DOW a lead COMPOUND or COMPOUND
DERIVATIVE.
5.2 OSI to Assist DOW in extension or restoration of PATENTS listed in
APPENDIX B - Although DOW shall be responsible for extension or
restoration of PATENTS listed on APPENDIX B, OSI agrees to provide DOW
with reasonably requested records, information and assistance to
achieve, where possible, the extension or restoration of any PATENTS in
the TERRITORY.
5.3 Notice of Patent Lapse - DOW shall advise OSI of the grant, lapse,
nullification, revocation, surrender, or invalidation of any of the
PATENTS at the annual update of the PATENT listing for APPENDIX B.
5.4 JOINT PATENTS - In those instances where joint inventions between DOW
and OSI (or its AFFILIATE or sublicensee) result in a patentable
invention [e.g., where a COMPOUND or COMPOUND DERIVATIVE has not been
previously published and OSI (or its AFFILIATE or sublicensee) has
discovered a new utility such that, for example, both compound and use
claims are possible], then DOW and OSI shall mutually determine, using
their good faith efforts, whether DOW or OSI shall file a patent
application, whether the patent application has joint ownership and
joint claim structure, and which Party should prosecute the patent
application and pay the annuities. Such PATENTS shall be listed on
APPENDIX D. If DOW has responsibility for the joint PATENTS, then
Articles 5.1, 5.2 and 5.3 shall also pertain to any PATENTS listed on
APPENDIX D. Thus OSI shall have rights to such joint PATENTS for use in
the FIELD provided OSI or its AFFILIATE is one of the joint owners;
however, if the other joint owner is a sublicensee, then only DOW's
rights are granted to OSI under Article 2.1.2.
5.5 Hold Harmless for OSI's MANUFACTURE - Without limiting the royalty
obligations provided in this License, if OSI or CONTRACTUAL
COLLABORATOR MANUFACTURES, then DOW grants OSI or CONTRACTUAL
COLLABORATOR an immunity from suit by DOW for the grant under Article 2
under DOW PATENTS.
5.6 OSI to Maintain OSI's PATENTS - OSI shall be responsible at its own
cost and expense for prosecuting the patent applications in PATENTS
listed in APPENDIX C and for maintaining and extending the PATENTS
listed on APPENDIX C. OSI shall use good faith efforts to prosecute,
issue and maintain all PATENTS in APPENDIX C. OSI shall identify any
PATENTS to be listed on APPENDIX C when DOW identifies in writing to
OSI a lead COMPOUND for use OUTSIDE the FIELD.
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ARTICLE 6 - PAYMENTS AND ROYALTIES
6.1 Initial Payment - OSI shall pay to DOW, within ten (10) days from the
EFFECTIVE DATE, ** Dollars paid in OSI common stock with the number of
shares owed computed from a ** . (Number of shares equals 352,162 at a
computed average price of ** per share.)
6.1.1 Upon DOW's request, OSI will (as long as it is a public
reporting company), as promptly as reasonably possible,
exercise its best efforts to cause the registration under the
Securities Act of 1933, as amended (the "Securities Act"), of
the shares of common stock delivered to DOW hereunder (the
"Shares") for disposition in accordance with DOW's intended
method of disposition stated in DOW's request. DOW may
request, and OSI shall undertake, a maximum of two
registrations pursuant to this Article 6.1.1.
6.1.2 If OSI at any time within 6 years after the EFFECTIVE DATE
proposes to register any of its securities under the
Securities Act for the purpose of an underwritten public
offering by OSI of its common stock for cash, it will at each
such time give written notice to DOW of its intention to do
so. Upon DOW's request, given within 20 days after receipt of
such notice, if OSI does in fact register any of its
securities, OSI will use its best efforts to cause the Shares
which OSI has been requested to register by DOW to be included
in such registration for the purpose of sale by DOW in such
public offering of the Shares so registered. The foregoing
obligations of OSI pursuant to this Article 6.1.2 shall be
subject to the reasonable restrictions and requirements
imposed by the underwriters in their sole discretion solely
for the purposes of ensuring the success of the public
offering and provided that DOW accepts the terms of the
underwriting agreement between OSI and the underwriters to the
extent OSI accepts such terms.
6.1.3 If and whenever OSI is obligated or required to use its best
efforts by the provisions of Article 6.1.1, to effect
registration of any Shares under the Securities Act, as
expeditiously as possible OSI will use its best efforts to:
(1) prepare and file with the Securities and Exchange
Commission (the "Commission") a registration
statement with respect to such Shares and cause such
registration statement to become and remain
effective, provided, that the OSI shall not be
required to keep such registration statement
effective, or to prepare and file any amendments or
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** This portion redacted pursuant to a request for confidential treatment.
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supplements thereto, later than 180 days after the
date on which such registration statement becomes
effective under the Securities Act; and
(2) prepare and file with the Commission such amendments
and supplements to such registration statement and
the prospectus used in connection therewith as may be
necessary to keep such registration statement
effective and to comply with the provision of the
Securities Act with respect to the disposition of all
Shares covered by such registration statement,
subject, however, to the proviso contained in the
immediately preceding Article 6.1.3, clause (1).
6.1.4 If and whenever OSI is obligated to use its best efforts under
Article 6.1.1 or 6.1.2 to effect registration of any Shares
under the Securities Act, OSI will use its best efforts to:
(1) furnish to DOW such numbers of copies of a
prospectus, including, if applicable, a preliminary
prospectus, in conformity with the requirements of
the Securities Act as DOW may reasonably request in
order to facilitate the disposition of such Shares;
and
(2) register or qualify the Shares covered by such
registration statement under such other securities or
blue sky laws of such jurisdictions in the United
States as DOW shall reasonably request to enable DOW
to consummate the disposition in such jurisdictions
in the United States of such Shares; and
(3) furnish to DOW at the time of the disposition of
Shares by DOW an opinion of counsel for OSI to the
effect that the registration statement covering such
Shares has been filed with the Commission under the
Securities Act and has been made effective by order
of the Commission, that a prospectus meeting the
requirements of the Securities Act is available for
delivery, that no stop order has been issued by the
Commission suspending the effectiveness of such
registration statement and that, to the best of such
counsel's knowledge, no proceedings for the issuance
of such a stop order are threatened or contemplated;
and
(4) furnish to DOW at the time of the disposition of
Shares by DOW a Blue Sky Memorandum prepared by
counsel to OSI (or, is applicable, counsel to the
underwriters) to the effect that the applicable
provisions of the securities or blue sky law of each
state in which the Company shall be required,
pursuant to clause (4) of Article 6.1.3 to register
or qualify such Shares, have been complied with or
that compliance therewith is not necessary by virtue
of US federal law.
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6.1.5 For any registration of Shares under the Securities Act
pursuant to this Article 6.1, OSI shall pay all expenses
incurred by it in complying with this Article 6.1 and DOW in
connection therewith (including without limitation all
registration and filing fees, printing expenses, fees and
disbursements of counsel for OSI and expenses of any special
audits incident to or required by any such registration), but
excluding underwriting discounts and commissions, if any,
associated with the Shares sold by DOW and fees and
disbursements of counsel to DOW. In connection with any
underwritten public offering of OSI's common stock, if
requested by OSI or an underwriter of such offering, DOW will
agree not to sell or otherwise transfer or dispose of any
common stock or other securities of OSI (other than such
securities included on DOW's behalf in such offering) for a
period of up to 180 days following the effective date of the
registration statement related to such offering (the
"Lock-up"), provided that OSI and all other shareholders of
OSI owning 5% or more of OSI common stock agree to Lock-up
agreements identical to that to which DOW agrees. In addition,
DOW agrees not to sell the OSI stock received hereunder for
six months from the EFFECTIVE DATE (the "Stand Still").
However, notwithstanding this Lock-up and Stand Still, if OSI
is merged with or acquired by another entity such that the
control (50% or more) of the management of OSI is no longer
solely that of OSI, then DOW may sell or tender this stock at
any time in accord with applicable securities laws.
6.1.6 In the event of any registration under the Securities Act of
any Shares pursuant to this Article 6.1, to the extent
permitted by law, OSI hereby agrees to indemnify and hold
harmless DOW and each other person, if any, who controls DOW
within the meaning of the Securities Act and each underwriter
and any controlling person of any such underwriter against any
losses, claims, damages, or liabilities, joint or several, to
which DOW or any underwriter or such controlling person may
become subject under the Securities Act or otherwise, in so
far as such losses, claims, damages or, liabilities (or
proceedings in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any
material fact contained, on the effective date thereof, in any
registration statement under which such Shares were registered
under the Securities Act, in any preliminary prospectus or
final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein (in the case of such prospectus, in the
light of circumstances under which they were made) not
misleading, and will reimburse DOW and each underwriter and
each such controlling person for any legal or any other
expenses reasonably incurred by DOW or any underwriter or any
such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or
proceeding, provided, OSI will not be liable in any such case
to the extent that any such loss, claim, damage, or liability
arises out of or is based upon an untrue
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statement or alleged untrue statement or omission or alleged
omission made in such registration statement, said preliminary
or final prospectus or said amendment or supplement in
reliance upon and in conformity with written information
furnished to OSI by DOW or such controlling or participating
person, as the case may be, specifically for use in the
preparation of such registration statement; provided, however,
that the indemnity agreement contained in this Article 6.1.6
shall not apply to amounts paid in settlement of any such
loss, claim, damage or liability if such settlement is
effected without the consent of OSI, which consent shall not
be unreasonably withheld.
6.1.7 In the event of any registration under the Securities Act of
any Shares pursuant to this Article 6.1, to the extent
permitted by law, DOW agrees to indemnify and hold harmless
OSI and each other person, if any, who controls OSI within the
meaning of the Securities Act and each underwriter and any
controlling person of any such underwriter against any losses,
claims, damages, or liabilities, joint or several, to which
OSI or controlling person thereof or such underwriter or
controlling person thereof may become subject under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or proceedings in respect thereof)
arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained, on the
effective date thereof, in any registration statement under
which such Shares were registered under the Securities Act, in
any preliminary prospectus or final prospectus contained
therein, or in any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of any
such prospectus, in light of the circumstances under which
they were made) not misleading, and will reimburse OSI and
each controlling person thereof and any underwriter and any
controlling person thereof for any legal or any other expenses
reasonably incurred by OSI or any controlling person thereof
or any underwriter and any controlling person thereof in
connection with investigating or defending any such loss,
claim, damage, liability or proceeding; provided, however,
that DOW's obligation with respect to such indemnification
(and hold harmless undertaking) will exist only to the extent
any such misstatement or omission occurs in reliance upon and
in conformity with written information furnished by DOW
expressly for use in connection with such registration; and
provided further that the indemnity agreement contained in
this Article 6.1.7 shall not apply to amounts paid in
settlement of any such loss, claim, damage or liability if
such settlement is effected without the consent of DOW, which
consent shall not be unreasonably withheld.
6.1.8 Upon the effectiveness of any registration statement filed
pursuant to this Article 6.1, OSI will, in good faith,
cooperate with DOW in connection with the disposition by DOW
of the Shares by providing instructions to OSI's
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counsel and OSI's transfer agent promptly to take the
necessary actions within their control (e.g., in the case of
counsel, delivering an opinion to the transfer agent regarding
the registration and transferability of the Shares) to permit
DOW to dispose of the Shares in accordance with DOW's intended
disposition thereof. Further, to the extent consistent with
applicable law and regulation, upon demand of DOW and DOW's
delivery to OSI of the certificate or certificates
representing the Shares, OSI will cause its transfer agent to
deliver to DOW a new certificate or certificates representing
the Shares, but not bearing any restrictive legend.
6.1.9 If at any time of DOW's request for registration of Shares
under such Article, counsel for OSI provides an opinion to OSI
and DOW that DOW may lawfully sell the Shares on the public
market without restriction in the absence of such registration
(e.g. pursuant to Rule 144 under the Securities Act), DOW will
give due consideration to such advice with a view toward not
requiring such registration, provided that DOW will not be
required to pursue such sale without registration if DOW, in
its sole discretion, determines that such sale without
registration may (a) result in DOW obtaining a lower price for
the Shares, (b) require DOW to qualify to do business or
consent to service of process in any jurisdiction, or (c) not
result in the broadest distribution of the Shares possible.
6.1.10 DOW hereby makes the representations and warranties set forth
in APPENDIX F as attached hereto and made a part hereof.
6.1.11 This payment shall not be creditable against any other
payments and is non-refundable.
6.2 Payment for License under PATENTS - OSI will pay DOW royalties as
follows:
6.2.1 If OSI directly markets a PRODUCT, then OSI shall pay DOW
royalties on NET SALES of PRODUCT based on the specified
categories as follows:
- CATEGORY 1 COMPOUNDS - ** percent;
- CATEGORY 2 COMPOUNDS - ** percent;
- CATEGORY 3 COMPOUNDS - ** percent;
- CATEGORY 4 COMPOUNDS, where DOW is responsible for JOINT
PATENTS - ** percent; and where OSI is responsible for
JOINT PATENTS - ** percent; and
- CATEGORY 5 COMPOUNDS - ** .
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6.2.2 If OSI participates in a venture or any type of collaboration
with a CONTRACTUAL COLLABORATOR which includes COMPOUNDS,
COMPOUND DERIVATIVES or PRODUCT in which OSI receives a
payment, then OSI shall pay DOW the following amounts based on
the specified categories as follows:
- CATEGORY 1 COMPOUNDS - ** percent of the amount received by
OSI;
- CATEGORY 2 COMPOUNDS - ** percent of the amount received by
OSI;
- CATEGORY 3 COMPOUNDS - ** percent due;
- CATEGORY 4 COMPOUNDS, where DOW is responsible for JOINT
PATENTS - ** percent of the amount received by OSI: and
where OSI is responsible for JOINT PATENTS - ** percent of
the amount received by OSI; and
- CATEGORY 5 COMPOUNDS - ** percent of the amount received by
OSI;
provided, however, that in no case shall the amounts set forth
above exceed the amounts to which DOW would have otherwise
been entitled pursuant to Article 6.2.1 had OSI directly
marketed the PRODUCTS.
6.2.3 If OSI sublicenses the COMPOUNDS or COMPOUND DERIVATIVES or
PRODUCTS to a THIRD PARTY, then OSI shall pay DOW the
following amounts based on the specified categories:
- CATEGORY 1 COMPOUNDS - ** percent of the amount received by
OSI;
- CATEGORY 2 COMPOUNDS - ** percent of the amount received by
OSI;
- CATEGORY 3 COMPOUNDS - ** percent due;
- CATEGORY 4 COMPOUNDS, where DOW is responsible for JOINT
PATENTS - ** percent of the amount received by OSI; and
where OSI is responsible for JOINT PATENTS - ** percent of
the amount received by OSI; and
- CATEGORY 5 COMPOUNDS - ** percent of the amount received by
OSI;
provided, however, that in no case shall the amounts set forth
above exceed the amounts to which DOW would have otherwise
been entitled pursuant to Article 6.2.1 had OSI directly
marketed the PRODUCTS.
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6.2.4 The Parties will negotiate in good faith an appropriate
compensation arrangement in the event that PRODUCTS are sold
directly or indirectly by OSI or if OSI is otherwise
recompensed in a manner other than as described as ARTICLE
6.2.1, 6.2.2 or 6.2.3. Additionally, if either Party is
uncertain whether a PRODUCT contains a COMPOUND or COMPOUND
DERIVATIVE, the Parties shall use their good faith efforts to
reach agreement as to which CATEGORY the PRODUCT is to be
computed. If the Parties are unable to reach mutual agreement,
then the provisions of Article 17 shall be used.
6.3 PATENT Royalty under APPENDIX D - If OSI is responsible for the JOINT
PATENTS with respect to CATEGORY 4 COMPOUNDS, listed on APPENDIX D as
discussed in Article 5.4, and the PRODUCT is within the scope of such a
PATENT, then the royalty due to DOW as stated in Article 6.2 shall be
reduced in each instance as follows:
6.3.1 If OSI directly markets the PRODUCT, then OSI shall pay DOW **
percent royalty on NET SALES; and
6.3.2 If OSI participates in a venture or any type of collaboration
which includes CATEGORY 4 COMPOUNDS in which OSI receives a
payment relevant to or pro rata for CATEGORY 4 COMPOUNDS
having any value (e.g., cash, stock warrants), then OSI shall
pay DOW ** percent of OSI's payment; and
6.3.3 If OSI sublicenses the CATEGORY 4 COMPOUNDS to a THIRD PARTY,
then OSI shall pay DOW ** percent of any payment having any
value (as defined in Article 6.3.2) received by OSI.
6.4 No royalties are due under Article 6.2 or 6.3 after the last to expire
PATENT on APPENDIX B or D expires and, if available, after any patent
term restoration or extension term ceases. No royalties are due under
Article 6.2 or 6.3 under any claim of a PATENT which is held invalid by
a court of competent jurisdiction from which no appeal is or can be
taken.
6.5 Quarterly Royalty Reports and Payments - Within ninety (90) days after
the close of each calendar quarter, OSI shall submit a report on the
NET SALES of PRODUCT for the TERRITORY in sufficient detail to enable a
calculation of the royalty and payments due in accord with Article 6
and payment of the royalty and other payments (if any) due. Prior to
commercialization one written annual report after the close of the
fourth quarter and quarterly oral reports are due from the EFFECTIVE
DATE at
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the close of each calendar quarter. Once commercialization of a PRODUCT
has begun, then there shall be quarterly written reports received by
DOW thirty (30) days from the close of each calendar quarter.
6.6 Payments - A written report, including: the amount of payment with the
date the payment was made; an itemized payment listing; and date of
this License under which payment is being made and the number
designated in a letter to be furnished by DOW, shall be sent to:
The Dow Chemical Company
Royalty Accounting
2020 Dow Center
Midland, MI 48674
USA.
Payment shall be by wire transfer to THE DOW CHEMICAL COMPANY and sent
to:
**
6.7 Books of Account - OSI shall maintain true and complete books of
account containing an accurate record of all data necessary for the
proper computation of royalty payments due from it or on behalf of any
AFFILIATE. Such records shall be maintained for at least five (5) years
after the date of the pertinent royalty payment.
6.8 Audit Right - DOW shall have the right, either through a certified
public accountant employed by DOW or through a firm of independent
public accountants to whom OSI has no reasonable objection, to examine
the books of account of OSI at reasonable times within three (3) years
after the end of the calendar year to which they relate (but not more
than once in each calendar year) for the purpose of verifying the
correctness of any report concerning diligence under Article 4.3 or
payment of royalties under Article 6. Such examination shall be made
during normal business hours, with twenty-four (24) hours notice, at
the place of business of OSI. The information furnished as a result of
any such examination shall be maintained in confidence on the terms
specified in Article 7. The fees and expenses of such an audit shall be
borne by DOW. If any such audit shows any underpayment or overcharge, a
correcting payment or refund shall be made within thirty (30) days of
OSI's receipt of the auditors' statement. If such error is material
(meaning +/-5%), then if OSI owes DOW from such material error, OSI
shall be subject to a penalty as if the payment were
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19
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deemed late in accord with Article 6.10. Should OSI fail to make any
correcting payment within sixty (60) days from receipt of the auditors'
statement, then DOW shall have the right to terminate this License
under Article 13.5. If OSI has made an overpayment, then the amount
shall be credited against the next quarterly payment.
6.9 Withholding Tax Payments - If any taxes for DOW's account, withholding
or otherwise, are levied by any taxing authority in the TERRITORY in
connection with the receipt by DOW of any amounts payable under Article
6 of this License according to any tax treaty or agreement between the
United States and a country in the TERRITORY, then OSI shall have the
right to pay such taxes to the local tax authorities and then payment
to DOW of the net amount due after reduction by the amount of such
taxes, together with:
(i) evidence of payment of such taxes and a translation
thereof into English,
(ii) indication of the amount of such tax paid, and
(iii) indication of the country in the TERRITORY and the
authority to whom it was paid, and
(iv) compliance with OSI's royalty reporting obligations
under this License.
However, if DOW still requires further information, the report due
under Article 6.5 may also be requested by DOW and OSI shall promptly
provide that information.
6.10 Late Payments - Royalty payments not remitted or deposited by the due
date shall bear interest at the current prime rate plus ** established
by a leading New York bank, such as CitiBank, as published in The Wall
Street Journal. Should OSI fail to make any late payment within ninety
(90) days from its due date, then DOW shall have the right to terminate
this License under Article 13.5 upon fifteen (15) days written notice
to OSI to allow cure.
ARTICLE 7 - CONFIDENTIALITY
7.1 Each Party shall use good faith efforts to retain in confidence and not
disclose to any third party each other's CONFIDENTIAL INFORMATION,
PATENTS, and any samples of COMPOUND, COMPOUND DERIVATIVE or PRODUCT,
the FIELD being developed, and business information for the development
of PRODUCT, disclosed pursuant to the terms of this License. Such "good
faith efforts" shall mean
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20
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the same degree of care, but no less than a reasonable degree of care,
as the receiving Party uses to protect its own CONFIDENTIAL INFORMATION
of a like nature. OSI shall use the same good faith efforts with
respect to the COMPOUNDS already in its possession.
7.2 Excepted from the obligation of confidence under Article 7.1 is that
information which:
(a) is available, or becomes available, to the general
public without fault of the receiving Party; or
(b) is obtained by the receiving Party without an
obligation of confidence from a third party (other
than a governmental agency or REGULATORY AUTHORITIES)
who is rightfully in possession of such information
and is under no obligation of confidentiality to the
disclosing Party concerning such information; or
(c) is required by law or by court order to be disclosed
by the receiving Party in which cases the receiving
Party will use its best efforts to limit such
disclosure to that required by law and to maintain
the confidentiality of the disclosed information to
the extent possible under a protective order; or
(d) must be necessarily disclosed to REGULATORY
AUTHORITIES to permit OSI to sell PRODUCT in the
FIELD; or
(e) may be disclosed to a OSI sublicensee under
confidentiality terms at least as strict as those of
this License; or
(f) may be disclosed to DowElanco as necessary as DOW's
designee for supply of the COMPOUNDS; or
(g) is released from confidentiality in writing by the
disclosing Party; or
(h) is permitted to be disclosed by Article 7.4.
For the purpose of Article 7.1, a specific COMPOUND or its TECHNOLOGY
or COMPOUND DERIVATIVE shall not be deemed to be within the foregoing
exceptions merely because it is embraced by more general information in
the public domain, or in the possession of the receiving Party. In
addition, any combination of features shall not be deemed to be within
the foregoing exceptions merely because individual features are in the
public domain or in the possession of the receiving Party, but only if
the combination itself and its principle of operation and process to
make it are in the public domain or in the possession of the receiving
Party.
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7.3 Notwithstanding the provisions of Article 7.1, if the receiving Party
becomes legally compelled to disclose any of the disclosing Party's
COMPOUNDS, TECHNOLOGY or COMPOUND DERIVATIVES, the receiving Party
shall promptly advise the disclosing Party of such required disclosure
in order that the disclosing Party may seek a protective order or such
other remedy as the disclosing Party may consider appropriate in the
circumstances. The receiving Party shall disclose only that portion of
the COMPOUNDS, TECHNOLOGY or COMPOUND DERIVATIVES which it is legally
required to disclose. Such a disclosure shall not release the receiving
Party with respect to the COMPOUNDS, TECHNOLOGY or COMPOUND DERIVATIVES
so disclosed except to the extent of permitting the required
disclosure.
7.4 Disclosure to AFFILIATES, Contractors - OSI may disclose COMPOUNDS to
its AFFILIATES, sublicensees, consultants, CONTRACTUAL COLLABORATORS
and, when permitted herein, its clinical investigators, contractors
(parties under contract with OSI or its AFFILIATES for the custom
manufacturing or shipping of PRODUCT, conduct of clinical studies or
obtention of registration of PRODUCT with a REGULATORY AUTHORITY in the
TERRITORY), as may be necessary to exercise the rights granted
hereunder and to register and prepare for commercialization of PRODUCT,
and to commercialize PRODUCT under this License, under conditions of
confidentiality at least as stringent as those set out in Articles 7.1,
7.2 and 7.3.
7.5 Document Return - In the event of termination of this License under
Article 13.2, 13.3 (if the breach is by OSI), 13.4, or 13.5 prior to
its normal expiration, OSI will cease its use of the COMPOUNDS
(CATEGORY 1 COMPOUNDS, CATEGORY 4 COMPOUNDS), and other CONFIDENTIAL
INFORMATION provided hereunder and, on DOW's request, within sixty (60)
days either return all such CONFIDENTIAL INFORMATION, including any
copies thereof, COMPOUNDS in whatever media or form, or will promptly
destroy the same and certify such destruction to DOW; except that such
CONFIDENTIAL INFORMATION as is or has become no longer subject to
confidentiality under Article 7.1 need not be returned or destroyed.
Notwithstanding the foregoing, OSI may retain such documents as are
necessary for it to discharge its surviving obligations hereunder and
its legal obligations to the governmental authorities; and OSI may
retain such copies of documents as may be necessary for the defense of
product liability or other litigation or similar proceedings relating
to PRODUCT, and may retain one copy thereof in its legal department as
a record of what was transmitted.
7.6 Survival of Confidentiality - Termination of this License for any
reason shall not relieve the Parties of their obligations under Article
7. The provisions of Article 7 shall survive termination of this
License for ten (10) years.
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ARTICLE 8 - THIRD PARTY INFRINGEMENT CLAIMS
8.1 Defense of Third Party Patent Claims - If a claim is brought by a third
party that manufacture, use or sale of a COMPOUND, COMPOUND DERIVATIVE
or PRODUCT in the TERRITORY (regardless of use) infringes a patent of
such third party, OSI will give prompt written notice to DOW of such
claim, if it concerns a PATENT on APPENDIX B, or, if DOW is
responsible, a PATENT on APPENDIX D. DOW shall have the sole discretion
and right to seek to dispose of said claim or to conduct the defense of
any suit resulting from such claim if OUTSIDE the FIELD in the
TERRITORY. OSI at its option and expense may participate in any suit
resulting from such claim that directly affects its market in the FIELD
in the TERRITORY.
If a claim is brought by a third party that manufacture, use or sale of
a COMPOUND, COMPOUND DERIVATIVE or PRODUCT in the TERRITORY (regardless
of use) infringes a patent of such third party, OSI will give prompt
written notice to DOW of such claim, if it concerns a PATENT on
APPENDIX D and OSI is responsible. DOW shall have the sole discretion
and right to seek to dispose of said claim or to conduct the defense of
any suit resulting from such claim if OUTSIDE the FIELD in the
TERRITORY. OSI shall be responsible for any suit resulting from such
claim or to dispose of said claim at its expense within the FIELD in
the TERRITORY.
8.2 Mutual Decisions - From the EFFECTIVE DATE and using their good faith
efforts, OSI and DOW shall discuss any claim or suit brought by a third
party for patent infringement that such third party's patent is
infringed by the manufacture, use or sale of COMPOUND or PRODUCT by OSI
or its AFFILIATES in the FIELD in the TERRITORY. Specifically, OSI and
DOW shall mutually try to agree on:
8.2.1 the strategy for such suit or claim, e.g. whether to negotiate
a settlement, sue or withdraw from the country in the
TERRITORY in which infringement is claimed;
8.2.2 the basis to be determined for sharing the costs of
litigation, damages awarded, and royalty to be paid to the
third party;
8.2.3 which Party should conduct the defense or if both OSI and DOW
should jointly defend; and
8.2.4 the consequences of such decisions, such as amendment to this
License with regard to royalties due to DOW or termination of
this License.
8.3 Third Party License - The Parties shall use their good faith efforts
(either individually or together) to negotiate any necessary agreement
for royalty payment to third parties with a view to enabling PRODUCT to
be commercialized in the FIELD in the TERRITORY. Until a lead COMPOUND
or lead COMPOUND DERIVATIVE is
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selected by OSI and notified to DOW, neither OSI nor DOW cannot
determine whether any such agreement with a third party is necessary.
ARTICLE 9 - PATENT ENFORCEMENT LITIGATION
9.1 Prosecution by DOW - DOW, at its sole discretion, may take action on
its own behalf and expense to institute any action or proceeding by
reason of infringement of any of the PATENTS listed on APPENDIX B or
for which DOW is responsible listed on APPENDIX D; however, OSI shall
be notified in advance in accord with Article 16.1. If either Party
learns of any infringement of a PATENT or misappropriation of
TECHNOLOGY or trade secrets by a third party, it shall promptly notify
the other Party.
DOW shall have the first right, at its own expense, to prosecute all
litigation against a third party infringer who may be infringing a
PATENT. OSI shall provide all reasonable cooperation, including any
necessary use of its name, required to prosecute such litigation. OSI
shall be consulted at its expense concerning the litigation. DOW will
bear the costs and shall be entitled to any recovery obtained from such
litigation, settlement or compromise thereof.
9.2 Prosecution by OSI - If DOW does not prosecute such infringer or
otherwise abate such infringement (which infringement must be of
commercial significance to OSI in DOW's reasonable business opinion)
within ninety (90) days after giving or receiving notification of such
infringement in the TERRITORY, unless an extension of the term is
mutually agreed upon by the Parties, then, OSI shall have the right to
prosecute such infringer at its own expense in the FIELD in the
TERRITORY for PATENTS in APPENDICES B or D and shall be entitled to
retain any recovery obtained from such litigation, settlement or
compromise thereof. OSI's cost of litigation in any quarter may be
credited against up to fifty (50%) percent of the royalties due to DOW
under Articles 6.2 and 6.3 in the following quarter. However, OSI shall
place all royalties due to DOW in escrow from the date of filing the
suit until the action or proceeding is finally concluded whereupon:
9.2.1 if the PATENT in the country in the TERRITORY is held valid
(whether infringed or not), then the royalties in escrow
(after deduction of OSI's cost of litigation as referred to
hereinabove) shall be paid to DOW; or
9.2.2 if the PATENT in the country in the TERRITORY is held invalid
(whether infringed or not), then (a) the royalties in escrow
shall be paid to OSI and (b) DOW shall reimburse OSI's cost of
such litigation up to fifty thousand dollars (US$50,000) in
each country in the TERRITORY where suit was determined for a
PATENT.
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At OSI's request, DOW shall cooperate with OSI in such litigation,
including joining in said litigation. DOW shall also cooperate, at
OSI's expense, by way of providing access to evidence and witnesses
available to DOW.
9.3 Prosecution by neither OSI or DOW - If DOW and OSI mutually decide that
neither DOW nor OSI will defend the PATENT in the FIELD in the
particular country in the TERRITORY, then the royalty under Article 6.2
or 6.3 for that PATENT in that country becomes zero (0%) percent upon
that decision date, unless mutually agreed to be reconsidered at a
later time.
9.4 Invalidity - In the event that a PATENT in the TERRITORY is finally
declared invalid or unenforceable in a judicial or administrative
proceeding from which no appeal is or can be taken, then from and after
that date no royalties under Article 6.2 or 6.3 shall be paid on the
basis of that PATENT in the relevant country of the TERRITORY,
provided, however, that royalties due for other PATENTS in the
TERRITORY not so held invalid or unenforceable shall not be affected.
9.5 Settlement - Any settlement of an infringement suit, whether brought by
DOW or by OSI, shall be subject to the consent of both Parties, which
consent shall not be unreasonably withheld.
9.6 Cooperation - Each Party shall cooperate with the other Party to the
extent reasonably requested in any legal action:
(i) brought by a third party against one Party; or
(ii) brought by a third party against both of them; or
(iii) taken against a third party by either Party;
regarding PATENTS in the FIELD in the TERRITORY, and each
Party shall have the right to participate in any defense,
compromise or settlement to the extent that, in its judgment,
it may be prejudiced thereby. In addition, OSI shall not
settle any claim or suit in any manner that shall adversely
affect any PATENTS, require any payment by DOW or reduce the
royalty due to DOW under Article 6 without the prior written
consent of DOW, except as provided in Article 9.2.
ARTICLE 10 - U.S. EXPORT CONTROL AND GOVERNMENT LICENSES
10.1 Compliance - OSI agrees to comply, at its expense, with all necessary
United States governmental regulations with respect to export of
COMPOUNDS, COMPOUND DERIVATIVES, TECHNOLOGY and any PRODUCTS in the
TERRITORY. OSI agrees to not export or re-export any PRODUCTS,
COMPOUND, COMPOUND DERIVATIVE or TECHNOLOGY received from DOW or the
direct products of such
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technology to any prohibited country listed in the U.S. Export
Administration Regulations unless properly authorized by the U.S.
Government. OSI shall be responsible for the acts of its AFFILIATES,
CONTRACTUAL COLLABORATORS, contractors, consultants and sublicensees.
OSI assumes all liability if it or its AFFILIATES, CONTRACTUAL
COLLABORATORS, or sublicensees fails to obtain any of the necessary
licenses or commits any violations of the United States Export Laws or
Regulations (15 C.F.R. Section 700 et seq.). OSI shall indemnify DOW
for such acts and for any breach of compliance.
10.2 Licenses - OSI agrees to obtain all necessary licenses, at its expense,
and to comply with all applicable regulations of agencies, such as
REGULATORY AUTHORITIES, in the TERRITORY and use GMP methods to the
extent required with respect to COMPOUNDS, COMPOUND DERIVATIVES and
PRODUCTS.
10.3 Clearances - OSI agrees to obtain all necessary clearances, at its
expense, from any government in the TERRITORY for import, export or
re-export with respect to the COMPOUNDS, COMPOUND DERIVATIVES or
PRODUCTS.
ARTICLE 11 - PRODUCT LIABILITY AND INDEMNIFICATION
11.1 Indemnity by DOW - DOW shall indemnify and hold OSI, its agents,
directors, officers, employees and AFFILIATES harmless from and against
any and all liabilities, claims, demands, damages, costs, expenses or
money judgments (including reasonable attorneys' fees and expenses)
incurred by or rendered against any of them for personal injury,
sickness, disease or death or property damage which directly arise out
of the intentional misconduct or negligence of DOW; provided, however,
that OSI shall give DOW notice in writing as soon as practicable of any
such claim or lawsuit and shall permit DOW to undertake the defense
thereof at DOW's expense. If DOW should MANUFACTURE, then the terms for
indemnity shall be as set forth in that agreement. DOW indemnifies OSI
with respect to a breach by DOW of any of its representations,
warranties or covenants contained in this License or any agreement
contemplated by the terms of this License. However,
(i) OSI will cooperate in such defense by providing
access to witnesses and evidence available to it. OSI
shall have the right to participate in any defense to
the extent that in its judgment, OSI may be
prejudiced thereby; and
(ii) in any claim or suit in which OSI seeks
indemnification by DOW, OSI shall not settle, offer
to settle or admit liability or damages in any such
claim or suit without the prior written consent of
DOW.
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11.2 Indemnity by OSI - OSI shall indemnify and hold DOW and AFFILIATES, and
their respective agents, directors, officers, employees harmless from
and against any and all liabilities, claims, demands, damages, costs,
expenses or money judgments (including reasonable attorneys' fees and
expenses) incurred by or rendered against any of them for personal
injury, sickness, disease or death or property damage which arise out
of
(i) the manufacturing, testing, use, promotion, sale or
distribution of COMPOUNDS, COMPOUND DERIVATIVES or
PRODUCT by OSI, its AFFILIATES, CONTRACTUAL
COLLABORATORS or sublicensees, except for those
instances provided in Article 11.1 for which DOW is
obligated to indemnify OSI; or
(ii) the breach by OSI of any of its representations,
warranties or covenants contained in this License or
any agreement contemplated by the terms of this
License; and
provided, however, that DOW shall give OSI notice in writing accord
with Article 16.1 as soon as practicable of any such claim or lawsuit
and shall permit OSI to undertake the defense thereof at OSI's expense.
However,
(i) DOW will cooperate in such defense by providing
access to witnesses and evidence available to it. DOW
shall have the right to participate in any defense to
the extent that in its judgment, DOW may be
prejudiced thereby; and
(ii) In any claim or suit in which DOW seeks
indemnification by OSI, DOW shall not settle, offer
to settle or admit liability or damages in any such
claim or suit without the prior written consent of
OSI.
ARTICLE 12 - WARRANTY, DISCLAIMER, GUARANTEE
12.1 Belief of Accuracy - DOW represents that COMPOUNDS, TECHNOLOGY and any
other CONFIDENTIAL INFORMATION transferred or provided to OSI hereunder
are believed to be accurate and complete as of their current status at
DOW on the EFFECTIVE DATE (NO representation is made by DOW on behalf
of DowElanco), and that DOW's interpretations and conclusions drawn
therefrom were made in good faith and in the exercise of DOW's
scientific judgment as of the dates of the documents contained therein,
and that to the best of DOW's knowledge, data when generated that was
subject to regulations regarding Good Laboratory Practices and Good
Clinical Practices and other FDA regulations is in compliance with such
regulations. However, DOW does not warrant or represent that such
information is or will be sufficient to obtain APPROVAL to market
PRODUCT or to commercially produce COMPOUNDS, COMPOUND DERIVATIVES or
PRODUCT or to
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commercialize COMPOUNDS, COMPOUND DERIVATIVES or PRODUCT with
REGULATORY AUTHORITIES in the TERRITORY or that OSI shall be free to
practice or sell any COMPOUND or COMPOUND DERIVATIVE or PRODUCT.
12.2 OSI Representation - OSI will be solely relying on its own evaluation
of COMPOUNDS, TECHNOLOGY and the other CONFIDENTIAL INFORMATION
transferred or provided to it hereunder and on its own medical and
scientific expertise in using the same in its development and
commercialization of COMPOUNDS, COMPOUND DERIVATIVES and PRODUCT.
12.3 Validity, Non-Infringement - DOW DOES NOT WARRANT that the manufacture,
use and sale of a PRODUCT does not fall within the scope of THIRD PARTY
patents or the industrial property rights of a THIRD PARTY. Until a
PRODUCT is identified by OSI, DOW DOES NOT WARRANT that any PATENTS
exist, either belonging to DOW or to a THIRD PARTY.
12.4 Disclaimer of Warranties as to DOW PATENTS - DOW makes NO
representation that the inventions covered in any PATENTS are
patentable or that the PATENTS are or will be valid or enforceable, NOR
does DOW warrant or represent that the exercise of the rights licensed
hereunder is free from infringement of patent rights of THIRD PARTIES.
Should any infringement or damages be alleged, suit brought or damages
collected therefore, NO damages are permitted to be collected from DOW,
and OSI shall hold DOW harmless from any such suit, claim, action for
damages or threat thereof.
ARTICLE 13 - TERM AND TERMINATION
13.1 Term - Unless terminated under the provisions of this Article 13, this
License shall continue in effect until the expiration of all PATENTS
listed on APPENDICES B or D, or if no PATENTS are filed, then the term
shall be twenty (20) years; provided, however, that Article 13.7 shall
survive termination of this License.
When this License expires under this Article 13.1, the licenses granted
under this License shall be paid-up; however, any payments still due
under Articles 6.2 and 6.3 will continue until paid in full for the
period prior to such termination.
13.2 Failure to Use License - If OSI and its AFFILIATES shall have:
(i) discontinued selling a given COMPOUND or PRODUCT in
commercial quantities using their good faith efforts
in accord with Article 4 to commercialize; or
28
<PAGE> 32
(ii) not commercialized any COMPOUNDS, COMPOUND
DERIVATIVES or PRODUCT in accord with Article 4; or
(iii) not found any lead COMPOUND or COMPOUND DERIVATIVE
within five (5) years from the EFFECTIVE DATE, or
(iv) not run at least three (3) screens on the appropriate
COMPOUNDS per twelve-month period; then in the case
of (ii), (iii) and (iv) above either OSI or DOW shall
have the right to terminate this License in whole, or
in the case of (i) above, terminate this License only
as to that given COMPOUND or PRODUCT, upon three (3)
months written notice.
If termination under this Article 13.2 results voluntarily, then OSI
shall promptly supply to DOW all registration information for
REGULATORY AUTHORITIES that is available to OSI or its AFFILIATES for
use by DOW, its AFFILIATES or sublicensees for a fair consideration to
OSI.
13.3 Termination for Breach - In the event of a material breach by either
DOW or OSI of any of the obligations contained in this License, the
other Party shall be entitled to terminate this License by notice in
writing under Article 16.1, provided that such notice shall specify the
breach or breaches. If the said breach or breaches are capable of
remedy, the Party committing such breach or breaches shall be entitled
to a period of sixty (60) days from the delivery of such notice in
which to remedy or to undertake to remedy the same. In the case the
defaulting Party shall fail to remedy the breach or to undertake to
remedy the breach to the satisfaction of the injured Party, the injured
Party shall have the right to cancel this License in whole or only
terminate those rights and obligations relating to the particular
breach by simple notification to the Party in default. Failure of a
Party to exercise its rights under this Article 13.3 shall not be
construed as a waiver as to future breaches whether or not they are
similar.
13.4 Termination by OSI - OSI may surrender and terminate this License on
three (3) months written notice to DOW. OSI will disclose to DOW its
reasons for any such termination.
13.5 Termination by DOW - DOW shall have the further right to terminate this
License immediately on written notice to OSI if:
(a) OSI shall cease to carry on business or shall go into
liquidation or a receiver shall be appointed to OSI's assets;
or
(b) OSI shall become bankrupt or insolvent or unable to meet any
of its financial obligations on their due dates; or
29
<PAGE> 33
(c) OSI fails to meet every payment in accord with Article 6,
including cure periods; or
(d) OSI breaches without cure any of the Export regulations of
Article 10.
13.6 On Termination - OSI shall, upon termination of this License by DOW
under Articles 13.2, 13.3 or 13.5 or termination by OSI under Article
13.2, 13.3 or 13.4:
(a) return to DOW all copies of documents containing COMPOUNDS and
their data and any materials received from DOW under
confidentiality and CONFIDENTIAL INFORMATION concerning
COMPOUNDS and PRODUCT in the FIELD;
(b) pay to DOW all payments and royalties due or accrued at the
termination date within thirty (30) days after termination;
and
(c) make no further use of, or permit any use by any THIRD PARTY
or CONTRACTUAL COLLABORATOR, of any kind of any and all
COMPOUNDS disclosed hereunder by DOW, except to the extent
such information has become public knowledge other than
through fault of OSI, and make no further use of the surviving
JOINT PATENTS or DOW PATENTS.
13.7 Survival of Certain Obligations - On termination of this License: the
obligations of confidentiality set forth in Article 7 shall survive for
the time stated therein; payments due under Article 6 shall survive for
the terms specified; Export Control compliance set forth in Article 10
shall survive indefinitely; and the indemnification obligations set
forth in Article 11 shall also survive as to all claims or actions
arising from events which occurred before termination.
ARTICLE 14 - FORCE MAJEURE
14.1 Event of Force Majeure - In the event that performance under this
License, or any obligation hereunder, is hindered, delayed or prevented
by reason of acts of God, strikes, lockouts, labor troubles,
intervention of any governmental authority, fire, riots, insurrections,
invasions, war or other reason of similar nature beyond the reasonable
control of the Party (including the failure of DowElanco to deliver on
a timely basis, as notified to DOW by OSI) and are without its fault or
negligence, then performance of that act shall be excused for the
period of the delay and the period for the performance of that act
shall be extended for an equivalent period.
14.2 Notification - Upon occurrence of an event of force majeure, the
affected Party shall promptly notify the other Party in writing,
setting forth the nature of the occurrence, its expected duration and
how that Party's performance is affected. The affected Party
30
<PAGE> 34
shall resume the performance of its obligations as soon as practicable
after the force majeure event ceases.
ARTICLE 15 - CONSENTS
15.1 Commitments - DOW agrees to take reasonable efforts to maintain in full
force and effect the agreements or written commitments which DOW has
made prior to the EFFECTIVE DATE for COMPOUND or PRODUCT in the
TERRITORY.
15.2 Agreements - DOW may enter into other agreements for licensees for
COMPOUNDS OUTSIDE the FIELD in the TERRITORY. If this occurs, DOW shall
notify OSI, if legally possible, of the identity of that entity and the
field.
ARTICLE 16 - NOTICES
16.1 Official - Any notice, request or communication specifically provided
for or permitted to be given under this License must be in writing and
may be delivered by hand delivery, courier service, or electronic
transmission such as telex, facsimile, telegram or electronic mail, and
shall be deemed effective as of the time of actual delivery thereof to
the addressee. For purposes of notice the addresses of the Parties
shall be as follows:
DOW:
The Dow Chemical Company
2030 Dow Center
Midland, Michigan 48674
USA
Attention: Michael J. Mintz, PhD
Director
External Technology
Telephone: 517-636-9458
Facsimile: 517-636-8127
31
<PAGE> 35
with a copy to:
The Dow Chemical Company
Patent Department
1790 Building, Washington Street
Midland, Michigan 48674
USA
Attention: Karen L. Kimble, JD
Senior Counsel
Telephone: 517-636-1687
Facsimile: 517-638-9786
OSI:
Oncogene Science, Inc.
106 Charles Lindbergh Blvd.
Uniondale, NY 11553
USA
Attention: Colin Goddard, PhD
Executive Vice President and
Chief Operating Officer
Telephone: 516-222-0023
Facsimile: 516-745-6429
with a copy to:
Oncogene Science, Inc.
106 Charles Lindbergh Blvd.
Uniondale, NY 11553
USA
Attention: Robert L. Van Nostrand
Chief Financial Officer
Telephone: 516-222-0023
Facsimile: 516-222-0409
16.2 Each Party may change its address and its representative for notice by
the giving of notice thereof in the manner provided in Article 16.1.
32
<PAGE> 36
ARTICLE 17- DISPUTE RESOLUTION
17.1 Choice of Law - This License shall be governed by the laws of the State
of Delaware, excepting its conflict of laws principles, in all respects
of validity, construction and performance, except that all questions
concerning the construction, validity, coverage or infringement of
patents or PATENTS shall be decided in accordance with the patent law
of the country where the patent was granted.
17.2 Disputes - Both Parties shall make good faith efforts to resolve any
questions concerning construction and performance under this License,
excluding PATENTS, by:
17.2.1 Notice, contact and resolution, all proceedings and documents
in English, between the Parties listed under Article 16.1
within one hundred twenty (120) days from the date of the
notice by negotiation either by telephone or by meeting in
Detroit, Michigan; and
17.2.2 If unsuccessful under Article 17.2.1, then senior executive
management with settlement authority and counsel of DOW and
OSI shall meet at a mutually agreeable location within sixty
(60) days from a date of notice that Article 17.2.1 failed to
resolve the issues. Counsel shall present the legal and
factual arguments to such executives in English, with
supporting evidence if necessary, and resolution by these
executives is expected within ten (10) days, which may be
reduced to writing in English as an amendment to this License;
and
17.2.3 If such executives have not met or resolved the issues under
Article 17.2.2, then within seventy five (75) days from the
date of the notice under Article 17.2.1, the Parties shall
submit the issues to arbitration in Chicago, Illinois, in
English, in accordance with the Rules of the American
Arbitration Association ("AAA"), which may be modified by the
Parties, and judgment shall not be binding. The Parties agree
that the following procedures shall be adhered to even though
they may, in part, not be in full conformance with said Rules:
(a) Three Arbitrators shall be selected from a list of at
least 20 arbitrators selected by the AAA and Parties
composed of experts in the area(s) of the dispute
(for example, for a patent issue patent counsel with
chemistry or pharmaceutical expertise who are
practicing or retired partners in law firms or
retired in-house corporate patent counsel not
affiliated with the Parties with at least 15 years of
experience in patent law and knowledge of the
pertinent laws of any country and the subject area of
the dispute). The arbitration proceedings and reports
shall be in English. The time from the beginning of
submission for arbitration and conclusion of any oral
or written proceedings shall not exceed six (6)
months; and
33
<PAGE> 37
(b) Limited discovery to only that which each Party has a
substantial, demonstrable need, and shall be
conducted in the most expeditious and cost-effective
manner. The Arbitrators shall resolve any issues with
regard to the discovery. Decision by the Arbitrators
shall be given in writing within thirty (30) days
from the end of oral proceedings; and
(c) Although the decision by the Arbitrators is
non-binding, should either Party then litigate in a
Court of competent jurisdiction for the Parties,
either Party may introduce the decision reached by
Arbitration with its supporting evidence.
ARTICLE 18 - ASSIGNMENT
18.1 Assignment - Neither Party to this License shall assign any rights
hereunder without the prior written consent of the other Party, such
consent not to be unreasonably withheld. It being agreed, however, that
without such consent being required from DOW, OSI may assign to its
AFFILIATES, but DOW must be notified in writing in accord with Article
16.1.
18.2 Consolidation, Reorganization or Merger - Should OSI be consolidated,
reorganized or merged with another entity, this License may be assigned
to the successor entity or the assignee of all or substantially all of
OSI's business and assets related to COMPOUNDS, COMPOUND DERIVATIVES or
PRODUCT without DOW's prior written consent. However, OSI shall
promptly notify DOW prior to such action in accord with Article 16.1.
It being understood that provisions for payments to DOW by such entity
must remain as in Article 6.
18.3 Effect on Successors and Assignees - This License shall inure to the
benefit of and be binding upon such successors and permitted assignees.
ARTICLE 19 - MISCELLANEOUS PROVISIONS
19.1 Amendments - This License may be amended only in writing executed by
both Parties.
19.2 Entirety of Agreement - This License sets forth the entire agreement
and understanding between the Parties hereto with respect to COMPOUNDS,
COMPOUND DERIVATIVES and PRODUCTS for their commercialization in the
TERRITORY for use in the FIELD. The Parties agree that this License is
in compliance with the LETTER OF INTENT and that the confidentiality
provisions contained therein are in force until the EFFECTIVE DATE.
34
<PAGE> 38
19.3 Severability - If any term or provision under this License is deemed
invalid under the laws of a particular country or jurisdiction, the
invalidity shall not invalidate the whole License but it shall be
construed as if not containing that particular term or provision for
that particular country or jurisdiction and the rights and obligations
of the Parties shall be construed and enforced accordingly. The Parties
shall negotiate in good faith a substitute provision as an addendum to
this License for that particular country or jurisdiction in compliance
with the law to as nearly as possible retain the Parties intent in
legally valid language.
19.4 Waivers, Cumulative Remedies - A waiver by either Party of any term or
condition of this License in any one instance shall not be deemed
construed to be a waiver of such term or condition for any similar
instance in the future or of any subsequent breach hereof. All rights,
remedies, undertakings, obligations and agreements contained in this
License shall be cumulative and none of them shall be a limitation of
any other remedy, right, undertaking, obligation or agreement of either
Party.
19.5 Publicity - Neither DOW nor OSI shall make the financial terms of this
License public, except as required by law. With regard to a filing with
the US Securities and Exchange Commission OSI shall seek confidential
treatment of information considered confidential by DOW. Any press
release or publicity of this License shall be reviewed and approved by
both Parties prior to any release.
19.6 Headings - Headings in this License are included herein for ease of
reference and shall not affect the meaning of the provisions of this
License, nor shall they have any other legal effect.
19.7 Other Documents - Each Party agrees to execute such additional papers
or documents in customary legal form and to make such governmental
filings or applications as may be necessary or desirable to effect the
purposes of this License and carry out its provisions.
19.8 Cooperation - OSI and DOW shall use good faith efforts to cooperate
with respect to any issues that concern the development of the PRODUCT
under this License. OSI is aware that competition in the TERRITORY is
likely if no PATENTS exist or are obtained and OSI accepts this License
with that knowledge.
35
<PAGE> 39
IN WITNESS WHEREOF, the Parties have duly executed duplicate originals
of this License by their appropriate authorized representative. This License
shall be void ab initio if not signed by both Parties prior to April 1, 1997.
This date is a one month extension of time from the date stated in the LETTER OF
INTENT, and this time extension is acceptable to both Parties. Such License is
subject to management and/or Board approval by each Party. Should the Parties
fail to reach agreement for the License by that date, then either the date may
be extended by mutual written consent or the negotiations may be terminated.
<TABLE>
<S> <C>
THE DOW CHEMICAL COMPANY ONCOGENE SCIENCE, INC.
By: /s/ Fred P. Corson By: /s/ Colin Goddard
------------------------------- ----------------------------
Name: Fred P. Corson Name: Colin Goddard
Title: Vice President Title: Executive Vice President
Research and Development and Chief Operating Officer
Date: March 16, 1997 Date: March 18, 1997
------------------------------- ----------------------------
</TABLE>
36
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<PERIOD-START> JAN-01-1997
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0
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