<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1996
REGISTRATION NO. 333-9307
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ARRIS PHARMACEUTICAL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction
of incorporation or organization)
22-2969941
(I.R.S. Employer
Identification Number)
--------------------
385 OYSTER POINT BOULEVARD
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(415) 829-1000
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
--------------------
DANIEL H. PETREE
EXECUTIVE VICE PRESIDENT, CORPORATION DEVELOPMENT AND CHIEF FINANCIAL OFFICER
ARRIS PHARMACEUTICAL CORPORATION
385 OYSTER POINT BOULEVARD, SUITE 3
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(415) 829-1000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
COPIES TO:
MICHAEL R. JACOBSON, ESQ.
COOLEY GODWARD CASTRO HUDDLESON & TATUM
FIVE PALO ALTO SQUARE
PALO ALTO, CALIFORNIA 94306
(415) 843-5000
FAX (415) 857-0663
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
TITLE OF EACH AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION FEE
SECURITIES TO REGISTERED PER SHARE(1) PRICE(1)
BE REGISTERED
- --------------------------------------------------------------------------------------------------------
Common Stock
$0.001 par value. . . . . . 161,418 shares $11.32 $1,827,251.80 $630.09
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of
computing the amount of the registration fee based on the average of the
high and low prices of the Company's Common Stock as reported on the Nasdaq
National Market on July 26, 1996.
--------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
==============================================================================
<PAGE>
DATED SEPTEMBER 19, 1996
PROSPECTUS
161,418 SHARES
ARRIS PHARMACEUTICAL CORPORATION
COMMON STOCK
___________________
This Prospectus relates to 161,418 shares of Arris Pharmaceutical
Corporation ("Arris" or the "Company") Common Stock, par value $.001 (the
"Common Stock"), which are being offered and sold by certain stockholders of the
Company (the "Selling Stockholders"). The Selling Stockholders, directly or
through agents, broker-dealers or underwriters, may sell the Common Stock
offered hereby from time to time on terms to be determined at the time of sale,
in transactions on the Nasdaq National Market or in privately negotiated
transactions or in a combination of such methods of sale, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders or the
purchasers of the shares for whom such broker-dealers may act as agents or to
whom they sell as principal or both (which compensation to a particular broker-
dealer may be in excess of customary commissions). The Company will not receive
any proceeds from the sale of shares by the Selling Stockholders. See "Selling
Stockholders" and "Plan of Distribution."
The Common Stock of the Company is quoted on the Nasdaq National Market
under the symbol "ARRS." The last reported sales price of the Company's Common
Stock on the Nasdaq National Market on September 19, 1996 was $11.75 per share.
____________________
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 3 OF THIS PROSPECTUS
_____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
No underwriting commissions or discounts will be paid by the Company in
connection with this offering. Expenses payable by the Company in connection
with this offering are estimated to be $55,000. The aggregate proceeds to
the Selling Stockholders from the Common Stock will be the purchase price of
the Common Stock sold less the aggregate agents' commissions and
underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. See "Plan of Distribution."
The Selling Stockholders and any agents, broker-dealers or underwriters
that participate in the distribution of the Common Stock may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, as amended
(the "Act"), and any commission received by them and any profit on the resale
of the Common Stock purchased by them may be deemed to be underwriting
discounts or commissions under the Act. The Company has agreed to indemnify
the Selling Stockholders and certain other persons against certain
liabilities, including liabilities under the Act.
September 19, 1996
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files annual and quarterly reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information may be inspected and
copied at the Commission's Public Reference Section, 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, as well as at the Commission's Regional
Offices at 7 World Trade Center, 13th Floor, New York, New York 10048; and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
The Common Stock of the Company traded on the Nasdaq National Market and
reports and other information concerning the Company may be inspected at the
offices of The National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
ADDITIONAL INFORMATION
A registration statement on Form S-3 with respect to the Common Stock
offered hereby (the "Registration Statement") has been filed with the
Commission under the Act. This Prospectus does not contain all of the
information contained in such Registration Statement and the exhibits and
schedules thereto, certain portions of which have been omitted pursuant to
the rules and regulations of the Commission. For further information with
respect to the Company and the Common Stock offered hereby, reference is made
to the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus regarding the contents of any
contract or any other documents are not necessarily complete and, in each
instance, reference is hereby made to the copy of such contract or document
filed as an exhibit to the Registration Statement. The Registration
Statement, including exhibits thereto, may be inspected without charge at the
Commission's principal office in Washington, D.C., and copies of all or any
part thereof may be obtained from the Public Reference Section, Securities
and Exchange Commission, Washington, D.C., 20549, upon payment of the
prescribed fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are by this reference incorporated in and made a
part of this Prospectus:
(1) The Annual Report on Form 10-K for the fiscal year ended December 31,
1995 (including all material incorporated by reference therein);
(2) The Quarterly Report on Form 10-Q, as amended, for the quarter ended
March 31, 1996;
(3) The Quarterly Report on Form 10-Q for the quarter ended July 31, 1996.
(4) The Current Report on Form 8-K filed on January 5, 1996, as amended
on February 5, 1996; and
(5) The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form 8-A filed with the Commission on
November 4, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by
reference herein and to be a part of this Prospectus from the date of filing
of such documents. Any statement contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents or into this
Prospectus) will be provided without charge to each person, including any
beneficial owner to whom this Prospectus is delivered, upon a written or oral
request to Arris Pharmaceutical Corporation, Attention: Daniel H. Petree,
Executive Vice President, Corporation Development and Chief Financial
Officer, 385 Oyster Point Boulevard, Suite 3, South San Francisco, California
94080, telephone number (415) 829-1000.
--------------------
Arris-Registered Trademark- is a registered service mark, and
Khepri-TM- and Delta Technology-TM- are trademarks of the Company. This
Prospectus also contains trademarks of companies other than the Company.
2.
<PAGE>
RISK FACTORS
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. IN
ADDITION TO THE OTHER INFORMATION INCLUDED OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING
FACTORS IN EVALUATING THE COMPANY AND ITS BUSINESS BEFORE PURCHASING ANY SHARES
OF THE COMMON STOCK OFFERED HEREBY.
THE FOLLOWING CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER SIGNIFICANTLY FROM
THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN
FACTORS, INCLUDING THOSE DISCUSSED IN THIS SECTION AND ELSEWHERE IN THIS
PROSPECTUS.
EARLY STAGE OF PRODUCT DEVELOPMENT; TECHNOLOGICAL UNCERTAINTY
All of the Company's potential products are in an early stage of
development, and no revenues have been generated from the sale of such
products. To achieve profitable operations, the Company, alone or with
collaborators, must successfully develop, manufacture, introduce and market
its potential products. The time necessary to achieve market success for any
individual product is long and uncertain. Most of the compounds currently
under development by the Company will require significant additional
research, development and preclinical testing, and all compounds currently
under development will require extensive clinical testing prior to
commercialization. To date, the Company has not requested or received
regulatory clearance for any potential product from the United States Food
and Drug Administration ("FDA") or any other regulatory body. The development
of new pharmaceutical products is highly uncertain and subject to a number of
significant risks. Products that appear to be promising at early stages of
development may not reach the market for a number of reasons. Such products
may be found to be ineffective or cause harmful side effects during
preclinical testing or clinical trials, may fail to receive necessary
regulatory clearance, may be difficult to manufacture on a large scale, may
be uneconomical, may fail to achieve market acceptance or may be precluded
from commercialization by proprietary rights of third parties. The Company's
first clinical compound, APC 366, has not been proven to be safe and
effective in humans. In addition, a significant portion of the Company's
receptor-based research program is based on the Company's belief that small
molecule therapeutics have the potential to replace naturally occurring
hormones in causing dimerization of receptor subunits, thereby causing cell
signaling. This concept has not been proven to have a therapeutic effect.
There can be no assurance that the Company's research or product development
efforts or those of its collaborators will be successfully completed or that
interim milestones will be achieved, that the products currently under
development will be successfully made into drugs, that required regulatory
clearance can be obtained, that products can be manufactured in adequate
quantities at an acceptable cost and with appropriate quality or that any
approved products can be successfully marketed or achieve customer
acceptance. Commercial availability of any Arris products is not expected
for a number of years, if at all.
DEPENDENCE ON COLLABORATIVE RELATIONSHIPS
The Company's strategy for the development, clinical testing,
manufacturing and commercialization of certain of its potential products
includes entering into collaborations with corporate partners, licensors,
licensees and others. To date, the Company has entered into significant
collaborations with Bayer AG ("Bayer"), Pharmacia & Upjohn, Inc. ("Pharmacia
& Upjohn"), Amgen Inc. ("Amgen") and SmithKline Beecham Corporation
("SmithKline"). Substantially all of the Company's revenues to date have
resulted from such collaborations, and the Company is dependent on the
activities of its collaborators with respect to the eventual
commercialization of the potential products subject to such collaborations.
The Company's collaborators are entitled to determine which potential
products, if any, are to be commercialized under the collaborations. The
Bayer collaboration provides that research and development expenses related
to the Company's first clinical compound, APC 366, will be borne by the
Company, at least through Phase IIa clinical trials. Thereafter, if Bayer
does not elect to develop APC 366, the Company could elect to do so at its
own expense. However, the Company would not be able to commercialize APC 366
without Bayer's consent.
The amount and timing of resources to be devoted to research,
development, eventual clinical trials and commercialization activities by the
collaborators are not within the control of the Company. There can be no
assurance that such partners will perform their obligations as expected or
that the Company will derive additional revenue from such arrangements beyond
the minimum contractual commitments. Moreover, the collaboration agreements
may be terminated under certain circumstances, including failure by the
Company to perform under the terms of such agreements. The Company's
collaboration with Bayer for tryptase and chymase inhibitors and with
Pharmacia & Upjohn for clotting enzymes expire in November 1999 and September
2000, respectively, but may be terminated at the discretion of the
collaborator in November 1997 and September 1998, respectively. The
Company's collaborations with Pharmacia & Upjohn for hGH and with Amgen for
EPO expire in April 1997 and February 1997, respectively. The agreement with
SmithKline for exploration of the application of the Company's proprietary
Delta Technology to intracellular antiviral protease targets incorporates an
initial proof-of-concept phase expiring in June 1997 which, assuming success
in the proof-of-concept phase, would be followed by a research and
development collaboration expiring in June 1999. The inability of the
Company to renew any of these collaborations may have a material adverse
effect on the Company's business, financial condition and results of
operations.
If any of the Company's collaborators breach or elect to terminate their
agreements with the Company or otherwise fail to conduct their collaborative
activities in a timely manner, the development or commercialization of
potential products or research programs may be delayed, and the Company may
be required to devote additional resources to product development and
commercialization, or to terminate certain development programs. There can
3.
<PAGE>
be no assurance that disputes will not arise in the future with respect to
the ownership of rights to any technology developed with third parties.
These and other possible disagreements between collaborators and the Company
could lead to delays in the achievement of milestones or receipt of payments
therefor, collaborative research, development and commercialization of
certain potential products or could require or result in litigation or
arbitration, which could be time-consuming and expensive and would have a
material adverse effect on the Company's business, financial condition and
results of operations.
Arris' collaborators in some cases are developing, either alone or with
others, products that may compete with the development and marketing of the
Company's potential products. In addition, some of these collaborators, such
as Amgen, currently derive substantial revenues from products that will
compete with the potential products being developed under the collaborations.
Accordingly, there can be no assurance that the collaborators will not pursue
their existing or alternative technologies in preference to therapeutics
being developed in collaboration with the Company. In addition, there can be
no assurance that the Company's collaborators will pay any additional option
or license fees to the Company or that they will develop and market any
potential products under the collaborations.
There can be no assurance that the Company will be able to negotiate
additional collaborations in the future on acceptable terms, if at all, or
that any such collaborations will be successful. To the extent that the
Company chooses not to or is unable to establish such arrangements, the
Company may experience increased capital requirements to undertake research,
development and marketing of its potential products at its own expense or may
encounter significant delays or termination of such products. In addition,
the Company may encounter significant delays in introducing its potential
products into certain markets or find that the development, manufacture or
sale of its potential products in such markets is adversely affected by the
absence of such collaborations.
UNCERTAINTIES RELATED TO CLINICAL TRIALS
Before obtaining regulatory clearance for the commercial sale of any of
its potential products under development, the Company must demonstrate
through preclinical studies and clinical trials that the potential product is
safe and efficacious for use in humans for each target indication. The
results from preclinical studies and early clinical trials may not be
predictive of results that will be obtained in large-scale testing, and there
can be no assurance that the Company's clinical trials will demonstrate
sufficient safety and efficacy necessary to obtain the requisite regulatory
clearance or will result in marketable products. A number of companies in
the pharmaceutical industry, including biotechnology companies, have suffered
significant setbacks in advanced clinical trials, even after promising
results in earlier trials. The failure to adequately demonstrate the safety
and efficacy of a potential product under development could delay or prevent
regulatory approval of the potential product and would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Any drug is likely to produce some toxicities or undesirable side
effects in animals and in humans when administered at sufficiently high doses
and/or for sufficiently long periods of time. There can be no assurance that
unacceptable toxicities or side effects will not occur at any dose level at
any time in the course of toxicological studies or of clinical trials of the
Company's potential products. The appearance of any such unacceptable
toxicities or side effects in toxicology studies or in clinical trials could
cause the Company or regulatory authorities to interrupt, limit, delay or
abort the development of any of the Company's potential products and could
ultimately prevent their clearance by the FDA or foreign regulatory
authorities for any or all targeted indications. Even after being cleared by
the FDA or foreign regulatory authorities, a product may later be shown to be
unsafe or to not have its purported effect, thereby preventing widespread use
or requiring withdrawal from the market. There can be no assurance that any
potential products under development by the Company will be safe or effective
when administered to patients.
The rate of completion of the Company's clinical trials is dependent
upon, among other factors, the rate of patient enrollment. Patient
enrollment is a function of many factors, including the size of the patient
population, the nature of the protocol, the proximity of patients to clinical
sites and the eligibility criteria for the study. Delays in planned patient
enrollment may result in increased costs, delays or termination of clinical
trials, which could have a material adverse effect on the Company's business,
financial condition and results of operations. There can be no assurance
that the Company will be able to submit a new drug application as scheduled
if clinical trials are completed, or that any such application will be
reviewed and cleared by the FDA in a timely manner, or at all.
The Company currently has one compound, APC 366, in Phase IIa clinical
trials in the United Kingdom. There can be no assurance that the Company
will be able to complete these or other clinical trials of APC 366
successfully, or at all, or that other drug candidates entering clinical
trials, if any, will successfully complete such trials, or that the Company
will be able to demonstrate the safety and efficacy of such drug candidates.
Clinical trial results that show insufficient safety or efficacy would have a
material adverse effect on the Company's business, financial condition and
results of operations.
UNCERTAINTY OF PATENTS AND PROPRIETARY RIGHTS
The Company's success will depend in large part on its ability to obtain
patents, maintain trade secrets and operate without infringing on the
proprietary rights of others, both in the United States and in other
countries. The patent positions of biotechnology and pharmaceutical companies
can be highly uncertain and involve complex legal and factual questions, and
therefore the breadth of claims allowed in biotechnology and pharmaceutical
patents or
4.
<PAGE>
their enforceability cannot be predicted. There can be no assurance that any
of the Company's patents, if issued, will not be challenged, invalidated or
circumvented, or that the rights granted thereunder will provide proprietary
protection or competitive advantages to the Company.
The commercial success of the Company also will depend, in part, on the
Company not infringing patents issued to others and not breaching the
technology licenses upon which any of the Company's potential products are
based. A number of pharmaceutical companies, biotechnology companies,
universities and research institutions have filed patent applications or
received patents in the areas of the Company's programs. In addition, patent
applications relating to the Company's potential products or technology,
including the area of dimerization, may currently be pending. Some of these
applications or patents may limit or preclude the Company's applications, or
conflict in certain respects with claims made under the Company's patents, if
issued. Furthermore, the Company in the past has been, and may from time to
time in the future be, notified of claims that the Company may be infringing
patents or other intellectual property rights owned by third parties. The
Company has obtained one license under a patent, and if necessary or
desirable the Company may seek additional licenses under other patents or
intellectual property rights. The Company's breach of an existing license or
failure to obtain a license to technology required to commercialize its
potential products could have a material adverse impact on the Company
business, financial condition or results of operations. Litigation, which
could result in substantial costs to the Company, also may be necessary to
enforce any patents issued to the Company or to determine the scope and
validity of third-party proprietary rights. If competitors of the Company
prepare and file patent applications in the United States that claim
technology also claimed by the Company, the Company may have to participate
in interference proceedings declared by the Patent and Trademark Office
("PTO") to determine priority of invention, which could result in substantial
cost to the Company, even if the eventual outcome is favorable to the
Company. An adverse outcome could subject the Company to significant
liabilities to third parties and require the Company to license disputed
rights from third parties or to cease using such technology.
The Company also relies on trade secrets to protect its technology,
especially where patent protection is not believed to be appropriate or
obtainable. The Company protects its proprietary technology and processes,
in part, by confidentiality agreements with its employees, consultants and
certain contractors. There can be no assurance that these agreements will
not be breached, that the Company would have adequate remedies for any
breach, or that the Company's trade secrets will not otherwise become known
or be independently discovered by competitors.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company has experienced significant operating losses since its
inception. As of March 31, 1996, the Company had an accumulated deficit of
approximately $ 58.4 million. The Company has not generated revenues from
any products and expects that it will incur significant operating losses over
at least the next several years as its research and development efforts and
preclinical and clinical testing activities expand. The Company expects
research and development expenses to increase significantly in the future,
especially in light of the recent acquisition of Khepri Pharmaceuticals, Inc.
("Khepri"). In addition, as part of the acquisition of Khepri, the Company
agreed to pay to former Khepri stockholders, on December 30, 1996, at the
Company's option either approximately $6.2 million or 518,701 additional
shares of Common Stock, subject to adjustment if the average of the closing
sale prices of the Common Stock on the Nasdaq National Market during the
ninety trading days ending on December 27, 1996 is less than $10.14 or
greater than $13.71. The development of the Company's technology and
potential products will require a commitment of substantial funds to conduct
the costly and time-consuming research and preclinical and clinical testing
activities necessary to develop and optimize such technology and potential
products, to bring any such potential products to market and, ultimately, to
establish manufacturing and marketing capabilities. The Company's future
capital requirements will depend on many factors, including continued
scientific progress in the research and development of the Company's
technology and drug development programs, the ability of the Company to
establish new and maintain existing collaborations with others for drug
development and to achieve certain milestones under such collaborations,
progress with preclinical and clinical trials, the time and cost involved in
obtaining regulatory approvals, the cost involved in preparing, filing,
prosecuting, maintaining and enforcing patent claims and the ability to
secure effective product commercialization activities and arrangements.
The Company expects that its existing capital resources, including
research and development revenues from existing collaborations, will enable
the Company to maintain current and planned operations through 1999. The
Company may need to raise substantial additional capital to fund its
operations before the end of such period. The Company expects that it will
seek such additional funding through new collaborations, or the extension of
existing collaborations, or through public or private equity or debt
financings. There can be no assurance that additional financing will be
available on acceptable terms or at all. If additional funds are raised by
issuing equity securities, further dilution to stockholders may result. If
adequate funds are not available, the Company may be required to delay,
reduce the scope of or eliminate one or more of its research or development
programs or to obtain funds through arrangements with collaborative partners
or others that may require the Company to relinquish rights to certain of its
technologies or products that the Company would otherwise seek to develop or
commercialize itself.
5.
<PAGE>
GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY CLEARANCE
The manufacturing and marketing of the Company's potential products and
its ongoing research and development activities are subject to extensive
regulation by numerous governmental authorities in the United States and
other countries. Failure to comply with applicable FDA or other applicable
regulatory requirements may result in criminal prosecution, civil penalties,
recall or seizure of products, total or partial suspension of production or
injunction, as well as other regulatory action against the Company or its
potential products.
Prior to marketing in the United States, any drug developed by the
Company must undergo rigorous preclinical and clinical testing and an
extensive regulatory approval process implemented by the FDA under the
federal Food, Drug and Cosmetic Act. Satisfaction of such regulatory
requirements, which includes satisfying the FDA that the product is both safe
and effective, typically takes several years or more depending upon the type,
complexity and novelty of the product and requires the expenditure of
substantial resources. Preclinical studies must be conducted in conformance
with the FDA's good laboratory practice ("GLP") regulations. Before
commencing clinical investigations in humans, the Company must submit to and
receive approval from the FDA of an investigational new drug application
("IND"). There can be no assurance that submission of an IND would result in
FDA authorization to commence clinical trials. Clinical testing must meet
requirements for institutional review board oversight, informed consent and
good clinical practice requirements and is subject to continuing FDA
oversight. The Company does not have extensive experience in conducting and
managing the clinical testing necessary to obtain regulatory approval.
Clinical trials may require large numbers of test subjects. Furthermore, the
Company or the FDA may suspend clinical trials at any time if it believes
that the subjects participating in such trials are being exposed to
unacceptable health risks or the FDA finds deficiencies in the IND or the
conduct of the investigation. Further, FDA regulations subject sponsors of
clinical investigations to numerous regulatory requirements, including, among
other requirements, selection of qualified investigators, proper monitoring
of the investigations, recordkeeping and record retention, and ensuring that
FDA and all investigators are promptly informed of significant new adverse
effects or risks with respect to the drug, as well as other ongoing reporting
requirements.
Before receiving FDA approval to market a product, the Company may have
to demonstrate that the product is safe and effective on the patient
population that will be treated. Data obtained from preclinical and clinical
activities are susceptible to varying interpretations which could delay,
limit or prevent regulatory clearance. In addition, delays or rejections may
be encountered based upon additional government regulation from future
legislation or administrative action or changes in FDA policy during the
period of product development, clinical trials and FDA regulatory review.
Similar delays also may be encountered in foreign countries. There can be no
assurance that even after such time and expenditures, regulatory clearance
will be obtained for any products developed by the Company. If regulatory
clearance of a product is granted, such clearance will be limited to those
disease states and conditions for which the product is useful, as
demonstrated through clinical studies. Marketing or promoting a drug for an
unapproved indication is prohibited. Furthermore, clearance may entail
ongoing requirements for postmarketing studies. Even if such regulatory
clearance is obtained, a marketed product, its manufacturer and its
manufacturing facilities are subject to continual review and periodic
inspections by the FDA. Discovery of previously unknown problems with a
product, manufacturer or facility may result in restrictions on such product
or manufacturer, including costly recalls or even withdrawal of the product
from the market. There can be no assurance that any compound developed by
the Company alone or in conjunction with others will prove to be safe and
efficacious in clinical trials and will meet all of the applicable regulatory
requirements needed to receive marketing approval.
Outside the United States, the Company's ability to market a product is
contingent upon receiving a marketing authorization from the appropriate
regulatory authorities. The requirements governing the conduct of clinical
trials, marketing authorization, pricing and reimbursement vary widely from
country to country. At present, foreign marketing authorizations are applied
for at a national level, although within the European Community ("EC")
certain registration procedures are available to companies wishing to market
a product in more than one EC member state. If the regulatory authority is
satisfied that adequate evidence of safety, quality and efficacy has been
presented, a marketing authorization will be granted. This foreign
regulatory approval process includes all of the risks associated with FDA
clearance set forth above.
NEED TO ATTRACT AND RETAIN KEY EMPLOYEES AND CONSULTANTS
The Company is highly dependent on the principal members of its
scientific and management staff. Retaining and attracting qualified
personnel, consultants and advisors is critical to the Company's success.
To pursue its product research and development plans, the Company will
be required, and currently is seeking, to hire additional qualified
scientific personnel to perform research and development. Expansion in
product development and clinical testing also is expected to require the
addition of management personnel and the development of additional expertise
by existing management personnel. The Company faces intense competition for
qualified individuals from numerous pharmaceutical and biotechnology
companies, universities and other research institutions. There can be no
assurance that the Company will be able to attract and retain such
individuals on acceptable terms or at all.
The Company's academic collaborators are not employees of the Company.
As a result, the Company has limited control over their activities and can
expect that only limited amounts of their time will be dedicated to the
6.
<PAGE>
activities of the Company. The Company's academic collaborators may have
relationships with other commercial entities, some of which could compete
with the Company.
INTENSE COMPETITION; RAPID TECHNOLOGICAL CHANGE
The pharmaceutical industry is intensely competitive. Many companies,
including biotechnology, chemical and pharmaceutical companies, are actively
engaged in the research and development of products in the Company's targeted
areas. Many of these companies have substantially greater financial,
technical and marketing resources than the Company. In addition, some of
these companies have considerable experience in preclinical testing, clinical
trials and other regulatory approval procedures. Moveover, certain academic
institutions, governmental agencies and other research organizations are
conducting research in areas in which the Company is working. These
institutions are becoming increasingly aware of the commercial value of their
findings and are becoming more active in seeking patent protection and
licensing arrangements to collect royalties for the use of technology that
they have developed. These institutions also may market competitive
commercial products on their own or through joint ventures and will compete
with the Company in recruiting highly qualified scientific personnel.
The Company is pursuing areas of product development in which there is a
potential for extensive technological innovation in relatively short periods
of time. The Company's first clinical compound, APC 366, is in clinical
trials in the United Kingdom for the treatment of asthma. Currently,
Schering-Plough, Astra and Glaxo-Wellcome, among others, produce therapeutics
for the treatment of asthma. The Company's competitors may succeed in
developing technologies or products that are more effective than those of the
Company. Rapid technological change or developments by others may result in
the Company's technology or potential products becoming obsolete or
noncompetitive. There can be no assurance that the Company's competitors
will not develop more efficacious or more affordable products, or achieve
earlier product development completion, patent protection, regulatory
approval or product commercialization than the Company.
LACK OF MANUFACTURING EXPERIENCE; RELIANCE ON CONTRACT MANUFACTURERS
The Company has no manufacturing facilities. The Company's potential
products have never been manufactured on a commercial scale. Furthermore,
the Company must rely on its collaborators, such as Bayer, Pharmacia &
Upjohn, Amgen and SmithKline, to manufacture potential products created by
the collaborations. Although the Company believes that it, or its
collaborators or contract manufacturers, will be able to manufacture its
compounds in a commercially viable manner, there can be no assurance that
such compounds can be manufactured at a cost or in quantities necessary to
make them commercially viable. If the Company and its collaborators are
unable to manufacture or contract with others for a sufficient supply of its
compounds on acceptable terms, or if they should encounter delays or
difficulties in their relationships with third party manufacturers, the
Company's preclinical and clinical testing schedule would be delayed,
resulting in delay in the submission of products for regulatory approval or
the market introduction and subsequent sales of such products, which would
have a material adverse effect on the Company. Moreover, the Company and its
collaborators and contract manufacturers must adhere to current good
manufacturing practices ("GMP") regulations enforced by the FDA through its
facilities inspection program. If these facilities cannot pass a
pre-approval plant inspection, the FDA pre-market approval of the products
will not be granted.
LACK OF MARKETING EXPERIENCE; DEPENDENCE ON THIRD PARTIES
The Company currently has no sales, marketing or distribution
capability. The Company will rely on its collaborative relationships, such as
those with Bayer, Pharmacia & Upjohn, Amgen and SmithKline, to market certain
of its potential products, may enter into future collaborations by which the
Company will come to rely on the collaborators to market its products, and
may decide to market other potential products directly. To market any of its
potential products directly, the Company must develop a marketing and sales
force with technical expertise and with supporting distribution capability.
There can be no assurance that the Company will be able to establish in-house
sales and distribution capabilities or relationships with third parties, or
that it will be successful in gaining market acceptance for its potential
products. Under its existing collaborations, and to the extent that the
Company enters into future co-promotion or other licensing arrangements, any
revenues received by the Company under those collaborations will depend upon
the efforts of third parties, and there can be no assurance that such efforts
will be successful.
NO ASSURANCE OF MARKET ACCEPTANCE
There can be no assurance that, if cleared for marketing, any of the
Company's potential products will achieve market acceptance. The degree of
market acceptance will depend upon a number of factors, including the receipt
of regulatory approvals, the establishment and demonstration in the medical
community of the clinical efficacy and safety of the Company's product
candidates and their potential advantages over existing treatment methods and
reimbursement policies of government and third-party payors. There is no
assurance that physicians, patients, payors or the medical community in
general will accept and utilize any products that may be developed by the
Company.
7.
<PAGE>
UNCERTAINTY OF PHARMACEUTICAL PRICING AND REIMBURSEMENT
The business and financial condition of pharmaceutical and biotechnology
companies will continue to be affected by the efforts of governmental and
third-party payors to contain or reduce the cost of health care. In certain
foreign markets pricing or profitability on prescription pharmaceuticals is
subject to governmental control. In the United States there have been, and
the Company expects that there will continue to be, a number of federal and
state proposals to implement similar governmental control. In addition, an
increasing emphasis on managed care in the United States has and will
continue to increase the pressure on pharmaceutical pricing. While the
Company cannot predict whether any such legislative or regulatory proposals
will be adopted or the effect such proposals or managed care efforts may have
on its business, the announcement of such proposals or efforts could have a
material adverse effect on the Company's ability to raise capital, and the
adoption of such proposals or efforts could have a material adverse effect on
the Company's business and financial condition. Further, to the extent that
such proposals or efforts have a material adverse effect on other
pharmaceutical companies that are prospective collaborators with the Company,
the Company's ability to establish a strategic alliance may be adversely
affected. In addition, in both domestic and foreign markets, sales of the
Company's potential products will depend in part on the availability of
reimbursement from third-party payors on such as government health
administration authorities, private health insurers and other organizations.
Third-party payors are increasingly challenging the price and
cost-effectiveness of medical products and services. Significant uncertainty
exists as to the reimbursement status of newly approved health care products.
There can be no assurance that the Company's potential products will be
considered cost-effective or that adequate third-party reimbursement will be
available to enable the Company to maintain price levels sufficient to
realize an appropriate return on its investment in product development.
RISKS OF PRODUCT LIABILITY; UNCERTAIN AVAILABILITY OF INSURANCE
The use of any of the Company's potential products in clinical trials
and the sale of any approved products, including the testing and
commercialization of APC 366, may expose the Company to liability claims
resulting from the use of such products. These claims might be made directly
by consumers, pharmaceutical companies or others. The Company maintains
product liability insurance coverage for claims arising from the use of its
products. However, coverage is becoming increasingly expensive. No
assurance can be given that the Company will be able to maintain insurance
or, if maintained, that insurance can be acquired at a reasonable cost or in
sufficient amounts to protect the Company against losses due to liability.
There can be no assurance that the Company will be able to obtain
commercially reasonable product liability insurance for any product approved
for marketing in the future or that insurance coverage and the resources of
the Company would be sufficient to satisfy any liability resulting from
product liability claims. A successful product liability claim or series of
claims brought against the Company could have a material adverse effect on
its business, financial condition and results of operations.
HAZARDOUS MATERIALS
The Company's research and development programs involve the controlled
use of hazardous materials, chemicals and various radioactive compounds. The
Company may incur substantial costs to comply with environmental regulations
if the Company develops manufacturing capacity. Although the Company
believes that its safety procedures for handling and disposing of such
materials comply with the standards prescribed by state and federal
regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of such an accident,
the Company could be held liable for any damages that result and any such
liability which could have a material adverse effect on the Company's
business, financial condition and results of operations.
ANTI-TAKEOVER PROVISIONS
The Company's Certificate of Incorporation and Bylaws require that any
action required or permitted to be taken by stockholders of the Company must
be effected at a duly called annual or special meeting of stockholders and
may not be effected by written consent. Special meetings of the stockholders
of the Company may be called only by the Board of Directors, the Chairman of
the Board or the President of the Company. These and other charter
provisions may discourage certain types of transactions involving an actual
or potential change in control of the Company, including transactions in
which the stockholders might otherwise receive a premium for their shares
over then current prices, and may limit the ability of the stockholders to
approve transactions they may deem to be in their best interests. In
addition, the Board of Directors has the authority, without action by the
stockholders, to fix the rights and preferences of and to issue shares of
Preferred Stock, which also may have the effect of delaying or preventing a
change in control of the Company.
PRICE VOLATILITY IN PUBLIC MARKET
The Company's Common Stock currently trades on the Nasdaq National
Market. The securities markets have from time to time experienced significant
price and volume fluctuations that may be unrelated to the operating
performance of particular companies. In addition, the market prices of the
common stock of many publicly traded biopharmaceutical companies have in the
past been, and can in the future be expected to be, especially volatile.
Announcements of technological innovations or new products of the Company or
its competitors, developments or disputes concerning patents or proprietary
rights, publicity regarding actual or potential medical results relating to
products under development by the Company or its competitors, regulatory
developments in both the U.S. and foreign countries, public concern as to the
safety of biopharmaceutical products and economic and other external
8.
<PAGE>
factors, as well as period-to-period fluctuations in the Company's operating
and product development results, may have a significant impact on the market
price of the Company's Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Substantially all of the Company's shares are eligible for sale in the
public market. An aggregate of 1,050,000 shares cannot be sold until January
1997 pursuant to contractual limitations entered into in connection with the
acquisition of Khepri. In addition, as part of the acquisition of Khepri,
the Company agreed to pay to former Khepri stockholders, on December 30,
1996, at the Company's option either approximately $6.2 million or 518,701
additional shares of Common Stock, subject to adjustment if the average of
the closing sale prices of the Common Stock on the Nasdaq National Market
during the ninety trading days ending on December 27, 1996 is less than
$10.14 or greater than $13.71. If such additional shares are issued they may
be traded immediately.
ABSENCE OF DIVIDENDS; DILUTION; ACQUISITION OF KHEPRI
The Company has not paid any cash dividends since its inception and does
not intend to pay any cash dividends in the foreseeable future. The public
offering price is substantially higher than the book value per share of the
outstanding Common Stock. Investors purchasing shares of Common Stock in
this offering will therefore incur immediate, substantial dilution. In
addition, dilution will occur upon the exercise of outstanding stock options
and warrants of the Company and may occur upon future equity financings of
the Company. Furthermore, in connection with acquisition of Khepri, the
Company may issue an additional 518,701 shares of Common Stock to the former
Khepri stockholders, subject to adjustment, which would result in further
dilution to purchasers in the offering.
THE COMPANY
Arris Pharmaceutical uses an integrated drug discovery approach
combining structure-based drug design, combinatorial chemistry and its
proprietary Delta Technology to discover and develop small molecule
therapeutics for existing markets where available therapies have significant
limitations. Arris' product development programs include: protease-based
discovery programs targeting the inhibition of enzymes implicated in
inflammatory and certain other diseases such as asthma, blood clotting
disorders, arthritis, osteoporosis, cancer and various infectious disease;
and receptor-based discovery programs, including those designed to discover
small molecule drugs that mimic therapeutically important proteins, such as
erythropoietin, human growth hormone, granulocyte colony stimulating factors
and thrombopoietin, and research programs to develop drugs that modulate the
activity of receptors involved in diseases such as cancer and diabetes.
Arris Pharmaceutical Corporation was incorporated in Delaware in April
1989. The Company's executive offices are located at 385 Oyster Point
Boulevard, Suite 3, South San Francisco, California 94080, and its telephone
number is (415) 829-1000. Unless the context otherwise requires, references
to "Arris" or "the Company" refer to Arris Pharmaceutical Corporation, a
Delaware corporation and its wholly-owned subsidiaries, Arris Protease, Inc.
and Arris Pharmaceuticals Canada, Inc.
RECENT DEVELOPMENTS
Michael J. Ross resigned from the Board of Directors of the Company
effective August 2, 1996.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders in the offering.
DIVIDEND POLICY
Arris has never paid any cash dividends on its Common Stock. The
Company presently intends to retain any earnings for use in its business and
therefore does not anticipate paying cash dividends in the foreseeable
future.
9.
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the names of the Selling Stockholders,
the number of shares of Common Stock owned beneficially by each of them as of
July 15, 1996 and the number of shares which may be offered pursuant to this
Prospectus. This information is based upon information provided by the
Selling Stockholders. The Selling Stockholders may sell all, some or none of
their Common Stock being offered.
<TABLE>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OWNED AFTER
OFFERING(1) OF SHARES OFFERING(1)(3)
------------------------------ BEING --------------------------------
NAME NUMBER PERCENT(2) OFFERED NUMBER PERCENT(2)
- --------------------------- ---------- ------------ ------------- --------- -------------
<S> <C> <C> <C> <C> <C>
Sofinov Societe Financiere
D'Innovation Inc.(4) 80,709(5) * 80,709 0 *
Societe Innovatech du
Grand Montreal(4) 80,709(5) * 80,709 0 *
</TABLE>
- --------------
* Less than one percent.
(1) Unless otherwise indicated below, the persons named in the table have sole
voting and investment power with respect to all shares beneficially owned
by them, subject to community property laws where applicable.
(2) Applicable percentage of ownership is based on 14,016,236 shares of Common
Stock outstanding on July 15, 1996.
(3) Assumes the sale of all shares offered hereby.
(4) Prior to the completion of the exchange for the Company's Common Stock,
each of the selling stockholders held 632,211 Class B shares of the
Canadian subsidiary of Khepri and had a representative on such entity's
five person board of directors.
(5) Shares were issued prior to this offering pursuant to certain contractual
exchange rights granted in connection with the acquisition of Khepri. See
"Plan of Distribution."
10.
<PAGE>
PLAN OF DISTRIBUTION
In connection with the acquisition of Khepri Pharmaceuticals, Inc.
("Khepri"), Arris entered into amendments to existing agreements relating to
a Canadian subsidiary of Khepri ("Khepri Canada"), of which Khepri held 50%
of the voting stock and two Canadian investors the remainder. Pursuant to
the Khepri Canada Agreements, defined below, in June 1996, the Company
terminated the parties' obligation to make additional equity investment in
Khepri Canada. The Canadian investors then exercised their right to exchange
all of their shares of Khepri Canada stock for an aggregate of 161,418 shares
of Arris Common Stock and to have the Company file a registration statement
registering such shares.
Specifically, the Company is registering the shares of Common Stock
offered by the Selling Stockholders hereunder pursuant to contractual
registration rights contained in the Subscription Agreement among Khepri,
Khepri Canada, the Selling Stockholders hereunder dated as of March 24, 1995,
as amended by the Agreement and First Amendment to Subscription Agreement
among Khepri, Khepri Canada, the Selling Stockholders hereunder and Arris
dated as of November 7, 1995, and the Stock Exchange Agreement among Khepri
and the Selling Stockholders hereunder dated March 24, 1995, as amended by
the First Amendment to Stock Exchange Agreement among Khepri, the Selling
Stockholders hereunder and Arris dated November 7, 1995 (the "Khepri Canada
Agreements"). Sales may be made by the Selling Stockholders or their
successors in interest on the Nasdaq National Market or in private
transactions or in a combination of such methods of sale, at fixed prices
that may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. The
Selling Stockholders and any persons who participate in the distribution of
the Common Stock offered hereby may be deemed to be underwriters within the
meaning of the Act, and any discounts, commissions or concessions received by
them and any provided pursuant to the sale of shares by them might be deemed
to be underwriting discounts and commissions under the Act.
In order to comply with the securities laws of certain states, if
applicable, the Common Stock may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states
the Common Stock may not be sold unless it has been registered or qualified
for sale or an exemption from registration or qualification requirements is
available and is complied with.
The Company has agreed in the Khepri Canada Agreements to register the
shares of Arris Common Stock received by the Selling Stockholders under
applicable Federal and state securities laws under certain circumstances and
at certain times. Pursuant to such agreements, the Company has filed a
registration statement related to the shares offered hereby and has agreed to
keep such registration statement effective until the earliest of (i) one
hundred twenty (120) days after the effective date of the registration
statement relating to the shares offered hereby, or (ii) the sale of all the
securities registered thereunder. The Company will pay substantially all of
the expenses incident to the offering and sale of the Common Stock to the
public, other than commissions, concessions and discounts of underwriters,
dealers or agents. Such expenses (excluding such commissions and discounts),
are estimated to be $55,000. The Company and the Selling Stockholders have
agreed to cross-indemnification to the extent permitted by law, for losses,
claims, damages, liabilities and expenses arising, under certain
circumstances, out of any registration of the Common Stock.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Cooley Godward Castro Huddleson & Tatum, Palo
Alto, California. As of the date of this Prospectus, Cooley Godward and
certain members of Cooley Godward beneficially owned an aggregate of
approximately 13,000 shares of Common Stock. In addition, Alan C. Mendelson,
a partner of Cooley Godward, is the Secretary of Arris.
EXPERTS
The consolidated financial statements of Arris Pharmaceutical
Corporation as December 31, 1995 and 1994 and for the three years ended
December 31, 1995 incorporated by reference herein, and the financial
statements of Khepri Pharmaceuticals, Inc. at December 31, 1994 and 1993 and
for the period from inception (April 24, 1992) to December 31, 1992 and the
two years ended December 31, 1994 also incorporated by reference herein have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports thereon included therein. Such financial statements of Arris
and Khepri are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
----------------------
11.
<PAGE>
No dealer, salesman or other ----------------
person has been authorized to
give any information or to 161,418
make any representations other
than those contained in this Common Stock
Prospectus and, if given or
made, such other information ARRIS PHARMACEUTICAL
and representations must not CORPORATION
be relied upon as having been
authorized by the Company.
This Prospectus does not
constitute an offer or
solicitation by anyone in any
state in which such offer or
solicitation is not
authorized, or in which the
person making such offer or
solicitation is not qualified
to do so, or to any person to
whom it is unlawful to make
such offer or solicitation.
The delivery of this
Prospectus at any time does
not imply that the information
herein is correct as of any
time subsequent to the date
hereof.
---------------
TABLE OF CONTENTS
Page PROSPECTUS
Available Information . . . . . . . . 2
Additional Information . . . . . . . . 2 --------------
Incorporation of Certain
Documents by Reference . . . . . . . . 2
Risk Factors . . . . . . . . . . . . . 3
The Company. . . . . . . . . . . . . . 9
Use of Proceeds. . . . . . . . . . . . 9
Dividend Policy. . . . . . . . . . . . 9 September 19, 1996
Selling Stockholders . . . . . . . . . 9
Plan of Distribution . . . . . . . . .11
Legal Matters. . . . . . . . . . . . .11
Experts . . . . . . . . . . . . . . .11
-------------
12.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the Registrant in connection with the sale
of the Common Stock being registered. All the amounts shown are estimates
except for the registration fee.
Registration fee.................. $ 630.09
Legal fees and expenses........... 35,000.00
Accounting Fees and Expenses...... 15,000.00
Miscellaneous..................... 4,369.91
--------------
Total......................... $ 55,000.00
--------------
--------------
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Under Section 145 of the Delaware General Corporation Law, the
Registrant has broad powers to indemnify its directors and officers against
liabilities they may incur in such capacities, including liabilities under
the Securities Act of 1933, as amended (the "Securities Act"). The
Registrant's Bylaws also provide that the Registrant will indemnify its
directors and executive officers and may indemnify its other officers,
employees and other agents to the fullest extent not prohibited by Delaware
law.
The Registrant's Certificate of Incorporation provides for the
elimination of liability for monetary damages for breach of the directors'
fiduciary duty of care to the Registrant and its stockholders. These
provisions do not eliminate the directors' duty of care and, in appropriate
circumstances, equitable remedies such an injunctive or other forms of
non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Registrant, for acts or omissions not in
good faith or involving intentional misconduct, for knowing violations of
law, for any transaction from which the director derived an improper personal
benefit, and for payment of dividends or approval of stock repurchases or
redemption that are unlawful under Delaware law. The provision does not
affect a director's responsibilities under any other laws, such as the
federal securities laws or state or federal environmental laws.
The Registrant has entered into agreements with its directors and
executive officers that require the Registrant to indemnify such persons
against expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred (including expenses of a derivative action) in
connection with any proceeding, whether actual or threatened, to which any
such person may be made a party by reason of the fact that such person is or
was a director or officer of the Registrant or any of its affiliated
enterprises, provided such person acted in good faith and in a manner such
person reasonably believed to be in or not opposed to the best interests of
the Registrant and, with respect to any criminal proceeding, had no
reasonable cause to believe his or her conduct was unlawful. The
indemnification agreements also set forth certain procedures that will apply
in the event of a claim for indemnification thereunder.
II-1
<PAGE>
ITEM 16. EXHIBITS
5.1 Opinion of Cooley Godward Castro Huddleson & Tatum (1)
10.39 Collaborative Research and License Agreement between SmithKline
Beecham Corporation and Arris Pharmaceutical Corporation, dated
June 27, 1996. (2)
10.40 Loan and Security Agreement between Registrant and Silicon
Valley Bank dated as of March 29, 1996. (3)
23.1 Consent of Ernst & Young LLP, Independent Auditors (1)
23.2 Consent of Ernst & Young LLP, Independent Auditors (1)
23.3 Consent of Cooley Godward Castro Huddleson & Tatum. Reference
is made to Exhibit 5.1.
24.1 Power of Attorney (see page II-4).
- ---------------------
(1) Previously filed.
(2) Previously filed as Exhibit 10.1. Portions omitted pursuant to a
request for confidentiality filed separately with the Commission.
(3) Previously filed as Exhibit 10.2.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
The undersigned registrant hereby undertakes:
(1) To file, during any period during which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or any decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low end or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for purposes of determining liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities to be offered therein, and the
offering of such securities at that time shall be deemed to be an initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which shall remain unsold at the termination
of the offering.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of South San Francisco City, County of San Francisco,
State of California, on the 19th day of September, 1996.
ARRIS PHARMACEUTICAL CORPORATION
By /s/Daniel H. Petree
-------------------
Daniel H. Petree
Executive Vice President, Corporate
Development and Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John P. Walker and Daniel H. Petree,
and each or any one of them, his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite and necessary to be
done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
II-3
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
Signature Title Date
--------- ----- -----
<S> <C> <C>
* Chief Executive Officer September 19, 1996
- ---------------------------- President, Chairman of the
John P. Walker Board and Director
(Principal Executive
Officer
/s/Daniel H. Petree Executive Vice President, Corporate September 19, 1996
- ----------------------------- President, Chairman of the
Daniel H. Petree Board and Director
(Principal Executive
Officer
* Director September 19, 1996
- -----------------------------
Brook H. Byers
* Director September 19, 1996
- -----------------------------
Anthony B. Evnin
* Director September 19, 1996
- -----------------------------
Vaughn M. Kailian
* Director September 19, 1996
- -----------------------------
Michael J. Ross
Director September 19, 1996
- -----------------------------
Hans Sivertsson
* /s/ Daniel H. Petree
--------------------------
Daniel H. Petree
Attorney-in-Fact
Date: September 19, 1996
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
5.1 Opinion of Cooley Godward Castro Huddleson & Tatum (1)
10.39 Collaborative Research and License Agreement between SmithKline
Beecham Corporation and Arris Pharmaceutical Corporation, dated June
27, 1996. (2)
10.40 Loan and Security Agreement between Registrant and Silicon Valley
Bank dated as of March 29, 1996. (3)
23.1 Consent of Ernst & Young LLP, Independent Auditors (1)
23.2 Consent of Ernst & Young LLP, Independent Auditors (1)
23.3 Consent of Cooley Godward Castro Huddleson & Tatum. Reference is made
to Exhibit 5.1.
24.1 Power of Attorney (see page II-4).
- ----------------------
(1) Previously filed.
(2) Previously filed as Exhibit 10.1. Portions omitted pursuant to a
request for confidentiality filed separately with the Commission.
(3) Previously filed as Exhibit 10.2.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 10.39
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
BETWEEN
SMITHKLINE BEECHAM CORPORATION
AND
ARRIS PHARMACEUTICAL CORPORATION
[]= Confidential Treatment Requested
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
BETWEEN
SMITHKLINE BEECHAM CORPORATION
AND
ARRIS PHARMACEUTICAL CORPORATION
l. DEFINITIONS
2. PROOF OF CONCEPT PHASE AND RESEARCH PHASE
3. GRANT
4. PAYMENTS AND ROYALTIES
5. COMPULSORY LICENSES AND THIRD PARTY LICENSES
6. DEVELOPMENT
7. TERM AND TERMINATION
8. RIGHTS AND DUTIES UPON TERMINATION
9. EXCHANGE OF INFORMATION AND CONFIDENTIALITY
10. INVENTIONS, PATENTS AND PATENT LITIGATION
11. TRADEMARKS AND NON-PROPRIETARY NAMES
12. STATEMENTS AND REMITTANCES
13. WARRANTIES AND REPRESENTATIONS
14. FORCE MAJEURE
15. GOVERNING LAW
16. DISPUTE RESOLUTION
17. SEPARABILITY
18. ENTIRE AGREEMENT
19. NOTICES
20. ASSIGNMENT
21. RECORDING
22. EXECUTION IN COUNTERPARTS
SIGNATURES
APPENDIX A - DELTA FACTOR PATENTS AND PRODUCT PATENTS
APPENDIX B - DELTA FACTOR COMPOUND STATUS AND
COLLABORATION COMPOUND STATUS CRITERIA
APPENDIX C - RESEARCH
APPENDIX D - SELECTION FILTERS FOR PRE-PROJECT STATUS
DESIGNATION
APPENDIX E - ANIMAL MODELS
[]= Confidential Treatment Requested
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
THIS COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (hereinafter referred to
as "AGREEMENT"), made as of the 27th day of June, 1996, between Arris
Pharmaceutical Corporation, a company organized under the laws of the state of
Delaware and having its principal place of business at 385 Oyster Point
Boulevard, Suite 3, South San Francisco 94080, U.S.A. and SmithKline Beecham
Corporation, a corporation of the Commonwealth of Pennsylvania, having a place
of business at One Franklin Plaza, Philadelphia, Pennsylvania 19101, U.S.A.,
WITNESSETH THAT:
WHEREAS, the parties desire to collaborate on the application of DELTA
FACTOR TECHNOLOGY (as hereinafter defined) to identify inhibitors of viral
proteases [ ] (as hereinafter
defined); and
WHEREAS, ARRIS is the owner of all right, title and interest in certain
patents, identified in Appendix A hereto, and know-how relating to such DELTA
FACTOR TECHNOLOGY; and
WHEREAS, SB desires to obtain certain worldwide licenses from ARRIS under
the aforesaid patents and know-how, and ARRIS is willing to grant to SB such
licenses;
NOW, THEREFORE, in consideration of the covenants and obligations expressed
herein, and intending to be legally bound, and otherwise to be bound by proper
and reasonable conduct, the parties agree as follows:
1. DEFINITIONS
1.01 "AFFILIATES" shall mean any corporation, firm, partnership or other
entity, whether DE JURE or DE FACTO, which directly or indirectly owns, is owned
by or is under common ownership with a party to this AGREEMENT where "owns" or
"ownership" means possession of at least fifty percent (50%) of the equity (or
such lesser percentage which is the maximum allowed to be owned by a foreign
corporation in a particular jurisdiction) having the power to vote on or direct
the affairs of the entity and any person, firm, partnership, corporation or
other entity actually controlled by, controlling or under common control with a
party to this AGREEMENT.
1.02 "ARRIS" shall mean Arris Pharmaceuticals Corporation, a company
organized under the laws of the state of Delaware and having its principal place
of business at 385 Oyster Point Boulevard, Suite 3, South San Francisco 94080,
U.S.A.
1.03 "BAYER" shall mean Bayer AG, a corporation of the country of
Germany, having a place of business at D-51368 Leverkusen, Germany.
1.04 "COMBINATION PRODUCT" shall mean a product that includes a PRODUCT
and one or more other therapeutically or prophylactically active compositions of
matter.
[]= Confidential Treatment Requested
3.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1.05 "COLLABORATION COMPOUND(S)" shall mean:
(a) any DELTA FACTOR COMPOUND that is synthesized by SB or ARRIS in
connection with the RESEARCH and that is shown to satisfy the parameters set
forth in Appendix B (Part 2), provided that such showing occurs [
]; or
(b) any DELTA FACTOR COMPOUND that:
[
].
1.06 "DELTA FACTOR" shall mean that factor whose presence enables the
indication of enhanced potency of a serine or cysteine protease inhibitor, which
factor is described in detail in the side letter to this AGREEMENT, which side
letter is executed by the parties contemporaneously with this AGREEMENT.
1.07 "DELTA FACTOR COMPOUND" shall mean any compound that meets the
parameters outlined in Appendix B (Part 1).
1.08 "DELTA FACTOR PATENTS" shall mean all patents and patent
applications in which ARRIS has, now or in the future, the right to grant the
licenses provided under this AGREEMENT, which generically or specifically claim
an invention related to DELTA FACTOR TECHNOLOGY, improvements on DELTA FACTOR
TECHNOLOGY or a use of DELTA FACTOR TECHNOLOGY, but only to the extent that such
claims relate to the FIELD, certain DELTA FACTOR COMPOUNDS (limited to those
compounds which are synthesized by SB or ARRIS in furtherance of this AGREEMENT,
during the course of the PROOF OF CONCEPT PHASE, the course of the RESEARCH
PHASE, or during one (1) year thereafter, as a result of which an intellectual
property right arises for either or both parties, and which meet the parameters
outlined in Appendix B (Part 1)), COLLABORATION COMPOUND, and/or PRODUCT. In
addition, included within the definition of DELTA FACTOR PATENTS are any
continuations, continuations-in-part, divisions, patents of addition, reissues,
renewals or extensions thereof and all SPCS. The current list of patent
applications and patents is set forth in APPENDIX A attached hereto. APPENDIX A
shall be updated by ARRIS on a semi-annual basis.
1.09 "DELTA FACTOR KNOW-HOW shall mean all information and expertise
which relates to DELTA FACTOR TECHNOLOGY.
1.10 "DELTA FACTOR TECHNOLOGY" shall mean that technology which is
described in detail in the side letter to this AGREEMENT, which side letter is
executed by the parties contemporaneously with this AGREEMENT.
[]= Confidential Treatment Requested
4.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1.11 "EFFECTIVE DATE" shall mean the date as of which this AGREEMENT is
effective and shall be the date of this AGREEMENT first written above.
1.12 "FDA" shall mean the United States Food and Drug Administration.
1.13 "FIELD" shall mean the identification of inhibitors of proteases of
any [ ].
1.14 [
].
1.15 "NET SALES" shall mean the gross receipts representing sales of
PRODUCT under this AGREEMENT by SB, its AFFILIATES or sublicensees ("the Selling
Party") to THIRD PARTIES:
(a) in finished product form (i.e., packaged and labeled for sale to
the ultimate consumer); and
(b) in any product form other than finished product form (such as
final stage bulk material ready for conversion to final form, or bulk
tablets, bulk capsules, bulk ampoules or bulk vials) to distributors who
subsequently convert such product into finished product form and sell to
THIRD PARTIES, provided that such distributors shall not be considered
sublicensees for purposes of this NET SALES definition, and further
provided that for purposes of this Paragraph, such sales of PRODUCT in
final stage bulk material form shall only occur where such sales are due to
local country requirements as such requirements are determined by SB;
less deductions actually allowed or specifically allocated to PRODUCT by the
Selling Party using generally accepted accounting standards for:
[
].
In the event that SB or any AFFILIATE or any of its sublicensees shall sell
or supply any PRODUCT to any THIRD PARTY for a consideration other than a
monetary consideration or at a price which is less than the arm's length
price, the royalties payable pursuant to Article 4 shall be calculated by
reference to the NET SALES at which such PRODUCT(S) would have
[]= Confidential Treatment Requested
5.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
been sold had they been sold to a THIRD PARTY entering into an arm's length
agreement with SB or the AFFILIATE or the sublicensee in question to purchase
such PRODUCT(S).
It is hereby agreed for the sake of absolute clarity and understanding that
any sales between SB, its AFFILIATES and its or their sublicensees shall be
excluded from the computation of NET SALES and no royalties will be payable on
such sales. Notwithstanding the immediately preceding sentence, it is hereby
nevertheless expressly agreed that any transactions between SB or any of its
AFFILIATES or any of its sublicensees on the one hand and PSB on the other hand
will be deemed to be transactions with THIRD PARTIES for the purposes
of computing NET SALES, provided that the conditions of such sales to PSB,
including any and all rebates and discounts allocated to transactions with any
such PSB, shall be on an arm's length basis and shall be [
].
In the event that any PSB type activity is within SB or within any of its
AFFILIATES or sublicensees as only part of its or their total activities rather
than in a separate AFFILIATE a notional Net Sales figure will be calculated
on an arm's length basis to cover such activities.
1.16 "PRODUCT" shall mean COLLABORATION COMPOUND and shall include
pharmaceutical compositions comprising such COLLABORATION COMPOUND.
1.17 "PRODUCT KNOW-HOW" shall mean all information and expertise which
relates to PRODUCT and shall include, without limitation, all chemical,
pharmacological, toxicological, clinical, assay, control and manufacturing data
and any other information and reagents relating to PRODUCT and useful or
required for the development and commercialization of PRODUCT, to the extent
that ARRIS is free to disclose such and grant SB the licenses provided by this
AGREEMENT.
1.18 "PRODUCT PATENT(S)" shall mean all patents and patent applications,
including all continuations, continuations-in-part, divisions, patents of
addition, reissues, renewals or extensions thereof and all SPCS, which are or
become owned by ARRIS and under which ARRIS has the right to grant licenses, or
to which ARRIS otherwise has, now or in the future, the right to grant licenses,
which generically or specifically claim PRODUCT, a process for manufacturing
PRODUCT, or an intermediate used in such process or a use of PRODUCT. Also
included within the definition of PATENTS are any patents or patent applications
which generically or specifically claim any improvements on PRODUCT or
intermediates or manufacturing processes required or useful for production of
PRODUCT which are developed by ARRIS and which ARRIS has the right to grant
licenses, or which ARRIS otherwise has the right to grant licenses, now or in
the future, during the term of this AGREEMENT. The current list of patent
applications and patents encompassed within PATENTS is set forth in APPENDIX A
attached hereto. APPENDIX A shall be updated by ARRIS on a semi-annual basis.
1.19 "PROOF OF CONCEPT PHASE" shall mean the period of time, such period
to be determined according to Paragraphs 2.01 together with Paragraph 2.02,
during which ARRIS and/or SB shall carry out work in furtherance of this
AGREEMENT to prove that the DELTA FACTOR TECHNOLOGY is applicable to
identification of inhibitors of intracellular serine proteases.
[]= Confidential Treatment Requested
6.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1.20 "PSB" shall mean any present or future AFFILIATE of SB or its
sublicensees which conducts a Pharmaceutical Service Business for or on behalf
of THIRD PARTIES, including Pharmaceutical Benefits Management Services
(hereinafter "PBM"), wholesaler distribution, pharmacy distribution, managed
care services, disease management services, hospital services, or mail order
prescription pharmacy services (hereinafter "PPS"). As of the EFFECTIVE DATE, an
AFFILIATE of SB which is included within the definition of PBM is Diversified
Pharmaceutical Services, a corporation of the state of Minnesota and having a
place of business at 3600 West 80th Street, Seventh Floor, Bloomington,
Minnesota 55431-1085. As of the EFFECTIVE DATE, an AFFILIATE of SB which is
included within the definition of PPS is Diversified Prescription Delivery, a
corporation of the Commonwealth of Pennsylvania and having a place of business
at 206 Welsh Road, Horsham, Pennsylvania 19044, U.S.A.
1.21 "PUBLIC DISCLOSURE" shall mean any publication or presentation,
either by ARRIS or any THIRD PARTY, of either:
[
].
1.22 "RELEVANT FACTOR" shall mean a factor which is physiologically
relevant to DELTA FACTOR, which relevant factor is described in detail in the
side letter to this AGREEMENT, which side letter is executed by the parties
contemporaneously with this AGREEMENT
1.23 "RESEARCH" shall mean the collaborative research program
undertaken by the parties pursuant to this AGREEMENT which is directed to the
application of DELTA FACTOR TECHNOLOGY to identify inhibitors of viral
proteases of [ ], which program is
conducted during the PROOF OF CONCEPT PHASE and the RESEARCH PHASE. The
scope of the RESEARCH is further elaborated in Appendix C which is attached
hereto and fully incorporated into this AGREEMENT as such may be amended in
accordance with Paragraph 2.05.
1.24 "RESEARCH PHASE" shall mean the period of time, determined in
accordance with Paragraph 2.03(b), after SB has made an election in accordance
with Paragraph 2.03(b) to have such period commence, during which ARRIS and/or
SB shall carry out work in furtherance of this AGREEMENT in accordance with the
relevant section of Appendix C.
1.25 "RESEARCH STEERING COMMITTEE" shall mean a committee containing
senior research members from both parties which the parties shall set up,
promptly after the EFFECTIVE DATE, to facilitate the RESEARCH. The
responsibilities of the RESEARCH STEERING COMMITTEE are set forth in Paragraph
2.05.
[]= Confidential Treatment Requested
7.
<PAGE>
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- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1.26 "SB" shall mean SmithKline Beecham Corporation, a corporation of the
Commonwealth of Pennsylvania, having a place of business at One Franklin Plaza,
Philadelphia, Pennsylvania 19101, U.S.A.
1.27 "SB PRODUCT PATENT" shall mean all patents, including all
continuations, continuations-in-part, divisions, patents of addition, reissues,
renewals or extensions thereof and all SPCS, which are owned by SB which
generically or specifically claim PRODUCT.
1.28 "SPC(S)" shall mean a right which is not a PRODUCT PATENT or an SB
PRODUCT PATENT but which is based upon a PRODUCT PATENT or an SB PRODUCT PATENT
to exclude others from making, using or selling PRODUCT, such as a Supplementary
Protection Certificate.
1.29 "TERRITORY" shall mean all the countries and territories of the
world.
1.30 "THIRD PARTY(IES)" shall mean any party other than a party to this
AGREEMENT except as otherwise provided in Paragraph 1.15.
2. PROOF OF CONCEPT PHASE AND RESEARCH PHASE
2.01 During the PROOF OF CONCEPT PHASE, ARRIS shall carry out work to
prove that the DELTA FACTOR TECHNOLOGY is applicable to the identification of
inhibitors of intracellular serine proteases. The PROOF OF CONCEPT PHASE shall
commence upon the EFFECTIVE DATE and continue until the expiration of [
] thereafter, unless such period is earlier terminated or
extended as provided in this AGREEMENT. SB shall provide funding to ARRIS to
assist ARRIS in carrying out ARRIS' responsibilities during the PROOF OF CONCEPT
PHASE. Such funding shall be provided based upon each full time scientific
person directly devoted to carrying out the PROOF OF CONCEPT PHASE work
("FTE(S)") at ARRIS, provided that [
]. Such funding shall be provided at a level of [
] per ARRIS FTE for a [
], or at a pro rata level for any portion of such period, provided
that the number of ARRIS FTES during such period to be funded by SB shall be [
]. The funding by SB to ARRIS shall be provided in [
] installments during the PROOF OF CONCEPT PHASE, with the first
installment to be paid, on a [ ] basis, no later than [
] after the EFFECTIVE DATE, and each installment thereafter to be
paid no later than [ ] in advance of the first day of the [
], with the last installment to be paid on a pro rata [
] basis. Notwithstanding the above, in the event that the Proof of
Concept milestone (as defined in Paragraph 4.01(4)) is achieved prior to the
expiration of such [ ] period, ARRIS shall
promptly reimburse SB, on a pro rata basis, for any excess funding paid by SB to
ARRIS under this Paragraph, and SB's funding obligations for PROOF OF CONCEPT
PHASE work shall terminate effective as of the date of such achievement. Such
funding is provided by SB to ARRIS as the full extent of SB's responsibility for
paying the direct and indirect costs to ARRIS associated with ARRIS' PROOF OF
8.
<PAGE>
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- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CONCEPT PHASE responsibilities, including, but not limited to, [
]. Any additional costs which may
arise in connection with ARRIS' PROOF OF CONCEPT PHASE responsibilities shall be
ARRIS' sole responsibility.
2.02 If ARRIS does not achieve Proof of Concept (as defined in Paragraph
4.01(4)) by the end of the initial [ ] period of
the PROOF OF CONCEPT PHASE, SB may elect, at its sole discretion, within [
] after the end of such initial period:
(a) to extend the PROOF OF CONCEPT PHASE for up to [
], after the
end of the initial [ ] period of the PROOF OF
CONCEPT PHASE ("Additional Period"), in which event [
] additional funding during such Additional Period to assist
ARRIS' continued work, such funding to be based upon the same terms and
conditions set out in Paragraph 2.01, provided that all funding provided [
] during such Additional Period shall be fully creditable against any
funding for the RESEARCH PHASE to be provided by SB to ARRIS under Paragraph
2.03, such credit to be taken at SB's discretion as provided in Paragraph 2.03.
If ARRIS does not achieve Proof of Concept (as defined in Paragraph 4.01(4)) by
the end of the [ ] of the Additional Period, SB may elect, at its
sole discretion, no later than [ ] after the end of the
first [ ] of the Additional Period to fund the [
] of the Additional Period or to make the election outlined
in Paragraph 2.02(c), provided that, in such event SB may continue the PROOF OF
CONCEPT PHASE work only for an additional [ ] period.
(1) If SB elects not to fund the [ ]
of the Additional Period or makes the election outlined in Paragraph 2.02(c)
but does not achieve Proof of Concept (as defined in Paragraph 4.01(4)) by the
end of the [ ], or if SB does elect to fund such [
] but ARRIS does not achieve Proof of Concept (as defined in
Paragraph 4.01(4)) by the end of the [ ] Additional
Period, the AGREEMENT shall terminate [
] and SB shall have no obligation to make the milestone payment
provided in Paragraph 4.01(b) or any other payments under this AGREEMENT which
have not accrued as of the effective date of such termination, except as
otherwise provided in Paragraph 2.06; provided that (i) all of the license
rights in Paragraphs 3.01, 3.02 and 3.03 shall immediately terminate and revert
back to the granting party, (ii) the license rights granted under Paragraph 3.04
and Paragraph 3.05 shall forever and irrevocably survive such termination, and
(iii) ARRIS shall have an irrevocable, exclusive right to make, have made, use
and sell, in the FIELD, all COLLABORATION COMPOUNDS in existence as of the
effective date of such termination, under a license to any SB PRODUCT PATENTS
which arose as a result of work performed in furtherance of this AGREEMENT which
claim the making, use or sale of such COLLABORATION COMPOUNDS in the FIELD.
(2) If SB funds the [ ] of the Additional
Period, but ARRIS does not achieve Proof of Concept (as defined in Paragraph
4.01(4)) by the end of the [
[]= Confidential Treatment Requested
9.
<PAGE>
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- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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- --------------------------------------------------------------------------------
] of the Additional Period, SB may, at its sole discretion, no later than
[ ] after the end of the [ ] of the Additional
Period make the election outlined in Paragraph 2.02(c), provided that, in such
event, SB may continue the PROOF OF CONCEPT PHASE work only for an additional [
] period. If SB does not make the election outlined in Paragraph
2.02(c), the AGREEMENT shall terminate retroactive to [
and SB shall have no obligation to make the milestone payment
provided in Paragraph 4.01(b) or any other payments under this AGREEMENT which
have not accrued as of the effective date of such termination, except as
otherwise provided in Paragraph 2.06 ; provided that (i) all of the license
rights in Paragraphs 3.01, 3.02 and 3.03 shall immediately terminate and revert
back to the granting party, (ii) the license rights granted under Paragraph 3.04
and Paragraph 3.05 shall forever and irrevocably survive such termination, and
(iii) ARRIS shall have an irrevocable, exclusive right to make, have made, use
and sell, in the FIELD, all COLLABORATION COMPOUNDS in existence as of the
effective date of such termination, under a license to any SB PRODUCT PATENTS
which arose as a result of work performed in furtherance of this AGREEMENT which
claim the making, use or sale of such COLLABORATION COMPOUNDS in the FIELD.
(3) If SB does make the election outlined in Paragraph 2.02(c),
the AGREEMENT shall terminate retroactive to the last day of the [
] period after the Additional Period and SB shall have no
obligation to make the milestone payment provided in Paragraph 4.01(b) or any
other payments under this AGREEMENT which have not accrued as of the effective
date of such termination, except as otherwise provided in Paragraph 2.06 ;
provided that (i) all of the license rights in Paragraphs 3.01, 3.02 and 3.03
shall immediately terminate and revert back to the granting party, (ii) the
license rights granted under Paragraph 3.04 and Paragraph 3.05 shall forever and
irrevocably survive such termination, and (iii) ARRIS shall have an irrevocable,
exclusive right to make, have made, use and sell, in the FIELD, all
COLLABORATION COMPOUNDS in existence as of the effective date of such
termination, under a license to any SB PRODUCT PATENTS which arose as a result
of work performed in furtherance of this AGREEMENT which claim the making, use
or sale of such COLLABORATION COMPOUNDS in the FIELD; or
(b) to terminate the AGREEMENT, such termination to be retroactively
effective to the last day of the [ ]
period of the PROOF OF CONCEPT PHASE, provided that SB shall have no obligation
to make the milestone payment provided in Paragraph 4.01(b) or any other
payments under this AGREEMENT which have not accrued as of the effective date of
such termination, except as otherwise provided in Paragraph 2.06 :
(i) SB's license rights under Paragraph 3.01 and ARRIS'
license rights under Paragraph 3.03 shall survive for [
] after the effective date of such termination.
(ii) SB's license rights under Paragraph 3.02 shall
immediately terminate, subject to Paragraph 2.02(b)(iii) and Paragraph
2.02(b)(iv).
[]= Confidential Treatment Requested
10.
<PAGE>
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- --------------------------------------------------------------------------------
CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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- --------------------------------------------------------------------------------
(iii) the license rights granted under Paragraph 3.04 and
Paragraph 3.05 shall forever and irrevocably survive such termination.
(iv) the RESEARCH STEERING COMMITTEE shall survive for one
(1) year after the effective date of such termination for the sole purpose of
determining whether or not the potential inhibitors identified by the parties
during the PROOF OF CONCEPT PHASE meet the parameters outlined in Appendix B
(Part 1) and/or Appendix B (Part 2).
(v) ARRIS shall not be permitted to enter into an agreement
with any THIRD PARTY related to the FIELD for [ ]
after the effective date of such termination.
(vi) At any time during the [ ]
after the effective date of such termination, SB, at its sole discretion, may
reactivate the AGREEMENT, upon provision of written notice thereof to ARRIS, in
which event all terms and conditions of the AGREEMENT shall be reinstated, and
SB shall provide ARRIS with additional funding as follows:
(A) during the period from the date SB provides written
notice of reinstatement to ARRIS until the end of the PROOF OF CONCEPT PHASE, to
assist ARRIS' continued work such additional funding shall be based upon the
same terms and conditions set out in Paragraph 2.01, and
(B) SB shall reimburse ARRIS for work performed by ARRIS
[
], such reimbursement to be based on the
FTE rate set out in Paragraph 2.01, provided that ARRIS shall submit a report to
SB which shall set forth ARRIS' determination of the actual number of ARRIS FTES
conducting PROOF OF CONCEPT PHASE work during the period from the effective date
of the termination to the date SB provided written notice of reinstatement, such
number to be confirmed by the RESEARCH STEERING COMMITTEE,
provided that all funding provided by SB to ARRIS during the period after the
effective date of the termination, i.e., all funding provided under this
Paragraph 2.02(b)(vi), shall, at SB's discretion, be [
];
(vii) If SB elects not to reinstate the AGREEMENT by the end of
the [ ], the AGREEMENT shall remain terminated and SB
shall have no obligation to make the milestone payment provided in Paragraph
4.01(b) or any other payments under this AGREEMENT which have not accrued as of
the effective date of such termination, except as otherwise provided in
Paragraph 2.06 ; provided that (a) all of the license rights in Paragraphs 3.01,
3.02 and 3.03 shall immediately terminate and revert back to the granting party,
(b) the license rights granted under Paragraph 3.04 and Paragraph 3.05 shall
forever and irrevocably survive such termination, and (c) ARRIS shall have an
irrevocable, exclusive right to make, have made, use and sell, in the FIELD, all
COLLABORATION COMPOUNDS in existence as of the effective date of such
termination, under a license to any SB PRODUCT PATENTS which arose as a result
of work performed in furtherance of this AGREEMENT which claim the making, use
or sale of such COLLABORATION COMPOUNDS in the FIELD; or
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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(c) to continue the PROOF OF CONCEPT PHASE work by performing
any remaining work at SB research facilities using internal SB resources, in
which event any funding owed by SB to ARRIS for the entirety of the period of
the PROOF OF CONCEPT PHASE would be limited to that funding to be provided to
ARRIS for the [ ] period of the PROOF OF CONCEPT PHASE as
provided in Paragraph 2.01 and any portion of the Additional Period elected by
SB as provided in Paragraph 2.02(a), provided that SB may continue such PROOF OF
CONCEPT PHASE work only for a period of up to [ ] after
the end of the [ ], or for any shorter period as provided in
Paragraph 2.02(a), and further provided that SB may terminate the AGREEMENT at
any time during such [ ]
or such shorter period upon [ ] written notice to ARRIS. In the event
Proof of Concept (as defined in Paragraph 4.01(4)) is achieved by either party
during such [ ] period or such shorter period, SB, at its
sole discretion, may elect not to make the milestone payment provided in
Paragraph 4.01(b) until such time as SB decides to initiate the RESEARCH PHASE,
provided that SB shall make such decision by providing written notice thereof to
ARRIS no later than [ ] after such achievement. In the event that
SB decides not to initiate the RESEARCH PHASE or does not provide such written
notice within such time period, (i) the AGREEMENT shall be terminated and SB
shall have no obligation to make the milestone payment provided in Paragraph
4.01(b) or any other payments under this AGREEMENT which have not accrued as of
the effective date of such termination, except as otherwise provided in
Paragraph 2.06 , (ii) all of the license rights in Article 3 shall immediately
terminate and revert back to the granting party but the license rights granted
under Paragraph 3.04 and Paragraph 3.05 shall forever and irrevocably survive
such termination, (iii) SB shall not have the first right to a license as
outlined in Paragraph 2.06(c), and (iv) ARRIS shall have an irrevocable,
exclusive right to make, have made, use and sell, in the FIELD, all
COLLABORATION COMPOUNDS in existence as of the effective date of such
termination, under a license to any SB PRODUCT PATENTS which arose as a result
of work performed in furtherance of this AGREEMENT which claim the making, use
or sale of such COLLABORATION COMPOUNDS in the FIELD.
2.03 Once Proof of Concept (as defined in Paragraph 4.01(4)) has been
achieved, SB shall [
]. Furthermore, within [ ] after such
achievement, SB shall elect, in writing, at its sole discretion, either:
(a) to terminate the AGREEMENT, such termination to be effective
upon ARRIS' receipt of such written election, in which case such termination
shall terminate all of SB's outstanding financial obligations under this
AGREEMENT except for any payment obligations which became due prior to the
effective date of such termination, except as otherwise provided in Paragraph
2.06 , and all of the license rights in Article 3 shall terminate and revert
back to the granting party, except that (i) the license rights granted under
Paragraph 3.04 and Paragraph 3.05 shall forever and irrevocably survive such
termination; and (ii) ARRIS shall have an irrevocable, exclusive right to make,
have made, use and sell, in the FIELD, all COLLABORATION
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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COMPOUNDS in existence as of the effective date of such termination, under a
license to any SB PRODUCT PATENTS which arose as a result of work performed in
furtherance of this AGREEMENT which claim the making, use or sale of such
COLLABORATION COMPOUNDS in the FIELD; or
(b) to have the RESEARCH PHASE commence.
In the event that SB elects to have the RESEARCH PHASE commence, SB shall [
] and SB and
ARRIS shall jointly carry out the RESEARCH PHASE in accordance with the plan
attached hereto as Appendix C during a period of [ ], such
period to commence upon the date of ARRIS' receipt of SB's election, unless such
RESEARCH PHASE period is terminated earlier as provided by this AGREEMENT or by
the mutual agreement of the parties because, for example, [
]. The period for
carrying out the RESEARCH PHASE may be extended by up to [ ] at SB's
option upon prior written notice of [ ]. SB shall provide
funding to ARRIS to assist ARRIS in carrying out ARRIS' responsibilities during
the RESEARCH PHASE until the expiration of the RESEARCH PHASE period. Such
funding shall be subject to any credit which may be due SB in accordance with
Paragraph 2.02, provided in the event such credit is taken, [
]. Such funding shall be provided based upon each full time
scientific personnel directly devoted to carrying out the RESEARCH PHASE work
("FTE(S)") at ARRIS, provided that [
]. Such funding shall be provided at a level of [
] per ARRIS FTE per year of the
RESEARCH PHASE period, or at a pro rata level for any portion of a year,
provided that the number of ARRIS FTES during such period to be funded by SB
shall be [ ]. The funding by SB to ARRIS shall be provided in [
] installments during the RESEARCH PHASE, with the first
installment to be paid, on a pro rata [ ]basis, no later than [
] after the initiation of the RESEARCH PHASE, and each installment
thereafter to be paid no later than [ ] in advance of the first day
of the respective [ ], with the last installment to be paid on a
pro rata [ ] basis. Such funding is provided by SB to ARRIS as
the full extent of SB's responsibility for paying the direct and indirect costs
to ARRIS associated with ARRIS' RESEARCH PHASE responsibilities, including, but
not limited to, [
]. Any additional costs which may arise in connection with ARRIS' RESEARCH
PHASE responsibilities shall be ARRIS' sole responsibility, provided that if the
RESEARCH PHASE funding is terminated early as provided in this Paragraph, then
ARRIS' responsibility to provide FTE support in the performance of the
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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RESEARCH PHASE work shall [ ] , but all other RESEARCH
PHASE activities, such as the RESEARCH STEERING COMMITTEE, shall continue for
the full term of the RESEARCH PHASE.
2.04 In the event that a THIRD PARTY or ARRIS makes a PUBLIC DISCLOSURE,
SB may, at its option, terminate the RESEARCH, upon [ ] prior
written notice, at any time during the later of (a) the PROOF OF CONCEPT
PHASE, or (b) the [ ] after the commencement of the
PROOF OF CONCEPT PHASE. In the event of termination of the RESEARCH, (i) the
license rights under Paragraphs 3.01 and 3.03 shall survive for [
] after the effective date of such termination, and thereafter such license
rights shall reverse back to the granting party; and (ii) the remaining license
rights under Article 3 shall survive such termination. In addition, in the
event of termination of the RESEARCH, such termination shall terminate all of
SB's outstanding financial obligations related to the RESEARCH except for any
payment obligations which became due prior to the effective date of such
termination.
2.05 Promptly after EFFECTIVE DATE, the parties shall set up a committee,
containing senior research members from both parties, to facilitate the PROOF OF
CONCEPT PHASE and the RESEARCH PHASE (hereinafter "RESEARCH STEERING
COMMITTEE"). The RESEARCH STEERING COMMITTEE shall consist of six (6) members,
three (3) of whom shall be appointed by SB and three (3) of whom shall be
appointed by ARRIS. The RESEARCH STEERING COMMITTEE shall meet at such times
and places as it may select but, in any event, it shall meet at least three (3)
times per calendar year after the EFFECTIVE DATE, provided that the first such
meeting shall be held as soon as practicable, but in no event later than ninety
(90) days, after the EFFECTIVE DATE. Prior to the conclusion of each four (4)
month period after the initiation of the PROOF OF CONCEPT PHASE and the RESEARCH
PHASE, the parties shall agree as to any changes in the direction and scope of
the PROOF OF CONCEPT PHASE and the RESEARCH PHASE as well as the primary
responsibilities of each party in the conduct of the PROOF OF CONCEPT PHASE and
the RESEARCH PHASE for the subsequent four (4) months, and Appendix C shall be
amended by the RESEARCH STEERING COMMITTEE to reflect such direction and scope,
and such amended Appendix C shall thereafter be part of this AGREEMENT. In
addition, the RESEARCH STEERING COMMITTEE shall determine whether or not the
potential inhibitors synthesized by the parties during the PROOF OF CONCEPT
PHASE and the RESEARCH PHASE or within [ ] after the end of the
term of the PROOF OF CONCEPT PHASE and the RESEARCH PHASE [
]. In addition, the RESEARCH STEERING
COMMITTEE shall determine whether or not each particular DELTA FACTOR COMPOUND
[
]. All decisions for
which the RESEARCH STEERING COMMITTEE cannot reach consensus shall be submitted
for resolution to senior ARRIS and SB management, provided that SB shall make
the final
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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determination with respect to any such issue that still remains unresolved,
except that in no event shall SB be permitted to [
] or to [
] or to determine any issues regarding which
party may have [ ].
2.06 (a) With respect to a DELTA FACTOR COMPOUND subject to Paragraph
3.05(b)(ii)(b), in the event that SB subsequently identifies such DELTA FACTOR
COMPOUND as having therapeutic activity of interest to SB pursuant to its
license rights under Paragraph 3.05(b)(ii)(b), and provided that [
], and further provided that ARRIS has not [
], in the event that
ARRIS owns any patents claiming the making, use or sale of such DELTA FACTOR
COMPOUND [ ], which patents are in addition to those outlined in
Paragraph 3.05(b)(ii)(b) which claim the making, use or sale of such DELTA
FACTOR COMPOUND, SB shall, upon written notice to ARRIS, have a worldwide,
exclusive license, with the right to grant sublicenses, under all such patents,
to the extent ARRIS is legally able to do so, to make, have made, use and sell
such DELTA FACTOR COMPOUND in the TERRITORY [ ], but SB
shall not exercise such right with respect to [
], and ARRIS shall be
entitled to [ ] of the royalty payments outlined in Paragraphs 4.02,
4.06, and 4.07 with respect to net sales of such DELTA FACTOR COMPOUND by SB,
its AFFILIATES and its sublicensees in the TERRITORY.
(b) With respect to a DELTA FACTOR COMPOUND subject to Paragraph
3.05(a)(ii) for which SB has an ownership interest as a result of work performed
in furtherance of this AGREEMENT or with respect to a DELTA FACTOR COMPOUND
subject to Paragraph 3.05(b)(ii)(a), in the event that ARRIS identifies such
DELTA FACTOR COMPOUND as having therapeutic activity of interest to ARRIS
pursuant to its license rights under Paragraph 3.05(a)(ii) or Paragraph
3.05(b)(ii)(a), and provided that, in the case of a DELTA FACTOR COMPOUND
subject to Paragraph 3.05(b)(ii)(a), [
], and further provided if SB has
not [
], ARRIS shall, upon written request to SB, receive an
exclusive license, with the right to grant sublicenses, under all patents and
know-how owned by SB which arose as a result of this AGREEMENT, to the extent SB
is legally able to do so, to make, have made, use and sell such DELTA FACTOR
COMPOUND, in the TERRITORY [ ], but in
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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the case of a DELTA FACTOR COMPOUND subject to Paragraph 3.05(b)(ii)(a), ARRIS
shall exercise such right only with respect to [
], and in the event that ARRIS
markets such DELTA FACTOR COMPOUND itself, ARRIS shall pay SB royalties on the
net sales of such DELTA FACTOR COMPOUND by ARRIS and its AFFILIATES [
].
(c) In the event that ARRIS should elect to license a DELTA
FACTOR COMPOUND referenced in Paragraph 2.06(b), or any composition of matter
derived therefrom, SB shall have the first right to a worldwide, exclusive
license, with the right to grant sublicenses, under any applicable patents and
know-how owned by ARRIS, to the extent ARRIS is legally able to do so, to make,
have made, use and sell such DELTA FACTOR COMPOUND, or composition of matter
derived therefrom, in the TERRITORY [ ], upon terms to be
mutually agreed upon by the parties in good faith. ARRIS shall provide SB with
written notification of the availability of such license and shall deliver to SB
all relevant information in ARRIS' possession (subject to THIRD PARTY binders of
confidentiality, if any) related to such DELTA FACTOR COMPOUND, or composition
of matter derived therefrom, and related research program(s) that would be
useful to SB in its evaluation of the desirability of entering into such license
arrangement. At the request of SB, ARRIS shall negotiate, in good faith, with
SB to determine whether or not there are mutually acceptable terms and
conditions under which the parties may proceed with such license arrangement.
If the parties have not determined such mutually acceptable terms and conditions
within [ ] after the delivery to SB of all relevant information outlined
above, ARRIS shall be free to enter into a license with a THIRD PARTY with
respect to such DELTA FACTOR COMPOUND, or composition of matter derived
therefrom, provided that [
].
In the event that SB shall determine it does not want to exercise such first
right, ARRIS shall be free to either license such DELTA FACTOR COMPOUND, or
composition of matter derived therefrom, to any THIRD PARTY or to market such
itself, provided that in the event that ARRIS do not elect to market on its own
such DELTA FACTOR COMPOUND, or composition of matter derived therefrom, and
ARRIS is also unable to complete a THIRD PARTY agreement with respect to
licensing such DELTA FACTOR COMPOUND, or composition of matter derived
therefrom, within [ ] after the end of the [ ] period
referenced above in this Paragraph 2.06(c), SB's first right to such a license
shall be reinstated in accordance with the mechanism outlined in Paragraph
2.06(c). Furthermore, notwithstanding Paragraph 2.06(c), [
].
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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(d) In the event that ARRIS grants a license to any THIRD PARTY
to any DELTA FACTOR COMPOUND referenced in Paragraph 2.06(b), or composition of
matter derived therefrom, for any of the reasons outlined in Paragraph 2.06(c),
SB shall be entitled to [ ] of [
] that ARRIS shall receive from such THIRD PARTY as a result of such
license to the extent that [ ] are [
].
(e) ARRIS warrants and represents that it will [
] with any such THIRD PARTY for the
purpose of [ ].
(f) In the event of the reasons outlined in Paragraph 2.06(c),
ARRIS elects to market any such DELTA FACTOR COMPOUND or composition of matter
derived therefor itself, ARRIS shall pay SB royalties on the net sales of such
by ARRIS, its AFFILIATES, and its sublicensees, [
].
(g) The rights and obligations of the parties under the entirety
of Paragraph 2.06 shall survive the termination of the AGREEMENT.
2.07 The principal scientists who will direct the carrying out of the
respective responsibilities of each party are, for ARRIS: [ ], and
for SB: [
], or such other person as may be designated by ARRIS for ARRIS or by SB
for SB. All data relating to information developed in furtherance of this
AGREEMENT during the PROOF OF CONCEPT PHASE, the RESEARCH PHASE, DELTA FACTOR
TECHNOLOGY and DELTA FACTOR KNOW-HOW disclosed pursuant to the AGREEMENT, and
all other communications concerning the PROOF OF CONCEPT PHASE and the RESEARCH
PHASE, shall be directed to said principal scientists to the extent reasonably
practicable.
2.08 During the term of the PROOF OF CONCEPT PHASE, the RESEARCH PHASE,
and for a [ ] thereafter, unless ARRIS is under a
superseding contractual obligation with a THIRD PARTY in existence as of the
EFFECTIVE DATE, and only in the event that ARRIS wants to enter into a
collaborative research effort with a THIRD PARTY, provided that such [
] shall not be applicable in the event that SB has terminated the
PROOF OF CONCEPT PHASE in accordance with Paragraph 2.02(c), or in the event
that the Proof of Concept payment has been made as provided in Paragraph 4.01(b)
but SB has not made the RESEARCH PHASE commencement election outlined in
Paragraph 2.03(b), ARRIS shall, in writing, notify SB of any and all new
research programs ARRIS may have which are reasonably expected, based on
existing knowledge, to be:
(a) applicable to the use of DELTA FACTOR TECHNOLOGY to identify
intracellular protease inhibitors which are not already part of the PROOF OF
CONCEPT PHASE or the RESEARCH PHASE at such time; or (b) applicable to
the use of DELTA FACTOR COMPOUNDS [
] for a particular
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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therapeutic target irrespective of whether or not DELTA FACTOR TECHNOLOGY would
be applicable to such research program. For a period of [
] after SB's receipt of such notification, SB shall have the first right
to negotiate with ARRIS, in good faith, for the purpose of entering into a
mutually acceptable collaborative research and license agreement related to such
research program. During such [ ], ARRIS shall
submit all relevant information in ARRIS' possession (subject to THIRD PARTY
binders of confidentiality, if any) related to any such research program that is
reasonably required to enable SB's full consideration thereof. In the event
that, after the end of such [ ] period, the
parties have failed to reach agreement on the material terms of such agreement,
and ARRIS has exercised good faith in such negotiations, ARRIS shall thereafter
be free to enter into such an agreement with a THIRD PARTY. The rights and
obligations of the parties under this Paragraph shall survive the termination of
the AGREEMENT.
3. GRANT
3.01 ARRIS hereby grants to SB a co-exclusive license, to the extent of
ARRIS' rights and interests, under DELTA FACTOR PATENTS and DELTA FACTOR
KNOW-HOW, to use DELTA FACTOR TECHNOLOGY and DELTA FACTOR COMPOUNDS, in the
FIELD, in the TERRITORY, during the term of the PROOF OF CONCEPT PHASE, the
RESEARCH PHASE, and for [ ] after the end of the term of the
PROOF OF CONCEPT PHASE or the RESEARCH PHASE.
3.02 ARRIS hereby grants to SB an exclusive license, to the extent of
ARRIS' rights and interests, with the right to grant sublicenses, under all
PRODUCT PATENTS, PRODUCT KNOW-HOW, DELTA FACTOR PATENTS and DELTA FACTOR
KNOW-HOW, to make, have made, use and sell PRODUCT in the TERRITORY, subject
to the terms and conditions of this AGREEMENT.
3.03 SB hereby grants to ARRIS a co-exclusive license, to the extent of
SB's rights and interests, without the right to grant sublicenses, in the
TERRITORY, under any applicable patents and know-how owned by SB, to use any
improvements made by SB which are exclusively and directly relevant to DELTA
FACTOR TECHNOLOGY which arise during the term of the PROOF OF CONCEPT PHASE, the
RESEARCH PHASE or within [ ] after the end of the term of the
PROOF OF CONCEPT PHASE or the RESEARCH PHASE, to identify inhibitors of
proteases [ ], provided that such use shall be made only
during the term of the PROOF OF CONCEPT PHASE, the RESEARCH PHASE, and for [
] thereafter.
3.04 Subject to Paragraph 3.03, SB hereby grants to ARRIS an exclusive
license, to the extent of SB's rights and interests, with the right to grant
sublicenses, in the TERRITORY, under any applicable patents and know-how, to use
any improvements made by SB which are exclusively and directly relevant to DELTA
FACTOR TECHNOLOGY for the purpose of identifying inhibitors of intracellular or
extracellular proteases, provided that in the event there is
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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a PUBLIC DISCLOSURE, the exclusive license to ARRIS outlined in this Paragraph
shall become non-exclusive.
3.05 Subject to the other provisions of Article 3 and this AGREEMENT, the
following shall apply to compounds which are synthesized by SB or ARRIS in
furtherance of this AGREEMENT, during the course of the PROOF OF CONCEPT PHASE,
the course of the RESEARCH PHASE, or during [ ] thereafter, as a result of
which an intellectual property right arises for either or both parties (provided
that any questions concerning such intellectual property right shall be referred
to the RESEARCH STEERING COMMITTEE for resolution):
(a) if such compound is [ ] the following shall apply:
(i) if the RESEARCH STEERING COMMITTEE determines that such compound
does not meet the criteria for DELTA FACTOR COMPOUND set forth in Appendix B
(Part I), such compound shall no longer be subject to this AGREEMENT, except
that the rights to make, have made, use and sell such compound shall be governed
by Paragraph 10.02.
(ii) if the RESEARCH STEERING COMMITTEE determines that such
compound does meet the criteria for DELTA FACTOR COMPOUND set forth in
Appendix B (Part I), but the RESEARCH STEERING COMMITTEE determines that such
compound does not meet the criteria for COLLABORATION COMPOUND set forth in
Appendix B (Part II), ARRIS shall have the exclusive right to make, have
made, use and sell such compound [ ], and ARRIS shall have an
exclusive, royalty-free license, with the right to grant sublicenses, to the
extent of SB's rights and interests, under any [
].
(b) if such compound is [ ] the
following shall apply:
(i) if the RESEARCH STEERING COMMITTEE determines that such
compound does not meet the criteria for DELTA FACTOR COMPOUND set forth in
Appendix B (Part I), such compound shall no longer be subject to this AGREEMENT,
except that the rights to make, have made, use and sell such compound shall be
governed by Paragraph 10.02.
(ii) if the RESEARCH STEERING COMMITTEE determines that such
compound does meet the criteria for DELTA FACTOR COMPOUND set forth in Appendix
B (Part I), but the RESEARCH STEERING COMMITTEE determines that such compound
does not meet the criteria for COLLABORATION COMPOUND set forth in Appendix B
(Part II):
(a) ARRIS shall have the exclusive right to make, have made, use
and sell such compound for [
], and
ARRIS shall have an exclusive royalty-free license, with the right to grant
sublicenses, to the extent of SB's rights and interests, under [
],
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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[ ], and
(b) SB shall have the exclusive right to make, have made, use and
sell such compound [
], and SB shall have an exclusive, royalty-free license, with the
right to grant sublicenses, to the extent of ARRIS' rights and interests, and to
the extent that ARRIS is legally able to do so, under [
].
4. PAYMENTS AND ROYALTIES
4.01 In consideration for the license under DELTA FACTOR PATENTS, DELTA
FACTOR KNOW-HOW, PRODUCT PATENTS and PRODUCT KNOW-HOW granted to SB in this
AGREEMENT, SB shall make the following milestone payments (in U.S. dollars) to
ARRIS, except as otherwise provided in Paragraph 2.02(c), in the specified
amounts, within [ ] after the occurrence of the following milestones:
[
].
provided that:
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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(1) each such payment for the events listed in Paragraph 4.01(a) through
(d) shall be made only one time regardless of how many times such
milestones are achieved, and no payment shall be owed for a milestone which
is not reached;
(2) each such payment shall be [ ] to SB;
(3) [
], provided that the full amount of such payment shall be fully
creditable against the payment to be made by SB to ARRIS [
];
(4) by the term "Proof of Concept" as used in this Paragraph is meant that
the parties have determined that all of the following three (3) conditions
have been satisfied:
(a) DELTA FACTOR TECHNOLOGY is useful to identify inhibitors of
viral [ ] which
inhibitors have [
];
(b) such activity has been demonstrated by compounds that are
[
]; and
(c) the compounds satisfying the conditions set forth in
Paragraphs 4.01(4)(a) and 4.01(4)(b) show [
].
(5) by the term [
] as used in this Paragraph is meant
[
], that the [ ] should
commence.
(6) by the term [ ] as used in this Paragraph is meant
[
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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] as outlined in Appendix E. In the event that there is [
] and
SB decides to [ ],
then the payment due under this Paragraph 4.01(6) shall be made upon the
earlier of [
] by such PRODUCT or [
];
(7) by the term [ ] as used in this Paragraph is meant [
];
(8) by the term [ ] as used in this Paragraph is meant [
];
(9) by the term "Pre-Project Status' as used in this Paragraph is meant a
determination by[ ]
that a [ ], whichever is applicable, is [
], provided that it is understood that [
];
(10) by the term "IND Acceptance" as used in this Paragraph shall mean the
acceptance by the U.S. Food and Drug Administration (hereinafter "FDA") of
an Investigational New Drug Application (hereinafter "IND") for a [ ],
whichever is applicable, [ ], or the equivalent occurrence in
any country of the Territory;
(11) by the term "Phase III Initiation" as used in this Paragraph shall
mean the [ ] in the [ ]
required for the filing of a New Drug Application (hereinafter "NDA") with
the FDA for a [ ], whichever is applicable, or [
];
(12) by the term "NDA Acceptance" as used in this Paragraph is meant the
FDA's acceptance of an NDA filed by or on behalf of SB for approval to
market a [ ], whichever is applicable, in the U.S.A.;
(13) by the term "MAA Filing" as used in this Paragraph is meant the filing
with the appropriate regulatory and pricing authorities in at least [
] Major European Markets of a Marketing Authorization Application ("MAA")
[ ] for
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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approval to market a [ ], whichever is applicable, in
such country;
(14) by the term "Major European Market" as used in this Paragraph is meant
the following countries United Kingdom, Germany, France, and Italy.
(15) by the term "NDA Approval" as used in this Paragraph is meant the FDA's
approval of an NDA [ ] for marketing a [ ],
whichever is applicable, in the U.S.A.;
(16) by the term "MAA Approval" as used in this Paragraph is meant the
approval by all of the requisite regulatory and pricing authorities in at
least [ ] Major European Markets of an MAA [ ] for
approval to market a [
], whichever is applicable, in such country;
(17) if a [ ] (hereinafter referred to, depending on
context, as "Agent") is [ ],
and SB subsequently [ ],
the only applicable milestone payments outlined in Paragraph 4.01(e)
through (r) due for such subsequent [
], provided that [
];
(18) in the event SB progresses development of [ ] subsequent Agents
against the same target, i.e., [ ] or
[ ] against the same [
], the milestone
payments outlined in Paragraph 4.01(e) through (r) shall [
] unless [ ].
In the event such [
], payment for the milestones
outlined in Paragraphs 4.01(e) through (r) for [
],
in which event all such milestones shall be paid to ARRIS by SB [
].
4.02 In further consideration for the license under PRODUCT PATENTS and
PRODUCT KNOW-HOW granted to SB under the AGREEMENT, SB shall make the following
royalty payments to ARRIS, [ ]:
[ ] of annual NET SALES up to and including [
];
[ ] of annual NET SALES in excess of [
] up to and including [
];
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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[ ] of annual NET SALES in excess of [ ];
provided that, for purposes of this Paragraph, achievement of the NET SALES
thresholds recited above shall be determined by adding the total annual NET
SALES in all countries of the TERRITORY in which there is [
].
4.03 In further consideration for the license under PRODUCT KNOW-HOW
granted to SB under the AGREEMENT, royalties on annual NET SALES in those
countries of the TERRITORY which are not subject to the royalty obligation
outlined in Paragraph 4.02 shall be calculated separately for each annual
period, on a [ ] basis, at [ ] royalty rate paid for the
same PRODUCT under Paragraph 4.02 for the same annual period, provided that
royalty obligations under this Paragraph in each country of the TERRITORY shall
expire upon the [ ] anniversary of the date of PRODUCT availability for
commercial sale by SB, its AFFILIATES, or its sublicensees in such country.
4.04 SB's royalty obligations under Paragraph 4.02 shall become effective
in each country in the TERRITORY at such time as a particular PRODUCT is
launched and available for commercial sale in such country by or on behalf of
SB, its AFFILIATES, or its sublicensees and [
]. In the event that in any particular country of the
TERRITORY there are NET SALES during the time in which there is a [
] in such country, and such [
], SB shall pay to ARRIS, within [ ] after issuance,
royalties on such NET SALES in accordance with Paragraph 4.02 less any royalties
on such NET SALES already paid to ARRIS under Paragraph 4.03, provided that in
the event there was [
] during any [ ],
the royalty differential owed by SB to ARRIS shall be [ ] such that it
shall be owed only for the period of time [
]. Notwithstanding the above, in
the event that any person or party initiates any legal or administrative
proceeding challenging the validity, scope or enforceability of an ISSUED
PRODUCT PATENT in any country in the TERRITORY, such as by opposing the grant of
the ISSUED PRODUCT PATENT in the European Patent Office, and in the event such
challenge were successful there would be no ISSUED PRODUCT PATENT claiming the
PRODUCT in such country, then such royalty obligation on NET SALES in such
country outlined in Paragraph 4.02 shall be [
]. If the enforceability of at least one
claim in the ISSUED PRODUCT PATENT claiming the PRODUCT is upheld by a court or
other legal
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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or administrative tribunal from which no appeal is or can be taken,
and there are no other ISSUED PRODUCT PATENTS which claim the PRODUCT in such
country, then the amount of royalties [
]. If the claims in the ISSUED PRODUCT PATENT are
held to be invalid or otherwise unenforceable by a court or other legal
or administrative tribunal from which no appeal is or can be taken, then the
amount of royalties [
].
4.05 (a) In the event that a THIRD PARTY or ARRIS makes a PUBLIC
DISCLOSURE prior to the expiration of [ ] after the
commencement of the RESEARCH PHASE, and SB elects to terminate further
funding of the RESEARCH in accordance with Paragraph 2.04, SB shall pay the
following percentage of the milestone payments and royalties outlined in
Article 4 with respect to any PRODUCT [
] the time periods set
forth below:
Timing After PUBLIC DISCLOSURE Milestone and Royalty Percentage
--------------------------------
Within [ [ ]
]
After [ ] but prior to [ [ ]
]
(b) In the event that a THIRD PARTY or ARRIS makes a PUBLIC
DISCLOSURE after the expiration of [ ] after the
commencement of the RESEARCH PHASE, and SB elects to terminate further funding
of the RESEARCH in accordance with Paragraph 2.04, SB shall pay the following
percentage of the milestone payments and royalties outlined in Article 4 with
respect to any PRODUCT [
] the time periods set forth below:
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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Timing After PUBLIC DISCLOSURE Milestone and Royalty Percentage
--------------------------------
Within [ [ ]
]
After [ [ ]
]
(c) In the event that a THIRD PARTY or ARRIS makes a PUBLIC
DISCLOSURE prior to the expiration of [ ] after the
commencement of the RESEARCH PHASE, and SB elects not to terminate further
funding of the RESEARCH in accordance with Paragraph 2.04, SB shall pay the
following percentage of the milestone payments and royalties outlined in Article
4 with respect to any PRODUCT [
] the time periods set forth below:
Timing After PUBLIC DISCLOSURE Milestone and Royalty Percentage
--------------------------------
Within [ [ ]
]
After [ [ ]
]
(d) In the event that a THIRD PARTY or ARRIS makes a PUBLIC
DISCLOSURE after the expiration of [ ] after the
commencement of the RESEARCH PHASE, and SB elects not to terminate further
funding of the RESEARCH in accordance with Paragraph 2.04, SB shall pay the
following percentage of the milestone payments and royalties outlined in Article
4 with respect to any PRODUCT [
] the time periods set forth below
Timing After PUBLIC DISCLOSURE Milestone and Royalty Percentage
------------------------------ --------------------------------
Within [ [ ]
]
After [ [ ]
]
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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4.06 Determination of royalties for the sale of COMBINATION PRODUCT by SB
shall be mutually agreed upon, in good faith, by the parties.
4.07 Royalties on NET SALES for veterinary use, diagnostic use or any
other use other than a human ethical pharmaceutical use shall be calculated
separately at [ ] the royalty rates set forth in Paragraphs 4.02, 4.03
and 4.05.
5. COMPULSORY LICENSES AND THIRD PARTY LICENSES
5.01 In the event that a governmental agency in any country or territory
grants or compels ARRIS to grant a license to any THIRD PARTY for PRODUCT, SB
shall have the benefit in such country or territory of the terms granted to such
THIRD PARTY to the extent that such terms are more favorable to the THIRD PARTY
than those of this AGREEMENT.
5.02 If, during the term of this AGREEMENT, SB, in its sole reasonable
discretion, deems it necessary to seek a license from any THIRD PARTY in order
to avoid infringement of such THIRD PARTY's intellectual property rights during
the exercise of the license herein granted hereunder related to DELTA FACTOR
TECHNOLOGY, DELTA FACTOR COMPOUND, COLLABORATION COMPOUND, or PRODUCT, [
] of any royalties or other fees
paid to such THIRD PARTY under such license may be deducted from royalties
otherwise due ARRIS under this Agreement, [
].
6. DEVELOPMENT
6.01 SB shall have full control, authority and responsibility for the
development of PRODUCT within the TERRITORY, including, but not limited to, the
selection of any PRODUCT for development or the termination of any PRODUCT's
development and commercialization thereof. Attainment and maintenance of
regulatory approvals and price registrations for PRODUCT within the TERRITORY
shall also be the sole responsibility of SB.
6.02 SB will exercise its reasonable efforts and diligence in
development, registration and commercialization of any PRODUCT selected for
development in accordance with SB's business, legal, medical and scientific
judgment and SB's normal practices and procedures for compounds having similar
technical and commercial potential. All such activity shall be undertaken at
SB's expense.
6.03 SB shall keep ARRIS reasonably informed, on a semi-annual basis, of
the progress of SB's efforts to develop and commercialize PRODUCT in the
TERRITORY. In addition, SB shall promptly provide additional summary
information to ARRIS in response to ARRIS' reasonable request for additional
information on SB's efforts in this regard.
7. TERM AND TERMINATION
7.01 Unless otherwise terminated, this AGREEMENT shall expire upon the
later of (a) the expiration, lapse or invalidation of the last remaining PRODUCT
PATENT and SB PRODUCT PATENT which claims PRODUCT; or (b) [ ] from
the date of first
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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marketing in the last country in the TERRITORY in which a PRODUCT is marketed by
SB. Expiration of the AGREEMENT under this provision shall not preclude SB from
continuing to market PRODUCT and to use PRODUCT KNOW-HOW in the TERRITORY
without further royalty payments or any other remuneration to ARRIS.
7.02 (a) SB's royalty obligations for a particular PRODUCT under
Paragraph 4.02 in each country of the TERRITORY [
]. Expiration of SB's
royalty obligations under Paragraph 4.02 for a particular PRODUCT under this
provision shall not preclude SB from continuing to market such PRODUCT and to
use PRODUCT KNOW-HOW in such country without further royalty payments or any
other remuneration to ARRIS, except to the extent that Paragraph 4.03 is still
applicable to the NET SALES of the particular PRODUCT in the particular country.
(b) SB's royalty obligations for a particular PRODUCT under
Paragraph 4.03 in each country of the TERRITORY shall commence upon the date of
first marketing of such PRODUCT in such country and shall expire upon the
expiration of [ ] from the date of first marketing of such
PRODUCT in such country. Expiration of SB's royalty obligations for a
particular PRODUCT under this provision shall not preclude SB from continuing to
market such PRODUCT and to use PRODUCT KNOW-HOW in such country without further
royalty payments or any other remuneration to ARRIS.
7.03 If either party materially fails or neglects to perform its
obligations set forth in this AGREEMENT and if such default is not corrected
within sixty (60) days after receiving written notice from the other party with
respect to such default, such other party shall have the right to terminate this
AGREEMENT by giving written notice to the party in default provided the notice
of termination is given within six (6) months of the default and prior to
correction of the default.
7.04 SB may terminate this AGREEMENT with respect to any country in the
TERRITORY by giving ARRIS at least [ ] written notice thereof based on a
reasonable determination by SB, using the same standards SB would use in
assessing whether or not to continue development and marketing of a product of
its own making, that the patent, medical/scientific, technical, regulatory or
commercial profile of every PRODUCT does not justify continued development or
marketing of any PRODUCT in such country, provided that the earliest such
termination can be effective shall be [ ] after the
commencement of the RESEARCH PHASE, except as otherwise provided in Paragraphs
2.02, 2.03, 20.01 or Article 7. Termination of this AGREEMENT with respect to
any country in the TERRITORY under this provision shall terminate all licenses
granted to SB in such country under Article 3 with full reversion to ARRIS of
all ARRIS' interest and rights in PRODUCT PATENTS and PRODUCT KNOW-HOW in such
country. Termination of this AGREEMENT with respect to all countries shall
effectively terminate this AGREEMENT.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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7.05 Either party may terminate this AGREEMENT if, at any time, the other
party shall file in any court or agency pursuant to any statute or regulation of
any state or country, a petition in bankruptcy or insolvency or for
reorganization or for an arrangement or for the appointment of a receiver or
trustee of the party or of its assets, or if the other party proposes a written
agreement of composition or extension of its debts, or if the other party shall
be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if the other party shall propose or be a party to
any dissolution or liquidation, or if the other party shall make an assignment
for the benefit of creditors.
7.06 Notwithstanding the bankruptcy of ARRIS, or the impairment of
performance by ARRIS of its obligations under this AGREEMENT as a result of
bankruptcy or insolvency of ARRIS, SB shall be entitled to retain the licenses
granted herein, subject to ARRIS' rights
to terminate this AGREEMENT for reasons other than bankruptcy or insolvency as
expressly provided in this AGREEMENT, and subject to performance by SB of its
preexisting obligations under this AGREEMENT.
7.07 All rights and licenses granted under or pursuant to this AGREEMENT
by ARRIS to SB, are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the U.S. Bankruptcy Code, licenses of rights to "intellectual
property" as defined under Section 101(52) of the U.S. Bankruptcy Code. The
parties agree that SB, as a licensee of such rights under this AGREEMENT, shall
retain and may fully exercise all of its rights and elections under the U.S.
Bankruptcy Code, subject to performance by SB of its preexisting obligations
under this AGREEMENT. The parties further agree that, in the event of the
commencement of a bankruptcy proceeding by or against ARRIS under the U.S.
Bankruptcy Code, SB shall be entitled to a complete duplicate of (or complete
access to, as appropriate) any such intellectual property and all embodiments of
such intellectual property, and same, if not already in its possession, shall be
promptly delivered to SB (a) upon any such commencement of a bankruptcy
proceeding upon written request therefor by SB, unless ARRIS elects to continue
to perform all of its obligations under this AGREEMENT, or (b) if not delivered
under (a) above, upon the rejection of this AGREEMENT by or on behalf of ARRIS
upon written request therefor by SB, provided, however, that upon ARRIS' (or its
successor's) written notification to SB that it is again willing and able to
perform all of its obligations under this AGREEMENT, SB shall promptly return
all such tangible materials to ARRIS, but only to the extent that SB does not
require continued access to such materials to enable SB to perform its
obligations under this AGREEMENT.
7.08 SB may terminate the AGREEMENT as provided in Paragraph 2.02 or
Paragraph 2.03(a) or Paragraph 20.01 in accordance with the provisions thereof.
8. RIGHTS AND DUTIES UPON TERMINATION
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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8.01 Upon termination of this AGREEMENT, ARRIS shall have the right to
retain any sums already paid by SB hereunder, and SB shall pay all sums accrued
hereunder which are then due.
8.02 Upon termination of this AGREEMENT in its entirety or with respect
to any country under Article 7, SB shall notify ARRIS of the amount of PRODUCT
SB and its sublicensees and distributors then have on hand, the sale of which
would, but for the termination, be subject to royalty, and SB and its
sublicensees and distributors shall thereupon be permitted to sell that amount
of PRODUCT provided that SB shall pay the royalty thereon at the time herein
provided for.
8.03 Termination or expiration of this AGREEMENT shall terminate all
obligations and rights between the parties arising from this AGREEMENT except
those described in Paragraphs 2.02(a)(1)(ii)-(iii), 2.02(a)(2)(ii)-(iii),
2.02(a)(3)(ii)-(iii), 2.02(b)(i) (for the time period provided therein),
2.02(b)(iii), 2.02(b)(v) (for the time period provided therein), 2.02(b)(vi)
(for the time period provided therein), 2.02(b)(vii)(b)-(c), 2.02(c)(ii),
2.02(c)(iv), 2.03(a)(i), 2.03(a)(ii), 2.05 (last sentence), 2.06, 3.05, 7.08
(last sentence), 9.02 (for the time period provided therein), 9.03, 9.04, 9.05,
9.06, 10.01(a) (first sentence), 10.01(b) (first sentence), 10.02, 10.03, 10.04,
10.05, 10.06, 10.08, 10.09, and Articles 8, and 11-21, as well as any other
provision which, by its terms, is stated to survive the termination or
expiration of this AGREEMENT. In addition, any other provision required to
interpret and enforce the parties' rights and obligations under this
AGREEMENT also shall survive to the extent required for the full observation and
performance of this AGREEMENT by the parties hereto. Except as otherwise
expressly set forth in this AGREEMENT, termination of this AGREEMENT shall [
].
8.04 Termination of this AGREEMENT under Paragraph 7.03 for a default by
ARRIS shall terminate SB's obligation to make any remaining payments required by
Articles 2 and 4 for the period effective as of the date ARRIS received written
notice from SB with respect to such default if after the elapse of sixty (60)
days from receipt of such notice such default is not corrected. Termination of
this AGREEMENT with respect to all countries of the TERRITORY under Paragraph
7.04 shall terminate SB's obligation to make any remaining payments required by
Article 4 for the period after the effective date of termination.
8.05 If, as a result of the happening of any event described in Paragraph
7.05 above, any tangible or intangible asset owned by ARRIS relating to PRODUCT
(e.g., intellectual property) is offered for sale or license, in addition to
other remedies in law or equity which may be available to SB, SB shall have a
right of first refusal with respect to the asset, with the proviso that, to the
extent the asset also relates to subject matter other than PRODUCT, SB's right
of first refusal shall extend only to so much of the asset as relates to
PRODUCT.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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8.06 All rights to terminate, and rights upon termination, provided for
either party in this AGREEMENT are in addition to other remedies in law or
equity which may be available to either party.
8.07 In the event that SB shall terminate all research and development
efforts which are being conducted by or on behalf of SB under the AGREEMENT
related to [
], SB shall grant ARRIS an exclusive license, with the right
to grant sublicenses, to the extent of SB's rights and interests, [
], any COLLABORATION COMPOUND [
], provided that nothing in this provision
shall be construed to require SB to transfer any such know-how to ARRIS, and
further provided that such license shall not apply to [
]. ARRIS shall be free to exclusively
screen such COLLABORATION COMPOUND using any technology for
[ ] provided that, to the extent ARRIS is legally able to do
so, SB shall [
] or composition of
matter derived therefrom, in the event that ARRIS should elect to license such
COLLABORATION COMPOUND, or composition of matter derived therefrom, for [
] other than the treatment or prophylaxis of infection by [
], upon such terms as the parties may mutually
agree upon in good faith. In the event that SB shall determine it does not want
to [ ] or in the event that the parties
cannot agree on terms within [
] of commencing negotiations, (a) ARRIS shall be free to license
such COLLABORATION COMPOUND, or composition of matter derived therefrom, to any
third party, provided that SB shall be entitled to [
] of all such milestone payments, royalties or other compensation that
ARRIS shall receive from such third party as a result of such license to the
extent that such milestone payments, royalties or other compensation is directly
related to such COLLABORATION COMPOUND or composition of matter derived
therefrom, and/or (b) ARRIS shall be free to market such COLLABORATION COMPOUND,
or composition of matter derived therefrom, by itself, in which event SB shall
be entitled to [
] of the royalty payments outlined in Paragraphs
4.02, 4.06, and 4.07 with respect to net sales of such COLLABORATION COMPOUND,
or composition of matter derived therefrom by ARRIS or its AFFILIATES in the
TERRITORY. ARRIS warrants and represents that it will [
] for the
purpose of [
]. In the event that ARRIS is not legally able to grant SB such first
right because a third party has a superseding right to such COLLABORATION
COMPOUND or composition of matter derived therefrom, SB shall be entitled to [
] of all remuneration that ARRIS shall receive from
such third party for such rights to the extent that such remuneration is
directly related to
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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such COLLABORATION COMPOUND or composition of matter derived therefrom, provided
that ARRIS warrants and represents that it will [
].
9. EXCHANGE OF INFORMATION AND CONFIDENTIALITY
9.01 Promptly after the EFFECTIVE DATE, and during the term of the
PROOF OF CONCEPT PHASE or the RESEARCH PHASE, and for [ ]
after the end of the term of the PROOF OF CONCEPT PHASE or the RESEARCH
PHASE, each party shall disclose to the other and/or supply the other with
DELTA FACTOR KNOW-HOW and information concerning the identification of
COLLABORATION COMPOUNDS. During the term of the AGREEMENT, ARRIS shall
promptly disclose to SB and/or supply SB with any PRODUCT KNOW-HOW which is
or may become known to ARRIS.
9.02 Following termination or expiration of the RESEARCH, irrespective of
any termination earlier than the expiration of this AGREEMENT, and except as
otherwise provided in Article 2, Paragraph 3.04, Paragraph 8.07, or any other
provision of this AGREEMENT, ARRIS and SB shall not be entitled to use, reveal
and disclose with and to THIRD PARTIES any information received from the other
party or otherwise developed by either party in the performance of activities
in furtherance of this AGREEMENT without first obtaining the written consent of
the party which originally disclosed the information. Notwithstanding the
preceding sentence, during the term of this AGREEMENT and for five (5) years
thereafter, irrespective of any termination earlier than the expiration of the
term of this AGREEMENT, ARRIS and SB shall not use or reveal or disclose to
THIRD PARTIES any information received from the other party or otherwise
developed by either party in the performance of activities in furtherance of
this AGREEMENT which relates directly to a PRODUCT that the other party has in
development or is commercializing without first obtaining the written consent of
the party which originally disclosed the information, except as may be otherwise
provided herein, or as may be required for purposes of investigating,
developing, manufacturing or marketing PRODUCT or for securing essential or
desirable authorizations, privileges or rights from governmental agencies, or is
required to be disclosed to a governmental agency or is necessary to file or
prosecute patent applications concerning PRODUCT or to carry out any litigation
concerning PRODUCT. This confidentiality obligation shall not apply to such
information which is or becomes a matter of public knowledge through no act or
omission of the receiving party, or is already in the possession of the
receiving party, or is disclosed to the receiving party by a THIRD PARTY having
the right to do so, or is subsequently and independently developed by employees
of the receiving party or AFFILIATES thereof who had no knowledge of the
confidential information disclosed. The parties shall take reasonable measures
to assure that no unauthorized use or disclosure is made by others to whom
access to such information is granted.
9.03 Nothing herein shall be construed as preventing a receiving party
from disclosing any information received from the other party to an AFFILIATE,
sublicensee or distributor of the
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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receiving party, provided such AFFILIATE, sublicensee or distributor has
undertaken, in writing, a similar obligation of confidentiality with respect to
the confidential information.
9.04 All confidential information disclosed by one party to the other
shall remain the intellectual property of the disclosing party. In the event
that a court or other legal or administrative tribunal, directly or through an
appointed master, trustee or receiver, assumes partial or complete control over
the assets of a party to this AGREEMENT based on the insolvency or bankruptcy of
such party, the bankrupt or insolvent party shall promptly notify the court or
other tribunal (a) that confidential information received from the other party
under this AGREEMENT remains the property of the other party and (b) of the
confidentiality obligations under this AGREEMENT. In addition, the bankrupt or
insolvent party shall, to the extent permitted by law, take all steps necessary
or desirable to maintain the confidentiality of the other party's confidential
information and to insure that the court, other tribunal or appointee maintains
such information in confidence in accordance with the terms of this AGREEMENT.
9.05 No public announcement or other disclosure to THIRD PARTIES
concerning the existence of or terms of this AGREEMENT shall be made, either
directly or indirectly, by any party to this AGREEMENT, except as may be legally
required or as may be required for recording purposes, without first obtaining
the approval of the other party and agreement upon the nature and text of such
announcement or disclosure. The party desiring to make any such public
announcement or other disclosure shall inform the other party of the proposed
announcement or disclosure in reasonably sufficient time prior to public
release, and shall provide the other party with a written copy thereof, in
order to allow such other party to comment upon such announcement or disclosure.
Each party agrees that it shall cooperate fully with the other with respect to
all disclosures regarding this AGREEMENT to the Securities Exchange Commission
and any other governmental or regulatory agencies, including requests for
confidential treatment of proprietary information of either party included in
any such disclosure.
9.06 Neither SB nor ARRIS shall submit for written or oral publication
any manuscript, abstract or the like which includes data or other information
generated and provided by the other party or developed by either party in
furtherance of the RESEARCH without first obtaining the prior written consent of
the other party, which consent shall not be unreasonably withheld. ARRIS shall
not submit for written or oral publication any manuscript, abstract or the like
which includes data or other information related to PRODUCT without first
obtaining the prior written consent of SB, which consent shall not be
unreasonably withheld. The contribution of each party shall be noted in all
publications or presentations by acknowledgment or coauthorship, whichever is
appropriate.
9.07 Nothing in this AGREEMENT shall be construed as preventing or in any
way inhibiting SB or ARRIS from complying with statutory and regulatory
requirements governing the development, manufacture, use and sale or other
distribution of PRODUCT in any manner which it reasonably deems appropriate,
including, for example, by disclosing to regulatory authorities confidential or
other information received from the other party or THIRD PARTIES.
[]= Confidential Treatment Requested
33.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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10. INVENTIONS, PATENTS AND PATENT LITIGATION
10.01 (a) ARRIS warrants that, as of the EFFECTIVE DATE, it has disclosed
to SB the complete texts of all DELTA FACTOR PATENTS and PRODUCT PATENTS, if
any, filed by ARRIS prior to the EFFECTIVE DATE, as well as all information
received concerning the institution or possible institution of any interference,
opposition, re-examination, reissue, revocation, nullification or any official
proceeding involving a DELTA FACTOR PATENT or PRODUCT PATENT anywhere in the
TERRITORY. SB shall have the right to review all such DELTA FACTOR PATENTS and
PRODUCT PATENTS and all proceedings related thereto and make recommendations to
ARRIS concerning them and their conduct. ARRIS agrees to keep SB promptly and
fully informed of the course of patent prosecution or other proceedings of such
DELTA FACTOR PATENTS and PRODUCT PATENTS including, without limitation,
providing SB with copies of substantive communications, search reports and THIRD
PARTY observations submitted to or received from patent offices within the
TERRITORY. SB shall provide such patent consultation to ARRIS related to such
DELTA FACTOR PATENTS and PRODUCT PATENTS at no cost to ARRIS.
(b) SB shall hold all information disclosed to it under this section
as confidential subject to the provisions of Article 9. SB shall have the right
to assume responsibility for any such DELTA FACTOR PATENT or PRODUCT PATENT or
any part of any such DELTA FACTOR PATENT or PRODUCT PATENT which ARRIS intends
to abandon or otherwise cause or allow to be forfeited provided that the claims
of such PRODUCT PATENT covers PRODUCT.
10.02 Each party shall have and retain sole and exclusive title to all
inventions, discoveries and know-how which are made, conceived, reduced to
practice or generated by its employees, agents, or other persons acting under
its authority in the course of or as a result of this AGREEMENT. Each party
shall own a [ ] percent ([ ]) undivided interest in all such inventions,
discoveries and know-how made, conceived, reduced to practice or generated
jointly by employees, agents, or other persons acting under the authority of
both parties in the course of or as a result of this AGREEMENT. Except as
expressly provided in this AGREEMENT, each joint owner may make, use, sell,
keep, license, assign, or mortgage such jointly owned inventions, discoveries
and know-how, and otherwise undertake all activities a sole owner might
undertake with respect to such inventions, discoveries and know-how, without the
consent of and without accounting to the other joint owner.
10.03 Each party shall promptly notify the other upon the making,
conceiving or reducing to practice of any invention or discovery referred to in
Paragraph 10.02. With respect to any such invention,
(i) SB shall have the first right, using in-house or outside
legal counsel selected at SB's sole discretion, to prepare, file, prosecute,
maintain and extend patent applications and patents concerning all such
inventions and discoveries owned in whole by SB or jointly by SB and ARRIS in
countries of SB's choice throughout the world with appropriate credit to ARRIS
representatives, including the naming of such parties as inventors where
[]= Confidential Treatment Requested
34.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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appropriate and in accordance with the relevant legal requirements, for which SB
shall bear the costs relating to such activities which occur at SB's request or
direction. SB shall solicit ARRIS' advice and review of the nature and text of
any such patent applications which are related to DELTA FACTOR TECHNOLOGY and
important prosecution matters related thereto in reasonably sufficient time
prior to filing thereof, and SB shall take into account ARRIS' reasonable
comments related thereto.
(ii) ARRIS shall have the first right, using in-house or outside
legal counsel selected at ARRIS' sole discretion, to prepare, file, prosecute,
maintain and extend patent applications and patents concerning all such
inventions and discoveries owned in whole by ARRIS in countries of ARRIS' choice
throughout the world, for which ARRIS shall bear the costs. ARRIS shall solicit
SB's advice and review of the nature and text of such patent applications and
important prosecution matters related thereto in reasonably sufficient time
prior to filing thereof, and ARRIS shall take into account SB's reasonable
comments related thereto.
(iii) If SB, prior or subsequent to filing certain patent
applications on any inventions or discoveries which are owned in whole or in
part by ARRIS, elects not to file, prosecute or maintain such patent
applications or ensuing patents or certain claims encompassed by such patent
applications or ensuing patents in any country of the TERRITORY, SB shall give
ARRIS notice thereof within a reasonable period prior to allowing such patent
applications or patents or such certain claims encompassed by such patent
applications or patents to lapse or become abandoned or unenforceable, and ARRIS
shall thereafter have the right, at its sole expense, to prepare, file,
prosecute and maintain patent applications and patents or divisional
applications related to such certain claims encompassed by such patent
applications or patents concerning all such inventions and discoveries in
countries of its choice throughout the world.
(iv) If ARRIS, prior or subsequent to filing certain patent
applications on any inventions or discoveries which are owned in whole by ARRIS,
elects not to file, prosecute or maintain such patent applications or ensuing
patents or certain claims encompassed by such patent applications or ensuing
patents in any country of the TERRITORY, ARRIS shall give SB notice thereof
within a reasonable period prior to allowing such patent applications or patents
or such certain claims encompassed by such patent applications or patents to
lapse or become abandoned or unenforceable, and SB shall thereafter have the
right, at its sole expense, to prepare, file, prosecute and maintain patent
applications and patents or divisional applications related to such certain
claims encompassed by such patent applications or patents concerning all such
inventions and discoveries in countries of its choice throughout the world.
(v) The party filing patent applications for jointly owned
inventions and discoveries shall do so in the name of and on behalf of both SB
and ARRIS. Each of ARRIS and SB shall hold all information it presently knows
or acquires under this Paragraph 10.03 which is related to all such patents and
patent applications as confidential subject to the provisions of Article 9.
10.04 Each party on behalf of itself and its AFFILIATES, and the
directors, employees, officers, shareholders, agents, successors and assigns of
any of them, hereby waives any and all
35.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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actions and causes of action, claims and demands whatsoever, in law or equity of
any kind it or they may have against the other party and its AFFILIATES, and
their officers, directors, employees, shareholders, agents, successors and
assigns, which may arise in any way except as a result of the other party's
gross negligence, recklessness, or willful misconduct in the performance of its
rights under Paragraph 10.03.
10.05 Notwithstanding the provisions of Paragraph 10.03, each party shall,
at its own expense, provide reasonable assistance to the other party to
facilitate filing of all patent applications covering inventions referred to in
Paragraph 10.02 and shall execute all documents deemed necessary or desirable
therefor.
10.06 In the event of the institution of any suit by a THIRD PARTY against
ARRIS, SB, an AFFILIATE, and/or their sublicensees for patent infringement
involving the manufacture, use, sale, distribution or marketing of PRODUCT
anywhere in the TERRITORY, the party sued shall promptly notify the other party
in writing. SB shall have the right but not the obligation to defend such suit
at its own expense. If SB does not commence a defense of such suit by [
], ARRIS, after notifying SB in writing, shall be entitled to
defend such suit at ARRIS' expense. ARRIS and SB shall assist one another and
cooperate in any such litigation at the other's reasonable request without
expense to the requesting party.
10.07 In the event that ARRIS or SB becomes aware of actual or threatened
infringement of a PRODUCT PATENT related to PRODUCT, anywhere in the TERRITORY,
that party shall promptly notify the other party in writing. SB shall have the
first right but not the obligation to bring, at its own expense, an infringement
action or file any other appropriate action or claim directly related to
infringement of a PRODUCT PATENT, wherein such infringement relates to PRODUCT,
against any THIRD PARTY and to use ARRIS' name in connection therewith and to
include ARRIS' name as a party thereto. If SB does not commence a particular
infringement action within ninety (90) days after it received such written
notice, ARRIS after notifying SB in writing, shall be entitled to bring such
infringement action or any other appropriate action or claim at its own expense
and to use SB's name in connection therewith. The party conducting such action
shall have full control over its conduct, including settlement thereof, subject
to Paragraph 10.09. In any event, ARRIS and SB shall assist one another and
cooperate in any such litigation at the other's request without expense to the
requesting party.
10.08 ARRIS and SB shall recover their respective actual out-of-pocket
expenses, or equitable proportions thereof, associated with any litigation or
settlement thereof from any recovery made by any party. Any excess amount shall
be [
].
10.09 The parties shall keep one another informed of the status of and of
their respective activities regarding any litigation or settlement thereof
concerning PRODUCT, provided
[]= Confidential Treatment Requested
36.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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however that no settlement or consent judgment or other voluntary final
disposition of any suit defended or action brought by a party pursuant to this
Article 10 may be entered into without the consent of the other party if such
settlement would require the other party to be subject to an injunction or to
make a monetary payment or would otherwise adversely affect the other party's
rights under this AGREEMENT.
10.10 SB shall have the right but not the obligation to seek extensions of
the terms of PRODUCT PATENTS. At SB's request, ARRIS shall either authorize SB
to act as ARRIS' agent for the purpose of making any application for any
extensions of the term of PATENTS and provide reasonable assistance therefor to
SB or shall diligently seek to obtain such extensions, in either event, at SB's
expense.
10.11 At SB's request, ARRIS shall seek to obtain SPCS based on PRODUCT
PATENTS or authorize SB to obtain SPCS based on PRODUCT PATENTS on ARRIS'
behalf. Where SB holds a relevant Marketing Authorization, SB shall at its sole
discretion provide to ARRIS a copy of said Marketing Authorization and any
information necessary for the purpose of obtaining an SPC based on a PRODUCT
PATENT.
10.12 At SB's request, ARRIS shall cooperate with SB to obtain "pipeline"
protection for PRODUCT PATENTS which may be available under the patent laws of
countries the patent laws of which are amended to provide improved protection
for PRODUCT.
11. TRADEMARKS AND NON-PROPRIETARY NAMES
11.01 SB shall be responsible for the selection of all trademarks which it
employs in connection with PRODUCT in the TERRITORY and shall own and control
such trademarks. SB shall be responsible for registration and maintenance of
all such trademarks. Nothing in this AGREEMENT shall be construed as a grant of
rights, by license or otherwise, to ARRIS to use such trademarks or any other
trademarks owned by SB for any purpose. SB shall own such tradenames and
trademarks and shall retain such ownership upon termination or expiration of
this AGREEMENT.
11.02 SB, at its expense, shall be responsible for the selection and
registration of non-proprietary names for PRODUCT in the TERRITORY.
12. STATEMENTS AND REMITTANCES
12.01 SB shall keep and require its AFFILIATES and sublicensees to keep
complete and accurate records of all gross invoices and NET SALES of PRODUCT
under the licenses granted herein. ARRIS shall have the right, at ARRIS'
expense, through a certified public accountant or like person reasonably
acceptable to SB, to examine such records during regular business hours during
the life of this AGREEMENT and for six (6) months after its termination;
provided, however, that such examination shall not take place more often than
once a year and shall not cover such records for more than the preceding [
] and provided further that such accountant shall report to ARRIS only as
to the accuracy of the royalty statements and payments.
[]= Confidential Treatment Requested
37.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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12.02 Within [ ] after the close of each calendar quarter, SB
shall deliver to ARRIS a true accounting of all PRODUCT sold by SB, its
AFFILIATES, and its sublicensees during such quarter and shall at the same time
pay all royalties due. Such accounting shall show sales on a country-by-country
and PRODUCT-by-PRODUCT basis.
12.03 Any tax, duty or other levy paid or required to be withheld by SB on
account of royalties payable to ARRIS under this AGREEMENT shall be deducted
from the amount of royalties otherwise due. SB shall secure and send to ARRIS
proof of any such taxes, duties or other levies withheld and paid by SB or its
sublicensees for the benefit of ARRIS.
12.04 All royalties due under this AGREEMENT shall be payable in U.S.
dollars. If governmental regulations prevent remittances from a foreign country
with respect to sales made in that country, the obligation of SB to pay
royalties on sales in that country shall be suspended until such remittances are
possible. ARRIS shall have the right, upon giving written notice to SB, to
receive payment in that country in local currency.
12.05 Monetary conversion from the currency of a foreign country, in which
PRODUCT is sold, into United States currency shall be calculated at the actual
average rates of exchange for the year to date as used by SB in producing its
quarterly and annual accounts, as confirmed by SB's auditors.
13. WARRANTIES AND REPRESENTATIONS
13.01 As of the EFFECTIVE DATE, ARRIS warrants and represents that, to
the best of its belief and knowledge, it owns the entire right and title
interest in DELTA FACTOR PATENTS, DELTA FACTOR KNOW-HOW, PRODUCT PATENTS, and
PRODUCT KNOW-HOW, or otherwise has the right to grant the license outlined in
Article 3 with respect to DELTA FACTOR PATENTS, DELTA FACTOR KNOW-HOW,
PRODUCT PATENTS, and PRODUCT KNOW-HOW, and has the right to enter into this
AGREEMENT. ARRIS further warrants and represents that there is nothing in
any THIRD PARTY agreement ARRIS has entered into as of the EFFECTIVE DATE,
including, but not limited to, any such agreement between ARRIS and the
Regents of the University of California, or between ARRIS and [
], which, in any way, will limit ARRIS' ability to perform all of
the obligations undertaken by ARRIS hereunder. ARRIS further warrants and
represents that there is nothing in any agreement ARRIS has entered into as of
the EFFECTIVE DATE with [
] any rights to any compounds owned by ARRIS which are prepared by
ARRIS in furtherance of any such agreement which compounds do not inhibit [
]. ARRIS further warrants and represents that the Regents of the
University of California, a corporation organized under the laws of the state of
California, and having its statewide administrative offices at 300 Lakeside
Drive, 22nd Floor, Oakland, California, 94612-3550, U.S.A. (hereinafter
"Regents"), has authorized ARRIS, or ARRIS is otherwise permitted, to sublicense
to SB, to the extent outlined in this AGREEMENT, all DELTA FACTOR PATENTS, DELTA
FACTOR KNOW-HOW, PRODUCT PATENTS and PRODUCT KNOW-HOW which were licensed to
ARRIS under the
[]= Confidential Treatment Requested
38.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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terms of the Exclusive License Agreement between ARRIS and the Regents dated
February 27, 1995. ARRIS warrants and represents that it:
(a) shall pay all royalties and other payments which ARRIS may owe
to the Regents, and any other THIRD PARTY by virtue of this AGREEMENT, and shall
perform and observe all of the other obligations outlined in all present and
future agreements between ARRIS and the Regents, and any other THIRD PARTY
related to such DELTA FACTOR PATENTS, DELTA FACTOR KNOW-HOW, PRODUCT PATENTS and
PRODUCT KNOW-HOW; and
(b) In the event that ARRIS receives notice from the Regents, or any
other such THIRD PARTY, that ARRIS has committed a breach of its obligations
thereto related to such DELTA FACTOR PATENTS, DELTA FACTOR KNOW-HOW, PRODUCT
PATENTS and PRODUCT KNOW-HOW, or if ARRIS anticipates such breach, such as may
give rise to a right by such THIRD PARTY to terminate or otherwise diminish
ARRIS' rights to such DELTA FACTOR PATENTS, DELTA FACTOR KNOW-HOW, PRODUCT
PATENTS and PRODUCT KNOW-HOW, ARRIS shall immediately notify SB of such
situation, and ARRIS shall promptly cure such breach. However, if ARRIS is
unable to cure such breach, ARRIS shall, to the extent possible, permit SB to
cure such breach and to negotiate directly with such THIRD PARTY regarding the
cure of such breach.
13.02 SB warrants and represents that, to the best of its belief and
knowledge, it has the right to enter into this AGREEMENT.
13.03 ARRIS warrants and represents that it has disclosed to SB the
complete texts of all DELTA FACTOR PATENTS and PRODUCT PATENTS, if any, as well
as all information received concerning the institution or possible institution
of any interference, opposition, re-examination, reissue, revocation,
nullification or any official proceeding involving a PRODUCT PATENT anywhere in
the TERRITORY. Nothing in this AGREEMENT shall be construed as a warranty that
DELTA FACTOR PATENTS or PRODUCT PATENTS are valid or enforceable or that their
exercise does not infringe any valid patent rights of THIRD PARTIES. ARRIS
hereby warrants and represents that it has no present knowledge from which it
can be inferred that DELTA FACTOR PATENTS and PRODUCT PATENTS are invalid or
that their exercise would infringe valid patent rights of THIRD PARTIES. A
holding of invalidity or unenforceability of any PRODUCT PATENT, from which no
further appeal is or can be taken, shall not affect any obligation already
accrued hereunder, except as otherwise provided by Paragraph 4.04.
13.04 ARRIS acknowledges that, in entering into this AGREEMENT, SB has
relied upon information supplied by ARRIS and information which ARRIS has caused
to be supplied to SB by ARRIS' agents and/or representatives, pursuant to that
certain Confidentiality Agreement, dated June 20, 1995, between the parties,
(all of such information being hereinafter referred to collectively as "Delta
Factor Technology Information") and ARRIS warrants and represents that, to the
best of its belief and knowledge, the Delta Factor Technology Information is
timely and accurate in all material respects. ARRIS further warrants and
represents that to the best of its knowledge, it has not, up through and
including the EFFECTIVE DATE, omitted to
39.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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furnish SB with any information available to ARRIS concerning Delta Factor
Technology Information or the transactions contemplated by this AGREEMENT, which
would be material to SB's decision to enter into this AGREEMENT and to undertake
the commitments and obligations set forth herein.
14. FORCE MAJEURE
14.01 If the performance of any part of this AGREEMENT by either party, or
of any obligation under this AGREEMENT, is prevented, restricted, interfered
with or delayed by reason of any cause beyond the reasonable control of the
party liable to perform, unless conclusive evidence to the contrary is provided,
the party so affected shall, upon giving written notice to the other party, be
excused from such performance to the extent of such prevention, restriction,
interference or delay, provided that the affected party shall use its reasonable
best efforts to avoid or remove such causes of non-performance and shall
continue performance with the utmost dispatch whenever such causes are removed.
When such circumstances arise, the parties shall discuss what, if any,
modification of the terms of this AGREEMENT may be required in order to arrive
at an equitable solution.
15. GOVERNING LAW
15.01 This AGREEMENT shall be deemed to have been made in the Commonwealth
of Pennsylvania and its form, execution, validity, construction and effect shall
be determined in accordance with the laws of the Commonwealth of Pennsylvania,
U.S.A.
16. DISPUTE RESOLUTION
16.01 Any dispute, controversy or claim arising out of or relating to this
AGREEMENT (hereinafter collectively referred to as "Dispute") shall be attempted
to be settled by the parties, in good faith, by submitting each such Dispute to
appropriate senior management representatives of each party in an effort to
effect a mutually acceptable resolution thereof. In the event no mutually
acceptable resolution is achieved, then each party shall be entitled to seek
relief for such Dispute by using any appropriate mechanism which may be
available, such as, but not limited to, judicial relief.
17. SEPARABILITY
17.01 In the event any portion of this AGREEMENT shall be held illegal,
void or ineffective, the remaining portions shall remain in full force and
effect.
17.02 If any of the terms or provisions of this AGREEMENT are in conflict
with any applicable statute or rule of law, then such terms or provisions shall
be deemed inoperative to the extent that they may conflict therewith and shall
be deemed to be modified to conform with such statute or rule of law.
40.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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17.03 In the event that the terms and conditions of this AGREEMENT are
materially altered as a result of Paragraphs 17.01 or 17.02, the parties will
renegotiate the terms and conditions of this AGREEMENT to resolve any
inequities.
18. ENTIRE AGREEMENT
18.01 This AGREEMENT, entered into as of the EFFECTIVE DATE, constitutes
the entire agreement between the parties relating to the subject matter hereof
and supersedes all previous writings and understandings. No terms or provisions
of this AGREEMENT shall be varied or modified by any prior or subsequent
statement, conduct or act of either of the parties, except that the parties may
amend this AGREEMENT by written instruments specifically referring to and
executed in the same manner as this AGREEMENT.
19. NOTICES
19.01 Any notice required or permitted under this AGREEMENT shall be sent
by air mail, postage pre-paid, to the following addresses of the parties:
ARRIS
Arris Pharmaceutical Corporation
385 Oyster Point Boulevard
Suite 3
South San Francisco, California 94080
Attention: Chief Executive Officer
copy to:
Cooley Godward Castro Huddleson & Tatum
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306-2155
Attention: Robert L. Jones, Esq/Barclay Kamb, Esq.
SB
SMITHKLINE BEECHAM CORPORATION
One Franklin Plaza
P.O. Box 7929
Philadelphia, Pennsylvania 19101
U.S.A.
Attention: Senior Vice President, Worldwide Business Development
41.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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copy to:
SMITHKLINE BEECHAM CORPORATION
One Franklin Plaza
P.O. Box 7929
Philadelphia, Pennsylvania 19101
U.S.A.
Attention: Corporate Law-U.S. (FP2225)
19.02 Any notice required or permitted to be given concerning this
AGREEMENT shall be effective upon receipt by the party to whom it is addressed.
20. ASSIGNMENT
20.01 This AGREEMENT and the licenses herein granted shall be binding upon
and inure to the benefit of the successors in interest of the respective
parties. Neither this AGREEMENT nor any interest hereunder shall be assignable
by either party without the written consent of the other provided, however, that
either party may assign this AGREEMENT or any patent owned by it to any
AFFILIATE, or to any corporation with which it may merge or consolidate or to
which it may transfer all or substantially all of its assets to which this
AGREEMENT relates, without obtaining the consent of the other party.
Notwithstanding the above, in the event that ARRIS is acquired by a THIRD PARTY
during the PROOF OF CONCEPT PHASE or during the term of the RESEARCH PHASE, SB
can, at its discretion, elect to terminate the RESEARCH or the AGREEMENT in
its entirety upon thirty (30) days written notice to ARRIS. In the event of
termination of the [ ] SB shall have [ ] to ARRIS
except with respect to [ ] which [ ] to the effective date of the
termination. In the event of [ ] of the [ ] but not the
[ ], (i) the [ ] under Paragraphs [ ] and [ ] shall [ ]
and [ ]; and (ii) the remaining [ ] under Aricle [ ] shall
survive such [ ]. In the event of [ ] of the [ ],
such [ ] shall [ ] all outstanding [ ] and [ ]
between the parties arising from the AGREEMENT except for any [ ]
which became [ ] to the [ ] of such [ ], except as
otherwise provided in Paragraph [ ]. In the event of [ ] (i)
SB shal have [ ]to make any payments under this AGREEMENT which have
[ ] as of the [ ] of such termination, except as otherwise
provided in Paragraph [ ], (ii) all of the [ ] in Article [ ] shall
immediately [ ] and [ ] but the [ ] under
Paragraph [ ] and Paragraph [ ] shall [ ] and [ ]
and (iii) ARRIS shall have an irrevocable, exclusive right to make, have
made, use and sell, in the FIELD, all COLLABORATION COMPOUNDS in existence as
of the [ ], under a license to any [ ] which
arose as a
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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result of [ ] in furtherance of the AGREEMENT which
[ ].
21. RECORDING
21.01 SB shall have the right, at any time, to record, register, or
otherwise notify this AGREEMENT in appropriate governmental or regulatory
offices anywhere in the TERRITORY, and ARRIS shall provide reasonable assistance
to SB in effecting such recording, registering or notifying.
22. EXECUTION IN COUNTERPARTS
22.01 This AGREEMENT may be executed in any number of counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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IN WITNESS WHEREOF, the parties, through their authorized officers, have
executed this AGREEMENT as of the date first written above.
SMITHKLINE BEECHAM CORPORATION
BY: /s/ Jean-Pierre Garnier, Ph.D.
--------------------------------
Jean-Pierre Garnier, Ph.D.
TITLE: Chief Operating Officer & President, Pharmaceuticals
& Consumer Healthcare
----------------------------------------------------
ARRIS PHARMACEUTICAL CORPORATION
BY: /s/ Daniel H. Petree
---------------------------
TITLE: E.V.P., C.F.O.
------------------------
44.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-ARRIS PHARMACEUTICAL CORPORATION
APPENDIX A-DELTA FACTOR PATENTS AND PRODUCT PATENTS
SERIAL NO. COUNTRY FILING DATE STATUS PATENT
NO.
[
].
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-ARRIS PHARMACEUTICAL CORPORATION
APPENDIX B
DELTA FACTOR COMPOUND STATUS AND
COLLABORATION COMPOUND STATUS CRITERIA
PART 1
DELTA FACTOR COMPOUND STATUS CRITERIA
IN ORDER TO BE CONSIDERED A DELTA FACTOR COMPOUND, A COMPOUND MUST MEET BOTH OF
THE FOLLOWING [ ] CRITERIA UNLESS A COMPOUND IS OTHERWISE DESIGNATED TO
BE A DELTA FACTOR COMPOUND BY THE RESEARCH STEERING COMMITTEE:
[
].
PART 2
COLLABORATION COMPOUND STATUS CRITERIA
IN ORDER TO BE CONSIDERED A COLLABORATION COMPOUND, A DELTA FACTOR COMPOUND MUST
MEET ALL OF THE FOLLOWING [ ] CRITERIA UNLESS A DELTA FACTOR COMPOUND
IS OTHERWISE DESIGNATED TO BE A COLLABORATION COMPOUND BY THE RESEARCH STEERING
COMMITTEE:
[
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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].
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47.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-ARRIS PHARMACEUTICAL CORPORATION
APPENDIX C-RESEARCH
PROOF OF CONCEPT PHASE PLAN AND RESEARCH PHASE PLAN
I. PROOF OF CONCEPT PHASE PLAN
ARRIS RESPONSIBILITIES SB RESPONSIBILITIES
[
].
II. RESEARCH PHASE PLAN
ARRIS RESPONSIBILITIES SB RESPONSIBILITIES
[
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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]
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49.
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-ARRIS PHARMACEUTICAL CORPORATION
APPENDIX D-ISSUES (TECHNICAL SELECTION FILTERS) WHICH MUST BE ADEQUATELY
ADDRESSED BEFORE A PRODUCT CAN BE CONSIDERED WITHIN SB FOR PRE-PROJECT STATUS
DESIGNATION
[
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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].
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51.
<PAGE>
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY BRACKETS,
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 406 OF THE SECURITIES EXCHANGE ACT OF 1933, AS
AMENDED.
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COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
SMITHKLINE BEECHAM CORPORATION-ARRIS PHARMACEUTICAL CORPORATION
APPENDIX E
[
].
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52.
