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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(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: 0-21696
ARIAD PHARMACEUTICALS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 22-3106987
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
26 LANDSDOWNE STREET, CAMBRIDGE, MASSACHUSETTS 02139
(Address of principal executive offices)(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (617) 494-0400
Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report: Not Applicable
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
--- ---
The number of shares of the Registrant's common stock outstanding as of May 1,
1997 was 19,264,341.
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ARIAD PHARMACEUTICALS, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE NO.
ITEM 1. UNAUDITED FINANCIAL STATEMENTS:
Condensed Consolidated Balance Sheets - March 31, 1997
and December 31, 1996 ......................................... 1
Condensed Consolidated Statements of Operations for the
Three Months Ended March 31, 1997 and 1996 .................... 2
Condensed Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1997 and 1996 .................... 3
Notes to Unaudited Condensed Consolidated Financial
Statements .................................................... 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ........................... 7
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ........... 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .............................. 12
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED FINANCIAL STATEMENTS
ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<CAPTION>
ASSETS
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 26,369,646 $ 2,906,851
Marketable securities 11,213,778 12,795,449
Accounts receivable and other 529,857 2,569,404
------------ ------------
Total current assets 38,113,281 18,271,704
------------ ------------
Property and equipment:
Leasehold improvements 7,000,873 7,000,873
Equipment and furniture 4,830,577 4,256,805
Construction in progress 375,000
------------ ------------
Total 12,206,450 11,257,678
Less accumulated depreciation and amortization 5,146,536 4,748,275
------------ ------------
Property and equipment, net 7,059,914 6,509,403
------------ ------------
Licensed technology and patent application costs, net 1,479,977 1,357,470
------------ ------------
Investment in Genomics Center 821,396
------------
Other assets, net 1,399,674 1,466,416
------------ ------------
Total $ 48,874,242 $ 27,604,993
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 985,774 $ 1,275,956
Accounts payable 1,191,733 788,282
Accrued liabilities 1,489,693 639,026
Deferred revenue 3,666,665 3,666,665
------------ ------------
Total current liabilities 7,333,865 6,369,929
------------ ------------
Long-term debt 1,322,619 1,472,812
------------ ------------
Deferred revenue 2,244,448 3,077,781
------------ ------------
Stockholders' equity:
Series B convertible preferred stock, $.01 par value; authorized,
5,000,000 shares; issued and outstanding, 2,526,316 shares in
1997 (liquidation preference, $24,000,000) 25,263
Common stock, $.001 par value; authorized, 60,000,000
shares; issued and outstanding, 19,260,412 shares in
1997 and 19,036,723 shares in 1996 19,260 19,037
Additional paid-in capital 94,679,082 70,593,840
Net unrealized loss on marketable securities (117,957) (102,699)
Accumulated deficit (56,632,338) (53,825,707)
------------ ------------
Stockholders' equity 37,973,310 16,684,471
------------ ------------
Total $ 48,874,242 $ 27,604,993
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
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ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Revenue:
Research revenue $ 1,973,333 $ 2,058,334
Interest income 292,717 347,725
------------ ------------
Total revenue 2,266,050 2,406,059
------------ ------------
Operating expenses:
Research and development 4,257,141 3,702,205
General and administrative 758,065 682,971
Interest expense 57,475 71,616
------------ ------------
Total operating expenses 5,072,681 4,456,792
------------ ------------
Net loss $ (2,806,631) $ (2,050,733)
============ ============
Net loss per share $ (.15) $ (.11)
============ ============
Weighted average number of shares
of common stock outstanding 19,145,577 18,976,539
</TABLE>
See notes to unaudited condensed consolidated financial statements.
2
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ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,806,631) $ (2,050,733)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 578,237 537,572
Deferred revenue (833,333) (833,334)
Stock-based compensation 19,975 1,951
Increase (decrease) from:
Accounts receivable and other 2,039,547 (164,823)
Other assets (277,270) (441,982)
Accounts payable 403,451 469,634
Accrued liabilities 850,667 (154,400)
------------ ------------
Net cash used in operating activities (25,357) (2,636,115)
------------ ------------
Cash flows from investing activities:
Acquisitions of marketable securities (5,527,348) (6,835,149)
Proceeds from sale and maturities of marketable securities 7,084,674 12,956,040
Investment in property and equipment, net (948,772) (349,978)
Investment in Genomics Center (625,000)
Acquisition of licensed technology and patents (145,780) (227,462)
------------ ------------
Net cash (used in) provided by investing activities (162,226) 5,543,451
------------ ------------
Cash flows from financing activities:
Proceeds from issuance of series B preferred stock 24,000,000
Repayment of borrowings (440,375) (364,191)
Proceeds from exercise of stock options 90,753 36,614
------------ ------------
Net cash provided by (used in) financing activities 23,650,378 (327,577)
------------ ------------
Net increase in cash and equivalents 23,462,795 2,579,759
Cash and equivalents, beginning of period 2,906,851 3,750,082
------------ ------------
Cash and equivalents, end of period $ 26,369,646 $ 6,329,841
============ ============
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
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ARIAD PHARMACEUTICALS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. MANAGEMENT STATEMENT
In the opinion of the Company's management, the accompanying unaudited
condensed consolidated financial statements contain all adjustments
(consisting of only normal recurring accruals) necessary to present
fairly the financial position as of March 31, 1997 and December 31,
1996 and the results of operations for the three-month periods ended
March 31, 1997 and 1996.
The results of operations for the three-month period ended March 31,
1997 are not necessarily indicative of the results to be expected for
the full year.
2. MARKETABLE SECURITIES
The Company has classified its marketable securities as available for
sale and, accordingly, carries such securities at aggregate fair value.
At March 31, 1997 and December 31, 1996, the Company's marketable
securities consisted of the following:
<TABLE>
<CAPTION>
Aggregate Amortized Gross Unrealized
1997 Fair Value Cost Basis Gains Losses
---- ----------- ----------- -------- ---------
<S> <C> <C> <C> <C>
U.S. Government obligations $ 4,351,839 $ 4,420,257 $ (68,418)
Corporate debt securities 6,612,468 6,662,007 $ 208 (49,747)
Certificate of deposit 249,471 249,471
----------- ----------- -------- ---------
Total $11,213,778 $11,331,735 $ 208 $(118,165)
=========== =========== ======== =========
1996
----
U.S. Government obligations $ 4,444,217 $ 4,507,983 $ 580 $ (64,346)
Corporate debt securities 8,101,761 8,140,694 3,120 (42,053)
Certificate of deposit 249,471 249,471
----------- ----------- -------- ---------
Total $12,795,449 $12,898,148 $ 3,700 $(106,399)
=========== =========== ======== =========
</TABLE>
At March 31, 1997, approximately $8,919,000 of investments in
marketable securities had contractual maturities of one year or less.
Realized gains and losses on sales of marketable securities were not
material during the quarter ended March 31, 1997; the net unrealized
loss of $117,957 is included in stockholders' equity.
3. NET LOSS PER SHARE
The shares of series B convertible preferred stock issued in the
quarter ended March 31, 1997 are common stock equivalents, but have
been excluded from the computation of net loss per share because their
effect is not dilutive.
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4. JOINT VENTURES
Hoechst-ARIAD Genomics Center, LLC
In March 1997, the Company entered into a 50/50 joint venture with
Hoechst Marion Roussel, Inc. ("HMR") to pursue functional genomics with
the goal of identifying novel therapeutic proteins and small-molecule
drug targets (the "1997 HMR Genomics Agreement"). The joint venture,
named the Hoechst-ARIAD Genomics Center, LLC (the "Genomics Center"),
is located at the Company's research facilities in Cambridge,
Massachusetts. Under the terms of the 1997 HMR Genomics Agreement, the
Company and HMR agreed to commit up to $85,000,000 to the establishment
of the Genomics Center and its first five years of operation. The
Company and HMR will jointly fund $78,500,000 of operating and related
costs over the period, and ARIAD will fund up to $6,500,000 in
leasehold improvements and equipment. HMR committed to provide ARIAD
with capital adequate to fund ARIAD's share of such costs through the
purchase of up to $49,000,000 of series B preferred stock over the
five-year period, including an initial investment of $24,000,000, as
discussed below.
On March 18, 1997, HMR purchased 2,526,316 shares of the Company's
series B preferred stock for $24,000,000. During the period from 1999
to 2002, at the Company's option, HMR has agreed to make subsequent
purchases of up to $25,000,000 of series B preferred stock at purchase
prices based on a premium to the market price of the common stock at
the time of each subsequent purchase (unless the market price of the
common stock exceeds a predetermined ceiling, in which case the
purchase price will be equal to the market price). The series B
preferred stock is convertible one-for-one into common stock upon the
earliest to occur of: (1) six months following termination of the
Genomics Center, (2) June 30, 2003, or (3) upon a change of control of
the Company; and, if still outstanding on December 31, 2006, the series
B preferred stock will automatically convert. Subject to certain
restrictions relative to a merger or acquisition of the Company, the
series B preferred stockholders have voting rights equivalent to common
stockholders. Should ARIAD and HMR determine that the Genomics Center
requires funds in excess of those committed, ARIAD may fund its share
of the excess through a loan facility made available by HMR. Funds
borrowed by ARIAD pursuant to such loan facility, if any, will bear
interest at a rate of LIBOR plus 0.25% and are repayable by 2003 in
cash or series B preferred stock, at the Company's option.
The Company also entered into agreements with the Genomics Center to
provide research and administrative services (the "Services
Agreements") to the Genomics Center on a cost reimbursement basis.
ARIAD's costs of providing the research and administrative services to
the Genomics Center will be charged to research and development expense
and general and administrative expense in its consolidated financial
statements. Under the Services Agreements, ARIAD will bill the Genomics
Center for 100% of its costs of providing the research and
administrative services; however, because ARIAD is providing 50% of the
funding of the Genomics Center, ARIAD will recognize as revenue only
50% of the amounts billed. ARIAD will account for its investment in the
Genomics Center using the equity method.
5
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ARIAD-Genovo Joint Venture
On February 14, 1997, ARIAD, through its subsidiary, ARIAD Gene
Therapeutics, Inc., and Genovo Inc. formed a joint venture to develop
and commercialize gene therapy products for the therapeutic protein
market. The joint venture combines ARIAD's regulated gene expression
technology with Genovo's gene transfer technology for the intramuscular
and subcutaneous delivery of gene therapy products.
Under the terms of the joint venture agreement, ARIAD and Genovo will
seek to develop gene therapy-based protein products. Each partner will
pay its respective costs of product development, and any payments
received by either party will be divided equally between ARIAD and
Genovo, after reimbursement of certain costs. In addition to developing
gene therapy-based protein products itself, the joint venture will seek
partnerships with companies that have a strong strategic interest in
protein therapeutics and the markets they address. Each company is free
to develop and partner its respective technology for all other
applications.
5. EXERCISE OF 1992 WARRANTS
In February and March 1997, warrants to purchase 733,258 shares of
common stock, with an exercise price of $5.60 per share, issued in
connection with a 1992 private placement, were exercised on a
conversion right basis (cashless exercise), resulting in the issuance
of 176,813 shares of common stock, or expired.
6. NEW ACCOUNTING PRONOUNCEMENT
The Company will adopt Statement of Financial Accounting Standards
("SFAS") No. 128, "Earnings Per Share," in the fourth quarter of 1997,
as required. The standard specifies the computation, presentation and
disclosure requirements for earnings per share. The Company will
continue to apply Accounting Principles Board Opinion No. 15, "Earnings
Per Share," until the adoption of SFAS 128.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
ARIAD Pharmaceuticals, Inc. (the "Company" or "ARIAD") is engaged in the
discovery and development of novel pharmaceuticals based on signal transduction
pathways and the genes that regulate them. The Company is currently focusing its
efforts in three areas: (i) the development of orally administered drugs to
block intracellular signal transduction pathways that are critical to major
diseases such as osteoporosis, allergy/asthma and immune-related disorders; (ii)
the development of a system to regulate gene therapy using orally administered
drugs; and (iii) the identification of new small-molecule drug targets and
therapeutic proteins through functional genomics. ARIAD has assembled a broad
portfolio of advanced technologies for the identification, validation and
optimization of novel drugs. These technologies have been integrated into a drug
discovery platform that, in conjunction with the Company's expertise in signal
transduction, forms the basis for multiple business opportunities, each with a
diversity of potential products. In each of its three areas of drug discovery,
the Company has entered into a strategic alliance with a collaborator to
complement its drug discovery technologies or to support its commercialization
efforts.
Since its inception in 1991, the Company has devoted substantially all of its
resources to its research and development programs. The Company receives no
revenue from the sale of pharmaceutical products, and substantially all revenue
to date has been received in connection with the Company's research
collaborations. The Company has not been profitable since inception and expects
to incur substantial losses for the foreseeable future, primarily due to the
expansion of its research and development programs, including the establishment
of the Genomics Center (see"- Recent Development"). The Company expects that
losses will fluctuate from quarter to quarter and that such fluctuations may be
substantial. As of March 31, 1997, the Company had an accumulated deficit of
$56,632,338.
RECENT DEVELOPMENT
In March 1997, the Company entered into a 50/50 joint venture with Hoechst
Marion Roussel, Inc. ("HMR") to pursue functional genomics with the goal of
identifying novel therapeutic proteins and small-molecule drug targets (the
"1997 HMR Genomics Agreement"). The joint venture, named the Hoechst-ARIAD
Genomics Center, LLC (the "Genomics Center"), will be located at the Company's
research facilities in Cambridge, Massachusetts. Under the terms of the 1997 HMR
Genomics Agreement, the Company and HMR agreed to commit up to $85,000,000 to
the establishment of the Genomics Center and its first five years of operation.
The Company and HMR will jointly fund $78,500,000 of operating and related costs
over the period, and ARIAD will fund up to $6,500,000 in leasehold improvements
and equipment. HMR has committed to provide ARIAD with capital adequate to
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fund ARIAD's share of such costs through the purchase of up to $49,000,000 of
series B preferred stock over the five-year period, including an initial
purchase of 2,526,316 shares of series B preferred stock for $24,000,000 on
March 18, 1997 (see "- Liquidity and Capital Resources").
The Company also entered into agreements with Genomics Center to provide
research and administrative services (the "Services Agreements") to the Genomics
Center on a cost reimbursement basis. ARIAD's costs of providing the research
and administrative services to the Genomics Center will be charged to research
and development expense and general and administrative expense in its
consolidated financial statements. Under the Services Agreements, ARIAD will
bill the Genomics Center for 100% of its costs of providing the research and
administrative services; however, because ARIAD is providing 50% of the funding
of the Genomics Center, ARIAD will recognize as revenue only 50% of the amounts
billed. Accordingly, the Company's operating losses will increase substantially
as a result of the 1997 HMR Genomics Agreement. ARIAD will account for its
investment in the Genomics Center using the equity method.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED WITH THE THREE MONTHS ENDED MARCH 31,
1996
REVENUE
The Company recognized research revenue of $1,973,000 for the quarter ended
March 31, 1997 compared to $2,058,000 for the same period in 1996. Research
revenue is comprised principally of research revenue from the Company's 1995
collaborative research and development agreement with HMR (the "1995 HMR
Osteoporosis Agreement") and government-sponsored research grants. The decrease
in research revenue of $85,000 for the quarter ended March 31, 1997 when
compared to the corresponding period in 1996 is a result of decreased research
activity under government-sponsored grants. Although research revenue recognized
under the 1995 HMR Osteoporosis Agreement is expected to remain substantially
equivalent in 1997, research revenue resulting from the Services Agreements with
the Genomics Center is expected to increase over the next three years.
Interest income decreased by $55,000 to $293,000 for the quarter ended March 31,
1997 from $348,000 for the same period in 1996 primarily as a result of lower
levels of funds invested.
OPERATING EXPENSES
Research and development expenses increased to $4,257,000 for the quarter ended
March 31, 1997 from $3,702,000 for the same period in 1996 due to increased
expenses
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incurred in the regulated gene therapy program, including manufacturing
development and other preclinical development costs, as well as increased
research activity under the 1995 HMR Osteoporosis Agreement. The Company expects
its research and development expenses to increase significantly as a result of
research services to be provided to the Genomics Center.
General and administrative expenses increased to $758,000 for the quarter ended
March 31, 1997 from $683,000 for the corresponding period in 1996 primarily due
to increased expenses in connection with the formation of the Genomics Center
and the ARIAD-Genovo joint venture.
The Company incurred interest expense of $57,000 for the quarter ended March 31,
1997 compared to $72,000 for the corresponding period in 1996. The decrease
resulted from a lower level of long-term debt during the period.
OPERATING RESULTS
The Company incurred losses of $2,807,000 for the quarter ended March 31, 1997
and $2,051,000 for the corresponding period in 1996, or $.15 and $.11 per share,
respectively. The Company expects that substantial operating losses will
continue for several more years, will increase as its activities expand and
services are provided to the Genomics Center and will fluctuate as a result of
differences in the timing and composition of revenue earned and expenses
incurred.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations and investments in property and
equipment primarily through the private placement and public offering of its
securities, including the sale of series B preferred stock to HMR in connection
with the formation of the Genomics Center in March 1997, supplemented by the
issuance of long-term debt, sale/leaseback and capital lease transactions,
interest income, government-sponsored research grants and research revenue under
the 1995 HMR Osteoporosis Agreement.
As of March 31, 1997, the Company had cash, cash equivalents and marketable
securities totaling $37,583,000 and working capital of $30,779,000 compared to
cash, cash equivalents and marketable securities totaling $15,702,000 and
working capital amounting to $11,902,000 at December 31, 1996.
The primary uses of cash during the three months ended March 31, 1997 were
$25,000 to finance the Company's operations and working capital requirements,
$949,000 to purchase laboratory equipment and begin renovation of space for the
Genomics Center, $625,000 for the initial investment in the Genomics Center
pursuant to the 1997 HMR Genomics Agreement, $440,000 to repay long-term debt
and $146,000 to acquire licensed technology and patents. The primary sources of
cash during the quarter ended March 31, 1997 were $24,000,000 from the issuance
of
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series B preferred stock to HMR, $3,000,000 of research funding from the 1995
HMR Osteoporosis Agreement, including the receipt of $2,000,000 for the
achievement of the first research milestone in December 1996, and $1,557,000 of
net proceeds from the sale and maturity of marketable securities.
In March 1997, the Company entered into a 50/50 joint venture with HMR to pursue
functional genomics with the goal of identifying novel therapeutic proteins and
small-molecule drug targets. The Company and HMR agreed to commit up to
$85,000,000 to the establishment of the Genomics Center and its first five years
of operation. The Company and HMR will jointly fund $78,500,000 of operating and
related costs, and ARIAD will fund up to $6,500,000 in leasehold improvements
and equipment. HMR committed to provide ARIAD with capital adequate to fund
ARIAD's share of such costs through the purchase of up to $49,000,000 of series
B preferred stock over the five-year period, including an initial investment of
$24,000,000 as discussed below.
Pursuant to the 1997 HMR Genomics Agreement, on March 18, 1997, HMR purchased
2,526,316 shares of the Company's series B preferred stock for $24,000,000.
During the period from 1999 to 2002, at the Company's option, HMR agreed to make
subsequent purchases of up to $25,000,000 of series B preferred stock at
purchase prices based on a premium to the market price of the common stock at
the time of each subsequent purchase (unless the market price of the common
stock exceeds a predetermined ceiling, in which case the purchase price will be
equal to the market price). Should ARIAD and HMR determine that the Genomics
Center requires funds in excess of those committed, ARIAD may fund its share of
the excess through a loan facility made available by HMR. Funds borrowed by
ARIAD pursuant to such loan facility, if any, will bear interest at a rate of
LIBOR plus 0.25% and are repayable by 2003 in cash or series B preferred stock,
at the Company's option.
In November 1995, the Company entered into the 1995 HMR Osteoporosis Agreement
to collaborate with HMR on the discovery and development of drugs to treat
osteoporosis and related bone diseases, one of the Company's signal transduction
inhibitor drug discovery programs. Under the terms of this agreement, HMR made
an initial cash payment to the Company of $10,000,000, agreed to provide
research funding in equal quarterly amounts of $1,000,000 up to an aggregate of
$20,000,000 over a five-year period and agreed to provide an aggregate of up to
$10,000,000 upon the attainment of certain research milestones. In addition, HMR
agreed to fund all of the preclinical and clinical development costs for
products that emerge from the collaboration and pay royalties to the Company
based on product sales. HMR may elect to terminate the agreement and further
payment obligations after three years, if certain scientific milestones have not
been achieved, whereupon all rights would revert back to the Company.
In February 1997, the Company began renovation of approximately 25,000 square
feet of previously leased space to provide laboratories and offices for the
Genomics Center and to expand existing chemistry and pharmacology laboratories.
The
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leasehold improvements are expected to be completed in the third quarter of 1997
at an aggregate cost of approximately $5,500,000.
The Company will require substantial additional funding for its research and
product development programs, for operating expenses, for the pursuit of
regulatory clearances and for building manufacturing, sales and marketing
capabilities. Adequate funds for these purposes, whether obtained through
financial markets or collaborative or other arrangements with corporate
partners, or from other sources, may not be available when needed or on terms
acceptable to the Company.
The Company believes that its available cash and existing sources of funding
will be adequate to satisfy its capital and operating requirements for the
Genomics Center for the next five years and will be adequate to satisfy its
other capital and operating requirements for at least the next two years.
However, there can be no assurance that changes in the Company's research and
development plans or other events affecting the Company's operating expenses
will not result in the Company depleting its funds earlier.
SECURITIES LITIGATION REFORM ACT
Safe harbor statement under the Private Securities Litigation Reform Act of
1995: Except for the historical information contained in this Quarterly Report
on Form 10-Q, the matters discussed herein are forward-looking statements that
involve risks and uncertainties, including but not limited to economic,
competitive, governmental and technological factors affecting the Company's
operations, markets, products, services and prices, and other factors discussed
under the heading "Cautionary Statement Regarding Forward-Looking Statements" in
the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission. As a result of these factors, actual events or results could differ
materially from those described herein.
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
quarter ended March 31, 1997.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed in the Exhibit Index are filed herewith in the
manner set forth therein.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended March 31, 1997.
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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.
ARIAD Pharmaceuticals, Inc.
(Registrant)
By: /s/ Jay R. LaMarche
--------------------------------------
Jay R. LaMarche
Executive Vice President and
Chief Financial Officer
(Duly authorized Officer and Principal
Financial Officer)
Date: May 12, 1997
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<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit No. Title
<S> <C>
3.1 Certificate of Incorporation of the Company, as amended (1)
3.2 By-laws of the Company, as amended (1)
3.3 Amendment of Certificate of Incorporation of the Company, dated April 8, 1994 (2)
3.4 Amendment of Certificate of Incorporation of the Company, dated October 4, 1994 (5)
3.5 Certificate of Designations in respect of Series B Preferred Stock of the Company (8)
3.6 Amendment of By-laws of the Company, adopted September 16, 1994 (5)
4.1 Form of ARIAD Pharmaceuticals, Inc. Common Stock Purchase Warrant (1)
4.2 Principal Stockholders' Agreement, dated as of January 5, 1992, among ARIAD Pharmaceuticals,
Inc., David Blech, David Blech as trustee of The Blech Family Trust, Mark S. Germain, Harvey
J. Berger, Harvey J. Berger and Wendy S. Berger as Trustees of the Berger Family Trust,
Avalon Ventures and Avalon Ventures IV. (1)
4.3 Form of Warrant Agreement (with Form of Warrant). (3)
4.4 Rights Agreement, dated as of December 15, 1994, between the Company and State Street Bank
and Trust Company, which includes the Certificate of Designations in respect of the Series A
Preferred Stock, as Exhibit A, the Form of Right Certificate as Exhibit B and the Summary of
Rights to Purchase Series A Preferred Stock as Exhibit C. Pursuant to the Rights Agreement,
Right Certificates will not be mailed until after the Separation Date (as defined therein). (4)
4.5 Amendment, dated as of April 24, 1995, to Rights Agreement, dated as of December 15, 1994,
between ARIAD Pharmaceuticals, Inc. and State Street Bank and Trust Company. (6)
4.6 Stock Purchase Agreement, dated as of April 24, 1995, between ARIAD Pharmaceuticals, Inc. and
Biotech Target S.A. (7)
10.1 Lease Agreement, dated January 8, 1992, between ARIAD Pharmaceuticals, Inc. and Forest City
Cambridge, Inc. (1)
10.2 Executive Employment Agreement, dated as of January 1, 1992, between ARIAD Pharmaceuticals,
Inc. and Harvey J. Berger, M.D. (1)
10.3 Executive Employment Agreement, dated as of January 3, 1992, between ARIAD Pharmaceuticals,
Inc. and Joan S. Brugge, Ph.D. (1)
10.4 Executive Employment Agreement, dated as of January 1, 1992, between ARIAD Pharmaceuticals,
Inc. and Charles C. Cabot III. (1)
10.5 Executive Employment Agreement, dated as of January 1, 1992, between ARIAD Pharmaceuticals,
Inc. and Jay R. LaMarche. (1)
10.6 Executive Employment Agreement, dated as of October 14, 1991, between ARIAD Pharmaceuticals,
Inc. and Manfred Weigele, Ph.D. (1)
10.7 Loan and Security Agreement, dated September 23, 1992, by and between ARIAD Pharmaceuticals,
Inc., ARIAD Corporation and BayBank Boston, N.A. and related instruments and documents. (1)
10.8 Loan Agreement, dated October 28, 1992, among ARIAD Corporation, ARIAD Pharmaceuticals, Inc.
and the Massachusetts Business Development Corporation and related instruments and
documents. (1)
10.9 Equipment Lease Agreement, dated December 10, 1992, by and between ARIAD Corporation and
General Electric Capital Corporation. (1)
10.10 Master Lease Agreement, dated December 21, 1992, by and between ARIAD Corporation and
Comdisco, Inc. (1)
10.11 ARIAD Pharmaceuticals, Inc. 1991 Stock Option Plan for Employees, as amended. (5)
10.12 ARIAD Pharmaceuticals, Inc. 1991 Stock Option Plan for Directors. (1)
10.13 ARIAD Retirement Savings Plan. (1)
10.14 Agreement dated as of January 1, 1994 between The Board of Trustees of The Leland Stanford
Junior University and ARIAD Gene Therapeutics, Inc. (3)
</TABLE>
14
<PAGE> 17
<TABLE>
<S> <C>
10.15 Amendment, dated April 19, 1994, to Executive Employment Agreement between ARIAD
Pharmaceuticals, Inc. and Harvey J. Berger, M.D. (3)
10.16 Amendment, dated March 2, 1994, to Executive Employment Agreement between ARIAD
Pharmaceuticals, Inc. and Joan S. Brugge, Ph.D. (3
10.17 Amendment, dated March 2, 1994, to Executive Employment Agreement between ARIAD
Pharmaceuticals, Inc. and Charles C. Cabot III. (3)
10.18 Amendment, dated March 2, 1994, to Executive Employment Agreement between ARIAD
Pharmaceuticals, Inc. and Jay R. LaMarche. (3)
10.19 Amendment, dated March 2, 1994, to Executive Employment Agreement between ARIAD
Pharmaceuticals, Inc. and Manfred Weigele, Ph.D. (3)
10.20 Unit Purchase and Technology Right of First Negotiation Agreement, dated May 5, 1994, among
Genentech, Inc. ARIAD Pharmaceuticals, Inc. and ARIAD Gene Therapeutics, Inc. (3)
10.21 Amendment No. 2, dated June 30, 1994, to Executive Employment Agreement between ARIAD
Pharmaceuticals, Inc. and Harvey J. Berger, M.D. (5)
10.22 ARIAD Pharmaceuticals, Inc. 1994 Stock Option Plan for Non-Employee Directors. (5)
10.23 Collaborative Research and License Agreement, dated November 5, 1995, between Roussel Uclaf
and ARIAD Pharmaceuticals, Inc. (7)
10.24 License Agreement dated as of September 12, 1996 between Mochida Pharmaceuticals Co., Ltd.
and ARIAD Pharmaceuticals, Inc. (8)
10.25 Joint Venture Agreement dated as of February 14, 1997 between Genovo, Inc. and ARIAD Gene
Therapeutics, Inc. (8)
10.26 Joint Venture Master Agreement dated as of March 4, 1997 between Hoechst Marion Roussel, Inc.
and ARIAD Pharmaceuticals, Inc. (8)
10.27 Stock Purchase, Standstill and Registration Rights Agreement dated as of March 4, 1997
between Hoechst Marion Roussel, Inc. and ARIAD Pharmaceuticals, Inc. (8)
10.28 Collaborative Agreement dated as of March 4, 1997 between Incyte Pharmaceuticals, Inc. and
ARIAD Pharmaceuticals, Inc. (8)
21.1 Subsidiaries of the Company. (3)
</TABLE>
--------------------------------
(1) Incorporated by reference to Registration Statement on Form 10 of the
Company filed with the Securities and Exchange Commission on June 25, 1993.
(2) Incorporated by reference to Form 10-K of the Company for the fiscal year
ended December 31, 1993 filed with the Securities and Exchange Commission
on April 15, 1994.
(3) Incorporated by reference to Registration Statement on Form S-1 of the
Company (No. 33-76414) filed with the Securities and Exchange Commission on
March 11, 1994.
(4) Incorporated by reference to Form 8-K of the Company filed with the
Securities and Exchange Commission on December 21, 1994.
(5) Incorporated by reference to Form 10-K of the Company for the fiscal year
ended December 31, 1994 filed with the Securities and Exchange Commission
on March 30, 1995.
(6) Incorporated by reference to Form 8-K of the Company filed with the
Securities and Exchange Commission on May 15, 1995.
(7) Incorporated by reference to Form 10-K of the Company for the fiscal year
ended December 31, 1995 filed with the Securities and Exchange Commission
on March 15, 1996.
(8) Filed herewith.
15
<PAGE> 1
EXHIBIT 3.5
ARIAD PHARMACEUTICALS, INC.
CERTIFICATE OF DESIGNATIONS
in respect of
SERIES B PREFERRED STOCK
------------------------------
Pursuant to Section 151 of the General Corporation Law
of the State of Delaware
------------------------------
The undersigned, being the Chairman of the Board, President and Chief
Executive Officer of ARIAD Pharmaceuticals, Inc. (the "Corporation"), a
corporation organized and existing under the General Corporation Law of the
State of Delaware, hereby certifies that, pursuant to the provisions of Section
151 of the General Corporation Law of the State of Delaware, the Board of
Directors of the Corporation duly adopted the following resolution, which
resolution remains in full force and effect as of the date hereof:
RESOLVED: That the Board of Directors of the Corporation, pursuant to
authority expressly vested in it by the provisions of the
Corporation's Certificate of Incorporation, as amended, hereby
establishes a series of Preferred Stock, $.01 par value, to be
known as Series B Convertible Preferred Stock of the
Corporation, consisting of Five Million (5,000,000) shares and
having the voting and other powers, designations, preferences
and relative, participating, optional or other special rights,
and qualifications, limitations or restrictions thereof as set
forth in Exhibit A attached hereto.
IN WITNESS WHEREOF, ARIAD Pharmaceuticals, Inc. has caused this
certificate to be signed by its Chairman of the Board, President and Chief
Executive Officer the 18 day of March, 1997.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger, M.D.
----------------------------------------
Harvey J. Berger, M.D.
Chairman of the Board, President and
Chief Executive Officer
<PAGE> 2
Exhibit A
Series B Convertible Preferred Stock
1. Liquidation Rights.
(a) Treatment at Liquidation, Dissolution or Winding Up.
(i) Except as otherwise provided in Section 1(b)
below, in the event of any liquidation, dissolution or winding up of the affairs
of the Corporation, whether voluntary or involuntary, after payment of all
amounts owing to holders of capital stock ranking senior to the Series B
Convertible Preferred Stock, the holders of Series B Convertible Preferred Stock
shall be entitled to be paid out of the assets of the Corporation available for
distribution to holders of the Corporation's capital stock, on a parity with
holders of any other class or series of the Corporation's capital stock
designated to be on a parity with the Series B Convertible Preferred Stock but
before payment or distribution of any of such assets to the holders of Common
Stock or of any other class or series of the Corporation's capital stock
designated to be junior to the Series B Convertible Preferred Stock, an amount
equal to the price paid to the Corporation upon issuance thereof (the "Issue
Price") per share of Series B Convertible Preferred Stock (which amount shall be
subject to equitable adjustment whenever there shall occur a stock dividend,
distribution, combination of shares, reclassification or other similar event
with respect to Series B Convertible Preferred Stock) plus all dividends thereon
declared but unpaid, to and including the date full payment shall be tendered to
the holders of Series B Convertible Preferred Stock with respect to such
liquidation, dissolution or winding up.
(ii) Following payment in full to the holders of
capital stock of the Corporation ranking senior to the Series B Convertible
Preferred Stock, and to the holders of Series B Convertible Preferred Stock and
the holders of any other class or series of the Corporation's capital stock
designated to be on a parity with the Series B Convertible Preferred Stock of
all amounts distributable to them under Section 1(a)(i) hereof, the remaining
assets of the Corporation available for distribution to holders of the
Corporation's capital stock shall be distributed to the respective holders of
Common Stock ratably in proportion to the number of shares of Common Stock they
then hold.
(iii) If the assets of the Corporation shall be
insufficient to permit the payment in full to the holders of Series B
Convertible Preferred Stock of all amounts distributable to them under Section
1(a)(i) hereof, then the entire assets of the Corporation available for such
distribution, after distribution to capital stock ranking senior to the Series B
Preferred, shall be distributed ratably among the holders of Series B
Convertible Preferred Stock and the holders of any other class or series of the
Corporation's capital stock designated to be on a parity with the Series B
Convertible Preferred Stock.
(b) Treatment of Consolidations, Mergers and Sales of Assets.
A consolidation or merger of the Corporation, or a sale of all or substantially
all of the assets of the Corporation, other than a merger, consolidation or sale
of all or substantially all of the assets of the Corporation in a transaction in
which the shareholders of the Corporation immediately prior to the transaction
-2-
<PAGE> 3
own equity securities of the surviving or successor entity (or parent, if any)
having fifty percent (50%) or more of the voting power of all outstanding equity
securities of such entity immediately after the transaction, shall be regarded
as a liquidation, dissolution or winding up of the affairs of the Corporation
within the meaning of this Section 1; provided, however, that the Corporation
shall provide no less than ten (10) business days notice to the holders of
Series B Convertible Preferred Stock prior to such transaction and, at any time
up to immediately before such transaction, the holders of the Series B
Convertible Preferred Stock may convert their shares of Series B Convertible
Preferred Stock in accordance with Section 2 below.
(c) Distributions other than Cash. Whenever the distribution
provided for in this Section 1 shall be payable in property other than cash, the
value of such distribution shall be the fair market value of such property as
determined in good faith by the Board of Directors of the Corporation.
2. Conversion.
2.1 Conversion of Series B Convertible Preferred Stock. The
holders of Series B Convertible Preferred Stock shall have conversion rights as
follows (the "Conversion Rights"):
(a) Right to Convert; Conversion Ratio.
(i) Each share of Series B Convertible Preferred
Stock shall be convertible, without the payment of any additional consideration
by the holder thereof and at the option of the holder thereof, at the office of
the Corporation or any transfer agent for the Series B Convertible Preferred
Stock, into one (1) fully paid and non-assessable share of Common Stock, subject
to adjustment as set forth in Section 2.1(d), at any time upon the earliest to
occur of: (1) a Change of Control or Acquisition of the Corporation (as such
terms are defined in Section 2.1(a)(ii)); (2) in the event the Joint Venture (as
such term is defined in the Joint Venture Master Agreement dated March 4, 1997
(the "JV Master Agreement") between the Corporation and Hoechst Marion Roussel,
Inc. ("HMRI")) is terminated pursuant to Section 9.3.1 or 9.3.3 of the JV Master
Agreement and (A) any Supplemental Capital Loan (as such term is defined in the
JV Master Agreement) remains outstanding as of the date of termination, three
(3) months after the date on which such Supplemental Capital Loan is due to be
repaid by the Corporation to HMRI or (B) no Supplemental Capital Loan remains
outstanding as of the date of termination, six (6) months following the
effective date of such termination; or (3) September 30, 2003, in the event the
Corporation and HMRI have agreed on additional funding arrangements for the
Joint Venture pursuant to Section 9.3.2 of the JV Master Agreement. The ratio of
the number of shares of Common Stock to be issued in conversion to the number of
shares of Series B Convertible Preferred Stock to be converted is referred to
herein as the "Conversion Ratio."
(ii) For purposes hereof, an "Acquisition" shall be
deemed to have occurred if the Corporation shall consolidate or merge with
another entity, or convey, sell or lease to another entity all or substantially
all of the stock, assets or business of the Corporation and its subsidiaries
taken as a whole, unless the stockholders of the Corporation immediately prior
to the transaction own a majority of the voting equity securities of the merged,
consolidated or acquiring entity after the transaction. For purposes hereof, a
"Change of Control" shall be deemed to have occurred upon consummation of any
transaction or event as a result of which any other entity
-3-
<PAGE> 4
acquires or controls and is able to vote without restriction (directly or
through nominees or beneficial ownership or by proxy) more than fifty percent
(50%) of the capital stock of the Corporation outstanding at the time having the
power ordinarily to vote for directors of the Corporation.
(b) Mechanics of Conversion. Before any holder of Series B
Convertible Preferred Stock shall be entitled to convert the same into full
shares of Common Stock, such holder shall surrender the certificate or
certificates therefor, duly endorsed, at the office of the Corporation or of any
transfer agent for the Series B Convertible Preferred Stock, and shall give
written notice to the Corporation at such office that such holder elects to
convert the same and shall state therein the name of such holder or the name or
names of the nominees of such holder in which such holder wishes the certificate
or certificates for shares of Common Stock to be issued. No fractional shares of
Common Stock shall be issued upon conversion of any shares of Series B
Convertible Preferred Stock and the number of shares of Common Stock to be
issued upon conversion shall be rounded up to the next highest whole share. The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Series B Convertible Preferred Stock, or to such
holder's nominee or nominees, a certificate or certificates for the number of
shares of Common Stock to which such holder shall be entitled as aforesaid. Such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the certificate or certificates for
the shares of Series B Convertible Preferred Stock to be converted, and the
person or persons entitled to receive the shares of Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock on such date.
(c) Automatic Conversion.
(i) Each share of Series B Convertible Preferred
Stock issued and outstanding on December 31, 2006 (the "Automatic Conversion
Date") shall automatically be converted into shares of the Corporation's Common
Stock on such date at the then effective Conversion Ratio in accordance with the
provisions of this Section 2 (the "Automatic Conversion").
(ii) Upon such Automatic Conversion of the Series B
Convertible Preferred Stock pursuant to Section 2(c)(i) hereof, all shares of
Series B Convertible Preferred Stock shall be converted automatically without
any further action by any holder of such shares and whether or not the
certificate or certificates representing such shares are surrendered to the
Corporation or the transfer agent for the Series B Convertible Preferred Stock;
provided, however, that the Corporation shall not be obligated to issue a
certificate or certificates evidencing such shares of Common Stock into which
the Series B Convertible Preferred Stock is being converted until such
certificates are either delivered to the Corporation or the transfer agent of
the Series B Convertible Preferred Stock, or the holder notifies the Corporation
or such transfer agent that such certificate or certificates have been lost,
stolen, or destroyed and executes an agreement satisfactory to the Corporation
to indemnify the Corporation from any loss incurred by it in connection
therewith and, if the Corporation so elects, provides an appropriate indemnity.
(iii) Upon such Automatic Conversion of the Series B
Convertible Preferred Stock pursuant to Section 2(c)(i) hereof, each holder of
Series B Convertible Preferred Stock shall surrender the certificate or
certificates representing such holder's shares of Series B
-4-
<PAGE> 5
Convertible Preferred Stock at the office of the Corporation or of the transfer
agent for the Series B Convertible Preferred Stock. Thereupon, there shall be
issued and delivered to such holder, promptly at such office and in such
holder's name as shown on such surrendered certificate or certificates, a
certificate or certificates for the number of shares of Common Stock into which
the shares of Series B Convertible Preferred Stock surrendered were convertible
on the Automatic Conversion Date. No fractional shares of Common Stock shall be
issued upon the Automatic Conversion of Series B Convertible Preferred Stock,
and the number of shares of Common Stock to be issued upon conversion shall be
rounded up to the next highest whole share.
(d) Adjustments to Conversion Ratio.
(i) Special Definitions. For purposes of this Section
2.1(d), the following definitions shall apply:
(A) "Original Issue Date" shall mean the
date on which shares of Series B Convertible Preferred Stock
were first issued.
(B) "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or, pursuant to
Section 2.1(d)(ii), deemed to be issued) by the Corporation
after the Original Issue Date.
(ii) Issue of Securities Deemed Issue of Additional
Shares of Common Stock.
(A) Stock Dividends, Stock Distributions and
Subdivisions. In the event the Corporation at any time or from
time to time after the Original Issue Date shall declare or
pay any dividend or make any other distribution on the Common
Stock payable in Common Stock or effect a subdivision of the
outstanding shares of Common Stock (by reclassification or
otherwise than by payment of a dividend in Common Stock), then
and in any such event, Additional Shares of Common Stock shall
be deemed to have been issued:
(I) in the case of any such dividend
or distribution, immediately after the close of
business on the record date for the determination of
holders of any class of securities entitled to
receive such dividend or distribution, or
(II) in the case of any such
subdivision, at the close of business on the date
immediately prior to the date upon which such
corporate action becomes effective.
If such record date shall have been fixed and such
dividend shall not have been fully paid on the date
fixed therefor, the adjustment previously made in the
Conversion Ratio which became effective on such
record date shall be cancelled as of the close of
business on such record date, and thereafter the
Conversion Ratio shall be adjusted pursuant to this
Section 2.1(d)(ii) as of
-5-
<PAGE> 6
the time of actual payment of such dividend.
(iii) Adjustment for Dividends, Distributions, Subdivisions,
Combinations or Consolidations of Common Stock.
(A) Stock Dividends, Distributions or Subdivisions.
In the event the Corporation shall issue Additional Shares of Common
Stock pursuant to Section 2.1(d)(ii)(A) in a stock dividend, stock
distribution or subdivision, the Conversion Ratio in effect immediately
prior to such stock dividend, stock distribution or subdivision shall,
concurrently with the effectiveness of such stock dividend, stock
distribution or subdivision, be proportionately increased.
(B) Combinations or Consolidations. In the event the
outstanding shares of Common Stock shall be combined or consolidated,
by reclassification or otherwise, into a lesser number of shares of
Common Stock, the Conversion Ratio in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness
of such combination or consolidation, be proportionately decreased.
(e) Adjustments for Other Distributions. In the event the Corporation
shall declare a distribution payable in securities of other persons, evidences
of indebtedness issued by the Corporation or other persons or assets (excluding
cash dividends), in each such case for purposes of this subsection 2(e), the
holders of the Series B Convertible Preferred Stock shall be entitled to a
proportionate share of any such distribution as though they were the holders of
the number of shares of Common Stock of the Corporation into which their shares
of Series B Convertible Preferred Stock are convertible as of the record date
fixed for the determination of the holders of Common Stock of the Corporation
entitled to receive such distribution.
(f) Adjustments for Recapitalizations. If at any time or from time to
time there shall be a recapitalization of the Common Stock (other than a
subdivision, combination, stock dividend, reclassification or other transaction
provided for elsewhere in this Section 2), provision shall be made so that the
holders of the Series B Convertible Preferred Stock shall thereafter be entitled
to receive upon the conversion of the Series B Convertible Preferred Stock the
number of shares of stock or other securities of the Corporation or otherwise,
to which a holder of the number of shares of Common Stock deliverable upon
conversion thereof immediately prior to such recapitalization would have been
entitled upon such recapitalization. In any such case, appropriate adjustment
shall be made in the application of this Section 2 with respect to the rights of
the holders of the Series B Convertible Preferred Stock after the
recapitalization to the end that the provisions of this Section 2 (including
adjustment of the Conversion Ratio then in effect and the number of shares
issuable upon conversion of the Series B Convertible Preferred Stock) shall be
applicable after that event in a manner as equivalent as may be practicable.
2.3 No Impairment. The Corporation shall not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation but shall at all times in good faith assist in the carrying out of
all the provisions of this Section 2 and in the taking of all such action as may
be necessary or appropriate in order to protect
-6-
<PAGE> 7
the conversion rights of the holders of Series B Convertible Preferred Stock
against impairment.
2.4 Certificate as to Adjustments. Upon the
occurrence of each adjustment or readjustment of the Conversion Ratio pursuant
to this Section 2, the Corporation at its expense shall promptly compute such
adjustment or readjustment in accordance with the terms hereof and furnish to
each affected holder of Series B Convertible Preferred Stock, a certificate
setting forth such adjustment or readjustment and showing in detail the facts
upon which such adjustment or readjustment is based.
2.5 Common Stock Reserved. The Corporation shall
reserve and keep available out of its authorized but unissued Common Stock such
number of shares of Common Stock as shall from time to time be sufficient to
effect the conversion of all outstanding shares of Series B Convertible
Preferred Stock.
2.6 Certain Taxes. The Corporation shall pay any
issue or transfer taxes payable in connection with the conversion of any shares
of Series B Convertible Preferred Stock; provided, however, that the Corporation
shall not be required to pay any tax which may be payable in respect of any
transfer to a name other than that of the holder of such Series B Convertible
Preferred Stock.
2.7 Closing of Books. The corporation shall at no
time close its transfer books against the transfer of any Series B Convertible
Preferred Stock, or of any shares of Common Stock issued or issuable upon the
conversion of any shares of Series B Convertible Preferred Stock, in any manner
which interferes with the timely conversion or transfer of such Series B
Convertible Preferred Stock.
3. Voting Rights. Except as otherwise required by law or by the
provisions establishing any other series of Preferred Stock, the holders of
Series B Convertible Preferred Stock and the holders of Common Stock and of all
classes and series of Preferred Stock shall be entitled to notice of any
stockholders' meeting and to vote as one class upon any matter submitted to the
stockholders for a vote, on the following basis:
(i) Holders of Common Stock shall have one vote per
share of Common Stock held by them; and
(ii) Holders of Series B Convertible Preferred Stock
shall have that number of votes per share of Series B Convertible Preferred
Stock as is equal to the number of shares of Common Stock into which each such
share of Series B Convertible Preferred Stock held by such holder could be
converted on the date for determination of stockholders entitled to vote at the
meeting (regardless of whether such shares of Series B Convertible Preferred
Stock are then convertible).
4. Dividend Rights. In the event the Board of Directors of the
Corporation shall declare a dividend payable upon the then outstanding shares of
the Common Stock (other than a dividend payable entirely in shares of the Common
Stock of the Corporation), the Board of Directors shall declare at the same time
a dividend upon the then outstanding shares of the Series B Convertible
Preferred Stock, payable at the same time as the dividend paid on the Common
Stock, in an amount
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<PAGE> 8
equal to the amount of dividends per share of Series B Convertible Preferred
Stock, as would have been payable on the largest number of shares (including
fractions of shares) of Common Stock which each share of Series B Convertible
Preferred Stock held by each holder thereof would have received if such Series B
Convertible Preferred Stock had been converted to Common Stock pursuant to the
provisions of Section 2 hereof as of the record date for the determination of
holders of Common Stock entitled to receive such dividends.
5. Covenants. So long as shares of Series B Convertible Preferred Stock
are outstanding, the Corporation shall not without first obtaining the approval
(by vote or written consent, as provided by law) of the holders of at least a
majority of the then outstanding shares of Series B Convertible Preferred Stock,
voting together as a single class:
(i) alter or change the rights, preferences or
privileges of the shares of Series B Convertible Preferred Stock so as to affect
adversely such shares;
(ii) increase the authorized number of shares of
Series B Convertible Preferred Stock; or
(iii) issue additional shares of Series B Convertible
Preferred Stock except pursuant to the JV Master Agreement or the other Joint
Venture Agreements (as such term is defined in the JV Master Agreement).
6. No Reissuance of Series B Convertible Preferred Stock. No share or
shares of Series B Convertible Preferred Stock acquired by the Corporation by
reason of redemption, purchase, conversion or otherwise shall be reissued, and
all such shares shall be cancelled, retired and eliminated from the shares which
the Corporation shall be authorized to issue.
7. Register. The Corporation shall maintain a register in which it
shall record the price paid to the Corporation upon issuance of each share of
Series B Convertible Preferred Stock. In the event any holder of Series B
Convertible Preferred Stock holding Series B Convertible Preferred Stock with
more than one Issue Price shall transfer any of such stock, such holder shall
notify the Corporation of the Issue Price of the shares to be transferred.
8. Residual Rights. All rights accruing to the outstanding shares of
the Corporation not expressly provided for in the terms of the Series B
Convertible Preferred Stock shall be vested in the Common Stock or the other
series or classes of the Corporation's stock.
-8-
<PAGE> 1
EXHIBIT 10.24
ARIAD PHARMACEUTICALS, INC. HAS OMITTED FROM THIS EXHIBIT 10.24 PORTIONS OF THE
AGREEMENT FOR WHICH ARIAD PHARMACEUTICALS, INC. HAS REQUESTED CONFIDENTIAL
TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE
AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH AN
ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
L I C E N S E A G R E E M E N T
THIS AGREEMENT is made and entered into as of September 12, 1996 by and between
Mochida Pharmaceutical Co., Ltd. of 7, Yotsuya l-chome, Shinjukuku, Tokyo 160,
Japan ("Mochida") and ARIAD Pharmaceuticals, Inc. of 26 Landsdowne Street,
Cambridge, Massachusetts 02139, U.S.A. ("ARIAD").
WITNESSETH:
WHEREAS, under the Confidential Disclosure Agreement dated February 5, 1996
concluded between the parties hereto ("Confidentiality Agreement"), ARIAD
evaluated certain confidential information disclosed by Mochida regarding the
Patents (as hereinafter defined);
WHEREAS, as the result of such evaluation, ARIAD is now desirous of acquiring a
worldwide non-exclusive license from Mochida to use the Patents for the purpose
of development, manufacture, use and sale of the Products (as hereinafter
defined); and
WHEREAS, as the worldwide exclusive licensee of the Patents appointed by OBI (as
hereinafter defined), Mochida is willing to grant such license to ARIAD under
the terms and conditions provided herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants provided
herein, the parties hereby agree as follows:
Article 1. Definitions
For the purpose of this Agreement:
A. "ARIAD-Information" shall mean any and all information, data,
techniques, know-how and formulas disclosed by ARIAD to Mochida under
this Agreement and provided in written form clearly specifying as
"Confidential" at the time of the disclosure thereof;
B. "Confidential Information" shall mean both M-Information (as
hereinafter defined) and ARIAD-Information;
<PAGE> 2
C. "Field" shall mean the use of Mochida's intellectual property rights to
the DNA sequence encoding portions of the Fas [*] for use in the
genetic engineering of cells using ARIAD's gene cassettes and for use
of such ARIAD's gene cassettes and/or cells for gene and cell therapy
in human and non-human animals.
D. "First Year" shall mean such calendar year in which the first Products
is (are) launched by ARIAD or its sublicensee(s) in any country in the
Territory (as hereinafter defined);
E. "M-Information" shall mean any and all information, data, techniques,
know-how and formulas disclosed by Mochida to ARIAD under this
Agreement and/or the Confidentiality Agreement provided in written form
clearly specifying as "Confidential" at the time of the disclosure
thereof, including, without limitation, those that relate to the
Patents and results of study or development conducted by Mochida and/or
OBI under the OBI Agreements (as hereinafter defined).
F. "Net Sales" shall mean the gross sales amount of the Products sold by
ARIAD and/or its sublicensees to any third party less actually allowed
rebates, normal trade discounts, credits and refunds for returned goods
granted to customers, transportation and insurance costs incidental to
the sale of the Products as well as sales taxes and excise taxes which
ARIAD and its sublicensees has/have to pay or absorb on such sales;
G. "OBI" shall mean Osaka Bioscience Institute of 2-4, Furuedai 6-chome,
Suitashi, Osaka, Japan;
H. "OBI Agreements" shall mean any and all agreements concluded between
OBI and Mochida relating to the Patents;
I. "Patents" shall mean all patents and patent applications listed in
Schedule 1 attached hereto as an integral part hereof, and such patents
and patent applications issuing thereon or derived from them,
including, without limitation, divisions, extensions, continuations,
continuation-in-parts, or substitute or reissue applications of the
same, specifically excluding those which are clearly unrelated to the
manufacture, use or sale of the Products;
J. "Payment Computation Period" shall mean each calendar half-year, that
is, six (6) month period ending the last day of June and December of
each year;
K. "Products" shall mean ARIAD's gene cassettes carrying portions of Fas
DNA or variants thereof or cells incorporating such gene cassettes to
be used in the Field, including improvements and modifications thereof,
the manufacture, use or sale of which, in the absence of the rights
granted hereunder, would infringe the Patents;
L. "Territory I" shall mean [*];
M. "Territory II" shall mean [*];
N. "Territory" shall mean both Territory I and Territory II; and
O. "Year" shall mean a calendar year.
Article 2. Grant of License
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2.1 Mochida hereby grants to ARIAD, and ARIAD hereby accepts, a nonexclusive
license, with the right to sublicense, to use the Patents and the M-Information
for the purpose of development, manufacture, import, use and/or sale of the
Products in the Field.
2.2 ARIAD assures to Mochida that it shall render its commercially reasonable
efforts in the development and commercialization of the Products.
2.3 This Agreement contains no other grant of rights or licenses by Mochida,
except to the extent of the rights and licenses expressly granted to ARIAD under
Paragraph 2.1. Without limiting the generality of the foregoing, ARIAD and its
sublicensees shall have no right or license to use the Patents and the
M-Information for any purpose other than the development, manufacture, import,
use and/or sale of the Products in the Field.
Article 3. Consideration
3.1 In consideration of the right and license granted hereunder, ARIAD shall pay
to Mochida as follows:
(a) Initial Payment - [*]. Payable within thirty (30) days from the
date first above written.
(b) Annual Fee - [*]. Payable by the end of each Year for the following
Year. The Annual Fee shall be payable from the end of Year 1996
(covering Year 1997) until the end of the Year immediately preceding
the First Year (covering the First Year).
(c) Minimum Royalty - [*]. Payable by the end of each Year for the
following Year. The Minimum Royalty shall be payable from the end of
the First Year (covering the Year immediately following the First Year)
until the end of the Year immediately preceding the Year of termination
or expiration of this Agreement (covering the last Year).
(d) Running Royalty - [*] the Net Sales in Territory I, [*] for the Net
Sales in Territory II. Payable semi-annually [*] days from the end of
each Payment Computation Period. If or when the Products are
manufactured in the Territory but exported to the customers located
outside the Territory for the use or sale therein, the Running Royalty
shall be imposed on the export price of the Products at the rates
provided in this Item (d).
3.2 The Initial Payment and the Annual Fee (except such Annual Fee that covers
the First Year) shall not be refundable or creditable for any reason. The
Minimum Royalty and such Annual Fee that covers the First Year shall not be
refundable for any reason but creditable against such Running Royalty that has
accrued in the Year for which the Minimum Royalty or the Annual Fee is related.
3.3 The Running Royalty shall be payable by ARIAD on the Net Sales of the
Products manufactured and/or sold by ARIAD or its sublicensees in the Territory
on a country-by-country basis until and unless any and all Patents cease to
exist in such country. Provided, however, that
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<PAGE> 4
as to the Products manufactured and/or sold in any of the constituent countries
[*], the Running Royalty shall be payable until and unless any and all Patents
cease to exist in all of the countries constituting the European Union.
Article 4. Payment Procedures, Records and Auditing
4.1 Unless otherwise instructed by Mochida in writing, payment by ARIAD to
Mochida hereunder shall be made in Dollars and by remittance to a bank account
designated by Mochida in writing. All payments to be made by ARIAD to Mochida
hereunder shall be subject to any income tax, withholding tax or other taxes
which are imposed under the relevant law and/or relevant tax conventions
concluded for the avoidance of double taxation. ARIAD shall withhold any such
taxes and send to Mochida official receipts of such tax payments as promptly as
practicably possible.
4.2 Within [*] days from the end of each Payment Computation Period, ARIAD shall
submit a written report to Mochida in a form to be agreed between the parties
separately, identifying, inter alia, the amount of the gross sales and the Net
Sales on a country-by-country and a Product-by-Product basis and the computation
of the Running Royalty payable to Mochida.
4.3 ARIAD shall, and cause its sublicensees to, keep accurate records in
sufficient detail to enable Mochida to confirm the accuracy of the amounts of
the royalties paid by ARIAD. Upon Mochida's request, but not more frequently
than once a year, and only during ordinary business hours, ARIAD shall permit,
[*] investigation of relevant records, necessary to verify the accuracy of the
royalty payments made hereunder. Such investigation and verification shall be
conducted by an independent public accountant selected by Mochida and
satisfactory to the party being inspected at Mochida'ssole expense.
Notwithstanding the foregoing, in the event that any such investigation and
verification reveals that the payment made by ARIAD to Mochida are incorrect by
more than [*] in any Payment Computation Period, ARIAD shall reimburse Mochida
for the costs of such audit in addition to promptly remitting the amount of any
underpayment.
4.4 Within [*] days after the end of each Year, ARIAD agrees to provide Mochida
with a written report on the status and a forecast of its [*] development
activities relating to the Products. Further, within [*] from the date of launch
of any of the Products in any country in the Territory, ARIAD shall notify, on a
Product-by-Product basis the details thereof in writing to Mochida.
Article 5. Confidentiality
5.1 During the term of this Agreement and for a period of [*] after the
expiration or termination hereof, ARIAD shall:
(a) keep the M-Information in strict confidence and not disclose it to
any third parties (except relevant sublicensees to whom ARIAD may
disclose the M-Information under the confidentiality obligations
substantially similar to those provided herein);
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<PAGE> 5
(b) not use the M-Information for applications of any intellectual
property rights or for any purpose other than as authorized herein; and
(c) prevent its directors, officers, employees and sublicensees from
unauthorized use or disclosure of the M-Information.
5.2 Any and all Confidential Patent Documents (as defined in the Confidentiality
Agreement) shall be deemed to have been disclosed hereunder as of the date first
above written and hereafter be protected pursuant to the provisions hereof.
5.3 Notwithstanding the provisions of Paragraphs 5.1 and 5.2 hereof, with
respect to such M-Information (including Confidential Patent Documents) that is
included or covered by, or directly related to, the Patents, ARIAD's
confidentiality obligations provided herein shall continue until and unless such
M-Information becomes publicly known through no breach of this Agreement by
ARIAD (or its directors, officers, employees or sublicensees). ARIAD hereby
specifically agrees that it will not use M-Information, including without
limitation, information to be provided by Mochida under Paragraph 5.2 hereof,
to, inter alia, deny or contest the validity or scope of the Patents.
5.4 During the term of this Agreement and for a period of [*] after the
expiration or termination hereof, Mochida shall keep the ARIAD-Information in
strict confidence and not disclose it to any third parties (except OBI to whom
Mochida may disclose the ARIAD-Information under the confidentiality obligations
substantially similar to those provided herein) or use for any purpose other
than as authorized herein or otherwise in writing, and shall prevent its
directors, officers and employees from unauthorized use or disclosure of the
ARIAD-Information.
5.5 The obligations of confidentiality provided in Paragraphs 5.1 and 5.4 shall
not apply to the extent that the receiving party of the Confidential Information
(hereinafter referred to as the "Receiving Party") can establish that the
Confidential Information:
(a) was available to the public at the time of disclosure or thereafter
becomes publicly known through no breach of this Agreement by the
Receiving Party (or its directors, officers, employees or
sublicensees);
(b) was known to the Receiving Party at the time of disclosure becomes
known to the Receiving Party through disclosure by sources other than
the disclosing party of the Confidential Information (hereinafter
referred to as the "Disclosing Party"), which was lawfully in
possession of the same and had the right to disclose the same;
(c) is required to be disclosed by law, government agency, court order
or valid discovery request in connection with a legal proceeding,
provided that the Receiving Party provides the Disclosing Party with
prior written notice of any such disclosure so that it can seek an
appropriate protective order; or (d) is approved for release by written
authorization of the Disclosing Party.
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<PAGE> 6
Article 6. Representations
6.1 Mochida agrees to make its commercially reasonable efforts to cause OBI to
(a) register the patent applications included in the Patents as promptly as
practically possible and (b) maintain the Patents pursuant to the relevant
patent laws in the Territory. If OBI and Mochida determines not to maintain any
of the Patents, it shall promptly notify thereof to ARIAD. In such a case, the
parties hereto (as well as OBI and any Mochida's licensees to such Patent(s)
other than ARIAD, if necessary) shall discuss the solution thereof in good
faith, provided, however, that in no event Mochida shall be liable for any
losses or damages incurred by ARIAD and/or ARIAD's sublicensees due to
cancellation, nullification or withdrawal of the Patent(s) in whole or part for
any reason. Notwithstanding the first provision of Paragraph 3.3, but without
affecting the generality of the proviso thereof, unless Mochida retains other
Patent(s) in the same country, on and after such abandonment, cancellation,
nullification or withdrawal of the Patents in whole, ARIAD shall be relieved
from the obligation to pay to Mochida the Running Royalty for the Products
manufactured, used and/or sold in the country where the Patent(s) cease to
exist.
6.2 Mochida shall provide ARIAD in a timely manner with copies of all
substantial communications between the patent attorney(s) representing OBI
and/or Mochida and the U. S. Patent Office so as to enable ARIAD to be kept
informed of the progress of the prosecution of such Patents in the U. S. A.
covering Products produced, or to be produced, by ARIAD. Each party agrees to
promptly notify the other party in writing of any infringement of the Patents by
a third party which shall come to its attention.
6.3 If or when ARIAD or its patent attorney submits to Mochida any comment or
advice to provide greater strength to the Patents, Mochida agrees to, and cause
OBI to, consider it carefully. Provided, however, that it shall be OBI/Mochida's
sole discretion to determine the [*].
6.4 Except as specifically set forth in this Article 6, Mochida makes no
representations or warranties, either express or implied, arising by law or
otherwise, including, without limitation, implied warranties of merchantability
or fitness for a particular purpose. In no event will Mochida have any
obligation or liability for loss of revenue or profit, or for incidental or
consequential damages. In particular, with no limitation, nothing in this
Agreement will be construed as:
(a) a warranty or representation by Mochida as to the validity or scope
of any Patents;
(b) a warranty or representation that anything made, used, sold or
otherwise disposed of under the license granted in this Agreement is or
will be free from infringement of patents of third parties;
(c) conferring the right to use in advertising, publicity, or otherwise
any trademark, trade name, or any contraction, abbreviation,
simulation, or adaptation thereof, of Mochida or of OBI. If or when
reference to Mochida and/or OBI is required by applicable law or
regulation, ARIAD shall notify the details thereof to Mochida and
acquire prior written consent therefor from Mochida, which consent
shall not be unreasonably withheld;
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<PAGE> 7
(d) conferring by implication, estoppel, or otherwise any license or
rights under any patents of Mochida or of OBI other than the Patents;
or
(e) conferring any license or right as to which Mochida has not been
granted by OBI the right to sublicense.
6.5 If, during the term of this Agreement, any third party infringes the
Patents, Mochida shall have the right, but not the obligation, to bring a suit
in its name to restrain and enjoin such infringement and to recover profits and
damages. Without affecting the generality of the foregoing provision, if or when
Mochida desires to discuss the solution of any patent infringement or other
disputes occurred in the Territory involving the Patents and/or the Products,
and seek ARIAD's cooperation for the settlement thereof, ARIAD shall comply with
any request made by Mochida, to the extent reasonable.
6.6 Mochida represents that it is the worldwide exclusive licensee of the
Patents pursuant to an agreement with OBI and has the right to grant the license
set forth herein.
Article 7. Indemnification
7.1 It shall be ARIAD's sole responsibility to investigate its market carefully
at its expense to avoid any dispute, including without limitation, infringement
disputes involving industrial property rights owned by third parties.
7.2 If any action, including, without limitation, patent infringement or product
liability action is brought against Mochida (or OBI) because of actual or
anticipated development, manufacture, use or sale of the Products by ARIAD or
its sublicensees in any country, ARIAD shall, without delay, defend, indemnify
and hold harmless Mochida (and OBI) against such action. ARIAD shall assume
control of the defense of such action. If or when such action is related to the
validity or scope of any of the Patents, ARIAD shall notify Mochida in advance
of the strategy of such action, and if Mochida considers that such strategy is
not suitable to protect the Patents or disadvantageous to Mochida's (or its
licensees') business activities, Mochida may suggest alternative solution or
strategy to ARIAD, and ARIAD shall comply with such suggestion to the extent
practical and reasonable.
7.3 Any reasonable costs and expenses incurred by Mochida (or OBI) as a result
of the action prescribed in Paragraph 7.2, including settlement costs, damages
assessed against Mochida (or OBI) and reasonable outside attorney fees, shall be
reimbursed by ARIAD to Mochida (or OBI). Upon Mochida's reasonable request,
ARIAD shall advise Mochida of the progress status and prospect of any action
involving Mochida, OBI and/or the Patents from time to time.
Article 8. Term and Termination
8.1 This Agreement shall become effective as of the date first above written and
continues to be in full force and effect until the last of the Patents expires
or otherwise cease to exist.
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<PAGE> 8
8.2 Should ARIAD determine to terminate all of the manufacture, use and sale of
the Products in the Territory entirely or if there is any other justifiable
reason, ARIAD shall have the right to terminate this Agreement forthwith by
giving [*] prior notice to Mochida in writing.
8.3 Failure by either party to comply with any of the respective obligations or
conditions contained in this Agreement shall entitle the other party to give to
the party in default notice requiring it to cure such default. If such default
be not cured within [*] after receipt of such notice, the notifying party shall
be entitled (without prejudice to any of its other rights conferred on it by law
or this Agreement) to terminate this Agreement by giving written notice to take
effect immediately. The right of either party to terminate this Agreement as
provided hereinabove shall not be affected in any way by its waiver of, or
failure to take, action with respect to any previous default.
8.4 In case of the bankruptcy or insolvency of either party, or in the event
that one of the parties hereto shall go into liquidation, that a receiver or a
trustee is appointed for all or substantially all of the property or estate of
that party, or that party makes an assignment for the benefit of creditor, and
whether any of the aforementioned events be the outcome of the voluntary act of
that party or otherwise, the other party shall be entitled to terminate this
Agreement forthwith by giving written notice to the first party, provided that
if any of such events is the outcome of an action by a third party without the
agreement of the party to this Agreement, such party shall have a period of [*]
to overturn such action.
8.5 Upon termination of this Agreement for any reason, except expiration hereof
pursuant to Paragraph 8.1, ARIAD shall, and cause its sublicensees to,
immediately terminate the manufacture, use, sale or distribution of the Products
in the Territory, and simultaneously cease to use, directly or indirectly, any
M-Information for any purpose in any country.
8.6 Upon expiration or termination of this Agreement, the Receiving Party shall
destroy, or at the request of the Disclosing Party, shall return to the
Disclosing Party any and all Confidential Information of the latter party in
tangible form, including, without limitation, all copies and reproductions
thereof, except that one (1) copy thereof may be retained by the Receiving Party
solely for the purpose of determining the extent of its confidentiality
obligations hereunder.
8.7 The following provisions shall survive any termination or expiration of this
Agreement:
Articles 5, 7 & 9
Paragraphs 3.2, 4.3, 6.4, 8.5 & 8.6
Article 9. Miscellaneous
9.1 Assignability
9.1.1 Neither this Agreement nor any rights or obligations hereunder
shall be assignable by either party without the prior written consent
of the other party. Each party agrees not
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to withhold the consent unreasonably. The major factors which Mochida
will take into consideration will be, without limitation, [*].
9.1.2 Notwithstanding the provisions of the preceding Item 9.1.1, ARIAD
may assign this Agreement and rights and obligations hereunder, without
additional obligation to Mochida, to:
(a) an entity with which ARIAD merges or consolidates or to
which it sells or transfers all or substantially all of its business
and assets pursuant to a legitimate vote of its stockholders with
thirty (30) days prior written notice to Mochida; or
(b) a corporation, partnership or other business entity which
during the term of this Agreement, directly or indirectly, is
controlled by, controls, or is under common control with ARIAD or to
which substantially all of its business and assets relating to the
Products are sold or otherwise transferred or to a partnership of which
ARIAD is a partner, with sixty (60) days prior written consent from
Mochida, subject to the condition that ARIAD continues to be liable as
to the due performance of this Agreement by the proposed assignee.
9.1.3 In no event the terms and conditions of this Agreement shall be
changed in any sense as the result of the assignment permitted
hereunder. Without affecting the generality of the provisions of this
Paragraph 9.1, this Agreement and any rights and obligations hereunder
shall be binding upon and inure to the benefit of the successors and
assigns of the respective parties.
9.2 In the exercise of the rights and obligations under this Agreement, the
parties hereto shall at all times comply with such requirements imposed on it by
all applicable laws and governmental regulations and shall cause such
requirements to be observed by its officers, employees and sublicensees. In the
event that any provision of this Agreement is held by a court, or a Fair Trade
Commission, of competent jurisdiction to be unenforceable because it is invalid
or in conflict with any law or governmental regulations of any relevant
jurisdiction, the validity of the remaining provisions shall not be affected,
and the offending provision shall be construed in such a manner as to effectuate
the original intent and purpose thereof to the maximum extent possible without
being invalid or unenforceable.
9.3 No waiver by either party of a term or condition of this Agreement in any
one instance shall be deemed or construed to be a waiver of such term or
condition for any similar instance in the past or future or of any preceding or
subsequent breach hereof. All rights, remedies, undertakings, obligations and
agreements contained in this Agreement shall be cumulative and none of them
shall be a limitation of any other right, remedy, undertaking, obligation or
agreement.
9.4 The captions used in this Agreement are for convenience of reference only
and are not to be used for interpreting the obligations of the parties under
this Agreement.
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9.5 This Agreement sets forth the entire agreement and understanding between the
parties and supersedes and merges all prior oral and written agreements and
understandings between Mochida and ARIAD, relating to the subject matter hereof.
Without affecting any rights and obligations already accrued, the
Confidentiality Agreement shall be replaced by this Agreement in its entirety.
This Agreement may not be modified or discharged, in whole or part, except by an
agreement in writing signed by the parties.
9.6 This Agreement shall be construed as to all matters including validity,
construction and performance by and under the laws of Japan.
9.7 All disputes, controversies, or differences which may arise between the
parties out of, or in relation to, or in connection with this Agreement shall be
settled amicably between the parties. In case this fails, such dispute shall be
exclusively and finally settled by arbitration. Such arbitration shall be held
at the place of the proposed respondent, i.e., in Tokyo, Japan under the rules
of the Japan Commercial Arbitration Association, if the proposed respondent is
Mochida, and in Boston, Massachusetts U.S.A. under the rules of American
Arbitration Association, if the proposed respondent is ARIAD.
9.8 Any notice required under this Agreement shall be in writing sent by
registered or certified airmail, postage pre-paid, or by overnight courier or by
facsimile confirmed by airmail and addressed as follows:
If to Mochida:
Attn: Mr. Masahiko Asakura
Director
International Business Development Division
Facsimile No.: 03-3225-1015
Telephone No.: 03-3225-6306
If to ARIAD:
Attn: Harvey J. Berger, M.D.
President and Chief Executive Officer
Facsimile No.: 617-494-1828
Telephone No.: 617-494-0400
All notices shall be deemed to be effective on the date of the actual receipt
thereof or, if such date is not verified, shall be deemed to have been duly
given seven (7) days after being dispatched by registered or certified airmail,
three (3) days after being sent by overnight courier, or one (1) day after being
sent by facsimile confirmed by airmail.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
For and on behalf of Mochida Pharmaceutical Co, Ltd.
/s/ S. Watanabe
Name: Susumu Watanabe
Title: President
Date: September 12, 1996
For and on behalf of ARIAD Pharmaceuticals, Inc.
/s/ Harvey Berger, M.D.
Name: Harvey J. Berger, M.D.
Title: President and Chief Executive Officer
Date: September 4, 1996
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Schedule 1
Details of the Patents
Country Application No. Date of Application Title
(Publication No.) (Date of Publication)
[*]
<PAGE> 1
EXHIBIT 10.25
ARIAD PHARMACEUTICALS, INC. HAS OMITTED FROM THIS EXHIBIT 10.25 PORTIONS OF THE
AGREEMENT FOR WHICH ARIAD PHARMACEUTICALS, INC. HAS REQUESTED CONFIDENTIAL
TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE
AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH AN
ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
[EXECUTION COPY]
JOINT VENTURE AGREEMENT
BETWEEN GENOVO, INC.
AND
ARIAD GENE THERAPEUTICS, INC.
FEBRUARY 14, 1997
<PAGE> 2
[EXECUTION COPY]
JOINT VENTURE AGREEMENT
This JOINT VENTURE AGREEMENT (the "Agreement") is entered into as of
February 14, 1997, by and between GENOVO, INC., a Delaware corporation, having
an address of P.O. Box 42884, Philadelphia, PA 19101 ("GENOVO") and ARIAD GENE
THERAPEUTICS, INC. ("AGT"), a subsidiary of ARIAD PHARMACEUTICALS, INC.
("ARIAD"), a Delaware corporation, having an address of 26 Landsdowne Street,
Cambridge, Massachusetts 02139.
WHEREAS, AGT is the owner and/or licensee of and has expertise in the
development and use of gene expression, regulation and apoptosis technologies;
and
WHEREAS, GENOVO is the owner and/or licensee of and has expertise in
the development and use of technologies for gene therapy utilizing viral and
other vectors; and
WHEREAS, the parties desire to enter into a joint venture (the "Joint
Venture") for the purposes of further developing their respective gene
expression, regulation and apoptosis and gene delivery technologies and of
jointly commercializing such technologies.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the parties hereto, intending to be
legally bound, hereby agree as follows:
1. DEFINITIONS
Whenever used in this Agreement with an initial capital letter, the terms
defined in this Section 1 shall have the meanings specified.
1.1 "AFFILIATE" means any corporation, firm, partnership or other entity which
directly or indirectly controls or is controlled by or is under common control
with a party to this Agreement. "Control" means ownership, directly or through
one or more Affiliates, of more than fifty percent (50%) of the shares of stock
entitled to vote for the election of directors, in the case of a corporation, or
more than fifty percent (50%) of the
<PAGE> 3
equity interests in the case of any other type of legal entity, status as a
general partner in any partnership, or any other arrangement whereby a party
controls or has the right to control the Board of Directors or equivalent
governing body of a corporation or other entity. Notwithstanding the foregoing,
regardless of its percentage ownership in GENOVO, Biogen, Inc. shall not be
deemed an Affiliate of GENOVO.
1.2 "ANNUAL R&D PLAN" means the written plan describing the research and
development activities to be carried out during each calendar year pursuant to
this Agreement. Each Annual R&D Plan will be set forth in a written document
prepared by AGT and GENOVO and approved by the R&D Steering Committee and will
include a budget for such research and development activities which shall be
approved by the Management Committee.
1.3 "APOPTOSIS DIMERIZER" means an organic small-molecule compound that
regulates or controls protein clustering in cells for use in the Field for the
purpose of inducing apoptosis of the engineered cells.
1.4 "AGT BACKGROUND TECHNOLOGY" means Technology of AGT that exists as of the
Effective Date and that is useful in Gene Therapy, including, without
limitation, gene expression, gene regulation, and inducible apoptosis technology
for use in Gene Therapy. AGT Background Technology is listed or described on
Exhibit 1.4.
1.5 "AGT COMMERCIALIZATION REIMBURSEMENT ACCOUNT" means the Commercialization
Reimbursement Account established by AGT pursuant to Section 8.4.1 hereof.
1.6 "AGT CONSULTATIVE DECISION" means a Consultative Decision which shall be
made by AGT, subject to the terms hereof, if, after appropriate consultations
and discussions by the Management Committee, the Management Committee shall be
unable to reach a decision concerning the subject matter thereof. All
Consultative Decisions which are AGT Consultative Decisions are specifically
identified as such hereunder, including without limitation, the decision
identified as such in Section 5.3 hereof.
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<PAGE> 4
1.7 "AGT DECISION" means a decision with respect to a Joint Venture matter which
AGT shall make in its sole discretion, subject to the terms hereof, without the
necessity of prior consultations or discussions by the Management Committee or
between the parties. All decisions which are AGT Decisions are specifically
identified as such hereunder, including without limitation, those decisions
identified as such in Sections 4.2.1, 8.1.2 and 8.2.1 hereof.
1.8 "AGT DEVELOPMENT REIMBURSEMENT ACCOUNT" means the Development Reimbursement
Account established by AGT pursuant to Section 4.5 hereof.
1.9 "AGT PROGRAM TECHNOLOGY" has the meaning set forth in Section 6.2.1 hereof.
1.10 "AGT TECHNOLOGY" means AGT Background Technology and AGT Program
Technology. For the avoidance of doubt, AGT Technology shall not include any
genes to which AGT has rights as of the Effective Date or thereafter acquires
rights, but shall include (i) those genes contemplated in Section 8.1.3 hereof
(ii) genes listed on Exhibit 1.4 and (iii) genes whose function is to regulate
expression using Dimerizer Drugs or induce apoptosis using Apoptosis Dimerizers.
1.11 "COMMERCIALIZATION PLAN" means the written plan describing the efforts of
the Joint Venture to commercially develop Products, Dimerizer Drugs and
Apoptosis Dimerizers in the Field or, alternatively, to seek partners for the
commercial development of Products, Dimerizer Drugs and Apoptosis Dimerizers in
the Field, pursuant to the terms of this Agreement. The Commercialization Plan
shall be prepared by the parties, and approved by the Management Committee and
may be amended by the Management Committee from time to time.
1.12 "COMMERCIALIZATION PROGRAM" means those efforts of the Joint Venture
directed at developing, licensing, registering, manufacturing, marketing,
promoting, distributing and selling Products, Dimerizer Drugs, and Apoptosis
Dimerizers either through the Joint Venture itself, by either party alone as
3
<PAGE> 5
permitted hereunder, or by the Joint Venture in conjunction with Licensees or
other third parties.
1.13 "CONFIDENTIAL INFORMATION" means all tangible embodiments of Technology and
all information (including but not limited to information about any element of
Technology) which is disclosed by one party to the other hereunder or under the
Superseded Confidentiality Agreement (as defined in Section 13.12) except to the
extent that such information (i) as of the date of disclosure is demonstrably
known to the party receiving such disclosure or its Affiliates, as shown by
written documentation, other than by virtue of a prior confidential disclosure
to such party or its Affiliates; (ii) as of the date of disclosure is in, or
subsequently enters, the public domain, through no fault or omission of the
party receiving such disclosure; or (iii) as of the date of disclosure or
thereafter is obtained from a third party free from any obligation of
confidentiality to the disclosing party.
1.14 "CONSULTATIVE DECISION" means a decision on a Joint Venture matter which
shall be made by the Management Committee after appropriate consultations and
discussions by the Management Committee or, if the Management Committee shall be
unable to reach a decision concerning the subject matter, by AGT if the decision
is identified as an AGT Consultative Decision hereunder or by GENOVO if the
decision is identified as a GENOVO Consultative Decision hereunder.
1.15 "DEVELOPMENT PHASE" means those activities of the R&D Program the objective
of which is to pursue the preclinical (in accordance with Good Laboratory
Practices and other applicable regulatory requirements) and clinical development
and testing of particular Products and associated Dimerizer Drugs and Apoptosis
Dimerizers which are part of a Development Project which has been designated as
a Development Project and approved by the Management Committee in writing
pursuant to Section 8.1.2 hereof. The Development Phase may be conducted
simultaneously with activities in the Research Phase.
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1.16 "DEVELOPMENT PROJECT" has the meaning set forth in Section 3.4(iv) hereof.
1.17 "DIMERIZER DRUG" means an organic small-molecule compound that regulates or
controls protein clustering in cells for use in the Field, but shall not include
use to induce apoptosis.
1.18 "EFFECTIVE DATE" means the date first written above.
1.19 "FIELD". Subject to any modifications to be made as set forth in Section
2.5 hereof, "Field" means Gene Therapy in which [*]. The definition of Field
shall not include Gene Therapy in the Liver/Lung Field of Use.
1.20 "FULLY BURDENED COST" shall be determined in accordance with generally
accepted accounting principles and shall include the following direct and
indirect costs incurred by AGT in the production of Dimerizer Drug and Apoptosis
Dimerizer and by GENOVO in the production of Products: salaries, benefits,
supplies, production materials, travel, packaging, shipping and other costs
directly identifiable to the production of the Dimerizer Drug, Apoptosis
Dimerizer or Products plus an allocable share of the associated manufacturing
overhead costs based on not less than [*] utilization of plant capacity for
those departments in which work is performed in the production of the Dimerizer
Drug, Apoptosis Dimerizer or Products less all realized credits (including,
without limitation, tax credits) directly identifiable to the production of the
Dimerizer Drug, Apoptosis Dimerizer or Products. Such costs shall not include
product and process development costs, royalties owed to third parties, selling
or general and administrative expenses.
The amount to be allocated for departmental manufacturing overhead
costs shall be determined by computing the percent of direct labor and materials
dollars applicable to the work performed in the production of the Dimerizer
Drug, Apoptosis Dimerizer or Products in a given department as a proportion to
all direct labor and material dollars charged to projects in that department,
and multiplying that percent by the total overhead dollars related to that
department. The percentage amounts used to determine the allocated amounts will
be calculated using the
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manufacturer's accounting system which will compute such rates on a systematic,
rational and consistent basis and shall be the same as used by the manufacturing
party in the preparation of its annual audited financial statements (except for
the [*] utilization factor discussed above). Should the manufacturer change its
method of allocating overhead (including changes in the nature of costs included
in overhead) to its products, it will so advise the other party, and the parties
will renegotiate the basis for allocating such costs to the work performed in
the production of Dimerizer Drug, Apoptosis Dimerizers or Products.
1.21 "GENE THERAPY" means (i) direct in vivo administration of genetic material
into a patient [*], or (ii) direct in vivo administration of [*], for
prophylactic or therapeutic purposes in humans.
1.22 "GENOVO BACKGROUND TECHNOLOGY" means Technology of GENOVO that exists as of
the Effective Date and that is useful in Gene Therapy, including, without
limitation, viral and other vectors for use in Gene Therapy. GENOVO Background
Technology is listed or described on Exhibit 1.22.
1.23 "GENOVO COMMERCIALIZATION REIMBURSEMENT ACCOUNT" means the
Commercialization Reimbursement Account established by GENOVO pursuant to
Section 8.4.2 hereof.
1.24 "GENOVO CONSULTATIVE DECISION" means a Consultative Decision which shall be
made by GENOVO, subject to the terms hereof, if, after appropriate consultations
and discussions by the Management Committee, the Management Committee shall be
unable to reach a decision concerning the subject matter thereof. All
Consultative Decisions which are GENOVO Consultative Decisions are specifically
identified as such hereunder, including without limitation, those decisions
identified as such in Section 5.3 hereof.
1.25 "GENOVO DECISION" means a decision with respect to a Joint Venture matter
which GENOVO shall make in its sole discretion, subject to the terms hereof,
without the necessity of prior consultations or discussions by the Management
Committee or between the parties. All decisions which are GENOVO Decisions
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are specifically identified as such hereunder, including without limitation,
those decisions identified as such in Sections 4.2.1, 8.1.2 and 8.2.2 hereof.
1.26 "GENOVO DEVELOPMENT REIMBURSEMENT ACCOUNT" means the Development
Reimbursement Account established by GENOVO pursuant to Section 4.5 hereof.
1.27 "GENOVO PROGRAM TECHNOLOGY" has the meaning set forth in Section 6.2.2
hereof.
1.28 "GENOVO TECHNOLOGY" means GENOVO Background Technology and GENOVO Program
Technology. For the avoidance of doubt, GENOVO Technology shall not include any
genes to which GENOVO has rights as of the Effective Date or thereafter acquires
rights, but shall include (i) those genes contemplated in Section 8.1.3 hereof,
(ii) genes listed on Exhibit 1.22, and (iii) genes whose function is to enable
Vectors to function in Gene Therapy or which are part of Vectors.
1.29 "IND" means an Investigational New Drug application, as defined in the
United States Food, Drug and Cosmetic Act, as amended, and applicable
regulations promulgated thereunder, or the equivalent in any other country.
1.30 "JOINT DECISION" means a decision with respect to a Joint Venture matter
which shall be made by the Management Committee or the R&D Steering Committee
after appropriate consultations and discussions concerning the same by the
representatives of AGT and GENOVO to said Committee. Joint Decisions shall
include any decisions expressly identified as such hereunder and any other
decisions specifically reserved to the Management Committee or R&D Steering
Committee hereunder.
1.31 "JOINT PATENT RIGHTS" means Patent Rights with respect to Joint Technology.
1.32 "JOINT TECHNOLOGY" has the meaning set forth in Section 6.2.3.
1.33 "JOINT VENTURE" means the association of AGT and GENOVO established
pursuant to Article 2 of this Agreement for the purposes set forth therein.
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1.34 "LICENSEE" means a third party licensee of rights from the Joint Venture or
a strategic partner of the Joint Venture.
1.35 "LIVER/LUNG FIELD OF USE" means [*].
1.36 "MANAGEMENT COMMITTEE" means the committee of AGT and GENOVO
representatives established pursuant to Section 3.1 hereof to administer the
affairs of the Joint Venture.
1.37 "MOLECULAR CONJUGATES" means a complex of protein and DNA.
1.38 "NDA" means a New Drug Application or Product License Application, as
defined in the United States Food, Drug and Cosmetic Act, as amended, and
applicable regulations promulgated thereunder, or any other application for
authorization to sell a Product, Dimerizer Drug or Apoptosis Dimerizer filed
with the United States Food and Drug Administration, or the equivalent in any
other country.
1.39 "PATENT RIGHTS" means the rights and interests in and to issued patents and
pending patent applications (which for purposes of this Agreement shall be
deemed to include certificates of invention and applications for certificates of
invention and priority rights) in any country, including all provisional
applications, substitutions, continuations, continuations-in-part, divisions,
and renewals, all letters patent granted thereon, and all reissues,
reexaminations and extensions thereof, whether owned or licensed in by a party
with the right to sublicense. "AGT Patent Rights" means Patent Rights with
respect to AGT Technology. "GENOVO Patent Rights" means Patent Rights with
respect to GENOVO Technology.
1.40 "PRODUCT" means DNA or RNA, alone or contained within a Vector, including,
without limitation, therapeutic genes, regulatory genes, apoptosis-inducing
genes, promoters and enhancers, for use in the Field developed or to be
developed by the Joint Venture itself, by either party alone as permitted
hereunder, or by the Joint Venture in conjunction with Licensees or other third
parties; provided that "Product" shall not include any nucleic acid or a
functional analog, derivative or homologue thereof which is complementary to a
segment of DNA of a gene or such gene's cognate RNA and which upon delivery by
any means,
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alters the transcription, processing, elaboration, RNA expression or protein
production of or by such gene (e.g., antisense, ribozyme or triplex products).
1.41 "R&D PROGRAM" means the collaborative research and development program in
the Field, consisting of the Research Phase and the Development Phase, to be
conducted by AGT and GENOVO pursuant to Article 4 of this Agreement and
reflected in the Annual R&D Plans.
1.42 "R&D STEERING COMMITTEE" or "RDSC" means the committee created pursuant to
Section 4.6.
1.43 "RESEARCH PHASE" means those activities of the R&D Program the objective of
which is to develop and demonstrate the functionality of a system for Gene
Therapy utilizing the AGT Technology and the GENOVO Technology and thereafter to
improve and further develop such system and to identify candidate Products,
Dimerizer Drugs and Apoptosis Dimerizers. The Research Phase may be conducted
simultaneously with activities in the Development Phase.
1.44 "TECHNOLOGY" means and includes all inventions, discoveries, improvements,
trade secrets and proprietary methods and materials, whether or not patentable,
including but not limited to, samples of, methods of production or use of, and
structural and functional information pertaining to, chemical compounds, DNA
vectors, cells, antibodies, other proteins or other biological substances,
including DNA sequence information and information pertaining to the
three-dimensional structure of proteins and other substances; other data;
formulations; techniques; and know-how; including any negative results.
"Technology" of a party includes Technology owned by a party or licensed to that
party with a right to grant sublicenses.
1.45 "TERM" means the term of this Agreement as set forth in Article 9.
1.46 "TERRITORY" means the world.
1.47 "TRANSACTION" has the meaning set forth in Section 8.1 hereof.
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1.48 [*] Conjugate.
2. FORMATION OF THE JOINT VENTURE
2.1 FORMATION. The parties hereto hereby agree to associate themselves for the
purpose of jointly creating Technology for use in the Field and developing,
registering, licensing, manufacturing, marketing, promoting, distributing and
selling Products, Dimerizer Drugs and Apoptosis Dimerizers in the Field in the
Territory (the "Joint Venture"), through the Joint Venture itself, by either
party alone as permitted hereunder, or by the Joint Venture in conjunction with
Licensees or other third parties. Such Joint Venture shall be conducted,
operated and administered solely in accordance with the terms of this Agreement,
and no separate jointly owned corporate or other entity or entities shall be
established for the purpose of conducting or administering the joint efforts and
endeavors of the parties hereunder, except as contemplated in Section 2.9
hereof.
2.2 SHARING OF COSTS/EXPENSES AND PROCEEDS. AGT and GENOVO shall be equal
participants in the Joint Venture and, subject to the provisions of Section 4.5
relating to funding of the Development Phase of the R&D Program and of Sections
8.3.2, 8.4.1 and 8.4.2 relating to the reimbursement to AGT and GENOVO, as the
case may be, of certain costs relating to the Commercialization Program, AGT and
GENOVO shall, as provided herein, share equally in the costs and proceeds of the
Joint Venture. Each party hereby agrees to pay any obligations incurred by it in
connection with its obligations hereunder on a timely basis.
2.3 [*]
2.4 PATENT RIGHTS. AGT and/or GENOVO, as the case may be, shall grant to each
other such licenses or sublicenses to Patent Rights or Technology, if any, as
the Management Committee shall deem reasonably necessary in order to effectuate
or protect the activities in the Field contemplated by this Agreement. AGT
hereby specifically grants to GENOVO a non-exclusive license under the AGT
Technology and AGT Patent Rights for the purpose of
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developing and manufacturing Vectors and Products for use in the R&D Program but
not for any other purpose.
2.5 OTHER ACTIVITIES OF THE PARTIES. The parties hereby acknowledge that (i)
[*]. The following Sections 2.5.1 and 2.5.2 apply solely with respect to such
[*].
2.5.1. AGT Exclusion. Upon written notice to GENOVO given by AGT prior
to [*], AGT shall have the right to exclude any or all of the following areas
from the Field hereunder: (i) products designed to produce and/or deliver [*];
(ii) products for [*]; and (iv) products closely related to any of the foregoing
which may be within modifications of the definitions of the areas described in
clauses (i), (ii) and (iii) that occur as a result of [*] and which would not
materially affect the scope of the remainder of the Field in a manner different
from exclusion of the areas described in clauses (i), (ii) and (iii). Any such
exclusion shall be deemed effective as of the Effective Date of this Agreement.
AGT will provide GENOVO with a copy of any agreement relating to such exclusion
or a detailed description of the terms thereof, with certain material terms
redacted. After [*], AGT shall no longer have the right to exclude any or all of
the foregoing areas from the Field or to enter into an agreement with respect to
such areas in the Field except pursuant to this Agreement.
2.5.2. GENOVO Exclusion. (i) In the event GENOVO proposes to enter into
an agreement with Biogen, Inc. with respect to [*] which would be in the Field
if not excluded pursuant to this Section, GENOVO may give written notice (a
"Preliminary Notice") to AGT of such desire, specifying the specific [*]
involved and such other material terms and information as may be available with
respect to the proposed transaction. AGT will use commercially reasonable
efforts to respond to the Preliminary Notice within thirty (30) days of receipt
thereof, indicating its then current view as to whether or not it is willing to
consider the exclusion of such gene or genes from the Field upon receipt of a
Definitive Notice.
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(ii) Upon written notice (a "Definitive Notice") to AGT given by GENOVO
prior to [*], GENOVO shall have the right to request the Management Committee to
approve the exclusion of any or all of the following areas from the Field
hereunder: [*]. A Definitive Notice shall be accompanied by a copy of the
proposed agreement or a detailed description of the terms thereof. GENOVO will
advise AGT and the Management Committee of all material changes to the agreement
or terms. The Management Committee shall not be required to act until a final
form of the proposed agreement is furnished to the Management Committee, and
shall only be required to consider exclusions if the relevant agreement is to be
executed on or before [*]. Any such approval by the Management Committee shall
require written consent of AGT, which shall not be unreasonably withheld if the
proposed agreement is consistent with the Preliminary Notice, pursuant to a
favorable AGT Decision before it shall become effective, such AGT Decision to be
made within thirty days of the notice to AGT given by GENOVO hereunder, but in
no event later than [*]. Notwithstanding the foregoing, no such exclusion will
in any way limit the Joint Venture's ability to use GENOVO Technology except in
conjunction with [*]. Any such exclusion shall be deemed effective as of the
Effective Date of this Agreement. After [*], GENOVO shall no longer have the
right to present a Preliminary Notice or Definitive Notice to the Management
Committee or to enter into an agreement with respect to any genes in the Field
except pursuant to this Agreement.
2.6 ADMINISTRATION. The program, operations and business of the Joint Venture
shall be administered by the Management Committee and the R&D Steering Committee
in accordance with the provisions of Articles 3 and 4 hereof.
2.7 ACCOUNTING INFORMATION. During the term of this Agreement, each party shall
provide annual audited and quarterly unaudited consolidated corporate financial
statements to the Chief Financial Officer or designee of the other party. Each
party shall also provide quarterly accounting information to the Management
Committee as specified in Sections 4.5 and 8.4 hereof,
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as well as any other accounting information reasonably requested by the
Management Committee.
2.8 PURPOSES AND SCOPE. The parties hereto understand and agree that this Joint
Venture is limited solely to the Field in the Territory and to the activities,
rights and obligations as set forth in this Agreement. Nothing in this Agreement
shall be construed (i) to create or imply a general partnership between the
parties, (ii) to make either party the agent of the other for any purpose, (iii)
to alter, amend, supersede or vitiate any other arrangements between the parties
with respect to any subject matters not covered hereunder, (iv) to give either
party the right to bind the other, (v) to create any duties or obligations
between the parties except as expressly set forth herein, or (vi) to grant any
direct or implied licenses or any other right other than as expressly set forth
herein.
2.9 LEGAL STRUCTURE. The parties acknowledge that it may be advisable and in
their mutual interests and the interests of the Joint Venture for the business
of the Joint Venture to be conducted in a limited liability partnership, limited
liability company, corporation, or other type of legal structure instead of the
structure set forth herein, if a material change in the Joint Venture's business
or other changes in circumstances shall occur. In the event that the Joint
Venture elects to pursue a Development Project pursuant to the terms of Article
8 hereof, except to the extent otherwise expressly agreed in writing, the
parties shall conduct such activities only through such an alternative legal
structure and under the terms of an agreement to be negotiated in good faith
between the parties hereto. In addition, either party shall have the right at
any time to recommend a change in the legal structure of the Joint Venture with
respect to the activities to be conducted hereunder. Any such change shall be
considered by the other party in good faith, but may only be made pursuant to a
favorable AGT Decision and a favorable GENOVO Decision.
2.10 MUTUAL SUPPORT. Each Party shall, by meeting with existing or prospective
investors, underwriters or investment
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bankers to discuss the Joint Venture, reasonably assist the other, upon
reasonable request, in any efforts of such other party to obtain additional
financing during the term of this Agreement.
3. ADMINISTRATION OF THE JOINT VENTURE
3.1 DECISION MAKING. Subject to any express provisions of this Agreement
designating decisions as Consultative Decisions, AGT Decisions or GENOVO
Decisions, or otherwise specifically reserving to either AGT or GENOVO, as the
case may be, the right to make unilateral decisions concerning the research,
development, registration, supply, licensing and commercialization programs of
the Joint Venture as provided herein, the general affairs and activities of the
Joint Venture and the research, development, registration, supply, licensing and
commercialization programs of the Joint Venture described herein shall be
administered, managed and coordinated by a committee (the "Management
Committee") consisting of two (2) representatives designated by AGT and two (2)
representatives designated by GENOVO. Notwithstanding the foregoing, certain R&D
decisions shall be reserved for the R&D Steering Committee as set forth in
Article 4 hereof.
3.2 MANAGEMENT COMMITTEE DESIGNEES. Each party shall designate one of its
representatives on the Management Committee as its "Co-Chair". Each party shall
have the right at any time to substitute individuals, on a permanent or
temporary basis, for any of its previously designated representatives to the
Management Committee, including its Co-Chair, by giving written notice thereof
to the other party.
Initial designees of the parties to the Management Committee shall be as
follows:
For ARIAD: Charles C. Cabot, III, Co-Chair
Harvey J. Berger, M.D.
[TO BE NAMED]
For GENOVO: Peter Neff, Co-Chair
[TO BE NAMED]
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Notwithstanding the foregoing, the GENOVO and AGT representatives shall not be
employees or designees of an entity which owns 5% or more of the stock of GENOVO
or ARIAD PHARMACEUTICALS, INC., respectively, at any time during the Term.
3.3 MANAGEMENT COMMITTEE MEETINGS.
3.3.1 Schedule of Meetings. The Management Committee shall
establish a schedule of times for meetings, taking into account, without
limitation, the planning needs of the R&D Program and Commercialization Program
herein described and the need of the Management Committee to consult and/or
render decisions required of it hereunder. Meetings shall also be convened upon
the determination of the Co-Chairs, or either of them, by written notice thereof
to the members of the Management Committee, that a meeting of the Management
Committee is required to discuss and/or resolve any matter or matters with
respect to the Joint Venture. In no event shall the Management Committee meet
less frequently than semi-annually. Meetings shall alternate between Cambridge,
Massachusetts and Philadelphia, Pennsylvania or another mutually agreed upon
location; provided, however, that the parties may mutually agree to meet by
teleconference or video conference.
3.3.2 Quorum; Voting; Decisions. At each Management Committee
meeting, both members designated by each party shall constitute a quorum. Each
Management Committee member shall have one vote on all matters before the
Management Committee. All decisions of the Management Committee shall be made by
majority vote of all of the members. Whenever any action by the Management
Committee is called for hereunder during a time period in which the Management
Committee is not scheduled to meet, the Co-Chairs shall cause the Management
Committee to take the action in the requested time period by calling a special
meeting or by action without a formal meeting by written memorandum signed by
the Co-Chairs. Representatives of each party or of its Affiliates, in addition
to the members of the Management Committee, may attend Management Committee
meetings as non-voting observers at the invitation of either party with the
approval of
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the other party, which shall not be unreasonably withheld. In the event that the
Management Committee is unable to resolve any matter before it, such matter
shall be resolved as set forth in Section 3.7 hereof.
3.3.3 Minutes. The Management Committee shall keep accurate minutes
of its deliberations which record all proposed decisions and all actions
recommended or taken. Drafts of the minutes shall be delivered to the Co-Chairs
of the Management Committee within a reasonable time not to exceed twenty (20)
days after the meeting. The party hosting the meeting shall be responsible for
the preparation and circulation of the draft minutes. Draft minutes shall be
edited by the Co-Chairs and shall be issued in final form within a reasonable
time not to exceed forty-five (45) days after the meeting only with their
approval and agreement as evidenced by their signatures on the minutes.
3.3.4 Expenses. AGT and GENOVO shall each bear all expenses of
their respective Management Committee members related to their participation on
the Management Committee and attendance at Management Committee meetings.
3.4 DECISION MAKING RESPONSIBILITIES. The Management Committee shall be solely
responsible for making all decisions specified as "Joint Decisions" hereunder
and all decisions specifically reserved to it hereunder, including, but not
limited to, decisions with respect to the following matters:
(i) any amendments to or changes in the objectives (but not the
actual conduct) of the R&D Program described in Article 4 hereof;
(ii) any amendments to or changes in the Commercialization Program
described in Article 8 hereof;
(iii) designation of specified Products or groups of Products and
selection of Dimerizer Drugs and Apoptosis Dimerizers from the Dimerizer Drug
List and the Apoptosis Dimerizers List, respectively, to be developed and
commercialized by the Joint Venture;
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[*]
(vi) designation of a negotiating team for Partnering Projects or
other potential transactions with third parties, including designation of a lead
negotiator and of other representatives of each of the parties hereto;
(vii) recommendations as to whether to grant any licenses to third
parties for the development, manufacture, use or sale in the Field of Products,
Dimerizer Drugs from the Dimerizer Drug List and Apoptosis Dimerizers from the
Apoptosis Dimerizer List, pursuant to any Transaction, and the terms and
conditions of any such licenses;
(viii) recommendations for the manufacture, marketing, distribution
or sale of any Products and their associated Dimerizer Drugs and Apoptosis
Dimerizers by the Joint Venture itself as a Development Project, and of the
structure for any such Development Project, with due acknowledgment of the
expectations of the parties as set forth in Section 8.1 hereof;
(ix) the amounts to be charged and the proportions and methods of
charging of costs by the parties to their respective Development Reimbursement
Accounts and/or Commercialization Reimbursement Accounts, to the extent not
otherwise set forth herein;
(x) the hiring of legal counsel, consultants or accountants on
behalf of the Joint Venture;
(xi) approval of any contracts with third parties for performance
of any part of the R&D Program or the Commercialization Program;
(xii) approval of development and/or commercialization plans or
programs in the Field to be presented by the parties, together or alone, to any
licensor of Technology or Patent Rights to such party;
(xiii) in the event of a dispute by the parties hereto as to the
appropriate classification of any decision hereunder, determination as to
whether such decision shall be classified hereunder as a Joint Decision, an AGT
Consultative Decision, a
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GENOVO Consultative Decision, an AGT Decision or a GENOVO Decision;
(xiv) review and approval of the annual budgets in the Annual R&D
Plans;
(xv) review of actual charges to either party's Development
Reimbursement Account or Commercialization Reimbursement Account; and
(xvi) a recommendation that the Joint Venture consider an
alternative legal structure (i.e., LLP, LLC or Corporation) for the purpose of
conducting the business of the Joint Venture hereunder, the terms of such
alternative structure to be negotiated in good faith by the parties hereto.
[*]
3.5 OTHER RESPONSIBILITIES. In addition to making decisions and taking actions
specifically reserved to it hereunder, the Management Committee shall also:
(i) serve as the forum for review of all Joint Venture matters,
including, without limitation, review of research and development, and
commercialization plans submitted by AGT and GENOVO hereunder and planning with
respect to and review of the progress of the R&D Program and the
Commercialization Program; and
(ii) after appropriate consultations, act as the decision-maker of
first resort for all AGT Consultative Decisions and GENOVO Consultative
Decisions.
(iii) appoint, if it so chooses, an independent auditor to review
the Development Reimbursement Accounts, Commercialization Reimbursement Accounts
or Joint Venture Payment Accounts of the parties.
3.6 INTERESTS OF THE PARTIES. Notwithstanding any other provisions of this
Agreement, all decisions made and all actions taken by the Management Committee,
by AGT or by GENOVO with respect to any Joint Venture matter, except for matters
specifically identified as AGT Decisions or GENOVO Decisions or otherwise
specifically reserved to a party for unilateral
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decision, shall be made or taken in the best interest of the Joint Venture.
3.7 DISPUTE RESOLUTION. In the event that the Management Committee shall not be
able to reach a decision or take an action on any matter which is reserved to
the Management Committee hereunder, then:
(i) as to Joint Decisions or any other decisions specifically
reserved to the Management Committee hereunder, the matter in question shall
first be referred for resolution to the [*], and in the event that said [*]
shall be unable to resolve such matter after reasonable efforts to do so and
after the passage of a reasonable period of time under the relevant
circumstances, in any event not to exceed [*], such matter shall be referred to
a committee consisting of [*]. In the event that said committee shall be unable
to resolve such matter after reasonable efforts to do so and after the passage
of a reasonable period of time under the relevant circumstances, in any event
not to exceed [*], such matter shall be resolved in accordance with the
otherwise applicable procedures for resolving disputes under this Agreement as
set forth in Article 12 hereof.
(ii) as to AGT Consultative Decisions, the matter shall be resolved
as directed by AGT.
(iii) as to GENOVO Consultative Decisions, the matter shall be
resolved as directed by GENOVO.
ARIAD Decisions and GENOVO Decisions shall not be submitted to the
Management Committee and shall not be subject to this Section 3.7.
4. RESEARCH AND DEVELOPMENT PROGRAM
4.1 OBJECTIVES OF THE R&D PROGRAM. The objectives of the R&D Program shall be as
set forth in Sections 1.15 and 1.43 hereof. In carrying out the R&D Program, AGT
and GENOVO shall each use commercially reasonable efforts to perform such tasks
as are set forth to be performed by it under the terms of this Agreement, in
accordance with all applicable laws, ordinances, rules, regulations, orders,
licenses and other requirements now or hereafter in effect.
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4.2 OBLIGATIONS OF THE PARTIES.
4.2.1 R&D Program; R&D Plans. For purposes of the R&D Program, in
consultation with the RDSC and in accordance with the objectives of the R&D
Program, as updated and amended from time to time, AGT shall be primarily
responsible for the conduct of the efforts relating to AGT Technology, including
gene expression and regulation and inducible apoptosis (to be conducted
principally at AGT's facilities), and GENOVO shall be primarily responsible for
the conduct of the efforts relating to GENOVO Technology, including (i) the
development and testing of Vectors and (ii) the development and testing of
Products incorporating such Vectors (where (i) is to be conducted principally at
GENOVO's facilities, or [*] or under a sponsored research agreement which shall
be reasonably acceptable to AGT; and where (ii) is to be conducted principally
at GENOVO's facilities, [*] alternatively in the laboratories of the [*] under a
sponsored research agreement which shall be reasonably acceptable to AGT). The
Annual R&D Plan for the first year of the R&D Program shall be prepared by AGT
and GENOVO and approved by the RDSC as promptly as practical after the Effective
Date and shall focus on the obligations of each party under the Research Phase
to demonstrate the use of the AGT Technology and GENOVO Technology in
combination, both in vitro and in vivo. For each year of the R&D Program
commencing with the second year, the Annual R&D Plan shall be prepared by AGT
and GENOVO and approved by the RDSC no later than thirty (30) days before the
end of the prior year. Each Annual R&D Plan shall be in writing and shall set
forth with reasonable specificity research and development objectives and tasks
in the Research Phase and the Development Phase to be performed by each of the
parties for the period covered by the Annual R&D Plan. The decisions as to how
to perform the tasks assigned to AGT and GENOVO in any Annual R&D Plan shall be
AGT Decisions and GENOVO Decisions, respectively. The RDSC may make adjustments
in the Annual R&D Plan at its semi-annual meetings or otherwise as it may
determine.
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4.2.2 Due Diligence. Each party will apply commercially reasonable
diligent efforts to the performance of all aspects of its obligations under the
R&D Program hereunder consistent, on an effort per budgeted dollar basis, with
the efforts it devotes to its other collaborations with commercial entities.
Without limiting the generality of the foregoing, AGT will apply commercially
reasonable diligent efforts to make Dimerizer Drugs and Apoptosis Dimerizers
available to the Joint Venture, and GENOVO will apply commercially reasonable
diligent efforts to make Vectors available to the Joint Venture.
4.3 MUTUAL OBLIGATIONS.
4.3.1 Collaborative Efforts and Reports. The parties agree that the
successful execution of the R&D Program will require the collaborative use of
both parties' areas of expertise. The parties shall keep the RDSC fully informed
about the status of the portions of the R&D Program they respectively perform
separately and/or jointly. In particular, without limitation, each party, to the
extent it is legally able to do so, shall furnish to the RDSC copies of all
reports received by it under sponsored research agreements pursuant to which any
research applicable to the Field is performed and a semi-annual written report,
describing the progress of the separate and joint work done by it under the R&D
Program in reasonable detail, at least fifteen (15) days prior to each
semi-annual meeting of the RDSC. Each party will use commercially reasonable
efforts to obtain the right under all sponsored research agreements which relate
to the R&D Program or the Field to furnish to the RDSC copies of all reports
received by it.
4.3.2 Information Exchange. Subject to any confidentiality
obligations to third parties as set forth in Section 5.4 hereof, scientists at
AGT and GENOVO shall cooperate in the performance of the R&D Program and shall
exchange information and materials as necessary to carry out the R&D Program,
including, without limitation, information from AGT concerning development of
Dimerizer Drugs and Apoptosis Dimerizers and processes for manufacture thereof
and information
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from GENOVO concerning development of Vectors and processes for manufacture
thereof. The parties expect that such exchange of information and materials may
involve short-term on-site visits by scientists of one party to the facilities
of the other to encourage close collaboration between the scientists of AGT and
GENOVO. Such visits will have defined purposes and be scheduled reasonably in
advance.
4.3.3 Provision of Reagents. Each party will supply the other, at
no charge, with any of its proprietary reagents reasonably necessary for the
conduct of the R&D Program. Such reagents shall be used by the recipient solely
in the performance of the R&D Program, and neither party shall transfer any such
reagents received hereunder to any third party without the prior written consent
of the providing party; provided, however, that GENOVO may supply such reagents
received from AGT to [*] pursuant to the terms of a Material Transfer Agreement
to be entered into between AGT [*].
4.4 RESEARCH PHASE FUNDING. Each party shall bear its own costs and expenses
incurred in the performance of the Research Phase of the R&D Program, except as
otherwise mutually agreed in writing between the parties hereto.
4.5 DEVELOPMENT PHASE FUNDING. There shall be established for each of AGT and
GENOVO a "Development Reimbursement Account" for each Development Project
approved by the Management Committee. Development Projects are to be pursued
without funding from any independent third party as provided in Section 8.1.2
hereof. All costs to be charged to and recorded in such accounts will be so
charged and recorded in accordance with the provisions of this Section 4.5. The
parties shall share equally all charges made to the parties' Development
Reimbursement Accounts as set forth below unless otherwise provided in any
Agreement entered into pursuant to Section 8.1.2 hereof.
4.5.1 Charges. Each party will charge to its Development
Reimbursement Account, as incurred, all approved direct and indirect costs
incurred by each party in performing
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its obligations under the Development Phase of any Development Project.
4.5.2 General Reporting. Each party shall provide reports listing
and describing the entries made and the balances contained in its Development
Reimbursement Account to the Management Committee within thirty (30) days
subsequent to the end of each calendar quarter.
4.5.3 Accounting Reconciliation. The Management Committee or its
designees shall, within forty-five (45) days after the end of each calendar
quarter, determine the total amount in the Development Reimbursement Accounts of
both parties, if any, and shall direct AGT to pay to GENOVO, or GENOVO to pay to
AGT, the amounts necessary to achieve the equal sharing of expenses contemplated
by this Section 4.5.
4.5.4 Records. Each party and its Affiliates shall keep for five
(5) years from the date of each expense incurred pursuant to this Section 4.5
complete and accurate records of such expenses in sufficient detail to allow the
rights and obligations of the parties hereto to be determined accurately. Each
party shall have the right for a period of three (3) years after receiving any
report or statement with respect to expenses to appoint at its own expense an
independent certified public accountant reasonably acceptable to the other party
to inspect the relevant records of such other party and its Affiliates to verify
such report or statement. The audited party and its Affiliates shall each 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 inspecting party,
solely to verify the accuracy of the reports. Such inspection right shall not be
exercised more than once in any calendar year nor more than once with respect to
any expense reported hereunder. The inspecting party agrees to hold in strict
confidence all information concerning expenses and reports, and all information
learned in the course of any audit or inspection, except to the extent necessary
for such party to
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reveal such information in order to enforce its rights under this Agreement or
if disclosure is required by law. The results of each inspection, if any, shall
be binding on both parties. The inspecting party shall pay for such inspections,
except that in the event there is an error in the total amount recorded in any
account over a period of six months or more leading to an error adverse to the
inspecting party in reconciliation payments under Section 4.5.3 over such period
of more than five percent (5%), the audited party shall pay for such inspection.
4.6 R&D STEERING COMMITTEE ("RDSC").
4.6.1 Establishment and Functions. AGT and GENOVO shall establish
an "R&D Steering Committee" (the "RDSC") upon execution of this Agreement. The
RDSC shall plan, administer and monitor the R&D Program. In particular, the RDSC
shall review and approve the Annual R&D Plan and budgets contained therein,
review and monitor the progress of the R&D Program, and recommend necessary
adjustments to the R&D Program as the research takes place. The RDSC shall also
establish Listing Criteria in accordance with Section 4.9 hereof. The RDSC shall
provide the Management Committee with semi-annual written reports regarding the
progress of the R&D Program. In planning and monitoring the R&D Program, the
RDSC shall allocate tasks and responsibilities taking into account each party's
respective specific research and development capacities and expertise in order
to avoid duplication and to enhance synergies.
4.6.2 Membership. AGT and GENOVO each shall appoint three (3)
members to the RDSC who are reasonably acceptable to the other party.
Substitutes or alternates, reasonably acceptable to the other party, for the
RDSC members may be appointed at any time by notice in writing to the other
party. The RDSC shall be chaired by two (2) Co-Chairs, one appointed by AGT and
the other appointed by GENOVO from the RDSC members. Initial designees of the
parties to the RDSC shall be as follows:
For AGT: Michael Z. Gilman, Ph.D., Co-Chair
Joan S. Brugge, Ph.D.
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Dennis Holt, Ph.D.,
For GENOVO: Matthew Gonda, Ph.D., Co-Chair
[TO BE NAMED]
[TO BE NAMED]
[*]shall be a non-voting observer on the RDSC provided
that and for so long as he is a consultant of GENOVO.
4.6.3 Meetings. The RDSC shall meet at least semi-annually, with
such meetings to be held, alternately, in Cambridge, Massachusetts and
Philadelphia, Pennsylvania, unless the parties agree otherwise. Any additional
meetings shall be held at places and on dates selected by the Co-Chairs of the
RDSC. In addition, the RDSC may meet by teleconference or video conference or
may act without a formal meeting by a written memorandum signed by the Co-Chairs
of the RDSC. Whenever any action by the RDSC is called for hereunder during a
time period in which the RDSC is not scheduled to meet, the Co-Chairs of the
RDSC shall cause the RDSC to take the action in the requested time period by
calling a special meeting or by action without a meeting. Representatives of
each party or of its Affiliates, in addition to the members of the RDSC, may
attend RDSC meetings at the invitation of either party with the approval of the
other party, which shall not be unreasonably withheld.
4.6.4 Minutes. The RDSC shall keep accurate minutes of its
deliberations which record all proposed decisions and all actions recommended or
taken. Drafts of the minutes shall be delivered to the Co-Chairs of the RDSC
within a reasonable time not to exceed twenty (20) days after the meeting. The
party hosting the meeting shall be responsible for the preparation and
circulation of the draft minutes. Draft minutes shall be edited by the Co-Chairs
and shall be issued in final form within a reasonable time not to exceed
forty-five (45) days after the meeting with their approval and agreement as
evidenced by their signatures on the minutes.
4.6.5 Quorum; Voting; Decisions. At each RDSC meeting, at least two
members designated by each party shall constitute a
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quorum. Each RDSC member shall have one vote on all matters before the RDSC,
provided that the member or members of each party present at an RDSC meeting
shall have the authority to cast the votes of any of such party's members on the
RDSC who are absent from the meeting. Provided a quorum is present, all
decisions of the RDSC shall be made by majority vote of all of the members. In
the event that the RDSC is unable to resolve any matter before it, such matter
shall be referred to the Management Committee and resolved by the Management
Committee or as set forth in Section 3.7 hereof.
4.6.6 Expenses. AGT and GENOVO shall each bear all expenses of
their respective RDSC members related to their participation on the RDSC and
attendance at RDSC meetings.
4.7 RECORDS AND REPORTS.
4.7.1 Record Keeping. AGT and GENOVO shall each maintain records in
sufficient detail and in accordance with good laboratory practice and as will
properly reflect, and will document in a manner appropriate for purposes of
supporting the filing of potential patent applications, all work done and
results achieved in the performance of the R&D Program (including all data in
the form required under any applicable governmental regulations). Subject to
Article 5 hereof, AGT and GENOVO shall each provide the other the right to
inspect and copy such records to the extent reasonably required for the
performance of its obligations under this Agreement and shall not use such
records or information except to the extent otherwise permitted by this
Agreement.
4.7.2 Technical Reports. Each party shall keep the RDSC fully
informed about the status of the R&D Program including, without limitation,
furnishing copies of all reports received pursuant to sponsored research
agreements which relate to the R&D Program. In particular, without limitation,
each party shall (i) report to the RDSC in reasonable detail as required in
Section 4.3.1 hereof; (ii) provide the other party with access to all technology
and information employed in or arising out of the R&D Program solely for the
purpose of conducting their respective
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roles hereunder; (iii) provide the other party with summaries of any regulatory
filings filed during the Term of this Agreement by it for Products, Dimerizer
Drugs or Apoptosis Dimerizers being developed on behalf of the Joint Venture
within the Field, and copies of essential correspondence with regulatory
authorities in the Territory; and (d) provide such other information concerning
the R&D Program as the other party shall reasonably request.
[*]
4.8 GENOVO-[*] RELATIONSHIP.
4.8.1 Compliance with [*] Policies and Guidelines. GENOVO
represents, warrants and covenants that it has and will comply with all
conflicts of interest and financial disclosure guidelines and policies of the
[*]. GENOVO agrees that it will not take any action which would result in a
violation of any of the conditions contained in the [*].
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4.9 DIMERIZER DRUGS AND APOPTOSIS DIMERIZERS.
4.9.1 Listing of Dimerizer Drugs and Apoptosis Dimerizers. During
the first [*] years following the Effective Date, in the event AGT develops a
potential Dimerizer Drug or a potential Apoptosis Dimerizer that AGT believes
should be developed in the Field, AGT will notify the RDSC. The RDSC shall
determine whether to include research and development activities on the
potential Dimerizer Drug or Apoptosis Dimerizer in the Research Phase of the R&D
Program, and shall amend the Annual R&D Plan as necessary to do so. In the event
that activities in the Research Phase on such potential Dimerizer Drug or
Apoptosis Dimerizer develop sufficient in vivo data to indicate that the
prospective Dimerizer Drug or Apoptosis Dimerizer is an appropriate candidate
for entering the Development Phase or for inclusion in a Partnering Project, in
accordance with "Listing Criteria" to be established by the RDSC as soon as
practicable but in any event no later than [*], then the prospective Dimerizer
Drug or Apoptosis Dimerizer shall be placed on the "Dimerizer Drug List" or the
"Apoptosis Dimerizer List;" provided however, that there shall be no more than
[*] prospective Dimerizer Drugs or [*] prospective Apoptosis Dimerizers on the
relevant list at any time. After the Listing Criteria are established, the
Management Committee will review the maximum number of Dimerizer Drugs and
Apoptosis Dimerizers to be contained on the relevant lists as set forth above
and determine whether [*].
4.9.2 Restriction of AGT. AGT agrees that, except pursuant to a
Partnering Project, it will not [*] for any Dimerizer Drug on the Dimerizer Drug
List or any Apoptosis Dimerizer on the Apoptosis Dimerizer List such that the
Dimerizer Drug or Apoptosis Dimerizer will not be available for inclusion in a
Development Project or a Partnering Project.
4.9.3 Removal from Lists. In the event AGT wishes to remove a
prospective Dimerizer Drug from the Dimerizer Drug List or a prospective
Apoptosis Dimerizer from the Apoptosis Dimerizer List, it may request the
Management Committee to consider such
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matter and shall advise the Management Committee of AGT's proposal for replacing
the removed Dimerizer Drug or Apoptosis Dimerizer or the reasons why the
Dimerizer Drug or Apoptosis Dimerizer is not needed for Development Projects or
Partnering Projects or is not suitable for use in the Field. The Management
Committee shall promptly consider such request in good faith.
5. TREATMENT OF CONFIDENTIAL INFORMATION
5.1 CONFIDENTIALITY.
5.1.1 AGT and GENOVO each recognize that the other party's
Confidential Information constitutes highly valuable and proprietary
confidential information. AGT and GENOVO each agree that during the Term of the
Joint Venture and for five (5) years thereafter, it will keep confidential, and
will cause its employees, consultants, Affiliates and licensees and sublicensees
to keep confidential, all Confidential Information of the other party that is
disclosed to it, or to any of its employees, consultants, Affiliates and
licensees and sublicensees, pursuant to or in connection with this Agreement,
except to the extent that disclosure is required in accordance with the
performance of this Agreement. Neither AGT nor GENOVO nor any of their
respective employees, consultants, Affiliates and licensees and sublicensees
shall use Confidential Information of the other party for any purpose whatsoever
except as expressly permitted in this Agreement. Notwithstanding anything
contained herein to the contrary, the parties agree that with respect to
commercial production technology and product registration files, such
information shall remain confidential without limit unless such information
becomes part of the public domain through no fault of the recipient of such
information.
5.1.2 AGT and GENOVO each agree that any disclosure of the other
party's Confidential Information to any officer, employee, consultant or agent
of the other party or of any of its Affiliates and licensees and sublicensees
shall be made only if and to the extent necessary to carry out its rights and
responsibilities under this Agreement, shall be limited to the maximum extent
possible consistent with such rights and
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responsibilities and shall only be made to persons who are bound by written
confidentiality obligations to maintain the confidentiality thereof and not to
use such Confidential Information except as expressly permitted by this
Agreement. AGT and GENOVO each agree not to disclose the other party's
Confidential Information to any third parties under any circumstance without the
prior written approval from the other party (such approval not to be
unreasonably withheld), except as required in any application for regulatory
approval for testing, manufacture or sale of a Product, Dimerizer Drug or
Apoptosis Dimerizer subject to this Agreement, or as otherwise required by law,
and except as otherwise expressly permitted by this Agreement. Each party shall
take such action, and shall cause its Affiliates and licensees and sublicensees
to take such action, to preserve the confidentiality of each other's
Confidential Information as it would customarily take to preserve the
confidentiality of its own Confidential Information, and in no event, less than
reasonable care. Each party, upon the other's request, will return all the
Confidential Information disclosed to it by the other party pursuant to this
Agreement, including all copies and extracts of documents and all manifestations
in whatever form, within sixty (60) days of the request following the
termination of this Agreement; provided that a party may retain Confidential
Information of the other party relating to any license or right to use
Technology which survives such termination and one copy of all other
Confidential Information may be retained in inactive archives solely for the
purpose of establishing the contents thereof.
5.1.3 AGT and GENOVO each represent that all of its employees and
the employees of its Affiliates, and any consultants to such party or its
Affiliates, participating in the Joint Venture's activities who shall have
access to Confidential Information of the other party are bound by written
obligations to maintain such information in confidence and not to use such
information except as expressly permitted herein. Each party agrees to enforce
confidentiality obligations to which its
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employees and consultants (and those of its Affiliates) are obligated.
5.2 PUBLICITY.
Neither party may disclose the existence or terms of this Agreement
without the prior written consent of the Management Committee; provided,
however, that either party may make such a disclosure to the extent required by
law. Such disclosure shall be on reasonable notice to the other party and after
taking all reasonable steps to maintain confidentiality. The parties, upon the
execution of this Agreement, will agree to a news release for publication. Any
costs incurred for public relations in respect of the Joint Venture shall be
shared equally by the parties. Once any written statement is approved for
disclosure by the Management Committee, either party may make subsequent public
disclosure of the contents of such statement without the further approval of the
other party.
5.3 PUBLICATION.
It is expected that each party may wish to publish the results of
its research under this Agreement. In order to safeguard patent rights, the
party wishing to publish or otherwise publicly disclose the results of any
research being conducted jointly by the parties hereunder shall first submit a
draft of the proposed manuscript to the Co-Chairs of the RDSC for review,
comment and consideration of appropriate patent action at least four (4) weeks
prior to any submission for publication or other public disclosure. Within no
more than thirty (30) days of receipt of the prepublication materials, the
Co-Chairs of the RDSC, with the advice of the Patent Coordinators, will advise
the party seeking publication as to whether a patent application shall be
prepared and filed and the party seeking publication shall delay submission
until a patent application can be filed, provided that such delay shall not
exceed ninety (90) days. All such decisions shall be AGT Consultative Decisions
for publications initiated by AGT, and shall be GENOVO Consultative Decisions
for publications initiated by GENOVO.
5.4 LIMITATION ON DISCLOSURES.
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Notwithstanding any provision in this Agreement, neither party
shall be obligated hereunder to disclose to the other party any information
which it is prohibited from disclosing by law or under any agreement with a
third party.
5.5 PROHIBITION ON HIRING.
Neither party nor its Affiliates shall, during the duration of the
Joint Venture but in any event for at least five (5) years from the Effective
Date, hire or solicit any person who was employed by the other party or its
Affiliates during such period, whether such person is hired as an employee or
consultant, unless authorized in writing by the other party.
6. INTELLECTUAL PROPERTY RIGHTS
6.1 DISCLOSURE OF INVENTIONS.
6.1.1 Notice of Inventions. Each party shall promptly inform the
other, unless prohibited by the provisions of any agreement with third parties,
about all inventions in or applicable to the Field that are conceived, made,
developed or acquired in the course of carrying out the R&D Program or otherwise
during the Term by employees or consultants of either of them or their
Affiliates, or any third party performing sponsored research for either of the
parties, alone or jointly with employees or consultants of the other party or
its Affiliates. The provisions of this Section 6.1 shall apply to rights in the
intellectual property conceived, made, developed or acquired by AGT or GENOVO,
or both, during the course of carrying out the R&D Program or otherwise during
the Term.
6.1.2 Exchange of Documents. Upon reasonable request AGT and GENOVO
shall also provide copies to the other of any Patent Rights or agreements
relating thereto existing as of the Effective Date or thereafter acquired from
third parties which are useful in the Field, provided that each of AGT and
GENOVO may redact portions of any such Patent Rights or agreements relating
thereto not relevant to the Field, and further provided that all such documents
shall be considered Confidential Information as set forth in Section 5.1 hereof.
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6.1.3 Third Party Consents. Each party shall, if necessary, (i) use
commercially reasonable efforts to obtain the written consent of any third party
needed to furnish the information set forth in Section 6.1.1, within sixty (60)
days of the Effective Date hereof; and (ii) use commercially reasonable efforts
to obtain the written consent of any third party needed to effectuate the
provisions of Section 6.1.2 hereof within sixty (60) days of the request of the
other party.
6.2 OWNERSHIP.
6.2.1 AGT Intellectual Property Rights.
AGT shall have sole and exclusive ownership of all right, title and
interest on a worldwide basis in and to any Technology (i) solely invented,
discovered or developed by AGT without use of GENOVO Technology, whether or not
in the conduct of the R&D Program, or (ii) acquired after the date hereof by AGT
(collectively, "AGT Program Technology"), with full rights to license or
sublicense, subject to the obligations to the Joint Venture in the Field as set
forth herein. Without limiting the foregoing, subject to the licenses to be
granted pursuant to Article 8 hereof and to GENOVO's rights under Section 2.4
and Section 6.2.5 hereof, AGT shall be the sole owner of all Patent Rights, all
trade secret rights, all know-how and any other intellectual property rights in
the AGT Program Technology including the sole and exclusive right to exclude
others from making, using, selling, offering for sale or importing the AGT
Program Technology or any products derived from any AGT Program Technology.
6.2.2 GENOVO Intellectual Property Rights.
GENOVO shall have sole and exclusive ownership of all right, title
and interest on a worldwide basis in and to any Technology (i) solely invented,
discovered or developed by GENOVO without use of AGT Technology, whether or not
in the conduct of the R&D Program, or (ii) or acquired after the date hereof by
GENOVO (collectively, "GENOVO Program Technology"), with full rights to license
or sublicense, subject to the obligations to the Joint Venture in the Field as
set forth herein. Without
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limiting the foregoing, subject to the licenses to be granted pursuant to
Article 8 hereof and AGT's rights under Section 6.2.4 hereof, GENOVO shall be
the sole owner of all Patent Rights, all trade secret rights, all know-how and
any other intellectual property rights in the GENOVO Program Technology
including the sole and exclusive right to exclude others from making, using,
selling, offering for sale or importing the GENOVO Program Technology or any
products derived from any GENOVO Program Technology.
6.2.3 Joint Technology.
GENOVO and AGT shall each own an undivided one-half interest in all
Technology jointly invented, discovered, acquired, or developed by both AGT
(and/or any party performing sponsored research for AGT) and GENOVO (and/or any
party performing sponsored research for GENOVO) or invented, discovered or
developed by one party (or during any research sponsored by such party) with the
use of the Technology of the other party (collectively, the "Joint Technology")
and shall jointly own all Joint Patent Rights.
6.2.4 AGT Rights Outside the Field.
Subject to the provisions of Section 6.2.5, AGT shall have no
obligations hereunder to GENOVO or to the Joint Venture with respect to
Technology, Products, Dimerizer Drugs and Apoptosis Dimerizers outside the
Field.
GENOVO hereby grants to AGT: (i) a [*] license (including the right
to grant sublicenses), under its ownership interest in any Joint Technology and
Joint Patent Rights to develop, have developed, make, have made, use, distribute
for sale, offer for sale and sell and import any product, and to practice any
process, for all uses outside of the Field. No licenses to any GENOVO Patent
Rights or GENOVO Technology are granted hereunder to AGT for use outside of the
Field, by implication or otherwise.
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6.2.5 GENOVO Rights Outside the Field.
Subject to the provisions of Section 6.2.4, GENOVO shall have no
obligations hereunder to AGT or the Joint Venture with respect to Technology,
Products, Dimerizer Drugs or Apoptosis Dimerizers outside the Field.
AGT hereby grants to GENOVO: (i) [*] license (including the right
to grant sublicenses), under its ownership interest in any Joint Technology and
Joint Patent Rights to develop, have developed, make, have made, use, distribute
for sale, offer for sale and sell and import any product, and to practice any
process, for all uses outside of the Field. No licenses to any AGT Patent Rights
or AGT Technology are granted hereunder to GENOVO for use outside of the Field,
by implication or otherwise.
6.3 PATENT COORDINATORS.
AGT and GENOVO shall each appoint a Patent Coordinator, reasonably
acceptable to the other party, who shall serve as such party's primary liaison
with the other party on matters relating to patent filing, prosecution,
maintenance and enforcement. Each party may replace its Patent Coordinator at
any time by notice in writing to the other party. The initial Patent
Coordinators shall be:
For AGT: David L. Berstein, Esq.
For GENOVO: [TO BE NAMED]
6.4 INVENTORSHIP.
In case of a dispute between AGT or GENOVO over inventorship, the
RDSC, with the advice of the Patent Coordinators, shall make the determination
of the inventor(s) by application of the standards contained in United States
patent law. The RDSC, with the advice of the Patent Coordinators, shall also, in
the case of dispute, make the determination as to whether an invention is Joint
Technology. All such determinations shall be treated as Joint Decisions
hereunder. If the RDSC cannot resolve the dispute, it shall be resolved by
independent patent counsel, not otherwise engaged by either of the parties,
selected by the Patent Coordinators. Expenses of
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such independent patent counsel shall be shared equally by the parties.
7. PROVISIONS CONCERNING THE FILING, PROSECUTION
AND MAINTENANCE OF PATENT RIGHTS
The following provisions relate to the filing, prosecution and
maintenance of Patent Rights during the term of this Agreement:
7.1 FILING OF PATENTS.
Each party will be responsible for the filing and prosecution, [*]
and such other countries as the responsible party shall select, of patents on
Technology solely owned or solely invented by such party and on Joint Technology
which principally relates to its own Technology and which is developed during
the R&D Program, provided that the other party will have the opportunity to
provide substantive review and comment on any such prosecution solely as it
relates to claims in the Field. Without limiting the generality of the
foregoing, patents on Joint Technology relating to [*] shall be filed and
prosecuted by AGT, and patents on Joint Technology relating to [*] shall be
filed and prosecuted by GENOVO, except that patents on Joint Technology relating
to the use of [*] shall be filed and prosecuted by AGT. Portions of any
documents relating to any such prosecution not related to the Field may be
redacted by a party prior to provision to the other party.
Except as set forth above, responsibility for filing and
prosecution, [*] and such other countries as the Management Committee shall
select, of patents on Joint Technology not principally related to either AGT
Technology alone or GENOVO Technology alone will be agreed upon by the parties
on a case-by-case basis and handled by mutually acceptable patent counsel
charged with the duty to act in the best interests of the Joint Venture.
Each party shall also promptly give notice to the other of the
initiation of any interference, opposition, reissue, reexamination or revocation
proceeding and the grant, lapse, revocation, surrender, invalidation or
abandonment of any Patent
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Rights relevant to this Agreement for which it has responsibility. If at any
time, either party wishes to discontinue the prosecution of any such patent(s)
owned solely by it, such party shall promptly give notice of such intention to
the other party and to the Management Committee. No such prosecution shall be
discontinued unless a Joint Decision to discontinue such patent is reached by
the Management Committee. If the Management Committee decides to allow any such
patent prosecution to be discontinued, the party not responsible for prosecution
shall have the right, but not the obligation, to assume responsibility for the
prosecution of any such patent(s) by giving notice to the party wishing to
discontinue such prosecution of such intention within thirty (30) days and such
patents shall thereafter be assigned to the party assuming the responsibility
for prosecution or maintenance of the Patent Right under this Agreement.
7.2 EXPENSES.
GENOVO shall bear the cost for the filing, prosecution and
maintenance of GENOVO Patent Rights. AGT shall bear the cost for the filing,
prosecution and maintenance of AGT Patent Rights. The parties shall share
equally the cost for the filing, prosecution and maintenance of Joint Patent
Rights, and in the event either party uses any in-house patent counsel, expenses
shall be shared in such instance based on reasonable rates as agreed in advance
by the Management Committee.
8. COMMERCIALIZATION PROGRAM
8.1 OBJECTIVES OF THE COMMERCIALIZATION PROGRAM.
The objectives of the Commercialization Program shall be to develop
and commercialize Products, Dimerizer Drugs and Apoptosis Dimerizers in the
Field [*] (collectively, "Transactions"). The proposed commercialization
activities will be set forth in a written "Commercialization Plan" drafted by
the parties and approved by the Management Committee, which shall be updated by
the Management Committee from time to time. The Commercialization Plan will
designate [*].
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8.1.1 [*]. Upon a [*] decision by the Management Committee to
pursue a program [*], each party shall have the obligations as specified in
Section 8.2, the parties will seek to achieve a Transaction structure generally
as provided in Section 38.3, and costs and proceeds shall be shared as provided
in Section 8.4, unless otherwise agreed in writing by the parties hereto.
8.1.2 [*]. Upon a decision by the Management Committee to pursue a
program [*], such program shall be pursued by the Joint Venture or one of the
parties hereto only under the terms of a separate agreement to be negotiated in
good faith by the parties hereto. Unless otherwise expressly agreed in writing,
such separate agreement shall establish an alternate structure (a "Joint Venture
Entity"), and will contain appropriate provisions to reflect the fact that no
third party is involved where the Joint Venture undertakes [*], or the fact that
one of the parties is in the position of a third party where only one of the
parties undertakes [*]. Subject to the foregoing, the agreement shall further
provide for the division of responsibilities generally as set forth in Section
8.3, and the sharing of costs and proceeds generally as set forth in Section
8.4, but may divide the responsibilities and financial returns to the parties
other than as contemplated in Sections 8.2, 8.3 and 8.4 hereof, depending on the
ability and desire of either party to finance and support its efforts relating
to any such [*] and the access of either party to the genes necessary for such
program. Such separate agreement shall also provide for the conduct of clinical
trials, the filing of INDs and NDAs, and the gaining of regulatory approvals by
the Joint Venture Entity and shall include provisions for the sharing of costs
and responsibilities related thereto. The Management Committee will recommend to
each party a general structure for any [*], consistent with the above. However,
the decision as to whether or not to participate in any [*] shall be an AGT
Decision and a GENOVO Decision for AGT and GENOVO, respectively.
Notwithstanding the foregoing, prior to the execution by
the parties of any agreement with respect to a [*], the
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Management Committee may recommend by Joint Decision [*]. The provisions of
Section 8.1.1 shall then apply.
8.1.3 Acquisition of Genes.
In the event that the Management Committee decides to acquire a
license to any patent or intellectual property rights relating to any
therapeutic gene or DNA sequence in conjunction with the Commercialization
Program, the costs of such acquisition incurred by the parties [*] and such
rights shall be treated as Joint Patent Rights and/or Joint Technology
hereunder, unless otherwise agreed in writing by the parties hereto.
8.1.4 Multiple Field Transactions. In the event that any
Transaction with any third party shall include rights to Patent Rights or
Technology outside the Field to be provided by either party hereto as well as
rights in the Field, the parties [*] to be received from such third party under
the Transaction for rights outside the Field, so that the Transaction may be
successfully concluded by the Joint Venture.
8.1.5 Due Diligence. Each party will apply commercially reasonable
diligent efforts to the performance of all aspects of its obligations under the
Commercialization Program hereunder consistent, on an effort per budgeted dollar
basis, with the efforts it devotes to its other collaborations with commercial
entities.
8.2 OBLIGATIONS OF THE PARTIES WITH RESPECT TO
TRANSACTIONS.
8.2.1 AGT Obligations.
(a) AGT shall make presentations to potential Licensees on AGT
Technology as requested by the Management Committee.
(b) AGT shall obtain and shall take all actions necessary to
maintain, [*]. Genovo shall [*]. All such rights licensed in by AGT shall be
specified on Exhibit 1.4 hereto, as amended from time to time.
(c) AGT shall provide to the Management Committee, upon reasonable
request, any material information regarding any of AGT's agreements with third
parties which the Management
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Committee deems useful in the planning, negotiation or execution of
Transactions.
(d) AGT shall use reasonable efforts to make all decisions required
of AGT during any negotiation of a Transaction in a timely manner.
(e) AGT shall promptly disclose to GENOVO and the Management
Committee any intellectual property rights of third parties of which it becomes
aware which may materially affect the ability of either party to perform its
obligations hereunder or the attainment of the objectives of the Joint Venture.
Such disclosure shall be in such a manner as to protect a claim of privilege for
such communication.
(f) Notwithstanding the foregoing, the decision as to whether or
not AGT will agree to any Transaction shall be an AGT Decision.
8.2.2 GENOVO Obligations.
(a) GENOVO shall make presentations to potential Licensees on
GENOVO Technology as requested by the Management Committee.
(b) GENOVO shall obtain and shall take all actions necessary to
maintain, [*]. All such rights licensed in by GENOVO shall be specified on
Exhibit 1.22 hereto, as amended from time to time.
(c) GENOVO shall provide to the Management Committee, upon
reasonable request, any material information regarding any of GENOVO's
agreements with third parties which the Management Committee deems useful in the
planning, negotiation or execution of Transactions.
(d) GENOVO shall use reasonable efforts to make all decisions
required of GENOVO during any negotiation of a Transaction in a timely manner.
(e) GENOVO shall promptly disclose to AGT and the Management
Committee any intellectual property rights of third parties of which it becomes
aware which may materially affect the ability of either party to perform its
obligations hereunder or the attainment of the objectives of the Joint Venture.
Such
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disclosure shall be in such a manner as to protect a claim of privilege for such
communication.
(f) Notwithstanding the foregoing, the decision as to whether or
not GENOVO will agree to any Transaction shall be a GENOVO Decision.
8.2.3 Expenses of Negotiations.
The expenses of the parties incurred in the identification and
negotiation of any Transaction shall be charged to their Commercialization
Reimbursement Accounts and reimbursed as set forth in Section 8.4. Itemized
records shall be kept by each party of all such expenses. Notwithstanding any
provision herein to the contrary, and provided that AGT shall have the right to
select counsel reasonably acceptable to GENOVO in such event, at the request of
GENOVO, AGT shall withhold from charging legal fees and expenses incurred in
connection with the identification and negotiation of any Transaction to its
Commercialization Reimbursement Account until the consummation of any
Transaction, at which time any such withheld legal fees and expenses shall be
charged by AGT to its Commercialization Reimbursement Account and reimbursed as
set forth in Section 8.4.
8.3 TRANSACTION STRUCTURES.
8.3.1 General.
It is the expectation of the parties that the structure of
any Transaction will provide for: [*].
8.3.2 Payment Terms of Transactions. It is expected that payment
terms and payment mechanisms for Transactions will be as follows:
[*]
8.4 GENERAL ACCOUNTING.
There shall be established for each of AGT and GENOVO a
"Commercialization Reimbursement Account." All costs to be charged to and
recorded in such accounts will be so charged and recorded in accordance with the
provisions of this Section 8.4.
8.4.1 AGT Charges. AGT will charge to its Commercialization
Reimbursement Account, as incurred, all direct
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and indirect costs incurred by AGT in performing its obligations hereunder
except those incurred [*], and (vi) as otherwise specifically provided herein.
Such costs to be charged to the Commercialization Reimbursement Accounts will
include, without limitation, (a) costs incurred in the filing, prosecution and
maintenance of patent applications and patents on Joint Technology, (b) costs
incurred in [*], expenses incurred as approved by the Management Committee (c)
costs incurred in [*] as approved by the Management Committee, and (i) any other
costs incurred pursuant to this Agreement which are not specifically allocated
to one party and which are authorized by the Management Committee.
8.4.2 GENOVO Charges. GENOVO will charge to its Commercialization
Reimbursement Account, as incurred, all costs incurred by GENOVO in performing
its obligations hereunder except those incurred [*], and (vi) as otherwise
specifically provided herein. Such costs to be charged to the Commercialization
Reimbursement Accounts will include, without limitation, (a) costs incurred in
the filing, prosecution and maintenance of patent applications and patents on
Joint Technology, (b) costs incurred in [*] expenses incurred as approved by the
Management Committee, (c) costs incurred in [*], (d) costs incurred in (e) [*]
as approved by the Management Committee, and (i) any other costs incurred
pursuant to this Agreement which are not specifically allocated to one party and
which are authorized by the Management Committee.
8.4.3 Distribution of Proceeds. Proceeds from the sale of all
Products, Dimerizer Drugs and Apoptosis Dimerizers in the Field (which will
include any direct or indirect remuneration received by either of the parties)
will be collected by the party [*]. For the purposes of this Agreement, the
terms "proceeds from the sale of Product," "proceeds from the sale of Dimerizer
Drug" and "proceeds from the sale of Apoptosis Dimerizer" shall not include the
proceeds of the sale of Product, Dimerizer Drug or Apoptosis Dimerizer by either
party to an Affiliate of such party, but shall include the proceeds from the
sale of Product,
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Dimerizer Drug or Apoptosis Dimerizer by a party or an Affiliate of such party
to a Licensee or other independent person or entity in an "arm's length"
transaction. Such party will first use such proceeds to reimburse itself for
100% of the Fully Burdened Cost incurred by it in the manufacture of such
Product, Dimerizer Drug or Apoptosis Dimerizer and for 100% of distribution
costs actually incurred and not deducted, and the balance shall be credited to
its "Joint Venture Payment Account." Proceeds received by either party from
royalties, license fees, milestone payments and the like as a result of
Transactions, proceeds recovered as a result of prosecution of infringers of
Joint Patents, AGT Patents and GENOVO Patents, and any other revenues received
pursuant to, or as a result of this Agreement, which are not specifically
allocated to one party, shall also be credited to each party's Joint Venture
Payment Account.
8.4.4 General Reporting. As determined by the Management Committee,
each party shall provide detailed reports describing the entries made and
resulting balances contained in its Commercialization Reimbursement Account and
Joint Venture Payment Account to the Management Committee within thirty (30)
days subsequent to the end of each calendar quarter. Such reports shall include
a statement reporting gross sales and Net Sales for the quarter, the Fully
Burdened Cost and distribution costs associated with such sales, and a
reconciliation of such reported amounts to the net proceeds accumulated in the
Joint Venture Payment Account. The parties may also request and promptly receive
and obtain with such reports specific additional information on gross sales
versus Net Sales, or other information needed in order to accurately determine
any royalty obligations to third parties hereunder.
8.4.5 Accounting Reconciliation. The Management Committee or its
designees shall, within forty-five (45) days after the end of each calendar
quarter, determine the total amount in the Joint Venture Payment Accounts of
both parties, if any, and shall apply such total amount to reimburse the parties
for the amounts charged to their Commercialization Reimbursement
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Accounts as of the end of such quarter. If there is any remainder, after such
reimbursement of the Commercialization Reimbursement Accounts, the remainder
shall be allocated equally to AGT and GENOVO. If there is no excess, based on
the balances in each party's Joint Venture Payment Account and each party's
Commercialization Reimbursement Account, the Management Committee shall direct
AGT to pay to GENOVO, or GENOVO to pay to AGT, the amounts necessary to achieve
an equal sharing of the revenues allocated to the Joint Venture Payment Accounts
and the expenses charged to the Commercialization Reimbursement Accounts as
contemplated herein.
8.4.6 Records. Each party and its Affiliates, licensees and
sublicensees shall keep for five (5) years from the date of each expense
incurred or payment received pursuant to this Agreement complete and accurate
records of such expenses or payments in sufficient detail to allow the rights
and obligations of the parties hereto to be determined accurately. Each party
shall have the right for a period of three (3) years after receiving any report
or statement with respect to payments or expenses to appoint at its expense an
independent certified public accountant reasonably acceptable to the other party
to inspect the relevant records of such other party and its Affiliates,
licensees and sublicensees to verify such report or statement. The audited party
and its Affiliates, licensees and sublicensees shall each 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 inspecting party, solely to
verify the accuracy of the reports. The inspecting 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 if disclosure is required by law. The results
of each inspection, if any, shall be binding on both parties. The
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inspecting party shall pay for such inspections, except that in the event there
is an error in the total amount recorded in any account over a period of six (6)
months or more leading to an error adverse to the inspecting party in
reconciliation payments under Section 8.4.5 over such period of more than five
percent (5%), the audited party shall pay for such inspection.
8.4.7 Tax Matters. The parties will consult with each other
concerning the tax treatment of items of income and expense, with a view to
achieving consistent treatment, but each party shall have the right to treat
items of income and expense as it determines to be appropriate.
8.5 LEGAL ACTION.
8.5.1 Actual or Threatened Infringement. Subject to any obligation
to a third party licensor of Technology or Patent Rights to a party with respect
to the subject matter hereof, and unless otherwise provided in any Transaction:
(a) In the event either party becomes aware of any possible
infringement or unauthorized possession, knowledge or use in the Field of any
intellectual property which is the subject matter of this agreement
(collectively, an "Infringement"), that party shall promptly notify the other
party and provide it with full details. Upon a determination by either party
that such Infringement involves the actual sale of products in the Field of this
Agreement by a third party, such party may give notice of such determination to
the other party hereto (an "Infringement Notice").
GENOVO shall have the first right and option, but not the
obligation, to prosecute or prevent the Infringement of GENOVO Patent Rights or
Joint Patent Rights claiming Products or the manufacture or use thereof, but if
GENOVO does not commence an action to prosecute, or otherwise take steps to
prevent or terminate the Infringement within one hundred eighty (180) days from
any Infringement Notice, then AGT shall have the right and option to take such
action as AGT will consider appropriate to prosecute or prevent such
Infringement.
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AGT shall have the first right and option, but not the obligation,
to prosecute or prevent the Infringement of AGT Patent Rights or Joint Patent
Rights claiming Dimerizer Drug, Apoptosis Dimerizer or the manufacture or use
thereof, but if AGT does not commence an action to prosecute, or otherwise take
steps to prevent or terminate the Infringement within one hundred eighty (180)
days from any Infringement Notice, then GENOVO shall have the right and option
to take such action as GENOVO will consider appropriate to prosecute or prevent
such Infringement in the Field.
If either party determines that it is necessary or desirable for
the other to join any such suit, action or proceeding, the second party shall
execute all papers and perform such other acts as may be reasonably required in
the circumstances.
In the event of an Infringement of a Joint Patent Right not within
the scope of the preceding three paragraphs, the Management Committee shall
determine whether and how to prosecute or prevent the Infringement.
Each party shall bear the cost of any proceeding or suit it will
bring under this Section 8.5.1(a) but shall charge such cost to its
Commercialization Reimbursement Account. All sums recovered in such suit or in
its settlement shall be credited to the receiving party's Joint Venture Payment
Account. Each party shall always have the right to be represented by counsel of
its own selection in any suit instituted under this Section by the other party
for Infringement and shall be permitted to charge the reasonable cost of such
representation to its Commercialization Reimbursement Account. If either party
lacks standing and the other party has standing to bring any such suit, action
or proceeding, then such other party shall bring such suit at the request and
expense of the other party.
(b) In any action under this Section 8.5.1, the parties shall fully
cooperate with and assist each other. No suit under Section 8.5.1(a) may be
settled without the approval of the Management Committee.
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(c) In the event of the imposition of a compulsory license in a
given country and receipt by either party of a royalty thereunder, such party
shall, within thirty (30) days of its receipt of each royalty payment
thereunder, credit such royalty to its Joint Venture Payment Account.
(d) In the event that the scope of an action under Section 8.5.1
goes beyond the scope of the Field of this Agreement and an award of damages or
royalties is granted for infringing activity outside the Field, such award shall
be retained by the owner of the Patent Right in question.
8.5.2 Defense of Claims. Subject to any obligation to a third party
licensor of Technology or Patent Rights to a party with respect to the subject
matter hereof and unless otherwise provided in any Transaction, in the event
that any action, suit or proceeding is brought against AGT or GENOVO or any
Affiliate, licensee or sublicensee of either party alleging the infringement of
the intellectual property rights of a third party by reason of the discovery,
development, manufacture, use, sale, importation or offer for sale of a Product,
Dimerizer Drug or Apoptosis Dimerizer in the Field or use of GENOVO, AGT or
Joint Technology in the discovery, development, manufacture, use, sale, offer
for sale, or importation of a Product, Dimerizer Drug or Apoptosis Dimerizer in
the Field, the parties will cooperate with each other in the defense of any such
suit, action or proceeding. Notwithstanding the foregoing, each party shall have
the option to assume control of the defense of any action, suit or proceeding
which principally relates to the use of such party's own Technology. The parties
will give each other prompt written notice of the commencement of any such suit,
action or proceeding or claim of infringement and will furnish each other a copy
of each communication relating to the alleged infringement. Neither party shall
compromise, litigate, settle or otherwise dispose of any such suit, action or
proceeding which involves the use of the other's Technology or Patent Rights
without the other party's advice and prior consent, provided that the party not
defending the suit shall not unreasonably withhold its consent to any
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settlement which does not have a material adverse effect on its business. If the
defending party agrees that the other party should institute or join any suit,
action or proceeding pursuant to this Section, the defending party may at its
expense, join the other party as a party to the suit, action or proceeding, and
the party so joined shall execute all documents and take all other actions,
including giving testimony, which may reasonably be required in connection with
the prosecution of such suit, action or proceeding. To the extent that the
allegation of infringement is based principally on the use of AGT Technology,
the expenses of defense of the suit shall be borne by AGT. To the extent that
the allegation of infringement is based principally on the use of GENOVO
Technology, the expenses of the suit shall be borne by GENOVO. To the extent
that the allegation of infringement is based principally on the use of Joint
Technology, or to the extent that the allegation of infringement is not based
principally on the use of either GENOVO Technology or AGT Technology, such
expenses shall be borne equally by the parties, and shall be charged by the
party incurring such expenses to its Commercialization Reimbursement Account.
If as a consequence of such action, suit or proceeding by a third
party claiming that the discovery, development, manufacture, use or sale of a
Product infringes such third party's intellectual property rights, the parties
shall examine and discuss in good faith the consequences of such prohibition or
restriction or other conditions on this agreement and on possible modifications
thereto.
9. TERMINATION AND DISENGAGEMENT
9.1 TERM.
This Agreement shall take effect as of the Effective Date and shall
continue until terminated in accordance with the provisions of this Article 9.
9.2 TERMINATION.
9.2.1 Initial Termination Conditions. The Agreement may be
terminated at any time by either party in the following ways:
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(i) by mutual consent of AGT and GENOVO;
(ii) upon written notice that (a) either party shall have
dissolved, ceased active business operations or
liquidated, unless such dissolution, cessation or
liquidation results from reorganization, acquisition,
merger or similar event, or (b) bankruptcy or
insolvency proceedings, including any proceeding
under Title 11 of the United States Code, have been
brought by or against such party and, in the event
such a proceeding has been brought against such
party, remains undismissed for a period of sixty (60)
days, or an assignment has been made for the benefit
of such party's creditors or a receiver of such
party's assets has been appointed (a "Bankruptcy
Event");
[*].
(iv) upon written notice by AGT in its sole discretion in
the event that [*];
(v) by default of either party in the full and timely
observance or performance of its material covenants or
obligations under this Agreement, including, but not
limited to, its obligations to bear its costs and expenses
of the R&D Program, upon sixty (60) days' prior written
notice by the other party, which notice shall specify the
nature of the default and the steps to be taken to cure
such default; provided, however, that if such default is
cured by the defaulting party within such sixty (60) day
period, such notice of termination shall be deemed null
and void as if the same had never been given and this
Agreement shall not be terminated pursuant thereto;
(vi) [*]
9.2.2 Termination After [*]. The Joint Venture may also be terminated
after the [*] of the Effective Date upon sixty (60) days' prior written notice
by either party in the event that the parties have not [*].
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9.2.3 Termination After [*]. This Joint Venture may also be [*] of
the parties set forth in Section [*] may be eliminated by either of the parties
hereto by ninety (90) days' prior written notice to be effective at any time
after the [*] anniversary of the Effective Date.
9.3 CONSEQUENCES OF TERMINATION.
9.3.1 Survival of Transactions.
Termination of this Agreement shall not affect the rights and
obligations of either party under any Transaction, including both Partnering
Projects and Development Projects, entered into by the Joint Venture prior to
such termination. The provisions of this Agreement, including without limitation
Section 8.4, shall continue to apply to the receipt and distribution of the
proceeds received by either party from any such Partnering Project or
Development Project.
9.3.2 Technology Rights.
In the event of termination of the Joint Venture:
(a) each party will retain exclusive rights under its own
Technology and Patent Rights, and each party shall be free to pursue the
development and commercialization of such rights in any manner that it may
choose in all fields, subject only to the terms of any Transaction or
Development Project and any other rights as set forth below;
(b) each party will retain the non-exclusive license to Joint
Technology granted to it in Sections 6.2.4 and 6.2.5 hereof, which licenses
shall, as of such termination, also be deemed to include rights within the Field
but shall not include by implication or otherwise rights in any other Technology
or Patent Rights of the other party;
(c) in the event of the termination of the Joint Venture or breach
of this Agreement by reason of a Bankruptcy Event or insolvency of a party (the
"Withdrawing Party") as provided in Section 9.2(ii)(b) above, the remaining
party shall have the right to continue the efforts of the Joint Venture
hereunder in the Field, in its own name and for its own benefit. The Withdrawing
Party shall be deemed to have granted to the
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surviving party a non-exclusive license providing for a [*] percent running
royalty on Net Sales of Products, Dimerizer Drugs or Apoptosis Dimerizers which
are within the claims of any issued Patent owned by or licensed to the
Withdrawing Party, such royalty to be payable to the Withdrawing Party within
ninety days after the end of each calendar quarter and no other financial terms
to use all Patent Rights and Technology of the Withdrawing Party (whether or not
patented) for the manufacture, use and sale of Products, Dimerizer Drugs or
Apoptosis Dimerizers in the Field. The Remaining Party shall also have the right
to use all pre-clinical and clinical trial data and information, regulatory
approvals and filings, finishing, marketing data and technology and know-how of
the Withdrawing Party relating to the production and sale of Products, Dimerizer
Drugs or Apoptosis Dimerizers in the Field. "Net Sales," for the purposes of
this Section 9.3.2, shall mean the gross amount billed by a party or licensees
or sublicensees to third parties worldwide for the sales of Products, Dimerizer
Drugs or Apoptosis Dimerizers, less (a) allowances for normal and customary
trade, quantity and cash discounts actually allowed and taken, (b) actual
transportation, insurance and postage charges, if paid by the party or any
Affiliate, licensee or sublicensee of the party and billed on the seller's
invoices as a separate item, (c) credits, rebates, returns (including, but not
limited to, wholesaler and retailer returns and wholesaler chargebacks), to the
extent actually allowed, and (d) sales, use and other taxes similarly incurred
to the extent stated on the invoice as a separate item, all subject to the
following:
(x) In the case of pharmacy incentive programs, hospital
performance incentive program chargebacks, disease management programs, similar
programs or discounts on "bundles" of products, all discounts and the like shall
be allocated among products on the basis on which such discounts and the like
were actually granted, or if such basis cannot be determined, proportionately to
the list prices of such products.
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(y) In the case of any sale or other disposal by a party hereto to
an Affiliate, for resale, the Net Sales shall be calculated as above on the
value charged or invoiced on the first subsequent arm's length sale to a party
who is not an Affiliate;
(z) In the event of a license or sublicense as to any Product,
Dimerizer Drug or Apoptosis Dimerizer, Net Sales will be calculated with respect
to sales of the Product, Dimerizer Drug or Apoptosis Dimerizer by the licensee
or sublicensee.
9.4 SURVIVING PROVISIONS.
Termination of this Agreement for any reason shall be without
prejudice to:
(a) the rights and obligations of the parties provided in Sections
4.5, 5.1, 5.2, 5.3, 5.5, 6.1, 6.2, 8.4 and 8.5.2 and Articles 9, 10, 11, 12 and
13, all of which shall survive such termination;
(b) AGT's and GENOVO's right to receive all payments earned and/or
accrued prior to termination hereunder; and
(c) any other rights or remedies provided at law or equity which
either party may otherwise have against the other.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS
10.1 MUTUAL REPRESENTATIONS.
AGT and GENOVO each represents and warrants to the other as
follows:
10.1.1 Organization.
It is a corporation duly organized, validly existing and is in good
standing under the laws of the State of Delaware, is qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the performance of its obligations hereunder requires such qualification and has
all requisite power and authority, corporate or otherwise, to conduct its
business as now being conducted, to own, lease and operate its properties and to
execute, deliver and perform this Agreement.
10.1.2 Authorization.
The execution, delivery and performance by it of this Agreement
have been duly authorized by all necessary corporate
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action and do not and will not (a) require any consent or approval of its
stockholders or (b) violate any provision of any agreement, law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award
presently in effect having applicability to it or any provision of its charter
documents.
10.1.3 Binding Agreement.
This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and conditions.
10.1.4 No Inconsistent Obligation.
It is not under any obligation to any person, or entity,
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 and that it has all power and authority
under all instruments or agreements to which it is a party to enter into this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, it has not granted to any third party any rights to
its Technology in the Field. Furthermore, it is not a party to any agreement
which would directly or indirectly grant rights in the other party's Technology
to any third party.
10.1.5 Right to Sublicense.
It has rights to grant sublicenses under the license agreements set
forth in Exhibits 1.4 (in the case of AGT) and 1.22 (in the case of GENOVO) to
the extent contemplated hereby and to effect the purposes of the Joint Venture.
10.2 Covenants of the Parties.
10.2.1 GENOVO Covenants.
(a) GENOVO covenants to take actions reasonably requested by AGT
prior to the date hereof with respect to [*] within [*] of the Effective Date.
(b) GENOVO covenants to take all actions necessary to obtain and
maintain any rights with respect to Technology in the
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Field under the licenses listed on Exhibit 1.22 and any licenses obtained in the
future.
10.2.2 AGT Covenants.
(a) AGT covenants to take actions reasonably requested by GENOVO
prior to the date hereof with respect to [*] of the Effective Date.
(b) AGT and ARIAD covenant to take all actions necessary to obtain
and maintain any rights with respect to Technology in the Field under the
licenses listed on Exhibit 1.4 and any licenses obtained in the future.
10.3 GENOVO REPRESENTATIONS.
GENOVO represents and warrants to AGT as follows:
10.3.1 Document Production. It has delivered to AGT, subject to the
terms of a confidentiality agreement, full and complete copies of the following
documents, and any amendments thereto or replacements thereof, with certain
terms redacted: [*] (collectively, the "Prior Documents") and that GENOVO has
the right to deliver complete copies of the Prior Documents, with such terms
redacted, to third parties, pursuant to confidentiality agreements, in
connection with any prospective Partnering Project. GENOVO is in compliance with
all material terms of the Prior Documents and is not in default thereunder.
10.3.2 Core Technology. It has and will have the right under the
Prior Documents, and to the best of its knowledge, information and belief, it
otherwise has and will have the right to use for the benefit of the Joint
Venture in the Field and to license as contemplated herein all "Core Technology"
as defined in the [*], whether such Core Technology exists as of the Effective
Date or is later developed pursuant to such Sponsored Research Agreement or any
successor thereof.
10.4 AGT REPRESENTATIONS.
10.4.1 Document Production. It has delivered to GENOVO, subject to
the terms of a confidentiality agreement, full and complete copies of the
following documents, and any amendments thereto or replacements thereof: [*]
(collectively, the "AGT Documents") and that AGT has the right to deliver
complete copies
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of the AGT Documents, with material financial terms redacted, to third parties,
pursuant to confidentiality agreements, in connection with any prospective
Partnering Project. AGT and/or ARIAD is in compliance with all material terms of
the AGT Documents and is not in default thereunder.
10.4.2 Core Technology. It has and will have the right under the
AGT Documents, and to the best of its knowledge, information and belief, it
otherwise has and will have the right to use for the benefit of the Joint
Venture in the Field and to license as contemplated herein all AGT Technology.
11. INDEMNIFICATION
11.1 INDEMNIFICATION OF AGT BY GENOVO.
GENOVO shall indemnify, defend and hold harmless AGT, its
Affiliates and their respective directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "AGT Indemnitees"), against
any liability, damage, loss or expense (including reasonable attorneys' fees and
expenses of litigation) incurred by or imposed upon the AGT Indemnitees, or any
one of them, in connection with any claims, suits, actions, demands or judgments
of third parties, including without limitation personal injury and product
liability matters and claims of suppliers and GENOVO employees (except in cases
where such claims, suits, actions, demands or judgments result from a material
breach of this Agreement, gross negligence or willful misconduct on the part of
AGT) arising out of any actions of GENOVO in the performance of the R&D Program,
the use by the Joint Venture or any Licensee of the GENOVO Technology or the
development, testing, production, manufacture, promotion, import, sale or use by
any person of any Product which is manufactured or sold by GENOVO or by an
Affiliate, licensee, sublicensee, distributor or agent of GENOVO other than a
Licensee or AGT.
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11.2 INDEMNIFICATION OF GENOVO BY AGT.
AGT shall indemnify, defend and hold harmless GENOVO and its
Affiliates and their respective directors, officers, employees, and agents and
their respective successors, heirs and assigns (the "GENOVO Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the GENOVO
Indemnitees, or any one of them, in connection with any claims, suits, actions,
demands or judgments of third parties, including without limitation personal
injury and product liability matters and claims of suppliers and AGT employees
(except in cases where such claims, suits, actions, demands or judgments result
from a material breach of this Agreement, gross negligence or willful misconduct
on the part of GENOVO), arising out of any actions of AGT in the performance of
the R&D Program, the use by the Joint Venture of the AGT Technology or the
development, testing, production, manufacture, promotion, import, sale or use by
any person of any Dimerizer Drug, Apoptosis Dimerizer or Product which is
manufactured or sold by AGT or by an Affiliate, licensee, sublicensee,
distributor or agent of AGT other than a Licensee or GENOVO.
11.3 WARRANTY DISCLAIMER.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, NEITHER
PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, SERVICES, RIGHTS
OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING.
11.4 LIMITED LIABILITY.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER AGT NOR GENOVO WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
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DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
TECHNOLOGY OR SERVICES.
12. DISPUTE RESOLUTION
12.1 DISPUTE RESOLUTION.
12.1.1 General. In the event of any dispute, difference or question
arising between the parties in connection with this Agreement, the construction
thereof, or the rights, duties or liabilities of either party, and which dispute
cannot be amicably resolved by the good faith efforts of the persons designated
under Section 3.7, then such dispute shall (i) be resolved by non-binding
mediation conducted in the manner set forth in Section 12.1.2, and (ii) in the
event that such dispute is not amicably resolved by such non-binding mediation,
shall be resolved by binding arbitration as set forth in Section 12.1.3.
12.1.2 Mediation. In the event of the occurrence of a dispute which
cannot be amicably resolved by the good faith efforts of the persons designated
under Section 3.7, either party may, by notice to the other party, commence a
non-binding mediation to resolve such dispute by providing written notice to the
other party, which notice (a "Mediation Notice") shall inform the other party of
such dispute and the issues to be resolved and shall contain a list of five (5)
recommended individuals to serve as the mediator. Within ten (10) business days
after the receipt of such Mediation Notice, the other party shall respond by
written notice to the party initiating mediation, which notice shall contain a
list of five (5) recommended individuals to serve as the mediator and which may
add additional issues to be resolved. The recommended mediators shall be
individuals with experience in the biotechnology and/or pharmaceutical industry
and shall not be any employee, director, shareholder or agent of either party or
of an Affiliate or subsidiary of either party, or otherwise involved (whether by
contract or otherwise) in the affairs of either party. If, within twenty (20)
business days after receipt of such Mediation Notice, the parties shall have
been unable to mutually agree upon an individual to serve as a mediator, then
such dispute shall be settled by final and binding
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arbitration conducted in the manner described in Section 12.1.3. If, within
twenty (20) business days after receipt of such Mediation Notice, the parties
shall have mutually agreed upon an individual to serve as a mediator, then the
mediator shall conduct a mediation in an effort to resolve such dispute as
follows:
(i) Within thirty (30) business days after selection, the
mediator shall hold a hearing to resolve each of the issues identified by the
parties. Each party shall be represented at the hearing by up to two (2)
employees of such party, one of whom is an officer of such party, and may be
represented by counsel. The hearing shall be held in a mutually agreeable
location. No discovery will be conducted, unless the parties otherwise mutually
agree.
(ii) At least ten (10) business days prior to the date set
for the hearing, each party shall submit to the other party and the mediator a
proposed ruling on each issue to be resolved, which writing (A) may, in addition
to containing the proposed rulings, contain arguments or analyses of the facts
or issues and (B) shall be limited to not more than twenty (20) pages.
(iii) Each party shall be entitled to no more than three
(3) hours of hearing time to present oral testimony. The oral testimony of both
parties shall be presented during the same calendar day. Such time limitation
shall include any direct, cross or rebuttal testimony, but such time limitation
shall only be charged against the party conducting such direct, cross or
rebuttal testimony. It shall be the responsibility of the mediator to determine
whether the parties have had the presentation time to which they are entitled.
(iv) At the hearing, the mediator shall attempt to resolve
each issue in dispute between the parties. If the mediator shall be unable to
resolve any issue, the mediator shall provide the parties with the mediator's
non-binding ruling on each such issue. The mediator shall, in rendering his
decision, apply the substantive law of the State of Delaware, without
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giving effect to its principles of conflicts of law, and without giving effect
to any rules or laws relating to arbitration.
(v) If the mediator has not been able to resolve each
issue, each issue remaining in dispute shall be settled by final and binding
arbitration conducted in the manner described in Section 12.1.3 below. At any
such arbitration or any subsequent legal proceeding, neither any rulings of the
mediator, any admissions or settlement offers made by any party at the mediation
nor any other information disclosed at the mediation may be introduced into
evidence. The mediation proceeding shall be confidential. Except as required by
law, no party shall make (or instruct the mediator to make) any public
announcement with respect to the proceedings or rulings of the mediator without
the prior written consent of each other party. The existence of any dispute
submitted to mediation, and the rulings of the mediator, shall be kept in
confidence by the parties and the mediator, except as required by applicable
law.
(vi) Each party shall pay its own costs (including,
without limitation, attorneys fees) and expenses in connection with such
mediation. The fees and expenses of the mediator shall be shared equally by the
parties.
12.1.3 Arbitration. Binding arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration panel shall be composed of three arbitrators, one
of whom shall be chosen by GENOVO, one by AGT and the third by the two so
chosen. If both or either of GENOVO or AGT fails to choose an arbitrator or
arbitrators within fourteen (14) days after receiving notice of commencement of
arbitration or if the two arbitrators fail to choose a third arbitrator within
fourteen (14) days after their appointment, the then President of the New York
office of the American Arbitration Association shall, upon the request of both
or either of the parties to the arbitration, appoint the arbitrator or
arbitrators required to complete the board or, if he shall decline or fail to do
so, such arbitrator or arbitrators
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shall be appointed by the Boston office of the American Arbitration Association.
(i) Exchange of Proposals. Within ten (10) days of the
appointment of the full arbitration panel, the parties shall exchange documents
setting forth their final detailed proposals for resolution of the matter in
dispute, together with a brief or other written memorandum supporting the merits
of their final proposal. The arbitration panel shall promptly convene a hearing,
at which time each party shall have an agreed upon time to argue and present
witnesses in support of its final proposal.
(ii) Selection of Final Proposal. The arbitration panel
shall select the proposal which most closely reflects a commercially reasonable
interpretation of the terms of this Agreement as the way to resolve the matter.
In making their selection, the arbitrators shall not modify the terms or
conditions of either party's final proposal nor shall the arbitrators combine
provisions from both final proposals. In making their selection, the arbitrators
shall consider the terms and conditions of this Agreement, the relative merits
of the final proposals, and the written and oral arguments of the parties. In
the event the arbitrators seek the guidance of the law of any jurisdiction, the
law of the State of Delaware shall govern.
(iii) Notification of Decision. The arbitrators shall make
their decision known to both parties as quickly as possible by delivering
written notice of their decision to both parties. The parties shall agree in
writing to comply with the proposal selected by the arbitration panel within
five (5) days of receipt of notice of such selection. The decision of the
arbitrators shall be final and binding on the parties, and specific performance
may be ordered by any court of competent jurisdiction.
(iv) Costs. The parties shall bear their own costs in
preparing for the arbitration. The costs of the arbitrators shall be equally
divided between the parties.
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13. MISCELLANEOUS
13.1 NOTICES.
All notices shall be in writing mailed via certified mail, return
receipt requested, courier, or facsimile transmission addressed as follows, or
to such other address as may be designated from time to time:
If to GENOVO: Genovo, Inc.
P.O. Box 42884
Philadelphia, PA 19101
Attn: Peter Neff,
Chairman and Chief Executive
Officer
With a copy to: Michael J. Lerner, Esq.
Crummy, DelDeo, Dolan, Griffinger
& Vecchione
One Riverfront Plaza
Newark, NJ 07102-5497
If to AGT: ARIAD Gene Therapeutics, Inc.
26 Landsdowne Street
Cambridge, MA 02139
Attn: Harvey J. Berger, M.D.,
Chairman and Chief Executive
Officer
With a copy to: Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
Notices shall be deemed given as of the date received.
13.2 GOVERNING LAW AND JURISDICTION.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware, U.S.A., without regard to the
application of principles of conflicts of law.
13.3 CURRENCY TRANSLATIONS.
All costs charged by either AGT or GENOVO to the Development and
Commercialization Reimbursement Accounts hereunder will be charged in the
currency or currencies in which the same are incurred. Any costs incurred by
either party in
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currencies other than United States Dollars will be converted to United States
Dollars as of the end of each calendar quarter using the median exchange rate
for such calendar quarter based on rates reported in The Wall Street Journal. In
charging any of the Reimbursement Accounts hereunder, the parties hereto shall
each bear all risks of exchange losses and/or currency restrictions, regardless
of when expenditures relating to the charging of such Reimbursement Accounts are
actually made by either party.
13.4 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of
the parties and their respective legal representatives, successors and permitted
assigns.
13.5 HEADINGS.
Section and subsection headings are inserted for convenience of
reference only and do not form a part of this Agreement.
13.6 COUNTERPARTS.
This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
13.7 AMENDMENT; WAIVER.
This Agreement may be amended, modified, superseded or canceled,
and any of the terms may be waived, only by a written instrument executed by
each party or, in the case of waiver, by the party or parties waiving
compliance. The delay or failure of any party at any time or times to require
performance of any provisions 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 instances, shall be deemed to be, or considered
as, a further or continuing waiver of any such condition or of the breach of
such term or any other term of this Agreement.
13.8 NO THIRD PARTY BENEFICIARIES.
Except as set forth in Articles 11.1 and 11.2 hereof, no third
party including any employee of any party to this
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Agreement, shall have or acquire any rights by reason of this Agreement.
13.9 ASSIGNMENT AND SUCCESSORS.
Neither this Agreement nor any obligation of a party hereunder may
be assigned by either party without the consent of the other which shall not be
unreasonably withheld, except that each party may assign this Agreement and the
rights, obligations and interests of such party, in whole or in part, to any of
its Affiliates, to any purchaser of all or substantially all of its assets or to
any successor corporation resulting from any merger or consolidation of such
party with or into such corporations.
13.10 FORCE MAJEURE.
Neither GENOVO nor AGT shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and neither shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of GENOVO or AGT. In event
of such force majeure, the party affected thereby shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
13.11 INTERPRETATION.
The parties hereto acknowledge and agree that: (i) each party and
its counsel reviewed and negotiated the terms and provisions of this Agreement
and have contributed to its revision; (ii) the rule of construction to the
effect that any ambiguities are resolved against the drafting party shall not be
employed in the interpretation of this Agreement; and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in a favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
13.12 INTEGRATION; SEVERABILITY.
This Agreement is the sole agreement with respect to the subject
matter hereof and supersedes all other agreements and understandings between the
parties with respect to same, including but not limited to the Confidentiality
Agreement
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between AGT and GENOVO dated August 6, 1996 (the "Superseded Confidentiality
Agreement"). If any provision of this Agreement is or becomes invalid or is
ruled invalid by any court of competent jurisdiction or is deemed unenforceable,
it is the intention of the parties that the remainder of the Agreement shall not
be affected.
13.13 FURTHER ASSURANCES.
Each of AGT and GENOVO agrees to duly execute and deliver, or cause
to be duly executed and delivered, such further instruments and do and cause to
be done such further acts and things, including, without limitation, the filing
of such additional assignments, agreements, documents and instruments, that may
be necessary or as the other party hereto may at any time and from time to time
reasonably request in connection with this Agreement or to carry out more
effectively the provisions and purposes of, or to better assure and confirm unto
such other party its rights and remedies under, this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
GENOVO, INC.
By: /s/ Peter Neff
---------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
Date: February 14, 1997
-------------------------------------
ARIAD GENE THERAPEUTICS, INC.
By: /s/ Harvey Berger
---------------------------------------
Title: Chief Executive Officer
-------------------------------------
Date: February 14, 1997
-------------------------------------
Agreed to and Acknowledged By ARIAD Pharmaceuticals, Inc., which
hereby approves and adopts the foregoing and guarantees the obligations of ARIAD
Gene Therapeutics, Inc. hereunder as fully as if it were a party to this
Agreement:
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey Berger
---------------------------------------
Title: Chief Executive Officer
-------------------------------------
Date: February 14, 1997
-------------------------------------
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EXHIBIT 1.4
AGT BACKGROUND TECHNOLOGY
A. Patent Documents
All U.S. and non-U.S. patent applications and patents which are
based and/or claim priority from the following applications
and/or from any priority applications relating thereto:
<TABLE>
<CAPTION>
DOCKET NO. OFFICIAL SERIAL NO. TITLE
<S> <C> <C> <C>
</TABLE>
[*]
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<PAGE> 68
B. Other Technology
AGT Background Technology includes inventions and discoveries, research and
development information, technical data and biological materials licensed under
or resulting from:
[*]
C. Additional AGT Background Technology includes knowledge, data, and tangible
materials, including negative results, relating to the following:
[*]
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EXHIBIT 1.22
GENOVO BACKGROUND TECHNOLOGY
A. Patent Documents
All U.S. and non-U.S. patent applications and patents based
on the following applications or on any of the priority
applications thereof:
<TABLE>
<CAPTION>
DOCKET NO. DESCRIPTION
<S> <C> <C>
</TABLE>
[*]
B. Other Technology
[*]
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<PAGE> 1
EXHIBIT 10.26
ARIAD PHARMACEUTICALS, INC. HAS OMITTED FROM THIS EXHIBIT 10.26 PORTIONS OF THE
AGREEMENT FOR WHICH ARIAD PHARMACEUTICALS, INC. HAS REQUESTED CONFIDENTIAL
TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE
AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH AN
ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
JOINT VENTURE MASTER AGREEMENT
BETWEEN
HOECHST MARION ROUSSEL, INC.
AND
ARIAD PHARMACEUTICALS, INC.
MARCH 4, 1997
<PAGE> 2
JOINT VENTURE MASTER AGREEMENT
This JOINT VENTURE MASTER AGREEMENT (the "Agreement") is entered into
as of March 4, 1997 by and between HOECHST MARION ROUSSEL, INC., a Delaware
corporation, having its offices at Route 202-206, P.O. Box 6800, Bridgewater,
New Jersey 08807-0800, U.S.A. ("HMRI"), and ARIAD PHARMACEUTICALS, INC., a
Delaware corporation, having its principal office at 26 Landsdowne Street,
Cambridge, Massachusetts 02139, U.S.A. ("ARIAD").
WHEREAS, the parties desire to enter into a joint venture in the form
of a limited liability company (the "Joint Venture" or "LLC") for the purposes
of combining and further developing their respective technologies in the area of
Functional Genomics in order to identify Candidate Genes, Validated Targets and
Validated Proteins for use in drug discovery; and
WHEREAS, the Joint Venture will perform research and will license the
results of such research to one or both of the parties and/or to other
licensees; and
WHEREAS, in order to implement the Joint Venture, the parties wish to
agree upon the terms thereof and to describe the agreements to be executed to
set forth in detail the terms and conditions of the Joint Venture.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS
Whenever used in this Agreement with an initial capital letter, the
terms defined in this Section 1 shall have the meanings specified.
1.1 "ACQUISITION" has the meaning set forth in Section 9.6.3.
1.2 "ADDITIONAL CAPITAL CONTRIBUTIONS" has the meaning set forth in Section
2.9.2(a).
1.3 "ADMINISTRATIVE SERVICES" has the meaning set forth in the Administrative
Services Agreement.
1.4 "ADMINISTRATIVE SERVICES AGREEMENT" has the meaning set forth
<PAGE> 3
in Section 4.1.1.
1.5 "AFFILIATE" means any corporation, firm, partnership or other entity which
directly or indirectly controls or is controlled by or is under common control
with a party to this Agreement. "Control" means ownership, directly or through
one or more Affiliates, of more than fifty percent (50%) of the shares of stock
entitled to vote for the election of directors, in the case of a corporation, or
more than fifty percent (50%) of the equity interests in the case of any limited
liability company or other type of legal entity, status as a general partner in
any partnership, or any other arrangement whereby a party controls or has the
right to control the Board of Directors or equivalent governing body of a
corporation or other entity.
1.6 "ANALOG PROTEIN DRUG" means a Protein or polypeptide, the discovery of which
was based on the identification of a Validated Protein or the Candidate Gene of
such Validated Protein, and which has been modified through a change in its
primary structure or sequence resulting in a functionally significant change.
1.7 "ANNUAL RESEARCH PLAN" means the written plan describing the scientific
activities to be carried out by the Joint Venture during each year pursuant to
this Agreement. Each Annual Research Plan will be set forth in a written
document prepared and approved by the Management Committee.
1.8 "ANTIBODY DRUG" means an antibody (monoclonal or polyclonal) or fragments or
constructs thereof.
1.9 "ANTISENSE DRUG" means any nucleic acid or a functional analog, derivative
or homologue thereof which is complementary to a segment of DNA of a Gene or
such Gene's cognate RNA, the discovery of which was based on the identification
of a Validated Target or the Candidate Gene of such Validated Target, and which,
upon delivery by any means, alters the transcription, processing, elaboration,
RNA expression, or protein production of or by such Gene.
1.10 "ARIAD BACKGROUND TECHNOLOGY" means Technology owned or
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<PAGE> 4
licensed by ARIAD or its Affiliates that exists as of the date hereof or is
acquired by ARIAD or its Affiliates during the Term, that is useful in
Functional Genomics and that is applicable to the objectives of the Research
Program. ARIAD Background Technology is listed or described as such on Schedule
I to the ARIAD License Agreement, as such Schedule is amended from time to time.
1.11 "ARIAD LICENSE AGREEMENT" has the meaning set forth in Section 7.1.1.
1.12 "BIOINFORMATICS" means genomics software and databases (including, without
limitation, databases containing information pertaining to the sequence,
function and relationship of genomic information) and methods and tools for
creation, maintenance and analysis thereof (including, without limitation,
source and object code, maintenance files and documentation for software, and
computer systems).
1.13 "CANDIDATE GENE" means a Gene whose [*] cDNA sequence is known and whose
function has been determined, in whole or in part, in accordance with criteria
to be determined by the Management Committee.
1.14 "CERTIFICATE" has the meaning set forth in Section 2.1.
1.15 "CHANGE OF CONTROL" has the meaning set forth in Section 9.6.3.
1.16 "CLOSING" has the meaning set forth in Section 8.1.
1.17 "CLOSING DATE" has the meaning set forth in Section 8.1.
1.18 "CONFIDENTIAL INFORMATION" means all tangible embodiments of Technology and
all information (including but not limited to information about any element of
Technology) which is disclosed by one party to the other hereunder or under the
Joint Venture Agreements, except to the extent that such information (i) as of
the date of disclosure is demonstrably known to the party receiving such
disclosure or its Affiliates, as shown by written documentation, other than by
virtue of a prior confidential disclosure to such party or its Affiliates; (ii)
as of the date of disclosure is in, or subsequently enters, the public domain,
-3-
<PAGE> 5
through no fault or omission of the party receiving such disclosure; or (iii) as
of the date of disclosure or thereafter is obtained from a third party free from
any obligation of confidentiality to the disclosing party.
1.19 "COPYRIGHT RIGHTS" means the rights and interests in and to copyrights in
any country, including without limitation, copyrights pertaining to
Bioinformatics or other software. "ARIAD Copyright Rights" means Copyright
Rights of ARIAD. "HMRI Copyright Rights" means Copyright Rights of HMRI.
1.20 "CROSS LICENSE AGREEMENT" has the meaning set forth in Section 7.1.5.
1.21 "DERIVATIVE PROTEIN DRUG" means a Protein, the discovery of which was based
on the identification of a Validated Protein or the Candidate Gene of such
Validated Protein, including, without limitation, species variant forms thereof,
amino acid variant forms thereof having [*] amino acid sequence identity and
truncated forms or fragments thereof.
1.22 "DIAGNOSTIC PRODUCT" means any product in the form of a device, compound,
kit or service, the discovery of which was based upon, or which utilizes, any
Candidate Gene, Validated Target or Validated Protein, which is intended to
predict, detect or identify a disease, determine the presence of a pathologic
condition or monitor the course of disease or therapy in humans.
1.23 "DRUG" means any product which is intended to treat and/or prevent a
disease or disorder in humans.
1.24 "EFFECTIVE DATE" means the date first written above.
1.25 "FIELD" means Functional Genomics.
1.26 "FUNCTIONAL GENOMICS" means the identification of Genes, and the function
of such Genes or the products thereof, and the interacting elements of pathways
involving those Genes.
1.27 "GENE" means a cDNA or a human gene or a family of such human genes or any
portion of such cDNA, gene or genes.
1.28 "GENE THERAPY DRUG" means a nucleic acid or a functional analog, derivative
or homologue thereof, the discovery of which was
-4-
<PAGE> 6
based on the identification of a Validated Protein or the Candidate Gene of such
Validated Protein, and which, upon delivery by any means, causes a gene product
encoded thereby to be expressed, but does not include an Antisense Drug or a
Vaccine.
1.29 "HMRI BACKGROUND TECHNOLOGY" means Technology owned or licensed by: (i)
HMRI or (ii) [*] of an Affiliate of HMRI [*] that exists as of the date hereof
or is acquired by any such party during the Term that is useful in Functional
Genomics and that is [*] of the Research Program. HMRI Background Technology is
listed or described as such on Schedule I to the HMRI License Agreement, as such
Schedule is amended from time to time. In the event of any restructuring of [*]
which involves the [*] HMRI and ARIAD agree to review in good faith the
definitions set forth in this Section 1.29 and in Section 1.5 and the provisions
of Section 7.1.2, and, to the extent they have the ability to do so, to modify
such definitions and provisions to achieve the same scope and inclusion of
entities and Technology as contemplated at the time of execution of this
Agreement.
1.30 "HMRI LICENSE AGREEMENT" has the meaning set forth in Section 7.1.2.
1.31 "HSR ACT" has the meaning set forth in Section 13.14.
1.32 "JOINT VENTURE" means the limited liability company to be established
pursuant to Article 2 of this Agreement by the parties for the purposes set
forth therein.
1.33 "JOINT VENTURE AGREEMENTS" means this Agreement, the Administrative
Services Agreement, the ARIAD License Agreement, the Certificate, the Cross
License Agreement, the HMRI License Agreement, the Operating Agreement, the
Scientific Research Services Agreement, the Stock Purchase, Standstill and
Registration Rights Agreement and the Product Rights Agreement.
1.34 "JOINT VENTURE TECHNOLOGY" has the meaning set forth in Section 7.2.
1.35 "LICENSEE" means a third party licensee of rights from the Joint Venture.
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1.36 "MANAGEMENT COMMITTEE" means the committee of ARIAD and HMRI
representatives, established pursuant to Section 3.1 hereof.
1.37 "MARKET VALUE" means [*] of the average of the closing prices of ARIAD
Common Stock on the NASDAQ National Market System (or, if the ARIAD Common Stock
is not listed on the NASDAQ National Market System, the principal exchange or
interdealer quotation system on which the ARIAD Common Stock is listed) for the
[*] trading days preceding the date as of which Market Value is determined (the
"Average Closing Price"); provided, however, that Market Value shall be no
greater than [*] and no less than the minimum purchase price determined in
accordance with the following sentence. The minimum purchase price shall be [*]
at the Closing and shall increase by [*] on each January 1 after the Closing.
Notwithstanding the foregoing, if the Average Closing Price is greater than [*]
Market Value shall mean the Average Closing Price.
1.38 "MASTER RESEARCH PLAN" means the written plan describing the scientific
research and other activities to be carried out by the Joint Venture attached as
Schedule I to this Agreement, and as reflected in the Annual Research Plans.
1.39 "MEMBERS" has the meaning set forth in Section 2.1.
1.40 "OPERATING AGREEMENT" has the meaning set forth in Section 2.1.
1.41 "OTHER PRODUCTS" means any product (e.g., a cosmetic or veterinary product)
which does not comprise a Small-molecule Drug, Peptidomimetic Drug, Antisense
Drug, Protein Drug, Derivative Protein Drug, Analog Protein Drug, Protein
Mimetic Drug, Gene Therapy Drug, Vaccine, Antibody Drug or Diagnostic Product.
1.42 "PATENT RIGHTS" means the rights and interests in and to issued patents and
pending patent applications (which for purposes of this Agreement shall be
deemed to include certificates of invention and applications for certificates of
invention and priority rights) in any country, including all substitutions,
continuations, continuations-in-part, divisions, and renewals, all letters
patent granted thereon, and all reissues, reexaminations
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and extensions thereof, whether owned or licensed in by a party with the right
to sublicense. "ARIAD Patent Rights" means Patent Rights with respect to ARIAD
Background Technology. "HMRI Patent Rights" means Patent Rights with respect to
HMRI Background Technology. "Joint Venture Patent Rights" means Patent Rights
with respect to Joint Venture Technology.
1.43 "PEPTIDOMIMETIC DRUG" means a synthetic organic molecule which is a mimetic
of, or is designed or developed, using computational, medicinal or combinatorial
chemistry techniques, to interact with a Validated Target and which incorporates
key structural features of a peptide or Protein which interacts with such
Validated Target.
1.44 "PRINCIPAL OFFICE" means the portion of the facility located at 26
Landsdowne Street, Cambridge, Massachusetts dedicated for the business
activities and operations of the Joint Venture, and the mechanical, laboratory,
office and common areas shared with ARIAD supporting those portions of the
facility.
1.45 "PRODUCT" means any product that comprises a Small-molecule Drug,
Peptidomimetic Drug, Antisense Drug, Protein Drug, Derivative Protein Drug,
Analog Protein Drug, Protein Mimetic Drug or Gene Therapy Drug; provided,
however, that Product shall not include any Diagnostic Product, Vaccine,
Antibody Drug or Other Product.
1.46 "PRODUCT RIGHTS AGREEMENT" has the meaning set forth in Section 7.4.
1.47 "PROTEIN" means any of a class of high molecular weight polymer compounds
composed of a variety of amino acids joined by peptide linkages, including
aggregates and hybrids thereof, as well as naturally post-translationally
modified variants thereof (e.g., glycosylated proteins) and chemically modified
versions thereof (e.g., pegylated or liposomally encapsulated proteins).
1.48 "PROTEIN DRUG" means a Validated Protein used as a Drug.
1.49 "PROTEIN MIMETIC DRUG" means a synthetic organic molecule which is a
mimetic of, or is designed or developed using computational, medicinal or
combinatorial chemistry techniques to incorporate the key properties of a
Validated Protein.
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1.50 "RESEARCH PROGRAM" means the research program, to be conducted by the Joint
Venture pursuant to the Joint Venture Agreements and reflected in the Master and
Annual Research Plans.
1.51 "RESEARCH PROJECT" means a detailed project approved by the Management
Committee, the objective of which is to discover and research Candidate Genes,
Validated Targets and Validated Proteins, generally in a particular disease area
or pathophysiologic condition.
1.52 "SCIENTIFIC ADVISORY BOARD" or "SAB" means the Scientific Advisory Board
created pursuant to Section 5.4.
1.53 "SCIENTIFIC DIRECTOR" has the meaning set forth in Section 3.3.
1.54 "SCIENTIFIC RESEARCH SERVICES AGREEMENT" has the meaning set forth in
Section 5.2.2.
1.55 "SCIENTIFIC RESEARCH SERVICES" has the meaning set forth in the Scientific
Research Services Agreement.
1.56 "SMALL-MOLECULE DRUG" means a small-molecule therapeutic product identified
in an assay using a Validated Target, other than a Peptidomimetic Drug,
Antisense Drug, Protein Drug, Derivative Protein Drug, Analog Protein Drug,
Protein Mimetic Drug, Gene Therapy Drug, Vaccine, or Antibody Drug.
1.57 "SPECIAL PROJECT" has the meaning set forth in Section 5.2.10.
1.58 "STOCK PURCHASE, STANDSTILL AND REGISTRATION RIGHTS AGREEMENT" has the
meaning set forth in Section 2.8.1.
1.59 "SUPPLEMENTAL CAPITAL CONTRIBUTIONS" has the meaning set forth in Section
2.9.2(c).
1.60 "SUPPLEMENTAL CAPITAL LOAN" has the meaning set forth in Section 2.9.2(d).
1.61 "TECHNOLOGY" means and includes all inventions, discoveries, improvements
and proprietary materials, whether or not patentable or copyrightable, including
but not limited to samples of, and structural and functional information
pertaining to, chemical compounds, DNA vectors, cells, antibodies, other
proteins or other biological substances, including DNA sequence information
and
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information pertaining to the three-dimensional structure of proteins and other
substances; Bioinformatics and other software (in both source and object form)
and documentation with respect thereto; other data; formulations; techniques;
and know-how; including any negative results. "Technology" of a party includes
Technology owned by a party or licensed to that party with a right to grant
sublicenses.
1.62 "TERM" means the term of this Agreement as set forth in Article 9.
1.63 "TERRITORY" means all the countries and territories of the world.
1.64 "VACCINE" means any product which achieves a prophylactic or therapeutic
effect by inducing an antigen-specific humoral and/or cellular immune system
response.
1.65 "VALIDATED PROTEIN" means a Protein encoded by a Candidate Gene and which
has been determined by the Management Committee to be potentially suitable for
development into a Drug or potentially useful in the discovery of a Drug.
1.66 "VALIDATED PROTEIN POOL" has the meaning set forth in Section 7.4.2.
1.67 "VALIDATED TARGET" means a biological molecule (e.g., receptor, enzyme, ion
channel or protein domain) or Gene, the function of which has been identified
and which has been determined by the Management Committee to be potentially
useful in the discovery of a Drug.
1.68 "VALIDATED TARGET POOL" has the meaning set forth in Section 7.4.2.
1.69 "VISITING SCIENTIST" has the meaning set forth in Section 5.2.8.
1.70 "YEAR" or "YEAR" means a calendar year ending December 31.
2. FORMATION OF THE JOINT VENTURE
2.1 FORMATION OF LIMITED LIABILITY COMPANY. On or prior to the Closing Date,
ARIAD and HMRI shall establish or cause to be established a Limited Liability
Company (the "LLC" or "Joint
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Venture") under the laws of the State of Delaware in accordance with the
Delaware Limited Liability Company Act (the "Act"). For purposes of this
Agreement, ARIAD and HMRI may be referred to individually as a "Member" and
collectively as the "Members". The "Percentage Interest" in the LLC of each of
the two Members shall be fifty percent (50%). The Members shall, on or prior to
the Closing Date, take all actions necessary to enter into an Operating
Agreement setting forth the rights, obligations and duties of the Members with
respect to the LLC in the form of Exhibit A hereto (the "Operating Agreement"),
to assure the prompt filing of a Certificate of Formation of the LLC in the form
of Exhibit B hereto (the "Certificate") with the Secretary of State of the State
of Delaware as required by the Act, and to execute the other Joint Venture
Agreements to be executed on or prior to the Closing Date, all in form and
substance satisfactory to each of ARIAD and HMRI. Except as expressly provided
herein and in the Operating Agreement and the other Joint Venture Agreements,
the rights and obligations of the Members with respect to the LLC shall be
governed by the Act.
2.2 NAME OF THE JOINT VENTURE. The name of the Joint Venture shall be the
"HOECHST-ARIAD Genomics Center, LLC" or such other name as the Members may from
time to time determine. The Members shall cause to be filed on behalf of the
Joint Venture such corporate, assumed or fictitious name or foreign
qualification certificate or certificates as may from time to time be required
by law.
2.3 PRINCIPAL OFFICE. The initial principal place of business of the Joint
Venture shall be located at the Principal Office.
2.4 PURPOSE OF JOINT VENTURE. The purpose of the Joint Venture shall be to
pursue Functional Genomics in order to [*] and to do and perform all acts
necessary or desirable to carry out the foregoing purpose in accordance with the
terms and conditions of this Agreement and the other Joint Venture Agreements,
and to take any other action not prohibited under the Act or other applicable
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law.
2.5 SCOPE OF MEMBERS' AUTHORITY. Except as provided in the Operating Agreement,
no Member shall have any authority to act for, hold itself out as the agent of,
or assume any obligation or responsibility on behalf of any other Member or the
Joint Venture. All property and rights acquired by the Joint Venture by
purchase, license, or otherwise will be the property of the Joint Venture and
not of either of the Members. Title to all such property shall be held in the
name of the Joint Venture.
2.6 ADMINISTRATION. The program, operations, and business of the Joint Venture
shall be administered by the Management Committee as provided herein and in the
Operating Agreement, and pursuant to an Administrative Services Agreement and
Scientific Research Services Agreement to be entered into by ARIAD, HMRI and the
Joint Venture, all as further described in Articles 3, 4 and 5.
2.7 TERM. The term of the Joint Venture shall commence upon the filing of the
Certificate with the Secretary of State of the State of Delaware and the Joint
Venture shall continue for ten (10) years unless sooner terminated pursuant to
the terms hereof and of the Operating Agreement or pursuant to applicable law or
extended pursuant to the terms hereof or of the Operating Agreement.
2.8 PURCHASE OF PREFERRED STOCK.
2.8.1 Initial Purchase of Preferred Stock. Simultaneously with the
execution of this Agreement, HMRI and ARIAD will enter into a Stock Purchase,
Standstill and Registration Rights Agreement in the form of Exhibit C hereto
(the "Stock Purchase, Standstill and Registration Rights Agreement"), pursuant
to which HMRI will purchase from ARIAD, and ARIAD will sell to HMRI, at the time
of the Closing hereunder, Two Million Five Hundred Twenty-Six Thousand Three
Hundred Sixteen (2,526,316) shares of Series B Convertible Preferred Stock, $.01
par value per share ("Series B Preferred Stock") of ARIAD having an aggregate
purchase price of Twenty-Four Million Dollars ($24,000,000) (the "Initial
Purchase").
2.8.2 Additional Purchases of Preferred Stock. In addition to
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the Initial Purchase, pursuant to the terms and conditions of the Stock
Purchase, Standstill and Registration Rights Agreement, ARIAD may require HMRI
to purchase an additional number of shares of Series B Preferred Stock equal to
the aggregate purchase price to be paid divided by the Market Value then in
effect at any time during such years and for an aggregate purchase price equal
to [*] or the amounts listed below [*]:
Year Aggregate Purchase Price
---- ------------------------
[*] [*]
In addition, except as otherwise provided in Section 9.6.2, at any time
that ARIAD elects or is required to repay a Supplemental Capital Loan pursuant
to Section 2.9.2(d) hereof or Section 3.2(b) of the Operating Agreement,
pursuant to the terms and conditions of the Stock Purchase, Standstill and
Registration Rights Agreement, ARIAD may require HMRI to purchase an additional
number of shares of Series B Preferred Stock equal to [*] divided by the Market
Value then in effect.
2.9 CAPITAL CONTRIBUTIONS.
2.9.1 Initial Capital Contributions. Each of the Members shall
contribute in cash to the Joint Venture immediately following its formation the
amount set forth in this Section 2.9.1, which shall also be set forth in the
Operating Agreement. Except as provided in this Section 2.9.1 or in the
Operating Agreement, no Member shall be required to make any capital
contributions or loans to the Joint Venture. The Initial Capital Contribution
for HMRI shall be [*] and the Initial Capital Contribution for ARIAD shall be
[*].
2.9.2 Additional Capital Contributions.
(a) Call for Additional Capital Contributions. Pursuant to the
terms of the Operating Agreement, each Member shall make additional Capital
Contributions in cash to the Joint Venture ("Additional Capital Contributions").
Pursuant to the Operating Agreement, if Additional Capital Contributions are
required to be
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made by the Members, the Joint Venture shall provide each Member with written
notice at least thirty (30) days prior to the date such payment is due (the
"Call Notice"). Such Call Notice shall specify the amount of the Additional
Capital Contribution to be paid, the purposes for the Additional Capital
Contribution and the date by which payment must be made (the "Due Date"), which
shall not be less than thirty (30) days from the date of the Call Notice.
(b) Circumstances Requiring Additional Capital Contributions.
Pursuant to the terms of the Operating Agreement, each of the Members shall make
quarterly Additional Capital Contributions to the Joint Venture, in addition to
the amount of its Initial Capital Contribution, as will be recommended by the
Management Committee from time to time and as agreed to by the Members, for
purposes of funding the operating expenses of the Joint Venture, on the terms
and conditions set forth in the Operating Agreement. Notwithstanding the
foregoing, pursuant to the terms of the Operating Agreement, each of HMRI and
ARIAD shall provide its "Expense Sharing Percentage" of the following aggregate
Joint Venture operating expenses (which have been calculated on the basis of [*]
to the Joint Venture as Additional Capital Contributions during the following
years:
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Joint Venture
Year Operating Expenses
---- ------------------
1997 [*] $[*]
1998 $[*]
1999 $[*]
2000 $[*]
2001 $[*]
2002 $[*]
; provided, however, that in the event that capital contributions in any year
are less than such amounts, [*] Contributions are intended to be used primarily
for Reimbursable Costs (as such term is defined in the Scientific Research
Services Agreement and the Administrative Services Agreement), and any remainder
may be used for other expenses of the Joint Venture.
HMRI's Expense Sharing Percentage shall be fifty percent (50%), and
ARIAD's Expense Sharing Percentage shall be fifty percent (50%), subject to
adjustment as set forth in the Operating Agreement.
(c) Pursuant to the terms of the Operating Agreement, in the
event that capital contributions in excess of the Additional Capital
Contributions [*] are required in any of such years to cover expenses such as
patent costs, operating costs for Visiting Scientists, transactions with or
acquisitions of Technology from third parties, capital purchases beyond the
initial plan, contingencies or other expenses of the Joint Venture, the Members
shall discuss and determine whether to make supplemental capital contributions
("Supplemental Capital Contributions") by the Members of amounts which exceed
the amount set forth as Additional Capital Contributions for any year.
(d) Pursuant to the terms of the Operating Agreement, in order
to provide funds to ARIAD for ARIAD's share of any Supplemental Capital
Contributions, HMRI shall, on the date the Supplemental Capital Contribution is
due, at ARIAD's request, lend the necessary funds to ARIAD (a "Supplemental
Capital Loan"), which
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shall be repayable, together with interest at [*] with interest to be reset
quarterly on the first business day of each calendar quarter, out of (a) [*] or
(b) in cash. Pursuant to the terms of the Operating Agreement, each Supplemental
Capital Loan shall provide that it shall be repayable (i) [*] years after the
Effective Date if additional funding arrangements are not agreed upon pursuant
to Section 9.3.2 or (ii) on terms and conditions to be agreed upon as part of
such arrangements if additional funding arrangements are agreed upon pursuant to
Section 9.3.2; provided, however, that ARIAD may elect to prepay all or part of
any Supplemental Capital Loan or Loans at any time, and provided, further, that
all Supplemental Capital Loans outstanding at the time of consummation of a
Change of Control or Acquisition of ARIAD shall become due [*] after the
occurrence of the Change of Control or Acquisition of ARIAD, pursuant to Section
9.6.2.
(e) Funding for Incyte Subscription. In order to provide funds
to ARIAD in connection with ARIAD's subscription to the [*] database of Incyte
Pharmaceuticals, Inc. ("Incyte") pursuant to the Collaborative Agreement
between ARIAD and Incyte dated March 4, 1997 (the "Incyte Agreement"), HMRI
shall reimburse to ARIAD [*] for each subscription year during the Access Term
(as defined in the Incyte Agreement) through the subscription year ending [*]
within thirty (30) days of the receipt of an invoice from ARIAD evidencing
ARIAD's payment to Incyte of the Access Fee (as defined in the Incyte
Agreement) for ARIAD's LifeSeq database subscription.
(f) Funding for Additional Incyte Subscription(s). In
addition, in the event that [*] (i) continue its subscription to the LifeSeq
database for the period from [*] or thereafter (an "Incyte Extension") or (ii)
upgrade its subscription to include additional Incyte databases or services [*]
(an "Incyte Enhancement"), [*] will take the same action or actions. The cost of
any Incyte Extension or Incyte Enhancement by ARIAD will be borne by ARIAD. HMRI
shall reimburse to ARIAD [*] of the cost to
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ARIAD of any Incyte Extension. HMRI shall make a Supplemental Capital Loan to
ARIAD for (a) [*] of the cost to ARIAD of the subscription pursuant to any
Incyte Extension and (b) [*] cost to ARIAD of any Incyte Enhancement, within
thirty (30) days of the receipt of an invoice from ARIAD for such reimbursement
or a request from ARIAD for such Supplemental Capital Loan, which invoice or
request shall not be sent by ARIAD more than forty-five (45) days prior to the
date payment is due to Incyte.
(g) Failure to Make Additional Capital Contributions. Pursuant
to the terms of the Operating Agreement, if a Member fails to make an Additional
Capital Contribution as required by the Operating Agreement by the Due Date, the
Joint Venture shall so notify such Member, and such Member shall be deemed to be
in default of its obligations to make an Additional Capital Contribution, unless
such Member cures the default within thirty (30) days of receipt of such notice
by the Joint Venture. In the event of such a default, the procedures set forth
in the Operating Agreement shall then apply.
(h) Use of Additional Capital Contributions. The Additional
Capital Contributions shall be paid or delivered to the Joint Venture by wire
transfer or by a certified or bank cashier's check when payment thereof is
called for pursuant to the terms of the Operating Agreement. Pursuant to the
terms of the Operating Agreement: (i) such Additional Capital Contributions
shall be used for the purposes set forth in the Call Notice and (ii) all Capital
Contributions will be temporarily invested by the Joint Venture in short-term
United States Treasury securities, or other such investment grade instruments
and securities as determined by the Management Committee.
(i) Benefit. The Members shall have no personal liability, one
to another, for the payment or repayment of Capital Contributions made pursuant
to the Operating Agreement, except for Supplemental Capital Loans and as
otherwise provided in the Operating Agreement. The provisions of this Section
2.9 are not
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intended to be for the benefit of any creditor of the Joint Venture or other
person, and no such creditor or other person shall by reason of any such
foregoing provisions make any claim in respect of any debt, liability or
obligation (or otherwise) against the Joint Venture or any of the Members.
2.10 LOANS. Pursuant to the terms of the Operating Agreement, in the event the
Joint Venture's funds are insufficient to meet its costs, expenses, obligations,
contingencies, liabilities and charges, or to make any expenditure authorized by
this Agreement, the Operating Agreement or the other Joint Venture Agreements,
and Additional Capital Contributions or Supplemental Capital Contributions are
not required to be made pursuant to the Operating Agreement or additional funds
are not available from third parties on terms acceptable to the Members in their
sole discretion, then a Member or its Affiliate may (but shall not be required
to) advance such funds to the Joint Venture upon the prior approval of the
Management Committee. Any such advance by a Member or an Affiliate of a Member
pursuant to the Operating Agreement shall be evidenced by a promissory note and
shall bear interest, accrued annually, at a rate of interest equal to [*] with
interest to be reset quarterly on the first business day of each calendar
quarter. Any such loan made pursuant to the Operating Agreement shall be on a
full recourse basis to the Joint Venture but without recourse to the Members.
2.11 CAPITAL ACCOUNTS; CONTRIBUTIONS AND WITHDRAWAL OF CAPITAL. The Operating
Agreement shall contain appropriate provisions for the establishment and
maintenance of separate capital accounts for each Member, all in accordance with
the rules of Treasury Regulations Section 1.704-1(b)(2)(iv).
2.12 WITHDRAWAL OF CAPITAL; VOLUNTARY CONTRIBUTION OF CAPITAL. The Operating
Agreement shall provide that: (i) without the approval of the Management
Committee, no Member shall have the right to withdraw from the Joint Venture all
or any part of its Capital Contribution or to receive any funds or property from
the Joint
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Venture, or to make any voluntary contribution of capital to the Joint Venture,
except as provided in the Operating Agreement, (ii) no Member shall have any
right to demand and receive property other than cash of the Joint Venture in
return of its Capital Contribution except as may be specifically provided in the
Operating Agreement or the other Joint Venture Agreements and (iii) no interest
shall be paid on any Capital Contribution.
2.13 ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.
2.13.1 Allocation of Profits and Losses; Taxation. The Operating
Agreement shall provide that: (i) the net profits, net losses, net cash flow and
net proceeds of any disposition of property of the Joint Venture or upon
liquidation of the Joint Venture shall be allocated among the Members according
to the Percentage Interest of each Member or as otherwise set forth in the
Operating Agreement; (ii) tax losses shall be allocated on a preferential basis
[*]; (iii) the Percentage Interest of each Member shall be fifty percent (50%);
(iv) net profits and net losses shall, for both allocation and tax purposes, be
net profits and net losses as determined for reporting on the Joint Venture's
federal income tax return; and (v) except as otherwise set forth in the
Operating Agreement, for tax purposes, all items of depreciation, gain, loss,
deduction or credit shall be determined in accordance with the Internal Revenue
Code of 1986, as amended (the "Code"), and, except to the extent otherwise
required by the Code, allocated to and among the Members in the same percentages
in which the Members share in net profits and net losses.
2.13.2 Distributions; Taxation. The Operating Agreement shall provide
that: (i) the Management Committee shall have sole discretion, to the extent
consistent with the maintenance of an appropriate and prudent capital structure,
to determine whether all cash available in excess of operating and capital
expenditure requirements and provision for repayment of borrowings of the Joint
Venture shall be: (a) used to fund the further operations of the Joint Venture
or (b) paid out to the Members in proportion to their
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Percentage Interests on the date the distribution is authorized by the
Management Committee; (ii) the Joint Venture is authorized to withhold from
distributions, or with respect to allocations, to the Members and to pay over to
any federal, foreign, state or local government any amounts required to be so
withheld pursuant to the Code or any provisions of any other federal, foreign,
state or local law and; (iii) all amounts withheld pursuant to the preceding
sentence with respect to any distribution or allocation shall be treated as
amounts distributed to the Members with respect to which such amounts were
withheld pursuant to this Section 2.13.2 for all purposes of the Operating
Agreement.
2.14 TAX MATTERS MEMBER. The Operating Agreement shall provide that ARIAD shall
serve as the tax matters Member for the Joint Venture (the "Tax Matters
Member"), with such duties and responsibilities as shall be enumerated in the
Operating Agreement and that the Joint Venture shall indemnify and reimburse the
Tax Matters Member for all expenses, including legal and accounting fees,
claims, liabilities, losses and damages incurred in connection with any
administrative or judicial proceeding with respect to the tax liability of the
Joint Venture and its Members, all as provided in the Operating Agreement.
2.15 LIMITATION OF LIABILITY. Each Member's liability shall be limited as set
forth in the Operating Agreement, the Act, and other applicable law. Except as
required pursuant to the Act or as otherwise provided in the Operating
Agreement, a Member will not be personally liable for any debts or losses of the
Joint Venture beyond the Member's Capital Contributions.
2.16 LIABILITY FOR CERTAIN ACTS. The Members shall perform their duties in good
faith, in a manner they reasonably believe to be in the best interests of the
Joint Venture, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances. Except as otherwise provided in
the Operating Agreement, each Member (including its Affiliates and their
respective officers, directors, partners, employees,
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shareholders and agents) who so performs such duties shall not have any
liability by reason of being or having been a Member of the Joint Venture.
Except as otherwise provided herein or in the Operating Agreement, no Member
(including its Affiliates and their respective officers, directors, partners,
employees, shareholders and agents) shall be liable to the Joint Venture or to
any Member for any loss or damage sustained by the Joint Venture or any Member,
unless the loss or damage shall have been the result of fraud, deceit, gross
negligence, willful misconduct, or a wrongful taking by the Member (including
its Affiliates and their respective officers, directors, partners, employees,
shareholders and agents).
2.17 INDEMNIFICATION OF MEMBERS.
(a) Pursuant to the terms of the Operating Agreement, to the
maximum extent permitted from time-to-time under the Act, each Member (including
its Affiliates and their respective officers, directors, partners, employees,
shareholders and agents) shall be entitled to indemnity from the Joint Venture
for any liability incurred and/or for any act performed by them within the scope
of the authority conferred on them by the Joint Venture Agreements and/or for
any act omitted to be performed, except in any case where the alleged act or
failure to act giving rise to the claim for indemnification is a result of
fraud, deceit, gross negligence, willful misconduct, or a wrongful taking by
such Member, which indemnification shall include all reasonable expenses
incurred, including reasonable legal and other professional fees and expenses.
(b) Pursuant to the terms of the Operating Agreement, to the
extent that the activities of a Member (including its Affiliates and their
respective officers, directors, partners, employees, shareholders and agents),
other than in connection with performing its obligations under the Joint Venture
Agreements (a "Non-Joint Venture Activity"), gives rise to a claim or
litigation, such Member shall indemnify the Joint Venture and each other Member
(including its Affiliates and their respective officers, directors,
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partners, employees, shareholders and agents) of the Joint Venture who was or is
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, which arises by reason
of the Non-Joint Venture Activities of the indemnifying Member or by reason of
fraud, deceit, gross negligence, willful misconduct, or a wrongful taking by the
Member (including its Affiliates and their respective officers, directors,
partners employees, shareholders and agents), against all expenses (including
attorneys' fees and expenses), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by the Joint Venture or the indemnified Member
in connection with such action, suit or proceeding. No amount paid hereunder
shall be treated as a Capital Contribution or a loan to the Joint Venture by the
Member making such payment.
2.18 OTHER BUSINESS ACTIVITIES OF MEMBERS. The Members acknowledge that each
Member and its Affiliates are engaged in drug discovery, drug development and
other activities which may be competitive with the business of the Joint Venture
and the other Member. Each Member and its Affiliates may engage independently or
with others in other business ventures of every nature and description;
provided, however, that if [*]. Each party shall keep the Management Committee
promptly informed as to any Functional Genomics research undertaken by the party
in areas closely related to the objectives of the Research Projects. Neither the
Joint Venture nor any Member shall have any right by virtue of the Operating
Agreement or the other Joint Venture Agreements or the relationship created
thereunder in or to such other ventures or activities of an individual Member or
to the income or proceeds derived therefrom, except as set forth in this Section
2.18.
3. MANAGEMENT OF THE JOINT VENTURE
3.1 DECISION MAKING. Pursuant to the terms of the Operating Agreement, subject
to any express provisions, if any, of the other Joint Venture Agreements
reserving to either ARIAD or HMRI, as the case may be, the right to make
unilateral decisions concerning the
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Joint Venture, the general affairs and activities of the Joint Venture and the
research, development and licensing programs of the Joint Venture described
herein shall be administered, managed and coordinated by a committee (the
"Management Committee") consisting of three (3) representatives designated by
ARIAD (who shall be officers, directors or employees of ARIAD or an Affiliate of
ARIAD) and three (3) representatives designated by HMRI (who shall be officers,
directors or employees of HMRI or an Affiliate of HMRI), in each case reasonably
acceptable to the other party. The Management Committee may be given such name
as ARIAD and HMRI may agree upon from time to time.
3.2 MANAGEMENT COMMITTEE CO-CHAIRS. The Operating Agreement shall provide that:
(i) each Member shall designate one of its representatives on the Management
Committee as its "Co-Chair"; (ii) the initial Co-Chair designated by ARIAD shall
be Harvey J. Berger, M.D., and the initial Co-Chair designated by HMRI shall be
Norbert G. Riedel, Ph.D.; (iii) each of the Co-Chairs shall have authority to
act for the Joint Venture as specified by the Management Committee; and (iv)
each Member shall have the right at any time to substitute individuals, on a
permanent or temporary basis, for any of its previously designated
representatives to the Management Committee, including its Co-Chair, by giving
written notice thereof to the other Member.
3.3 APPOINTMENT OF SCIENTIFIC DIRECTOR AND OTHER OFFICERS. The Operating
Agreement shall provide that: (i) the Management Committee shall select a
Scientific Director of the Joint Venture (the "Scientific Director"), who shall
be responsible for setting the scientific direction of the Joint Venture in
conjunction with the Management Committee, directing the Joint Venture's
research programs, and managing the day-to-day operations of the Joint Venture,
and who shall be an officer, director or employee of ARIAD or HMRI (or their
respective Affiliates); (ii) the Management Committee shall also appoint a
Secretary-Treasurer and a Director of Finance and Administration of the Joint
Venture who shall keep
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the records of the Joint Venture and be authorized to act for the Joint Venture
within the level of authority designated by the Management Committee; and (iii)
the Scientific Director, Secretary-Treasurer and Director of Finance and
Administration shall report to the Co-Chairs of the Management Committee.
3.4 MANAGEMENT COMMITTEE MEETINGS.
3.4.1 Schedule of Meetings. The Operating Agreement shall provide that:
(i) the Management Committee shall meet at least semi-annually; (ii) meetings
shall also be convened upon the determination of the Co-Chairs, or either of
them, by written notice thereof to the members of the Management Committee, that
a meeting of the Management Committee is required to discuss and/or resolve any
matter or matters with respect to the Joint Venture; and (iii) meetings shall be
held in the Principal Office of the Joint Venture unless the Co-Chairs otherwise
agree; provided, however, that the parties may mutually agree to meet by
teleconference or video conference and may act by unanimous written action
without a meeting.
3.4.2 Quorum; Voting; Decisions. The Operating Agreement shall provide
that: (i) at each Management Committee meeting, attendance by at least [*]
members appointed by each party shall constitute a quorum; (ii) each Management
Committee member shall have [*] vote on all matters before the Management
Committee; provided, however, that the member or members of each party present
at a Management Committee meeting shall have the authority to cast the votes of
any of such party's members on the Management Committee who are absent from the
meeting; (iii) all decisions of the Management Committee shall be made by
majority vote of all of the members; (iv) whenever any action by the Management
Committee is called for hereunder during a time period in which the Management
Committee is not scheduled to meet, the Co-Chairs shall cause the Management
Committee to take the action in the requested time period by calling a special
meeting or by action without a meeting; (v) representatives of each party, in
addition to the
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members of the Management Committee, may attend Management Committee meetings at
the invitation of either party with the approval of the other party, which shall
not be unreasonably withheld; and (vi) in the event that the Management
Committee is unable to resolve any matter before it, such matter shall be
resolved as set forth in Section 3.8 hereof.
3.4.3 Minutes. The Operating Agreement shall provide that: (i) the
Management Committee shall keep accurate minutes of its deliberations which
record all proposed decisions and all actions recommended or taken; (ii) the
Co-Chairs shall designate a member of the Management Committee to prepare and
circulate a draft of the minutes of each meeting; and (iv) drafts of the minutes
shall be delivered to the Co-Chairs of the Management Committee within twenty
(20) days after the meeting. Draft minutes shall be edited by the Co-Chairs and
shall be issued in final form as soon as is practical, but not more than
forty-five (45) days after the meeting only with their approval and agreement as
evidenced by their signatures on the minutes.
3.4.4 Expenses. Pursuant to the terms of the Operating Agreement, ARIAD
and HMRI shall each bear all expenses of their respective Management Committee
members related to their participation on the Management Committee and
attendance at Management Committee meetings.
3.5 DECISION MAKING RESPONSIBILITIES. Pursuant to the terms of the Operating
Agreement, the Management Committee shall be solely responsible for making all
decisions regarding the operation and policies of the Joint Venture, not
expressly reserved to the Members or to one Member, including, but not limited
to, decisions with respect to the following matters:
(i) any amendments to or changes in the objectives and scope
of the Research Program described in Article 5 hereof;
(ii) approval of the Annual Research Plans;
(iii) the appointment of the Scientific Director of the Joint
Venture;
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(iv) the appointment of the members of the Scientific Advisory
Board of the Joint Venture;
(v) the appointment of consultants and scientific experts on
behalf of the Joint Venture;
(vi) calls for Additional Capital Contributions from the
Members;
(vii) business plans and annual budgets of the Joint Venture,
subject to the limitations on Additional Capital Contributions;
(viii) prioritization of Research Projects, Special Projects
and other activities of the Joint Venture;
(ix) annual financial statements, distributions to the
Members, investment and allocation of surplus funds, establishment of reserves
out of earnings (including disposition of such reserves) and establishment of
accounting policy, including depreciation rates and accruals and internal
accounting controls;
(x) [*]
(xi) [*]
(xii) [*]
(xiii) [*]
(xiv) [*]
(xv) appointment of a Secretary-Treasurer and Director of
Finance and Administration of the Joint Venture;
(xvi) determination of levels of authority for the Management
Committee Co-Chairs, Scientific Director, Secretary-Treasurer and Director of
Finance and Administration;
(xvii) authorization of individuals to act on behalf of the
Joint Venture for particular matters or classes of matters (subject to the
authority of the Management Committee);
(xviii) maintenance of a list of Technology in accordance with
Section 7.3;
(xix) establishment and amendment of the criteria for
determining whether a Candidate Gene, Validated Target or Validated Protein has
been discovered by the Joint Venture; and,
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(xx) recommendations to the Members for modifications of the
selection procedures set forth in Section 7.4 and the Product Rights Agreement.
The representatives of a Member on the Management Committee shall at
all times be entitled to consult with that Member prior to taking any action as
members of the Management Committee. In addition, the Management Committee, as a
whole, may from time to time consult with, and act as directed by, the Members
on any matter related to the conduct and operations of the Joint Venture.
3.6 DECISIONS RESERVED TO THE MEMBERS.
Pursuant to the terms of the Operating Agreement, the Members shall
reserve to themselves the following decisions:
(i) [*]
(ii) capital contributions in excess of the amounts set forth
in Sections 2.9.2(b);
(iii) Supplemental Capital Contributions;
(iv) conduct of litigation involving the Joint Venture;
(v) hiring of legal counsel and independent public
accountants; and
(vi) modifications of the procedures set forth in Section 7.4
and the Product Rights Agreement.
3.7 ANNUAL BUDGET. The Operating Agreement shall provide that: (i) the
Management Committee shall annually adopt a budget for the Joint Venture; (ii)
the Management Committee shall use commercially reasonable efforts to adopt such
budget thirty (30) days prior to the beginning of each year; and (iii) such
budget may be amended from time to time by the Management Committee.
3.8 MANAGEMENT COMMITTEE DISPUTE RESOLUTION.
3.8.1 Reference to Senior Officials. In the event that the Management
Committee shall not be able to reach a decision or take an action on any matter
for which the Management Committee is responsible, or in the event that the
parties are unable to resolve any dispute involving any of the Joint Venture
Agreements, the matter in question shall be referred for final resolution to [*]
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(or, if [*] is also a member of the Management Committee, [*] if such person is
not an employee of ARIAD), and if [*] is an employee of ARIAD, then to [*] who
is not an employee of ARIAD, and to the [*] of Hoechst Marion Roussel (or, if
the [*] is a Member of the Management Committee, then to a senior officer of
HMRI designated by the Chief Executive Officer of HMRI who is not a member of
the Management Committee), respectively, or a person or persons designated by
each or both said officials.
3.8.2 Scientific Issues. In the event that a matter for dispute
resolution pursuant to Section 3.8.1 involves a scientific issue, and said
persons or their respective designees (none of whom may be a member of the
Management Committee) shall be unable to resolve such matter after reasonable
efforts to do so and after the passage of a reasonable period of time under the
relevant circumstances, in any event not to exceed [*], each party shall, at its
own expense, appoint an unaffiliated scientific expert to advise such persons on
the matter. The scientific experts shall be chosen based on their experience and
expertise in the particular type of issue which is unresolved. The experts shall
render a written advisory opinion to such persons, [*].
3.8.3 Budget Disputes. In the event that the Management Committee is
unable to adopt an annual budget for the Joint Venture (or amend such budget as
required from time to time) within the annual limitations as set forth in
Section 3.2(a) of the Operating Agreement, the matter shall be resolved in
accordance with the procedures set forth in Section 3.8.1; provided, however,
without the approval of the Members, such budget shall be limited to the amount
of Additional Capital Contributions [*] set forth in Section 3.2(a) of the
Operating Agreement, and such dispute shall not be subject to the dispute
resolution procedures set forth in Section 12.1. In the event that a dispute
regarding an annual budget is not resolved in accordance with the procedures set
forth in Section 3.8.1, the amount of the annual budget shall be the amount set
forth for the year in question in Section 3.2(a) of the Operating
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Agreement, excluding any carry-forward amounts. Notwithstanding any provision
contained herein or in the other Joint Venture Agreements to the contrary, the
parties agree that any decision as to whether to make Supplemental Capital
Contributions shall be reserved solely to the Members and such decision shall
not be subject to the dispute resolution procedures set forth in Section 3.8.1
or Section 12.1, and under no circumstance shall either Member be required to
make Supplemental Capital Contributions without the agreement of the Members.
3.9 INTERESTS OF THE PARTIES. Notwithstanding any other provisions of this
Agreement, all decisions made and all actions taken by the Management Committee
with respect to any Joint Venture matter shall be made or taken in the best
interest of the Joint Venture.
4. OPERATIONS OF THE JOINT VENTURE
4.1 PROVISION OF ADMINISTRATIVE SERVICES; COMPENSATION.
4.1.1 Services. Immediately following formation of the LLC as set forth
in Section 2.1, ARIAD and HMRI agree to enter into and agree to cause the Joint
Venture to enter into an Administrative Services Agreement in the form of
Exhibit D hereto (the "Administrative Services Agreement") in form and substance
satisfactory to each of ARIAD, HMRI and the Joint Venture, pursuant to which
ARIAD will use commercially reasonable efforts to provide to the Joint Venture
the Administrative Services (as such term is defined in the Administrative
Services Agreement). Pursuant to the terms of the Administrative Services
Agreement, ARIAD shall provide the Administrative Services in a prompt manner
generally consistent with ARIAD's past practices in the conduct of its own
business and operations.
4.1.2 Compensation for Administrative Services; Determination of Cost.
The Administrative Services Agreement shall provide that:
(a) In consideration of the performance of the Administrative
Services by ARIAD, the Joint Venture shall pay to ARIAD the Reimbursable Costs
(as defined in the Administrative
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Services Agreement) incurred by ARIAD in providing such Administrative Services
on a quarterly basis as follows: the amount of the budget for the first calendar
quarter will be paid by the Joint Venture to ARIAD within thirty (30) days
following execution of the Administrative Services Agreement. The amount of the
budget for the second calendar quarter will be paid by the Joint Venture to
ARIAD on or before April 1, 1997. Thereafter, at least forty-five (45) days
prior to each calendar quarter, ARIAD will invoice the Joint Venture for an
amount equal to the budgeted amount for the following quarter as contained in
the annual budget (as amended), plus or minus the excess or deficiency of actual
expenditures during the calendar quarter preceding the invoice compared to the
budgeted amount for such quarter. The invoice will be paid by the Joint Venture
to ARIAD on or before the first day of the following quarter. For example, if
the annual budget for 1998 was $1,200,000 in equal quarterly amounts of
$300,000, and actual expenditures were $220,000 in the first quarter, $320,000
in the second quarter, and $300,000 in each of the third and fourth quarters,
then the Joint Venture would pay to ARIAD $300,000 on January 1, 1998, $300,000
on April 1, 1998, $220,000 on July 1, 1998 ($300,000 less $80,000 deficiency
from first quarter) and $320,000 on September 1, 1998 ($300,000 plus $20,000
excess from the second quarter).
(b) Each invoice shall set forth in reasonable detail the
determination of the cost upon which the amount to be reimbursed is based,
broken down by the nature of costs incurred in rendering Administrative Services
and the period to which such invoice relates. A copy of each invoice will be
sent to HMRI at the time it is sent to the Joint Venture. If HMRI or the Joint
Venture has objection to the amount of any invoice, the Joint Venture shall
nevertheless be obligated to pay the undisputed portion of the invoice in full,
and the parties shall promptly meet to resolve the matter. If the parties do not
resolve the matter within thirty (30) days, the Joint Venture or HMRI may
thereafter
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cause ARIAD's records with respect thereto to be audited in accordance with
Section 4.1.3. Following such audit, or at the request of either party after the
thirty (30) day period if no audit is requested, the Management Committee shall
endeavor in good faith to resolve any disagreement with respect to costs for
Administrative Services rendered by ARIAD to the Joint Venture under the
Administrative Services Agreement. If the Management Committee does not resolve
the matter, it shall be resolved in accordance with the procedures set forth in
Sections 3.8 and 12.1. Notwithstanding the foregoing, in the event that ARIAD
anticipates that the total amount to be paid to ARIAD for the Administrative
Services will exceed the annual budget approved by the Management Committee,
ARIAD shall promptly advise the Management Committee, which shall, in
consultation with ARIAD, determine whether to reduce the services to be provided
or amend the budget. If the Management Committee does not resolve the matter, it
shall be resolved in accordance with the procedures set forth in Section 3.8.
4.1.3 Maintenance of Books and Records; Audits. The Administrative
Services Agreement shall provide that: (i) ARIAD shall maintain true and
complete books of account containing an accurate record of the data necessary
for the proper determination and computation of all charges and costs to be
reimbursed by the Joint Venture to ARIAD under the terms of the Administrative
Services Agreement; provided, however, that ARIAD shall not be required hereby
to maintain any duplicate books of account or records; (ii) ARIAD shall retain
and maintain such records in accordance with ARIAD's records retention policy
for its other books and records; provided, however, that no such retained
records will be destroyed without the consent of HMRI (such consent not to be
unreasonably withheld); (iii) the Joint Venture and HMRI shall each have the
right, using the firm of independent certified public accountants employed by
ARIAD to conduct ARIAD's regular annual audit, or another national firm of
independent certified public
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accountants acceptable to ARIAD (whose approval of such accountants will not be
unreasonably withheld), to audit such books on any one occasion as to each
fiscal year within two (2) years after the delivery of year-end financial
statements for the fiscal year to which they relate for the purpose of verifying
such charges and costs; and (iv) such examination shall be made upon reasonable
advance notice to ARIAD during normal business hours at the Principal Office.
4.2 RENOVATION COSTS; START-UP EXPENSES. ARIAD, in consultation with HMRI, shall
prepare a plan and budget for the construction of the Joint Venture's
laboratories and offices at the Principal Office, and for equipping the
facility. ARIAD shall undertake to construct and renovate the Principal Office
and equip the laboratory in accordance with such plans and budget and shall use
commercially reasonable efforts to complete such construction within six (6)
months after approval of such plans and budget by ARIAD and HMRI. The parties
agree that all costs incurred by ARIAD under this Section 4.2 shall be borne by
ARIAD, but ARIAD shall not be obligated to spend in excess of [*]. If such costs
are less than [*], the remainder shall be used by ARIAD for additional equipment
and leasehold improvements, if any, for the Principal Office, during the Term of
the Joint Venture. In the event the parties determine that the costs of
constructing and renovating the Principal Office and equipping the laboratory is
greater than such amount, then the Members shall either revise the plans and
budget or shall agree upon a method for funding the excess costs.
4.3 INSURANCE. Pursuant to the Administrative Services Agreement, ARIAD, on
behalf of the Joint Venture, shall use commercially reasonable efforts to obtain
insurance for the Joint Venture, and in the name of the Joint Venture, against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated. Each of ARIAD and HMRI shall be
responsible for directors and officers liability insurance insuring their
respective members serving on the Management Committee, but
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neither party shall be required to maintain such insurance.
4.4 LITIGATION. Each of ARIAD, HMRI and the Joint Venture shall promptly notify
the others of any actions which are threatened or commenced against or by such
party which relates to or may affect the business or operations of the Joint
Venture.
4.5 ACCESS. At any time and from time to time during the term of the Joint
Venture and until completion of wind-down of the Joint Venture after
termination, authorized representatives of ARIAD and HMRI shall have access to
the Principal Offices, upon reasonable notice and at reasonable times for
specified periods, without further consideration and subject to reasonable
confidentiality undertakings, for the purpose of allowing such ARIAD and HMRI
authorized representatives to review the operations, books and records of the
Joint Venture and to assist with the business and purposes of the Joint Venture.
4.6 INDEPENDENT CONTRACTOR; RELATIONSHIP OF THE PARTIES.
(a) Nothing herein or in the Administrative Services Agreement
shall be deemed to constitute ARIAD (or any of ARIAD's employees or agents) to
be the agent, representative or employee of the Joint Venture. ARIAD shall be an
independent contractor and shall have responsibility for and control over the
details and means of performing the Administrative Services.
(b) Nothing herein or in the Administrative Services Agreement
shall be construed as: (i) an assumption by ARIAD of responsibility for the
operations of the Joint Venture except as expressly set forth in the
Administrative Services Agreement; (ii) an assumption by ARIAD of any financial
obligation of the Joint Venture; or (iii) the assumption by ARIAD of any
responsibility for work performed by outside suppliers employed directly by the
Joint Venture at the suggestion or recommendation of ARIAD.
4.7 COOPERATION. Each of ARIAD, HMRI and the Joint Venture shall use
commercially reasonable efforts to perform and fulfill all conditions and
obligations to be fulfilled or performed by it under
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this Article 4 and as provided in the Administrative Services Agreement.
5. STRUCTURE OF RESEARCH PROGRAM
5.1 RESEARCH PROGRAM; RESEARCH PLANS. In accordance with the Master Research
Plan, as updated and amended from time to time by the Annual Research Plans and
otherwise, the Joint Venture shall conduct the scientific research efforts in
the Research Program. The Annual Research Plan for the first year of the
Research Program shall be prepared by HMRI and ARIAD and approved by the
Management Committee as promptly as practical after the Closing Date. For each
year of the Research Program commencing with the second year, the Annual
Research Plan shall be prepared by the Management Committee no later than sixty
(60) days before the end of the prior year. Each Annual Research Plan shall set
forth: (i) the Research Projects to be pursued, (ii) the specific objectives of
each Research Project, (iii) a detailed plan to achieve such objectives and the
tasks to be performed and (iv) the therapeutic and/or pathophysiologic rationale
for each Research Project. The Management Committee shall review and monitor the
progress of the Research Program. In planning and monitoring the Research
Program, the Management Committee may propose that certain tasks and
responsibilities be assigned to the parties outside the Scientific Research
Services Agreement, taking into account each party's respective specialized
facilities, know-how, expert personnel and research expertise in order to avoid
duplication and enhance synergies among the parties. The Management Committee
may make adjustments in the Annual Research Plan at its meetings or otherwise as
it may determine.
5.2 PERFORMANCE OF SCIENTIFIC RESEARCH.
5.2.1 Scientific Research. Pursuant to the terms of the
Scientific Research Services Agreement, ARIAD, with the cooperation of HMRI,
will use commercially reasonable efforts to employ at the Joint Venture at least
[*] in order to accomplish such objectives.
5.2.2 Scientific Research Services Agreement.
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Immediately following formation of the LLC as set forth in Section 2.1, ARIAD
and HMRI agree to enter into and agree to cause the Joint Venture to enter into
a Scientific Research Services Agreement in the form of Exhibit E hereto (the
"Scientific Research Services Agreement") in form and substance satisfactory to
each of ARIAD, HMRI and the Joint Venture, pursuant to which ARIAD will use
commercially reasonable efforts to provide to the Joint Venture the Scientific
Research Services (as such term is defined in the Scientific Research Services
Agreement). Pursuant to the terms of the Scientific Research Services Agreement,
ARIAD will furnish scientific employees and consultants (e.g., the Scientific
Advisory Board), supervision (including the Scientific Director), services,
supplies and materials to perform the Scientific Research Services for the Joint
Venture and provide compensation and benefits, including, without limitation,
stock options, for the employees and certain consultants rendering the
Scientific Research Services. Pursuant to the terms of the Scientific Research
Services Agreement, ARIAD shall provide the Scientific Research Services in a
prompt manner generally consistent with ARIAD's past practices in the conduct of
its own business and operations.
5.2.3 Compensation for Scientific Research Services;
Determination of Cost. The Scientific Research Services Agreement shall provide
that:
(a) In consideration of ARIAD's provision of
facilities and the performance of the Scientific Research Services, the Joint
Venture shall pay to ARIAD the Reimbursable Costs (as defined in the Scientific
Research Services Agreement) incurred by ARIAD in providing such facilities and
services on a quarterly basis as follows: the amount of the budget for the first
calendar quarter will be paid by the Joint Venture to ARIAD within thirty (30)
days following execution of the Scientific Research Services Agreement. The
amount of the budget for the second calendar quarter will be paid by the Joint
Venture to ARIAD on or before April 1, 1997. Thereafter, at least forty-five
(45) days prior to
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each calendar quarter, ARIAD will invoice the Joint Venture for an amount equal
to the budgeted amount for the following quarter as contained in the annual
budget (as amended), plus or minus the excess or deficiency of actual
expenditures during the calendar quarter preceding the invoice compared to the
budgeted amount for such quarter. The invoice will be paid by the Joint Venture
to ARIAD on or before the first day of the following quarter. For example, if
the annual budget for 1998 was $12,000,000 in equal quarterly amounts of
$3,000,000, and actual expenditures were $2,200,000 in the first quarter,
$3,200,000 in the second quarter and $3,000,000 in each of the third and fourth
quarters, then the Joint Venture would pay to ARIAD $3,000,000 on January 1,
1998, $3,000,000 on April 1, 1998, $2,200,000 on July 1, 1998 ($3,000,000 less
$800,000 deficiency from first quarter) and $3,200,000 on September 1, 1998
($3,000,000 plus $200,000 excess from the second quarter).
(b) Each invoice shall set forth in reasonable detail
the determination of the cost upon which the amount to be reimbursed is based,
broken down by the nature of costs incurred in rendering Scientific Research
Services and the period to which such invoice relates. A copy of each invoice
will be sent to HMRI at the time it is sent to the Joint Venture. If the Joint
Venture or HMRI has objection to the amount of any invoice, the Joint Venture
shall nevertheless be obligated to pay the undisputed portion of the invoice in
full, and the parties shall promptly meet to resolve the matter. If the parties
do not resolve the matter within thirty (30) days, the Joint Venture or HMRI may
thereafter cause ARIAD's records with respect thereto to be audited in
accordance with Section 5.2.4. Following such audit, or at the request of either
party after the thirty (30) day period if no audit is requested, the Management
Committee shall endeavor in good faith to resolve any disagreement with respect
to costs for Scientific Research Services rendered by ARIAD to the Joint Venture
under the Scientific Research Services Agreement. If the Management
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Committee does not resolve the matter, it shall be resolved in accordance with
the procedures set forth in Sections 3.8 and 12.1. Notwithstanding the
foregoing, in the event that ARIAD anticipates that the total amount to be paid
to ARIAD for the Scientific Research Services will exceed the annual budget
approved by the Management Committee, ARIAD shall promptly advise the Management
Committee, which shall, in consultation with ARIAD, determine whether to reduce
the services to be provided or amend the budget. If the Management Committee
does not resolve the matter, it shall be resolved in accordance with the
procedures set forth in Section 3.8.
5.2.4 Maintenance of Books and Records; Audits. The Scientific
Research Services Agreement shall provide that: (i) ARIAD shall maintain true
and complete books of account containing an accurate record of the data
necessary for the proper determination and computation of all charges and costs
to be reimbursed by the Joint Venture under the terms of the Scientific Research
Services Agreement; provided, however, that ARIAD shall not be required hereby
to maintain any duplicate books of account or records; (ii) ARIAD shall retain
and maintain such records in accordance with ARIAD's records retention policy
for its other books and records; provided, however that no such retained records
shall be destroyed without the consent of HMRI (such consent not to be
unreasonably withheld); (iii) the Joint Venture and HMRI shall each have the
right, using the firm of independent certified public accountants employed by
ARIAD to conduct ARIAD's regular annual audit, or another national firm of
independent certified public accountants acceptable to ARIAD (whose approval of
such accountants will not be unreasonably withheld), to audit such books on any
one occasion as to each fiscal year within two (2) years after the delivery of
year-end financial statements for the fiscal year to which they relate for the
purpose of verifying such charges and costs; and (iv) such examination shall be
made upon reasonable advance notice to ARIAD during normal business hours at the
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Principal Office.
5.2.5 Reports to Management Committee. Pursuant to the
Scientific Research Services Agreement, ARIAD shall furnish to the Management
Committee a semi-annual written report, describing the progress of the work done
by it under the Scientific Research Services Agreement pursuant to the Annual
Research Plan in reasonable detail, at least fifteen (15) days prior to each
semi-annual meeting of the Management Committee.
5.2.6 Research Collaborations. In the event that the
Management Committee or its designee determines that any research task exceeds
the scope or capacity available under the Scientific Research Services
Agreement, the Joint Venture may contract with HMRI, ARIAD or a third party
(including any academic laboratory) to perform such research. Such research
contracts shall be on terms approved by the Management Committee or its
designee; provided, however, that if the party performing the research is HMRI
or ARIAD or an Affiliate of either, such agreement shall provide that any
Technology developed in such research shall become the property of the Joint
Venture.
5.2.7 Scientific Cooperation. Pursuant to the Scientific
Research Services Agreement, scientists at ARIAD and HMRI shall cooperate with
the Joint Venture in the performance of the Research Program and, subject to any
confidentiality obligations to third parties, shall exchange information and
materials as necessary to carry out the Research Program and to assist the Joint
Venture in the performance of the Research Program, but subject to the
provisions of Article 6. Such activities shall be deemed to be part of the Joint
Venture, and any Technology developed in such activities will be Joint Venture
Technology.
5.2.8 Visiting Scientists. Pursuant to the Scientific Research
Services Agreement, the parties expect that scientists from ARIAD and HMRI
("Visiting Scientists") may work at the Principal Office of the Joint Venture on
the Research Program or Special Projects (as defined in Section 5.2.10). Under
no
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circumstances shall any such Visiting Scientist be deemed an agent,
representative or employee of the Joint Venture, and each shall remain an
employee of HMRI or ARIAD, as the case may be. Notwithstanding the foregoing or
any agreement between the Visiting Scientist and his or her employer, any
Technology developed by a Visiting Scientist relating to his or her activities
for the Joint Venture will be Joint Venture Technology, except as otherwise
provided in Section 5.2.10. Salary, benefits, housing and relocation expenses of
Visiting Scientists shall be borne by the party by whom they are employed.
5.2.9 Specialized Facilities of the Parties. Each of ARIAD and
HMRI shall make available to the Joint Venture their specialized facilities,
such as [*], for reasonable use by the Joint Venture without charge in
fulfilling the Master Research Plan and Annual Research Plans. In addition, the
parties shall furnish to the Joint Venture specialized materials and reagents
without charge, for reasonable use by the Joint Venture in fulfilling the Master
Research Plan and Annual Research Plans, with each such task being performed by
the party with appropriate expertise and resources.
5.2.10 Special Projects for ARIAD and HMRI. Either party may
request the Joint Venture to perform a special project or projects (each, a
"Special Project") [*] for such requesting party, where the Joint Venture has
specialized Technology, resources, skills or equipment which are otherwise not
available to such requesting party and where the objectives of the Special
Project are [*]. Subject to the availability of the needed personnel, resources
and equipment, as determined by the Management Committee, the Joint Venture will
perform such Special Projects through the Scientific Research Services Agreement
and the Administrative Services Agreement; provided, however, that the Joint
Venture shall in no event be obligated to devote more than [*] full-time
employees (including Visiting Scientists) in the aggregate to all Special
Project(s) for ARIAD and HMRI at any time. [*] shall
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reimburse the Joint Venture for [*] of the fully burdened cost of performing the
Special Projects, and such costs shall not be deemed to be a part of the Joint
Venture's annual budget. Any Technology developed by the Joint Venture in any
Special Project for a Project Sponsor that is useful only in conducting the
Special Project or exploiting the results thereof, as determined by the
Management Committee, shall be assigned to the [*]. Any other Technology
developed by the Joint Venture in any Special Project shall be owned by the
Joint Venture, which shall grant to such Project Sponsor an irrevocable,
world-wide, exclusive, royalty-free license to such Technology for use by [*] or
exploiting the results thereof.
5.2.11 Bioinformatics and Information Services. Pursuant to
the Scientific Research Services Agreement, scientists from ARIAD and HMRI shall
cooperate with the Joint Venture to establish a Bioinformatics center as
required to achieve the objectives of the Research Program and each party's
internal use outside the Joint Venture, subject to the limitations set forth in
Section 7.2(c). The Management Committee will establish standards for the
network system to be used by the Joint Venture, which shall comply with the
security requirements of ARIAD and HMRI. The Joint Venture will provide overall
system administration and support for the network components at the Principal
Office. System administration and support for the network components at ARIAD
and HMRI will be the responsibility of the respective party.
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5.2.12 Compliance with Laws. ARIAD shall conduct the
Scientific Research Services under the Scientific Research Services Agreement,
and the parties shall conduct any other research conducted by them for the Joint
Venture, in compliance with all applicable laws, rules, regulations and orders.
5.2.13 Independent Contractor; Relationship of the Parties.
(a) Nothing in the Scientific Research Services Agreement
shall be deemed to constitute ARIAD or HMRI or any of ARIAD's or HMRI's
employees or agents to be the agent, representative or employee of the Joint
Venture. ARIAD and HMRI shall each be an independent contractor and shall have
responsibility for and control over the details and means of performing the
Scientific Research Services.
(b) Nothing in the Scientific Research Services Agreement
shall be construed as an assumption by ARIAD or HMRI of any financial obligation
of the Joint Venture or the assumption by ARIAD or HMRI of any responsibility
for work performed by outside third parties engaged directly by the Joint
Venture.
5.2.14 Cooperation. Each of ARIAD, HMRI and the Joint Venture
shall use commercially reasonable efforts to perform and fulfill all conditions
and obligations to be fulfilled or performed by it under this Section 5.2 and as
provided in the Scientific Research Services Agreement.
5.3 RECORDS AND REPORTS.
5.3.1 Record Keeping. ARIAD, HMRI and the Joint Venture shall
each maintain records in sufficient detail and in good form 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). ARIAD, HMRI and the
Joint Venture shall each provide the other the right to inspect and copy such
records to the extent reasonably required for the exercise of its rights and the
performance of its obligations under the Joint
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Venture Agreements; provided, however, that each party shall maintain such
records and the information of the other contained therein in confidence in
accordance with Article 6 and shall not use such records or information except
to the extent otherwise permitted by this Agreement.
5.3.2 Technical Reports. Each party shall keep the Management
Committee fully informed about the status of any part of the Research Program
performed by it outside the Scientific Research Services Agreement. In
particular, without limitation, each party shall provide the other party with
access to Technology and Confidential Information employed in or arising out of
the Research Program and provide such other information concerning the Research
Program as the other party shall reasonably request.
5.4 SCIENTIFIC ADVISORY BOARD.
5.4.1 Establishment and Functions. The Operating Agreement
shall provide that: (i) the Management Committee shall establish a Scientific
Advisory Board ("SAB") for the Joint Venture, consisting of experts in the Field
or related fields who may be members of the Scientific Advisory Board of either
ARIAD or HMRI or may be previously unaffiliated with either party; and (ii) the
SAB shall perform such functions and advise the Joint Venture on matters as the
Management Committee may from time to time determine, including, without
limitation, evaluation of the Research Program and the provision of advice on
scientific, technical and intellectual property matters.
5.4.2 Meetings. The Operating Agreement shall provide that:
(i) the SAB shall meet as needed in Cambridge, Massachusetts at the Principal
Office of the Joint Venture; and (ii) representatives of each party, in addition
to the members of the SAB, may attend such meetings at the invitation of either
party, with the approval of the other party.
5.4.3 Expenses. The Joint Venture shall bear all expenses of
the SAB members related to the participation of the SAB members on the SAB and
attendance at SAB meetings pursuant to the
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Scientific Research Services Agreement; provided, however, that when
appropriate, upon consultation with the Management Committee, ARIAD shall make
appropriate provision for the grant of ARIAD stock options to the SAB members
pursuant to the Scientific Research Services Agreement.
5.5 INCYTE AGREEMENTS. Simultaneously with the execution of this Agreement,
ARIAD, HMRI and Hoechst Aktiengesellschaft will collectively enter into a letter
agreement with Incyte in the form of Exhibit F hereto.
6. TREATMENT OF CONFIDENTIAL INFORMATION
6.1 CONFIDENTIALITY.
6.1.1 ARIAD and HMRI each recognize that the Confidential
Information of the Joint Venture and the other party (including minutes of
meetings of the Management Committee) constitute highly valuable and proprietary
confidential information. ARIAD and HMRI each agree that during the Term of the
Joint Venture and for five (5) years thereafter, but in no event less than ten
(10) years, it will keep confidential, and will cause its employees,
consultants, Affiliates and licensees and sublicensees to keep confidential, all
Confidential Information of the other party and the Joint Venture that is
disclosed to it, or to any of its employees, consultants, Affiliates and
licensees and sublicensees, pursuant to or in connection with this Agreement,
except to the extent that disclosure is required in accordance with the
performance of this Agreement. Neither ARIAD nor HMRI nor any of their
respective employees, consultants, Affiliates and licensees and sublicensees
shall use Confidential Information of the other party or the Joint Venture for
any purpose whatsoever except as expressly permitted in this Agreement.
6.1.2 ARIAD and HMRI each agree that any disclosure of the
Confidential Information of the Joint Venture and the other party (including
minutes of meetings of the Management Committee) to any of its officers,
employees, consultants or agents or those of any of its Affiliates and licensees
and sublicensees shall be
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made only if and to the extent necessary to carry out its rights and
responsibilities under this Agreement, shall be limited to the maximum extent
possible consistent with such rights and responsibilities and shall only be made
to persons who are bound by written confidentiality obligations to maintain the
confidentiality thereof and not to use such Confidential Information except as
expressly permitted by this Agreement. ARIAD and HMRI each agree not to disclose
the Confidential Information of the Joint Venture or the other party to any
third parties under any circumstance without the prior written approval from the
other party or the Joint Venture (such approval not to be unreasonably
withheld), except as required by law, and except as otherwise expressly
permitted by this Agreement. Each party shall take such action, and shall cause
its Affiliates and licensees and sublicensees to take such action, to preserve
the confidentiality of the Joint Venture's and each other's Confidential
Information as it would customarily take to preserve the confidentiality of its
own Confidential Information, and in no event, less than reasonable care. Each
party, upon the other's request, will return all the Confidential Information
disclosed to it by the other party pursuant to this Agreement, including all
copies and extracts of documents, within sixty (60) days of the request
following the termination of this Agreement; provided, however, that a party may
retain Confidential Information of the other party relating to any license or
right to use Technology or any Candidate Gene, Validated Target or Validated
Protein which survives such termination and one copy of all other Confidential
Information may be retained in inactive archives solely for the purpose of
establishing the contents thereof.
6.1.3 ARIAD and HMRI each represent that all of its employees
and the employees of its Affiliates, and any consultants to such party or its
Affiliates, participating in the Joint Venture's activities who shall have
access to Confidential Information of the Joint Venture or the other party are
bound by
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written obligations to maintain such information in confidence and not to use
such information except as expressly permitted herein. Each party agrees to
enforce confidentiality obligations to which its employees and consultants (and
those of its Affiliates) are obligated.
6.1.4 The Operating Agreement shall contain appropriate
provisions setting forth the confidentiality obligations between the Joint
Venture and each of the Members.
6.2 PUBLICITY. Neither party may disclose the terms of this Agreement or the
Joint Venture without the prior consent of the other party; provided, however,
that either party may make such a disclosure to the extent required by law;
provided, further, that prior to any such required disclosure the non-disclosing
party shall be allowed to review the proposed disclosure, and the party making
the disclosure shall seek confidential treatment for such disclosure as
permitted by applicable laws. The parties, upon the execution of this Agreement,
will agree to a news release for publication. Once any written statement is
approved for disclosure by the parties, either party may make subsequent public
disclosure of the contents of such statement without the further approval of the
other party.
6.3 PUBLICATION. It is expected that ARIAD, HMRI and the Joint Venture may wish
to publish the results of the research under the Research Program. In order to
safeguard patent rights, the party wishing to publish or otherwise publicly
disclose the results of any such research shall first submit a draft of the
proposed manuscript or disclosure to the Scientific Director for review, comment
and consideration of appropriate action at least four (4) weeks prior to any
submission for publication or other public disclosure. Within thirty (30) days
of receipt of the prepublication materials, the Scientific Director, with the
advice of the Co-Chairs of the Management Committee and patent counsel, will
advise the party seeking publication as to whether a patent application shall be
prepared and filed and the party seeking
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publication shall delay submission for thirty (30) days from such request or
until a patent application can be filed, whichever is sooner. Notwithstanding
the foregoing, the Members agree that the Co-Chairs of the Management Committee
may jointly [*].
6.4 SOLICITATION. During the Term of the Joint Venture, in the event either
party or its Affiliates wishes to hire or solicit for employment any person who
is employed by the other party or its Affiliates, the party wishing to hire or
solicit such person shall notify and consult with the Management Committee prior
to engaging in any such solicitation or hiring.
7. JOINT VENTURE TECHNOLOGIES AND RIGHTS TO RESEARCH
7.1 Patent and Technology Rights of Joint Venture. In order to
fulfill its obligations under the Research Program, the Joint Venture shall be
granted rights by the parties as follows:
7.1.1 ARIAD License to Joint Venture. Immediately following
the formation of the LLC as set forth in Section 2.1, ARIAD agrees to enter into
and the Members shall cause the Joint Venture to enter into a License Agreement
in the form of Exhibit G hereto (the "ARIAD License Agreement") in form and
substance satisfactory to each of ARIAD and the Joint Venture pursuant to which
ARIAD shall grant to the Joint Venture [*] license or sublicense, as the case
may be, in the Field to all ARIAD Background Technology and ARIAD Patent Rights
to research, discover, develop, have developed, make and have made Candidate
Genes, Validated Targets and Validated Proteins in accordance with the Research
Program and the terms of the ARIAD License Agreement. Except as set forth in
Section 7.1.3, any fees payable to any licensor as a result of the grant of any
such sublicense to the Joint Venture shall be paid by ARIAD. Set forth on
Schedule I to the ARIAD License Agreement is a list (with a reasonable
description thereof) designating all ARIAD Background Technology. The initial
Schedule I to the ARIAD License Agreement includes Technology which is the
subject of licensing or acquisition negotiations with third parties (which is so
designated under
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Section C of such Schedule I). To the extent ARIAD [*] acquire Technology after
the date hereof that [*] ARIAD shall so advise the Management Committee, and,
upon agreement by HMRI, [*].
7.1.2 HMRI License to Joint Venture. Immediately following
formation of the LLC as set forth in Section 2.1, HMRI agrees to enter into and
the Members shall cause the Joint Venture to enter into a License Agreement in
the form of Exhibit H hereto (the "HMRI License Agreement") in form and
substance satisfactory to each of HMRI and the Joint Venture pursuant to which
HMRI shall grant to the Joint Venture a [*], as the case may be, in the Field to
all HMRI Background Technology and HMRI Patent Rights to research, discover,
develop, have developed, make and have made Candidate Genes, Validated Targets
and Validated Proteins in accordance with the Research Program and the terms of
the HMRI License Agreement. Except as set forth in Section 7.1.3, any fees
payable to any licensor as a result of the grant of any such sublicense to the
Joint Venture shall be paid by HMRI. Set forth on Schedule I to the HMRI License
Agreement is a list (with a reasonable description thereof) designating all HMRI
Background Technology. The initial Schedule I to the HMRI License Agreement
includes Technology which is the subject of licensing or acquisition
negotiations with third parties (which is so designated under Section C of such
Schedule I). Subject to Section 1.29, to the extent HMRI or [*] acquires
Technology after the date hereof that [*], HMRI shall so advise the Management
Committee, and, upon agreement by ARIAD, [*].
7.1.3 Royalty to Third Parties. If either ARIAD or HMRI would
be obligated [*] as a result of granting any sublicense pursuant to Section
7.1.1 or 7.1.2, [*] shall reimburse the party granting the sublicense [*] within
[*] after receipt of an invoice for such payment from the party granting the
sublicense. The party receiving the license shall not be obligated [*], except
for those: (i) based on or resulting from [*] or (ii) as otherwise expressly
provided in the Joint Venture Agreements.
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7.1.4 Limitation on In-Licenses to Joint Venture.
Notwithstanding anything to the contrary in this Section 7.1, neither ARIAD nor
HMRI nor their respective Affiliates shall be obligated to make any disclosure
of or grant any license for any Technology if ARIAD, HMRI or their Affiliates
are prohibited by law or third party agreements from making such disclosure or
granting such license. Each party agrees to [*].
7.1.5 Licenses Between ARIAD and HMRI. Immediately following
formation of the LLC as set forth in Section 2.1, ARIAD and HMRI agree to enter
into a Cross License Agreement in the form of Exhibit I hereto (the "Cross
License Agreement") in form and substance satisfactory to each of ARIAD and HMRI
pursuant to which: (i) ARIAD shall grant to HMRI a [*] license or sublicense in
the Field under the ARIAD Background Technology and ARIAD Patent Rights for the
purposes of (a) developing, making, using and selling Products to which HMRI
shall have been granted rights pursuant to Section 7.4 hereof and the Joint
Venture Agreements, and (b) utilizing in the Field any Joint Venture Technology
licensed to HMRI pursuant to Section 7.2, but not for any other purpose; and
(ii) HMRI shall grant to ARIAD a [*] license or sublicense in the Field [*] for
the purposes of (a) developing, making, using and selling Products to which
ARIAD shall have been granted rights pursuant to Section 7.4 hereof and the
Joint Venture Agreements, and (b) utilizing in the Field any Joint Venture
Technology licensed to ARIAD pursuant to Section 7.2, but not for any other
purpose. If a Member cannot grant [*], then, subject to the approval of the
other Member, [*]. Notwithstanding the foregoing, neither Member shall have any
rights to the other Member's combinatorial, natural product or other compound
libraries or sources. If the party granting the sublicense or taking such other
steps (the "Grantor") would be obligated [*] based on or resulting from the
development, manufacture or sale of a Product by the other party (the "Grantee")
as a result of [*], the Grantee shall [*]. The Grantee shall not be obligated to
[*], except for those: (i)
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based on or resulting from [*] or (ii) as otherwise expressly provided in the
Joint Venture Agreements.
7.1.6 In-Licensing of Technology. Pursuant to the ARIAD
License Agreement and the HMRI License Agreement, respectively, and the Cross
License Agreement, ARIAD and HMRI will [*] in accordance with the terms hereof.
7.2 RIGHTS TO JOINT VENTURE TECHNOLOGY. Rights to Joint Venture Technology shall
be allocated as follows:
(a) The Joint Venture shall have sole and exclusive ownership
of all right, title and interest on a world-wide basis in and to any technology
(the "Joint Venture Technology") or patents (the "Joint Venture Patent Rights")
arising out of the Research Program or any Special Project, except as otherwise
provided in Section 5.2.10.
(b) Except with respect to Candidate Genes, Validated Targets,
Validated Proteins and Technology related to specific Research Projects, the
Joint Venture shall grant to each of ARIAD and HMRI a [*] (except as set forth
in the next to last sentence of this Section 7.2(b)) license, with the right to
grant sublicenses, to any Joint Venture Technology and Joint Venture Patents
which are designated by the Management Committee, using criteria to be
established by the Management Committee, as having been sufficiently developed
so as to be suitable for use outside the Joint Venture (i) for any use outside
the Field, and (ii) for use in the Field for projects and products other than
Research Projects and Products, Antibody Drugs, Vaccines and Other Products
derived from Validated Targets and Validated Proteins. In the event either ARIAD
or HMRI wish to license from the Joint Venture any rights to the Joint Venture
Technology and Joint Venture Patents outside the Field [*], any such license
shall be [*], and the parties agree to [*] and other terms of such a license;
provided, however, that neither party shall be obligated to agree that the other
shall[*]. If the Joint Venture [*] or resulting from the development,
manufacture or sale of a Product by the party receiving the license
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as a result of granting such licenses [*]. The party receiving the license shall
not be obligated to [*] except for those: (i) based on or resulting from [*] or
(ii) as otherwise expressly provided in the Joint Venture Agreements.
(c) Without limiting the generality of Section 7.2(b), the
Joint Venture shall grant to each of ARIAD and HMRI [*] license, with the right
to grant sublicenses, to any Bioinformatics developed or utilized by the Joint
Venture, for each party's internal use (including for uses in collaborations
with third parties); provided, however, that neither ARIAD nor HMRI shall have
access to the other party's proprietary data bases developed outside the Joint
Venture by virtue of such licenses.
(d) The Management Committee shall determine the extent to
which, and the terms of, arrangements for the possible licensing by the Joint
Venture of the Joint Venture Technology and Joint Venture Patents to potential
Licensees.
(e) ARIAD shall be responsible for filing, prosecuting,
maintaining and enforcing patent rights with respect to Joint Venture
Technology, in consultation with HMRI, in accordance with the terms of the
Scientific Research Services Agreement. HMRI shall, at ARIAD's request and in
consultation with ARIAD, file outside the United States any patent application
of the Joint Venture. The Joint Venture shall reimburse HMRI for out-of-pocket
costs incurred in such filings. ARIAD and HMRI will provide quarterly reports of
all patent filings undertaken on behalf of the Joint Venture to the Management
Committee and each other in a format approved by the Management Committee. With
respect to any Products as to which a party has rights pursuant to the Product
Rights Agreement, such party shall be responsible for filing, prosecuting,
maintaining and enforcing patent rights claiming inventions made by such party
with respect to such Products. Pursuant to the Product Rights Agreement, the
party with responsibility for prosecution shall furnish copies of relevant
filings and correspondence to the Joint Venture as reasonably
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requested by the Joint Venture and cooperate with the Joint Venture and the
other party to achieve consistency in prosecution of all patent applications
relating to the Research Program. In the event a Product is a Validated Protein,
responsibility for prosecuting, maintaining and enforcing patent rights shall be
effective from and after the time the relevant Validated Protein has been
selected as described in Section 7.4, in accordance with the terms of the
Product Rights Agreement. In the event Technology developed in a Special Project
is assigned to a Project Sponsor, the Project Sponsor shall assume
responsibility for filing, prosecuting, maintaining and enforcing patent rights
with respect to Technology assigned to it.
(f) ARIAD and HMRI shall each appoint a Patent Coordinator who
shall serve as such party's primary liaison with the other party on matters
relating to patent filing, prosecution, maintenance and enforcement. Each party
may replace its Patent Coordinator at any time by notice in writing to the other
party. The initial Patent Coordinators shall be:
For ARIAD: David L. Berstein
For HMRI: Stephen L. Nesbitt
7.3 REVIEW OF TECHNOLOGY.
(a) In the event either party becomes aware of Technology
believed to be useful in the Field or of any opportunity to license or otherwise
acquire such Technology, it shall notify the Management Committee or its
designees, providing reasonable details of the Technology and the terms on which
it may be available, as promptly as is reasonably practical, and subject to
confidentiality obligations to third parties and other legal obligations. The
Management Committee shall maintain and update a list of all such Technology.
The Management Committee or its designees will review such Technology and advise
the Members on the utility of such Technology in the Field. ARIAD and HMRI each
agrees that it will not in any way compete with the other to obtain rights to
any Technology brought by the other party to the
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Management Committee or its designees pursuant to this Section 7.3 or in any way
interfere with the other party's efforts to obtain rights to such Technology.
(b) In the event either party proposes to subscribe to a
database or Bioinformatics service other than the LifeSeq database or other
database or Bioinformatics service offered by Incyte or its affiliates, it shall
so advise the Management Committee, which shall determine whether or not the
Joint Venture should subscribe to such database or other Bioinformatics service.
The cost of any such database or other Bioinformatics service shall be funded
pursuant to Section 3.2 of the Operating Agreement, provided, however, that any
Supplemental Capital Contribution shall require the approval of the Members.
7.4 PRODUCT RIGHTS AGREEMENT. Immediately following the formation of the LLC as
set forth in Section 2.1, ARIAD and HMRI agree to enter into and agree to cause
the Joint Venture to enter into a Product Rights Agreement in the form of
Exhibit J hereto (the "Product Rights Agreement") in form and substance
satisfactory to the parties, which will provide for the following mechanism to
grant rights to ARIAD and HMRI to Candidate Genes, Validated Targets and
Validated Proteins developed by the Joint Venture:
7.4.1 Determination of Discovery of Candidate Genes, Validated
Targets and Validated Proteins. Whenever ARIAD, HMRI or the Joint Venture
believes it has discovered a Candidate Gene, Validated Target or Validated
Protein in the course of the Research Program, it shall promptly notify and
provide all relevant data to the Management Committee. Upon such notice (and on
its own initiative even without notice), the Management Committee shall
determine whether a Candidate Gene, Validated Target or Validated Protein has
been discovered by the Joint Venture utilizing criteria to be established by the
Management Committee and furnished to the parties in writing. The Management
Committee shall use its best efforts to establish the initial criteria by [*]
and shall have the right to amend the criteria from time to time. Regardless of
the
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date of determination of discovery by the Management Committee, any Candidate
Gene, Validated Target or Validated Protein will be deemed to have been
discovered at the earlier of disclosure of such Candidate Gene, Validated Target
or Validated Protein in: [*]. The required scope and contents of such disclosure
shall be determined by the Management Committee as part of the criteria for
determination of discovery of a Candidate Gene, Validated Target or Validated
Protein. Upon a determination by the Management Committee that a Validated
Target or Validated Protein has been discovered by the Joint Venture, the
Management Committee shall provide prompt written notice to each of ARIAD and
HMRI, and such Validated Targets and Validated Proteins shall be added to the
respective Pools, as described below.
7.4.2 Establishment of Validated Target Pool and Validated
Protein Pool. The Management Committee shall establish a Validated Target Pool
(the "Validated Target Pool") and a Validated Protein Pool (the "Validated
Protein Pool"). The [*] discovered by the Joint Venture shall constitute the
initial Validated Target Pool, and the [*] discovered by the Joint Venture shall
constitute the initial Validated Protein Pool, and additional Validated Targets
and Validated Proteins shall be added to the Pools as the Management Committee
determines that they have been discovered in accordance with Section 7.4.1. The
Management Committee shall provide prompt written notice to each of ARIAD and
HMRI of the establishment of each initial Pool. Validated Targets and Validated
Proteins will be deemed added to the Pools in the order in which they are
discovered; provided, however, that if the Management Committee later determines
that the contents of a Pool should have been different at the time of selection
by a party, the party which has made such selection will neither be required nor
entitled to return that selection to the Pool or otherwise change its selection.
In the event more than one Validated Target or Validated Protein is discovered
[*].
7.4.3 Procedure for Selecting Candidates from Pools.
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(a) As to each of the Validated Target Pool and Validated
Protein Pool, the selection procedures set forth below for ARIAD and HMRI shall
apply separately to each such Pool. As used below, the word "Pool" means the
Validated Target Pool or the Validated Protein Pool, and the word "Candidate"
means a Validated Target or a Validated Protein, as the case may be.
(b) Upon receipt from the Management Committee of notice of
creation of each initial Pool, [*]; provided, however, that within thirty (30)
days of receipt from the Management Committee of notice that the Validated
Target Pool is comprised of [*] and the Validated Protein Pool is comprised of
[*], with respect to each Pool, HMRI shall give written notice to the Management
Committee of [*].
(c) If [*] shall have the right to [*]. [*] to provide written
notice to the Management Committee of [*].
(d) If [*] within [*] shall then have the [*] by the
Management Committee. [*] to provide written notice to the Management Committee
of [*].
(e) If [*] shall then have the [*] by the Management
Committee. [*] to provide written notice to the Management Committee of [*]. If
[*] under the circumstances described in subparagraph (d) above, then [*]. [*]
shall have [*] described in subparagraph (d) to provide written notice to the
Management Committee of [*]. Whether or not [*] shall have [*] to provide
written notice to the Management Committee of [*]. If [*] under the
circumstances described in subparagraph (c) above, then [*] by the Management
Committee. [*] to provide written notice to the Management Committee of [*].
(f) It is the intention of ARIAD and HMRI that the selection
process for Candidates shall continue thereafter in a manner consistent with:
(i) [*].
(g) Notwithstanding the foregoing, at any time that ARIAD or
HMRI has the [*] right to select a Candidate from a Pool, such party may
exercise such right upon written notice to the
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Management Committee [*]. ARIAD and HMRI may [*] upon mutual agreement.
(h) Any selection of a Candidate by ARIAD or HMRI pursuant to
this Section 7.4 shall be deemed to have been made upon receipt by the
Management Committee of written notice thereof. In the event ARIAD or HMRI fails
to provide written notice to the Management Committee of a selection of a
Candidate from a Pool within such [*] day period for selection, [*] in
accordance with the procedures set forth in this Section 7.4. The Management
Committee shall promptly inform ARIAD or HMRI whenever the other has selected a
Candidate from a Pool, or failed or affirmatively decided not to select a
Candidate within any such [*] during which such party has a right to select a
Candidate.
7.4.4 Rights to Diagnostic Products, Vaccines, Antibody Drugs
and Other Products. The Joint Venture shall have sole and exclusive ownership of
all right, title and interest in any Diagnostic Product, Vaccine, Antibody Drug
or Other Product derived from any Candidate Gene, Validated Target, Validated
Protein or otherwise derived from the Research Program. The Management Committee
shall have sole discretion in determining whether to grant any licenses to
ARIAD, HMRI or third parties for the development, manufacture, use or sale of
any Diagnostic Product, Vaccine, Antibody Drug or Other Product, and the terms
and conditions of any such licenses, in order to maximize the value of the Joint
Venture.
7.4.5 Licenses to Drugs Derived from Validated Targets.
Pursuant to the terms of the Product Rights Agreement, effective upon selection
of a Validated Target by ARIAD or HMRI, the Joint Venture shall be deemed,
without further action, to have granted to the party selecting such Validated
Target [*] license under all Joint Venture Technology and Joint Venture Patent
Rights, and [*] to use such Validated Target for purposes of developing, making,
having made, using, having used, selling, having sold, offering for sale and
importing any Small-molecule
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Drug, Peptidomimetic Drug, or Antisense Drug. If the Joint Venture [*], the
party receiving the license[*] The party receiving the license [*], except for
those: (i) based on or resulting from [*] or (ii) as otherwise expressly
provided in the Joint Venture Agreements.
7.4.6 Licenses to Drugs Derived from Validated Proteins.
Pursuant to the terms of the Product Rights Agreement, effective upon selection
of a Validated Protein by ARIAD or HMRI, the Joint Venture shall be deemed,
without further action, to have granted to the party selecting such Validated
Protein [*] license under all Joint Venture Technology and Joint Venture Patent
Rights, and [*] sublicense (limited to the field and scope of the license to the
Joint Venture) under all licenses of Technology to the Joint Venture to use such
Validated Protein for purposes of developing, making, having made, using, having
used, selling, having sold, offering for sale and importing any Protein Drug,
Derivative Protein Drug, Protein Mimetic Drug, Analog Protein Drug or Gene
Therapy Drug. If the Joint Venture [*], the party receiving the license [*]. The
party receiving the license shall not be obligated [*], except for those: (i)
based on or resulting from [*] or (ii) as otherwise expressly provided in the
Joint Venture Agreements.
7.5 DILIGENCE AND PRODUCT REVERSION. Pursuant to the terms of the Product Rights
Agreement, with respect to each Validated Target or Validated Protein selected
by ARIAD or HMRI, the party selecting such Validated Target or Validated Protein
shall, by virtue of selecting the Validated Protein and without further action,
be deemed to have committed itself in good faith to apply [*], to diligently
pursue the discovery, development and/or commercialization of at least [*]
derived from such Validated Target or Validated Protein. Notwithstanding the
fact that, as set forth in Section 7.1.5, neither party has any rights to the
other party's combinatorial, natural product or other compound libraries or
services, if the party selecting the Validated Target or
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Validated Protein fails to utilize such diligent efforts or ceases to pursue for
any reason such Validated Target or Validated Protein, the relevant Validated
Target or Validated Protein [*], and the party which failed to utilize such
diligent efforts or ceased pursuit [*]. If [*] accepts the transfer of the
Validated Target or Validated Protein, by virtue of such transfer and without
further action it will be deemed to have received a license under Section 7.4.5
or Section 7.4.6, as the case may be, and to have [*], to diligently pursue the
discovery, development and/or commercialization of such Validated Target,
Validated Protein or Product. If the party which originally selected the
Validated Target or Validated Protein [*] as a result of the transfer of the
Validated Target or Validated Protein [*]. If the [*] does not wish to acquire
rights to such Validated Target or Validated Protein, or if, after acquiring
rights to such Validated Target or Validated Protein fails to utilize diligent
efforts or ceases to pursue for any reason such Validated Target or Validated
Protein, the relevant Validated Target or Validated Protein shall be [*].
7.6 RIGHTS TO VALIDATED TARGETS AND VALIDATED PROTEINS REMAINING IN POOL.
Pursuant to the Product Rights Agreement, the Management Committee shall have
the authority, at such times as the Management Committee deems appropriate, to
assess the Pools containing Candidates that each of ARIAD and HMRI has not
selected or has returned, for purposes of determining whether to grant any
licenses to third parties for rights to such Candidates previously unselected or
returned by ARIAD and HMRI. The Management Committee shall have sole discretion
in determining the terms and conditions of any such licenses.
7.7 ROYALTIES. Pursuant to the terms of the Product Rights Agreement:
(a) In the event ARIAD or HMRI develops a Product, that is [*]
Validated Target or Validated Protein or the associated Candidate Gene, it shall
pay a [*] royalty on its Net Sales (as such term is defined in the Product
Rights Agreement) and those of
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its Affiliates to the other party.
(b) In the event ARIAD or HMRI shall grant a sublicense to a
third party to make, use or sell a Product, that is [*] a Validated Target or
Validated Protein, the royalty shall be the lesser of the amount set forth in
subparagraph (a) above calculated on the sublicensee's Net Sales (as such term
is defined in the Product Rights Agreement) or [*] of the royalties actually
received from the sublicensee.
(c) In the event that ARIAD or HMRI shall be obligated to pay
royalties in excess of [*] its Net Sales and those of its Affiliates or
sublicensees to a third party with respect to a particular Product being
developed or sold by it under a license from the third party for a Gene or
Protein necessary to develop or sell such Product, then the paying party shall
be entitled to reduce the royalty payable hereunder to the other party by [*];
provided, however, that the royalty payable to the other party under
subparagraph (a) above shall not be reduced below [*] of Net Sales and the
royalty payable to the other party under subparagraph (b) above shall not be
reduced below [*] of the royalties actually received by the paying party from
the sublicensee.
(d) In the event that ARIAD or HMRI shall be obligated to pay
royalties or other payments to a third party with respect to a particular
Product being developed or sold by the other party or its Affiliates or
sublicensees as a result of the grant of a sublicense to the Joint Venture or
the other party, [*] after receipt of an invoice for such payment from the party
granting the sublicense. The party receiving the license shall not be obligated
[*], except for those: (i) based on or resulting from [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
7.8 RIGHT OF FIRST NEGOTIATION. Pursuant to the terms of the Product Rights
Agreement, for a period of [*] years [*] by ARIAD or HMRI under Section 7.4 or
7.5, in the event that the party making the selection determines to license or
sublicense to any non-Affiliate rights to any such Validated Target or Validated
Protein,
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or any Products derived therefrom, it shall give written notice to the other
party, specifying in reasonable detail the rights it intends to license (the
"Negotiation Notice"). The party receiving the Negotiation Notice (the
"Recipient") shall have [*] after the date of the Negotiation Notice to provide
a written response (the "Response") to the party sending the Negotiation Notice
(the "Sender") as to whether or not the Recipient wishes to enter into
negotiations with the Sender concerning the licensing of such rights. If the
Sender does not receive a Response within such [*] period or if the Recipient
declines to enter into negotiations, the Sender shall thereafter have the right
to license the rights which were the subject of the Negotiation Notice free of
any restriction, limitation or duty to the Recipient whatsoever. If the Response
states that the Recipient wishes to enter into negotiations with the Sender, the
parties shall negotiate in good faith the licensing of such rights to the
Recipient for a period of [*] from the date of the Response.
If the parties do not agree upon and execute a written
agreement for such rights within such [*] period, as such period may be extended
by written agreement of both parties, the Recipient [*].
8. CONDITIONS TO CLOSING
8.1 CLOSING. The closing of the transactions which are the subject matter of
this Agreement (the "Closing") will take place at 9:00 a.m. Eastern Standard
Time on a date to be specified by the parties (the "Closing Date"), which shall
be not later than the second business day after satisfaction or waiver of the
conditions set forth in Section 8.2 (and in no event later than May 30, 1997),
at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. in Boston,
Massachusetts unless another date or place is agreed to in writing by the
parties hereto.
8.2 CONDITIONS TO CLOSING. The respective obligations of each party to effect
the transactions contemplated under this Agreement shall be subject to the
satisfaction, at or prior to the Closing
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Date, of the following conditions (the performance of any of which by the other
party may be waived in writing by ARIAD or HMRI):
(a) Neither ARIAD nor HMRI shall be subject to any order, decree or
injunction by a court of competent jurisdiction which prevents or materially
delays the consummation of the transactions contemplated hereby;
(b) No statute, rule or regulation shall have been enacted by the
government (or any governmental agency) of the United States or any state,
municipality or other political subdivision thereof that makes the consummation
of the transactions contemplated hereby illegal;
(c) Any waiting period (and any extension thereof) applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated;
(d) The Operating Agreement and the Stock Purchase, Standstill and
Registration Rights Agreement shall have been entered into by the parties
thereto and the Certificate shall have been filed with the Secretary of State of
the State of Delaware;
(e) ARIAD shall have furnished to HMRI evidence satisfactory to HMRI
that ARIAD has entered into an agreement with Incyte for a subscription to
Incyte's [*] to become effective at the time of Closing of this Agreement and
extending through [*], and HMRI shall have furnished to ARIAD evidence
satisfactory to ARIAD that HMRI has amended its agreement with Incyte extending
through [*] and otherwise modifying HMRI's subscription to Incyte's [*] to
become effective at the time of Closing of this Agreement;
(f) Each party shall have furnished to the other party evidence
satisfactory to the other party of its authority to enter into the Joint
Venture, the consent or approval of those persons or entities whose consent or
approval shall be required in order for such party to consummate the
transactions contemplated hereby (including, without limitation, any necessary
consents of third parties for the grant of licenses or sublicenses to the Joint
Venture), and such other documents as the other party may
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reasonably request; and
(g) The representations and warranties of the other party shall be
accurate in all material respects as of the time of the Closing and such other
party shall have delivered a certificate of an officer certifying the same.
9. TERMINATION AND DISENGAGEMENT
9.1 TERM. This Agreement shall take effect as of the Effective Date and shall
continue for ten (10) years unless terminated in accordance with the provisions
of this Article 9 or extended pursuant to the terms hereof or of the Operating
Agreement (the "Term").
9.2 EXTENSION OF THE JOINT VENTURE. The parties may agree to extend the term of
the Joint Venture beyond ten years by mutual written agreement.
9.3 TERMINATION.
9.3.1 General Termination Conditions. The Joint Venture (and the rights
and obligations of the parties pursuant to the Joint Venture Agreements) may be
terminated in the following ways:
(a) if either party files for protection under bankruptcy laws, makes
an assignment for the benefit of creditors, appoints or suffers appointment of a
receiver or trustee over substantially all of its property, files a petition
under any bankruptcy or insolvency act or has any such petition filed against it
which is not discharged within sixty (60) days of the filing thereof, then the
other party may terminate this Agreement upon written notice to such party;
(b) upon a material breach of either party (subject first to the
dispute resolution procedures set forth in Sections 3.8 and 12.1) in the full
and timely observance or performance of its covenants or obligations under this
Agreement which has been determined in arbitration pursuant to Section 12.1 to
affect the ability of the Joint Venture to carry out its objectives and purposes
and the arbitration panel has determined that termination
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is the appropriate remedy for such material breach, upon thirty (30) days' prior
written notice by the other party, which notice shall specify the nature of the
breach and the steps to be taken to cure such breach; provided, however, that if
such breach is cured by the breaching party within such thirty (30) day period,
such notice of termination shall be deemed null and void as if the same had
never been given and this Agreement shall not be terminated pursuant thereto; or
(c) if without fault of the terminating party, the Closing shall not
have occurred on or before May 30, 1997.
9.3.2 Further Funding for Joint Venture. HMRI and ARIAD currently
expect that the Joint Venture will continue in operation and be funded beyond
[*]; provided, however, that the parties acknowledge that neither this
Agreement nor the other Joint Venture Agreements creates a binding commitment
to fund the Joint Venture beyond [*]. [*]
9.3.3 Potential Termination After [*]. The Joint Venture may be
terminated by either of the parties hereto at any time on or after [*], unless
additional funding arrangements have been agreed upon pursuant to Section 9.3.2,
by six (6) months written notice to the other party.
9.4 CONSEQUENCES OF TERMINATION.
9.4.1 Technology Rights. In the event of termination of the Joint
Venture:
(a) each party will retain exclusive rights under such party's
Technology and Patent Rights, and each party shall be free to pursue the
development and commercialization of such rights in any manner that it may
choose in all fields except to the extent that exclusive rights have been
granted to the other party pursuant to the Product Rights Agreement;
(b) each party will retain the licenses to the Joint Venture Technology
granted to it in Section 7.2 and in the Product Rights Agreement, subject to
continued royalty obligations to the other party in connection therewith
pursuant to Section 10 of the
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Product Rights Agreement;
(c) each party will retain the licenses and sublicenses granted to it
by the other party pursuant to Section 7.1.5;
(d) each party will be free to pursue activities in the Field alone or
with a third party;
(e) the procedures set forth in Section 7.4 and as set forth in the
Product Rights Agreement shall be applied until there are no more Candidates in
either Pool;
(f) each party will retain the licenses and sublicenses granted to it
by the Joint Venture in Section 7.4.5 and 7.4.6 and as set forth in Section 6
and 7 of the Product Rights Agreement prior to termination; and
[*]
9.4.2 Wind-down Payments. HMRI shall pay to ARIAD an amount equal to
[*] to be paid to ARIAD under the Scientific Research Services Agreement and the
Administrative Services Agreement for the last calendar year of the Joint
Venture (provided, however, that no such payment shall exceed [*] in the event
the Joint Venture is terminated under any of the following conditions:
(a) ARIAD and HMRI are unable to agree upon further funding for the
Joint Venture and either party terminates the Joint Venture pursuant to Section
9.3.3;
(b) ARIAD terminates the Joint Venture upon a material breach by HMRI
pursuant to Section 9.3.1(c); or
(c) HMRI terminates the Joint Venture for any reason other than: (i)
upon a material breach by ARIAD pursuant to Section 9.3.1(c) or (ii) pursuant to
Section 9.6.2.
Any such payment required hereunder shall be made on or before the effective
date of termination of the Joint Venture.
9.5 SURVIVING PROVISIONS.
Termination of this Agreement for any reason shall be without prejudice to:
(a) the rights and obligations of the parties provided
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in Section 7.5 of the Operating Agreement, Section 8 of the ARIAD License
Agreement (with respect to Validated Targets and Validated Proteins discovered
at the time of termination), Section 8 of the HMRI License Agreement (with
respect to Validated Targets and Validated Proteins discovered at the time of
termination), Sections 7.1.5, 7.2(b), 7.2(c), and Articles 6, 11, 12 and 13
hereof and Section 17 of the Product Rights Agreement, all of which shall
survive such termination;
(b) ARIAD's and HMRI's right to receive all payments earned and/or
accrued prior to termination hereunder; and
(c) any other rights or remedies which either party may otherwise have
against the other.
9.6 CONSEQUENCES OF CHANGE OF CONTROL OR ACQUISITION.
9.6.1. Notice. If ARIAD enters into any written agreement for a
transaction which, upon consummation, will result in an Acquisition or Change of
Control, it shall give written notice thereof to HMRI at least thirty (30) days
prior to the scheduled consummation thereof.
9.6.2. Consequences. In the event a Change of Control or Acquisition of
ARIAD shall occur, then [*] upon termination of the Joint Venture for any
reason. [*]
[*]
[*]
[*]
[*]
[*]
9.6.3. Definition. For purposes hereof, an "Acquisition" shall be
deemed to have occurred if ARIAD shall consolidate or merge with another entity,
or convey, sell or lease to another entity all or substantially all of the
stock, assets or business of ARIAD and its subsidiaries taken as a whole, unless
the stockholders of ARIAD immediately prior to the transaction own a majority of
the voting equity securities of the merged, consolidated or acquiring entity
after the transaction. For
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purposes hereof, a "Change of Control" shall be deemed to have occurred upon
consummation of any transaction or event as a result of which any other entity
acquires or controls [*].
10. REPRESENTATIONS AND WARRANTIES
10.1 MUTUAL REPRESENTATIONS. ARIAD and HMRI each represents and warrants as
follows:
10.1.1 Organization. It is a corporation duly organized, validly
existing and is in good standing under the laws of the State of Delaware, is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the performance of its obligations hereunder requires
such qualification and has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform this Agreement.
10.1.2 Authorization. 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 or
(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 documents.
10.1.3 Binding Agreement. This Agreement is a legal, valid and binding
obligation of it enforceable against it in accordance with its terms and
conditions.
10.1.4 No Inconsistent Obligation. It is not under any obligation to
any person, or entity, contractual or otherwise, that is materially conflicting
or materially inconsistent in any respect with the terms of this Agreement or
that would materially impede the diligent and complete fulfillment of its
obligations.
11. INDEMNIFICATION
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11.1 INDEMNIFICATION OF ARIAD BY HMRI. HMRI shall indemnify, defend and hold
harmless ARIAD, its Affiliates and their respective directors, officers,
employees, and agents and their respective successors, heirs and assigns (the
"ARIAD Indemnitees"), against any liability, damage, loss or expense (including
reasonable attorneys' fees and expenses of litigation) incurred by or imposed
upon the ARIAD Indemnitees, or any one of them, in connection with any claims,
suits, actions, demands or judgments of third parties, including without
limitation personal injury and product liability matters (except in cases where
such claims, suits, actions, demands or judgments result from a material breach
of this Agreement, gross negligence or willful misconduct on the part of ARIAD)
arising out of any actions of HMRI in the performance of the Research Program,
the use by the Joint Venture or any Licensee of the HMRI Background Technology
or the development, testing, production, manufacture, promotion, import, sale or
use by any person of any Product which is manufactured or sold by HMRI or by an
Affiliate, licensee, sublicensee, distributor or agent of HMRI other than a
Licensee.
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11.2 INDEMNIFICATION OF HMRI BY ARIAD. ARIAD shall indemnify, defend and hold
harmless HMRI and its Affiliates and their respective directors, officers,
employees, and agents and their respective successors, heirs and assigns (the
"HMRI Indemnitees"), against any liability, damage, loss or expense (including
reasonable attorneys' fees and expenses of litigation) incurred by or imposed
upon the HMRI Indemnitees, or any one of them, in connection with any claims,
suits, actions, demands or judgments of third parties, including without
limitation claims of suppliers and ARIAD employees (except in cases where such
claims, suits, actions, demands or judgments result from a material breach of
this Agreement, gross negligence or willful misconduct on the part of HMRI),
arising out of any actions of ARIAD in the performance of the Research Program,
the use by the Joint Venture of the ARIAD Background Technology or the
development, testing, production, manufacture, promotion, import, sale or use by
any person of any Product which is manufactured or sold by ARIAD or by an
Affiliate, licensee, sublicensee, distributor or agent of ARIAD other than a
Licensee.
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11.3 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY,
GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY
DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
11.4 LIMITED LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
OTHERWISE, NEITHER ARIAD NOR HMRI WILL BE LIABLE WITH RESPECT TO ANY SUBJECT
MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
12. ARBITRATION
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12.1 ARBITRATION. In the event of any dispute, difference or question arising
between the parties in connection with this Agreement or the other Joint Venture
Agreements, the construction hereof or thereof, or the rights, duties or
liabilities of either party hereunder or under the other Joint Venture
Agreements (other than disputes concerning Management Committee decisions
subject to resolution by the good faith efforts of specified persons under
Section 3.8), then such dispute shall be resolved by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration panel shall be composed of three arbitrators, one
of whom shall be chosen by ARIAD, one by HMRI and the third by the two so
chosen. If both or either of ARIAD or HMRI fails to choose an arbitrator or
arbitrators within fourteen (14) days after receiving notice of commencement of
arbitration or if the two arbitrators fail to choose a third arbitrator within
fourteen (14) days after their appointment, the then President of the American
Arbitration Association shall, upon the request of both or either of the parties
to the arbitration, appoint the arbitrator or arbitrators required to complete
the board or, if he or she shall decline or fail to do so, such arbitrator or
arbitrators shall be appointed by the New York office of the American
Arbitration Association. The decision of the arbitrators shall be by majority
vote and, at the request of either party, the arbitrators shall issue a written
opinion of findings of fact and conclusions of law. Costs shall be borne as
determined by the arbitrators. Unless the parties to the arbitration shall
otherwise agree to a place of arbitration, the place of arbitration shall be at
New York, New York, U.S.A. The arbitration award shall be final and binding upon
the parties to such arbitration and may be entered in any court having
jurisdiction.
13. MISCELLANEOUS
13.1 NOTICES. All notices, requests and other communications to ARIAD, HMRI and
the Joint Venture hereunder or under the other
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Joint Venture Agreements shall be in writing (including telecopy or similar
electronic transmissions), shall refer specifically to the Joint Venture
Agreement(s) to which they pertain and shall be personally delivered by a
courier service providing evidence of receipt or sent by telecopy or other
electronic facsimile transmission or by registered air mail or certified air
mail, return receipt requested, postage prepaid, in each case to the respective
address specified below (or such other address as may be specified in writing to
the other party hereto):
If to HMRI: Hoechst Marion Roussel, Inc.
Route 202-206 P.O. Box 6800
Bridgewater, NJ 08807-0800
Attn: Senior Vice President,
Business Development
and Strategic Planning
With a copy to: Hoechst Marion Roussel, Inc.
Route 202-206 P.O. Box 6800
Bridgewater, NJ 08807-0800
Attn: General Counsel, Global
Development Center
If to ARIAD: ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, MA 02139
Attn: Chief Executive Officer
With a copy to: Jeffrey M. Wiesen, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
One Financial Center
Boston, MA 02111
If to the To the Co-Chairs at their respective
Management addresses at HMRI and ARIAD.
Committee:
In addition, any Call Notice for Additional Capital Contributions or
Supplemental Capital Contributions addressed to HMRI shall also be sent to:
Hoechst Marion Roussel, Inc.
Route 202-206 P.O. Box 6800
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Bridgewater, NJ 08807-0800
Attn: R&D Controller
Any notice or communication given in conformity with this section shall be
deemed to be effective on the same day as delivered if personally delivered or
if sent by telecopy or other electronic facsimile transmission and seven (7)
days after mailing, if mailed.
13.2 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, U.S.A., without
regard to the application of principles of conflicts of law.
13.3 CURRENCY TRANSLATIONS. All costs charged by either party hereunder will be
charged in the currency or currencies in which the same are incurred. Any costs
incurred by either party in currencies other than United States Dollars will be
converted to United States Dollars as of the end of each calendar quarter using
the average exchange rate for such calendar quarter based on rates reported in
The Wall Street Journal. The parties hereto shall each bear all risks of
exchange losses and/or currency restrictions, regardless of when expenditures
relating to the charging of such costs are actually made by either party.
13.4 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.
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13.5 HEADINGS. Section and subsection headings are inserted for convenience of
reference only and do not form a part of this Agreement.
13.6 COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
13.7 AMENDMENT; WAIVER. This Agreement may be amended, modified, superseded or
canceled, and any of the terms may be waived, only by a written instrument
executed by each party or, in the case of waiver, by the party or parties
waiving compliance. The delay or failure of any party at any time or times to
require performance of any provisions 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 instances, shall be deemed to be, or considered
as, a further or continuing waiver of any such condition or of the breach of
such term or any other term of this Agreement.
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13.8 NO THIRD PARTY BENEFICIARIES. Except as set forth in Article 11 hereof, no
third party, including any employee of any party to this Agreement, shall have
or acquire any rights by reason of this Agreement.
13.9 ASSIGNMENT AND SUCCESSORS. Neither this Agreement nor any obligation of a
party hereunder may be assigned by either party without the consent of the other
which shall not be unreasonably withheld, except that each party may assign this
Agreement, its interest in the Joint Venture, and the rights, obligations and
interests of such party, in whole or in part, to any of its Affiliates, to any
entity created for the purpose of providing financing for either party's
contributions to the Joint Venture (provided, however, that any such assignment
by a party to such entity shall not be permitted without the prior consent of
the other party, which shall not be unreasonably withheld), to any purchaser of
all or substantially all of its assets or to any successor corporation resulting
from any merger or consolidation of such party with or into such corporations.
Subject to the foregoing, any reference to ARIAD or HMRI hereunder shall be
deemed to include the successor thereto and assigns thereof.
13.10 FORCE MAJEURE. Neither ARIAD nor HMRI shall be liable for failure of or
delay in performing obligations set forth in this Agreement, and neither shall
be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes beyond the reasonable control of ARIAD or HMRI.
In event of such force majeure, the party affected thereby shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.
13.11 INTERPRETATION. The parties hereto acknowledge and agree that: (i) each
party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (iii) the
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terms and provisions of this Agreement shall be construed fairly as to all
parties hereto and not in a favor of or against any party, regardless of which
party was generally responsible for the preparation of this Agreement.
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13.12 INTEGRATION; SEVERABILITY. This Agreement together with the other Joint
Venture Agreements constitutes on and as of the date hereof the entire
understanding of the parties with respect to the subject matter hereof and all
prior or contemporaneous agreements and understandings, whether written or oral,
between the parties with respect to such subject matter are hereby superseded in
their entirety, including but not limited to the Confidentiality Agreement
between ARIAD and HMRI dated October 28, 1996; provided, however, that all or
part of this Agreement may be superseded by the remainder of the Joint Venture
Agreements. This Agreement and the other Joint Venture Agreements do not
supersede the Collaborative Research and License Agreement between ARIAD and
Roussel Uclaf dated as of November 5, 1995. If any provision hereof should be
held invalid, illegal or unenforceable in any respect in any jurisdictions then,
to the fullest extent permitted by law, (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the parties hereto as nearly
as may be possible and (b) such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of such provision in any
other jurisdiction. To the extent permitted by applicable law, each party hereby
waives any provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
13.13 FURTHER ASSURANCES. Each of ARIAD and HMRI agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
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13.14 HART-SCOTT-RODINO FILING. The parties shall cooperate fully and use their
best efforts to comply with the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations issued thereunder (the "HSR
Act"), to determine if a Notification Report is required thereunder, and to file
any required Notification Report form with the Federal Trade Commission and the
Department of Justice in accordance with such rules and regulations with respect
to the transactions contemplated in this Agreement.
13.15 ACTIONS BY JOINT VENTURE. Whenever this Agreement provides that the Joint
Venture (or its Management Committee) shall take or refrain from taking any
action or shall do or refrain from doing anything, the Members agree that they
shall cause the Joint Venture (or its Management Committee) to do so.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
HOECHST MARION ROUSSEL, INC.
By: /s/ Frank L. Douglas, M.D.
-------------------------------
Title: Executive Vice President
----------------------------
Date: March 3, 1997
----------------------------
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey Berger
-------------------------------
Title: Chief Executive Officer
----------------------------
Date: March 3, 1997
----------------------------
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SCHEDULE I
MASTER RESEARCH PLAN
[*]
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<PAGE> 79
EXHIBIT A
FORM OF OPERATING AGREEMENT
OPERATING AGREEMENT
OF
HOECHST-ARIAD GENOMICS CENTER, LLC
<PAGE> 80
OPERATING AGREEMENT
This Operating Agreement is dated as of March 18, 1997 (the "Agreement"),
by and between HOECHST MARION ROUSSEL, INC., a Delaware corporation ("HMRI"),
having its offices at Route 202-206, P.O. Box 6800, Bridgewater, New Jersey
08807-0800, and ARIAD PHARMACEUTICALS, INC., a Delaware corporation ("ARIAD"),
having its principal office at 26 Landsdowne Street, Cambridge, Massachusetts
02139. HMRI and ARIAD are sometimes referred to herein individually as a
"Member" and collectively as the "Members." Capitalized terms used but not
defined herein shall have the same meaning as provided in the Joint Venture
Master Agreement dated March 4, 1997 between HMRI and ARIAD (the "JV Master
Agreement").
PRELIMINARY STATEMENT
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics in order to identify
Candidate Genes, Validated Targets and Validated Proteins for use in drug
discovery, the Members desire to form the HOECHST-ARIAD GENOMICS CENTER, LLC
(the "Company"); and
WHEREAS the purpose of this Agreement is to form the Company in accordance
with the Delaware Limited Liability Company Act (the "Act") and to set out fully
the rights, obligations and duties of the Members.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the parties hereto
agree to form the Company, and to set out fully the rights, obligations and
duties of the Members, as follows:
ARTICLE I
GENERAL PROVISIONS
1.1 Formation of Limited Liability Company. The Company is hereby formed
under the Act. Except as expressly provided herein and in the other Joint
Venture Agreements, the rights and obligations of the Members and the
administration and termination of the Company shall be governed by the Act. The
Members shall take all actions necessary to assure the filing of a Certificate
of Formation of the Company (the "Certificate") with the Secretary of State of
the State of Delaware (the "Delaware Secretary") as required by Delaware law
upon satisfaction of the conditions to closing set forth in Section 8.2 of the
JV Master Agreement. The names and addresses of the Members are as set forth on
Schedule A hereto.
1.2 Name of the Company. The name of the Company shall be the
"HOECHST-ARIAD GENOMICS CENTER, LLC" or such other name as the Members may from
time to time determine. The Members shall cause to be filed on behalf of the
Company such corporate,
<PAGE> 81
assumed or fictitious name or foreign qualification certificate or certificates
as may from time to time be required by law.
1.3 Principal Place of Business of the Company; Registered Agent. The
initial principal place of business of the Company shall be located at the
Principal Office. The Members may, at any time and from time to time, change the
location of the Company's principal place of business. The Company shall
maintain its records at such address. The registered agent for service of
process for the Company in the State of Delaware shall be The Prentice-Hall
Corporation System, Inc., with a principal place of business at 1013 Center
Road, Wilmington, Delaware 19805.
1.4 Title to Company Property. All property and rights owned or acquired
by the Company by purchase, license or otherwise, whether real or personal,
tangible or intangible, shall be deemed to be owned by the Company as an entity,
and no Member, individually, shall have any ownership rights with respect to
such property. Title to all such property shall be held in the name of the
Company.
1.5 Representations and Warranties of Members. Each Member represents and
warrants to the Company and to the other Member as follows:
(a) It is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the performance of
its obligations hereunder requires such qualification and has
all requisite power and authority, corporate or otherwise, to
conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform
this Agreement.
(b) The execution, delivery and performance by it of this
Agreement have been duly authorized by all corporate action
and do not and will not: (i) require any consent of its
stockholders or (ii) 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 documents.
(c) This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and
conditions.
(d) It is not under any obligation to any person, or entity,
contractual or otherwise, that is materially conflicting or
materially inconsistent in any respect with the terms of this
Agreement or that would materially impede the diligent and
complete fulfillment of its obligations.
2
<PAGE> 82
ARTICLE II
PURPOSE OF BUSINESS; TERM
2.1 Company Purpose. The purpose of the Company shall be to pursue
Functional Genomics in order to identify Candidate Genes, Validated Targets and
Validated Proteins and to do and perform all acts necessary or desirable to
carry out the foregoing purpose in accordance with the terms and conditions of
this Agreement and the other Joint Venture Agreements, and to take any other
action not prohibited under the Act or other applicable law.
2.2 Term. The term (the "Term") of the Company shall commence upon the
filing of the Certificate with the Secretary of State of the State of Delaware
and the Company shall continue for ten (10) years unless sooner terminated and
dissolved pursuant to Article IX of this Agreement or pursuant to applicable law
or extended pursuant to the terms hereof or of the JV Master Agreement.
2.3 Scope of Members' Authority. Except as expressly provided for herein
or in the other Joint Venture Agreements, no Member shall have any authority to
act for, hold itself out as the agent of, or assume any obligation or
responsibility on behalf of the Company or any other Member.
2.4 Fiscal Year. The fiscal year of the Company shall be the calendar
year.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Initial Capital Contributions. Each of the Members will, immediately
following the Closing under the JV Master Agreement and upon execution of this
Agreement, contribute in cash to the Company the amount set forth opposite its
name in the column entitled "Initial Capital Contribution" on Schedule A hereto.
Except as provided in this Section or Section 3.2 herein or by law, no Member
shall be required to make any capital contributions or loans to the Company.
3.2 Additional and Supplemental Capital Contributions.
(a) Additional Capital Contributions. Each of the Members shall make
quarterly Additional Capital Contributions to the Company, in addition to the
amount of its Initial Capital Contribution, as will be recommended by the
Management Committee from time to time and as agreed to by the Members, for
purposes of funding the operating expenses of the Company, on the terms and
conditions set forth herein. Notwithstanding the foregoing, each of the Members
shall provide its Expense Sharing Percentage of the following aggregate Company
operating expenses [*] to the Company as Additional Capital Contributions during
the following years:
3
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<TABLE>
<CAPTION>
Company
Year Operating Expenses
---- ------------------
<S> <C>
1997 [*] $ [*]
1998 $ [*]
1999 $ [*]
2000 $ [*]
2001 $ [*]
2002 $ [*]
</TABLE>
; provided, however, that in the event that capital contributions in any year
are less than such amounts, the remainder of the financial commitment will be
carried forward to subsequent years, but no later than March 31, 2002. Such
Additional Capital Contributions are intended to be used primarily for
Reimbursable Costs (as such term is defined in the Scientific Research Services
Agreement and the Administrative Services Agreement), and any remainder may be
used for other expenses of the Company. HMRI's Expense Sharing Percentage shall
be fifty percent (50%), and ARIAD's Expense Sharing Percentage shall be fifty
percent (50%), subject to adjustment as set forth in Section 3.2(e).
(b) Supplemental Capital Contributions. In the event that capital
contributions in excess of the Additional Capital Contributions [*] are
required in any of such years to cover expenses of the Company such as patent
costs, operating costs for Visiting Scientists, transactions with or
acquisitions of Technology from third parties, capital purchases beyond the
initial plan, contingencies or other expenses of the Company, the Members shall
discuss and determine whether to make supplemental capital contributions (the
"Supplemental Capital Contributions") by the Members of amounts which exceed
the amount set forth in Section 3.2(a) for any year. In order to provide funds
to ARIAD for ARIAD's share of any Supplemental Capital Contributions, HMRI
shall, on the date the Supplemental Capital Contribution is due, at ARIAD's
request, lend the necessary funds to ARIAD (a "Supplemental Capital Loan")
which shall be repayable, together with interest at [*] with interest to be
reset quarterly on the first business day of each calendar quarter, out of (a)
[*] or (b) in cash. Each Supplemental Capital Loan shall provide that it shall
be repayable (i) [*] years after the date of this Agreement if additional
funding arrangements are not agreed upon pursuant to Section 9.3.2 of the JV
Master Agreement or (ii) on terms to be agreed upon as part of such
arrangements if additional funding arrangements are agreed upon pursuant to
Section 9.3.2 of the JV Master Agreement; provided, however, that ARIAD may
elect to prepay all or part of any Supplemental Capital Loan or Loans at any
time and, provided, further, that all Supplemental Capital Loans outstanding at
the time of consummation of a Change of Control or Acquisition of ARIAD shall
become due [*] after the occurrence of the Change of Control or Acquisition of
ARIAD, pursuant to Section 9.6.2 of the JV Master Agreement.
(c) Procedure for Additional and Supplemental Capital Contributions.
If Additional Capital Contributions are required to be made by the Members
pursuant to Section 3.2(a) or the Members agree to make Supplemental Capital
Contributions pursuant to Section
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3.2(b), the Company shall provide each Member with written notice at least
thirty (30) days prior to the date such payment is due (the "Call Notice"). The
Call Notice shall specify the amount of the Additional Capital Contributions or
Supplemental Capital Contributions to be paid, the purposes for the Additional
Capital Contributions or Supplemental Capital Contributions and the date by
which payment must be made (the "Due Date"), which shall not be less than thirty
(30) days from the date of the Call Notice. The Company shall call for payment
of Additional Capital Contributions or Supplemental Capital Contributions from
all Members on a pro rata basis based on their respective Percentage Interests
as of the date of the Call Notice.
(d) Failure to Make Additional Capital Contribution or Supplemental
Capital Contribution. If a Member fails to make an Additional Capital
Contribution or Supplemental Capital Contribution by the Due Date, it (the
"Named Member") shall be deemed to be in default of its obligations hereunder as
of the Due Date. The following procedures shall then apply:
(i) The Company shall immediately send a default notice (the
"Default Notice") to the Named Member. If the Named
Member has not cured its default within thirty (30) days
following receipt of the Default Notice, it shall be
deemed to be an Event of Default herein.
(ii) Upon such Event of Default, the nondefaulting Member
shall have the option, but not the obligation, to pay to
the Company the amount of the Named Member's Additional
Capital Contribution or Supplemental Capital
Contribution that it failed to pay. Such payment must be
made within thirty (30) days from the date of the Event
of Default.
(iii) Upon such Event of Default, and following any payment to
the Company by a nondefaulting Member of the Named
Member's Additional Capital Contribution or Supplemental
Capital Contribution that it failed to pay, the
Percentage Interests of the Members shall be adjusted in
accordance with Section 3.2(e).
(iv) Notwithstanding the foregoing, in the event that the
Named Member fails to make a required Additional Capital
Contribution or Supplemental Capital Contribution
pursuant to this Section 3.2(d), then the Company may
proceed to pursue any and all available legal remedies
against the Named Member in order to collect the amount
owed by the Named Member to the Company. In furtherance
thereof, the Company may proceed to collect any amount
due from the Named Member as and when due, together with
interest thereon from the date for payment stated herein
at the lesser of: (a) the prime rate as reported by the
Morgan Guaranty Bank and Trust, New York, New York, on
the date such payment is due, plus an additional three
percent (3%) or (b) the maximum rate permitted by
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<PAGE> 85
applicable law, and all costs and expenses of collection
incurred by the Company (including reasonable fees and
disbursements of counsel). So long as a Named Member
remains in default, it shall have no right to receive
any distributions or allocations of credits, profits or
losses under this Agreement. Any actions by the Company
under this clause (iv) shall be controlled by, and at
the direction of, the Member other than the Named
Member.
(e) When any adjustment of the Percentage Interests is required
hereunder, the Percentage Interests shall be adjusted such that each Member's
new Percentage Interest shall be equal to the sum of (i) such Member's aggregate
paid-in Capital Contributions (including its Initial, Additional and
Supplemental Capital Contributions), divided by (ii) aggregate paid-in Capital
Contributions (including Initial, Additional and Supplemental Capital
Contributions) made by all of the Members.
(f) Use of Additional and Supplemental Capital Contributions. The
Additional and Supplemental Capital Contributions shall be paid or delivered to
the Company by wire transfer or by a certified or bank cashier's check when
payment thereof is called for pursuant to this Section 3.2. Such Additional and
Supplemental Capital Contributions shall be used for the purposes set forth in
the Call Notice. All Capital Contributions will be temporarily invested by the
Company in short-term United States Treasury securities or other such investment
grade instruments and securities as determined by the Management Committee.
(g) Benefit. The Members shall have no personal liability, one to
another, for the payment or repayment of Capital Contributions made pursuant to
this Section 3.2, except for Supplemental Capital Loans and as otherwise
provided herein. The provisions of this Section 3.2 are not intended to be for
the benefit of any creditor of the Company or any Member or other person and no
such creditor or other person shall by reason of any such foregoing provisions
make any claim in respect of any debt, liability or obligation (or otherwise)
against the Company or any of the Members.
3.3 Loans. In the event the Company's funds are insufficient to meet its
costs, expenses, obligations, contingencies, liabilities and charges, or to make
any expenditure authorized by this Agreement or the other Joint Venture
Agreements, and Additional Capital Contributions or Supplemental Capital
Contributions are not required to be made pursuant to Section 3.2 herein or
additional funds are not available from third parties on terms acceptable to the
Members in their sole discretion, a Member or its Affiliate may (but shall not
be required to) advance such funds to the Company upon the prior approval of the
Management Committee. Any advance by a Member or an Affiliate of a Member
pursuant to this Section 3.3 shall be evidenced by a promissory note and shall
bear interest, accrued annually, at a rate of interest equal to [*] with
interest to be reset quarterly on the first business day of each calendar
quarter. Any such loan made pursuant to this Section 3.3 shall be on a full
recourse basis to the Company but without recourse to the Members.
3.4 Capital Accounts. A separate capital account (each, a "Capital
Account") shall be
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<PAGE> 86
established and maintained for each Member in accordance with the rules of
Treasury Regulations Section 1.704-1(b)(2)(iv), and this Section 3.4 shall be
interpreted and applied in a manner consistent therewith. Whenever the Company
would be permitted to adjust the Capital Accounts of the Members pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of
Company property, the Company shall so adjust the Capital Accounts of the
Members. In the event that the Capital Accounts of the Members are adjusted
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect
revaluations of Company property, (i) the Capital Accounts of the Members shall
be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g)
for allocations of depreciation, depletion, amortization and gain or loss, as
computed for book purposes, with respect to such property and (ii) the Member's
distributive shares of depreciation, depletion, amortization and gain or loss,
as computed for tax purposes, with respect to such property shall be determined
so as to take account of the variation between the adjusted tax basis and book
value of such property in the same manner as under Section 704(c) of the
Internal Revenue Code of 1986, as amended (the "Code"). In the event that Code
Section 704(c) applies to the Company property, the Capital Accounts of the
Members shall be adjusted in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization
and gain and loss, as computed for book purposes, with respect to such property.
3.5 Withdrawal of Capital; Voluntary Contribution of Capital. Without the
approval of the Management Committee, no Member shall have the right to withdraw
from the Company all or any part of its Capital Contribution or to receive any
funds or property from the Company, or to make any voluntary contribution of
capital to the Company, except as provided herein or in the other Joint Venture
Agreements. No Member shall have any right to demand and receive property other
than cash of the Company in return of its Capital Contribution except as may be
specifically provided in this Agreement or the other Joint Venture Agreements.
No interest shall be paid on any Capital Contribution.
ARTICLE IV
DISTRIBUTIONS
4.1 Distributions. Unless otherwise determined by the Members, to the
extent consistent with the maintenance of an appropriate and prudent capital
structure, the Management Committee shall have sole discretion to determine
whether all cash available in excess of operating and capital expenditure
requirements, provision for repayment of borrowings of the Company and
maintenance of appropriate reserves shall be: (i) used to fund the further
operations of the Company or (ii) paid out to the Members in proportion to their
Percentage Interests on the date the distribution is authorized by the
Management Committee.
4.2 Withholding From Certain Distributions. The Company is authorized to
withhold from distributions, or with respect to allocations, to the Members and
to pay over to any federal, foreign, state or local government any amounts
required to be so withheld pursuant to the Code or any provisions of any other
federal, foreign, state or local law. All amounts withheld pursuant to the
preceding sentence of this Section 4.2 with respect to any distribution or
allocation
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shall be treated as amounts distributed to the Members with respect to which
such amounts were withheld pursuant to this Article IV for all purposes of this
Agreement.
ARTICLE V
ALLOCATION OF PROFITS AND LOSSES
5.1 Profits. Net profits shall be allocated:
(a) First, to reverse any allocations of net losses, determined on a
cumulative basis from the inception of the Company, with the most recent
allocations of losses being reversed first; and
(b) Thereafter, among the Members according to their respective
Percentage Interests.
5.2 Losses. Net losses shall be allocated:
(a) First, to reverse any allocations of net profits, determined on
a cumulative basis from the inception of the Company, with the most recent
profits being reversed first;
(b) [*]
(c) [*]
(d) Fourth, among the Members in proportion to, and to the extent
of, their Capital Contributions made after the Company's first five fiscal
years;
(e) Thereafter, among the Members according to their respective
Percentage Interests.
5.3 Curative Allocations. In the event any losses allocated to a Member
under Section 5.2 are not so allocable according to Treasury regulations, such
losses shall instead be allocated to the other Member. In such case items of
gross income shall be allocated to such other Member to reverse the effect of
the preceding sentence as quickly as possible.
8
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ARTICLE VI
MANAGEMENT
6.1 Decision Making. Subject to any express provisions, if any, of the
other Joint Venture Agreements reserving to either of ARIAD or HMRI, as the case
may be, the right to make unilateral decisions concerning the Company, the
general affairs and activities of the Company and the research, development and
licensing programs of the Company described in the Master JV Agreement shall be
administered, managed and coordinated by a committee (the "Management
Committee") consisting of three (3) representatives designated by ARIAD (who
shall be officers, directors or employees of ARIAD or an Affiliate of ARIAD) and
three (3) representatives designated by HMRI (who shall be officers, directors
or employees of HMRI or an Affiliate of HMRI), in each case reasonably
acceptable to the other party. The Management Committee may be given such name
as the Members may agree upon from time to time.
6.2 Management Committee Co-Chairs. Each Member shall designate one of its
representatives on the Management Committee as its "Co-Chair". The initial
Co-Chair designated by ARIAD shall be Harvey J. Berger, M.D., and the initial
Co-Chair designated by HMRI shall be Norbert G. Riedel, Ph.D. Each of the
Co-Chairs shall have authority to act for the Company, as specified by the
Management Committee. Each Member shall have the right at any time to substitute
individuals, on a permanent or temporary basis, for any of its previously
designated representatives to the Management Committee, including its Co-Chair,
by giving written notice thereof to the other Member.
6.3 Appointment of Scientific Director and Other Officers. The Management
Committee shall select a Scientific Director of the Company (the "Scientific
Director"), who shall be responsible for setting the scientific direction of the
Company in conjunction with the Management Committee, directing the Company's
research programs, and managing the day-to-day operations of the Company, and
who shall be an officer, director or employee of ARIAD or HMRI (or their
respective Affiliates). The Management Committee shall also appoint a Secretary
- - Treasurer of the Company and a Director of Finance and Administration who
shall keep the records of the Company and be authorized to act for the Company
within the level of authority designated by the Management Committee. The
Scientific Director, Secretary - Treasurer and Director of Finance and
Administration shall report to the Co-Chairs of the Management Committee.
6.4 Management Committee Meetings.
(a) Schedule of Meetings. The Management Committee shall meet at
least semi-annually. Meetings shall also be convened upon the determination of
the Co-Chairs, or either of them, by written notice thereof to the members of
the Management Committee, that a meeting of the Management Committee is required
to discuss and/or resolve any matter or matters with respect to the Company.
Meetings shall be held in the Principal Office of the Company unless the
Co-Chairs otherwise agree; provided, however, that the parties may mutually
agree to meet by
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teleconference or video conference and may act by unanimous written action
without a meeting.
(b) Quorum; Voting; Decisions. At each Management Committee meeting,
attendance by at least [*] members appointed by each Member shall constitute a
quorum. Each Management Committee member shall have [*] vote on all matters
before the Management Committee; provided, however, that the member or members
of each Member present at a Management Committee meeting shall have the
authority to cast the votes of any of such Member's members on the Management
Committee who are absent from the meeting. All decisions of the Management
Committee shall be made by majority vote of all of the members. Whenever any
action by the Management Committee is called for hereunder during a time period
in which the Management Committee is not scheduled to meet, the Co-Chairs shall
cause the Management Committee to take the action in the requested time period
by calling a special meeting or by action without a meeting. Representatives of
each party, in addition to the members of the Management Committee, may attend
Management Committee meetings at the invitation of either Member with the
approval of the other Member, which shall not be unreasonably withheld. In the
event that the Management Committee is unable to resolve any matter before it,
such matter shall be resolved as set forth in Section 6.8 herein.
(c) Minutes. The Management Committee shall keep accurate minutes of
its deliberations which record all proposed decisions and all actions
recommended or taken. The Co-Chairs shall designate a member of the Management
Committee to prepare and circulate a draft of the minutes of each meeting.
Drafts of the minutes shall be delivered to the Co-Chairs of the Management
Committee within twenty (20) days after the meeting. Draft minutes shall be
edited by the Co-Chairs and shall be issued in final form within forty-five (45)
days after the meeting only with their approval and agreement as evidenced by
their signatures on the minutes.
(d) Expenses. The Members shall each bear all expenses of their
respective Management Committee members related to their participation on the
Management Committee and attendance at Management Committee meetings.
6.5 Decision Making Responsibilities. The Management Committee shall be
solely responsible for making all decisions regarding the operation and policies
of the Company not expressly reserved to the Members or to one Member,
including, but not limited to, decisions with respect to the following matters:
(i) any amendments to or changes in the objectives and scope
of the Research Program described in Article 5 of the JV Master Agreement;
(ii) approval of the Annual Research Plans;
(iii) the appointment of the Scientific Director of the
Company;
(iv) the appointment of the members of the Scientific Advisory
Board of the Company;
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(v) the appointment of consultants and scientific experts on
behalf of the Company;
(vi) calls for Additional Capital Contributions from the
Members;
(vii) business plans and annual budgets of the Company,
subject to the limitations on Additional Capital Contributions;
(viii) prioritization of Research Projects, Special Projects
and other activities of the Company;
(ix) annual financial statements, distributions to the
Members, investment and allocation of surplus funds, establishment of reserves
out of earnings (including disposition of such reserves) and establishment of
accounting policy, including depreciation rates and accruals and internal
accounting controls;
[*]
(xv) appointment of a Secretary - Treasurer and Director of
Finance and Administration of the Company;
(xvi) determination of levels of authority for the Management
Committee Co-Chairs, Scientific Director, Secretary - Treasurer and Director of
Finance and Administration;
(xvii) authorization of individuals to act on behalf of the
Company for particular matters or classes of matters (subject to the authority
of the Management Committee);
(xviii) maintenance of a list of Technology in accordance with
Section 7.3 of the JV Master Agreement;
(xix) establishment and amendment of the criteria for
determining whether a Candidate Gene, Validated Target or Validated Protein has
been discovered by the or the Company; and
(xx) recommendations to the Members for modifications of the
procedures set forth in Section 7.4 of the JV Master Agreement and the Product
Rights Agreement.
The representatives of a Member on the Management Committee shall at all
times be entitled to consult with that Member prior to taking any action as
members of the Management Committee. In addition, the Management Committee, as a
whole, may from time to time consult with, and act as directed by, the Members
on any matter related to the conduct and operations of the Company.
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6.6 Decisions Reserved to the Members. The Members shall reserve to
themselves the following decisions:
[*]
(ii) capital contributions in excess of the amounts set forth
in Section 3.3(b);
(iii) Supplemental Capital Contributions;
(iv) conduct of litigation involving the Company;
(v) control of actions by the Company pursuant to Section
3.2(d)(iv);
(vi) hiring of legal counsel and independent public
accountants; and
(vii) modifications of the procedures set forth in Section 7.4
of the JV Master Agreement and the Product Rights Agreement.
6.7 Annual Budget. The Management Committee shall annually adopt a budget
for the Company. The Management Committee shall use commercially reasonable
efforts to adopt such budget thirty (30) days prior to the beginning of each
year. Such budget may be amended from time to time by the Management Committee.
6.8 Dispute Resolution.
(a) Reference to Senior Officials. In the event that the Management
Committee shall not be able to reach a decision or take an action on any matter
for which the Management Committee is responsible, or in the event that the
parties are unable to resolve any dispute involving any of the Joint Venture
Agreements, the matter in question shall be referred for resolution to [*] (or,
if [*] is also a member of the Management Committee, [*] if such person is not
an employee of ARIAD), and if [*] is an employee of ARIAD, then to [*] who is
not an employee of ARIAD, and to [*] (or, if the [*] is also a member of the
Management Committee, then to a senior officer of HMRI designated by the Chief
Executive Officer of HMRI who is not a member of the Management Committee),
respectively, or a person or persons designated by each or both said officials.
(b) Scientific Issues. In the event that a matter for dispute
resolution pursuant to Section 6.8(a) involves a scientific issue, and said
persons or their respective designees (none of whom may be a member of the
Management Committee) shall be unable to resolve such matter after reasonable
efforts to do so and after the passage of a reasonable period of time under the
relevant circumstances, in any event not to exceed [*], each party shall, at
its own expense, appoint an unaffiliated scientific expert to advise such
persons on the matter. The scientific experts shall be chosen based on their
experience and expertise in the particular type of
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issue which is unresolved. The experts shall render a written advisory opinion
to such persons, [*].
(c) Budget Disputes. In the event that the Management Committee is
unable to adopt an annual budget for the Joint Venture (or amend such budget as
required from time to time) within the annual limitations as set forth in
Section 3.2(a), the matter shall be resolved in accordance with the procedures
set forth in Section 6.8(a); provided, however, without the approval of the
Members, such budget shall be limited to the amount of Additional Capital
Contributions [*] set forth in Section 3.2(a), and such dispute shall not be
subject to the dispute resolution procedures set forth in Section 12.1 of the
JV Master Agreement. In the event that a dispute regarding an annual budget is
not resolved in accordance with the procedures set forth in Section 6.8(a), the
amount of the annual budget shall be the amount set forth for the year in
question in Section 3.2(a), excluding any carry-forward amounts.
Notwithstanding any provision contained herein or in the other Joint Venture
Agreements to the contrary, the parties agree that any decision as to whether
to make Supplemental Capital Contributions shall be reserved solely to the
Members and such decision shall not be subject to the dispute resolution
procedures set forth in Section 3.8 or Section 12.1 of the JV Master Agreement
or Section 6.8 or Section 10.1 hereof, and under no circumstance shall either
Member be required to make Supplemental Capital Contributions without the
agreement of the Members.
6.9 Restrictions on the Authority of the Members and the Management
Committee. Notwithstanding any other provisions of this Agreement, neither the
Members nor the Management Committee shall have the authority (i) to perform any
act in violation of any applicable law; (ii) to perform any act in violation of
this Agreement or the other Joint Venture Agreements; (iii) to possess Company
property, or assign the Company's rights in specific Company property, for other
than a Company purpose; or (iv) to knowingly perform any act, or knowingly cause
the Company to perform any act, which would result in the Company being
classified as an Investment Company under the Investment Company Act of 1940, as
amended.
6.10 Obligations of the Members.
(a) The Members shall take such action as may be necessary or
appropriate for the continuation of the Company's valid existence under the laws
of the State of Delaware and in order to form or qualify the Company under the
laws of any jurisdiction in which the Company is doing business or in which such
formation or qualification is necessary to protect the limited liability of the
Members or in order to continue in effect such formation or qualification. The
Members shall file or cause to be filed for recordation in the office of the
appropriate authorities of the State of Delaware and in the proper office or
offices in each other jurisdiction in which the Company is formed or qualified,
such certificates, including limited liability company and fictitious name
certificates, and other documents as are required by the applicable statutes,
rules or regulations of any such jurisdiction.
(b) Each of the Members hereby recognizes that, for United States
federal income tax purposes, the Company will be subject to all provisions of
Subchapter K of Chapter 1
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of Subtitle A of the Code. The Members shall cause to be prepared and filed on
or before the due date (or any extension thereof) any federal, state or local
tax returns required to be filed by the Company.
6.11 Tax Matters Member. ARIAD shall serve as the tax matters Member for
the Company (the "Tax Matters Member"). Each Member by the execution of this
Agreement consents to ARIAD serving as the Tax Matters Member and agrees to
execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such consent. To the extent and in the manner provided by applicable
law and regulations, the Tax Matters Member shall furnish the name, address,
profits interest and taxpayer identification number of each Member to the
Secretary of the Treasury or his delegate (the "Secretary"). The Tax Matters
Member shall keep the Members informed of the administrative and judicial
proceedings for the adjustment at the Company level of any item required to be
taken into account by a Member for income tax purposes (such administrative
proceedings referred to hereinafter as a "tax audit" and such judicial
proceeding referred to hereinafter as "judicial review").
The Tax Matters Member is hereby authorized, subject to the consent of all
Members, but not required:
(a) to make all elections and to take any actions to perfect the
election by the Company to be treated for tax purposes only as a partnership
under Subchapter K of the Code;
(b) to enter into any settlement with the Internal Revenue Service
or the Secretary with respect to any tax audit or judicial review, in which
agreement the Tax Matters Member may expressly state that such agreement shall
bind the other Member, except that such settlement agreement shall not bind any
Member who (within the time prescribed pursuant to the Code and regulations
thereunder) files a statement with the Secretary providing that the Tax Matters
Member shall not have the authority to enter into a settlement agreement on the
behalf of such Member;
(c) in the event that a notice of a final partnership administrative
adjustment at the Company level of any item required to be taken into account by
a Member for tax purposes (a "final adjustment") is mailed to the Tax Matters
Member, to seek judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court, the District Court of the
United States for the district in which the Company's principal place of
business is located, or the U.S. Court of Federal Claims;
(d) to intervene in any action brought by any other Member for
judicial review of a final adjustment;
(e) to file a request for an administrative adjustment with the
Secretary at any time and, if any part of such request is not allowed by the
Secretary, to file a petition for judicial review with respect to such request;
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<PAGE> 94
(f) to enter into an agreement with the Internal Revenue Service to
extend the period for assessing any tax which is attributable to any item
required to be taken into account by a Member for tax purposes, or an item
affected by such item; and
(g) to take any other action on behalf of the Members or the Company
in connection with any administrative or judicial tax proceeding to the extent
permitted by applicable law or regulations.
The Company shall indemnify and reimburse the Tax Matters Member for
all expenses, including legal and accounting fees, claims, liabilities, losses
and damages incurred in connection with any administrative or judicial
proceeding with respect to the tax liability of the Members. The payment of all
such expenses shall be made before any distributions are made pursuant to
Article IV herein or any discretionary reserves are set aside by the Members.
Subject to the provisions of this Section 6.11, the taking of any action and the
incurring of any expense by the Tax Matters Member in connection with any such
proceeding, except to the extent required by law, is a matter in the sole
discretion of the Tax Matters Member and the provisions on limitations of
liability and indemnification set forth in Section 6.14 shall be fully
applicable to the Tax Matters Member in its capacity as such.
6.12 Limitation of Liability. Each Member's liability shall be limited as
set forth in this Agreement, the other Joint Venture Agreements, the Act, and
other applicable law. Except as required pursuant to the Act or as otherwise
provided herein or in the other Joint Venture Agreements, a Member will not be
personally liable for any debts or losses of the Company beyond the Member's
Capital Contributions.
6.13 Liability for Certain Acts. The Members shall perform their duties in
good faith, in a manner they reasonably believe to be in the best interests of
the Company, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances. Except as otherwise provided
herein or in the other Joint Venture Agreements, each Member (including its
Affiliates and their respective officers, directors, partners, employees,
shareholders and agents) who so performs such duties shall not have any
liability by reason of being or having been a Member of the Company. Except as
otherwise provided herein or in the other Joint Venture Agreements, no Member
(including its affiliates and their respective officers, directors, partners,
employees, shareholders and agents) shall be liable to the Company or to any
Member for any loss or damage sustained by the Company or any Member, unless the
loss or damage shall have been the result of fraud, deceit, gross negligence,
willful misconduct, or a wrongful taking by the Member (including its affiliates
and their respective officers, directors, partners, employees, shareholders and
agents).
6.14 Indemnification of Members.
(a) To the maximum extent permitted from time-to-time under the Act,
each Member (including its Affiliates and their respective officers, directors,
partners, employees,
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<PAGE> 95
shareholders and agents) shall be entitled to indemnity from the Company for any
liability incurred and/or for any act performed by them within the scope of the
authority conferred on them by the Joint Venture Agreements and/or for any act
omitted to be performed, except in any case where the alleged act or failure to
act giving rise to the claim for indemnification is a result of fraud, deceit,
gross negligence, willful misconduct, or a wrongful taking by such Member, which
indemnification shall include all reasonable expenses incurred, including
reasonable legal and other professional fees and expenses.
(b) To the extent that the activities of a Member (including its
Affiliates and their respective officers, directors, partners, employees,
shareholders and agents) other than in connection with performing its
obligations under the Joint Venture Agreements (a "Non-Company Activity"), gives
rise to a claim or litigation, such Member shall indemnify the Company and each
other Member (including its Affiliates and their respective officers, directors,
partners, employees, shareholders and agents) of the Company who was or is made
a party to or a witness in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, which
arises by reason of the Non-Company Activities of the indemnifying Member or by
reason of fraud, deceit, gross negligence, willful misconduct, or a wrongful
taking by the Member (including its Affiliates and their respective officers,
directors, partners, employees, shareholders and agents), against all expenses
(including attorneys' fees and expenses), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by the Company or the indemnified
Member in connection with such action, suit or proceeding. No amount paid
hereunder shall be treated as a Capital Contribution or a loan to the Company by
the Member making such payment.
6.15 Interests of the Parties. Notwithstanding any other provisions of
this Agreement, all decisions made and all actions taken by the Management
Committee with respect to any Company matter shall be made or taken in the best
interest of the Company.
6.16 Scientific Advisory Board.
(a) Establishment and Functions. The Management Committee shall
establish a Scientific Advisory Board ("SAB") for the Company, consisting of
experts in the Field or related fields who may be members of the Scientific
Advisory Board of either Member or may be previously unaffiliated with either
party. The SAB shall perform such functions and advise the Company on matters as
the Management Committee may from time to time determine, including, without
limitation, evaluation of the Research Program and the provisions of advice on
scientific, technical and intellectual property matters.
(b) Meetings. The SAB shall meet as needed in Cambridge,
Massachusetts at the Principal Office of the Company. Representatives of each
Member, in addition to the members of the SAB, may attend such meetings at the
invitation of either Member, with the approval of the other Member.
(c) Expenses. The Company shall bear all expenses of the SAB members
related
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<PAGE> 96
to the participation of the SAB members on the SAB and attendance at SAB
meetings, pursuant to the Scientific Research Services Agreement; provided,
however, that when appropriate, upon consultation with the Management Committee,
ARIAD shall make appropriate provision for the grant of ARIAD stock options to
the SAB members pursuant to the Scientific Research Services Agreement.
ARTICLE VII
BOOKS AND RECORDS; CONFIDENTIALITY
7.1 Books and Records; Inspection. ARIAD, on behalf of the Company and
pursuant to the Administrative Services Agreement, shall keep just and true
books of account with respect to the Company's operations. Such books shall be
maintained at the Principal Office, or at such other location as approved by the
Members, and each Member, and their duly authorized representatives, shall have
access to such books as provided in the Administrative Services Agreement.
7.2 Accounting Basis and Fiscal Year. The books of the Company shall be
kept on the accrual method of accounting, or on such other method of accounting
as the Members may from time to time determine, and shall be closed and balanced
at the end of each fiscal year. The same method of accounting shall be used for
both Company accounting and tax purposes. All decisions as to accounting matters
shall be made in accordance with the accounting methods utilized for federal
income tax purposes and otherwise in accordance with generally accepted
accounting principles applied in a consistent manner. The Company and the
Members may rely upon the advice of the firm of independent certified public
accountants employed by ARIAD to conduct ARIAD's regular annual audit as to
whether such decisions are in accordance with generally accepted accounting
principles.
7.3 Reports. ARIAD, on behalf of the Company and pursuant to the
Administrative Services Agreement, shall prepare or cause to be prepared the
following unless otherwise determined by the Members:
(a) Within ninety (90) days after the end of each fiscal year, ARIAD
shall cause to be prepared and delivered to each person who was a Member at any
time during the fiscal year then ended an audited financial report of the
Company, including a balance sheet, a profit and loss statement and a cash flow
or source and application of funds statement, all of which shall be prepared on
the accrual basis of accounting and audited by the independent certified public
accountants hired by the Members pursuant to Section 6.6. In addition, within
ninety (90) days after the end of each fiscal year, ARIAD shall cause to be
prepared and delivered to each Member such information as may be needed to
enable such Member to file its federal income tax return, any required state
income tax return and any other reporting or filing requirements imposed by any
governmental agency or authority.
(b) Within forty-five (45) days after the end of each fiscal
quarter, ARIAD shall cause to be prepared and distributed to each Member a
financial report of the Company, including a
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<PAGE> 97
balance sheet and a profit and loss statement, and a cash flow or source and
application of funds statement, all of which shall be prepared on the accrual
basis of accounting. Such report shall contain a status report on all material
Company activities for such quarter.
(c) Promptly after the commencement thereof, ARIAD shall cause to be
delivered to the Members notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Company or any assets of the
Company.
(d) The cost of all reporting described in this Section 7.3 shall be
paid by the Company to ARIAD in accordance with the terms of the Administrative
Services Agreement. HMRI and ARIAD shall each have the right, using the firm of
independent certified public accountants employed by the Company to conduct the
Company's regular annual audit, or another national firm of independent
certified public accountants acceptable to the Company (whose approval of such
accountants will not be unreasonably withheld), to audit such books on any one
occasion as to each fiscal year within two (2) years after the delivery of
year-end financial statements for the fiscal year to which they relate for the
purpose of verifying such charges and costs. Such examination shall be made upon
reasonable advance notice to the Company during normal business hours at the
Principal Office of the Company.
7.4 Bank Accounts. ARIAD, on behalf of the Company, shall cause one or
more separate accounts to be maintained in a bank (or banks) or other reputable
financial depository or institution (including, without limitation, money market
funds), which accounts shall be used for the payment of the expenditures
incurred in connection with the business of the Company, and in which shall be
deposited any and all cash receipts of the Company. All such amounts shall be
and remain the property of the Company, and shall be received, held and
disbursed by the Company and its designees for the purposes specified in this
Agreement. There shall not be deposited in any of said accounts any funds other
than funds belonging to the Company, and no other funds shall in any way be
commingled with such funds.
7.5 Confidentiality.
(a) The Company and each Member each recognize that the Confidential
Information of the Company and the other Member (including minutes of meetings
of the Management Committee) constitute highly valuable and proprietary
confidential information. The Company and each Member each agree that during the
Term and for five (5) years thereafter, but in no event less than ten (10)
years, it will keep confidential, and will cause its employees, consultants,
Affiliates and licensees and sublicensees to keep confidential, all Confidential
Information of the other party and the Company that is disclosed to it, or to
any of its employees, consultants, Affiliates and licensees and sublicensees,
pursuant to or in connection with this Agreement, except to the extent that
disclosure is required in accordance with the performance of this Agreement.
Neither the Company nor each Member nor any of their respective employees,
consultants, Affiliates and licensees and sublicensees shall use Confidential
Information of the other party or the Company for any purpose whatsoever except
as expressly permitted in this Agreement.
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(b) The Company and each Member each agree that any disclosure of
the Confidential Information of the Company and the other Member (including
minutes of meetings of the Management Committee) to any of its officers,
employees, consultants or agents or those of any of its Affiliates and licensees
and sublicensees shall be made only if and to the extent necessary to carry out
its rights and responsibilities under this Agreement, shall be limited to the
maximum extent possible consistent with such rights and responsibilities and
shall only be made to persons who are bound by written confidentiality
obligations to maintain the confidentiality thereof and not to use such
Confidential Information except as expressly permitted by this Agreement. The
Company and each Member each agree not to disclose the Confidential Information
of the Company or the other party to any third parties under any circumstance
without the prior written approval from the other party or the Company (such
approval not to be unreasonably withheld), except as required by law, and except
as otherwise expressly permitted by this Agreement. The Company and each Member
each shall take such action, and shall cause its Affiliates and licensees and
sublicensees to take such action, to preserve the confidentiality of the
Company's and each other's Confidential Information as it would customarily take
to preserve the confidentiality of its own Confidential Information, and in no
event, less than reasonable care. The Company and each Member upon the other's
request, will return all the Confidential Information disclosed to it by the
other party pursuant to this Agreement, including all copies and extracts of
documents, within sixty (60) days of the request following the termination of
this Agreement; provided, however, that a party may retain Confidential
Information of the other party relating to any license or right to use
Technology or any Candidate Gene, Validated Target or Validated Protein which
survives such termination and one copy of all other Confidential Information may
be retained in inactive archives solely for the purpose of establishing the
contents thereof.
(c) The Company and each Member each represent that all of its
employees and the employees of its Affiliates, and any consultants to such party
or its Affiliates, participating in the Company's activities who shall have
access to Confidential Information of the Company or the other party are bound
by written obligations to maintain such information in confidence and not to use
such information except as expressly permitted herein. The Company and each
Member each agrees to enforce confidentiality obligations to which its employees
and consultants (and those of its Affiliates) are obligated.
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ARTICLE VIII
ASSIGNABILITY OF MEMBERSHIP INTERESTS
8.1 Assignment.
(a) Neither this Agreement nor any interest or obligation of a
Member hereunder may be assigned by either Member without the consent of the
other which shall not be unreasonably withheld, except that either Member may
assign this Agreement, its interest in the Company, and the rights, obligations
and interests of such Member, in whole or in part, to any of its Affiliates, to
any entity created for the purpose of providing financing for either Member's
Capital Contributions to the Company, to any purchaser of all or substantially
all of its assets or to any successor corporation resulting from any merger or
consolidation of such Member with or into such corporations.
(b) An assignment of a Member's interest does not of itself dissolve
the Company.
8.2 Substitute Members. No assignee of a Member's interest shall have the
right to be admitted as a substitute member (a "Substitute Member") in place of
the assignor unless:
(a) the assignor shall designate in writing to the other Member the
intention that the assignee is to become a Substitute Member;
(b) the assignee shall agree in writing to be bound by all of the
terms of this Agreement;
(c) the assignee shall execute and/or deliver such instruments,
including without limitation, an opinion of counsel satisfactory to the Members,
to the effect that such proposed assignment and substitution does not violate
state or federal securities laws, and such instrument as the Members deem
necessary or desirable to effect such assignee's admission as a Substitute
Member and to evidence the assignee's acceptance of the terms of this Agreement;
and
(d) the assignee shall pay all reasonable expenses in connection
with the assignee's admission as a Substitute Member.
ARTICLE IX
TERMINATION AND DISENGAGEMENT
9.1 Termination. The Term of the Company shall commence on the date first
above written and shall be in full force and effect for ten (10) years until the
earliest of the following:
(a) the termination of the JV Master Agreement pursuant to Section
9.3 thereof;
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(b) the entry of a decree of judicial dissolution under Section 802
of the Act; or
(c) the occurrence of any event, other than those referred to in
paragraph (b), which causes dissolution of a limited liability company under the
Act.
9.2 Extension of Term. The Members may agree to extend the Term of the
Company beyond ten (10) years by mutual written agreement.
9.3 Distribution Upon Dissolution.
(a) After payment of liabilities owing to creditors (other than
liabilities to ARIAD under the Administrative Services Agreement and Scientific
Research Services Agreement), the Members or liquidator shall set up such
reserves as they deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company, including the expenses of
liquidation. Such reserves may be paid over by the Members or liquidator to a
bank, to be held in escrow for the purpose of paying any such contingent or
unforeseen liabilities or obligations and, at the expiration of such period as
the Members or liquidator may deem advisable, such reserves shall be distributed
to all of the Members or their assigns in the manner set forth below in Section
9.3(b). In the event that any part of such net assets consists of securities or
other non-cash assets, the Members or liquidator may (but shall not be required
to) take whatever steps they deem appropriate to convert such assets into cash
or into any other form that would facilitate the distribution thereof.
(b) After payment has been made pursuant to Section 9.3(a) hereof,
Section 9.4 of the JV Master Agreement shall be applied with respect to
determining the relative rights and obligations of the Members in the event of
termination of the Company. Any remaining assets shall be distributed to the
Members in accordance with their positive Capital Account balances.
(c) The Company shall terminate when all property has been
distributed among the Members. Upon such termination, the Members shall execute
and cause to be filed a certificate of cancellation of the Company, as provided
for in Section 203 of the Act, and any and all other documents necessary in
connection with the termination of the Company.
9.4 Survival. Termination of the Company as provided herein shall be
without prejudice to those rights and obligations of the parties as described in
Section 9.5 of the JV Master Agreement, and Sections 6.14, 7.5, 10.1 and Article
XI hereunder shall survive such termination.
ARTICLE X
DISPUTE RESOLUTION
10.1 Dispute Resolution. In the event of any dispute, difference or
question arising between the parties in connection with this Agreement, the
construction thereof, or the rights,
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duties or liabilities of either party, then such disputes shall be resolved in
accordance with the procedures set forth in Section 6.8 hereof and Section 12.1
of the JV Master Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
11.2 Governing Law and Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, U.S.A.,
without regard to the application of principles of conflicts of law.
11.3 Binding Effect. This Agreement shall take effect as of the date first
above written immediately following the Closing under the JV Master Agreement
and upon execution of this Agreement and shall be binding upon and inure to the
benefit of the parties and their respective legal representatives, successors
and permitted assigns.
11.4 Headings. Section and subsection headings are inserted for
convenience of reference only and do not form a part of this Agreement.
11.5 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
11.6 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party or
parties waiving compliance. The delay or failure of any party at any time or
times to require performance of any provisions 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 instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
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11.7 No Third Party Beneficiaries. Except as set forth in Sections 6.13
and 6.14 hereof, no third party including any employee of any party to this
Agreement, shall have or acquire any rights by reason of this Agreement.
11.8 Assignment and Successors. Neither this Agreement nor any obligation
of a party hereunder may be assigned by either party without the consent of the
other which shall not be unreasonably withheld, except that each party may
assign this Agreement, its interest in the Company, and the rights, obligations
and interests of such party, in whole or in part, to any of its Affiliates, to
any entity created for the purpose of providing financing for either party's
contributions to the Company (provided, however, that no party may make any such
assignment to any such entity without the consent of the other party which shall
not be unreasonably withheld), to any purchaser of all or substantially all of
its assets or to any successor corporation resulting from any merger or
consolidation of such party with or into such corporations. Subject to the
foregoing, any reference to ARIAD or HMRI hereunder shall be deemed to include
the successor thereto and assigns thereof.
11.9 Force Majeure. Neither ARIAD nor HMRI shall be liable for failure of
or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes beyond the reasonable control of ARIAD or HMRI.
In event of such force majeure, the party affected thereby shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.
11.10 Interpretation. The parties hereto acknowledge and agree that: (i)
each party and its counsel reviewed and negotiated the terms and provisions of
this Agreement and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all parties hereto and not in a favor of or against any party, regardless
of which party was generally responsible for the preparation of this Agreement.
11.11 Integration; Severability. This Agreement, together with the other
Joint Venture Agreements, constitutes on and as of the date hereof the entire
understanding between the parties with respect to the subject matter hereof, and
all prior or contemporaneous understandings or agreements, whether written or
oral, between the parties with respect to such subject matter are hereby
superseded in their entirety, and this Agreement supersedes any duplicative or
inconsistent provision in the JV Master Agreement. If any provision hereof
should be held invalid, illegal or unenforceable in any respect in any
jurisdictions then, to the fullest extent permitted by law, (a) all other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (b) such invalidity, illegality, or
unenforceability shall not affect the validity, legality or enforceability of
such provision in any other jurisdiction. To the extent permitted by applicable
law, each party hereby waives any provision of law that would render any
provision hereof prohibited or unenforceable in any respect.
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11.12 Further Assurances. Each of ARIAD and HMRI agrees to duly execute
and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including,
without limitation, the filing of such additional assignments, agreements,
documents and instruments, that may be necessary or as the other party hereto
may at any time and from time to time reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes of, or to
better assure and confirm unto such other party its rights and remedies under,
this Agreement.
11.13 Partition. The Members hereby agree that no Member, nor any
successor-in-interest to any Member, shall have the right while this Agreement
remains in effect to have the property of the Company partitioned, or to file a
complaint or institute any proceeding at law or in equity to have the property
of the Company partitioned, and each Member, on behalf of itself and its
successors, representatives, heirs, and assigns, hereby waives any such right.
It is the intention of the Members that during the term of this Agreement, the
rights of the Members and their successors-in-interest, as among themselves,
shall be governed by the terms of this Agreement and the other Joint Venture
Agreements, and that the right of any Member or successor-in-interest to assign,
transfer, sell or otherwise dispose of its interest in the property shall be
subject to the limitations and restrictions of this Agreement and the other
Joint Venture Agreements.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal as of the day and year first above written.
HOECHST MARION ROUSSEL, INC.
By:
-------------------------------------
Title:
ARIAD PHARMACEUTICALS, INC.
By:
-------------------------------------
Title: Chief Executive Officer
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SCHEDULE A
TO
HOECHST-ARIAD GENOMICS CENTER, LLC
OPERATING AGREEMENT
<TABLE>
<CAPTION>
Initial
Capital
Contribution Percentage Interest
------------ -------------------
<S> <C> <C>
HOECHST MARION ROUSSEL, INC. $ [*] 50%
Route 202-206
P.O. Box 6800
Bridgewater, NJ 08807-0800
ARIAD PHARMACEUTICALS, INC. $ [*] 50%
26 Landsdowne Street
Cambridge, MA 02139
--------- ---
Total $ [*] 100%
========= ===
</TABLE>
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<PAGE> 106
EXHIBIT D
FORM OF ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT
This ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is entered
into as of [__________] [___], 1997, by and among ARIAD PHARMACEUTICALS, INC., a
Delaware corporation with principal offices at 26 Landsdowne Street, Cambridge,
MA 02139-4234 ("ARIAD"), the HOECHST-ARIAD GENOMICS CENTER, LLC, a Delaware
limited liability company with principal offices at 26 Landsdowne Street,
Cambridge, MA 02139-4234 (the "Company"), and HOECHST MARION ROUSSEL, INC., a
Delaware corporation having its offices at Route 202-206, P.O. Box 6800,
Bridgewater, NJ 08807-0800 ("HMRI").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HMRI have
entered into a Joint Venture Master Agreement, dated March 4, 1997 (the "JV
Master Agreement") and related Joint Venture Agreements, providing for the
formation of the Company and the establishment of a joint venture to pursue
Functional Genomics collaboratively;
WHEREAS, in order to carry out its purpose to pursue Functional
Genomics and conduct its business activities and operations pursuant thereto,
the Company requires, among other things, certain personnel, facilities and
services;
WHEREAS, the Company desires to engage ARIAD to provide to the Company
pursuant to this Agreement, among other things, administrative, managerial,
financial, accounting, insurance, human resource, and other corporate services
required by the Company to conduct its business and operations as directed by
the Management Committee, all on the terms and conditions as set forth herein
(the "Administrative Services");
WHEREAS, ARIAD desires to provide such Administrative Services on the
terms and conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions.
Unless otherwise provided, all capitalized terms used herein
shall have the meanings set forth in the JV Master Agreement.
2. Administrative Services.
Pursuant to the terms herein, ARIAD will use commercially
reasonable efforts to provide to the Company such of the Administrative Services
as are required by the Company to
<PAGE> 107
conduct the business activities and operations of the Company as are proposed to
be conducted as determined by the Management Committee, all in accordance with
an annual budget approved by the Management Committee as provided in the JV
Master Agreement. ARIAD shall provide the Administrative Services in a prompt
manner generally consistent with ARIAD's past practices in the conduct of its
own business and operations. Without limiting the generality of the foregoing,
the Administrative Services to be provided to the Company by ARIAD shall
include, but are not limited to:
(i) Services concerning accounting and financial matters,
government and public relations, personnel
administration, recruiting, relocation, procurement,
purchasing, planning, auditing, administrative
matters and insurance, including, without limitation,
maintenance of Company books and records, maintenance
of separate Company bank accounts and preparation of
forecasts and financial statements.
(ii) Treasury services, including without limitation,
cashier, payroll and payment services and sales
records.
(iii) Employee benefits administration, including, without
limitation, workers compensation, health, dental,
disability and life insurance programs and 401(k)
programs.
(iv) Services concerning selection, recruitment,
supervision and evaluation of personnel assigned to
the Company, including, without limitation,
immigration matters.
(v) Handling of regulatory, legal and tax matters before
local, state, United States and international
authorities.
(vi) Fixed asset management, records retention and
communications services.
(vii) Meeting planning and organization.
3. Compensation for Administrative Services; Determination of
Cost.
(a) In consideration of the performance of the Administrative
Services by ARIAD, the Company shall pay to ARIAD the Reimbursable Costs (as
defined herein) incurred by ARIAD in providing such Administrative Services on a
quarterly basis as follows: the amount of the budget for the first calendar
quarter will be paid by the Company to ARIAD within thirty (30) days following
execution of this Agreement. The amount of the budget for the second calendar
quarter will be paid by the Company to ARIAD on or before April 1, 1997.
Thereafter, at least forty-five (45) days prior to each calendar quarter, ARIAD
will invoice the Company for an amount equal to the budgeted amount for the
following quarter as contained in the annual budget (as amended), plus or minus
the excess or deficiency of actual expenditures during the calendar quarter
preceding the invoice compared to the budgeted amount for such quarter. The
invoice will be paid by the Company to ARIAD on or before the first day of the
following quarter. For example, if the annual budget for 1998 was $1,200,000 in
equal quarterly amounts of $300,000,
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<PAGE> 108
and actual expenditures were $220,000 in the first quarter, $320,000 in the
second quarter, and $300,000 in each of the third and fourth quarters, then the
Company would pay to ARIAD $300,000 on January 1, 1998, $300,000 on April 1,
1998, $220,000 on July 1, 1998 ($300,000 less $80,000 deficiency from first
quarter) and $320,000 on September 1, 1998 ($300,000 plus $20,000 excess from
the second quarter).
(b) Each invoice shall set forth in reasonable detail the
determination of the cost upon which the amount to be reimbursed is based,
broken down by the nature of costs incurred in rendering the Administrative
Services and the period to which such invoice relates. A copy of each invoice
will be sent to HMRI at the time it is sent to the Company. If HMRI or the
Company has objection to the amount of any invoice, the Company shall
nevertheless be obligated to pay the undisputed portion of the invoice in full,
and the parties shall promptly meet to resolve the matter. If the parties do not
resolve the matter within thirty (30) days, the Company or HMRI may thereafter
cause ARIAD's records with respect thereto to be audited in accordance with
Section 4 hereof. Following such audit, or at the request of either party after
the thirty (30) day period if no audit is requested, the Management Committee
shall endeavor in good faith to resolve any disagreement with respect to costs
for Administrative Services rendered by ARIAD to the Company under this
Agreement. If the Management Committee does not resolve the matter, it shall be
resolved in accordance with the procedures set forth in Sections 3.8 and 12.1 of
the JV Master Agreement. Notwithstanding the foregoing, in the event that ARIAD
anticipates that the total amount to be paid to ARIAD for the Administrative
Services will exceed the annual budget approved by the Management Committee,
ARIAD shall promptly advise the Management Committee, which shall, in
consultation with ARIAD, determine whether to reduce the services to be provided
or amend the budget. If the Management Committee does not resolve the matter, it
shall be resolved in accordance with the procedures set forth in Section 3.8 of
the JV Master Agreement.
(c) "Reimbursable Costs" shall mean all direct and indirect
costs incurred by ARIAD in performing work under this Agreement. Such
Reimbursable Costs shall include, but are not limited to:
(i) Personnel costs, including, without
limitation: salaries, wages and bonuses (but
not including stock options); employee
benefits, including, without limitation,
workers compensation, health, dental,
disability and life insurance and 401(k)
matching contributions; payroll taxes; and
recruiting and relocation, including,
without limitation, immigration matters.
(ii) Outside service costs contracted to
institutions, consultants, accountants,
counsel and others, including, without
limitation, out-of-pocket expenses.
(iii) General office administration costs,
including, without limitation:
communication, networking and data
processing; hardware and software
maintenance; office services, including,
without limitation, equipment rental,
postage, printing and graphic arts; library
and database services; and seminars and
other training.
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<PAGE> 109
(iv) Facilities costs, including, without
limitation: rent, depreciation and
amortization; maintenance, real estate
taxes, utilities and repairs; interest
expense; insurance; and parking.
(v) Equipment costs, including, without
limitation: operating lease payments;
finance charges under capital leases;
depreciation and amortization; interest
expense; sales and use taxes; and
maintenance and repairs.
Notwithstanding the foregoing, Reimbursable Costs shall exclude expenses,
including compensation, of members of the Management Committee in performance of
their duty as members of the Management Committee. Costs and expenses not
included in the annual budget shall be authorized in a manner consistent with
ARIAD's internal accounting controls, and the application of such accounting
controls to the Company shall be subject to approval by the Management
Committee.
(d) In determining Reimbursable Costs under this Agreement,
ARIAD and its Affiliates will employ the following cost accounting policies:
(i) Direct and indirect costs shall be
determined as incurred based on specifically
identified personnel, activities, services
and materials that are provided by ARIAD to
the Company.
(ii) General and administrative expenses of ARIAD
charged to ARIAD's administrative
departments, presently consisting of the
finance, corporate administration and
operations departments, shall be allocated
to the Company based on a ratio of: (A) the
total number of ARIAD full time employees
assigned to the Company on the last day of a
calendar quarter (but not less than [*] to
(B) the total number of ARIAD full time
employees assigned to all of ARIAD's
research and development departments (other
than research support departments),
including those assigned to the Company on
the last day of a calendar quarter (the
"Employee Ratio"). For purposes of
calculating the Employee Ratio, Visiting
Scientists from ARIAD and HMRI will be [*]
the total number of full time employees
assigned to the Company (as in (A) above)
and the total number of full time employees
assigned to all of ARIAD's research and
development departments (other than research
support departments) (as in (B) above). For
example, based on ARIAD's expectation that
it will have [*] full time employees
assigned to its research and development
departments (exclusive of those assigned to
the Company) on March 31, 1997, the Employee
Ratio would be approximately [*] as of [*].
(e) All other direct and indirect costs and expenses which are
not otherwise covered in this Section 3 and which are in support of
Administrative Services pursuant to this
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<PAGE> 110
Agreement will be allocated on the basis specified in subparagraph (d), except
that if it is not reasonable or appropriate to use the basis specified in
subparagraph (d), such costs and expenses shall be allocated on the basis
generally employed by ARIAD in allocating costs and expenses among departments.
(f) No amount charged under the Scientific Research Services
Agreement shall be charged under this Agreement.
4. Maintenance of Books and Records; Audits.
ARIAD shall maintain true and complete books of account
containing an accurate record of the data necessary for the proper determination
and computation of all charges and Reimbursable Costs to be reimbursed by the
Company to ARIAD under the terms of this Agreement; provided, however, that
ARIAD shall not be required hereby to maintain any duplicate books of account or
records. ARIAD shall retain and maintain such records in accordance with ARIAD's
records retention policy for its other books and records; provided, however,
such retained records shall not be destroyed without the consent of HMRI (such
consent not to be unreasonably withheld). The Company and HMRI shall each have
the right, using the firm of independent certified public accountants employed
by ARIAD to conduct ARIAD's regular annual audit, or another national firm of
independent certified public accountants acceptable to ARIAD (whose approval of
such accountants will not be unreasonably withheld), to audit such books on any
one occasion as to each fiscal year within two (2) years after the delivery of
year-end financial statements for the fiscal year to which they relate for the
purpose of verifying such charges and costs. Such examination shall be made upon
reasonable advance notice to ARIAD during normal business hours at the Principal
Office of the Company.
5. Insurance.
ARIAD, on behalf of the Company, shall use commercially
reasonable efforts to obtain insurance for the Company, and in the name of the
Company, against such casualties and contingencies and of such types and in such
amounts as is customary for companies similarly situated. Each of ARIAD and HMRI
shall be responsible for directors and officers liability insurance insuring
their respective members serving on the Management Committee, but neither party
shall be required to maintain such insurance.
6. Quarterly Financial Reports.
As part of the Administrative Services, ARIAD shall provide to
the Management Committee, within forty-five (45) days after each calendar
quarter, a financial report, broken down into reasonable line items and
categories, showing costs and expenses of the Company as compared to the budget
for such quarter.
7. Access.
At any time and from time to time during the term of this
Agreement and until completion of wind-down of the Company after termination,
authorized representatives of ARIAD
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<PAGE> 111
and HMRI shall have access to the Principal Offices, upon reasonable notice and
at reasonable times for specified periods, without further consideration and
subject to reasonable confidentiality undertakings, for the purpose of allowing
such ARIAD and HMRI authorized representatives to review the operations, books
and records of the Company and to assist with the business and purposes of the
Company, including, but not limited to, internal auditors of ARIAD or HMRI
examining books and records of the Company for the purpose of resolving any
disputed invoice amount under this Agreement or the Scientific Research Services
Agreement.
8. Independent Contractor; Relationship of the Parties.
(a) Nothing herein shall be deemed to constitute ARIAD (or any
of ARIAD's employees or agents) to be the agent, representative or employee of
the Company. ARIAD shall be an independent contractor and shall have
responsibility for and control over the details and means of performing the
Administrative Services.
(b) Nothing herein shall be construed as: (i) an assumption by
ARIAD of responsibility for the operations of the Company except as expressly
set forth in this Agreement; (ii) an assumption by ARIAD of any financial
obligation of the Company; or (iii) the assumption by ARIAD of any
responsibility for work performed by outside suppliers employed directly by the
Company at the suggestion or recommendation of ARIAD.
9. Cooperation.
Each of ARIAD, HMRI and the Company shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
fulfilled or performed by it under this Agreement.
10. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement.
11. Subcontractors.
With the prior consent of the Company, ARIAD may subcontract
all or any portion of its services to be provided hereunder to third parties;
provided, however, that any such subcontractor shall be bound by the terms of
this Agreement; provided, further, however, that for services usually performed
for ARIAD by third parties and services performed for ARIAD by its Affiliates,
no such consent shall be required. Notwithstanding the foregoing, with the prior
consent of the Company, ARIAD may request that HMRI perform certain services,
and if HMRI agrees to perform such services, the costs to the Company of such
services shall be reasonably determined by the parties, which costs shall
include a reasonable allocation of overhead.
12. Indemnification of ARIAD.
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<PAGE> 112
The Company shall, and hereby agrees to, indemnify, protect
and hold each ARIAD Indemnitee harmless from and against any and all
liabilities, costs or expenses incurred by any ARIAD Indemnitee as a result of
services rendered by ARIAD under this Agreement, including lawsuits of and
claims by third parties, except for liabilities, costs or expenses resulting
from ARIAD's or any of its employees or agents' gross negligence or willful
misconduct.
13. Force Majeure.
None of the parties shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and no party shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such party. In event of
such force majeure, the party seeking to be excused on the basis of force
majeure shall advise the other party of the beginning and end of the
circumstances constituting the force majeure, and shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
14. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement. Notwithstanding the foregoing, invoices for Reimbursable Costs
pursuant to Section 3 hereof shall be sent to HMRI at the following address:
Hoechst Marion Roussel, Inc.
Route 202-206, P.O. Box 6800
Bridgewater, NJ 08807-0800
Attn: R&D Controller
15. Further Assurances.
Each of the parties hereto agrees to duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
16. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by a party without the
consent of the others which shall not be unreasonably withheld, except that a
party may assign this Agreement and the rights, obligations and interests of
such party, in whole or in part, to any of its Affiliates, to any entity created
for the purpose of providing financing for either party's contributions to the
Company (provided, however,
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<PAGE> 113
that any such assignment by a party to such entity shall not be permitted
without the prior consent of the other party, which shall not be unreasonably
withheld), to any purchaser of all or substantially all of its assets or to any
successor corporation resulting from any merger or consolidation of such party
with or into such corporations. Subject to the foregoing, any reference to
ARIAD, HMRI or the Company hereunder shall be deemed to include the successor
thereto and assigns thereof.
17. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by a party
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by the parties,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by the parties.
18. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
19. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, each party hereby waives any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
20. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
21. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which
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<PAGE> 114
counterparts together, shall constitute one and the same instrument.
22. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
23. Dispute Resolution.
In the event of any dispute, difference or question arising
between the parties in connection with this Agreement, the construction thereof,
or the rights, duties or liabilities of either party, then such disputes shall
be resolved in accordance with the procedures set forth in Sections 3.8 and 12.1
of the JV Master Agreement.
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<PAGE> 115
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives:
ARIAD PHARMACEUTICALS, INC.
By: ________________
Title: Chief Executive Officer
HOECHST MARION ROUSSEL, INC.
By: ________________
Title:
HOECHST-ARIAD GENOMICS CENTER, LLC
By: ________________
Title: Co-Chair of Management Committee
By: ________________
Title: Co-Chair of Management Committee
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<PAGE> 116
EXHIBIT E
FORM OF SCIENTIFIC RESEARCH SERVICES AGREEMENT
SCIENTIFIC RESEARCH SERVICES AGREEMENT
This SCIENTIFIC RESEARCH SERVICES AGREEMENT (the "Agreement") is
entered into as of [__________] [___], 1997, by and among ARIAD PHARMACEUTICALS,
INC., a Delaware corporation with principal offices at 26 Landsdowne Street,
Cambridge, MA 02139-4234 ("ARIAD"), the HOECHST-ARIAD GENOMICS CENTER, LLC, a
Delaware limited liability company with principal offices at 26 Landsdowne
Street, Cambridge, MA 02139-4234 (the "Company"), and HOECHST MARION ROUSSEL,
INC., a Delaware corporation having its offices at Route 202-206, P.O. Box 6800,
Bridgewater, NJ 08807-0800 ("HMRI").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HMRI have
entered into a Joint Venture Master Agreement, dated March 4, 1997 (the "JV
Master Agreement") and related Joint Venture Agreements, providing for the
formation of the Company and the establishment of a joint venture to pursue
Functional Genomics collaboratively;
WHEREAS, in order to carry out its purpose to pursue Functional
Genomics and conduct its business activities and operations pursuant thereto,
the Company requires, among other things, certain personnel, facilities and
services;
WHEREAS, the Company desires to engage ARIAD to provide to the Company
pursuant to this Agreement, among other things, (i) scientists (the "Company
Scientists") to conduct research in furtherance of the Master Research Plan and
the then current Annual Research Plan as directed by the Scientific Director and
the Management Committee; (ii) facilities for the Company to conduct its
business activities, including laboratories for Company Scientists and Visiting
Scientists to conduct research; (iii) access for Company Scientists and Visiting
Scientists to certain common areas of ARIAD's facilities along with other ARIAD
employees; (iv) the Scientific Director to manage the day-to-day operations of
the Company (subject to the selection of the Scientific Director by the
Management Committee); (v) the Scientific Advisory Board (subject to selection
of the members of the Scientific Advisory Board by the Management Committee);
and (vi) other personnel to support the start-up and ongoing Research Program of
the Company, on the terms and conditions as set forth herein (collectively, the
"Scientific Research Services");
WHEREAS, ARIAD desires to provide such Scientific Research Services on
the terms and conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
<PAGE> 117
1. Definitions.
Unless otherwise provided, all capitalized terms used herein shall
have the meanings set forth in the JV Master Agreement.
2. Scientific Research Services.
(a) Pursuant to the terms herein, ARIAD will use commercially
reasonable efforts to provide to the Company such of the Scientific Research
Services as are required by the Company to conduct the Research Program as
proposed to be conducted as determined by the Management Committee, all in
accordance with the Master Research Plan and the then current Annual Research
Plan and annual budget approved by the Management Committee as provided in the
JV Master Agreement, in a facility or facilities to be owned (or leased) and
operated by ARIAD. ARIAD will furnish scientific employees and consultants
(e.g., the Scientific Advisory Board), supervision (including the Scientific
Director), services, supplies and materials to perform the Scientific Research
Services for the Company and provide compensation and benefits, including,
without limitation, stock options, for the employees and certain consultants
rendering the Scientific Research Services. ARIAD shall provide the Scientific
Research Services in a prompt manner generally consistent with ARIAD's past
practices in the conduct of its own business and operations.
(b) ARIAD, with the cooperation of HMRI, will use commercially
reasonable efforts to employ at the Company [*] in order to accomplish the
Company's scientific objectives as reflected in the Annual Research Plans.
3. Compensation for Scientific Research Services; Determination of
Cost.
(a) In consideration of ARIAD's provision of facilities and the
performance of the Scientific Research Services, the Company shall pay to ARIAD
the Reimbursable Costs (as defined herein) incurred by ARIAD in providing such
facilities and services on a quarterly basis as follows: the amount of the
budget for the first calendar quarter will be paid by the Company to ARIAD
within thirty (30) days following execution of this Agreement. The amount of the
budget for the second calendar quarter will be paid by the Company to ARIAD on
or before April 1, 1997. Thereafter, at least forty-five (45) days prior to each
calendar quarter, ARIAD will invoice the Company for an amount equal to the
budgeted amount for the following quarter as contained in the annual budget (as
amended), plus or minus the excess or deficiency of actual expenditures during
the calendar quarter preceding the invoice compared to the budgeted amount for
such quarter. The invoice will be paid by the Company to ARIAD on or before the
first day of the following quarter. For example, if the annual budget for 1998
was $12,000,000 in equal quarterly amounts of $3,000,000, and actual
expenditures were $2,200,000 in the first quarter, $3,200,000 in the second
quarter, and $3,000,000 in each of the third and fourth quarters, then the
Company would pay to ARIAD $3,000,000 on January 1, 1998, $3,000,000 on April 1,
1998, $2,200,000 on July 1, 1998 ($3,000,000 less $800,000 deficiency from first
quarter) and $3,200,000 on September 1, 1998 ($3,000,000 plus $200,000 excess
from the second quarter).
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<PAGE> 118
(b) Each invoice shall set forth in reasonable detail the
determination of the cost upon which the amount to be reimbursed is based,
broken down by the nature of costs incurred in rendering the Scientific Research
Services and the period to which such invoice relates. A copy of each invoice
will be sent to HMRI at the time it is sent to the Company. If the Company or
HMRI has objection to the amount of any invoice, the Company shall nevertheless
be obligated to pay the undisputed portion of the invoice in full, and the
parties shall promptly meet to resolve the matter. If the parties do not resolve
the matter within thirty (30) days, the Company or HMRI may thereafter cause
ARIAD's records with respect thereto to be audited in accordance with Section 4
hereof. Following such audit, or at the request of either party after the thirty
(30) day period if no audit is requested, the Management Committee shall
endeavor in good faith to resolve any disagreement with respect to costs for
Scientific Research Services rendered by ARIAD to the Company under this
Agreement. If the Management Committee does not resolve the matter, it shall be
resolved in accordance with the procedures set forth in Sections 3.8 and 12.1 of
the JV Master Agreement. Notwithstanding the foregoing, in the event that ARIAD
anticipates that the total amount to be paid to ARIAD for the Scientific
Research Services will exceed the annual budget approved by the Management
Committee, ARIAD shall promptly advise the Management Committee, which shall, in
consultation with ARIAD, determine whether to reduce the services to be provided
or amend the budget. If the Management Committee does not resolve the matter, it
shall be resolved in accordance with the procedures set forth in Section 3.8 of
the JV Master Agreement.
(c) "Reimbursable Costs" shall mean all direct, indirect and
allocable costs incurred by ARIAD in performing work under this Agreement. Such
Reimbursable Costs shall include, but are not limited to:
(i) Personnel costs, including, without
limitation: salaries, wages and bonuses (but
not including stock options); employee
benefits, including, without limitation,
workers compensation, health, dental,
disability and life insurance and 401(k)
matching contributions; payroll taxes; and
recruiting and relocation, including,
without limitation, immigration matters.
(ii) Laboratory costs, including, without
limitation: laboratory supplies; small tools
and instruments; laboratory services,
including, without limitation, protein
sequencing, waste disposal, radiation
safety, biohazard control, laboratory
uniforms and laboratory cleaning; and media
and glassware preparation.
(iii) Outside service costs contracted to
laboratories, institutions, consultants,
accountants, counsel and others, including,
without limitation: patent and other
intellectual property services, consultant
fees and travel/meeting expenses.
(iv) General office administration costs,
including, without limitation:
communication, networking and data
processing; hardware and software
maintenance; office services, including,
without limitation,
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<PAGE> 119
equipment rental, postage, printing and
graphic arts; library and database services;
travel; and seminars and other training.
(v) Facilities costs, including, without
limitation: rent; depreciation and
amortization; maintenance, real estate
taxes, utilities and repairs; interest
expense; insurance; and parking.
(vi) Equipment costs, including, without
limitation: operating lease payments;
finance charges under capital leases;
depreciation and amortization; interest
expense; sales and use taxes; and
maintenance and repairs.
Notwithstanding the foregoing, Reimbursable Costs shall exclude expenses,
including compensation, of members of the Management Committee in performance of
their duty as members of the Management Committee. Costs and expenses not
included in the annual budget shall be authorized in a manner consistent with
ARIAD's internal accounting controls, and the application of such accounting
controls to the Company shall be subject to approval by the Management
Committee.
(d) In determining Reimbursable Costs under this Agreement,
ARIAD and its Affiliates will employ the following cost accounting policies:
(i) Direct and indirect costs shall be
determined as incurred based on specifically
identified personnel, activities, services
and materials that are provided by ARIAD to
the Company.
(ii) Costs and expenses incurred by ARIAD's
research support departments, presently
consisting of the research and development
operations department and intellectual
property department, shall be allocated to
the Company based on a ratio of: (A) the
total number of ARIAD full time employees
assigned to the Company on the last day of a
calendar quarter (but not less than [*]) to
(B) the total number of ARIAD full time
employees assigned to all of ARIAD's
research and development departments (other
than research support departments),
including those assigned to the Company, on
the last day of a calendar quarter (the
"Employee Ratio"). For purposes of
calculating the Employee Ratio, Visiting
Scientists from ARIAD and HMRI will [*]
total number of full time employees assigned
to the Company (as in (A) above) and the
total number of full time employees assigned
to all of ARIAD's research and development
departments (other than research support
departments) (as in (B) above). For example,
based on ARIAD's expectation that it will
have [*] full time employees assigned to its
research and development departments
(exclusive of those assigned to the Company)
on March 31, 1997, the Employee Ratio would
be approximately [*] as of [*].
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<PAGE> 120
(iii) Facilities expenses shall include all
direct, indirect and allocated costs of
maintaining and operating the facility
occupied or to be occupied by employees
assigned to the Company (and associated
mechanical areas containing equipment
supporting the facility) effective upon
execution of this Agreement. Costs and
expenses of operating and maintaining common
areas within the facility and certain
mechanical rooms containing equipment
supporting the facility occupied by both the
Company and ARIAD shall be allocated to the
Company based on the Employee Ratio.
(iv) The Company shall pay depreciation or
amortization of, and financing and interest
charges for, capital acquisitions made by
ARIAD utilized in the performance of
Scientific Research Services under this
Agreement.
(A) The term "capital acquisition" as
used herein shall mean the portion
of capital equipment or leasehold
improvements which are capitalized
on the accounting records of
ARIAD. Assets acquired under
financing leases will be
considered capital acquisitions
for purposes of this section.
Capital acquisitions will be
assigned an estimated economic (as
opposed to tax) useful life and
salvage value, if any, and
depreciation and amortization will
be computed using the
straight-line method.
(B) The financing and/or interest
charges will be determined based
on the actual terms of the finance
agreements. Financing charges
under capital lease agreements
shall be determined in accordance
with generally accepted accounting
principles and as reported in
ARIAD's audited financial
statements.
(e) In the event that ARIAD employees not assigned to the
Company on a full time basis provide supervision for the Scientific Research
Services on a part time basis (other than in performance of their duty as
members of the Management Committee), they shall be allocated to this Agreement
based on the ratio of: (A) the time which is devoted to the performance of
Scientific Research Services under this Agreement by such personnel to (B) the
total time spent by such personnel on work for ARIAD and the Company. Such costs
and expenses shall include all direct and indirect personnel costs supplemented
by an overhead allowance of [*].
(f) All other direct, indirect and allocable costs and
expenses which are not otherwise covered in this Section 3 and which are in
support of Scientific Research Services pursuant to this Agreement will be
allocated on the basis of the Employee Ratio, except that if it is not
reasonable or appropriate to use such basis, such costs and expenses shall be
allocated on the basis generally employed by ARIAD in allocating costs and
expenses among departments.
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(g) No amount charged under the Administrative Services Agreement
shall be charged under this Agreement.
4. Maintenance of Books and Records; Audits.
ARIAD shall maintain true and complete books of account containing
an accurate record of the data necessary for the proper determination and
computation of all charges and Reimbursable Costs to be reimbursed by the
Company to ARIAD under the terms of this Agreement; provided, however, that
ARIAD shall not be required hereby to maintain any duplicate books of account or
records. ARIAD shall retain and maintain such records in accordance with ARIAD's
records retention policy for its other books and records; provided, however,
such retained records shall not be destroyed without the consent of HMRI (such
consent not to be unreasonably withheld). The Company and HMRI shall each have
the right, using the firm of independent certified public accountants employed
by ARIAD to conduct ARIAD's regular annual audit, or another national firm of
independent certified public accountants acceptable to ARIAD (whose approval of
such accountants will not be unreasonably withheld), to audit such books on any
one occasion as to each fiscal year within two (2) years after the delivery of
year-end financial statements for the fiscal year to which they relate for the
purpose of verifying such charges and costs. Such examination shall be made upon
reasonable advance notice to ARIAD during normal business hours at the Principal
Office of the Company.
5. Reports to Management Committee.
ARIAD shall furnish to the Management Committee a semi-annual
written report setting forth in reasonable detail (i) a summary of the progress
of the work done by it under this Agreement pursuant to each Annual Research
Plan and (ii) a description of any material developments with respect to the
Research Program, at least fifteen (15) days prior to each semi-annual meeting
of the Management Committee.
6. Scientific Cooperation.
Scientists at ARIAD and HMRI shall cooperate with the Company in the
performance of the Research Program and, subject to any confidentiality
obligations to third parties, shall exchange information and materials as
necessary to carry out the Research Program and to assist the Company in the
performance of the Research Program, but subject to the provisions of Article 6
of the JV Master Agreement. Such activities shall be deemed to be a part of the
Company, and any Technology developed in such activities will be Joint Venture
Technology.
7. Technology Ownership.
All Technology developed under this Agreement shall be owned as set
forth in the JV Master Agreement.
8. Visiting Scientists.
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ARIAD, HMRI and the Company expect that scientists from ARIAD and
HMRI ("Visiting Scientists") may work on the Research Program at the facility
which the Research Services are provided hereunder. Under no circumstances shall
any such Visiting Scientist be deemed an agent, representative or employee of
the Company, and each shall remain an employee of HMRI or ARIAD, as the case may
be. Salary, benefits, housing and relocation expenses of Visiting Scientists
will be borne by the party by whom they are employed.
9. Special Projects for ARIAD and HMRI.
[*]
10. Bioinformatics and Information Services.
Scientists from ARIAD and HMRI shall cooperate with the Company to
establish a Bioinformatics center as required to achieve the objectives of the
Research Program and for each of ARIAD's and HMRI's internal use outside the
Company, subject to the limitations set forth in Section 7.2(c) of the JV Master
Agreement. The Management Committee will establish standards for the network
system to be used by the Company, which shall comply with the security
requirements of ARIAD and HMRI. The Company will provide overall system
administration and support for the network components at the Principal Office.
System administration and support for the network components at ARIAD and HMRI
will be the responsibility of the respective party.
11. Compliance with Laws.
ARIAD shall conduct the Scientific Research Services for the
Company under this Agreement in compliance with all applicable laws, rules,
regulations and orders.
12. Independent Contractor; Relationship of the Parties.
(a) Nothing herein shall be deemed to constitute ARIAD (or any of
ARIAD's employees or agents) to be the agent, representative or employee of the
Company. ARIAD shall be an independent contractor and shall have responsibility
for and control over the details and means of performing the Scientific Research
Services.
(b) Nothing herein shall be construed as: (i) an assumption by ARIAD
of responsibility for the operations of the Company except as expressly set
forth in this Agreement; (ii) an assumption by ARIAD of any financial obligation
of the Company; or (iii) the assumption by ARIAD of any responsibility for work
performed by outside suppliers employed directly by the Company at the
suggestion or recommendation of ARIAD.
13. Cooperation.
Each of ARIAD, HMRI and the Company shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
fulfilled or performed by it under this Agreement.
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14. Term and Termination.
This Agreement shall take effect as of the date first written above
and shall continue until termination of the JV Master Agreement in accordance
with Section 9.3 of the JV Master Agreement.
15. Subcontractors.
With the prior consent of the Company, ARIAD may subcontract all or
any portion of its services to be performed hereunder to third parties;
provided, however, that any such subcontractor shall be bound by the terms of
this Agreement; provided, further, however, that for services usually performed
for ARIAD by third parties and services performed for ARIAD by its Affiliates,
no such consent shall be required. Notwithstanding the foregoing, with the prior
consent of the Company, ARIAD may request that HMRI perform certain services,
and if HMRI agrees to perform such services, the costs to the Company of such
services shall be reasonably determined by the parties, which costs shall
include a reasonable allocation of overhead.
16. Indemnification of ARIAD.
The Company shall, and hereby agrees to, indemnify, protect and
hold each ARIAD Indemnitee harmless from and against any and all liabilities,
costs or expenses incurred by any ARIAD Indemnitee as a result of services
rendered by ARIAD under this Agreement, including lawsuits of and claims by
third parties, except for liabilities, costs or expenses resulting from ARIAD's
or any of its employees or agents' gross negligence or willful misconduct.
17. Force Majeure.
None of the parties shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and no party shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such party. In event of
such force majeure, the party seeking to be excused on the basis of force
majeure shall advise the other party of the beginning and end of the
circumstances constituting the force majeure, and shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
18. Notices.
All notices, requests, consents and other communications hereunder
shall be made in accordance with Section 13.1 of the JV Master Agreement.
Notwithstanding the foregoing, invoices for Reimbursable Costs pursuant to
Section 3 hereof shall be sent to HMRI at the following address:
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Hoechst Marion Roussel, Inc.
Route 202-206, P.O. Box 6800
Bridgewater, NJ 08807-0800
Attn: R&D Controller
19. Further Assurances.
Each of the parties hereto agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
20. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement nor any
obligation of a party hereunder may be assigned by a party without the consent
of the other parties which shall not be unreasonably withheld, except that a
party may assign this Agreement and the rights, obligations and interests of
such party, in whole or in part, to any of its Affiliates, to any entity created
for the purpose of providing financing for either party's contributions to the
Company (provided, however, that any such assignment by a party to such entity
shall not be permitted without the prior consent of the other party, which shall
not be unreasonably withheld), to any purchaser of all or substantially all of
its assets or to any successor corporation resulting from any merger or
consolidation of such party with or into such corporations. Subject to the
foregoing, any reference to ARIAD, HMRI or the Company hereunder shall be deemed
to include the successor thereto and assigns thereof.
21. Amendments.
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement nor consent to any departure by a party therefrom,
shall in any event be effective unless the same shall he in writing specifically
identifying this Agreement and the provision intended to be amended, modified,
waived, terminated or discharged and signed by the parties, and each amendment,
modification, waiver, termination or discharge shall be effective only in the
specific instance and for the specific purpose for which given. No provision of
this Agreement shall be varied, contradicted or explained by any oral agreement
course of dealing or performance or any other matter not set forth in an
agreement in writing and signed by the parties.
22. Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to principles of
conflicts of law.
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<PAGE> 125
23. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, each party hereby waives any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
24. Headings.
Headings used herein are for convenience only and shall not in any
way affect the construction of, or be taken into consideration in interpreting,
this Agreement.
25. Execution in Counterparts.
This Agreement may be executed in any number of counterparts each
of which counterpart when so executed and delivered, shall be deemed to be an
original, and all of which counterparts together, shall constitute one and the
same instrument.
26. Entire Agreement.
This Agreement, together with the other Joint Venture Agreements,
constitutes, on and as of the date hereof, the entire agreement of the parties
with respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the parties with
respect to such subject matter are hereby superseded in their entirety, and this
Agreement supersedes any duplicative or inconsistent provision in the JV Master
Agreement.
27. Dispute Resolution.
In the event of any dispute, difference or question arising between
the parties in connection with this Agreement, the construction thereof, or the
rights, duties or liabilities of either party, then such disputes shall be
resolved in accordance with the procedures set forth in Sections 3.8 and 12.1 of
the JV Master Agreement.
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<PAGE> 126
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
ARIAD PHARMACEUTICALS, INC.
By:___________________________________________
Title: Chief Executive Officer
HOECHST MARION ROUSSEL, INC.
By:___________________________________________
Title:
HOECHST-ARIAD GENOMICS CENTER, LLC
By:___________________________________________
Title: Co-Chair of Management Committee
By:___________________________________________
Title: Co-Chair of Management Committee
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EXHIBIT F
Form of Incyte Letter Agreement
Incyte Pharmaceuticals, Inc.
3174 Porter Drive
Palo Alto, CA 94304
March 4, 1997
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, MA 02139-4234
Hoechst Marion Roussel, Inc.
Global Development Center
Route 202-206
P.O. Box 6800
Bridgewater, NJ 08807-0800
Gentlemen:
Reference is made to the Collaborative Agreement dated March 4, 1997
between Incyte Pharmaceuticals, Inc. ("Incyte") and ARIAD Pharmaceuticals, Inc.
("ARIAD") (the "ARIAD Agreement") and to the Amended and Restated Collaborative
Agreement dated March 4, 1997 between Incyte and Hoechst Aktiengesellschaft and
Hoechst Marion Roussel, Inc. (collectively, "Hoechst") (the "Hoechst
Agreement"). The ARIAD Agreement and the Hoechst Agreement are referred to
herein collectively as the "Agreements." ARIAD and Hoechst Marion Roussel, Inc.
have entered into agreements to form a limited liability company known as
Hoechst-ARIAD Genomics Center, LLC (the "HMRI-ARIAD JV"). This letter will set
forth our mutual understanding regarding the integration of the ARIAD Agreement,
the Hoechst Agreement, and certain rights and obligations of Hoechst, ARIAD and
the HMRI-ARIAD JV under the
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Agreements. For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, we have agreed as follows:
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1. Notwithstanding the definition of "Affiliate" in the Agreements, the
HMRI-ARIAD JV shall be treated as an Affiliate of ARIAD under the ARIAD
Agreement and as an Affiliate of Hoechst under the Hoechst Agreement. Without
limiting the generality of the foregoing, the HMRI-ARIAD JV shall have any and
all of the applicable rights (with the corresponding obligations) as fully if it
were a party in ARIAD's place under the ARIAD Agreement and as fully if it were
a party in Hoechst's place under the Hoechst Agreement, except as set forth in
this letter.
2. Section 3.4.3 of the ARIAD Agreement and Section 3.9 of the Hoechst Agreement
require ARIAD and Hoechst, respectively, to "use due diligence to pursue the
development, governmental approval and commercial exploitation" of products
covered by any exclusive license from Incyte, and further provide for
termination of licenses from Incyte and grant of licenses by ARIAD or Hoechst
respectively, in the event of discontinuation of development or
commercialization of such products, all as set forth in such sections. It is
hereby agreed that [*]
3. [*] The determination of whether a Product is a Hoechst Product, an
HMRI-ARIAD JV Product or an ARIAD Product shall be based on the party named in
the IND Filing.
4. Disclosure by the HMRI-ARIAD JV to consultants and third party collaborators
of the HMRI-ARIAD JV will be governed by Section 5.2(b) of the ARIAD Agreement
and not Section 5.2(b) of the Hoechst Agreement.
This letter Agreement shall become effective upon the consummation of
the Closing under the agreements under which the HMRI-ARIAD JV is formed. All
rights granted to the HMRI-ARIAD JV shall terminate upon termination of the
HMRI-ARIAD JV, provided, however, that the accrued rights of the HMRI-ARIAD JV
shall be governed by Section 7.5 of the Hoechst Agreement and Section 7.6 of the
ARIAD Agreement, as appropriate. In the event of any
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<PAGE> 130
inconsistency between this Letter Agreement and the ARIAD Agreement or the
Hoechst Agreement, the provisions of this Letter Agreement shall govern. Except
as set forth herein, the ARIAD Agreement and the Hoechst Agreement shall not be
modified hereby, and shall remain in full force and effect in accordance with
their respective terms.
If the foregoing accurately sets forth our understanding, please so
signify by signing below and returning a copy of this letter, whereupon it will
take effect as an amendment to both the ARIAD Agreement and the Hoechst
Agreement.
Very truly yours,
Incyte Pharmaceuticals, Inc.
By: _________________________
Title:
ACCEPTED AND AGREED:
ARIAD Pharmaceuticals, Inc.
By: ________________________________
Title:
Hoechst Aktiengesellschaft
By: _________________________________
Title:
Hoechst Marion Roussel, Inc.
By: ___________________________________
Title:
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EXHIBIT G
FORM OF ARIAD LICENSE AGREEMENT
ARIAD LICENSE AGREEMENT
This ARIAD LICENSE AGREEMENT (the "Agreement") is entered into as of
[__________] [___], 1997, by and between ARIAD PHARMACEUTICALS, INC., a Delaware
corporation with principal offices at 26 Landsdowne Street, Cambridge, MA
02139-4234 ("ARIAD") and the HOECHST-ARIAD GENOMICS CENTER, LLC, a Delaware
limited liability company with principal offices at 26 Landsdowne Street,
Cambridge, MA 02139-4234 (the "Company").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HOECHST
MARION ROUSSEL, INC., a Delaware corporation ("HMRI") have entered into a Joint
Venture Master Agreement, dated March 4, 1997 (the "JV Master Agreement") and
related Joint Venture Agreements, providing for the formation of the Company and
the establishment of a joint venture to pursue Functional Genomics
collaboratively;
WHEREAS, in connection with the Company's performance of research in
the area of Functional Genomics in order to identify Candidate Genes, Validated
Targets and Validated Proteins, ARIAD and the Company desire to enter into this
Agreement pursuant to which, among other things, ARIAD will grant to the Company
a license or sublicense, as the case may be, for certain uses of ARIAD
Background Technology, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions.
Unless otherwise provided, all capitalized terms used herein
shall have the meanings set forth in the JV Master Agreement.
2. ARIAD License to Company.
(a) ARIAD hereby grants to the Company [*] license under all
ARIAD Background Technology and ARIAD Patent Rights, and [*] (except as set
forth in Section 2(b)) sublicense (limited to the field, scope and term of the
license to ARIAD) under all licenses of Technology to ARIAD, in the Field to
research, discover, develop, have developed, make and have made Candidate Genes,
Validated Targets and Validated Proteins in accordance with the Research Program
and the terms and conditions of this Agreement. Except as set forth in Section
2(b), any fees payable to any licensor as a result of the grant of any such
sublicense to the Company shall be paid by ARIAD. Set forth on Schedule I hereto
is a list (with a reasonable description thereof) designating all ARIAD
Background Technology. The initial Schedule I includes Technology which is the
subject of licensing or acquisition negotiations with third parties (which is so
designated under Section C of such Schedule I). Pursuant to the terms of the JV
Master Agreement, to the extent ARIAD [*] acquires
<PAGE> 132
Technology after the date of this Agreement that [*] ARIAD shall so advise the
Management Committee, and, upon agreement by HMRI, [*] .
(b) If ARIAD would be obligated [*] as a result of granting
any sublicense pursuant to Section 2(a), [*] within [*] of the receipt of an
invoice therefor, which invoice shall contain a calculation of the amount due in
reasonable detail. The party receiving the license shall not be obligated [*],
except for those: (i) based on or resulting from [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
(c) Notwithstanding anything to the contrary in this Section
2, neither ARIAD [*] shall be obligated to [*] for any Technology if ARIAD or
its Affiliates are prohibited by law [*]. ARIAD agrees to [*].
(d) In the event any license or rights granted to ARIAD under
which a sublicense or rights to the Company is granted hereby is due to expire,
ARIAD shall give written notice of such potential expiration to the Company at
least sixty (60) days prior to the date of expiration, which notice shall
specify whether or not ARIAD intends to extend the license or rights and the
terms of any proposed extensions. If ARIAD advises the Company that it does not
intend to extend the license or rights, the Company may request that ARIAD
extend the license or rights and ARIAD will consider such extension in good
faith, or the Company may seek to obtain a license or rights to the Technology
covered by such license or rights directly from the licensor thereof.
(e) Except as expressly set forth in Section 2(a), no license
is granted hereby to the Company or HMRI.
3. Technology Transfer; Confidentiality; Company Efforts.
After the date hereof, upon request by the Company, ARIAD shall, within
a reasonable time thereafter, make available to the Company the ARIAD Background
Technology through such reasonable written and oral disclosures and such
reasonable on site training as the Company may request. Without limiting the
generality of the foregoing, ARIAD will provide the Company with such manuals,
standard operating procedures, process descriptions and the like, as ARIAD
employs in its own utilization of such Technology. All disclosures pursuant to
this Agreement are subject to the confidentiality provisions of Section 7.5 of
the Operating Agreement and Article 6 of the JV Master Agreement. The Company
shall use the ARIAD Background Technology and ARIAD Patent Rights licensed to it
hereunder in the Field to research, discover, develop, have developed, make and
have made Candidate Genes, Validated Targets and Validated Proteins in
accordance with the Research Program and the terms and conditions of this
Agreement but for no other purpose.
4. Indemnification.
The Company (the "Indemnitor"), shall indemnify, defend and
hold harmless ARIAD, its Affiliates and its directors, officers, employees, and
agents and their respective successors, heirs and assigns (the "Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Indemnitees, or
any one of them, in connection with any claims, suits, actions, demands or
judgments of third parties, including, without limitation, personal injury,
product liability and patent infringement matters (except in cases where such
claims, suits, actions, demands or judgments result from a material breach of
this Agreement, gross negligence or willful misconduct on the part of an
Indemnitee) arising out of any
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<PAGE> 133
actions of the Indemnitor in the use of the ARIAD Background Technology by the
Indemnitor or by an Affiliate, licensee, sublicensee, distributor or agent of
the Indemnitor.
5. Warranty Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
ARIAD MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, PRODUCTS,
SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
6. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER ARIAD NOR THE COMPANY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER
OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
7. Cooperation.
Each of ARIAD and the Company shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
fulfilled or performed by it under this Agreement.
8. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement; provided, however, that
in the event of termination the rights and obligations of the parties provided
in Sections 2 (with respect to Validated Targets and Validated Proteins
discovered at the time of termination), 4, 5, 6, 9, 10, 11, 12, 13, 14, 15, 18
and 19 shall survive such termination.
9. Force Majeure.
Neither ARIAD nor the Company shall be liable for failure of
or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes beyond the reasonable control of ARIAD or the
Company. In event of such force majeure, the party seeking to be excused on the
basis of force majeure shall advise the other party of the beginning and end of
the circumstances constituting the force majeure, and shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.
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<PAGE> 134
10. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
11. Further Assurances.
Each of the parties agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
12. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by either party without
the consent of the other which shall not be unreasonably withheld, except that
each party may assign this Agreement and the rights, obligations and interests
of such party, in whole or in part, to any of its Affiliates, to any entity
created for the purpose of providing financing for either party's contributions
to the Company (provided, however, that any such assignment by a party to such
entity shall not be permitted without the prior consent of the other party,
which shall not be unreasonably withheld), to any purchaser of all or
substantially all of its assets or to any successor corporation resulting from
any merger or consolidation of such party with or into such corporations.
Subject to the foregoing, any reference to ARIAD or the Company hereunder shall
be deemed to include the successor thereto and assigns thereof.
13. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by the parties
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by each party,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each party.
14. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
15. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or
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<PAGE> 135
unenforceability shall not affect the validity, legality or enforceability of
such provision in any other jurisdiction. To the extent permitted by applicable
law, the parties hereby waive any provision of law that would render any
provision hereof prohibited or unenforceable in any respect.
16. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
17. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which counterparts together, shall constitute one and
the same instrument.
18. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
19. Dispute Resolution.
Except as otherwise provided herein, in the event of any
dispute, difference or question arising between the parties in connection with
this Agreement, the construction thereof, or the rights, duties or liabilities
of either party, then such disputes shall be resolved in accordance with the
procedures set forth in Sections 3.8 and 12.1 of the JV Master Agreement.
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<PAGE> 136
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
ARIAD PHARMACEUTICALS, INC.
By:_____________________________________
Title: Chief Executive Officer
HOECHST-ARIAD GENOMICS CENTER, LLC
By:_____________________________________
Title: Co-Chair of Management Committee
By:_____________________________________
Title: Co-Chair of Management Committee
6
<PAGE> 137
Schedule I
ARIAD Background Technology
[*]
7
<PAGE> 138
EXHIBIT H
FORM OF HMRI LICENSE AGREEMENT
HMRI LICENSE AGREEMENT
This HMRI LICENSE AGREEMENT (the "Agreement") is entered into as of
[__________] [___], 1997, by and between HOECHST MARION ROUSSEL, INC., a
Delaware Corporation having its offices at Route 202-206, P.O. Box 6800,
Bridgewater, NJ 08807-0800 (collectively, "HMRI") and the HOECHST-ARIAD GENOMICS
CENTER, LLC, a Delaware limited liability company with principal offices at 26
Landsdowne Street, Cambridge, MA 02139-4234 (the "Company").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, HMRI and ARIAD
Pharmaceuticals, Inc., a Delaware Corporation ("ARIAD") have entered into a
Joint Venture Master Agreement, dated March 4, 1997 (the "JV Master Agreement")
and related Joint Venture Agreements, providing for the formation of the Company
and the establishment of a joint venture to pursue Functional Genomics
collaboratively;
WHEREAS, in connection with the Company's performance of research in
the area of Functional Genomics in order to identify Candidate Genes, Validated
Targets and Validated Proteins, HMRI and the Company desire to enter into this
Agreement pursuant to which, among other things, HMRI will grant to the Company
a license or sublicense, as the case may be, for certain uses of HMRI Background
Technology, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions.
Unless otherwise provided, all capitalized terms used herein
shall have the meanings set forth in the JV Master Agreement.
<PAGE> 139
2. HMRI License to Company.
(a) HMRI hereby grants to the Company [*] license under all
HMRI Background Technology and HMRI Patent Rights, and [*] (except as set forth
in Section 2(b)) sublicense (limited to the field, scope and term of the license
to HMRI) under all licenses of Technology to HMRI, in the Field to research,
discover, develop, have developed, make and have made Candidate Genes, Validated
Targets and Validated Proteins in accordance with the Research Program and the
terms and conditions of this Agreement. Except as set forth in Section 2(b), any
fees payable to any licensor as a result of the grant of any such sublicense or
right to the Company shall be paid by HMRI. Set forth on Schedule I hereto is a
list (with a reasonable description thereof) designating all HMRI Background
Technology. The initial Schedule I includes Technology which is the subject of
licensing or acquisition negotiations with third parties (which is so designated
under Section C of such Schedule I). Pursuant to the terms of the JV Master
Agreement (and subject to Section 1.29 thereof), to the extent HMRI [*] acquires
Technology after the date of this Agreement that [*], HMRI shall so advise the
Management Committee, and, upon agreement by ARIAD, [*].
(b) If HMRI would be obligated [*] as a result of granting any
sublicense or rights pursuant to Section 2(a), [*] within [*] of the receipt of
an invoice therefor, which invoice shall contain a calculation of the amount due
in reasonable detail. The party receiving the license shall not be obligated
[*], except for those: (i) based on or resulting [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
(c) Notwithstanding anything to the contrary in this Section
2, neither HMRI [*] shall be obligated [*] for any Technology if HMRI or its
Affiliates are prohibited by law [*]. HMRI agrees to [*].
(d) In the event any license or rights granted to HMRI under
which a sublicense or rights to the Company is granted hereby is due to expire,
HMRI shall give written notice of such potential expiration to the Company at
least sixty (60) days prior to the date of expiration, which notice shall
specify whether or not HMRI intends to extend the license or rights and the
terms of any proposed extensions. If HMRI advises the Company that it does not
intend to extend the license or rights, the Company may request that HMRI extend
the license or rights and HMRI will consider such extension in good faith, or
the Company may seek to obtain a license or rights to the Technology covered by
such license or rights directly from the licensor thereof.
(e) Except as expressly set forth in Section 2(a), no license
is granted hereby to the Company or HMRI.
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<PAGE> 140
3. Technology Transfer; Confidentiality; Company Efforts.
After the date hereof, upon request by the Company, HMRI shall, within
a reasonable time thereafter, make available to the Company the HMRI Background
Technology through such reasonable written and oral disclosures and such
reasonable on site training as the Company may request. Without limiting the
generality of the foregoing, HMRI will provide the Company with such manuals,
standard operating procedures, process descriptions and the like, as HMRI
employs in its own utilization of such Technology. All disclosures pursuant to
this Agreement are subject to the confidentiality provisions of Section 7.5 of
the Operating Agreement and Article 6 of the JV Master Agreement. The Company
shall use the HMRI Background Technology and HMRI Patent Rights licensed to it
hereunder in the Field to research, discover, develop, have developed, make and
have made Candidate Genes, Validated Targets and Validated Proteins in
accordance with the Research Program and the terms and conditions of this
Agreement but for no other purpose.
4. Indemnification.
The Company (the "Indemnitor"), shall indemnify, defend and
hold harmless HMRI, its Affiliates and its directors, officers, employees, and
agents and their respective successors, heirs and assigns (the "Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Indemnitees, or
any one of them, in connection with any claims, suits, actions, demands or
judgments of third parties, including, without limitation, personal injury,
product liability and patent infringement matters (except in cases where such
claims, suits, actions, demands or judgments result from a material breach of
this Agreement, gross negligence or willful misconduct on the part of an
Indemnitee) arising out of any actions of the Indemnitor in the use of the HMRI
Background Technology by the Indemnitor or by an Affiliate, licensee,
sublicensee, distributor or agent of the Indemnitor.
5. Warranty Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, HMRI
MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, PRODUCTS, SERVICES,
RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING.
6. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER HMRI NOR THE COMPANY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER
OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
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<PAGE> 141
7. Cooperation.
Each of HMRI and the Company shall use commercially reasonable
efforts to perform and fulfill all conditions and obligations to be fulfilled or
performed by it under this Agreement.
8. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement; provided, however, that
in the event of termination the rights and obligations of the parties provided
in Sections 2 (with respect to Validated Targets and Validated Proteins
discovered at the time of termination), 4, 5, 6, 9, 10, 11, 12, 13, 14, 15, 18
and 19 shall survive such termination.
9. Force Majeure.
Neither HMRI nor the Company shall be liable for failure of or
delay in performing obligations set forth in this Agreement, and neither shall
be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes beyond the reasonable control of HMRI or the
Company. In event of such force majeure, the party seeking to be excused on the
basis of force majeure shall advise the other party of the beginning and end of
the circumstances constituting the force majeure, and shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.
10. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
11. Further Assurances.
Each of the parties agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
12. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by either party without
the consent of the other which shall not be unreasonably withheld, except that
each party may assign this Agreement and the rights, obligations
-4-
<PAGE> 142
and interests of such party, in whole or in part, to any of its Affiliates, to
any entity created for the purpose of providing financing for either party's
contributions to the Company (provided, however, that any such assignment by a
party to such entity shall not be permitted without the prior consent of the
other party, which shall not be unreasonably withheld), to any purchaser of all
or substantially all of its assets or to any successor corporation resulting
from any merger or consolidation of such party with or into such corporations.
Subject to the foregoing, any reference to HMRI or the Company hereunder shall
be deemed to include the successor thereto and assigns thereof.
13. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by the parties
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by each party,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each party.
14. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
15. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
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<PAGE> 143
16. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
17. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which counterparts together, shall constitute one and
the same instrument.
18. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
19. Dispute Resolution.
Except as otherwise provided herein, in the event of any
dispute, difference or question arising between the parties in connection with
this Agreement, the construction thereof, or the rights, duties or liabilities
of either party, then such disputes shall be resolved in accordance with the
procedures set forth in Sections 3.8 and 12.1 of the JV Master Agreement.
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<PAGE> 144
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
HOECHST MARION ROUSSEL, INC.
By: _________________________________________
Title:
HOECHST-ARIAD GENOMICS CENTER, LLC
By: _________________________________________
Title: Co-Chair of Management Committee
By: _________________________________________
Title: Co-Chair of Management Committee
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<PAGE> 145
SCHEDULE I
HMRI BACKGROUND TECHNOLOGY
[*]
-8-
<PAGE> 146
EXHIBIT I
FORM OF CROSS LICENSE AGREEMENT
CROSS LICENSE AGREEMENT
This CROSS LICENSE AGREEMENT (the "Agreement") is entered into as of
[__________] [___], 1997 by and between ARIAD PHARMACEUTICALS, INC., a Delaware
corporation with principal offices at 26 Landsdowne Street, Cambridge, MA
02139-4234 ("ARIAD") and HOECHST MARION ROUSSEL, INC., a Delaware corporation
having its offices at Route 202-206, P.O. Box 6800, Bridgewater, NJ 08807-0800
("HMRI").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HMRI have
entered into a Joint Venture Master Agreement, dated March 4, 1997 (the "JV
Master Agreement") and related Joint Venture Agreements, providing for the
formation of the HOECHST-ARIAD GENOMICS CENTER, LLC, a Delaware limited
liability company with principal offices at 26 Landsdowne Street, Cambridge, MA
02139-4234 (the "Company") and the establishment of a joint venture to pursue
Functional Genomics collaboratively;
WHEREAS, in connection with each party's rights to develop, make, use
and sell Products as to which it has been granted rights pursuant to the Product
Rights Agreement and other Joint Venture Agreements, ARIAD and HMRI desire to
enter into this Agreement pursuant to which, among other things, the parties
will grant to each other a license or sublicense in the Field, as the case may
be, for certain uses of the other party's Background Technology and Patent
Rights, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions.
Unless otherwise provided, all capitalized terms used herein
shall have the meanings set forth in the JV Master Agreement.
2. ARIAD License to HMRI.
(a) ARIAD hereby grants to HMRI [*] license and sublicense
(limited to the field, scope and term of the license to ARIAD) in the Field
under all ARIAD Background Technology and ARIAD Patent Rights for the purposes
of: (i) developing, making, using and selling Products to which HMRI shall have
been granted rights pursuant to the Product Rights Agreement and the other Joint
Venture Agreements, and (ii) utilizing in the Field any Joint Venture Technology
licensed to HMRI pursuant to Section 7.2 of the JV Master Agreement, but not for
any other purpose.
(b) In the event any license to ARIAD under which a sublicense
to HMRI is granted hereby is due to expire, ARIAD shall give written notice of
such potential expiration to HMRI
<PAGE> 147
least sixty (60) days prior to the date of expiration, which notice shall
specify whether or not ARIAD intends to extend the license and the terms of any
proposed extensions. If ARIAD advises HMRI that it does not intend to extend the
license, HMRI may request that ARIAD extend the license and ARIAD will consider
such extension in good faith, or HMRI may seek to obtain a license to the
Technology covered by such license directly from the licensor thereof.
(c) Except as expressly set forth in Section 2(a), no license
is granted hereby to HMRI by ARIAD.
3. HMRI License to ARIAD.
(a) HMRI hereby grants to ARIAD [*] license and sublicense
(limited to the field, scope and term of the license to HMRI) in the Field under
all HMRI Background Technology and HMRI Patent Rights for the purposes of: (i)
developing, making, using and selling Products to which ARIAD shall have been
granted rights pursuant to the Product Rights Agreement and the other Joint
Venture Agreements, and (ii) utilizing in the Field any Joint Venture Technology
licensed to ARIAD pursuant to Section 7.2 of the JV Master Agreement, but not
for any other purpose.
(b) In the event any license to HMRI under which a sublicense
to ARIAD is granted hereby is due to expire, HMRI shall give written notice of
such potential expiration to ARIAD least sixty (60) days prior to the date of
expiration, which notice shall specify whether or not HMRI intends to extend the
license and the terms of any proposed extensions. If HMRI advises ARIAD that it
does not intend to extend the license, ARIAD may request that HMRI extend the
license and HMRI will consider such extension in good faith, or ARIAD may seek
to obtain a license to the Technology covered by such license directly from the
licensor thereof.
(c) Except as expressly set forth in Section 3(a), no license
is granted hereby to ARIAD by HMRI.
4. Limitation on In-Licenses of Technology; Payments to Third
Parties.
(a) ARIAD and HMRI shall each [*] with the terms hereof and of
the JV Master Agreement in any in-license of Technology which it enters into for
use in the Field. [*] Notwithstanding the foregoing, neither party shall have
rights to the other party's combinatorial, natural product or other compound
libraries or sources.
(b) If the party granting the sublicense or taking such other
steps (the "Grantor") would be obligated [*] as a result of granting such
sublicense or taking such other steps, [*]. The Grantee shall not be obligated
[*], except for those: (i) based on or resulting from [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
5. Technology Transfer; Confidentiality; Efforts.
After the date hereof, each party shall (upon request by the other
party), within a reasonable time thereafter, make available to the other party
its Background Technology licensed or sublicensed hereunder pursuant to Section
2(a) and Section 3(a), respectively, through such reasonable written and oral
disclosures and such reasonable on site training as the other party may request.
Without limiting the generality of the foregoing, each party will provide the
other party with such manuals, standard operating procedures, process
descriptions and the like, as it in its own utilization of such Technology. All
disclosures pursuant to this Agreement are subject to the confidentiality
provisions of Section 7.5
2
<PAGE> 148
of the Operating Agreement and Article 6 of the JV Master Agreement. The other
party shall use the Background Technology and Patent Rights licensed to it
hereunder in the Field for the purposes of: (i) developing, making, using and
selling Products to which it shall have been granted rights pursuant to the
Product Rights Agreement and the other Joint Venture Agreements, and (ii)
utilizing in the Field any Joint Venture Technology licensed to it pursuant to
Section 7.2 of the JV Master Agreement, but not for any other purpose.
6. Indemnification.
Each party (the "Indemnitor"), shall indemnify, defend and
hold harmless the other party, its Affiliates and its directors, officers,
employees, and agents and their respective successors, heirs and assigns (the
"Indemnitees"), against any liability, damage, loss or expense (including
reasonable attorneys' fees and expenses of litigation) incurred by or imposed
upon the Indemnitees, or any one of them, in connection with any claims, suits,
actions, demands or judgments of third parties, including, without limitation,
personal injury, product liability and patent infringement matters (except in
cases where such claims, suits, actions, demands or judgments result from a
material breach of this Agreement, gross negligence or willful misconduct on the
part of an Indemnitee) arising out of any actions of the Indemnitor in the use
of the Indemnitee's Background Technology by the Indemnitor or by an Affiliate,
licensee, sublicensee, distributor or agent of the Indemnitor.
7. Warranty Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
NEITHER ARIAD NOR HMRI MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS,
PRODUCTS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY
DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
8. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER ARIAD NOR HMRI WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
TECHNOLOGY OR SERVICES.
9. Cooperation.
Each of ARIAD and HMRI shall use commercially reasonable
efforts to perform and fulfill all conditions and obligations to be fulfilled or
performed by it under this Agreement.
10. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement; provided, however, that
in the event of termination each party will retain the licenses and sublicenses
granted to it by the other party pursuant to Sections 2 and 3 and Sections 4, 6,
7, 8, 11, 12, 13, 14, 15, 16, 17, 20 and 21 shall survive such termination.
3
<PAGE> 149
11. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
12. Force Majeure.
Neither ARIAD nor HMRI shall be liable for failure of or delay
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of ARIAD or HMRI. In event
of such force majeure, the party seeking to be excused on the basis of force
majeure shall advise the other party of the beginning and end of the
circumstances constituting the force majeure, and shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
13. Further Assurances.
Each of the parties agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
14. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by either party without
the consent of the other which shall not be unreasonably withheld, except that
each party may assign this Agreement and the rights, obligations and interests
of such party, in whole or in part, to any of its Affiliates, to any entity
created for the purpose of providing financing for either party's contributions
to the Company (provided, however, that any such assignment by a party to such
entity shall not be permitted without the consent of the other party, which
shall not be unreasonably withheld), to any purchaser of all or substantially
all of its assets or to any successor corporation resulting from any merger or
consolidation of such party with or into such corporations. Subject to the
foregoing, any reference to ARIAD or HMRI hereunder shall be deemed to include
the successor thereto and assigns thereof.
15. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by the parties
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by each party,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each party.
16. Governing Law.
4
<PAGE> 150
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
17. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
18. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
19. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which counterparts together, shall constitute one and
the same instrument.
20. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
21. Dispute Resolution.
Except as otherwise provided herein, in the event of any
dispute, difference or question arising between the parties in connection with
this Agreement, the construction thereof, or the rights, duties or liabilities
of either party, then such disputes shall be resolved in accordance with the
procedures set forth in Sections 3.8 and 12.1 of the JV Master Agreement.
5
<PAGE> 151
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
ARIAD PHARMACEUTICALS, INC.
By:__________________________________
Title: Chief Executive Officer
HOECHST MARION ROUSSEL, INC.
By:__________________________________
Title:
6
<PAGE> 152
EXHIBIT J
FORM OF PRODUCT RIGHTS AGREEMENT
PRODUCT RIGHTS AGREEMENT
This PRODUCT RIGHTS AGREEMENT (the "Agreement") is entered into as of
[__________] [___], 1997, by and among ARIAD PHARMACEUTICALS, INC., a Delaware
corporation with principal offices at 26 Landsdowne Street, Cambridge, MA
02139-4234 ("ARIAD"), HOECHST-ARIAD GENOMICS CENTER, LLC, a Delaware limited
liability company with principal offices at 26 Landsdowne Street, Cambridge, MA
02139-4234 (the "Company"), and HOECHST MARION ROUSSEL, INC., a Delaware
corporation having its offices at Route 202-206, P.O. Box 6800, Bridgewater, NJ
08807-0800 ("HMRI").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HMRI have
entered into a Joint Venture Master Agreement, dated March 4, 1997 (the "JV
Master Agreement") and related Joint Venture Agreements, providing for the
formation of the Company and the establishment of a joint venture to pursue
Functional Genomics collaboratively;
WHEREAS, in connection with the Company's performance of research in
the area of Functional Genomics in order to identify Validated Targets and
Validated Proteins, the parties desire to enter into this Agreement which, among
other things, will provide for a mechanism for the granting of rights to ARIAD
and HMRI with respect to Validated Targets and Validated Proteins discovered by
the Company and the payment of royalties on Products developed by ARIAD or HMRI
which are Validated Proteins or based on the use of a Validated Target or
Validated Protein, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions. Unless otherwise provided, all capitalized terms
used herein shall have the meanings set forth in the JV Master Agreement.
2. Determination of Discovery of Candidate Genes, Validated
Targets and Validated Proteins.
Whenever ARIAD, HMRI or the Company believes it has discovered
a Candidate Gene, Validated Target or Validated Protein in the course of the
Research Program, it shall promptly notify and provide all relevant data to the
Management Committee. Upon such notice (and on its own initiative even without
notice), the Management Committee shall determine whether a Candidate Gene,
Validated Target or Validated Protein has been discovered by the Company
utilizing criteria to be established by the Management Committee and furnished
to the parties in writing. The Management Committee shall use its best efforts
to establish the initial
<PAGE> 153
criteria by [*] and shall have the right to amend the criteria
from time to time. Regardless of the date of determination of discovery by the
Management Committee, any Candidate Gene, Validated Target or Validated Protein
will be deemed to have been discovered at the earlier of disclosure of such
Candidate Gene, Validated Target or Validated Protein in: [*]. The
required scope and contents of such disclosure shall be determined by the
Management Committee as part of the criteria for determination of discovery of
a Candidate Gene, Validated Target or Validated Protein. Upon a determination
by the Management Committee that a Validated Target or Validated Protein has
been discovered by the Company, the Management Committee shall provide prompt
written notice to each of ARIAD and HMRI, and such Validated Targets and
Validated Proteins shall be added to the respective Pools, as described below.
3. Establishment of Validated Target Pool and Validated Protein
Pool.
The Management Committee shall establish a Validated Target
Pool (the "Validated Target Pool") and a Validated Protein Pool (the "Validated
Protein Pool"). The [*] discovered by the Company shall constitute the initial
Validated Target Pool, and the [*] discovered by the Company shall constitute
the initial Validated Protein Pool, and additional Validated Targets and
Validated Proteins shall be added to the Pools as the Management Committee
determines that they have been discovered in accordance with Section 2. The
Management Committee shall provide prompt written notice to each of ARIAD and
HMRI of the establishment of each initial Pool. Validated Targets and Validated
Proteins will be deemed added to the Pools in the order in which they are
discovered; provided, however, that if the Management Committee later
determines that the contents of a Pool should have been different at the time
of a selection by a party, the party which has made such selection will neither
be required nor entitled to return that selection to the Pool or otherwise
change its selection. In the event more than one Validated Target or Validated
Protein is discovered [*].
4. Procedure for Selecting Candidates from Pools.
As to each of the Validated Target Pool and Validated Protein
Pool, the selection procedures set forth below for ARIAD and HMRI shall apply
separately to each such Pool. As used below, the word "Pool" means the Validated
Target Pool or the Validated Protein Pool, and the word "Candidate" means a
Validated Target or a Validated Protein, as the case may be.
(a) Upon receipt from the Management Committee of notice of
creation of each initial Pool, [*]; provided, however, that within thirty (30)
days of receipt from the Management Committee of notice that the Validated
Target Pool is comprised of [*] and the Validated Protein Pool is comprised of
[*], with respect to each Pool [*] shall give written notice to the Management
Committee of [*].
(b) [*] shall have the right to [*] to provide written notice
to the Management Committee of [*].
(c) If [*] within the [*] shall then have the [*] by the
Management Committee.
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[*] to provide written notice to the Management Committee of [*].
(d) If [*] shall then have the [*] by the Management
Committee. [*] to provide written notice to the Management Committee of [*]. If
[*] under the circumstances described in subparagraph (c) above, then [*] shall
have [*] described in subparagraph (c) to provide written notice to the
Management Committee of [*] . Whether or not [*] shall have [*] to provide
written notice to the Management Committee of [*] . If [*] under the
circumstances described in subparagraph (b) above, then [*] by the Management
Committee [*] to provide written notice to the Management Committee of [*] .
(e) It is the intention of ARIAD and HMRI that the selection
process for Candidates shall continue thereafter in a manner consistent with:
(i) [*].
(f) Notwithstanding the foregoing, at any time that ARIAD or
HMRI has the [*] right to select a Candidate from a Pool, such party may
exercise such right upon written notice to the Management Committee [*] . ARIAD
and HMRI may [*] upon mutual agreement.
(g) Any selection of a Candidate by ARIAD or HMRI pursuant to
this Section 4 shall be deemed to have been made upon receipt by the Management
Committee of written notice thereof. In the event ARIAD or HMRI fails to provide
written notice to the Management Committee of a selection of a Candidate from a
Pool within any such [*] period for selection, [*] in accordance with the
procedures described in this Section 4. The Management Committee shall promptly
inform ARIAD or HMRI whenever the other has either selected a Candidate from a
Pool, or failed to select or affirmatively decided not to select a Candidate
within any such [*] period during which such party has a right to select a
Candidate.
5. Rights to Diagnostic Products, Vaccines, Antibody Drugs and
Other Products.
The Company shall have sole and exclusive ownership of all right, title
and interest in any Diagnostic Product, Vaccine, Antibody Drug or Other Product
derived from any Candidate Gene, Validated Target, Validated Protein or
otherwise derived from the Research Program. The Management Committee shall have
sole discretion in determining whether to grant any licenses to ARIAD, HMRI or
third parties for the development, manufacture, use or sale of any Diagnostic
Product, Vaccine, Antibody Drug or Other Product, and the terms and conditions
of any such licenses, in order to maximize the value of the Company.
6. Licenses to Drugs Derived from Validated Targets.
Effective upon selection of a Validated Target by ARIAD or HMRI, the
Company shall be deemed, without further action, to have granted to the party
selecting such Validated Target [*] license under all Joint Venture Technology
and Joint Venture Patent Rights, and [*] to use such Validated Target for
purposes of developing, making, having made, using, having used, selling, having
sold, offering for sale and importing any Small-molecule Drug, Peptidomimetic
Drug, or Antisense Drug. If the Company [*] , the party receiving the license
[*] . The party receiving the license shall not be obligated [*] , except for
those: (i) based on or resulting from [*] or (ii) as otherwise expressly
provided in the Joint Venture Agreements.
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7. Licenses to Drugs Derived from Validated Proteins.
Effective upon selection of a Validated Protein by ARIAD or HMRI, the
Company shall be deemed, without further action, to have granted to the party
selecting such Validated Protein [*] license under all Joint Venture
Technology and Joint Venture Patent Rights, and [*] sublicense (limited to
the field and scope of the license to the Company) under all licenses of
Technology to the Company to use such Validated Protein for purposes of
developing, making, having made, using, having used, selling, having sold,
offering for sale and importing any Protein Drug, Derivative Protein Drug,
Protein Mimetic Drug, Analog Protein Drug or Gene Therapy Drug. If the Company
[*] as a result of granting such licenses, [*] . The party receiving the
license shall not be obligated [*] , except for those: (i) based on or
resulting [*] or (ii) as otherwise expressly provided in the Joint Venture
Agreements.
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8. Diligence and Product Reversion.
With respect to each Validated Target or Validated Protein selected by
ARIAD or HMRI, the party selecting such Validated Target or Validated Protein
shall, by virtue of selecting the Validated Target or Validated Protein and
without further action, be deemed to have committed in good faith to apply [*],
consistent with the efforts it devotes to its other projects, to diligently
pursue the discovery, development and/or commercialization of at least [*]
derived from such Validated Target or Validated Protein. Notwithstanding the
fact that, as set forth in Section 7.1.5 of the JV Master Agreement and in the
Cross License Agreement, neither party has any rights to the other party's
combinatorial, natural product or other compound libraries or sources, if the
party selecting the Validated Target or Validated Protein fails to utilize such
diligent efforts or ceases to pursue such Validated Target or Validated Protein,
the relevant Validated Target or Validated Protein [*] , and the party which
failed to utilize such diligent efforts or ceased pursuit [*] : If [*] accepts
the transfer of the Validated Target or Validated Protein, by virtue of such
transfer and without further action it will be deemed to have received a license
under Section 6 or Section 7, as the case may be, and to have [*], to diligently
pursue the discovery, development and/or commercialization of such Validated
Target, Validated Protein or Product. If the party which originally selected the
Validated Target or Validated Protein [*] as a result of the transfer of the
Validated Target or Validated Protein [*] . If [*] does not wish to acquire
rights to such Validated Target or Validated Protein, or if, after acquiring
rights to such Validated Target or Validated Protein fails to utilize diligent
efforts or ceases to pursue for any reason such Validated Target or Validated
Protein, the relevant Validated Target or Validated Protein shall be [*].
9. Rights to Validated Targets and Validated Proteins Remaining
in Pool.
The Management Committee shall have the authority, at such times as the
Management Committee deems appropriate, to assess the Pools containing
Candidates that each of ARIAD and HMRI has not selected or has returned, for
purposes of determining whether to grant any licenses to third parties for
rights to such Candidates previously unselected or returned by ARIAD and HMRI.
The Management Committee shall have sole discretion in determining the terms and
conditions of any such licenses.
10. Royalties.
(a) In the event ARIAD or HMRI develops a Product that is
[*] Validated Target or Validated Protein or the associated Candidate Gene, it
shall pay a [*] royalty on its Net Sales and those of its Affiliates
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to the other party.
(b) In the event ARIAD or HMRI shall grant a sublicense to a
third party to make, use or sell a Product that is [*] a Validated Target or
Validated Protein, the royalty shall be the lesser of the amount set forth in
Section 10(a) calculated on the sublicensee's Net Sales or [*] of the royalties
actually received by a party from the sublicensee.
(c) In the event that ARIAD and HMRI shall be obligated to pay
royalties in excess of [*] of its Net Sales and those of its Affiliates or
sublicensees to a third party with respect to a particular Product being
developed or sold by it under a license from the third party for a Gene or
Protein necessary to develop or sell such Product, then the paying party shall
be entitled to reduce the royalty payable hereunder to the other party [*] ;
provided that the royalty payable to the other party under Section 10(a) shall
not be reduced below [*] of Net Sales and the royalty payable to the other party
under Section 10(b) shall not be reduced below [*] of the royalties actually
received by the paying party from the sublicensee.
(d) In the event that ARIAD or HMRI shall be obligated to pay
royalties or other payments to a third party with respect to a particular
Product being developed or sold by the other party or its Affiliates or
sublicensees as a result of the grant of a sublicense to the Company or the
other party, [*] after receipt of an invoice for such payment from the party
granting the sublicense. The party receiving the license shall not be obligated
[*] , except for those: (i) based on or resulting from [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
(e) "Net Sales" shall mean the gross amount billed by ARIAD or
HMRI or their Affiliates or licensees or sublicensees to third parties worldwide
for the sales of Products, less (a) allowances for normal and customary trade,
quantity and cash discounts actually allowed and taken, (b) transportation,
insurance and postage charges, if prepaid by a party or any Affiliate, licensee
or sublicensee of a party and billed on a party's or any Affiliate's, licensee's
or sublicensee's invoices as a separate item, (c) credits, rebates, returns
(including, but not limited to, wholesaler and retailer returns), to the extent
actually allowed, and royalties payable to third parties, and (d) sales, use and
other taxes similarly incurred to the extent stated on the invoice as a separate
item, all subject to the following:
(i) In the case of pharmacy incentive programs, hospital
performance incentive program chargebacks, disease
management programs, similar programs or discounts on
"bundles" of products, all discounts and the like shall
be allocated among products on the basis on which such
discounts and the like were actually granted, or if such
basis cannot be determined, proportionately to the list
prices of such products.
(ii) In the case of any sale or other disposal by ARIAD or
HMRI to an Affiliate, for resale, the Net Sales shall be
calculated as above on the value charged or invoiced on
the first arm's length sale to a party who is not an
Affiliate.
(iii) In the case of any other sale or other disposal, such as
barter or counter-trade, of any Product, or part thereof,
otherwise than in an arm's length transaction
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exclusively for money, the Net Sales shall be calculated
as above on the fair market price (if higher) in the
relevant country of sale or disposal.
(f) Royalties shall be paid by ARIAD or HMRI to the other
party on Net Sales within sixty (60) days after the end of each fiscal quarter
in which such Net Sales are made. Such payments shall be accompanied by a report
showing the quantity and Net Sales of each Product sold by ARIAD or HMRI or any
Affiliate, licensee or sublicensee of ARIAD or HMRI in each country, the
applicable royalty rate for such Product, and a calculation of the amount of
royalty due.
(g) The Net Sales used for computing the royalties payable to
ARIAD or HMRI from the other party shall be computed, and royalties shall be
paid, in U.S. dollars. For purposes of determining the amount of royalties due,
the amount of Net Sales in any foreign currency shall be computed by converting
such amount into dollars at the prevailing commercial rate of exchange for
purchasing dollars with such foreign currency as reported in The Wall Street
Journal on the last business day of the fiscal quarter to which a royalty
payment relates.
(h) ARIAD and HMRI and their respective Affiliates, licensees
and sublicensees shall keep for five (5) years from the date of each payment of
royalties complete and accurate records of sales by each of them and their
Affiliates, licensees and sublicensees of each Product in sufficient detail to
allow the accruing royalties to be determined accurately. Each of ARIAD and HMRI
shall have the right for a period of three (3) years after receiving any report
or statement with respect to royalties due and payable to appoint at its expense
an independent certified public accountant reasonably acceptable to the other
party to inspect the relevant records of the other party and its Affiliates,
licensees and sublicensees to verify such report or statement. ARIAD and HMRI
and their respective Affiliates, licensees and sublicensees shall each make
their 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,
solely 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 of any Product in any given period. ARIAD and HMRI agree
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 a party to reveal such information in order
to enforce its rights under this Agreement or if disclosure is required by law.
The results of each inspection, if any, shall be binding on both ARIAD and HMRI.
The party requesting inspection shall pay for such inspection, except that in
the event there is any upward adjustment in aggregate royalties payable for any
fiscal year shown by such inspection of more than two percent (2%) of the amount
paid, the party whose records were inspected shall pay for such inspection.
(i) Royalties not paid within the time period set forth in
subparagraph (e) shall bear interest at the lesser of: (i) the prime rate as
reported by the Morgan Guaranty Bank and Trust, New York, New York, on the date
such payment is due, plus an additional three percent (3%) or (ii) the maximum
rate permitted by applicable law, from the due date until paid in full.
11. Patents.
(a) If either party selects a Validated Protein pursuant to
Section 4 or Section 8,
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such party shall assume prosecution and maintenance of pending and issued patent
applications and patents with claims directed only to such Validated Protein and
its Candidate Gene, effective as of the time of selection. Each of ARIAD and
HMRI, with respect to any Product as to which it has rights pursuant to this
Agreement, shall, on its own behalf and expense (directly or through another
entity), be responsible for filing patent applications, continuing prosecution
of such applications, and obtaining patents claiming inventions made by such
party with respect to any such Product. The party filing or continuing to
prosecute a patent application shall be entitled to control the prosecution of
such application and make all decisions necessary or appropriate to the conduct
of such prosecution, including decisions to resolve any interference or
opposition. In the event that any patent is issued, the party with
responsibility for prosecution shall control the maintenance and enforcement of
such patent and shall be entitled to make all decisions concerning payment of
all taxes and fees necessary for the maintenance and enforcement of such patent.
The party with responsibility for prosecution shall furnish copies of relevant
filings and correspondence to the Company as reasonably requested by the Company
and cooperate with the Company and the other party to achieve consistency in
prosecution of all patent applications relating to the Research Program. The
parties undertake that they shall take such actions which are reasonably
necessary or desirable to establish, maintain and assert any rights or interest
of the parties in respective patent rights, including the execution of all
documents necessary or desirable so that title or other rights can be
established and maintained and so that any patent filings permitted hereunder
can be made, prosecuted and maintained. Such actions shall include cooperative
efforts as reasonable to obtain the broadest possible protection for Product(s)
in all jurisdictions, to the mutual benefit of the parties, taking into account
the nature of the invention(s) and the state of the law in the respective
jurisdictions.
(b) ARIAD and HMRI shall notify each other and the Company in
a timely manner of any decision to abandon a pending patent application or an
issued patent directed to a Product. Thereafter, the Company shall have the
option, at its expense, of continuing to prosecute any such pending patent
application or of keeping the issued patent in force.
(c) In the event that either of ARIAD or HMRI becomes aware of
any infringement or alleged infringement by a third party of any patent rights
with respect to a Product as to which ARIAD or HMRI has rights pursuant to this
Agreement, it shall promptly notify the Company in writing and provide available
evidence, if any, of such infringement. The party with rights to the Product
shall have the right at its own expense to initiate and prosecute litigation
against the alleged infringer, and shall be entitled to any amounts recovered.
In the event any such proceeding is instituted, the Company and the other party
shall cooperate with the party pursuing the proceeding at the expense of such
party, and shall execute all documents and perform such other acts as may be
reasonably requested in the circumstances.
(d) In the event that any action, suit or proceeding is
brought against ARIAD, HMRI, or any Affiliate, licensee or sublicensee of ARIAD
or HMRI, alleging the infringement of the intellectual property rights of a
third party by reason of the development, manufacture, use, sale, importation or
offer for sale of a Product, the party whose Product is the subject matter of
the action, suit or proceeding shall have the obligation to defend itself, the
other party and the Company in such action, suit or proceeding at its own
expense; provided, however, that any other party named in such action, suit or
proceeding shall be allowed to participate in the defense of such action, suit
or proceeding with its own counsel at its own expense. The defending party shall
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provide the Company and the other party with prompt written notice of the
commencement of any such action, suit, proceeding or claim of infringement and
will furnish to the Company and the other party a copy of each substantive
communication relating to the alleged infringement. The Company and the other
party will cooperate with the defending party in the defense of any such action,
suit or proceeding at the expense of the defending party, and shall execute all
documents and take all other actions which may reasonably be requested in
connection with the prosecution of such action, suit or proceeding.
(e) ARIAD and HMRI, as the owners of the Company, agree that
they will not challenge the validity of any patent owned by or licensed to the
Company or either party which claims any Candidate Gene, Validated Target,
Validated Protein or Product.
12. Right of First Negotiation.
(a) For a period of [*] by ARIAD or HMRI under Section 4 or
Section 8, in the event that ARIAD or HMRI determines to license or sublicense
to any non-Affiliate rights to any such Validated Target or Validated Protein,
or any Products derived therefrom, it shall give written notice to the other
party, specifying in reasonable detail the rights it intends to license (the
"Negotiation Notice"). The party receiving the Negotiation Notice (the
"Recipient") shall have [*] after the date of the Negotiation Notice to provide
a written response (the "Response") to the party sending the Negotiation Notice
(the "Sender") as to whether or not the Recipient wishes to enter into
negotiations with the Sender concerning the licensing of such rights. If the
Sender does not receive a Response within such [*] period or if the Recipient
declines to enter into negotiations, the Sender shall thereafter have the right
to license the rights which were the subject of the Negotiation Notice free of
any restriction, limitation or duty to the Recipient whatsoever. If the Response
states that the Recipient wishes to enter into negotiations with the Sender, the
parties shall negotiate in good faith the licensing of such rights to the
Recipient for a period of [*] from the date of the Response.
(b) If the parties do not agree upon and execute a written
agreement for such rights within such [*] period, as such period may be extended
by written agreement of both parties, the Recipient [*]
13. Indemnification.
Each party, with respect to any Product as to which it has
rights pursuant to this Agreement (the "Indemnitor"), shall indemnify, defend
and hold harmless the other party, its Affiliates and their respective
directors, officers, employees, and agents and their respective successors,
heirs and assigns (the "Indemnitees"), against any liability, damage, loss or
expense (including reasonable attorneys' fees and expenses of litigation)
incurred by or imposed upon the Indemnitees, or any one of them, in connection
with any claims, suits, actions, demands or judgments of third parties,
including, without limitation, personal injury and product liability matters
(except in cases where such claims, suits, actions, demands or judgments result
from a material breach of this Agreement, gross negligence or willful misconduct
on the part of an Indemnitee) arising out of any actions of the Indemnitor in
the development, testing, production, manufacture, promotion, import, sale or
use by any person of any Product which is manufactured
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or sold by the Indemnitor or by an Affiliate, licensee, sublicensee, distributor
or agent of the Indemnitor other than a Licensee.
14. Warranty Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE
COMPANY MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, PRODUCTS,
SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
15. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER ARIAD, HMRI NOR THE COMPANY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT
MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
16. Cooperation.
Each of ARIAD, HMRI and the Company shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
fulfilled or performed by it under this Agreement.
17. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement; provided, however, that
in the event of termination:
(a) the procedures set forth in Section 4 shall be applied
until there are no more Candidates in either Pool;
(b) the procedures set forth in Section 9.4.1(f) of the JV
Master Agreement shall be applied with respect to rights to Diagnostic Products,
Vaccines, Antibody Drugs and Other Products described in Section 5 herein;
(c) ARIAD and HMRI will retain the licenses granted to each in
Sections 6 and 7 prior to termination;
(d) each of ARIAD's and HMRI's rights to receive royalty
payments pursuant to Section 10 shall survive such termination; and,
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(e) Sections 11, 12, 13, 14, 15, 19, 20, 22, 23, 24, 25, 26,
28 and 29 shall survive such termination.
18. Force Majeure.
None of the parties shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and no party shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such party. In event of
such force majeure, the party seeking to be excused on the basis of force
majeure shall advise the other party of the beginning and end of the
circumstances constituting the force majeure, and shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
19. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
20. Further Assurances.
Each of the parties agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
21. Hart-Scott-Rodino Filing.
The parties shall cooperate fully and use their best efforts
to comply with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations issued thereunder (the "HSR Act"), to
determine if a Notification Report form is required thereunder, and to file any
required Notification Report form with the Federal Trade Commission and the
Department of Justice in accordance with such rules and regulations with respect
to transactions contemplated in this Agreement.
22. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by either party without
the consent of the other which shall not be unreasonably withheld, except that
each party may assign this Agreement and the rights, obligations and interests
of such party, in whole or in part, to any of its Affiliates, to any entity
created for the purpose of providing financing for a party's contributions to
the Company (provided, however, that
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any such assignment by a party to such entity shall not be permitted without the
prior consent of the other party, which shall not be unreasonably withheld), to
any purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporations. Subject to the foregoing, any reference to ARIAD, HMRI
or the Company hereunder shall be deemed to include the successor thereto and
assigns thereof.
23. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by the parties
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by each party,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each party.
24. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
25. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
26. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
27. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which counterparts together, shall constitute one and
the same instrument.
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28. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
29. Dispute Resolution.
In the event of any dispute, difference or question arising
between the parties in connection with this Agreement, the construction thereof,
or the rights, duties or liabilities of any party, then such disputes shall be
resolved in accordance with the procedures set forth in Sections 3.8 and 12.1 of
the JV Master Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
ARIAD PHARMACEUTICALS, INC.
By:______________________________________
Title: Chief Executive Officer
HOECHST MARION ROUSSEL, INC.
By:______________________________________
Title:
HOECHST-ARIAD GENOMICS CENTER, LLC
By:______________________________________
Title: Co-Chair of Management Committee
By:______________________________________
Title: Co-Chair of Management Committee
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<PAGE> 1
EXHIBIT 10.27
ARIAD PHARMACEUTICALS, INC. HAS OMITTED FROM THIS EXHIBIT 10.27 PORTIONS OF THE
AGREEMENT FOR WHICH ARIAD PHARMACEUTICALS, INC. HAS REQUESTED CONFIDENTIAL
TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE
AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH AN
ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
STOCK PURCHASE, STANDSTILL AND REGISTRATION RIGHTS AGREEMENT
BETWEEN
ARIAD PHARMACEUTICALS, INC.
AND
HOECHST MARION ROUSSEL, INC.
MARCH 4, 1997
<PAGE> 2
ARIAD PHARMACEUTICALS, INC.
STOCK PURCHASE, STANDSTILL AND REGISTRATION RIGHTS AGREEMENT
THIS AGREEMENT dated March 4, 1997 is by and between ARIAD
PHARMACEUTICALS, INC. (the "Company"), a Delaware corporation with principal
offices at 26 Landsdowne Street, Cambridge, MA 02139-4234 and HOECHST MARION
ROUSSEL, INC. (the "Purchaser"), a Delaware corporation with offices at Route
202-206, P.O. Box 6800, Bridgewater, NJ 08807-0800.
IN CONSIDERATION of the mutual covenants contained in this Agreement,
the parties agree as follows:
SECTION 1. Authorization of Sale of the Shares. The Company has
authorized the issuance and sale of a number of shares determined as set forth
in Sections 3.2 and 3.3 (the "Preferred Shares") of Series B Convertible
Preferred Stock, $.01 par value per share ("Series B Stock") of the Company at
the Closings (as defined below). The relative rights and preferences and other
terms and provisions of the Preferred Shares are set forth in Exhibit 1 hereto,
which, as filed with the Secretary of State of Delaware, is referred to herein
as the "Certificate of Designations." The shares of common stock of the Company,
$.001 par value per share (the "Common Stock"), issuable upon conversion of the
Preferred Shares are referred to herein as the "Common Shares."
SECTION 2. Agreement to Sell and Purchase the Preferred Shares. At each
Closing the Company agrees to issue and sell to the Purchaser, and the Purchaser
agrees to purchase from the Company, upon the terms and conditions hereinafter
set forth, a number of Preferred Shares determined in accordance with Section
3.3, having an aggregate purchase price as set forth in Section 3.2.
SECTION 3. The Closings.
3.1 The First Closing. The completion of the purchase and sale
of the first tranche of Preferred Shares being purchased and sold pursuant to
this Agreement (the "First Closing") shall occur at the time of the Closing
under the Joint Venture Master Agreement between the Company and the Purchaser
dated as of even date herewith (the "JV Master Agreement") or such other time as
shall be agreed to by the Company and the Purchaser. The number of Preferred
Shares to be purchased at the First Closing shall be 2,526,316 shares. The
aggregate purchase price for the Preferred Shares to be purchased at the First
Closing shall be $24,000,000.
<PAGE> 3
3.2 Additional Closings. In addition to the First Closing,
subsequent purchases of Preferred Shares by the Purchaser from the Company under
this Agreement shall take place at such times and at such locations as the
Company shall specify by at least ten (10) days prior written notice to the
Purchaser, upon fulfillment of the closing conditions contained in Section 3.4
(each, an "Additional Closing" and, together with the First Closing, referred to
collectively herein as the "Closings") as follows:
(a) 1999 Capital Contribution Closing(s). At any time
or times during the 1999 calendar year, the Company may on up to [*] the
Purchaser to purchase up to an additional number of Preferred Shares determined
in accordance with Section 3.3, for an aggregate purchase price equal to the
lesser of: (i) [*] (as such term is defined in the JV Master Agreement) [*] for
such year, as amended, or (ii) [*].
(b) 2000 Capital Contribution Closing(s). At any time
or times during the 2000 calendar year, the Company may on up to [*] require the
Purchaser to purchase up to an additional number of Preferred Shares determined
in accordance with Section 3.3, for an aggregate purchase price equal to the
lesser of: (i) [*] (as such term is defined in the JV Master Agreement) [*] for
such year, as amended, or (ii) [*].
(c) 2001 Capital Contribution Closing(s). At any time
or times during the 2001 calendar year, the Company may on up to [*] require the
Purchaser to purchase up to an additional number of Preferred Shares determined
in accordance with Section 3.3, for an aggregate purchase price equal to the
lesser of: (i) [*] (as such term is defined in the JV Master Agreement) [*] for
such year, as amended, or (ii) [*].
(d) 2002 Capital Contribution Closing(s). At any time
during the period January 1, 2002 through March 31, 2002, the Company may [*]
require Purchaser to purchase up to an additional number of Preferred Shares
determined in accordance with Section 3.3, for an aggregate purchase price equal
to the lesser of: (i) [*] (as such term is defined in the JV Master Agreement)
[*], or (ii) [*].
(e) Supplemental Capital Loan Repayment Closing(s).
In addition, unless there has been a Change of Control or Acquisition (each as
defined in the JV Master Agreement) of the Company, at any time that the Company
elects or is required to repay a Supplemental Capital Loan pursuant to Section
2.9.2(d) of the JV Master Agreement or Section 3.2(b) of the Operating
Agreement, the Company may require the Purchaser to purchase up to an additional
number of
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<PAGE> 4
Preferred Shares determined in accordance with Section 3.3, for an aggregate
purchase price equal to the amount of such Supplemental Capital Loan to be
repaid, plus accrued interest thereon.
3.3 Number of Preferred Shares. The number of Preferred Shares
to be purchased at the First Closing shall be 2,526,316 shares. The number of
Preferred Shares to be purchased at any Additional Closing shall be equal to the
aggregate purchase price to be paid at such Closing, divided by the Market Value
on the date of such Closing. "Market Value" shall mean [*] of the average of the
closing prices of the Common Stock on the NASDAQ National Market System (or, if
the Common Stock is not listed on the NASDAQ National Market System, the
principal exchange or interdealer quotation system on which the Common Stock is
listed) for the [*] trading days preceding the date as of which Market Value is
determined (the "Average Closing Price"); provided, however, that Market Value
shall be no greater than [*] and no less than the minimum purchase price
determined in accordance with the following sentence. The minimum purchase price
shall be [*] as of the date of the First Closing and shall increase by [*] on
each January 1 after the First Closing. Notwithstanding the foregoing, if the
Average Closing Price is greater than [*], Market Value shall mean the Average
Closing Price. At each Closing, the Company shall deliver to the Purchaser one
or more stock certificates representing the number of Preferred Shares purchased
by the Purchaser, each such certificate to be registered in the name of the
Purchaser.
3.4 Closing Conditions.
(a) The Company's obligation to issue and sell the
Preferred Shares to the Purchaser at each Closing shall be subject to the
following conditions, any of which may be waived by the Company: (i) receipt by
the Company of a certified or official bank check or checks or wire transfer of
funds in the full amount of the purchase price for the Preferred Shares being
purchased hereunder; (ii) execution and delivery by the Company and the
Purchaser of the JV Master Agreement; (iii) the accuracy in all material
respects as of the time of the Closing of the representations and warranties
made by the Purchaser herein (except, with respect to Closings other than the
First Closing, to the extent that facts and conditions have changed over time)
and the fulfillment of those undertakings of the Purchaser to be fulfilled prior
to the Closing, and the Company's receipt of a Certificate of an officer of
Purchaser certifying as to the same; (iv) neither ARIAD nor HMRI shall be
subject to any order, decree or injunction by a court of competent jurisdiction
which prevents such Closing; (v) no statute, rule or regulation shall have been
enacted by the government (or any governmental agency) of the United States or
any state, municipality or
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<PAGE> 5
other political subdivision thereof that makes the consummation of such Closing
illegal; and (vi) any applicable waiting period (and any extension thereof)
under the HSR Act (as such term is defined in the JV Master Agreement) shall
have expired or been terminated.
(b) The Purchaser's obligation to purchase the
Preferred Shares from the Company at each Closing shall be subject to the
fulfillment of the following conditions any of which may be waived by the
Purchaser: (i) execution and delivery by the Company and the Purchaser of the JV
Master Agreement, (ii) receipt by the Purchaser of an opinion of Mintz, Levin,
Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Company, in the form
attached as Exhibit 2, (iii) the accuracy in all material respects as of the
time of the Closing of the representations and warranties made by the Company
herein (except, with respect to Closings other than the First Closing, the
representations and warranties contained in Sections 4.4, 4.5, 4.6 and 4.7 will
be updated, to the extent that facts have changed over time and made as of the
date of such Closing, and with respect to Section 4.7, with written disclosure
of exceptions thereto) and the fulfillment of those undertakings of the Company
to be fulfilled prior to the Closing, and Purchaser's receipt of a Certificate
executed by the Chief Executive Officer of the Company certifying as to the
same, (iv) neither ARIAD nor HMRI shall be subject to any order, decree or
injunction by a court of competent jurisdiction which prevents such Closing, (v)
no statute, rule or regulation shall have been enacted by the government (or any
governmental agency) of the United States or any state, municipality or other
political subdivision thereof that makes the consummation of such Closing
illegal, (vi) any applicable waiting period (and any extension thereof) under
the HSR Act (as such term is defined in the JV Master Agreement) shall have
expired or been terminated, and (vii) there shall not have occurred an
Acquisition or Change of Control (each as defined in the JV Master Agreement) of
the Company.
3.5 Use of Proceeds. The Company shall use $24,000,000 of the
proceeds received from the First Closing in the following manner: (i) up to [*]
for the construction of the Joint Venture's laboratories and offices at the
Principal Office (as such terms are defined in the JV Master Agreement), and for
the equipping of the facility, as set forth in Section 4.2 of the JV Master
Agreement; (ii) [*] to fund a portion of the Company's Capital Contributions to
the Joint Venture; and (iii) up to [*] for payments to Incyte Pharmaceuticals,
Inc. ("Incyte") under the Collaborative Agreement between the Company and Incyte
dated March 4, 1997 (the "Incyte Agreement") for the initial Access Term (as
such term is defined in the Incyte Agreement).
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<PAGE> 6
Proceeds received by the Company from Additional Closings shall be used by the
Company to fund the Company's Capital Contributions to the Joint Venture.
SECTION 4. Representations, Warranties and Covenants of the Company.
The Company hereby represents and warrants to, and covenants with, the Purchaser
as follows:
4.1 Organization. The Company is duly organized, validly
existing and in good standing under the laws of the State of Delaware. The
Company has full corporate power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and is registered
or qualified to do business and in good standing in each jurisdiction in which
it owns or leases property or transacts business and where the failure to be so
qualified would have a material adverse effect upon the business, financial
condition, properties or operations of the Company.
4.2 Due Authorization. The Company has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement, and this Agreement has been duly authorized and validly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution may be limited by state, federal
or foreign laws or the public policy underlying such laws, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' and contracting
parties' rights generally and except as enforceability may be subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
4.3 Non-Contravention. The execution and delivery of this
Agreement, the issuance and sale of the Preferred Shares to be sold by the
Company hereunder and the consummation of the transactions contemplated by this
Agreement will not conflict with or constitute a violation of, or default (with
the passage of time or otherwise) under, any material agreement or instrument to
which the Company is a party or by which it is bound or the charter, by-laws or
other organizational documents of the Company nor result in the creation or
imposition of any lien, encumbrance, security interest or restriction whatsoever
upon any of the material properties or assets of the Company nor conflict with,
or result in a violation of, any law, administrative regulation, ordinance or
order or decree of any court or governmental agency, or authority applicable to
the Company. No consent, approval, authorization or other order of, or
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<PAGE> 7
registration, qualification or filing with, any regulatory body, administrative
agency, or other governmental body is required for the valid issuance and sale
of the Preferred Shares pursuant to this Agreement, other than such as have been
or will be made or obtained at or prior to the Closing.
4.4 Capitalization. The Company has a total authorized
capitalization consisting of (i) 60,000,000 shares of Common Stock, and (ii)
10,000,000 shares of Serial Preferred Stock, $.01 par value ("Serial Preferred
Stock") of which 500,000 shares have been designated as Series A Preferred Stock
and 5,000,000 shares have been designated as Series B Preferred Stock. As of
December 31, 1996, 19,036,723 shares of Common Stock were issued and
outstanding, no shares of Series A Preferred Stock were issued and outstanding
and no shares of Series B Preferred Stock were issued and outstanding. After
giving effect to the purchase and sale of the Preferred Shares at the First
Closing, 2,526,316 shares of Series B Preferred Stock will be issued and
outstanding. The Preferred Shares to be sold pursuant to this Agreement have
been duly authorized, and when issued and paid for in accordance with the terms
of this Agreement will be validly issued, fully paid and nonassessable. The
Common Shares to be issued upon conversion of the Preferred Shares have been
duly authorized, and when issued upon conversion of the Preferred Shares in
accordance with the terms of this Agreement and the Certificate of Designations
will be validly issued, fully paid and nonassessable. The outstanding shares of
capital stock of the Company have been duly and validly issued and are fully
paid and nonassessable. As of December 31, 1996, there were 3,079,361 shares of
Common Stock reserved for issuance pursuant to outstanding options granted by
the Company, 706,353 shares of Common Stock authorized for future option grants
under the Company's stock option plans, and 2,858,483 shares of Common Stock
reserved for issuance upon the exercise of outstanding warrants. As of the date
hereof, there were 5,000,000 shares of Common Stock reserved for issuance upon
conversion of the Preferred Shares.
4.5 Financial Statements. The Company has delivered to
Purchaser its audited consolidated financial statements (balance sheet,
statement of operations, and statements of cash flows and notes to financial
statements) set forth in the Company's 1995 Annual Report to Shareholders and
its Annual Report on Form 10-K for the fiscal year ended December 31, 1995 and
its unaudited consolidated financial statements (balance sheet, statement of
operations, and statements of cash flows and notes to financial statements) at
and for the fiscal quarters ended March 31, 1996, June 30, 1996 and September
30, 1996, set forth in the Company's Forms 10-Q for such periods (all of which
together constitute the "Financial Statements"). The Financial Statements are
complete and correct in all material respects, subject to normal year-end
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<PAGE> 8
adjustments, and have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated. The Financial Statements accurately set forth the financial condition
and operating results of the Company as of the dates, and for the periods,
indicated therein, subject, in the case of the unaudited financial statements,
to normal year-end audit adjustments. Except as set forth in the Financial
Statements, the Company has no liabilities, contingent or otherwise, other than
liabilities incurred in the ordinary course of business subsequent to the end of
the latest fiscal quarter which, individually or in the aggregate, are not
material to the financial condition or operating results of the Company.
4.6 Company Reports. The Company has filed with the Securities
and Exchange Commission (the "Commission") its Annual Report on Form 10-K for
the fiscal year ended December 31, 1995, quarterly reports on Form 10-Q for the
fiscal quarters ended March 31, 1996, June 30, 1996, and September 30, 1996, the
Proxy Statement dated April 24, 1996 and its 1995 Annual Report to Shareholders
(collectively, the "SEC Filings"). The Company has delivered true and correct
copies of the SEC Filings to Purchaser. The Company warrants that the SEC
Filings, as of their respective filing dates, complied in all material respects
with the laws and regulations under which they were filed and did not contain
any untrue or misleading statement of material fact or omit to state any
material fact necessary in order to make the statements contained therein, in
light of the circumstances in which made, not misleading.
4.7 Changes. Since the close of the Company's latest fiscal
quarter, there has not been:
(a) any change in the assets, liabilities, financial
condition or operating results of the Company from that reflected in the
Financial Statements or the SEC Filings, except changes in the ordinary course
of business which have not been, in the aggregate, materially adverse, and
except that the Company has continued to incur operating losses; or,
(b) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the assets, properties,
financial condition, operating results, or business of the Company.
4.8 Information. Until expiration or termination of
the Joint Venture (as such term is defined in the JV Master Agreement) pursuant
to Article 9 of the JV Master Agreement, as long as Purchaser (alone or with its
Affiliates or associates) beneficially owns (calculated in accordance with Rule
13d-3 promulgated under the Securities Exchange Act of 1934 (the "Exchange
Act")) at least five percent (5%) of the Company's outstanding voting stock, the
Chief
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<PAGE> 9
Executive Officer and the Chief Financial Officer of the Company and, upon
request of Purchaser, at least one member of the Company's Board of Directors
who is not also an employee of the Company, shall meet, in person, at the
Company's offices in Cambridge, Massachusetts, or by teleconference or video
conference, with senior representatives of Purchaser reasonably acceptable to
ARIAD, on a quarterly basis at times to be mutually agreed upon by the parties,
to discuss the affairs of the Company and related matters. At or prior to any
such scheduled meeting, the Company shall provide to Purchaser copies of minutes
of meetings of the Company's Board of Directors held during the preceding
quarter (redacted to exclude information in accordance with the next to last
sentence of this Section 4.8), and information regarding the Company's financing
plans, general progress of ongoing research programs (to the extent permitted by
confidentiality agreements with third parties), executive compensation,
financial updates and variance reports, and litigation and employment matters.
Purchaser shall not be entitled to receive materials and information, where it
is determined by the Company in good faith that such materials and information
would jeopardize the confidentiality of proprietary information of the Company
or third parties or otherwise create a conflict of interest, including any
instance where the Company's business relationship with Purchaser is the subject
matter. Prior to receiving any materials or information from the Company or
attendance at any meeting pursuant to this Section 4.8, each representative of
Purchaser shall: (i) execute a confidentiality agreement in the form attached
hereto as Exhibit 3, and (ii) agree to comply with the Company's insider trading
policy attached hereto as Exhibit 4.
SECTION 5. Representations, Warranties and Covenants of the Purchaser.
The Purchaser hereby represents and warrants to, and covenants with, the Company
as follows:
5.1 Securities Law Compliance. The Purchaser is an "accredited
investor" as defined in Regulation D under the United States Securities Act of
1933, as amended (the "Securities Act") and is knowledgeable and experienced in
making investments in private placement transactions such as the purchase of the
Preferred Shares; (ii) the Purchaser is acquiring the Preferred Shares, and upon
conversion of the Preferred Shares will acquire the Common Shares for its own
account for investment and with no present intention of distributing any of such
Preferred Shares or Common Shares, and no arrangement or understanding exists
with any other person regarding the distribution of any of such Preferred Shares
or Common Shares (except as set forth in Section 7 hereof); and (iii) the
Purchaser will not, directly or indirectly, voluntarily offer, sell,
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<PAGE> 10
pledge, transfer or otherwise dispose of (or solicit any offers to buy, purchase
or otherwise acquire or take a pledge of) any of the Preferred Shares or Common
Shares except in compliance with the Securities Act, applicable state securities
laws and the respective rules and regulations promulgated thereunder, and
applicable foreign laws.
5.2 Due Authorization. The Purchaser has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement. This
Agreement constitutes the legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, except as rights
to indemnity and contribution may be limited by state, federal or foreign laws
or the public policy underlying such laws, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' and contracting parties' rights generally and
except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5.3 Absence of Registration. The Purchaser acknowledges and
understands that the Preferred Shares and the Common Shares have not been
registered under the Securities Act and, therefore, cannot be sold unless
subsequently registered under the Securities Act or an exemption from such
registration is available and that the Purchaser must bear the economic risk of
its investment in the Preferred Shares and the Common Shares for an indefinite
period of time. The Purchaser acknowledges and agrees that the certificates
representing the Preferred Shares and the Common Shares issued to Purchaser will
bear a legend in substantially the following form:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR ANY APPLICABLE STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT COVERING
SUCH SECURITIES UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR A WRITTEN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH
REGISTRATION IS
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<PAGE> 11
NOT REQUIRED UNDER THE ACT OR UNDER APPLICABLE STATE
SECURITIES LAWS."
The Purchaser covenants and agrees that any sale, transfer, pledge,
hypothecation or other disposition of the Preferred Shares or Common Shares
shall be made in compliance with the foregoing legend.
5.4 Non-Contravention. Neither the execution and delivery of
this Agreement by Purchaser nor the consummation by Purchaser of the
transactions contemplated hereby conflicts with or constitutes a violation of or
default under the charter or by-laws of Purchaser, nor will conflict with or
result in a violation of any law, administrative regulation, ordinance or order
or decree of any court or governmental agency or authority applicable to
Purchaser. No consent, approval, authorization or other order of, or
registration, qualification or filing with, any regulatory body, administrative
agency, or other governmental body is required for the consummation of the
transaction contemplated hereby by Purchaser, other than such as have been or
will be made or obtained at or prior to Closing.
5.5 Disclosure. The Purchaser acknowledges receipt of the SEC
Filings. The Purchaser acknowledges that it has had the opportunity to ask
questions and receive answers from the officers and other employees of the
Company regarding the transactions contemplated hereby (including, without
limitation, the acquisition of the Preferred Shares and, upon conversion of the
Preferred Shares, the Common Shares), as well as the affairs of the Company and
related matters, and it has obtained such information and has had the
opportunity to obtain any additional information necessary to verify the
accuracy of all information so obtained.
SECTION 6. Limitations and Restrictions.
6.1 [*]
(a) acquire, announce an intention to acquire, offer
or propose to acquire, by purchase, by gift, by joining a partnership, limited
partnership, syndicate or other entity or "group" (as such term is used in
Section 13(d)(3) of the Exchange Act, such term to have such meaning throughout
this Agreement) or otherwise, directly or indirectly, any (i) assets, businesses
or properties of the Company other than in the ordinary course of business
pursuant to the express terms of this Agreement, the JV Master Agreement and the
Joint Venture Agreements (as defined in the JV Master Agreement), or (ii) record
or beneficial ownership of, or any other right to acquire any, shares of Common
Stock or any securities convertible into, exchangeable for or exercisable for
Common Stock, or any put, call, or other derivative security related to the
Common
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<PAGE> 12
Stock (all such securities, collectively, "Voting Securities"), other than
pursuant to the express terms of this Agreement, the JV Master Agreement and the
Joint Venture Agreements.
(b) participate in the formation or encourage the
formation of, or join or in any way participate with, any "person" (as such term
is used in Section 13(d)(3) of the Exchange Act and Section 2(2) of the
Securities Act, such term to have such meaning throughout this Agreement) which
owns or seeks to acquire beneficial ownership of Voting Securities;
(c) solicit, or participate in any "solicitation" of
"proxies" or become a "participant" in any "election contest" (as such terms are
defined or used in Regulation 14A under the Exchange Act, these terms to have
such meaning throughout this Agreement) with respect to the Company;
(d) initiate, propose or otherwise solicit
stockholders for the approval of one or more stockholder proposals with respect
to the Company or induce any other person to initiate any stockholder proposal;
(e) seek to place any representative on the Board of
Directors of the Company, or to prevent the election of any person to the Board
of Directors nominated and recommended by the Board of Directors, or to affect
the size of or composition of the Company's Board of Directors, or seek to have
called any meeting of the stockholders of the Company or seek any consent of
stockholders in lieu of a meeting;
(f) deposit any Voting Securities in a voting trust
or, except pursuant to this Agreement, subject them to a voting agreement or
other agreement or arrangement with respect to the voting of such Voting
Securities;
(g) otherwise, alone or in concert with others:
(i) seek to control the management, Board of
Directors, policies or affairs of the Company;
(ii) solicit, propose, seek to effect or
negotiate with any other person (including, without
limitation, the Company), or announce any intent to do so,
with respect to (A) any form of business combination or other
extraordinary transaction with the Company or any of its
subsidiaries, (B) any restructuring, recapitalization, similar
transaction or other transaction not in the ordinary course of
business with respect to the Company or any of its
subsidiaries or (C) any tender offer or exchange offer for any
securities of the Company or any of its subsidiaries;
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<PAGE> 13
(iii) solicit, publicly disclose an intent,
purpose, plan or proposal with respect to any of the
foregoing, or any other action that would violate the
provisions of this Section 6.1; or
(iv) assist, participate, facilitate or
solicit any effort or attempt by any person to do or seek to
do any of the foregoing, or any other action that would
violate the provisions of this Section 6.1.
Notwithstanding the foregoing, in the event any third party publicly
announces a tender offer for shares of the Company or publicly announces a
proposal for any other transaction that, if consummated, would result in a
Change of Control or Acquisition of the Company (each a "Third Party Bid"),
then, none of the restrictions contained in this Section 6.1 shall apply to
Purchaser, and Purchaser shall be entitled to make a competing, bona fide tender
offer for shares of the Company, or a competing, bona fide proposal for a
transaction that, if consummated, would result in the Acquisition of the Company
by Purchaser (each a "Competing Bid"); provided, however, that the restrictions
contained in this Section 6.1 shall again apply to Purchaser upon the withdrawal
or abandonment of all outstanding Third Party Bids or the failure to consummate
a transaction pursuant to any outstanding Third Party Bid.
6.2 Restrictions on Sales by Purchaser. Purchaser agrees that
it will not, nor will it permit any of its affiliates or associates, to sell,
solicit an offer to sell, agree to sell, offer or propose to sell (collectively
"Sell"), any Voting Securities of the Company until the occurrence of a
Restriction Termination Event (as defined in Section 6.6); and thereafter,
except as set forth in Section 7, will not sell more than 250,000 shares of
Common Stock in any calendar quarter, except as follows:
(a) Purchaser may transfer Voting Securities to an
Affiliate (as such term is defined in the JV Master Agreement) subject to all of
the terms and conditions of this Agreement; provided, however, that (i) such
Affiliate executes a written agreement satisfactory to the Company to evidence
its agreement to be bound hereby and (ii) the certificates for any such
securities transferred to such Affiliate are marked with a legend restricting
the transfer of such securities and specifically referring to this Agreement;
(b) Purchaser may transfer Voting Securities in
connection with a tender offer for all outstanding shares of the Company's
Common Stock approved by the Company's Board of Directors; and
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<PAGE> 14
(c) Purchaser may transfer Voting Securities in a
registered public offering pursuant to the provisions of Section 7 of this
Agreement.
6.3 Company Right of First Refusal. Prior to making any sale
or transfer of Voting Securities of the Company following the occurrence of a
Restriction Termination Event (other than to an Affiliate of Purchaser or
pursuant to Section 7 hereof), Purchaser shall give the Company the opportunity
to purchase such Voting Securities in the following manner:
(a) Purchaser shall give notice (the "Transfer
Notice") to the Company in writing of such intention specifying the approximate
number of the proposed purchasers or transferees, the amount of Voting
Securities proposed to be sold or transferred, the proposed price per share
therefor (the "Transfer Price") and the other material terms upon which such
disposition is proposed to be made.
(b) The Company or a designee of the Company shall
have the right, exercisable by written notice given by the Company to Purchaser
within thirty (30) days after receipt of such Transfer Notice (provided,
however, that in the event of a proposed transfer by Purchaser pursuant to Rule
144 promulgated under the Securities Act, the Company must provide such written
notice within ten (10) days after receipt of such Transfer Notice), to purchase
all the Voting Securities specified in such Transfer Notice for cash per share
equal to the Transfer Price.
(c) If the Company exercises its right of first
refusal hereunder, the closing of the purchase of the Voting Securities with
respect to which such right has been exercised shall take place within thirty
(30) days after the Company gives written notice of such exercise at a time and
place specified in such notice, which period of time shall be extended, if
necessary, in order to comply with applicable securities laws and regulations.
Upon exercise of its right of first refusal, the Company and Purchaser shall be
legally obligated to consummate the purchase contemplated thereby and shall use
their best efforts to secure any approvals required in connection therewith.
(d) If the Company does not exercise its right of
first refusal hereunder within the time period specified for such exercise, the
Purchaser shall be free, during the period of ninety (90) days following the
expiration of such time for exercise, to sell the Voting Securities specified in
such Transfer Notice on terms no less favorable to Purchaser than the terms
specified in such Transfer Notice.
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(e) The Company and Purchaser each agree to keep
confidential the issuance of any Transfer Notice hereunder and the contents
thereof, to the extent permitted under applicable law.
6.4 Voting. Purchaser agrees that, as long as Purchaser,
(alone or with its affiliates or associates) beneficially owns (calculated in
accordance with Rule 13d-3 promulgated under the Exchange Act) more than five
percent (5%) of the Company's outstanding voting stock, it shall, and shall
direct its associates and affiliates to, vote all the Voting Securities owned by
them in the same proportion as the votes cast by all other holders of the Voting
Securities with respect to (and shall take no actions in opposition to) any
merger, consolidation, sale of assets, sale of all or substantially all of the
outstanding shares of the Company's stock, or the like involving the Company and
recommended by the Company's Board of Directors; provided, however, that the
foregoing restriction contained in this Section 6.4 shall not apply to Purchaser
when a Competing Bid of Purchaser is the subject of any vote of the Company's
stockholders. Purchaser shall be entitled to rely upon the information provided
to it in writing by the Company or, in the absence thereof, filed by the Company
with the Commission, regarding the number of shares of capital stock outstanding
and issuable upon exercise or conversion of options, warrants or the other
securities.
6.5 Legend. The Purchaser acknowledges and agrees that the
certificates representing Voting Securities of the Company beneficially owned by
Purchaser or its affiliates or associates shall bear a legend in substantially
the following form, until such time as the shares of capital stock represented
thereby are no longer subject to the provisions hereof:
"THE SALE, TRANSFER OR ASSIGNMENT OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN STOCK PURCHASE, STANDSTILL AND
REGISTRATION RIGHTS AGREEMENT DATED MARCH 4, 1997, AS AMENDED
FROM TIME TO TIME, BETWEEN THE COMPANY AND HOECHST MARION
ROUSSEL, INC. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY."
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6.6 Definition. As used in this Section 6, the term "Restriction
Termination Event" shall mean the earliest to occur of: (i) consummation of a
Change of Control or Acquisition (each as defined in the JV Master Agreement) of
the Company; (ii) in the event the Joint Venture is terminated pursuant to
Section 9.3.1 or 9.3.3 of the JV Master Agreement and (A) a Supplemental Capital
Loan (as defined in the JV Master Agreement) or Loans remain outstanding as of
the date of termination, three (3) months after the date on which such
Supplemental Capital Loan or Loans are due to be repaid by the Company to
Purchaser or (B) no Supplemental Capital Loan or Loans remain outstanding as of
the date of termination, [*] in the event the Company and Purchaser have agreed
on additional funding arrangements for the Joint Venture pursuant to Section
9.3.2 of the JV Master Agreement.
SECTION 7. Registration Rights.
7.1 "Piggy-Back" Registrations.
(a) If at any time following the occurrence of a
Restriction Termination Event, the Company shall determine to register for its
own account or the account of others under the Securities Act any of its equity
securities, other than on Form S-4 or Form S-8 or their then equivalents or
otherwise relating to shares of Common Stock to be issued in connection with any
acquisition of any entity or business or shares of Common Stock issuable in
connection with stock option or other employee benefit plans, it shall send to
Purchaser written notice of such determination and, if within ten (10) business
days after receipt of such notice, Purchaser shall so request in writing, the
Company shall use its best efforts to include in such registration statement all
or any part of the Registrable Shares Purchaser requests to be registered. As
used in this Section 7, the term "Registrable Shares" shall mean the Common
Shares.
(b) If, in connection with any offering involving an
underwriting, the managing underwriter shall impose a limitation on the number
of shares of Common Stock which may be included in the registration statement
because, in its judgment, such limitation is necessary to effect an orderly
public distribution or because in its judgment the inclusion of shares being
sold by persons other than the Company would adversely affect the offering, then
the Company shall be obligated to include in such registration statement only
such limited portion (which may be none) of the Registrable Shares with respect
to which Purchaser has requested inclusion pursuant hereto as may reasonably be
determined by the managing underwriter. Any inclusion of Registrable Shares in
an offering, when the managing underwriter has so limited the number of shares
that may be
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included in such offering, shall be allocated pro rata among the holders of
similar "piggyback" registration rights granted by the Company seeking to
include their shares, in proportion to the number of shares of Common Stock
(whether or not such shares are sought to be included in such offering) held by
such persons. The Company shall have the right to delay or withdraw any
registration initiated by it pursuant to this Section 7.1.
(c) The Company will use its best efforts to maintain
the effectiveness for up to ninety (90) days, (or such shorter period of time as
the underwriters need to complete the distribution of a registered offering or
until the securities are actually sold) of any registration statement pursuant
to which any of the Registrable Shares are being offered pursuant to this
Section 7.1, and from time to time will amend or supplement such registration
statement and the prospectus contained therein to the extent necessary to comply
with the Securities Act and any applicable state securities statute or
regulation.
7.2 Requested Registration. At any time following the
occurrence of a Restriction Termination Event, and subject to the conditions
herein set forth, Purchaser shall have the right to require the Company to
effect the registration of Registrable Shares on Form S-3 (or its successor
form) under the Securities Act by giving the Company written notice requesting
such registration specifying the number of Registrable Shares proposed to be
sold and the proposed plan for distribution of such Registrable Shares;
provided, however, that such request shall cover a number of Registrable Shares:
(i) that shall have an anticipated aggregate offering price of at least [*]
(based on the current market price of the Company's Common Stock at the time of
the filing of the registration statement) and (ii) unless the Registrable Shares
are being sold in a "firm commitment" underwriting, that shall not exceed [*] of
the Company's outstanding Common Stock at the time of the filing of the
registration statement, unless the Company consents in writing to the
registration of a greater number of Registrable Shares in the Company's sole
discretion; provided, further, however, subject to the provisions of this
Section 7.2, at any time following [*] days after the effective date of the
registration statement filed by the Company pursuant to this Section 7.2,
Purchaser may on any one occasion require the Company to effect the registration
of such Registrable Shares excluded from registration pursuant to clause (ii)
above, in a "firm commitment" underwriting or, if not in a "firm commitment"
underwriting, effect a registration of that number of Registrable Shares that
does [*] of the Company's outstanding Common Stock at the time of filing of such
registration statement.
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If and when the Company shall be required by the provisions of this
Section 7.2 to effect the registration of any Registrable Shares under the
Securities Act, the Company will, as expeditiously as possible:
(a) prepare and file a registration statement on Form
S-3 (or its successor form) giving effect to the plan of distribution of the
Registrable Shares proposed to be sold, and use its best efforts to cause such
registration statement to become effective in order that Purchaser may sell its
Registrable Shares in accordance with the proposed plan of distribution;
(b) prepare and file 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 provisions of the Securities Act with respect to the offer of the
Registrable Shares covered by such registration statement during the period
required for distribution of the Registrable Shares, provided, however, that
such period shall not exceed [*] from the effective date of the registration
statement; provided, further, that Purchaser agrees to suspend any sales if the
Company advises Purchaser that an amendment or supplement is required, until
such amendment or supplement has been prepared (which the Company agrees to do
as soon as practicable in the circumstances) and in which event the [*] day
period shall be extended by the number of days for which selling was suspended;
and,
(c) furnish Purchaser such number of copies of such
prospectus as it may reasonably request in order to facilitate the sale of the
Registrable Shares.
If a request for registration is made pursuant to this Section 7.2
within thirty (30) days prior to the conclusion of the Company's then current
fiscal year, or if at the time of such request the Company is engaged or has
plans to engage in a registered public offering or in any other activity which,
in the reasonable good faith determination of the Company's Board of Directors,
would be adversely affected by the requested registration, the Company shall
have the right to direct that such request be delayed for a period not in excess
of ninety (90) days.
Under the provisions of this Section 7.2, Purchaser shall be entitled
to one requested registration on Form S-3 (or its successor form); provided,
however, that the Company shall not be obligated to file a requested
registration until at least one hundred eighty (180) days have passed since the
effective date of the Company's most recent public offering of securities other
than an offering (i) to employees or directors of the Company or (ii) in
connection with an acquisition.
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7.3 Indemnification of Purchaser. In the event that the
Company registers any of the Registrable Shares under the Securities Act, the
Company will indemnify and hold harmless Purchaser and each underwriter of
Registrable Shares (including their officers, directors, affiliates and partners
and including any broker or dealer through whom Registrable Shares may be sold
in such registration) and each person, if any, who controls Purchaser or any
such underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them become subject under the Securities Act,
applicable state securities laws or under any other statute or at common law or
otherwise, as incurred, and, except as hereinafter provided, will reimburse
Purchaser, each such underwriter and each such controlling person, if any, for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, as incurred, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the final prospectus (or the registration statement or prospectus as from
time to time amended or supplemented by the Company) 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 in order to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by Purchaser (in the case of
indemnification of Purchaser), any such underwriter (in the case of
indemnification of such underwriter) or any such controlling person (in the case
of indemnification of such controlling person) expressly for use therein, or
unless (ii) in the case of a sale directly by Purchaser (including a sale of
Registrable Shares through any underwriter retained by Purchaser to engage in a
distribution solely on behalf of Purchaser), such untrue statement or alleged
untrue statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus copies of which were
delivered to Purchaser or such underwriter on a timely basis, and Purchaser
failed to deliver a copy of the final or amended prospectus at or prior to the
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<PAGE> 20
confirmation of the sale of the Registrable Shares to the person asserting any
such loss, claim, damage or liability in any case where such delivery is
required by the Securities Act.
Promptly after receipt by Purchaser, any underwriter or any
controlling person of notice of the commencement of any action in respect of
which indemnity may be sought against the Company, Purchaser, or such
underwriter or such controlling person, as the case may be, shall notify the
Company in writing of the commencement thereof (provided, however, that failure
to so notify the Company shall not relieve the Company from any liability it may
have hereunder, except to the extent prejudiced by such failure) and, subject to
the provisions hereinafter stated, the Company shall be entitled to assume the
defense of such action (including the employment of counsel, who shall be
counsel reasonably satisfactory to Purchaser, such underwriter or such
controlling person, as the case may be) and the payment of expenses insofar as
such action shall relate to any alleged liability in respect of which indemnity
may be sought against the Company.
Purchaser, any such underwriter or any such controlling person
shall have the right to employ separate counsel in any such action and to
participate in the defense thereof but the fees and expenses of such counsel
subsequent to any assumption of the defense by the Company shall not be at the
expense of the Company unless the employment of such counsel has been
specifically authorized in writing by the Company; provided, however, that, if
the defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be reasonable defenses available to it which are different from
or additional to those available to the indemnifying party or if the interests
of the indemnified party reasonably may be deemed to conflict with the interests
of the indemnifying party, the indemnified party shall have the right to select
a separate counsel and to assume such legal defenses and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred. At any time, Purchaser may
select separate counsel and assume its own legal defense with the expenses and
fees of such separate counsel and other expenses related to such separate
counsel to be borne by Purchaser. The Company shall not be liable to indemnify
Purchaser, any underwriter or any controlling person for any settlement of any
such action effected without the Company's written consent (which consent shall
not be unreasonably withheld or delayed). The Company shall not, except with the
approval of each party being indemnified under this Section 7.3, consent to
entry of any judgment or enter into any settlement which does not
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include as an unconditional term thereof the giving by the claimant or plaintiff
to the parties being so indemnified of a release from all liability in respect
to such claim or litigation.
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which Purchaser, or any
controlling person of Purchaser, makes a claim for indemnification pursuant to
this Section 7.3 but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 7.3 provides for indemnification in such case, then, the Company
and Purchaser will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and of Purchaser on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative fault of the
Company on the one hand and of Purchaser on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by Purchaser
on the other, and each party's relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission; provided,
however, that, in any such case, (A) Purchaser will not be required to
contribute any amount in excess of the public offering price of all Registrable
Shares offered by it pursuant to such registration statement; and (B) no person
or entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
7.4 Indemnification of Company. In the event that the Company registers
any of the Registrable Shares under the Securities Act, Purchaser will indemnify
and hold harmless the Company, each of its directors, each of its officers who
have signed or otherwise participated in the preparation of the registration
statement, each underwriter of the Registrable Shares so registered (including
any broker or dealer through whom such of the shares may be sold) and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act from and against any and all losses, claims, damages, expenses or
liabilities, joint or several, to which they or any of them may become subject
under the Securities Act, applicable state securities laws or under any other
statute or at common law or otherwise, and, except as hereinafter provided, will
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reimburse the Company and each such director, officer, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
or any of them in connection with investigating or defending any actions whether
or not resulting in any liability, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the final prospectus (or in the registration statement or prospectus as from
time to time amended or supplemented) 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 in order to make the statements therein not
misleading, but only insofar as any such statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Company in connection therewith by Purchaser expressly for use therein;
provided, however, that Purchaser's obligations hereunder shall be limited to an
amount equal to the proceeds received by Purchaser for the Registrable Shares
sold in such registration.
Promptly after receipt of notice of the commencement of any
action in respect of which indemnity may be sought against Purchaser, the
Company shall notify Purchaser in writing of the commencement thereof (provided,
however, that failure to so notify Purchaser shall not relieve Purchaser from
any liability it may have hereunder, except to the extent prejudiced by such
failure), and Purchaser shall, subject to the provisions hereinafter stated, be
entitled to assume the defense of such action (including the employment of
counsel, who shall be counsel reasonably satisfactory to the Company) and the
payment of expenses insofar as such action shall relate to the alleged liability
in respect of which indemnity may be sought against Purchaser. The Company and
each such director, officer, underwriter or controlling person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel subsequent to any
assumption of the defense by Purchaser shall not be at the expense of Purchaser
unless employment of such counsel has been specifically authorized in writing by
Purchaser. Purchaser shall not be liable to indemnify any person for any
settlement of any such action effected without Purchaser's written consent
(which consent shall not be unreasonably withheld or delayed).
In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which the Company, its
officers, directors or controlling persons ("Company Indemnitees") exercising
its rights under this Section 7.4, makes a claim for indemnification pursuant to
this Section 7.4, but it is judicially determined (by the entry of a final
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judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding that this
Section 7.4 provides for indemnification, in such case, then, the Company
Indemnitee and Purchaser will contribute to the aggregate losses, claims,
damages or liabilities to which they may be subject (after contribution from
others) in such proportion as is appropriate to reflect the relative fault of
the Company Indemnitee on the one hand and of the Purchaser on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company Indemnitee on the one hand and
of Purchaser on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by the Company Indemnitee on the one hand or by Purchaser on the other,
and each party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided, however,
that, in any such case, (A) Purchaser will not be required to contribute any
amount in excess of the public offering price of all such Registrable Shares
offered by it pursuant to such registration statement; and (B) no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
7.5 Further Obligations of the Company. Whenever under the
preceding Sections of this Section 7, the Company is required hereunder to
register Registrable Shares, it agrees that it shall also do the following:
(a) Furnish to Purchaser such copies of each
preliminary and final prospectus and such other documents as Purchaser may
reasonably request to facilitate the public offering of the Registrable Shares;
(b) Use its best efforts to register or qualify the
Registrable Shares covered by said registration statement under the applicable
securities or "blue sky" laws of such jurisdictions as Purchaser may reasonably
request; provided, however, that the Company shall not be obligated to qualify
to do business in any jurisdictions where it is not then so qualified or to take
any action which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so subject;
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<PAGE> 24
(c) Permit Purchaser or its counsel or other
representatives to inspect and copy such corporate documents and records as may
reasonably be requested by them, after reasonable advance notice and without
undue interference with the operation of the Company's business;
(d) Furnish to Purchaser a copy of all documents
filed with and all correspondence from or to the Commission in connection with
any such offering of securities;
(e) Use its best efforts to insure the obtaining of
all necessary approvals from the National Association of Securities Dealers,
Inc.; and
(f) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earning statement
covering the period of at least twelve months, but not more than eighteen
months, beginning with the first month after the effective date of the
registration statement covering a public offering, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
Whenever under the preceding Sections of this Section 7
Purchaser is registering Registrable Shares pursuant to any registration
statement, (i) Purchaser agrees to timely provide to the Company, at its
request, such information and materials as it may reasonably request in order to
effect the registration of such Registrable Shares and (ii) if the offering is
underwritten, the Company and Purchaser agree to execute an underwriting
agreement containing customary conditions.
7.6 Expenses. In the case of each registration effected under
this Section 7, the Company shall bear the reasonable costs and expenses of each
such registration on behalf of Purchaser, including, but not limited to, the
Company's printing, legal and accounting fees and expenses, Commission and NASD
filing fees and "blue sky" fees and expenses; provided, however, that the
Company shall have no obligation to pay or otherwise bear any portion of the
underwriters' commissions or discounts or transfer taxes attributable to the
Registrable Shares being offered and sold by Purchaser, or the fees and expenses
of counsel for Purchaser in connection with the registration of the Registrable
Shares.
7.7 Non-Transferability. Except as set forth in Section
6.2(a), Purchaser's rights and obligations contained in this Section 7 shall not
be transferable to any other party under any circumstances, whether by operation
of law or otherwise.
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7.8 Lock-Up Agreement. Purchaser agrees, if so requested by
the Company in connection with any public offering of the Company's securities,
not to sell, grant any option or right to buy or sell, or otherwise transfer or
dispose of in any manner, whether in privately-negotiated or open-market
transactions (collectively, "sell"), any Common Stock or other securities of the
Company held by it, without the consent of the underwriters of the public
offering, for a period following the effective date of a registration statement
filed pursuant to a public offering to be reasonably determined by the
underwriters (the "Lock-Up Period") but not to exceed one hundred eighty (180)
days, nor will it permit any of its affiliates or associates to do any of the
foregoing; provided, however, that directors and executive officers of the
Company and persons entitled to registration rights who are not parties to this
Agreement shall also have agreed not to sell any Common Stock or other
securities of the Company during the Lock-Up Period, or the provisions of this
Section 7.8 shall not apply. Purchaser, its affiliates or associates shall enter
into "lock-up" agreements to such effect. Such "lock-up" agreements shall be in
writing and in form and substance satisfactory to the Company. The Company may
impose stop-transfer instructions with respect to the Shares (or securities)
subject to the foregoing restrictions until the end of the Lock-Up Period.
SECTION 8. Survival of Representations, Warranties and Agreements.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein shall survive the execution of this Agreement, the delivery
to the Purchaser of the Preferred Shares being purchased, and the payment
therefor, and the delivery of the Common Shares.
SECTION 9. Notices. All notices, requests, consents and other
communications hereunder shall be made in accordance with Section 13.1 of the JV
Master Agreement.
SECTION 10. Amendment or Modification. Any term of this Agreement may
be amended or modified, or compliance therewith waived, only with the written
consent of both parties hereto.
SECTION 11. Assignment. Except as otherwise provided herein, the rights
and obligations under this Agreement may not be assigned by either party hereto
without the prior written consent of the other party.
SECTION 12. Benefit. All statements, representations, warranties,
covenants and agreements in this Agreement shall be binding on the parties
hereto and shall inure to the benefit of the respective successors and permitted
assigns of each party hereto. Nothing in this Agreement
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shall be construed to create any rights or obligations except among the parties
hereto, and no person or entity shall be regarded as a third-party beneficiary
of this Agreement.
SECTION 13. Expenses. Each of the parties hereto shall pay its own fees
and expenses (including the fees of any attorneys, accountants, appraisers or
others engaged by such party) in connection with this Agreement and the
transactions contemplated hereby whether or not the transactions contemplated
hereby are consummated.
SECTION 14. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.
SECTION 15. Severability. If any provision hereof should be held
invalid, illegal or unenforceable in any respect in any jurisdictions then, to
the fullest extent permitted by law, (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the parties hereto as nearly
as may be possible and (b) such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereby waive any provision of law that would render any provision hereof
prohibited or unenforceable in any respect.
SECTION 16. Governing Law. This Agreement shall be governed by and
construed in accordance with (a) the internal laws of the State of Delaware
without giving effect to principles of conflicts of law, and (b) United States
federal law.
SECTION 17. Counterparts. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one instrument, and shall become effective
when one or more counterparts have been signed by each party hereto and
delivered to the other parties.
SECTION 18. Further Assurances. From and after the date of this
Agreement, upon the request of Purchaser or the Company, the Company and
Purchaser shall execute and deliver such instruments, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement.
SECTION 19. Term and Termination. This Agreement shall take effect as
of the time of Closing under the JV Master Agreement and shall continue until
termination of the JV Master Agreement in accordance with Section 9.3 of the JV
Master Agreement; provided, however, that
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Sections 6, 7, 9, 10, 11, 12, 14, 15, 16, 18 and 20 shall survive such
termination in accordance with their terms.
SECTION 20. Miscellaneous.
20.1 Interpretation. For all purposes of this Agreement, the
term Common Stock shall include any securities of any issuer entitled to vote
generally for the election of directors of such issuer which securities the
holders of the Common Stock shall have received or as a matter of right be
entitled to receive as a result of (i) any capital reorganization or
reclassification of the capital stock of the Company, (ii) any consolidation,
merger or share exchange of the Company with or into another corporation or
(iii) any sale of all or substantially all the assets of the Company.
20.2 Dispute Resolution. In the event of any dispute,
difference or question arising between the parties in connection with this
Agreement, the construction thereof, or the rights, duties or liabilities of
either party, then such disputes shall be resolved in accordance with the
procedures set forth in Sections 3.8 and 12.1 of the JV Master Agreement.
20.3 Entire Agreement. This Agreement, together with the other
Joint Venture Agreements, constitutes on and as of the date hereof the entire
understanding of the parties with respect to the subject matter hereof, and all
prior or contemporaneous understandings or agreements, whether written or oral,
between the parties with respect to such subject matter are hereby superseded in
their entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
20.4 Amendment; Waiver. This Agreement may be amended,
modified, superseded or canceled, and any of the terms may be waived, only by a
written instrument executed by each party or, in the case of waiver, by the
party or parties waiving compliance. The delay or failure of any party at any
time or times to require performance of any provisions 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 instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
-26-
<PAGE> 28
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first referred to above.
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger
----------------------------------
Name: Harvey J. Berger
Title: Chief Executive Officer
HOECHST MARION ROUSSEL, INC.
By: /s/ Thomas Hofstaatter
----------------------------------
Name: Thomas Hofstaatter, Ph.D.
Title: Senior Vice President
-27-
<PAGE> 29
Exhibit 1
CERTIFICATE OF DESIGNATIONS OF
SERIES B PREFERRED STOCK OF
ARIAD PHARMACEUTICALS, INC.
[Filed as Exhibit 3.5 to the Registrant's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997]
-28-
<PAGE> 30
Exhibit 2
FORM OF OPINION
FORM OF OPINION OF COMPANY COUNSEL
Purchaser shall have received from Mintz, Levin, Cohn, Ferris, Glovsky
and Popeo, P.C., counsel for the Company, an opinion dated as of each Closing
Date, to the effect that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and the Company has
all requisite corporate power and authority to own and occupy its properties and
to conduct its business as presently conducted.
(b) The Company is qualified to do business as a foreign corporation in
the Commonwealth of Massachusetts.
(c) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Agreement. The Agreement
has been duly and validly authorized by the Company, duly executed and delivered
by an authorized officer of the Company and constitutes the legal, valid and
binding obligation of the Company. The Agreement is enforceable against the
Company in accordance with its terms, subject to laws of general application
relating to bankruptcy, insolvency, and the relief of debtors and rules of law
governing specific performance, injunctive relief and other equitable relief,
and except insofar as the enforceability of the indemnification provisions
contained in Section 7 of the Agreement may be limited by applicable laws.
(d) The authorized capital stock of the Company is as follows: (i)
10,000,000 shares of Serial Preferred Stock, $.01 par value, of which 500,000
shares have been designated as Series A Preferred Stock, and 5,000,000 shares
have been designated as Series B Preferred Stock, and (ii) 60,000,000 shares of
Common Stock, $.001 par value. 5,000,000 shares of Common Stock have been duly
reserved for issuance upon conversion of the Series B Preferred Stock. As of the
last calendar month immediately preceding the Additional Closing, [__________]
shares of Common Stock were issued and outstanding, no shares of Series A
Preferred Stock were issued and outstanding and [__________] shares of Series B
Preferred Stock were issued and outstanding. After giving effect to the purchase
and sale of the Preferred Shares at the Closing, [__________] shares of Series B
Preferred Stock will be issued and outstanding.
(e) The certificates representing shares of the Series B Preferred
Stock are in due and proper form and have been duly and validly executed by the
officers of the Company named thereon. The shares of Series B Preferred Stock
purchased under the Agreement, when issued, sold and delivered against payment
therefor in accordance with the provisions of the Agreement, and the shares of
Common Stock issuable upon conversion of the Series B Preferred Stock, when
converted and issued in accordance with the terms of the Certificate of
Designations, will be duly and validly issued, fully paid and non-assessable.
(f) The execution, delivery, performance and compliance with the terms
of the Agreement by the Company (provided that no opinion is expressed as to the
indemnification
-29-
<PAGE> 31
provisions of Section 7 of the Agreement) do not violate any provision of any
applicable federal or state law, rule or regulation or any provision of the
Company's Certificate of Incorporation or Bylaws and, to such counsel's
knowledge, do not conflict with or constitute a default under the provisions of
any judgment, writ, decree, order or material agreement to which the Company is
a party or by which it is bound of which such counsel is aware, which violation,
conflict or default would be materially adverse to the Company.
(g) All consents, approvals, orders or authorizations of, and all
qualifications, registrations, designations, declarations, or filings with, any
federal or state governmental authority on the part of the Company (other than
by federal or state securities laws which are covered in Section (h) below)
required to be made prior to each Closing in connection with the consummation of
the transactions contemplated by the Agreement have been obtained, and are
effective, as of each Closing and such counsel is not aware of any proceedings,
or threat thereof, which question their validity.
(h) Based in part upon the representations of Purchaser, the offer and
sale of the Series B Preferred Stock pursuant to the terms of the Agreement are
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended. Such counsel will express no opinion as to compliance with
applicable Federal or State antifraud statutes, or statutes, rules or
regulations of any applicable State law governing the issuance of securities.
-30-
<PAGE> 32
Exhibit 3
CONFIDENTIALITY AGREEMENT
REPRESENTATIVE'S CONFIDENTIALITY AGREEMENT
_____________ ___, 199__
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, Massachusetts 02139
Gentlemen:
Pursuant to Section 4.8 of the Stock Purchase, Standstill and
Registration Rights Agreement dated March 4, 1997 (the "Purchase Agreement";
capitalized terms not defined herein shall have the meanings ascribed to such
terms in the Purchase Agreement) between ARIAD Pharmaceuticals, Inc. (the
"Company") and Hoechst Marion Roussel, Inc. (the "Purchaser"), I have been
designated as a representative of the Purchaser to attend meetings with certain
Company representatives to discuss the affairs of the Company and related
matters.
I understand that information to be discussed and/or distributed at and
in connection with such meetings is confidential, that such confidentiality is
of great importance to the Company and that any disclosure of such information
would result in serious harm to the Company. Consequently, I hereby agree that I
will keep all such information confidential, will disclose such information only
to persons who are senior representatives of Purchaser responsible for
monitoring Purchaser's Investment in the Company to whom a copy of this
Agreement has been delivered and who agree to be bound by the terms hereof, will
use such information only in connection with my attendance at such meetings, and
I will not disclose, directly or indirectly, such information to any third
party; provided that (i) the foregoing obligation with respect to the use and
disclosure of such information shall not apply to any information which I can
demonstrate (A) was at the time of disclosure to me or thereafter, but prior to
its disclosure by me to the Purchaser or any other third party, through no fault
of mine or the Purchaser, publicly available (other than as a result of my
disclosure), (B) has been disclosed to me on a nonconfidential basis from a
source other than the Company which, to the best of my knowledge, was not
prohibited from disclosing such information to me by a legal, contractual,
fiduciary or other obligation or (C) has been independently developed by the
Purchaser without the violation of any of my obligations under this letter
agreement and (ii) I may, if required by subpoena or valid legal process,
disclose any such information, but only to the extent so required and only after
giving the Company prior notice of such required
-31-
<PAGE> 33
disclosure in order to afford the Company an opportunity to obtain an
injunction, a protective order or other relief.
I further agree to comply with the Company's insider trading policy (a
copy of which I have reviewed) and all federal and state securities laws
applicable to me in connection with any receipt of materials or information from
the Company or attendance at any meeting pursuant to Section 4.8 of the Purchase
Agreement.
I further agree that money damages would not be a sufficient remedy for
any breach of this Agreement by me and that the Company shall be entitled to
equitable relief, including injunction and specific performance, as a remedy for
any such breach, in addition to all other remedies available to the Company at
law or in equity.
Very truly yours,
-------------------------------
Representative
Agreed to:
ARIAD PHARMACEUTICALS, INC.
-32-
<PAGE> 34
Exhibit 4
ARIAD INSIDER TRADING POLICY
Exhibit 4
[ARIAD LOGO]
ARIAD POLICIES, PRACTICES AND PROCEDURES
SUBJECT: TRADING IN ARIAD SECURITIES
EFFECTIVE DATE: 7/94
- --------------------------------------------------------------------------------
BACKGROUND
Since the mid-1980s, the Securities and Exchange Commission ("SEC") and the
Justice Department have been vigorously pursuing violations of federal insider
trading laws. To date, these efforts have concentrated primarily on individuals
directly involved in trading abuses. However, in order to further deter insider
trading violations, Congress expanded the authority of the SEC and the Justice
Department by adopting the Insider Trading and Securities Fraud Enforcement Act
("Insider Trading Act"). In addition to increasing the penalties for insider
trading, this statute holds companies responsible for insider trading violations
by company personnel.
To assure full compliance with the Insider Trading Act and to avoid any
appearance of improper conduct on the part of ARIAD directors, officers,
employees and advisors ARIAD (the "Company") is adopting this Policy Statement.
We have worked hard to establish a reputation for integrity and ethical conduct
and cannot afford to have it compromised in any way.
PENALTIES FOR INSIDER TRADING
As a result of the Insider Trading Act and other changes to federal securities
laws, the consequences of insider trading violations can be severe.
For individuals who trade on insider information (or tip information to others),
the penalties include:
- - A civil penalty of up to three times the profit gained or loss avoided,
- - A criminal fine (no matter how small the profit) of up to $1 million, and
- - A jail term of up to ten years.
ARIAD PHARMACEUTICALS, INC.
<TABLE>
<S> <C>
26 LANDSDOWNE STRESS - CAMBRIDGE, MASSACHUSETTES 02139-4234 - TELEPHONE 617 490 0400 - FACSIMILE 617 494 8144
</TABLE>
-33-
<PAGE> 35
Moreover, if a director, officer, employee or advisor violates the Company's
insider trading policy, Company-imposed sanctions, including termination for
cause, could result.
For a company that fails to take appropriate steps to prevent illegal trading,
penalties include:
- - A civil penalty of up to the greater of $1 million or three times the
profit gained or loss avoided as a result of the individual's violation,
and
- - A criminal penalty of up to $2.5 million.
Needless to say, any of the above consequences, even an SEC investigation that
does not result in prosecution, can tarnish the reputation of the Company and
any individuals involved and can irreparably damage a career.
ARIAD'S POLICY
If an ARIAD director, officer, employee or advisor has material non public
information relating to the Company, (i.e., not published or disclosed in our
periodic or special reports ), it is the Company's policy that neither that
person nor any member of that person's immediate family (see below) may buy or
sell securities of the Company or engage in any other action to take advantage
of, or pass on to others, that information.
Transactions that may be necessary or justifiable for independent reasons (such
as the need to raise money for an emergency expenditure) are no exception. Even
the appearance of an improper transaction must be avoided to preserve our
reputation for adhering to the highest standards of conduct.
Material Information. "Material information" is any information that a
reasonable investor would consider important in a decision to buy, hold or sell
stock. In short, this includes any information which could reasonably be
expected to affect the price of the stock. Common examples of information that
would frequently be regarded as material are: projections of future earnings or
losses; news of a pending or proposed merger, acquisition or tender offer; the
declaration of a stock split or the offering of additional securities; changes
in management; significant new products or discoveries; impending bankruptcy or
financial liquidity problems; research findings based on laboratory assays,
preclinical tests, clinical trials, or any problems with laboratory, preclinical
or clinical testing; and the timing of research announcements. Either positive
or negative information may be considered material.
20-20 Hindsight. Remember, if your securities transaction becomes the subject of
scrutiny, it will be viewed after-the-fact with the full benefit of hindsight.
As a
<PAGE> 36
result, before engaging in any transaction, you should carefully consider how
regulators, attorneys, and others might view your transaction in hindsight.
Transactions By Family Members. The same restrictions described above apply to
your immediate family members and to any one else living in your household.
Compliance is your responsibility.
Pre-Clearance of Trades. To prevent inadvertent violations, avoid even the
appearance of an improper trade and comply with SEC regulations, all
transactions in Company securities (purchases, sales, transfers, etc.) by
directors, officers, key advisors and designated administrative and finance
personnel must be precleared by the Company. If you are a member of this group
and contemplate a transaction, including the exercise of stock options, you must
contact the Chief Financial Officer before contacting your broker or taking any
other step to initiate a transaction in Company securities.
Tipping Information to Others. Whether the information is proprietary
information belonging to ARIAD or other information that could have an impact on
our stock price, nonpublic material information may not be passed on to others.
Individuals who tip others are subject to the above penalties, whether or not
they derive any benefit from someone else's actions.
When Information is Public. It is improper for an ARIAD officer, director,
employee or advisor to enter a trade after the Company has made a public
announcement of material information, including earnings releases or scientific
publications or announcements, but before the information has been disseminated
to the public. Because the Company's stockholders and the investing public
should be afforded a reasonable amount of time to receive the information and
act upon it, as a general rule, you should not engage in any transactions until
the third business day after the information has been released to the public.
Additional Prohibited Transactions. Because the Company believes that it is
improper and inappropriate for any Company personnel to engage in short-term or
speculative transactions involving ARIAD securities, it is the Company's policy
that directors, officers, employees and advisors should not engage in any of the
following activities with respect to securities of the Company:
1. "In and out" trading in Company securities. With the exception of the
exercise of stock options, any Company stock purchased in the open market
should generally be held for a minimum of six months. (Note that the SEC's
"short-swing profit rule" already prevents officers and directors from
selling any Company stock within six months of a purchase of Company
stock).
2. Purchases of Company stock on margin (i.e., borrowing a part of the
purchase price with the stock as collateral).
<PAGE> 37
3. Short sales (i.e., selling common stock you do not own and borrowing the
shares to make delivery.)
4. Buying or selling puts or calls.
COMPANY ASSISTANCE
Any person who has questions about specific transactions may obtain additional
guidance in confidence from the Company's Chief Financial Officer. Remember,
however, that the ultimate responsibility for adhering to this Policy Statement
and avoiding improper transactions rests with you. In this regard, it is
imperative that you use your best judgment.
<PAGE> 1
EXHIBIT 10.28
ARIAD PHARMACEUTICALS, INC. HAS OMITTED FROM THIS EXHIBIT 10.28 PORTIONS OF THE
AGREEMENT FOR WHICH ARIAD PHARMACEUTICALS, INC. HAS REQUESTED CONFIDENTIAL
TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE
AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED
WITH AN ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED
COLLABORATIVE AGREEMENT
between
INCYTE PHARMACEUTICALS, INC.
and
ARIAD PHARMACEUTICALS, INC.
Page 1
<PAGE> 2
This Agreement is entered into as of this day of ___________, 1997 by
and between ARIAD Pharmaceuticals, Inc., ("ARIAD"), a Delaware corporation
having its principal place of business at 26 Landsdowne Street, Cambridge, MA
02139-4234, and Incyte Pharmaceuticals, Inc., a Delaware corporation ("Incyte"),
having its principal place of business at 3174 Porter Drive, Palo Alto, CA
94304.
RECITALS
WHEREAS, Incyte owns or has rights in certain patent rights and
know-how regarding certain high-throughput partial cDNA sequencing, cloning, and
data analysis technologies; and
WHEREAS, Incyte has compiled and is compiling, and owns, certain
information and data regarding certain cDNAs in confidential databases which may
be useful in the study of biological phenomena; and
WHEREAS, Incyte owns or has rights in certain patent rights and
know-how regarding certain cDNAs as well as certain of the proteins they encode;
and
WHEREAS, Incyte and Hoechst Aktiengesellschaft and Hoechst Marion
Roussel, Inc. (collectively ("HMRI") have entered into an Amended and Restated
Collaborative Agreement of even date herewith providing [*] to HMRI (the
"Incyte-HMRI [*] Agreement"); and
WHEREAS, ARIAD and Hoechst Marion Roussel, intend to establish a joint
venture through the formation of Hoechst-ARIAD Genomics Center, LLC, a Delaware
Limited Liability Company (the "HMRI-ARIAD JV"); and
WHEREAS, ARIAD desires to obtain access to Incyte's LifeSeq(R)
Database, and to obtain certain licenses under certain of Incyte's patent rights
and know-how, to conduct research and development with respect to certain cDNAs
and the proteins they encode in the development and commercialization of
diagnostics and pharmaceuticals;
NOW, THEREFORE, the Parties agree as follows:
1.0 DEFINITIONS.
The following terms shall have the following meanings:
Page 2
<PAGE> 3
1.1 "Access Term": shall mean the period commencing on the Installation
Date and ending on[*] , during which ARIAD shall have access to the
LifeSeq(R) Database under the terms and conditions of this Agreement.
1.2 "Annotation Information": shall mean information associated with
individual cDNAs in the LifeSeq(R) Database, including, but not limited
to, Gene Expression Profiles, homology information, gene cluster
identifiers, etc.
1.3 "Antisense Field of Use": shall mean the prevention or treatment of any
disease, state or condition in humans by use of one or more
oligonucleotides or modified oligonucleotides which bind either (i) to
mRNA to block the translation of mRNA in vivo to inhibit, prevent
and/or alter protein production, or (ii) to DNA to prevent the
transcription of DNA into the mRNA copy of the gene in vivo; provided,
however, that the Antisense Field of Use does not include [*].
1.4 "Antisense Product(s)": shall mean oligonucleotides or modified
oligonucleotides derived from or targeted to Gene Product(s) for use in
the Antisense Field of Use.
1.5 "ARIAD Affiliate(s)": shall mean any corporation, firm, partnership, or
other legal entity, which is
a) directly or indirectly owned or under common ownership by
ARIAD to the extent of which the common stock or other equity
ownership thereof is one hundred percent (100%) owned by
ARIAD; provided however, that where local laws require a
minimum percentage of local ownership, the status of ARIAD
Affiliate will be established if ARIAD directly or indirectly
owns or controls at least one hundred percent (100%) of the
maximum ownership percentage that may, under such local laws,
be owned or controlled by foreign interests;
b) the "HMRI-ARIAD JV".
1.6 "cDNA": shall mean a DNA copy of human mRNA.
1.7 "cDNA Clone(s)": shall mean an individual plasmid vector and cDNA
insert, which cDNA is usually a partial gene, and not necessarily a
full length gene.
1.8 "cDNA Template": shall mean a specific, purified cDNA Clone derived
from a given cDNA library and prepared for RTI Analysis, from which
partial gene sequence information is obtained. There may be many
different cDNA Templates which correspond to a single gene.
Page 3
<PAGE> 4
1.9 "Consensus cDNA Sequence": shall mean DNA Sequence Information
corresponding to the same gene, as determined by homology and
overlap/cluster analysis.
1.10 "Database Information": shall mean all or any part of the Annotation
Information and DNA Sequence Information in the LifeSeq(R) Database as
applicable.
1.11 "Designated Gene Product": shall mean a given Gene Product which is
intended for research and development, or other use by ARIAD in
accordance with the terms and conditions of this Agreement, and is
"Used By ARIAD" as defined in Section 1.41 below.
1.12 "Diagnostic Field of Use": shall mean (a) the diagnosis and monitoring
of any disease, state or condition in humans (including without
limitation, the diagnosis of disease susceptibility), (b) the selection
of a method of prevention or treatment of any disease, state or
condition in humans, and (c) the determination of genetic traits in
humans; [*].
1.13 "Diagnostic Product(s)": shall mean any product or service derived from
or directed to Gene Product(s) for use in the Diagnostic Field of Use.
1.14 "DNA Sequence Information": shall mean (a) human nucleotide sequence of
cDNA Templates [*]obtained from RTI Analyses released to the LifeSeq(R)
Database from internal sources, (b) sequence information reasonably
available to Incyte from external sources including GenBank DNA,
GenBank protein, dbEST, and at Incyte's discretion, such other publicly
available databases and incorporated into the LifeSeq(R) Database, or
(c) otherwise provided by Incyte to ARIAD; as applicable.
1.15 "Drug Product(s)": shall mean compositions of matter which are ligands,
modulators or inhibitors of Gene Product(s) such as small molecules,
antibodies, agonists, and/or antagonists for use in the prevention or
treatment of any disease, state or condition in humans; provided,
however, that Drug Product(s) shall not include Antisense Product(s).
1.16 "Full Length Clone": shall mean, with respect to a given human gene and
in the case where no Full Length Insert or Full Length Contig exists, a
specific, purified cDNA Clone containing the nucleotide sequence of the
entire amino acid coding region of such human gene, which is obtained
by Incyte independent of those services regularly performed by Incyte
to produce or generate Database Information, [*].
Page 4
<PAGE> 5
1.17 "Full Length Contig": shall mean, with respect to a given human gene,
two or more isolated cDNA Templates represented in the LifeSeq(R)
Database determined by Incyte, using cluster/overlap analysis and by
identifying a putative initiation site and/or signal sequence by
homology analysis, to correspond to the entire amino acid coding region
of such human gene. A Full Length Contig shall not be a Full Length
Clone.
1.18 "Full Length Insert": shall mean, with respect to a given human gene, a
single isolated cDNA Template determined by Incyte, by identifying a
putative initiation site and/or signal sequence by homology analysis,
to contain the entire amino acid coding region of such human gene,
which is obtained by Incyte in the performance of those services
regularly performed by Incyte to produce or generate Gene Expression
Profiles and DNA Sequence Information intended to be released to the
LifeSeq(R) Database. A Full Length Insert shall not be a Full Length
Clone.
1.19 "Gene Expression Profile(s)": shall mean a listing of human cDNAs by
name with each cDNA assessed by a homology score to be:
an exact match to a known gene sequence, or
a match to an Incyte cDNA, or a homolog of
a known gene or proprietary Incyte cDNA, or
a new clone with no prior identified homology or overlap.
This profile, resulting from a given RTI Analysis released to the
LifeSeq(R) Database, includes transcript abundance and certain
annotation information regarding such cDNA derived from Incyte and
public databases, but does not include DNA Sequence Information.
1.20 "Gene Product(s)": shall mean all Database Information and any cDNA
Clone(s) corresponding to a given gene, provided to ARIAD in accordance
with and during the term of this Agreement, and products or materials
that are materially developed or materially derived therefrom, e.g.
partial cDNAs, DNA's, genes, full length cDNAs corresponding thereto,
RNAs, peptides, polypeptides and proteins encoded thereby; provided,
however, that Gene Product(s) shall not include Drug Product(s).
1.21 "Incyte Know-how": shall mean certain information, data and biological
materials proprietary to Incyte either at the time of disclosure to
ARIAD or at the time of Use By ARIAD as such time is specifically
referenced under the applicable terms and conditions of this Agreement
(i.e. not already known to ARIAD, or not generally available to the
public or otherwise part of the public domain at the time of disclosure
to ARIAD, as can be demonstrated by written
Page 5
<PAGE> 6
records created prior to such disclosure), consisting of or directly
and solely relating to Database Information, including Proprietary
Database Information and cDNA Clone(s) provided to ARIAD in accordance
with and during the term of this Agreement or such other know-how of
Incyte expressly provided by Incyte to ARIAD. Incyte Know-how does not
include any rights under any Incyte Patent Rights.[*]
1.22 "Incyte Patent Rights": shall mean certain patents of Incyte directed
to the composition of matter of Gene Product(s); (including inventors'
certificates) and applications therefor throughout the world and
substitutions, extensions, reissues, renewals, divisions, continuations
or continuations-in-part thereof or therefor, which Incyte now or
hereafter during the term of this Agreement owns or controls, or which
are otherwise the property of Incyte.[*]
[*]
1.24 "Incyte Technology": shall mean, collectively, Incyte Know-how and
Incyte Patent Rights.
1.25 "Installation Date": shall mean the date on which Incyte first installs
and makes the LifeSeq(R) Database operational at the Installation Site.
1.26 "Installation Site": shall mean the research facilities of [*] where
Incyte will provide [*]on-site access to Incyte's LifeSeq(R) Database,
in accordance with the Database Access Plan and subject to appropriate
provisions of this Agreement, including Section 5.0 and the provisions
of Section 2.3 and Exhibit A.
1.27 "The Letter Agreement") shall mean the agreement of even date herewith
by and among Incyte, HMRI and ARIAD, which sets forth a mutual
understanding regarding the integration of this Agreement and the
Incyte-HMRI LifeSeq(R) Agreement and certain rights and obligations of
HMRI, ARIAD and the HMRI-ARIAD JV thereunder.
1.28 "LifeSeq(R) Database": shall mean Incyte's proprietary database of
human Annotation Information and DNA Sequence Information and
corresponding cDNA Clones as of the Effective Date, and as updated
thereafter during the Access Term to include additional Annotation
Information and/or DNA Sequence Information and corresponding cDNA
Clones, together with related software and documentation, as described
generally in Exhibit C, which is made available by Incyte on a
non-exclusive basis to ARIAD and other subscribers and subject to the
grant of license rights as described in Section 3.0 [*].
Page 6
<PAGE> 7
1.29 "Net Sales": shall mean the gross invoiced sales of Product (said
Product being in the final form intended for use by the end user), by
ARIAD, its Affiliates or its sublicensees to unrelated third parties
less any of the following charges or expenses, to the extent each is
actually incurred and included in the invoiced sales price and does not
exceed the reasonable and customary amount for such item in the market
in which such sale occurred:
(a) credits, allowances and rebates to, and chargebacks from
the account of, such customers for spoiled, damaged, out-dated
and returned Product;
(b) actual freight and insurance costs incurred in
transporting the Product in final form to such customers;
(c) trade discounts, cash discounts, quantity discounts,
rebates and other price reduction programs;
(d) sales, value-added and other direct taxes; and
(e) customs duties, surcharges and other governmental charges
incurred in connection with the exportation or importation of
the Product in final form.
1.30 "Party": shall mean ARIAD, or Incyte and, when used in the plural,
shall mean ARIAD and Incyte.
1.31 "Pending Claim": shall mean a claim pending in an Incyte patent
application that has not been allowed, and for which claim Incyte (or
ARIAD as applicable) is using reasonable efforts to obtain allowance.
1.32 "Phase III Clinical Trial": shall mean that portion of the clinical
development program which provides for the continued trials of a
specific Product on sufficient numbers of patients to establish the
safety, efficacy and regulatory approval to a standard consistent with
that of the U.S. Food and Drug Administration for Phase III clinical
trials or foreign equivalent.
1.33 "Product(s)": shall mean Drug Product(s), Diagnostic Product(s),
Antisense Product(s) and/or Therapeutic Protein Product(s), singly or
in combination as applicable.
1.34 "Proprietary Database Information": shall mean Database Information,
which at the time of disclosure to ARIAD or the time of Use By ARIAD,
as such time is specifically referenced under the applicable terms and
conditions of this
Page 7
<PAGE> 8
Agreement, which i) was not part of the public domain or ii) was not
already known to ARIAD (with the right to use) independent of the
Database Information, as can be demonstrated by written records of
ARIAD existing prior to the time of disclosure.[*]
1.35 "Regulatory Approval": shall mean the government approvals required to
market a product in a given country, including, but not limited to,
product registration(s) and price and marketing approval(s), as
applicable, in such country.
1.36 "Research Field of Use": shall mean all internal research applications
of Gene Product(s), including, but not limited to conducting research
in the Diagnostic Field of Use, the Antisense Field of Use, the
Therapeutic Field of Use and in the research, identification,
development and commercialization of Drug Products [*]
1.37 "RNA-based Transcript Imaging Analysis" or "RTI Analysis": shall mean
the use of high-throughput partial EST cDNA sequencing and computer
analysis to analyze the expression profile of transcripts present in a
given cell or tissue type. DNA sequence, sequence homology and
transcript abundance information is compiled from cDNA Templates
randomly sampled from a cDNA library.
[*]
1.39 "Therapeutic Field of Use": shall mean the prevention or treatment of
any disease, state or condition in humans by any means, (including
without limitation, gene therapy), excluding the Antisense Field of
Use[*]
1.40 "Therapeutic Protein Product(s)": shall mean any product or service,
including gene therapy, which uses a protein, peptide or polypeptide
which is a Gene Product in the prevention or treatment of any disease,
state or condition in humans, including gene therapy products; provided
however, that Therapeutic Protein Product(s) does not include Antisense
Product(s).
1.41 "Used or Use By ARIAD": shall mean the use of Database Information or a
cDNA Clone obtained from Incyte hereunder which would constitute Incyte
Know-How at the time of such use by ARIAD and which meets any or all of
the following criteria:
[*]
1.42 "Valid Claim": shall mean a claim of an issued or granted and unexpired
Incyte Patent Right which has not been held unenforceable, unpatentable
or invalid by a
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decision of a court or governmental body of competent jurisdiction,
unappealable or unappealed within the time allowed for appeal, which
has not been rendered unenforceable through disclaimer or otherwise,
which has not been abandoned, or which has not been lost through an
interference proceeding.
2.0 DATABASE ACCESS.
2.1 Access to the LifeSeq(R) Database.
2.1.1 Access Grant. During the Access Term, Incyte hereby grants to
ARIAD and its Affiliates, including the HMRI-ARIAD JV, non-exclusive
access and the right to use the LifeSeq(R) Database and Database
Information solely in accordance with the terms and conditions of this
Agreement at the Installation Site. ARIAD Affiliates (other than the
HMRI-ARIAD JV which shall be governed by the terms of the Letter
Agreement) shall have all of the rights (with the corresponding
obligations) of ARIAD hereunder as fully as if they were parties
hereunder.
2.1.2 Installation. At a date and time mutually acceptable, Incyte
agrees to provide ARIAD with on-site access to the LifeSeq(R) Database
at the Installation Site. Any additional implementation or support
services provided by Incyte to ARIAD shall be in a manner consistent
with and under terms consistent with those of comparable users of the
LifeSeq(R) Database.
2.1.3 Updated Releases and Updates. During the Access Term, Incyte
shall provide the Installation Site with data updates of newly released
DNA Sequence Information and Annotation Information typically available
on a [*]basis, and updated releases of the LifeSeq(R) Database when
available. Incyte shall provide the Installation Site with such updated
releases and data updates using a written receipt and acknowledgment
system and on electronic media as applicable. [*]Incyte may, at a
future date provide access and updates to the LifeSeq(R) Database via
on-line services via secure lines.
2.2 Database Access Plan.
2.2.1 Database Access Committee. Within ten (10) days after the
Effective Date, Incyte and ARIAD each shall designate their respective
representatives on a joint ARIAD Database Access Committee, which shall
meet prior to the Installation Date. This Database Access Committee
shall be responsible for preparing the Database Access Plan,
supervising the installation and use of the LifeSeq(R) Database at the
Installation Site, including the implementation of and adherence to the
Database Access Plan and the other security requirements of Section 2.3
below. Each party shall bear all out-of-pocket expenses of its own
representatives on the Database Access Committee.
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2.2.2 Database Access Plan. Within thirty (30) days after the Effective
Date, the Database Access Committee shall prepare and provide Incyte
and ARIAD with the Database Access Plan, subject to such modifications
as are acceptable to Incyte and ARIAD. The Database Access Plan shall
establish mechanisms to document access to the LifeSeq(R) Database and
the Database Information, [*], and assure compliance with the grant of
access under Section 2.1.1 above and the use limitations and security
requirements of Section 2.3 below. Upon preparation of the Database
Access Plan, with such modifications as are mutually acceptable to
Incyte and ARIAD, the Database Access Plan shall be incorporated into
this Agreement as if set forth in full herein.
2.3 Use Restrictions and Security Requirements
2.3.1 Ownership. ARIAD hereby acknowledges that (a) Incyte has expended
significant resources and efforts to develop the LifeSeq(R) Database
and the Database Information, (b) the LifeSeq(R) Database represents a
highly valuable and confidential asset, and is the principal product of
Incyte, (c) Incyte is willing to grant ARIAD access to the LifeSeq(R)
Database in reliance upon the assurance by ARIAD that it shall use all
reasonable efforts (including not less than those efforts that ARIAD
uses to protect its own confidential information of like character) to
protect the LifeSeq(R) Database from unauthorized disclosure and use at
each Installation Site, and (d) the LifeSeq(R) Database at all times
during the term of this Agreement shall remain, the sole and exclusive
property of Incyte.
2.3.2 Designated CPU's at the Installation Site. The LifeSeq(R)
Database, including the DNA Sequence Information, shall only be
installed at the Installation Site on[*]. A second copy of the
database(s) may reside[*]. A back-up computer or fileserver may be
designated such that a copy of the database may be installed on this
computer in the event that the primary computer fails. Under no
circumstances will the LifeSeq(R) Database, including the DNA Sequence
Information be installed on any designated CPU(s) which would allow
unauthorized network access (e.g. third party access via the Internet).
All other database access is prohibited, including access by facilities
of ARIAD other than those designated as Installation Sites, including
facilities of Affiliates, academic collaborators, licensees, or
otherwise.[*]
2.3.3 Permitted Use.
(a) During the Access Term, ARIAD shall have the right to use
the LifeSeq(R) Database and Database Information solely for
its own internal use by authorized personnel of ARIAD and the
HMRI-ARIAD JV at the
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Installation Site in secure work facilities of the
Installation Site in accordance with the terms and conditions
of this Agreement and the Database Access Plan. ARIAD shall
have no access to or right to use the LifeSeq(R) Database
except at the Installation Site under the terms and conditions
of this Agreement.
(b) ARIAD shall not disclose the LifeSeq(R) Database, or any
portion thereof, to any third party[*] . ARIAD shall not
disclose or transfer Database Information, or any portion
thereof, to any third party, except for [*]in accordance with
the provisions of Section 2.3.4 and Article 5.0.
(c) ARIAD shall not transfer the LifeSeq(R) Database or the
Database Information, or any portion thereof, from a
designated CPU at the Installation Site, except for[*].
(d) Except as otherwise agreed by Incyte in writing, ARIAD
shall not reproduce, adapt, prepare derivative works based
upon, or distribute copies (by any means whatsoever whether
now known or hereafter invented) of the LifeSeq(R) Database,
including any substantial portion of the Database Information
from any field of the database, for any purpose except as
expressly permitted under this Agreement.
2.3.4 Designated Gene Product(s). During the Access Term and pursuant
to[*], ARIAD shall make [*]in accordance with the terms and conditions
of this Agreement. ARIAD shall then have the right to, [*]subject to
the appropriate terms and conditions of this Agreement, including
Article 5.0. Any use of Database Information not in accordance with the
above is expressly prohibited.
2.3.5 Records. ARIAD shall maintain records of access to and use of the
LifeSeq(R) Database and the Database Information, sufficient to enable
ARIAD and Incyte to determine, and monitor compliance with, their
respective rights and obligations under this Agreement (e.g. laboratory
notebooks and such other records as are customary for documenting
research and product development activities). No more than once a year
unless as otherwise agreed, at the request and the expense of Incyte,
upon at least ten (10) days' prior written notice, ARIAD shall permit
an agent appointed by Incyte and acceptable to ARIAD to examine these
records solely to the extent necessary to verify the fulfillment of
ARIAD's obligations under this Agreement, provided that such agent has
entered into a confidentiality agreement with ARIAD substantially
similar to the confidentiality provisions of this Agreement limiting
the use and disclosure of such information to purposes germane hereto.
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2.3.6 Loss, Theft, Unauthorized Disclosure or Use. ARIAD promptly shall
notify Incyte of any loss, theft or unauthorized disclosure or use of
the LifeSeq(R) Database or the Database Information which comes to
ARIAD's attention.
2.3.7 Termination of the Access Term. Upon termination or expiration of
the Access Term, ARIAD shall[*]. ARIAD agrees to perform with Incyte a
mutually acceptable final accounting of those Designated Gene
Product(s) which are subject to one or more of the licenses granted to
ARIAD under Article 3.0 below.
2.4 Training.
2.4.1 At a time mutually acceptable to Incyte and ARIAD, Incyte shall
provide ARIAD and the HMRI-ARIAD JV with [*]days of training services
with respect to the Installation Site, at Incyte's training facility in
Palo Alto, California, regarding the use of the LifeSeq(R) Database.
ARIAD and the HMRI-ARIAD JV may designate not more than [*]employees to
attend each such training at Incyte, or such other number as mutually
agreed. Each party shall bear all accrued and out-of-pocket expenses of
its own employees in connection therewith.
2.4.2 At times mutually acceptable to Incyte and ARIAD and the
HMRI-ARIAD JV after the Installation Date at the Installation Site,
Incyte shall provide ARIAD and the HMRI-ARIAD JV with [*]days of
training services, at the Installation Site, regarding the use of the
LifeSeq(R) Database. The number of employees to receive such training
shall be in the reasonable discretion of ARIAD and the HMRI-ARIAD JV.
Each party shall bear all accrued and out-of-pocket expenses of its own
employees in connection therewith.
2.4.3 Incyte shall provide ARIAD and the HMRI-ARIAD JV with such
additional training services in such manner and on such terms and
conditions as Incyte makes generally available to comparable
subscribers to the LifeSeq(R) Database.
3.0 LICENSE AND OPTION GRANTS.
3.1 Non-Exclusive License under Incyte Technology -- Research. During the
Access Term, Incyte hereby grants to ARIAD a perpetual, worldwide,
non-exclusive license (with a right to sublicense as provided in
Section 3.6) under the Incyte Technology to conduct research with
respect to Designated Gene Product(s) and to discover, develop, make,
have made, use and sell Drug Product(s) in the Research Field of Use;
provided however, that with respect to the Research Field of Use such
grant does not include the right to sell Gene Product(s).
3.2 Non-Exclusive License under Incyte Know-how -- Diagnostic, Therapeutic
and Antisense. During the Access Term, Incyte hereby grants to ARIAD a
perpetual,
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worldwide, non-exclusive license (with a right to sublicense as
provided in Section 3.6) under the Incyte Know-how with respect to
Designated Gene Product(s) to discover, develop, make, have made, use
and sell Diagnostic Product(s) in the Diagnostic Field of Use, and/or
Antisense Product(s) in the Antisense Field of Use, and/or Therapeutic
Protein Product(s) in the Therapeutic Field of Use.
3.3 Non-Exclusive License under Incyte Patent Rights in the Diagnostics
Field of Use. During the Access Term and upon Incyte's receipt of
written notice of election to license a Designated Gene Product under
Incyte Patent Rights, Incyte thereby grants to ARIAD a perpetual
worldwide non-exclusive license (with the right to sublicense as
provided in Section 3.6), under Incyte Patent Rights directed to such
Designated Gene Product to discover, develop, make, have made, use and
sell Diagnostic Product(s) in the Diagnostics Field of Use.
3.4 Option to Exclusive License(s) under Incyte Patent Rights --
Therapeutic Field of Use and Antisense Field of Use.
3.4.1 Therapeutic Field of Use.
a. Option Grant. With respect to each Designated Gene Product
which ARIAD identifies pursuant to Section 3.4.1(b) below and pays the
applicable option fee to Incyte pursuant to Section 3.4.1(c) below, and
subject to the provisions of Section 3.5 below, Incyte hereby grants to
ARIAD an exclusive option (the "Therapeutic Option"), during the
applicable option period, to obtain a perpetual, worldwide, exclusive
license under the Incyte Patent Rights directed to the Designated Gene
Product to discover, develop, make, have made, use and sell Therapeutic
Protein Product(s) in the Therapeutic Field of Use.[*]
b. Option Notice. Subject to the provisions of Section 3.5
below, prior to the expiration of the Access Term, ARIAD may identify
each Designated Gene Product which shall be subject to the Therapeutic
Option solely by giving Incyte express written notice specifying such
Designated Gene Product.
c. Option Fee. With respect to each Designated Gene Product
within the LifeSeq(R) Database, the option fee shall [*], and the
option period shall be [*]from the date of notice specifying that such
Designated Gene Product shall be subject to the Therapeutic Option.
d. License Exercise and Grant. Subject to the provisions of
Section 3.5 below, ARIAD may exercise the Therapeutic Option with
respect to any Designated Gene Product which is subject to a
Therapeutic Option solely by giving Incyte express written notice of
exercise, specifying such Designated Gene
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Product to which the license shall apply, and by paying to Incyte a
license fee of [*]prior to the expiration of the applicable option
period. Upon Incyte's timely receipt of written notice of ARIAD's
exercise and payment of the applicable license fee with respect to such
Designated Gene Product, and subject to the provisions of Section 3.5
below, Incyte grants to ARIAD a perpetual, worldwide exclusive license
(with a right to sublicense as provided in Section 3.6) under the
Incyte Patent Rights directed to such Designated Gene Product to
discover, develop, make, have made, use and sell Therapeutic Protein
Product(s) in the Therapeutic Field of Use.
3.4.2 Antisense Field of Use.
a. Option Grant. With respect to each Designated Gene Product
which ARIAD identifies pursuant to Section 3.4.2(b) below and pays the
applicable option fee to Incyte pursuant to Section 3.4.2(c) below and
subject to the provisions of Section 3.5 below, Incyte hereby grants to
ARIAD Antisense Product(s) in the Antisense Field of Use.[*]
b. Option Notice. Subject to the provisions of Section 3.5
below, prior to the expiration of the Access Term, ARIAD may identify
each Designated Gene Product which shall be subject to the Antisense
Option solely by giving Incyte express written notice specifying such
Designated Gene Product.
c. Option Fee. With respect to each Designated Gene Product
within the LifeSeq(R) Database Product(s), the option fee shall be
[*]and the option period shall be [*] from the date of notice
specifying that such Designated Gene Product shall be subject to the
Antisense Option.
d. License Exercise and Grant. Subject to the provisions of
Section 3.5 below, ARIAD may exercise the Antisense Option with respect
to any Designated Gene Product which is subject to a Antisense Option
solely by giving Incyte express written notice of exercise, specifying
such Designated Gene Product to which the license shall apply, and by
paying to Incyte a license fee of [*]prior to the expiration of the
applicable option period. Upon Incyte's timely receipt of written
notice of ARIAD's exercise and payment of the applicable license fee
with respect to such Designated Gene Product, and subject to the
provisions of Section 4.5 below, Incyte grants to ARIAD a perpetual,
worldwide exclusive license (with a right to sublicense as provided in
Section 3.6) under the Incyte Patent Rights directed to such Designated
Gene Product to discover, develop, make, have made, use and sell
Antisense Product(s) in the Antisense Field of Use.
3.4.3 Development Obligations.
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(a) Due Diligence. [*]ARIAD agrees to use due diligence to pursue the
development, governmental approval and commercial exploitation of
Product(s) pursuant to an exclusive license with respect to any
Designated Gene Product. ARIAD's obligation to use due diligence shall
[*]
(b) Reversion. [*]if ARIAD and the HMRI-ARIAD JV fail, abandon or
suspend the development or commercialization of Product(s), [*], then
Incyte shall have the right, in its sole discretion upon written notice
to ARIAD, to terminate such exclusive license with respect to such
Designated Gene Product. In the event of such termination, ARIAD shall
grant Incyte a perpetual worldwide, exclusive license to all ARIAD
know-how and interest in such Designated Gene Product(s) and
corresponding ARIAD patent rights[*].
3.5 Limitations on Patent Licenses.
3.5.1 Reservation of Rights.
(a) Incyte reserves the right under the Incyte Technology to[*]. For
any Designated Gene Product which is the subject of an exclusive option
or exclusive license in the Therapeutic Field of Use or Antisense Field
of Use under Section 3.4, Incyte shall use commercially reasonable
efforts to [*] regarding such, exclusive option or exclusive license,
without specifying the identity of the licensee.
(b) Incyte reserves the right under the Incyte Technology (i) to
satisfy its obligations under this Agreement, (ii) to discover,
develop, make, have made, use and sell Gene Products and Products in
all fields of use outside the scope of an exclusive patent option or an
exclusive patent license granted to ARIAD under Section 3.4 above, and
(iii) to grant licenses to third parties to discover, develop, make and
use and sell Gene Products and Products in all fields of use outside
the scope of an exclusive patent option or an exclusive patent license
granted to ARIAD under Section 3.4 above.
(c) With respect to any such cDNA Clone corresponding to a Designated
Gene Product under exclusive license to ARIAD under[*], Incyte reserves
the right under the Incyte Technology at any time to[*].
3.5.2 Third Party Obligations. If any Gene Product is subject to the
grant of an unexpired exclusive option, or an exclusive license, to any
third party in the Therapeutic Field of Use or Antisense Field of Use
[*]at the time Incyte receives written notice from ARIAD of ARIAD's
desire to obtain an exclusive option or exclusive license with respect
to such Gene Product, Incyte promptly shall advise
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ARIAD of such prior option or license (without specifying the identity
of such other party), and ARIAD shall have no right to obtain an
exclusive option or license with respect to such Gene Product in the
Therapeutic Field of Use or Antisense Field of Use, as applicable,
during the term of the option or license to such other party. For each
Gene Product in the LifeSeq(R) Database Product(s) which is the subject
of an exclusive option or exclusive license granted to any party,
Incyte shall use commercially reasonable efforts to annotate such Gene
Product accordingly.
3.5.3 Incyte's Rights to Unlicensed Full Length Inserts, Full Length
Contigs or Full Length Clones. Notwithstanding anything to the
contrary, with respect to a Full Length Insert, Full Length Contig or
Full Length Clone for which Incyte has obtained [*]subscribers have the
right to acquire exclusive licenses to such Full Length Insert(s), Full
Length Contigs or Full Length Clones under provisions as under Section
3.4 herein; provided however, [*], Incyte may elect to retain exclusive
rights under Incyte Patent Rights to any such Full Length Insert, Full
Length Contig or Full Length Clone which is not subject to an option or
license, for commercial development at its discretion.
3.6 Sublicensing. The Parties agree that brokerage of Incyte Technology is
not intended by ARIAD nor in Incyte's best interests. Therefore:
a. On an individual Gene Product-by-Gene Product basis, ARIAD
may sublicense to any third party the rights to Designated
Gene Product(s) and the Incyte Technology relating thereto in
order to make, have made, use, and sell Drug Products,
Diagnostic Products, Antisense Products, and Therapeutic
Protein Product(s) granted under this Article 3.0; provided,
however, that without the prior written consent of Incyte, no
sublicense of Incyte Technology will be granted to any third
party other than[*]; and further provided that each sublicense
has a grant which is consistent with the terms herein and
ARIAD shall be responsible for payments and royalties under
such sublicenses due to Incyte under Article 4.0 as if such
were made by ARIAD directly and pursuant to the terms and
conditions of this Agreement.
b. No grant of right to sublicense rights to Designated Gene
Product(s) and the Incyte Technology relating thereto in order
to discover, research and develop Drug Products, Diagnostic
Products, Antisense Products and Therapeutic Protein Products
is provided by Incyte to ARIAD herein.
c. ARIAD shall obtain the written commitment of any
sublicensee to abide by all applicable terms and conditions of
this Agreement. Promptly upon execution of any permitted
sublicense, ARIAD shall provide notice
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thereof to Incyte and reasonable satisfactory evidence that such
sublicense is in compliance with this Section 3.6.
3.7 No Implied Licenses. No implied right or license is granted to ARIAD to
utilize the Incyte Technology in a manner not expressly included within
the scope of the licenses granted pursuant to this Agreement. Other
than as expressly granted herein, no licenses either by estoppel,
implication or otherwise are granted herein.
3.8 Supply of cDNA Clones. During the Access Term, Incyte hereby agrees to
provide to ARIAD, at ARIAD's option and pursuant to its written request
from time to time, one or more isolated cDNAs, corresponding to a given
Consensus DNA Sequence in the Database Information and the subject of
license(s) granted hereunder this Article 3, at the following rates:
[*]
ARIAD agrees to submit payments within thirty (30) days from receipt of
invoice from Incyte in reasonably detailed form regarding such clone
supply.
ARIAD agrees that such cDNA Clone(s) are provided to ARIAD on a
non-exclusive basis and the subject of license(s) granted under Article
3. No rights under Incyte Patent Rights are granted under this Section
3.8.
4.0 SCHEDULE OF PAYMENTS; ROYALTIES.
4.1 Access Fee(s).
4.1.1 The Access Fees for the LifeSeq(R) Database subscription will be
payable by ARIAD on the following schedule:
[*]
4.2 Non-Exclusive License(s) under Incyte Know-how; Milestone Payments and
Royalties. Contingent on the following events, and subject to Sections
4.6 and 4.7, the following payments and royalties shall be paid by
ARIAD to Incyte for Drug Product(s), Antisense Product(s) and
Therapeutic Protein Product(s) in the respective fields of use, with
respect to Designated Gene Product(s) under Non-Exclusive License as
granted under Sections 3.1 and 3.2:
(a) IND Filing: [*]the filing of the first Investigational New
Drug application ("IND") with the United States Food and Drug
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Administration ("FDA") or foreign equivalent with respect to
each given Product.
(b) Phase III Clinical Trials: [*]the first initiation of
Phase III Clinical Trials with respect to each given Product.
(c) Regulatory Approval: [*]the first Regulatory Approval of
the marketing of each given Product.
[*]
(e) Royalties on Net Sales: A royalty will be paid equal to[*]
4.3 Non-Exclusive License under Incyte Know-how and Incyte Patent Rights in
the Diagnostic Field of Use; Milestone Payments and Royalties.
Contingent on the following events, and subject to Sections 4.6 and
4.7, the following payments and royalties shall be paid by ARIAD to
Incyte for Diagnostic Product(s) in the Diagnostic Field of Use with
respect to Designated Gene Product(s) under Non-Exclusive License
granted under Sections 3.1 and 3.2, and Section 3.3 as applicable:
(a) Regulatory Approval: [*]the first Regulatory Approval of
the marketing of each Diagnostic Product.
[*]
(c) Royalties on Net Sales: A royalty will be paid equal[*]
4.4 Exclusive Therapeutic License under Incyte Patent Rights; Milestone
Payments and Royalties. Contingent on the following events, and subject
to Sections 4.6 and 4.7, the following payments and royalties shall be
paid by ARIAD to Incyte for Therapeutic Protein Product(s) in the
Therapeutic Field of Use with respect to Designated Gene Product(s)
under exclusive license under Incyte Patent Rights granted by Incyte
under Section 3.4.1(d):
(a) IND Filing: [*]the first Investigational New Drug
application ("IND") with the United States Food and Drug
Administration ("FDA") or foreign equivalent with respect to
each Therapeutic Protein Product .
(b) Phase III Clinical Trials: [*]the first initiation of
Phase III Clinical Trials with respect to each Therapeutic
Protein Product.
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(c) Regulatory Approval: [*]the first Regulatory Approval of
the marketing of each Therapeutic Protein Product.
[*]
(e) Royalties on Net Sales: A royalty will be paid equal to:
[*]
4.5 Exclusive Antisense License under Incyte Patent Rights; Milestone
Payments and Royalties. Contingent on the following events, and subject
to Sections 4.6 and 4.7, the following payments and royalties shall be
paid by ARIAD to Incyte for Antisense Product(s) in the Antisense Field
of Use with respect to Designated Gene Product(s) under exclusive
license under Incyte Patent Rights granted by Incyte under Section
3.4.2(d):
(a) IND Filing: [*]after the filing of the first Investigative
New Drug application ("IND") the United States Food and Drug
Administration ("FDA") or foreign equivalent with respect to
each Antisense Product.
(b) Phase III Clinical Trials: [*]the first initiation of
Phase III Clinical Trials with respect to each Antisense
Product.
(c) Regulatory Approval: [*]the first Regulatory Approval of
the marketing of each Antisense Product.
[*]
(e) Royalties on Net Sales: A royalty will be paid equal to:
[*]
4.6 4.6.1 Payment Obligation. The foregoing payments under Sections 4.2
through 4.5 will accrue or become due or payable with respect to Gene
Product(s), Drug Product(s), Antisense Product(s), Therapeutic Protein
Product(s), and/or Diagnostic Product(s) which are:
[*]
4.7 Duration of Payment Obligation. Royalty obligations with respect to
each Product under any portion of this Article 4.0 shall[*]
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4.8 Mode of Payment. For purposes of determining when a sale of a
royalty-bearing Product occurs, the sale shall be deemed to occur on
the date of the invoice to the purchaser of the Product. All royalty
payments shall be made within ninety (90) days of the end of each
calendar quarter in which the sale was made. Any royalty payment that
is not paid on or before the date such payment is due under this
Agreement shall bear interest, to the extent permitted by applicable
law, at two percentage points over the prime rate of interest as
reported by Bank of America NT&SA in San Francisco, California, from
time to time, calculated on the number of days such payment is
delinquent. Payments shall be calculated in the currency in which sales
took place and then converted to United States Dollars at the rate of
exchange of the currency of the country in which the Net Sales were
made as reported by the Wall Street Journal as of the close of the last
business day of the calendar quarter for which such payment is due.
4.9 Records Retention. ARIAD agrees to keep for at least three (3) years
records of all sales of Products in sufficient detail to permit Incyte
to confirm the accuracy of ARIAD's royalty calculations. Not more than
once a year, at the request and the expense of Incyte during normal
business hours, upon at least five (5) days' prior written notice,
ARIAD shall permit a nationally recognized, independent, certified
public accountant appointed by Incyte and acceptable to ARIAD, to
examine these records solely to the extent necessary to verify such
calculations, provided that such accountant has entered into a
confidentiality agreement with ARIAD substantially similar to the
confidentiality provisions of this agreement, limiting the use and
disclosure of such information to purposes germane hereto. Results of
any such examination shall be made available to both Parties. If such
examination reveals an underpayment of royalties by five percent (5%)
or more, ARIAD shall pay all costs of such examination. In the event
such accountant concludes that additional royalties were owed, the
additional royalties shall be paid within thirty (30) days of the date
Incyte delivers to ARIAD such accountant's written report so
concluding. This section shall survive the cessation of payment
obligations under Section 4.6 for a period of six (6) years.
4.10 Miscellaneous Payments. Unless otherwise provided in this Agreement,
neither Party shall provide services or information to the other on a
chargeable basis without the prior written agreement of such other
Party, both as to such services or information and as to the charges
and payment schedules therefor.
4.11 Shipping. ARIAD shall pay, for its own account, any shipping, freight,
mailing expenses and the like arising out of this Agreement and the
transactions contemplated herein.
4.12 Payments and Taxes. Unless otherwise provided in this Agreement, ARIAD
agrees to submit payments[*]
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5.0 CONFIDENTIALITY AND PUBLICATION.
5.1 Confidentiality. The Parties acknowledge that during the course of this
Agreement they will each receive from the other information which is
proprietary, confidential and of commercial value to the disclosing
Party. For purposes of this Agreement, "Confidential Information" shall
mean technical and business information belonging to the disclosing
Party, including, where appropriate and without limitation, any
information, business, financial and scientific data, Database
Information, Gene Product(s), patent disclosures, patent applications,
structures, models, techniques, processes and, compositions, compounds,
biological samples, apparatus, and the like, and bioinformatics
methods, hardware configurations and software in various stages of
development or any software product (source code, object code or
otherwise), including its audiovisual components (menus, screens,
structure and organization) and any human or machine readable form of
the program, and any writing or medium in which the program or
information therein is stored, written or described, including, without
limitation, diagrams, flow charts, designs, drawings, specifications,
models, data, bug reports, and the like. Except to the extent expressly
authorized by this Agreement, [*]the Parties agree that, for the Access
Term and for ten (10) years thereafter, the receiving Party shall keep
confidential and shall not publish or otherwise disclose and shall not
use for any purpose (except those expressly permitted under this
Agreement) any Confidential Information furnished to it by the other
Party pursuant to this Agreement, and regardless of the medium on which
it is provided, including know-how, except to the extent that it can be
established by the receiving Party by competent proof that such
information:
(a) was already known to the receiving Party, other than under
an obligation of confidentiality, at the time of disclosure by
the other Party;
(b) was generally known to the public or otherwise part of the
public domain at the time of its disclosure to the receiving
Party;
(c) became generally available to the public or otherwise part
of the public domain after its disclosure other than through
any act or omission of the receiving Party in breach of this
Agreement;
(d) was subsequently lawfully disclosed to the receiving Party
by a third party, provided it was not obtained by such third
party directly or indirectly from the other Party;
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<PAGE> 22
(e) was independently discovered or developed by the receiving
Party without the use of the other Party's Confidential
Information, as can be documented by written records created
at the time of such independent discovery or development.
Each Party may disclose the other's information to the extent such
disclosure is reasonably necessary in (i) prosecuting patent
applications and maintaining patents, or (ii) prosecuting or defending
litigation or (iii) complying with applicable governmental regulations
provided, however, that if a Party is required to make any disclosure
of the other Party's secret or confidential information it will give
reasonable advance notice to the other Party of such disclosure
requirement and will use its reasonable efforts to secure confidential
treatment of such information required to be disclosed.
5.2 Disclosure; Third Party Access. ARIAD agrees that the LifeSeq(R)
Database provided hereunder will be for internal use by ARIAD and its
Affiliates, including the HMRI-ARIAD JV, only and subject to all the
terms and provisions of Article 5.0 of this Agreement. Except as
provided for in Sections 2.3.4 and 3.6 above, Confidential Information
of Incyte will not be published or disclosed in any form without the
written authorization of Incyte.
(a) ARIAD and its sublicensees may publish scientific results
of their work within the scope of the licenses granted under
this Agreement, provided, however, that:
(i) any such publication by ARIAD or its sublicensees
that would disclose Confidential Information of
Incyte shall require the prior consent of Incyte,
provided that such disclosure is on an individual
Gene Product-by-Gene Product-basis and ARIAD has
taken necessary steps to provide for diligent review
by Incyte for removal of, or approval to disclose,
Incyte Confidential Information; and
(ii) [*]
(iii) any such publications will include recognition
of the contributions of Incyte according to standard
practice for assigning scientific credit, either
through authorship or acknowledgment as may be
appropriate.
(b) Incyte recognizes that ARIAD, in the normal course of
business, utilizes consultants and third party collaborators
who are bound by a contractual obligation to ARIAD, including
an obligation of confidentiality to ARIAD. ARIAD may disclose
Confidential Information
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of Incyte, solely on an individual Gene Product-by-Gene
Product-basis, to such consultants and third party
collaborators in the context of the disclosure of ARIAD's own
scientific results or the conduct of its work within the scope
of the licenses granted herein, provided, however, subject to
the Letter Agreement, that:
(i) any such disclosure by ARIAD that would disclose
Confidential Information of Incyte shall require the
prior written consent of Incyte, which consent will
not be unreasonably withheld or delayed, and further
provided that ARIAD has obtained a written agreement
regarding obligations of confidentiality and
appropriate use restrictions comparable to and
consistent with those set forth herein and provided
that such third party shall not further disclose
Confidential Information, and provided that such
written agreement is subject to review and written
approval of Incyte prior to any disclosure of
Confidential Information of Incyte; and
(ii) any such disclosure of Confidential Information
which includes the transfer of DNA Sequence
Information or biological materials shall be subject
to a written materials transfer agreement which
protects the intellectual property rights of Incyte
and ARIAD as set forth herein, such agreement to
include customary provisions regarding scope of work,
publication, protection of proprietary subject matter
and ownership of inventions, and provided that such
written agreement is subject to review and written
approval of Incyte prior to any transfer of DNA
Sequence Information or biological materials of
Incyte; and
(iii) [*]
(iv) ARIAD has obtained a written obligation from
such third party regarding Incyte's right to review
publications as under the provisions of Section
5.2(a) herein.
[*]
5.3 Notwithstanding anything to the contrary set forth herein, this Article
5.0 shall not be construed to allow ARIAD, Affiliates, sublicensees,
collaborators or consultants to publish or disclose the LifeSeq(R)
Database, including any Consensus cDNA Sequence(s) or substantial
portions of Annotation Information, or any Incyte software or hardware
configurations, at any time without the express written consent of
Incyte.
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6.0 INTELLECTUAL PROPERTY.
6.1 Incyte Rights. With the exception of intellectual property rights
granted to ARIAD under the non-exclusive or exclusive license(s)
granted under this Agreement, Incyte retains all rights to the Incyte
Technology and to all cDNA sequences, partial cDNAs, and their
corresponding full length cDNAs, Consensus DNA Sequence, gene products,
proteins encoded thereby and Incyte applications thereof and Incyte
information relating thereto, including, but not limited to Database
Information and the LifeSeq(R) Database.
ARIAD Rights. Except as otherwise provided herein, ARIAD, or its
Affiliates, licensees, or sublicensees, as applicable, shall
respectively retain all intellectual property rights and title in and
to any Gene Product(s), Product(s), and inventions relating thereto,
discovered or developed by or for ARIAD, or its Affiliates, licensees,
or sublicensees, as applicable; provided, however, that with respect to
Full Length Inserts or Full Length Contigs provided to ARIAD under the
provisions of Section 3.8, Incyte retains the sole right to file the
first patent application(s) with claims directed to composition of
matter covering such Full Length Inserts or Full Length Contigs, and
that Incyte shall be the sole owner of such patent application(s).
6.2 Patent Prosecution. Except as provided herein, the filing, prosecution,
maintenance and enforcement of patent(s), copyrights, and other
proprietary rights regarding the Incyte Technology shall be the
responsibility and expense of, and at the discretion of Incyte.
6.3 Cooperation. The Parties undertake that they shall do all things which
are reasonably necessary or desirable to establish, maintain and assert
any rights or interest of the Parties in respective patent rights,
including the execution of all documents necessary or desirable so that
title or other rights can be established and maintained and so that any
patent filings permitted hereunder can be made, prosecuted and
maintained. Such actions shall include cooperative efforts as
reasonable to obtain the broadest possible protection for Gene
Product(s) in all jurisdictions, to the mutual benefit of both parties,
taking into account the nature of the invention(s) and the state of the
law in the respective jurisdictions. Such actions may include
discretionary provision by ARIAD to Incyte of full length genes
corresponding to a Designated Gene Product from partial cDNA Clone(s)
provided by Incyte under Section 3.8.
With respect to a Gene Product under Non-Exclusive Patent License in
the Diagnostics Field of Use, and for the duration of such license,
patent costs,[*]
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Upon entering into an exclusive license to a Designated Gene Product
and for the duration of such license, patent costs[*].
6.4 ARIAD Patent Rights.[*]
6.5 Third Party Patents. Subject to the warranties made hereunder as to
each Party's knowledge of any third party rights that may be infringed
by the uses of the Database Information as contemplated herein, the
Parties acknowledge that, in order to discover, develop, and/or
commercialize one or more Gene Products, they may require licenses
under third party patent rights or such other rights, including for
example a Sybase or Oracle license), and it is hereby agreed that it
shall be each Party's responsibility to satisfy itself as to the need
for such licenses and, if necessary, to obtain such licenses.
7.0 TERM; TERMINATION.
7.1 Term: Termination at Full Term. This Agreement shall commence as of the
Effective Date and shall terminate as provided herein.
7.2 Access Term. The Access Term shall extend [*]unless terminated earlier
as provided under Sections 7.3, 7.4 or 7.5, or extended under Section
4.1.2.
7.3 Breach. Failure by either Party to comply with any of the material
obligations contained in this Agreement shall entitle the other Party
to give to the Party in default written notice specifying the nature of
the default and requiring it to make good such default. If such default
is not cured within ninety (90) days after the receipt of such notice,
the notifying Party shall be entitled, without prejudice to any of its
other rights conferred on it by this Agreement, in addition to any
other remedies available to it by law or in equity, immediately to
terminate this Agreement by giving written notice to the other Party.
The right of a Party to terminate this Agreement, as hereinafter
provided, shall not be affected in any way by its waiver or failure to
take action with respect to any previous default.
7.4 Insolvency or Bankruptcy. Either Party may, in addition to any other
remedies available to it by law or in equity, terminate this Agreement,
in whole or in part as the terminating Party may determine, by written
notice to the other Party in the event the other Party shall have
become insolvent or bankrupt, or shall have made an assignment for the
benefit of its creditors, or there shall have been appointed a trustee
or receiver of the other Party or for all or a substantial part of its
property, or any case or proceeding shall have been commenced or other
action taken by or against the other Party in bankruptcy or seeking
reorganization, liquidation, dissolution, winding-up, arrangement,
composition or readjustment of its debts or any other relief under any
bankruptcy, insolvency,
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<PAGE> 26
reorganization or other similar act or law of any jurisdiction now or
hereafter in effect.
[*]
7.6 Accrued Rights Surviving Obligations. Termination, relinquishment or
expiration of this Agreement for any reason shall be without prejudice
to any rights which shall have accrued to the benefit of either Party
prior to such termination, or expiration. Upon any termination,
relinquishment or expiration of this Agreement, the following
provisions will not terminate, but will continue in full force and
effect: Sections 2 (database access) to the extent relating to
Designated Gene Products, 5 (confidentiality), 6 (intellectual
property), 8 (representations/warranties), 9 (indemnity), 10
(miscellaneous) and [*]and any licenses granted or options entered, and
any payment obligations thereunder pursuant to ARIAD's rights under
Sections 3 and 4, as of the termination, relinquishment or expiration
of this Agreement.
8.0 REPRESENTATIONS AND WARRANTIES; COVENANTS.
8.1 Representations and Warranties. Each Party represents and warrants to
the other Party that:
(a) it has the corporate power and authority and the legal
right to enter into this Agreement and to perform its
obligations hereunder;
(b) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been
duly authorized by all necessary corporate action of such
Party;
(c) the execution and delivery of this Agreement and the
performance by such Party of any of its obligations under this
Agreement do not and will not (i) conflict with, or constitute
a breach or violation of, any other contractual obligation to
which it is a party, any judgment of any court or governmental
body applicable to such Party or its properties or, to such
Party's knowledge, any statute, decree, order, rule or
regulation of any court or governmental agency or body
applicable to such Party or its properties, and (ii) with
respect to the execution and delivery of this Agreement,
require any consent or approval of any governmental authority
or other person;
(d) with respect to Incyte, there are no material adverse
proceedings, claims or actions pending, or to the best of
Incyte's knowledge,
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threatened, relating to the Incyte Technology as of the
Effective Date of this Agreement which would materially
interfere with Incyte's performance of its obligations under
this Agreement. Further, Incyte shall to the best of its
knowledge without undertaking a special investigation,
disclose to ARIAD any material adverse proceedings, claims or
action that arise, relating to Incyte Technology during the
Access Term, which would materially interfere with Incyte's
performance of its obligations under this Agreement.
8.2 Compliance with Law. ARIAD and Incyte each represent and warrant that
it shall comply with all applicable laws, regulations and guidelines in
connection with that Party's performance of its obligations and rights
pursuant to this Agreement. Without limiting the generality of the
foregoing, each Party shall be responsible for compliance with all
applicable product safety, product testing, product labeling, package
marking, and product advertising laws and regulations with respect to
its own activities and products. Further, ARIAD and Incyte shall each
comply with the regulations of the United States and any other relevant
nation concerning any export or other transfer of technology, services,
or products.
8.3 Disclaimers.
(a) NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A REPRESENTATION
MADE OR WARRANTY GIVEN BY INCYTE THAT ANY PATENT WILL ISSUE BASED UPON
ANY PENDING PATENT APPLICATION WITHIN THE INCYTE PATENT RIGHTS, THAT
ANY PATENT WITHIN THE INCYTE PATENT RIGHTS THAT HAS ISSUED OR ISSUES
WILL BE VALID, OR THAT THE USE OF ANY LICENSE GRANTED HEREUNDER OR THAT
THE USE OF ANY INCYTE PATENT RIGHTS WILL NOT INFRINGE THE PATENT OR
PROPRIETARY RIGHTS OF ANY OTHER PERSON. INCYTE MAKES NO REPRESENTATIONS
OR WARRANTIES WITH RESPECT TO ARIAD's USE OF THE INFORMATION TO BE
PROVIDED TO IT HEREUNDER. EXCEPT AS EXPLICITLY STATED HEREIN, ALL
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WARRANTIES OF
MERCHANTABILITY, NOVELTY OR FITNESS OF GENE PRODUCTS OR DATABASE
INFORMATION FOR ANY PARTICULAR PURPOSE, ARE EXCLUDED. INCYTE MAKES NO
WARRANTY THAT THE DATABASE INFORMATION DOES NOT CONTAIN ERRORS.
(b) EXCEPT AS EXPLICITLY STATED HEREIN NEITHER PARTY WILL BE LIABLE FOR
CONSEQUENTIAL OR INCIDENTAL DAMAGES OF ANY NATURE ARISING FROM SUCH
PARTY'S ACTIVITIES UNDER THIS AGREEMENT; PROVIDED, HOWEVER, THAT THIS
LIMITATION SHALL
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NOT LIMIT THE INDEMNIFICATION OBLIGATION OF SUCH PARTY UNDER SECTION
9.2 BELOW FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES RECOVERED BY A THIRD
PARTY.
(c) Notwithstanding the provisions of this Agreement:
(i) Incyte retains the right to undertake research and
development programs or establish collaborations with third
parties in any research area, [*], provided, however that
Incyte remains subject to its license and confidentiality
obligations to ARIAD as set forth in Sections 3 and 5;
(ii) ARIAD recognizes that the LifeSeq(R) Database and Gene
Products provided pursuant to this Agreement may be, or may
become, subject to prior license grants to third parties.
9.0 INDEMNITY.
9.1 Direct Indemnity. Each Party shall indemnify and hold the other Party
harmless, and hereby forever releases and discharges the other Party,
from and against all losses, liabilities, damages and expenses
(including attorney's fees and costs) arising out of a breach of the
indemnifying Party's warranties or out of the negligence, recklessness
or intentional misconduct of the indemnifying Party or its affiliates
in connection with activities under this Agreement except to the extent
such losses, liabilities, damages and expenses (including attorney's
fees and costs) resulted from the recklessness or intentional
misconduct of the other Party.
ARIAD acknowledges and agrees that with respect to the nature of
Incyte's Technology, there can be no adequate remedy at law for any
breach of ARIAD's obligations under the security provisions of this
Agreement, that any such breach may result in irreparable harm to
Incyte, and therefore, that upon any such breach, Incyte shall be
entitled to seek appropriate equitable relief in addition to whatever
remedies it might have at law, including injunctive relief, specific
performance or such other relief as Incyte may request to enjoin or
otherwise restrain any act prohibited hereby, as well as the recovery
of all costs and expenses, including attorney's fees incurred. Incyte
shall be entitled to indemnification by ARIAD from any losses,
liabilities, damages and expenses (including attorney's fees and
costs), in connection with such unauthorized use or release of
Confidential Information of Incyte.
9.2 Other Indemnity. Except as otherwise provided below, each Party agrees
to indemnify and hold the other Party and its affiliates harmless from
and against any losses, liabilities, damages and expenses (including
attorney's fees and costs)
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<PAGE> 29
suffered or incurred, and claims made, in connection with third party
claims, demands, actions or other proceedings for personal injuries or
any Product(s) recall to the extent caused by: (a) any and all uses or
other disposition of Gene Product(s) or Product(s) by the indemnifying
Party or its affiliates, licensees, or sublicensees (other than the
other Party), (b) any failure to test for or provide adequate warnings
of adverse side effects to the extent such failure arises out of acts
or omissions in connection with a Party's or its affiliates',
licensees', or sublicensees' (other than the other Party), preclinical
or clinical testing or marketing of Gene Product(s) or Product(s)
contemplated hereunder, (c) any manufacturing defect in any product or
other material manufactured by a Party or its affiliates, licensees, or
sublicensees (other than the other Party), or (d) any other act or
omission of a Party or its affiliates, licensees, or sublicensees
(other than the other Party), in connection with the activities
contemplated under this Agreement, except to the extent such losses,
liabilities, damages and expenses (including attorney's fees and costs)
resulted from, recklessness or intentional misconduct of the other
Party.
9.3 Procedure. A Party (the "Indemnitee") that intends to claim
indemnification under this Section 9 shall promptly notify the other
Party (the "Indemnitor") of any loss, liability, damage, expense,
claim, demand, action or other proceeding in respect of which the
Indemnitee or any of its affiliates intend to claim such
indemnification, and the Indemnitor shall have the right to participate
in, and, to the extent the Indemnitor so desires, jointly with any
other Indemnitor similarly noticed, to assume the defense thereof with
counsel selected by the Indemnitor and reasonably satisfactory to the
Indemnitee; provided, however, that an Indemnitee shall have the right
to retain its own counsel, with the fees and expenses to be paid by the
Indemnitee, if representation of such Indemnitee by the counsel
retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other
party represented by such counsel in such proceedings. The indemnity
agreement in this Section 9 shall not apply to amounts paid in
settlement of any loss, liability, damage, expense, claim, demand,
action or other proceeding if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld
unreasonably. The failure to deliver notice to the Indemnitor within a
reasonable time after the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Section 9, but
the omission so to deliver notice to the Indemnitor will not relieve it
of any liability that it may have to any Indemnitee otherwise than
under this Section 9. The Indemnitor may not settle the action or
otherwise consent to an adverse judgment in action or other proceeding
that materially diminishes the rights or interests of the Indemnitee
without the express written consent of the Indemnitee. The Indemnitee
under this Section 9 and its employees and agents, shall cooperate
fully with the Indemnitor and its
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legal representatives in the investigation of any action, claim or
liability covered by this indemnification.
10.0 MISCELLANEOUS PROVISIONS.
10.1 No Partnership. Nothing in this Agreement is intended or shall be
deemed to constitute a partnership, agency, distributorship,
employer-employee or joint venture relationship between the Parties. No
Party shall incur any debts or make any commitments for the other,
except to the extent, if at all, specifically provided herein.
10.2 Assignments. Neither Party shall assign any of its rights or
obligations hereunder except: (i) as incident to the merger,
consolidation, reorganization or acquisition of stock or assets or
similar transaction affecting all or substantially all of the assets or
voting control of the assigning Party; (ii) to any directly or
indirectly wholly-owned subsidiary if the assigning Party remains
liable and responsible for the performance and observance of all of the
subsidiary's duties and obligations hereunder; (iii) with respect to
Incyte as the assignor, as incident to the acquisition or transfer of
the assets affecting all or substantially all of the assets of the
business of Incyte relating to a given field of use, provided that
Incyte or such third party continues to fulfill its obligations to
ARIAD hereunder; or (iv) with the consent of the other Party, which
consent shall not be withheld unreasonably. This Agreement shall be
binding, upon the successors and permitted assigns of the Parties and
the name of a Party appearing herein shall be deemed to include the
names of such Party's successor's and permitted assigns to the extent
necessary to carry out the intent of this Agreement. Any assignment not
in accordance with the above shall be void and any assignment by ARIAD
hereunder shall be subject to ARIAD's obligations under Section 4.12,
Payments and Taxes.
Notwithstanding the foregoing, in no event shall ARIAD's database
access rights be assignable to a successor or permitted assign.
10.3 Further Actions. Each Party agrees to execute, acknowledge and deliver
such further instruments, and to do all such other acts, as may be
necessary or appropriate in order to carry out the purposes and intent
of this Agreement.
10.4 No Trademark Rights. Except as otherwise provided herein, no right,
express or implied, is granted by this Agreement to use in any manner
the names "Incyte" or "ARIAD", or any other trade name or trademark of
Incyte or ARIAD or their Affiliates in connection with the performance
of this Agreement.
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10.5 Public Announcements. Except as may otherwise be required by law or
regulation, neither Party shall make any public announcement concerning
this Agreement or the subject matter hereof without first submitting a
copy of the proposed announcement to the other Party for review. The
other Party shall have seven (7) business days or such other time as
mutually agreed to consent to the publication of such announcement,
such consent not to be unreasonably withheld.
10.6 Entire Agreement of the Parties; Amendments. This Agreement, together
with the Letter Agreement constitutes and contains the entire
understanding and agreement of the Parties and cancels and supersedes
any and all prior negotiations, correspondence, representations,
understandings and agreements, whether verbal or written, between the
Parties respecting the subject matter hereof. No waiver, modification
or amendment of any provision of this Agreement shall be valid or
effective unless made in writing and signed by a duly authorized
officer of each of the Parties.
10.7 Severability. In the event any one or more of the provisions of this
Agreement should for any reason be held by any court or authority
having jurisdiction over this Agreement or either of the Parties to be
invalid, illegal or unenforceable, such provision or provisions shall
be validly reformed to as nearly as possible approximate the intent of
the Parties and, if unreformable, shall be divisible and deleted in
such jurisdiction; elsewhere, this Agreement shall not be affected so
long as the Parties are still able to realize the principal benefits
bargained for in this Agreement.
10.8 Captions. The captions to this Agreement are for convenience only, and
are to be of no force or effect in construing or interpreting any of
the provisions of this Agreement.
10.9 Applicable Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Delaware, without reference to
the conflicts of law principles thereof.
10.10 Notices and Deliveries. Any notice, requests, delivery, approval or
consent required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been sufficiently given if
delivered in person, transmitted by commercial overnight courier, or
transmitted by telex telegram or telecopy to the Party to whom it is
directed at its address shown below or such other address as such Party
shall have last given by notice to the other Party. All notices shall
be effective upon receipt.
If to Incyte, addressed to:
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Incyte Pharmaceuticals, Inc.
3174 Porter Drive
Palo Alto, CA 94304
Attn: Roy Whitfield, Chief Executive Officer
If to ARIAD, addressed to:
ARIAD Pharmaceuticals, Inc.
26 Landsdowne Street
Cambridge, MA 02139-4234
Attn: Harvey J. Berger, Chairman and
Chief Executive Officer
10.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
10.12 Attorney's Fees. In any litigation relating to or arising out of this
Agreement, the prevailing Party shall be entitled to its reasonable
attorneys' fees, including expert witness costs, and all costs of
proceedings incurred in such litigation, in addition to any other
relief it may be awarded.
10.13 Force Majeure. Force Majeure shall mean an Act of God, flood, fire,
explosion, earthquake, strike, lockout, casualty or accident, war,
civil commotion, act of public enemies, blockage or embargo, or any
injunction, law, order, proclamation, regulation, ordinance, demand or
requirement of any government or any subdivision, authority
representative thereof, or the inability to procure or use materials,
labor, equipment, transportation or energy sufficient to meet
manufacturing needs without the necessity of allocation, or any other
cause whatsoever, whether similar or dissimilar to those enumerated
above, which are beyond the reasonable control of such Party, which the
Party affected has used its reasonable best efforts to avoid, and which
prevent, restrict or interfere with the performance by a Party of its
obligations hereunder. The Party affected by Force Majeure shall give
notice to the other Party promptly in writing and whereupon shall be
excused from those obligations hereunder, to the extent of such
prevention, restriction or interference, provided that the affected
party shall use its commercially reasonable efforts to avoid or remove
such cause(s) of non-performance and shall continue performance
whenever such cause(s) is removed.
10.14 Affiliate Performance. To the extent that any Affiliate of ARIAD has
access to any LifeSeq(R) Database, has the right to receive any other
rights or benefits under this Agreement or otherwise is obligated to
perform any obligations under this Agreement, ARIAD shall cause such
Affiliate to perform in full, when due, all applicable obligations
under this Agreement to the same extent as if such
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Affiliate were a party to this Agreement; provided, however, that
nothing in this Section 10.14 shall expand the rights or benefits of
ARIAD or its Affiliates, or the obligations of Incyte, beyond those
otherwise expressly set forth in this Agreement. ARIAD shall guaranty
timely performance in full by such Affiliate of all such obligations. A
breach by such Affiliate of any such obligation shall constitute a
breach by ARIAD of this Agreement and shall entitle Incyte to exercise
its rights under Article 7.0 (Term and Termination) above, in addition
to any other rights and remedies to which Incyte may be entitled.
10.15 Effective Date: This Agreement shall become effective upon consummation
of the Closing under the agreements under which the HMRI-ARIAD JV is
formed (the "Effective Date"). If HMRI and ARIAD determine not to form
the HMRI-ARIAD JV, or the consummation of the JV Closing does not and
will not occur for any reason, ARIAD shall promptly notify Incyte in
writing, whereupon this Agreement shall become null and void and of no
effect.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their respective duly authorized officers as of the Effective Date.
INCYTE PHARMACEUTICALS, INC.
By: /s/ Randy Scott
-------------------------------------
Name: Randy Scott
-------------------------------------
Title: President & CSO
-------------------------------------
ARIAD PHARMACEUTICALS, INC.
By: /s/ Harvey J. Berger
-------------------------------------
Name: Harvey J. Berger
-------------------------------------
Title: Chairman and Chief Executive Officer
-------------------------------------
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EXHIBIT A
[*]
The parties agree to the following access monitoring mechanisms intended to
document the use of Database Information by ARIAD and the reporting of this
to[*]
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EXHIBIT B
INCYTE PHARMACEUTICALS INC. ISSUED PATENTS
BPI
U.S. Patent No. 5,171,739 December 15, 1992
Treatment of Endotoxin-Associated Shock and Prevention Thereof Using a BPI
Protein
U.S. Patent No. 5,089,274 February 18, 1992
Use of Bactericidal/Permeability Increasing Protein or Biologically Active
Analogs Thereof to Treat Endotoxin-Related Disorders
U.S. Patent No. 5,234,912 August 10, 1993
Pharmaceutical Compositions Comprising Recombinant BPI Proteins and a Lipid
Carrier and Uses Thereof
U.S. Patent No. 5,308,834 May 3, 1994
Treatment of Endotoxin-Associated Shock and Prevention Thereof Using a BPI
Protein
U.S. Patent No. 5,334,584 August 2, 1994
Non-Glycosylated BPI
Australian Patent No. 647,734 March 31, 1994
Method of Purifying BPI
U.S. Patent No. 5,532,216 July 2, 1996
Neutralization of non-LPS Compounds with BPI
PROTEASE NEXIN-1
U.S. Patent No. 5,006,252 April 9, 1991
Purified Protease Nexin
U.S. Patent No. 5,087,368 February 11, 1992
Purified Recombinant Protease Nexin
U.S. Patent No. 5,112,608 May 12, 1992
Use of Protease Nexin-1 to Mediate Wound Healing
U.S. Patent No. 5,278,049 January 11, 1994
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Recombinant Molecule Encoding Human Protease Nexin
U.S. Patent No. 5,187,089 February 16, 1993
Protease Nexin-1 Variants which Inhibit Elastase
U.S. Patent No. 5,196,196 March 23, 1993
Use of Protease Nexin-1 in Wound Dressings
U.S. Patent No. 5,206,017 April 27, 1993
Use of Protease Nexin-1 as an Anti-inflammatory
U.S. Patent No. 5,326,562 July 5, 1994
Pharmaceutical Dosage Unit for Treating Inflammation Comprising Protease Nexin-1
Australian Patent No. 625,492 November 10, 1992
Recombinant Purified Protease Nexin
Australian Patent No. 647,210 March 17, 1994
Protease Nexin-1 for Wound Healing
Australian Patent No. 650,275 June 16, 1994
Protease Nexin-1 Variants
U.S. Patent No. 5,457,090 October 10, 1995
Protease Nexin-1 Variants
U.S. Patent No. 5,495,001 February, 27, 1996
Recombinant Protease Nexin
L-14-1
French Patent No. 87/10288 July 27, 1987
Beta-galactoside Binding Lectins
Australian Patent No. 616,195 February 18, 1992
Beta-galactoside Binding Lectins
Australian Patent No. 632,474 May 11, 1993
14kD Mammalian Lectins
European Patent No. 03/68920 June 9, 1993
Beta-galactoside Binding Lectins
Page 36
<PAGE> 37
GRANULOCYTE PROTEINS
U.S. Patent No. 5,032,574 July 16, 1991
Novel Antimicrobial Peptide
U.S. Patent No. 5,087,569 February 11, 1992
Antimicrobial Proteins, Compositions Containing Same and Uses Thereof
U.S. Patent No. 5,126,257 June 30, 1992
Antimicrobial Proteins, Compositions Containing Same and Uses Thereof
U.S. Patent No. 5,210,027 May 11, 1993
DNA Encoding Novel Antimicrobial Polypeptide and Methods for Obtaining such
Polypeptide
Australian Patent No. 633,832 June 4, 1993
Novel Antimicrobial Polypeptide, Compositions Containing Same and Uses Thereof
U.S. Patent No. 5,338,724 August 16, 1994
Novel Antimicrobial Proteins, Compositions Containing Same and Uses Thereof
U.S. Patent No. 5,470,825 November 28, 1995
Basophil Granule Proteins
U.S. Patent No. 5,476,839 December 9, 1995
Basophil Granule Proteins
INCYTE PHARMACEUTICAL INC. PUBLISHED FOREIGN APPLICATIONS
BPI AND RELATED MOLECULES
PCT/US90/00837 August 23, 1990
Use of Bactericidal/Permeability Increasing Protein or Biologically Active
Analogs Thereof to Treat Lipopolysaccharide Associated Gram Negative Infections
PCT/US91/05758 March 5, 1992
Recombinant BPI Proteins, Uses of BPI Proteins and Methods of Preparing Same
PCT/US92/08234 April 1, 1993
Compositions Comprising a Bactericidal/Permeability Increasing Protein and a
Lipid Carrier, Methods of Making Same, and Uses Thereof
Page 37
<PAGE> 38
PCT/US92/08298 April 1, 1993
A New Form of Lipopolysaccharide Binding Protein (LBP)
EPO 91/918397 June 9, 1993
Recombinant BPI Proteins, Uses of BPI Proteins, and Methods of Preparing Same
EPO 0605653 July 13, 1994
A New Form of LBP-Beta
Japan 504267/94 May 19, 1994
BPI Variants
PCT/WO 94/21280 September 29, 1994
Use of BPI and LBP Levels and Ratios Thereof in Diagnosis
PCT/WO 94/25476 November 10, 1994
BPI Variants
PCT/WO 95/01428 January 12, 1995
Glycosylated and Non-glycosylated BPI and Methods for Producing Same
GRANULOCYTE PROTEINS
EPO 87/117408.2 June 29, 1988
Antimicrobial Proteins, Compositions Containing Same and Uses Thereof
PCT/US90/06317 May 16, 1991
Recombinant Production of Lactoperoxidase
PCT/US91/04869 January 23, 1992
Basophil Granule Proteins
PCT WO 94/06829 March 31, 1994
Basophil Granule Proteins
PROTEASE NEXIN-1
EPO 87/810057.7 August 26, 1987
Neurite-Promoting Factor and Processes for the Manufacture Thereof
Page 38
<PAGE> 39
PCT/US91/02161 October 17, 1991
Use of Protease Nexin-1 to Mediate Wound Healing
PCT/US91/04331 December 26, 1991
Protease Nexin-1 Variants
PCT/US92/10484 June 10, 1993
Use of Protease Nexin-1 as an Anti-inflammatory
EPO 91/9074062 August 25, 1993
Use of Protease Nexin-1 to Mediate Wound Healing
Japan 5-508148 November 18, 1993
Use of Protease Nexin-1 to Mediate Wound Healing
Japan 6-501148 February 10, 1994
Protease Nexin-1 Variants
L-14-1
EPO 89/303714.3 October 18, 1989
14-Beta-Gal Mammalian Lectins
PCT WO 94/11497 May 26, 1994
Method of Causing Selective Immunosuppression using HL-60-Relate Lectins
LACTOPEROXIDASE
PCT WO 91/06639 May 16, 1991
Recombinant Production of Lactoperoxidase
Japan 5-504679 July 22, 1993
Recombinant Production of Lactoperoxidase
Page 39
<PAGE> 40
EXHIBIT C
LifeSeq(R) Specifications
LifeSeq(R) V4.2 Overview
LifeSeq(R) is a powerful genomic database, based on relational database
management system (RDBMS) architecture. The LifeSeq(R) database resides on a
UNIX server, available in either Oracle or Sybase format and is accessed across
distributed client/server networks by users working on Macintosh, PC, or UNIX
computers such as DEC, SGI and Sun.
LifeSeq(R) currently has two core components: the DNA Sequence database and the
Gene Expression database. The DNA Sequence database contains the nucleotide
sequences for Incyte's computer-edited ESTs and provides access to robust
sequence-analysis tools such as BLAST. In addition to Incyte's proprietary cDNA
sequences, the LifeSeq(R) database includes public-domain sequence data from the
WashU-Merck EST Project. The Gene Expression database contains high-quality
annotations for each sequence. The sequence data and annotations in LifeSeq(R)
are generated by an automated bioanalysis suite of software, which is
proprietary to Incyte and not included as part of the LifeSeq(R) product.
In addition to the two databases, the LifeSeq(R) product includes a set of
utility programs that enables customers to link their sequencing databases into
the LifeSeq(R) application.
LifeSeq(R) as a product is naturally under continual update, review, and
development. The specifications presented here reflect the functionality present
in version 4.2 released on October, 1996.
[*]
Page 40
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