Exhibit 10.12
AGREEMENT
This Agreement (the "Agreement") is entered into as of the last date of
signature appearing below (the "EFFECTIVE DATE") between NeoGenesis Drug
Discovery, Inc., a Delaware corporation ("NEOGENESIS") and Schering-Plough Ltd.,
a Swiss corporation ("SPL"), and sets forth the terms and conditions that will
apply to the provision by NeoGenesis to SPL of certain screening and analysis
services.
BACKGROUND
SPL is interested in identifying potential pharmaceutical products for treatment
of certain human diseases and wishes to identify compounds that exhibit a high
degree of chemical binding and functional activity to specific protein targets.
NeoGenesis has certain technology and know-how, including screening processes of
libraries of mass-encoded small molecule compounds, relating to the
identification, discovery, validation and optimization of novel compounds which
may be useful for development of novel therapeutics employing targets implicated
in a disease process. The parties wish to pursue a collaborative screening
process to identify compounds exhibiting a high degree of chemical binding
activity to targets designated by SPL from among the NeoGenesis libraries of
mass-encoded small molecule compounds and which have activity in target-specific
functional assays. The terms and conditions set forth below shall govern the
performance of such collaborative effort.
1. DEFINITIONS.
The following capitalized terms used in this Agreement, whether in the
singular or plural, shall have the meaning set forth below.
1.1 "ACTIVE COMPOUND" means any Compound identified as having binding
activity when tested against a Target pursuant to the Screening Program and
which (a) has Kd values of [*] and (b) has demonstrated bioactivity in
functional assays against the applicable Target as determined by the Steering
Committee following SPL's performance of the procedure specified in Paragraph 3
of ATTACHMENT A.
1.2 "AFFILIATE" means with respect to either party, any Person that,
directly or indirectly, is controlled by, controls or is under common control
with such party. For purposes of this definition, control means, with respect to
any Person, the direct or indirect ownership of [*] or more of the outstanding
voting securities of an entity, or the right to receive [*] or more of the
profits or earnings of an entity, or the possession otherwise, directly or
indirectly, of the power to direct the management, business and affairs of an
entity.
1.3 "ALIS" means the Automated Ligand Identification System, an
automated, ultra-high throughput ligand selection system proprietary to
NeoGenesis that is used to identify multiple classes of chemical ligands against
a target protein.
1.4 "CHEMOTYPE" means a family or group of Compounds closely
structurally related to one or more Active Compounds.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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1.5 "CIP" means "Carriage and Insurance Paid", as that expression is
defined in Incoterms 2000, ICC Publishing S.A.
1.6 "COMMERCIALLY REASONABLE EFFORTS" shall mean, with respect to (a)
any objective by either party, reasonable, diligent, good faith efforts to
accomplish such objective as such Party would normally use to accomplish a
similar objective under similar circumstances; and (b) with respect to any
objective relating to the development or commercialization of any Licensed
Product efforts and resources normally used by such party with respect to a
product owned by such party or to which such party has similar rights which is
of similar market potential at a similar stage in the development or life of
such product, taking into account issues of safety, efficacy, product profile,
the competitiveness of the marketplace, the proprietary position of the product,
the regulatory structure involved, profitability of the product and other
relevant commercial factors.
1.7 "COMPOUND" shall mean all proprietary compounds contained in the
NeoMorph Screening Library or any NeoMorph Focused Libraries which are screened
by NeoGenesis against one or more Targets in performance of the Screening
Program.
1.8 "COMPOUND PATENT RIGHTS" shall mean any Schering Patent Rights
which claim Selected Compounds, Derivative Compounds, Designated Compounds or
Licensed Product, or the manufacture or use thereof.
1.9 "CONFIDENTIAL INFORMATION" means any proprietary or confidential
information of either party (including but not limited to all Schering Know-How
and all NeoGenesis Know-How) disclosed to the other party pursuant to this
Agreement in written or other tangible medium and marked as confidential, or if
disclosed orally or displayed, confirmed in writing within thirty (30) days of
disclosure.
1.10 "DERIVATIVE COMPOUND" means a compound which is derived from a
Selected Compound or a Lead Compound by or on behalf of SPL, or by NeoGenesis in
performance of medicinal chemistry optimization pursuant to Section 2.2(b), and
having activity against the same Target as such Selected Compound and/or Lead
Compound. A compound will be deemed to have been "derived" from a Selected
Compound or a Lead Compound if it (i) is the result of a chemical modification
made to a Selected Compound or Lead Compound, (ii) is otherwise derived from a
chemical synthesis program based upon a Selected Compound or Lead Compound, or
(iii) is based on proprietary structure-function data obtained from Selected
Compounds or Lead Compounds. Derivative Compounds will include, without
limitation, all Compounds contained in the NeoMorph Focused Library(ies).
1.11 "DESIGNATED COMPOUND" means any Selected Compound or Derivative
Compound which becomes the subject of a development program conducted by SPL or
its Affiliates, as further defined in Section 2.8(b) of the Agreement.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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1.12 "EMEA" means the European Medicines Evaluation Authority, or any
successor thereto.
1.13 "FDA" means the United States Food and Drug Administration, or
any successor thereto.
1.14 "FD&C ACT" means the United States Federal Food, Drug and
Cosmetic Act of 1938, as amended.
1.15 "FIELD" means the treatment or prevention of any disease or
condition in humans or animals.
1.16 "FIRST COMMERCIAL SALE" means, with respect to a Licensed
Product, the first sale (or other transfer for value in an arms-length
transaction) for end use of such Licensed Product in a country within the
Territory after obtaining all necessary Regulatory Approvals for the marketing
and sale of the Licensed Product in such country.
1.17 "FTE" means the equivalent of a full time (12) months (including
normal vacations, sick days and holidays) work of an individual scientist,
carried out by one or more employees or agents of NeoGenesis, who devotes a
portion of his or her time to performing the Screening Program.
1.18 "GOOD CLINICAL PRACTICE" means the then current standards for
clinical trials for pharmaceuticals, as set forth in the FD&C Act and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good clinical practice as are required by the European Union and
other Regulatory Authorities in countries in which the Product is intended to be
sold, to the extent such standards are not in contravention with United States
Good Clinical Practices.
1.19 "GOOD LABORATORY PRACTICE" means the then current standards for
laboratory activities for pharmaceuticals, as set forth in the FD&C Act and
applicable regulations promulgated thereunder, as amended from time to time, and
such standards of good laboratory practice as are required by the European Union
and other Regulatory Authorities in countries in which the Product is intended
to be sold, to the extent such standards are not in contravention with United
States Good Laboratory Practices.
1.20 "GOOD MANUFACTURING PRACTICE" means the current standards for the
manufacture of pharmaceuticals, as set forth in the FD&C Act and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good manufacturing practice as are required by the European Union
and other Regulatory Authorities in countries in which the Product is intended
to be sold, to the extent such standards are not in contravention with United
States Good Manufacturing Practices.
1.21 "IMPROVED ACTIVE COMPOUND" means any Compound identified as a
result of initial optimization of one or more Active Compounds by NeoGenesis (as
described in paragraph 4 of ATTACHMENT A) and having binding activity when
tested against a Target pursuant to the Screening Program with a Kd value of
[*].
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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1.22 "IND" means an investigational new drug application, as defined
in the FD&C Act and applicable regulations thereunder, or any equivalent
document,filed with the FDA and necessary for beginning clinical trials of any
Licensed Product in humans or any application or other documentation filed with
any Regulatory Authority of a country other than the United States prior to
beginning clinical trials of any Licensed Product in humans in that country.
1.23 "INVENTIONS" means any and all discoveries, developments,
inventions and innovations (whether or not patentable) that are conceived and/or
reduced to practice (i) solely by one or more employees or consultants of
NeoGenesis in connection with the performance of the Screening Program; (ii)
solely by one or more employees or consultants of SPL in connection with the
performance of the Screening Program; or (iii) jointly by one or more employees
or consultants of NeoGenesis and one or more employees or consultants of SPL in
connection with the performance of the Screening Program.
1.24 "LEAD COMPOUNDS" means those Selected Compounds which are
designated by SPL as Lead Compounds (pursuant to Section 2.2(b) of the
Agreement) for the performance of medicinal chemistry optimization by
NeoGenesis.
1.25 "LICENSED PRODUCT(S)" means any pharmaceutical product which
contains as an active ingredient a Selected Compound or Derivative Compound, and
which is covered by one or more claims of a NeoGenesis Patent Right and/or
Compound Patent Right.
1.26 "MAJOR MARKET COUNTRY" means the United States, Japan, or any
three or more of the following European countries, the United Kingdom, France,
Germany, Italy or Spain, as the case may be.
1.27 "NDA" means a new drug application or product license
application,each as defined in the FD&C Act and applicable regulations
thereunder, seeking approval to market and sell a Licensed Product in the United
States.
1.28 "NEOGENESIS KNOW-HOW" means all proprietary information, data and
know-how relating to the NeoMorph Screening Library, NeoMorph Focused Libraries,
NeoMorph Chemistry, ALIS, QSCD, the Compounds, Active Compounds, Improved Active
Compounds, Selected Compounds, Derivative Compounds, Designated Compounds or
Licensed Products together with, where applicable, any analogs, derivatives or
fragments thereof, which is (i) owned or controlled by NeoGenesis as of the
Effective Date, or (ii) developed by or on behalf of NeoGenesis during the term
of this Agreement.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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1.29 "NEOGENESIS PATENT RIGHTS" means any and all patents and patent
applications (which for the purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention) which during the term of this Agreement are owned by NeoGenesis
(and/or any of its Affiliates), or to which NeoGenesis (and/or any of its
Affiliates) through license or otherwise acquires rights, and which have claims
covering: (i) the NeoMorph Screening Library, the NeoMorph Focused Libraries,
NeoMorph Chemistry, ALIS or QSCD; or (ii) any Active Compounds, Improved Active
Compounds, Selected Compounds, Derivative Compounds, Designated Compounds or
Licensed Products, or the manufacture or use of any of the foregoing; or (iii)
NeoGenesis Inventions (as defined in Section 3.5(a)); or (iv) NeoGenesis' rights
in Joint Inventions (as defined in Section 3.5(b)), as well as all divisionals,
continuations, continuations-in-part, reissues, re-examinations, extensions,
renewals, registrations, supplementary protection certificates and/or foreign
counterparts of any of the foregoing which are owned or controlled by NeoGenesis
and its Affiliates during the term of this Agreement. The NeoGenesis Patent
Rights shall include those listed in ATTACHMENT B pursuant to Section 3.8.
1.30 "NEOMORPH CHEMISTRY" means the process, proprietary to
NeoGenesis, of forming libraries and sub-libraries of discrete compounds by
coupling a broad set of diverse cores with diverse sets of building blocks
employing proprietary mass-coding algorithms.
1.31 "NEOMORPH FOCUSED LIBRARIES" means any and all compounds or
collections of compounds synthesized by NeoGenesis which are derived from or
based upon Lead Compounds, and which are designed to optimize the structure of
such Lead Compounds with respect to activity against one or more specific
Targets.
1.32 "NEOMORPH SCREENING LIBRARY" means the entire collection of
libraries consisting of mass-encoded small molecule organic compounds owned by
NeoGenesis and developed with NeoMorph Chemistry, comprising at least twelve
million (12,000,000) different compounds.
1.33 "NET SALES" means the proceeds actually received by SPL or any of
its Affiliates or sub-licensees on all sales of a Product in the Territory to an
unaffiliated third party (whether an end-user, a distributor or otherwise), and
exclusive of intercompany transfers or sales, less the reasonable and customary
deductions from such gross amounts including: (i) normal and customary trade,
cash and quantity discounts, allowances and credits; (ii) credits or allowances
actually granted for damaged goods, returns or rejections of a Product and
retroactive price reductions; (iii) sales or similar taxes (including duties,
value added taxes or other governmental charges otherwise measured by the
billing amount, when included in billing); (iv) freight, postage, shipping,
customs duties and insurance charges; (v) charge back payments and rebates
granted to managed health care organizations or to federal, state and local
governments, their agencies, and purchasers and reimbursers or to trade
customers, including but not limited to, wholesalers and chain and pharmacy
buying groups; (vi) commissions paid to third parties other than sales personnel
and sale representatives or sales agents; and (vii) rebates (or equivalents
thereof) granted to or charged by national, state or local governmental
authorities in countries other than the United States. If a Product is sold in
the form of a combination product with one or more other active ingredients, Net
Sales for such combination product with one or more active ingredients will be
calculated by multiplying actual Net Sales of such combination product by the
fraction A/(A+B) where:
"A" is the invoice price of the Product contained in the combination
product if sold separately by SPL or any of its Affiliates or
sub-licensee; and
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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"B" is the aggregate invoice price of any other active component(s) in
the combination product if sold separately by SPL or any of its
Affiliates or sub-licensee.
If one or more of the other active ingredients in the combination product are
not sold separately, then the above formula shall be modified such that:
"A" shall be the fully allocated manufacturing cost to SPL or any of
its Affiliates or sub-licensee of the Product, and
"B" shall be the fully allocated manufacturing cost to SPL or any of
its Affiliates or sub-licensee of any other active component(s) in the
combination,
such fully allocated manufacturing costs being determined in accordance with
generally accepted accounting principles.
1.34 "PERSON" means any individual, corporation, association,
partnership (general or limited), joint venture, trust, estate, limited
liability company, limited liability partnership, unincorporated organization,
government (or any agency or political subdivision thereof) or other legal
entity or organization.
1.35 "PRELIMINARY COMPOUND" means any Compound identified as having
binding activity when tested against a Target pursuant to the Screening Program
and which has Kd values of [*] or such other binding affinity threshold for a
specific Target as shall be agreed upon by the parties in writing.
1.36 "QSCD" means Quantisized Surface Complimentary Diversity, a model
proprietary to NeoGenesis, in terms of which discrete chemical compliments to
the surfaces of a Target are defined.
1.37 "REGULATORY APPROVAL" means, for any country in the Territory,
those authorizations by the appropriate Regulatory Authority(ies) required for
the manufacture, importation, distribution, marketing, promotion, pricing and
sale of the Licensed Product(s) in such country, including, without limitation,
any NDAs, Health Registration Dossiers, supplements, amendments, pre- and
post-approvals, marketing authorizations based upon such approvals (including
any prerequisite manufacturing approvals or authorizations related thereto) and
pricing, third party reimbursement or labeling approval(s), technical, medical
and scientific licenses, registrations or authorizations.
1.38 "REGULATORY AUTHORITY" means any national, supra-national,
regional, state or local regulatory agency, department, bureau, commission,
council or other governmental entity in the Territory, including, without
limitation, the FDA and the EMEA.
1.39 "SCHERING KNOW-HOW" means all information, data and know-how
which is owned or controlled by SPL or its Affiliates as of the Effective Date,
or developed by or on behalf of SPL or its Affiliates during the term of this
Agreement, related to the Screening Program, the Targets, Active Compounds,
Improved Active Compounds, Selected Compounds, Derivative Compounds, Designated
Compounds or Licensed Products. Schering Know-How includes, without limitation,
all processes, formulas, discoveries and inventions whether relating to
biological, chemical, pharmacological, toxicological, pharmaceutical, physical
and analytical safety, quality control and clinical data, including, without
limitation, clinical study data related to Designated Compounds and/or Licensed
Products. Schering Know-How also includes relevant medical information relating
to the Licensed Products (such as Regulatory Authority questions, responses
thereto and adverse drug event history) in the possession of SPL, its Affiliates
or sublicensees.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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1.40 "SCHERING PATENT RIGHTS" means any and all patents and patent
applications (which for the purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention) which during the term of this Agreement are owned by SPL (and/or any
of its Affiliates), or to which SPL (and/or any of its Affiliates) through
license or otherwise acquires rights, which have claims covering: (i) Selected
Compounds, Derivative Compounds, Designated Compounds or Licensed Products, or
the manufacture or use of any of the foregoing; (ii) the Targets; or (iii)
Schering Inventions (as defined in Section 3.5(a)) or Joint Inventions (as
defined in Section 3.5(b)), as well as all divisionals, continuations,
continuations-in-part, reissues, re-examinations, extensions, renewals,
registrations, supplementary protection certificates and/or foreign counterparts
of any of the foregoing which are owned or controlled by SPL and its Affiliates
during the term of this Agreement.
1.41 "SELECTED COMPOUND" means any and all Active Compounds and/or
Improved Active Compounds which have demonstrated bioactivity in secondary
functional assays against the applicable Target as determined by SPL in
accordance with Section 2.7, and which are designated by SPL pursuant to Section
2.7(a) of the Agreement.
1.42 "SCREENING PROGRAM" means the screening program described in
ATTACHMENT A (including as it may be amended by the Steering Committee) to
identify Active Compounds and Improved Active Compounds against one or more
Targets.
1.43 "STEERING COMMITTEE" means the joint steering committee
established by the parties pursuant to Section 2.6 of the Agreement.
1.44 "SUCCESS CRITERIA" means the success criteria, to be defined by
the Steering Committee with respect to a given Target, for determining whether
or not Selected Compounds and/or Derivative Compounds have a certain desired
degree of chemical binding activity, activity in Target-based functional assays,
and other chemical, biological, pharmacological and toxicological properties,
suitable for drug development.
1.45 "TARGET" means a specific biological target (including, without
limitation, nucleic acids and proteins, and/or active fragments thereof) that a
small molecule is screened against in order to determine whether the small
molecule demonstrates a specific biochemical or pharmaceutical effect, selected
by SPL and accepted by NeoGenesis in accordance with Section 2.1(b) for which
NeoGenesis will perform the Screening Program.
1.46 "TERRITORY" means all of the countries and territories of the
world (including Puerto Rico), except for the United States and it territories,
possessions and commonwealths other than Puerto Rico.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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1.47 "US AGREEMENT" means the contemporaneous Agreement entered into
by NeoGenesis and Schering's Affiliate, Schering Corporation relating to the
United States and its territories, possessions and commonwealths, excluding
Puerto Rico.
1.48 "VALID CLAIM" means a composition-of-matter or method-of-use
claim of an issued and unexpired patent included within (i) the NeoGenesis
Patent Rights or (ii) Compound Patent Rights, and in each case which has not
been revoked or held unenforceable or invalid by a decision of a court or other
governmental agency of competent jurisdiction, unappealable or unappealed within
the time allowed for appeal, and which has not been disclaimed, denied or
admitted to be invalid or unenforceable through reissue or disclaimer or
otherwise.
2. SCREENING PROGRAM
2.1 DELIVERY OF TARGETS.
(a) SPL shall deliver one or more of the Targets listed in
ATTACHMENT A to NeoGenesis for screening within [*] following the Effective
Date. SPL shall provide the Targets in the quantities and formats specified in
ATTACHMENT A, along with a written description of the concentration and volume
of the Target.
(b) From time to time during the term of this Agreement, SPL may
select additional Targets for screening under the Screening Program. In such
event, SPL shall notify NeoGenesis in writing of the additional Target(s) to be
provided for screening. NeoGenesis shall notify SPL in writing within [*] of
such notice whether the Target is approved for inclusion in the Screening
Program. Subject to the terms of Section 2.1(c), the Target will be accepted for
inclusion in the Screening Program unless the proposed Target: (i) is subject to
an exclusivity period in an existing agreement between NeoGenesis and a third
party; or (ii) is the subject of an existing internal research program at
NeoGenesis. The parties shall promptly amend ATTACHMENT A to include each
additional Target added to the Screening Program pursuant to this Section
2.1(b). SPL shall thereafter provide the Targets to NeoGenesis in appropriate
quantities and formats for screening, along with a written description of the
concentration and volume of the Target. The Steering Committee shall establish a
schedule for delivery of the additional Targets to NeoGenesis based on the time
necessary to prepare and validate the approved Target; PROVIDED, that such
period shall not exceed [*] from NeoGenesis' notice to SPL that a Target is
approved.
(c) The parties acknowledge and agree that the Screening Program
will be limited to active screening and/or optimization programs at NeoGenesis
directed to [*] distinct Targets, based upon research support for [*] FTEs at
NeoGenesis. In the event that the screening and optimization programs directed
to a specific Target are completed or discontinued, SPL shall have the right to
select an additional Target to replace such discontinued Target. Further, in the
event that the number of FTEs working on the Screening Program is increased,
pursuant to Section 2.2(f), the limit on the number of active Targets shall be
increased proportionately.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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(d) All Targets to be supplied by SPL hereunder shall be
delivered CIP to NeoGenesis' Cambridge facility using a carrier selected by SPL.
The Targets are and shall remain the sole and exclusive property of SPL.
NeoGenesis will only use the Targets for screening in performance of the
Screening Program and will not use the Targets for any other purpose without
SPL's prior written consent.
(e) SPL will identify to NeoGenesis all Targets provided by SPL
for use in the Screening Program. The identity of the Targets and any other
information related thereto will be considered Schering Confidential
Information. During the applicable Exclusivity Period (as defined below) for a
Target, NeoGenesis shall not screen the NeoMorph Screening Library for itself or
for any third party against the same Target, without SPL's prior written
approval. The "Exclusivity Period" for a given Target shall begin on the date
the Target is accepted for inclusion in the Screening Program pursuant to
Section 2.1(b) and shall expire:
(i) if NeoGenesis does not perform any medicinal chemistry
optimization activities pursuant to Section 2.2(b) to develop
NeoMorph Focused Libraries with respect to the Target, [*]
after NeoGenesis delivers to SPL the Final Target Report with
respect to such Target; or
(ii) if NeoGenesis does perform medicinal chemistry optimization
activities pursuant to Section 2.2(b) to develop NeoMorph
Focused Libraries with respect to such Target, [*] after the
later of the date upon which SPL files an IND for a Licensed
Product directed to the Target or discontinues the
development of Licensed Products against such Target.
Upon the expiration of the Screening Program, and annually thereafter, SPL
shall notify NeoGenesis in writing of the list of Targets with respect to
which SPL has ongoing programs to discover and develop Licensed Products. SPL
shall promptly notify NeoGenesis in writing in the event that it discontinues
the development of Licensed Products against a Target. For purposes of this
Section 2.1(e), SPL shall be deemed to have discontinued development of
Licensed Products against a Target if it ceases to maintain a minimum of [*]
FTEs assigned full time to work on the discovery and pre-clinical development
of Licensed Products against a Target. During the term of the Screening
Program, if NeoGenesis intends to screen the NeoMorph Screening Libraries
(including all newly created Compounds contained therein) for a third party
against a Target with respect to which SPL's Exclusivity Period has expired
pursuant to subsection (i), above, NeoGenesis shall first offer SPL the
opportunity to screen the NeoMorph Screening Libraries against the Target.
SPL shall have [*]in which to accept or reject such offer. If SPL accepts the
offer, such screening shall be conducted under the terms of this Agreement
and SPL shall have a renewed Exclusivity Period with respect to such Target.
If NeoGenesis does perform medicinal chemistry optimization activities
pursuant to Section 2.2(b) to develop NeoMorph Focused Libraries with respect
to a Target, then notwithstanding the expiration of the applicable
Exclusivity Period pursuant subsection (ii), above, NeoGenesis shall be
permanently prohibited from screening the NeoMorph Screening Libraries
against the Target for itself and in such instance may only perform such
screening for third parties. In the event that NeoGenesis does screen the
NeoMorph Screening Libraries against a Target for itself or a third party as
permitted under this Section 2.1(e), NeoGenesis shall not use (i) any
Schering Know-How (including without limitation any of SPL's proprietary
information related to the existence of or uses for the Target), or (ii) any
NeoGenesis Know-How related to the Target and developed in performance of the
Screening Program, in connection with such screening activities.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
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(f) For purposes of this Agreement, and in particular with
respect to the provisions of Sections 2.1(b) and 2.1(e), a Target identified by
SPL for screening under this Agreement will encompass the nucleic acid or amino
acid sequence of the actual Target to be provided by SPL, and in the case of a
Target which is a human biological molecule, shall be further defined by the
nucleic acid or protein encoded by the specified genomic location of origin
(which will be identified by SPL in the notification to NeoGenesis of a proposed
Target pursuant to Section 2.1(b)) and natural polymorphic variants thereof such
as SNP, insertion, deletion and splice variants or the synthetic equivalent
thereof. If a Target can not be distinguished from another biological target
based on the above, then the Target shall be considered the same as another
biological target if the other biological target comprises a contiguous region
of [*] identical to the Target or is derived from such Target by modification.
If a Target is a biological molecule of non-human origin, then the Target shall
be considered the same as another target if they are both derived from the
comparable chromosomal location of related strains of the applicable species.
For example, a target defined by [*] shall be considered the same as a target
specified by the [*] including targets derived by modification. Similarly, a
target specified by a chromosomal location in one particular strain of [*] shall
be considered identical to a target specified by the analogous location in a
second strain of bacteria. If the chromosomal locations of two targets can not
be defined, then a target shall be considered the same as a second target if it
comprises a contiguous region of [*] to said second target or is derived from
such a second Target by modification. It is expressly understood that a
non-human target falling outside the criteria defined above may not be screened
using the NeoMorph Screening Libraries with the intent of developing a product
affecting the activity of a human target that would meet the identity criteria.
For clarity, a primate ortholog of a human gene or protein may not be screened
using the Neomorph Screening Libraries if the intent is to develop a product for
human use against an otherwise excluded target. Nothing in this paragraph shall
limit the screening of non-human targets for non-human usage.
2.2 SCREENING PROGRAM.
(a) During the term of the Screening Program, NeoGenesis will utilize
its proprietary technology and methods, including without limitation the ALIS
method, to screen the NeoMorph Screening Library for activity with respect to
each Target for purposes of identifying Active Compounds for further evaluation
and development. Screening will be performed pursuant to the protocol for the
Screening Program, as set forth in paragraphs 1-2 of ATTACHMENT A. With respect
to each accepted Target provided by SPL under Section 2.1, NeoGenesis shall
complete the screening of the NeoMorph Screening Library within [*] following
the date that the Target is delivered to NeoGenesis. The results of such
screening shall be provided to SPL through the Steering Committee in the form of
a Preliminary Target Report (as defined in ATTACHMENT A). NeoGenesis shall
provide SPL with samples of all Preliminary Compounds selected by the Steering
Committee for further evaluation by SPL pursuant to paragraph 3 of ATTACHMENT A.
SPL will evaluate such Preliminary Compounds in Target-based functional assays
and/or secondary assays to identify Active Compounds, and will report the
results of such evaluations to the Steering Committee, and NeoGenesis will
promptly thereafter provide SPL with all available structural information for
each Active Compound so identified. NeoGenesis will, at the direction of the
Steering Committee, conduct initial optimization activities, as described in
paragraph 4, of ATTACHMENT A, to identify Improved Active Compounds. It is
acknowledged that all compounds generated from such initial optimization
activities and having activity against the relevant Target shall be deemed to be
Improved Active Compounds; provided that such optimization activities and all
Improved Active Compounds arising therefrom shall not be deemed to be
optimization of Lead Compounds for purposes of Section 2.1(e) or for determining
SPL's financial obligations under Sections 4.3 and 4.4.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
10
(b) NeoGenesis will, at the direction of the Steering Committee,
conduct a full program of medicinal chemistry optimization activities, based
upon those Selected Compounds identified as Lead Compounds that are suitable for
optimization. Such optimization activities shall include the design and
preparation of NeoMorph Focused Libraries based upon such Lead Compounds, and
the screening of the NeoMorph Focused Libraries against the relevant Target(s).
The parties acknowledge and agree that, subject to the terms of Sections 3.5(a),
and effective on the date that SPL acquires an exclusive license to the relevant
Selected Compound(s) pursuant to Sections 2.7(c), 3.1 and 3.2, any and all
Compounds which are included in NeoMorph Focused Libraries prepared against the
relevant Target shall be the exclusive property of SPL. NeoGenesis shall not use
the NeoMorph Focused Libraries, any Compounds contained therein, or any
structural information or other know-how related thereto, for any purpose other
than the performance of the Screening Program. NeoGenesis shall not provide any
NeoMorph Focused Libraries, any Compounds contained therein, or any structural
information or other NeoGenesis Know-How related thereto, to any third party
without the prior written consent of SPL. Notwithstanding the foregoing
limitations, it is expressly understood and agreed that NeoGenesis may, through
use of the NeoMorph Screening Library on behalf of third parties independently
generate results or data similar to the results or data generated in the course
of the Screening Program and that the use of such independently generated
results or data shall not constitute a breach of NeoGenesis' obligations under
this Section 2.2(b); PROVIDED, that NeoGenesis has complied with its obligations
to mask Compounds in accordance with Section 2.3 of this Agreement.
(c) NeoGenesis shall not perform any tests on or using any of the
Targets that are outside the scope of the Screening Program, or attempt to
modify the Targets supplied by SPL, including, without limitation, the making of
any derivatives, analogs or components thereof. In the event that NeoGenesis
does not consume all of the Targets supplied by SPL in performance of the
Screening Program, NeoGenesis will upon completion of the Screening Program
promptly, return to SPL any quantities of such Target(s) and any derivatives,
analogs or components thereof.
(d) The term of the Screening Program shall begin on the Effective
Date and shall continue in effect for a period of two (2) years. SPL shall have
the right to extend the term of the Screening Program for up to three additional
one (1) year terms, by providing NeoGenesis with written notice to that effect
at least sixty (60) days prior to the expiration of the then current term of the
Screening Program and subject to the provisions of Section 4.1 concerning
research funding for such extension term. The Screening Program shall remain in
effect for the period specified in this Section 2.2(d), including as it may be
extended, unless sooner terminated in accordance with Section 8.2 or Section
9.5.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
11
(e) During the term of the Screening Program, upon request,
NeoGenesis shall provide SPL with samples of Selected Compounds and Derivative
Compounds from NeoMorph Focused Libraries in a form and quantity suitable to
enable SPL to conduct additional testing to confirm the specific binding
activity of such Compounds and to evaluate and determine the functional activity
of the Selected Compounds and/or Derivative Compounds. SPL may also elect to
perform medicinal chemistry research using such Selected Compounds and/or
Derivative Compounds to discover and evaluate additional Derivative Compounds.
SPL shall keep NeoGenesis reasonably informed of the results of such activities
through the Steering Committee.
(f) During the term of the Screening Program NeoGenesis shall provide
appropriately trained dedicated scientific personnel to perform the Screening
Program in accordance with the terms of this Agreement. During the initial two
(2) year term of the Screening Program, NeoGenesis shall provide such support at
the level of [*] FTEs during each year of the Screening Program, it being
understood that NeoGenesis may allocate such FTE time within any calendar year
in a manner consistent with its obligations under the Screening Program based on
the workload for such Screening Program at any particular time during the
Screening Program. In addition, NeoGenesis will, upon written request by SPL,
provide additional FTE support for the Screening Program of up to an additional
[*] FTEs during the term of the Screening Program. In the event that the term of
the Screening Program is extended pursuant to Section 2.2(d), the Steering
Committee shall establish the number of FTEs to be provided by NeoGenesis for
performance of the Screening Program during the extended term.
(g) NeoGenesis shall monitor expenditures, in accordance with its
corporate policies, to ensure that the funds provided by SPL are spent in
accordance with this Agreement. NeoGenesis shall keep and maintain adequate
books and records to furnish information to SPL regarding calculation of the
amounts expended by NeoGenesis on the Screening Program according to the
provisions of this Agreement. During the Screening Program and for two (2)
years following the expiration of the Screening Program, NeoGenesis shall
permit SPL to examine such books and records during normal business hours,
upon thirty (30) days notice to NeoGenesis. Upon the expiration of the two
(2) year period, the calculation of the amounts expended on each year of the
Screening Program shall be binding and conclusive upon the parties and
NeoGenesis shall be released from any further accountability with respect to
the Screening Program.
(h) NeoGenesis will perform its screening obligations in accordance
with all applicable laws, rules and regulations.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
12
2.3 COMPOUND MASKING.
(a) Upon the identification of Preliminary Compounds and Active
Compounds through screening of the NeoMorph Screening Library against a
particular Target, NeoGenesis shall mask such Preliminary Compounds and Active
Compounds from the NeoMorph Screening Library by removing such Compounds from
the compound resource information associated with the NeoMorph Screening Library
and shall take all other steps reasonably necessary to ensure that information
with regard to such Compounds is not available or accessible to any third party,
including third parties for which NeoGenesis is screening the NeoMorph Screening
Library against other biological targets. NeoGenesis shall similarly mask any
Improved Active Compounds which are discovered pursuant to Section 2.2(a).
(b) NeoGenesis shall have the right to unmask any Preliminary
Compounds which are not confirmed as Active Compounds and are not in the same
Chemotype as such Active Compounds. In addition, upon expiration of SPL's right
to designate Selected Compounds with regard to a specific Target, pursuant to
Section 2.7(a), NeoGenesis shall have the right to unmask any Active Compounds
and/or Improved Active Compounds identified through screening against that
Target which are not (i) Selected Compounds or (ii) Preliminary Compounds,
Active Compounds and/or Improved Active Compounds of the same Chemotype as such
Selected Compounds.
2.4 GRANT OF RESEARCH LICENSES.
(a) SPL hereby grants NeoGenesis a nonexclusive, nontransferable,
royalty-free license under the Schering Patent Rights and to use the Schering
Know-How solely for the purpose of conducting the Screening Program. NeoGenesis
will not use Schering Know-How or Schering Patent Rights for any other purpose,
and shall not offer or grant a sub-license to use Schering Know-How or Schering
Patent Rights to any third party, without the express prior written consent of
SPL.
(b) NeoGenesis hereby grants SPL a nonexclusive, nontransferable,
royalty-free license under the NeoGenesis Patent Rights and to use the
NeoGenesis Know-How solely for the purpose of conducting SPL's activities under
the Screening Program. SPL will not use NeoGenesis Know-How or NeoGenesis Patent
Rights for any other purpose, and shall not offer or grant a sub-license to use
NeoGenesis Know-How or NeoGenesis Patent Rights to any third party, without the
express prior written consent of NeoGenesis (not to be unreasonably withheld).
(c) With respect to Selected Compounds identified pursuant to Section
2.7(a), NeoGenesis hereby grants SPL, during the relevant Option Period (as
defined in Section 2.7(b)), an exclusive, nontransferable, royalty-free license
under the NeoGenesis Patent Rights and to use the NeoGenesis Know-How solely for
the purpose of performing research and development work necessary to enable SPL
to determine whether or not to exercise its option to obtain an exclusive
license with respect to such Selected Compounds.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
13
2.5 RECORD KEEPING AND REPORTS.
(a) NeoGenesis will keep and maintain complete and accurate records
of all laboratory data and results generated in the course of the Screening
Program, including records of all Preliminary Compounds, Active Compounds, and
Improved Active Compounds identified, and any Inventions discovered and/or
developed by NeoGenesis, during the Screening Program. All such written records
of NeoGenesis shall be open to inspection by SPL during normal business hours
upon reasonable prior written notice; provided, however, that except with
respect to (i) Improved Active Compounds, (ii) Active Compounds, and (iii)
Preliminary Compounds of the same Chemotype as such Improved Active Compounds or
Active Compounds, NeoGenesis shall not provide SPL with access to any chemical
structures or structural data.
(b) NeoGenesis shall provide SPL with reasonably-detailed written
reports describing the results of the research performed pursuant to the
Screening Program including all Preliminary Compounds, Active Compounds and
Improved Active Compounds identified in the Screening Program but shall not
include any chemical structures or structural data with respect to any Compounds
which are not (i) Improved Active Compounds, (ii) Active Compounds, and (iii)
Preliminary Compounds of the same Chemotype as such Improved Active Compounds or
Active Compounds. Such reports shall be delivered to SPL at least quarterly
during the term of the Screening Program. In addition, with respect to each
Target, promptly following the completion of screening of the entire NeoMorph
Screening Library against such Target, NeoGenesis will deliver to SPL a
Preliminary Target Report (as defined in ATTACHMENT A) with respect to any and
all Preliminary Compounds identified during the Screening Program as having
activity with respect to such Target. Each Preliminary Target Report shall
include the binding affinities for all such Preliminary Compounds, as well as
any information generated by NeoGenesis with regard to Target specificities and
functional activities of such Preliminary Compounds. NeoGenesis shall also
provide SPL with a Final Target Report (as defined in ATTACHMENT A) in
accordance with the provisions of Paragraph 4 of ATTACHMENT A. NeoGenesis shall
also provide SPL with reports at least one (1) week prior to each Steering
Committee Meeting detailing the results of any Lead Compound optimization
activities performed by NeoGenesis pursuant to Section 2.2(b) and ATTACHMENT A,
which reports shall include the chemical structures and binding affinities of
all Derivative Compounds contained in NeoMorph Focused Libraries prepared by
NeoGenesis based upon such Lead Compound(s) and other information generated by
NeoGenesis with respect thereto.
2.6 STEERING COMMITTEE.
(a) Promptly after the Effective Date, the parties shall establish a
joint committee (the "STEERING COMMITTEE") having oversight responsibility for
the day-to-day management and performance of the Screening Program. The Steering
Committee shall consist of six (6) members, three (3) members to be appointed by
each of NeoGenesis and SPL. Each party shall notify the other party of the names
and contact information for its members of the Steering Committee, and
thereafter may with notice to the other substitute any of its members serving on
the Steering Committee. Each member of the Steering Committee will have one vote
and all decisions of the Steering Committee will be by [*]. The quorum for
Steering Committee meetings shall be two, provided there is at least one member
from each of NeoGenesis and SPL present. The Steering Committee will render
decisions by [*].
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
14
(b) The Steering Committee shall be responsible for the management
and conduct of the Screening Program and shall in particular: (i) consider,
review and amend the Screening Program from time to time in such manner as may
be appropriate; (ii) monitor progress of the Screening Program; (iii) report
regularly to the management of both parties upon the progress of the Screening
Program; and (iv) be the initial medium for transfer of information between the
parties. SPL shall keep the Steering Committee reasonably informed of the status
of SPL's activties with respect to the discovery and development of Licensed
Products against each Target.
(c) During the term of the Screening Program, the Steering Committee
shall hold meetings as mutually agreed by the parties (but in no event less
quarterly) to review the Screening Program. The first meeting of the Steering
Committee shall be held within forty-five (45) days of the Effective Date and
shall be held in Cambridge, MA. Thereafter, meetings may be held by telephone or
video conference if requested by either party in writing to the other, PROVIDED
THAT the parties shall meet in person at least four (4) times per year during
the term of the Screening Program. Minutes of all meetings setting forth
decisions of the Steering Committee relative to the Screening Program shall be
prepared by the host party and circulated to both parties within fifteen (15)
days after each meeting, but minutes shall not become official until approved
and countersigned by both parties (which approval the parties shall use
reasonable efforts to give within thirty (30) days of receipt of such minutes).
(d) In the event that the Steering Committee is unable to reach
agreement, the issue in dispute shall be referred to an "OVERSIGHT COMMITTEE"
consisting of the Executive Vice President, Discovery Research of the
Schering-Plough Research Institute (an Affiliate of SPL) and NeoGenesis' Chief
Executive Officer, or their respective designees, for resolution. If the
disagreement is not resolved by the Oversight Committee within thirty (30) days,
then SPL shall have the right to make the final decision on such matter;
PROVIDED, that in the event and to the extent that any dispute concerns whether
or not budgeted FTE funding for the Screening Program has been expended in
accordance with the provisions of this Agreement such matter shall be resolved
using the procedure specified in Section 9.1.
2.7 SELECTED COMPOUNDS.
(a) From time to time during the term of this Agreement, SPL may
designate, by written notice to NeoGenesis, one or more Active Compounds and/or
Improved Active Compounds identified by screening of the NeoMorph Screening
Libraries pursuant to Section 2.2 as Selected Compounds; provided, that at any
given time SPL may not designate Active Compounds and Improved Active Compounds
representing more than [*] different Chemotypes against a given Target from the
NeoMorph Screening Library. The parties acknowledge and agree that the foregoing
limitation does not apply to the NeoMorph Focused Libraries. [*] Selected
Compounds that SPL may designate from the NeoMorph Focused Libraries. With
respect to each Target, SPL shall use diligent efforts to identify and designate
at least one Selected Compound within [*] following SPL's receipt of the Final
Target Report for all screening against such Target in accordance with Section
2.5(b) and ATTACHMENT A. In the event that the SPL does not designate any
Selected Compounds with respect to such Target, then upon expiration of the
applicable [*] period, SPL's right to designate Selected Compounds with respect
to such Target shall expire. If the NeoMorph Screening Library is subsequently
re-screened against a given Target pursuant to Section 2.1(e) and new Active
Compounds and/or Improved Active Compounds are identified as a result of such
re-screening, then to the extent SPL's right to designate Selected Compounds
against such Target has previously expired, SPL shall have a renewed right to
designate Selected Compounds arising from such re-screening on the same terms as
set forth above.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
15
(b) Effective upon the date of receipt by NeoGenesis of notice from
SPL, pursuant to Section 2.7(a) that one or more Active Compounds and/or
Improved Active Compounds have been designated as Selected Compounds, NeoGenesis
grants to SPL an exclusive option to obtain the exclusive license provided for
in Article 3 with respect to such Selected Compounds and related Derivative
Compounds (including without limitation any Compounds contained in a NeoMorph
Focused Library prepared based upon such Selected Compound). The masking of the
Selected Compound(s) (and any Preliminary Compounds, Active Compounds and
Improved Active Compounds of the same Chemotype(s) as such Selected Compound(s))
from the NeoMorph Screening Library in accordance with Section 2.3 shall be
maintained during the applicable Option Period (as defined below). In addition,
within [*] following receipt of notification from SPL identifying Selected
Compounds, NeoGenesis shall amend ATTACHMENT B to identify any applicable
NeoGenesis Patent Rights not previously identified to SPL. The "OPTION PERIOD"
with respect to each Selected Compound identified pursuant to Section 2.7(a),
shall extend until the later of: (i) the [*] anniversary of the expiration of
the Screening Program for the applicable Target, or (ii) in the event that SPL
is conducting an active internal medicinal chemistry research program to
identify Derivative Compounds based upon such Selected Compound (as documented
with written notice to NeoGenesis), a period of [*] following the termination of
such medicinal chemistry program. For purposes of this Section 2.7(b), SPL shall
be deemed to be conducting an active medicinal chemistry program if [*] working
full time on the design and discovery of Derivative Compounds with respect to a
given Selected Compound. SPL shall provide NeoGenesis with written
certification, at least [*] every [*], during the performance of such medicinal
chemistry program for purposes of monitoring the expiration of the Option
Period.
(c) SPL shall have the right to exercise the option granted to it
under Section 2.7(b) with respect to one or more Selected Compounds (and
related Derivative Compounds, including without limitation any Compounds
contained in a NeoMorph Focused Library prepared based upon such Selected
Compound) at any time prior to the expiration of the applicable Option
Period, by providing written notice to NeoGenesis to that effect. The
exclusive licenses granted to SPL pursuant to Article 3 with respect to such
Selected Compounds (and related Derivative Compounds, including without
limitation any Compounds contained in a NeoMorph Focused Library prepared
based upon such Selected Compound) shall become effective upon NeoGenesis'
receipt of such notice, and SPL shall pay the applicable license fee under
Section 4.2 to NeoGenesis within five (5) business days of such notice. As of
such date of such notice, the masking of the applicable Selected Compound(s)
(and related Derivative Compounds, including without limitation any Compounds
contained in a NeoMorph Focused Library prepared based upon such Selected
Compound), as well as any Preliminary Compounds, Active Compounds and
Improved Active Compounds of the same Chemotype as such Selected Compound,
from the NeoMorph Screening Library in accordance with Section 2.3 shall
become permanent, and during the term of this Agreement NeoGenesis shall
continue take such other steps as are reasonably necessary to ensure that
information with regard to the Selected Compounds and the relevant Active
Compounds, Improved Active Compounds and Preliminary Compounds of the same
Chemotype as such Selected Compounds are no longer available or accessible to
any third party.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
16
(d) In the event that SPL fails to exercise its option rights with
respect to one or more Selected Compounds prior to the expiration of the
applicable Option Period, then upon expiration of the Option Period SPL's option
right shall expire with respect to the applicable Selected Compound(s), the
licenses provided for in Article 3 with respect to such Selected Compound(s)
shall be void and of no further force or effect, and NeoGenesis shall be free to
unmask such Selected Compound(s) in the NeoMorph Screening Library.
(e) In the event that during the applicable Option Period, one or
more Selected Compounds with respect to a given Target become Designated
Compounds and SPL has not, as of the effective date of such designation,
exercised the option and paid the license fee due under section 4.2 with
respect to Selected Compounds against such Target, then the license fee shall
be paid concurrently with the milestone payment due upon designation of such
Designated Compounds in accordance with Section 2.8.
(f) SPL shall not begin screening any Selected Compound or related
Derivative Compounds against any biological targets other than Targets until
such time as it has exercised its option in accordance with Section 2.7(c) and
paid the applicable licensee fee.
2.8 PRODUCT DEVELOPMENT.
(a) During the term of this Agreement, SPL shall, at its expense,
conduct a research and development program to evaluate Selected Compounds and
Derivative Compounds as potential candidates for commercial development as
Licensed Products. Such efforts may include the performance of further medicinal
chemical research based upon such Selected Compounds and Derivative Compounds,
as well as biological, pharmacokinetic and toxicology studies and other
preclinical research activities. SPL shall have sole discretion over the scope
of such research and development program, and the selection of which Selected
Compounds and Derivative Compounds will be the focus of such activities.
(b) SPL shall notify NeoGenesis in writing in the event that SPL, in
its sole discretion (based on SPL's good faith evaluation of the satisfaction of
the applicable Success Criteria by such Selected Compound or Derivative
Compound), decides to proceed with a development program for any Selected
Compounds or Derivative Compounds as suitable candidates for drug development
(thereafter, each a "DESIGNATED COMPOUND"). A Selected Compound or Derivative
Compound will be deemed to be a Designated Compound upon the earlier of that
date on which (i) SPL (or its Affiliate) formally approves proceeding with full
development of such Compound, or (ii) SPL (or its Affiliate) initiates IN VIVO
toxicology trials necessary, and meeting U.S. FDA (or corresponding European or
Japanese) standards, for obtaining approval for use of such Compound in human
clinical trials, unless SPL sooner designates such Selected Compound or
Derivative Compound as a Designated Compound with notice to NeoGenesis. Upon
SPL's designation of a Designated Compound, SPL shall thereafter, at its
expense, use Commercially Reasonable Efforts to develop and commercialize
Licensed Products incorporating the Designated Compound in the Territory. SPL
shall be solely responsible for determining in which countries in the Territory
to develop and commercialize each Licensed Product, provided that it shall use
Commercially Reasonable Efforts to obtain Regulatory Approval and to market and
sell each Licensed Product in the Major Market Countries.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
17
(c) Subject to SPL's diligence obligations under this Agreement, the
Parties acknowledge and agree that all business decisions regarding research,
development and commercialization of Designated Compounds and Licensed Products
including, without limitation, decisions relating to the design, development,
manufacture, sale, price, distribution, marketing and promotion of Licensed
Products under this Agreement, and the decision of whether to develop a
particular Designated Compound, or to develop and commercialize a particular
Licensed Product, shall be within the sole discretion of SPL.
(d) SPL shall have no quotas or other minimum diligence obligations
with regard to the number of Designated Compounds and/or Licensed Products to be
developed and commercialized hereunder. The parties acknowledge and agree that
so long as SPL is using Commercially Reasonable Efforts to discover, develop and
commercialize [*] Licensed Product in the Territory, SPL shall be deemed to be
in compliance with its diligence obligations under this Agreement.
2.9 COMMERCIALIZATION OF LICENSED PRODUCTS. With respect to each
Licensed Product developed and commercialized by SPL, or its designated
Affiliates, under this Agreement, SPL shall be solely responsible, at its sole
expense, for all aspects of the development and commercialization of the
Licensed Product in the Territory, including, without limitation:
(i) the manufacture of Designated Compounds and Licensed Products
in accordance with the applicable Regulatory Approvals, laws,
Good Laboratory Practices and Good Manufacturing Practices;
(ii) preparation, filing, obtaining, maintaining and supporting, in
its own name or that of its designated Affiliate, with the
appropriate regulatory authorities of all regulatory
approvals, authorizations, permits and licenses (including,
without limitation, all Regulatory Approvals) that are
necessary to conduct clinical studies of Licensed Products
and/or to manufacture, import, distribute, market and sell
Licensed Products;
(iii) the reporting all adverse events associated with any Licensed
Product to the appropriate regulatory authorities in
accordance with applicable laws, rules and regulations in the
Territory; and
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
18
(iv) the distribution, marketing, promotion and sale of Licensed
Products.
Following the expiration of the Screening Program, SPL shall provide NeoGenesis
with semi-annual reports summarizing the status of SPL's development and
commercialization activities with respect to each Licensed Product being
developed under this Agreement. In addition, SPL shall notify NeoGenesis in
writing upon the filing of each application for Regulatory Approval of a
Licensed Product in the Territory.
2.10 DILIGENCE EXCEPTIONS. All of SPL's diligence obligations
hereunder with respect to each Licensed Product being developed or
commercialized hereunder are expressly conditioned upon the continuing absence
of any adverse condition or event which warrants a delay in commercialization of
the Licensed Product due to an adverse condition or event relating to the safety
or efficacy of such Licensed Product or unfavorable pricing, pricing
reimbursement, labeling or lack of regulatory approval, and SPL shall have no
obligation to develop or market any such Licensed Product so long as in SPL's
reasonable opinion any such condition or event exists.
2.11 THIRD PARTY LICENSES. SPL shall be solely responsible for (a)
obtaining any and all licenses from third parties necessary or desirable to
develop or commercialize any Licensed Product and (b) any and all consideration
payable with respect to such licenses. The decision as to whether or not to
obtain any such third party licenses relating to Licensed Products, and the
negotiation and acceptance of the terms and conditions for any such licenses,
shall be within the sole discretion and control of SPL, and nothing herein shall
be construed as obligating SPL to obtain any such third party licenses.
2.12 COMPLIANCE WITH LAW. SPL shall be responsible for ensuring that
all activities related to the development and commercialization of Licensed
Products conducted by or on its behalf are performed in compliance with all
applicable laws, rules and regulations (including, but not limited to, those
related to occupational safety and health, public safety and health, protecting
the environment, the disposal of wastes, Good Clinical Practices, Good
Laboratory Practices and Good Manufacturing Practices, as applicable).
3. LICENSES; INTELLECTUAL PROPERTY RIGHTS
3.1 LICENSE TO LICENSED PRODUCTS. NeoGenesis hereby grants to SPL,
and SPL hereby accepts, an exclusive (even as to NeoGenesis), right and license
in the Territory and within the Field under the NeoGenesis Patent Rights and to
use the NeoGenesis Know-How to make, have made, use, distribute, promote,
market,offer for sale, sell, import and export Licensed Products. The licenses
granted to SPL under this Section 3.1 include the right to grant sublicenses to
Affiliates or third parties in accordance with the provisions of Section 3.3.
SPL shall xxxx or have marked all containers or packages of Licensed Products
that are the subject of the license granted under this Section 3.1 in accordance
with the patent marking laws of the jurisdiction in which such Licensed Products
are manufactured, used or sold. For purposes of clarity and avoidance of doubt,
it is acknowledged that the exclusive licenses granted hereunder shall not be
construed as encompassing Compounds other than Selected Compounds (and Active
Compounds, Improved Active Compounds and Preliminary Compounds of the same
Chemotype as such Selected Compounds), Derivative Compounds and Designated
Compounds.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
19
3.2 LICENSE TO COMPOUNDS. NeoGenesis hereby grants to SPL, and SPL
hereby accepts, an exclusive (even as to NeoGenesis), right and license in the
Territory and within the Field under the NeoGenesis Patent Rights and to use the
NeoGenesis Know-How to research, develop, make, have made, import, export and
use the Selected Compounds (and Active Compounds, Improved Active Compounds and
Preliminary Compounds of the same Chemotype as such Selected Compounds),
Designated Compounds and Derivative Compounds, for research purposes and to
develop Licensed Products. The licenses granted to SPL under this Section 3.2
include the right to grant sublicenses to Affiliates or third parties in
accordance with the provisions of Section 3.3. SPL shall xxxx or have marked all
containers or packages of Selected Compounds Derivative Compounds and Designated
Compounds that are the subject of the license granted under this Section 3.1 in
accordance with the patent marking laws of the jurisdiction in which such
Selected Compounds, Derivative Compounds and Designated Compounds are
manufactured, used or sold.
3.3 SUBLICENSING. SPL's shall have the right to grant sublicenses
under this Agreement to third parties and/or Affiliates; provided that all such
sublicenses shall be consistent with the terms and conditions of this Agreement,
and in particular shall include provisions to ensure that such sublicense is
subject to the obligations set forth in Section 3.1(last sentence), 4.4, 4.5,
4.6, 4.7 and 8.3(b) (last sentence) of this Agreement. SPL shall remain
responsible to NeoGenesis for all of its sublicensees financial and other
obligations under this Agreement. SPL's sublicensees shall have no further right
to grant sublicenses, and any sublicense granted by SPL under this Agreement
shall not be assigned, transferred or otherwise conveyed by the sublicensee to
any third party, as a matter of law or through any action by sublicensee,
without the prior written consent of NeoGenesis.
3.4 RETAINED RIGHTS.
(a) Title to the NeoGenesis Know-How and NeoGenesis Patent
Rights shall at all times remain vested in NeoGenesis, and this Agreement does
not convey to SPL any ownership rights or other interest in any NeoGenesis
Know-How or NeoGenesis Patent Rights, by implication, estoppel or otherwise,
except for those rights and licenses expressly granted under this Agreement.
(b) Title to the Schering Know-How and Schering Patent Rights
shall at all times remain vested in SPL, and this Agreement does not convey to
NeoGenesis any ownership rights or other interest in any Schering Know-How or
Schering Patent Rights, by implication, estoppel or otherwise, except for the
rights and licenses expressly granted under this Agreement.
(c) The parties acknowledge and agree that notwithstanding the
exclusive licenses granted to SPL hereunder, with respect to the NeoGenesis
Know-How and NeoGenesis Patent Rights, NeoGenesis shall retain the right to
continue to use its NeoMorph Screening Library to screen target proteins (other
than Targets) for third parties; PROVIDED that NeoGenesis complies with all of
its obligations with respect to the masking of Preliminary Compounds, Active
Compounds, Improved Active Compounds and Selected Compounds from the NeoMorph
Screening Library.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
20
3.5 INVENTIONS.
(a) Title to and ownership of all Inventions directly related
to (i) Selected Compounds, Derivative Compounds, Designated Compounds and
Licensed Products, or the manufacture or use thereof, or (ii) Targets provided
to NeoGenesis by SPL, in each case regardless of inventorship, as well as those
Inventions subject to Section 3.5(b)(ii), shall be the sole property of SPL
(hereinafter "SCHERING INVENTIONS") and are included in Schering Know-How and/or
Schering Patent Rights, as the case may be. NeoGenesis hereby assigns and agrees
to assign to SPL all of NeoGenesis' right, title and interest in such Schering
Inventions; such assignment to take effect with respect to particular Selected
Compounds (and related Derivative Compounds, Designated Compounds and Licensed
Products) upon the date NeoGenesis receives notice from SPL pursuant to Section
2.7(c) that SPL has decided to exercise its option to exclusively license the
Selected Compounds and related Derivative Compounds; and NeoGenesis shall use
Commercially Reasonable Efforts to perfect such assignment (at SPL's expense).
Title to and ownership of all Inventions directly related to the NeoMorph
Screening Library, ALIS screening technology or QSCD (regardless of
inventorship), as well as those Inventions subject to Section 3.5(b)(i)
(hereinafter "NEOGENESIS INVENTIONS"), shall be the sole property of NeoGenesis
and are included in NeoGenesis Know-How and/or NeoGenesis Patent Rights, as the
case may be. SPL hereby assigns and agrees to assign to NeoGenesis, all of SPL's
right title and interest (if any) in such NeoGenesis Inventions and SPL shall
use Commercially Reasonable Efforts to perfect such assignment (at the
NeoGenesis' expense).
(b) Title to and ownership of all other Inventions arising from
the Screening Program and which are not covered by Section 3.5(a) shall be
determined as follows:
(i) Inventions made solely by one or more employees or
agents of NeoGenesis shall be the sole property of
NeoGenesis are NeoGenesis Inventions and are included
in NeoGenesis Know-How and/or NeoGenesis Patent
Rights, as the case may be.
(ii) Inventions made solely by one or more employees or
agents of SPL shall be the sole property of SPL, are
Schering Inventions, and are included in Schering
Know-How and/or Schering Patent Rights, as the case
may be.
(iii) Inventions made jointly by one or more employees or
agents of NeoGenesis and one or more employees or
agents of SPL shall be the joint property of
NeoGenesis and SPL (hereinafter "JOINT INVENTIONS").
In determining each party's contribution to Inventions arising under this
Agreement, inventorship shall be determined in accordance with United States
patent law.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
21
3.6 PATENT PROTECTION FOR INVENTIONS. Each of NeoGenesis and SPL
shall promptly disclose to the other knowledge of any Inventions arising in
connection with the Screening Program. Responsibility for the preparation,
filing, prosecution and maintenance of any patent applications and patents
claiming such Inventions shall be determined based upon ownership of the
Inventions and shall be handled in accordance with the provisions of this
Section 3.6. Within forty-five (45) days following disclosure of any
Invention(s), the parties shall classify such Invention as a Schering
Invention, a NeoGenesis Invention or a Joint Invention and shall update
ATTACHMENT C to add such Invention and reflect such classification.
(a) NeoGenesis shall have the right and responsibility to
prepare, file, prosecute, and maintain all patent applications and patent
within the NeoGenesis Patent Rights throughout the Territory at NeoGenesis
sole expense, including, without limitation, those with respect to NeoGenesis
Inventions. NeoGenesis shall have sole discretion as to all such activities
with regard to the NeoGenesis Patent Rights. NeoGenesis shall keep SPL
currently advised as to the status of all patents and patent applications
with respect to the NeoGenesis Patent Rights and shall supply SPL promptly
with copies of all patents, patent applications, substantive patent office
actions, substantive responses received or filed in connection with such
applications. SPL may offer comments and suggestions with respect to the
matters that are the subject of this Section 3.6(a) and NeoGenesis agrees to
consider such comments and suggestions; PROVIDED that nothing herein shall
obligate NeoGenesis to adopt or follow such comments or suggestions. In the
event that NeoGenesis elects not to file for patent protection for any
NeoGenesis Inventions or elects not to continue to prosecute or maintain a
patent or patent application under the NeoGenesis Patent Rights it shall
notify SPL of such decision at least forty-five (45) days prior to the due
date of any action or payment due with respect thereto. SPL shall have the
right, but not the obligation to assume the responsibility therefor at its
own cost and expense.
(b) SPL and NeoGenesis, acting through the Steering Committee,
shall select and retain patent counsel mutually acceptable to each of them for
the purpose of preparing, prosecuting, issuing and maintaining appropriate
patent applications concerning Joint Inventions. NeoGenesis, in consultation
with SPL, shall be primarily responsible for the preparation, filing (including
foreign filing decisions), prosecution and maintenance of such patent
applications and patents relating to Joint Inventions. NeoGenesis shall furnish
or have furnished to SPL copies of documents relevant to the same and provide
SPL with the opportunity to review and comment on patent decisions made by
patent counsel. Any disagreements between NeoGenesis and SPL with respect to
preparation, filing, prosecution, issuance and maintenance matters will be
discussed and resolved to their mutual satisfaction using the procedures
specified in Section 9.1, if necessary; PROVIDED, that to the extent that any
disagreement regards only the costs associated with a particular proposed
action, NeoGenesis may assume responsibility for such costs and the requirement
that the parties mutually agree upon resolution of the matter shall not apply.
Each party shall be responsible for fifty percent (50%) of all expenses
associated with the preparation, filing, prosecution, issuance and maintenance
of patents or other intellectual property protection for Joint Inventions. In
the event that either party elects not to pursue a particular action with
respect to which the parties disagree regarding costs, the other party shall
have the right to assume such costs and to have such action taken; PROVIDED
FURTHER that the non-paying party's licenses hereunder shall exclude any
intellectual property rights that are the subject of such action (e.g., patent
coverage in a particular country) unless and until such party reimburses the
other party for one-half (50%) of the costs of such action.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
22
(d) SPL shall have the sole right, but not the obligation, to
file, prosecute, and maintain, at SPL's sole expense, each of the Schering
Patent Rights throughout the Territory. Upon request, and at SPL's expense,
NeoGenesis will provide SPL with reasonable assistance to prepare, file,
prosecute, maintain and defend the Schering Patent Rights, and will take all
steps necessary to enable SPL to perfect its rights and title to the Schering
Patent Rights with respect to any Schering Inventions. Reasonable assistance
shall include, without limitation, providing SPL any data and information
relating to such Schering Inventions and access to the NeoGenesis employees who
are inventors of such Schering Inventions, as well as causing the execution of
any patent assignment or other documents.
3.7 ENFORCEMENT. Each party shall promptly notify the other of its
knowledge of any actual or potential infringement of the NeoGenesis Patent
Rights, the Schering Patent Rights or any Joint Inventions.
(a) NeoGenesis shall be solely responsible for defense and
enforcement of NeoGenesis Know-How and NeoGenesis Patent Rights. SPL shall be
solely responsible for the defense and enforcement of Schering Know-How and
Schering Patent Rights. In the event that either party recovers any sums in such
litigation by way of damages or in settlement thereof, such party shall have the
right to retain all such sums; PROVIDED that any recovery of ordinary damages by
SPL to the extent based upon third party sales of products that infringe upon
Compound Patent Rights shall be deemed to be Net Sales and SPL shall pay
NeoGenesis an amount calculated in accordance with Section 4.4 to reimburse
NeoGenesis for royalties due on lost sales of Licensed Product represented by
such ordinary damages; PROVIDED FURTHER that this allocation shall not apply
with respect to special or punitive damages, and that SPL shall be entitled to
deduct all litigation costs incurred by it in connection therewith from such
settlement or award prior to calculating such royalties.
(b) SPL shall have the first option to pursue any
enforcement or defense of any patents claiming Joint Inventions within the
Field and the Territory ("JOINT PATENT RIGHTS"); PROVIDED, that SPL pays all
costs and expenses related thereto. SPL shall have three (3) months from the
date it receives notice of such infringement to obtain a discontinuance of
such infringement or bring suit against the third party infringer. SPL shall
keep NeoGenesis reasonably informed of the status of such activities.
NeoGenesis shall provide reasonable assistance to SPL in any suit for
infringement of a Joint Patent Right brought by SPL against a third party,
and shall have the right to consult with SPL and to participate in and be
represented by independent counsel in such litigation at its own expense. For
purposes of this Section 3.7(b), reasonable assistance shall mean providing
SPL reasonable access to information, materials and NeoGenesis personnel
which SPL reasonably determines is necessary to enable SPL to conduct the
suit. SPL shall periodically reimburse NeoGenesis for its out-of-pocket costs
(excluding the costs of retaining independent counsel) incurred in
cooperating with SPL. SPL shall incur no liability to NeoGenesis as a
consequence of such litigation or any unfavorable decision resulting
therefrom, including any decision holding any of the Joint Patent Rights
invalid or unenforceable. In the event that SPL recovers any sums in such
litigation by way of damages or in settlement thereof, SPL shall have the
right to retain all such sums; PROVIDED that any recovery of ordinary damages
to the extent based upon third party sales of products that infringe upon the
Joint Patent Rights shall be deemed to be Net Sales and SPL shall pay
NeoGenesis an amount calculated in accordance with Section 4.4 to reimburse
NeoGenesis for royalties due on lost sales of Licensed Product represented by
such ordinary damages; PROVIDED FURTHER that this allocation shall not apply
with respect to special or punitive damages and that SPL shall be entitled to
deduct all litigation costs incurred by it in connection therewith from such
settlement or award prior to calculating such royalties.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
23
(c) If, after the expiration of the three (3) month period
specified in Section 3.6(b), SPL has not overcome the allegation of
infringement, obtained a discontinuance of such infringement, or brought suit
against the third party infringer, then, provided such infringement is
substantial, NeoGenesis shall have the right, but not the obligation, to
bring suit against such infringer under the Joint Patent Right, provided that
NeoGenesis shall bear all the expenses of such suit. SPL shall provide
reasonable assistance to NeoGenesis in any suit for infringement of a Joint
Patent Right brought by NeoGenesis against a third party, and shall have the
right to consult with NeoGenesis and to participate in and be represented by
independent counsel in such litigation at its own expense. For purposes of
this Section 3.6(c), reasonable assistance shall mean providing NeoGenesis
reasonable access to information, materials and SPL personnel which
NeoGenesis reasonably determines is necessary to enable NeoGenesis to conduct
the suit. NeoGenesis shall periodically reimburse SPL for its out-of-pocket
costs (excluding the costs of retaining independent counsel) incurred in
cooperating with NeoGenesis. NeoGenesis shall incur no liability to SPL as a
consequence of such litigation or any unfavorable decision resulting
therefrom, including any decision holding any of the Joint Patent Rights
invalid or unenforceable. In the event that NeoGenesis recovers any sums in
such litigation by way of damages or in settlement thereof, NeoGenesis shall
have the right to retain all such sums.
(d) Each party shall immediately give written notice to the
other of any certification of which it becomes aware filed pursuant to the
Xxxxxx-Xxxxx Act (21 U.S.C. Section355(b)(2)(A), or Section355(j)(2)(A)(vii)),
or any amendment or successor statute thereto, at least fourteen (14) days prior
to expiration of the forty five (45) day period set forth in 21 U.S.C.
Section355(c)(3)(c) (or any amendment or successor statute thereto).
3.8 LIST OF NEOGENESIS PATENT RIGHTS. The NeoGenesis Patent Rights
exclusively licensed to SPL pursuant to Sections 3.1 and 3.2 shall be listed in
ATTACHMENT B, which shall be amended from time to time during the term of this
Agreement to reflect additions or changes to the NeoGenesis Patent Rights in
accordance with Section 2.7. For the avoidance of doubt, to the extent that
ATTACHMENT B is not updated to include any NeoGenesis Patent Rights that are
directly related to any Selected Compounds (and Active Compounds and Improved
Active Compounds of the same Chemotype as such Selected Compounds), Designated
Compounds, Derivative Compounds and/or Licensed Products within the scope of an
exclusive license granted to SPL under Sections 3.1 and 3.2, NeoGenesis agrees
that it shall not have any action against SPL in relation thereto and shall
automatically amend ATTACHMENT B to include such NeoGenesis Patent Rights.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
24
4. CONSIDERATION
4.0 ADDITIONAL PAYMENT OBLIGATIONS. The parties acknowledge that
SPL's payment obligations as set forth in Sections 4.1, 4.2, 4.3 and 4.4 of this
Agreement are in addition to the payment obligations of Schering Corporation set
forth in Sections 4.1, 4.2, 4.3 and 4.4 of the US Agreement.
4.1 RESEARCH FUNDING. In consideration for the performance of the
Screening Program and activities related thereto by NeoGenesis, SPL shall pay
to NeoGenesis research funding during the term of the Screening Program at
the rate of [*] per FTE per year during the initial two year term of the
Screening Program. Such payments constitute [*] payment for FTEs at a rate of
[*] per year per FTE, with [*] of such funding to be paid by Schering
Corporation under the terms of the US Agreement. The amount of such funding
shall be based upon the actual number of FTEs assigned by NeoGenesis to work
on the Screening Program pursuant to Section 2.2(f), it being understood that
except as otherwise agreed by the parties in writing, research funding shall
be paid based upon [*] FTEs. Research funding shall be payable in equal
quarterly installments during the term of the Screening Program, with the
first such payment due within [*] after the Effective Date and each
successive payment due quarterly in advance on the first day of each calendar
quarter starting on October 1, 2001. It is understood and agreed by the
parties that first two research funding payments due under this Agreement [*]
represents payment for work performed by NeoGenesis in connection with the
Screening Program during the entire 2001 calendar year, including activities
performed during the period extending from January 1, 2001 until the
Effective Date. In the event that the term of the Screening Program is
extended, the FTE rate payable under this Section 4.1 in each such extension
year shall be increased by the CPI (as defined below). If SPL is unwilling to
provide funding for such documented cost increases and the parties are unable
to resolve such funding matter to their mutual satisfaction within forty-five
(45) days then the Screening Program shall not be extended for such extension
year. If in any quarterly funding period, actual expenditures by NeoGenesis
with respect to FTE's exceed the amount budgeted for the period, the overrun
will be carried forward for the next period and paid for from the next
payment(s); PROVIDED, that SPL payment obligations for any year of the
Screening Program shall not exceed the budgeted amount for such year unless
SPL has agreed to fund additional FTE work beyond that budgeted for such year
by means of a written amendment to this Agreement approved in writing by the
parties. For purposes of this Section 4.1, "CPI" means the Consumer Price
Index [*], as published by the Bureau of Labor Statistics of the United
States Department of Labor. In the event that the Bureau of Labor Statistics
ceases to publish the CPI or substantially changes its content or format in a
manner that precludes its further use hereunder, SPL and NeoGenesis shall
substitute therefor another comparable measure published by an agreed-upon
source.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
25
4.2 LICENSE FEES.
(a) In partial consideration for the licenses and other rights
granted to SPL hereunder, SPL shall pay to NeoGenesis a license fee of [*] with
respect to each Target for which one or more Selected Compounds are designated
pursuant to Section 2.7. Each such license fee shall be payable within [*] after
the effective date of the licenses to such Selected Compounds, as provided under
Section 2.7(b). The license fee shall be payable [*], irrespective of the number
of Selected Compounds, Designated Compounds or Licensed Products which may be
identified and/or developed with respect thereto. Payment of any license fees
under this Section 4.2(a) shall be made concurrently with payment of the
corresponding license fees under Section 4.2(a) of the US Agreement.
4.3 MILESTONES. In partial consideration for the licenses and other
rights granted to SPL hereunder, SPL shall pay to NeoGenesis the following
payments upon the occurrence of the indicated milestone event.
(a) with respect to any Designated Compound (and any Licensed
Products based upon such Designated Compound) which is being developed based
upon activity with respect to a specific Target, and was discovered as a result
of optimization of one or more Lead Compounds by NeoGenesis pursuant to Section
2.2(b):
(i) [*] upon designation of such Designated Compound pursuant
to Section 2.8;
(ii) [*] upon initiating treatment of the first patient in
a Phase I clinical trial for the applicable Licensed
Product under an approved IND (or its equivalent);
(iii) [*] upon initiating treatment of the first patient in
a Phase III clinical trial for the applicable Licensed
Product;
(iv) [*] upon filing and acceptance of the first NDA
(or its European or Japanese equivalent) for the
applicable Licensed Product; and
(v) [*] upon receipt of the first Regulatory Approval for
the applicable Licensed Product in a Major Market
Country.
(b) with respect to any Designated Compound (and any Licensed
Products based upon such Designated Compound) which is being developed based
upon activity with respect to a specific Target, but was not discovered as a
result of optimization of one or more Lead Compounds by NeoGenesis pursuant to
Section 2.2(b):
(i) [*] upon designation of such Designated Compound pursuant
to Section 2.8;
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
26
(ii) [*] upon initiating treatment of the first patient in
a Phase I clinical trial for the applicable Licensed
Product under an approved IND (or its equivalent);
(iii) [*] upon initiating treatment of the first patient in
a Phase III clinical trial for
the applicable Licensed Product;
(iv) [*] upon filing and acceptance of the first NDA
(or its European or Japanese
equivalent) for the applicable Licensed Product; and
(v) [*] upon receipt of the first Regulatory Approval for
the applicable Licensed Product
in a Major Market Country.
(c) All payments made to NeoGenesis by SPL pursuant to
Section 4.3(a) or (b) shall be due within thirty (30) days after the achievement
of the corresponding milestone and shall be nonrefundable and not creditable
against other amounts due to NeoGenesis. The payments provided for under this
Section 4.3 shall only be payable once upon the first achievement of the
indicated milestone with respect to Designated Compound and/or Licensed Product
developed against a particular Target and no additional payments shall be due on
subsequent or repeated achievement of the same milestone for another Designated
Compound and/or Licensed Product developed against the same Target. No
milestones shall be payable under this Section 4.3 with respect to (i) any
compounds or products other than Designated Compounds and Licensed Products, or
(ii) any Designated Compounds or Licensed Products being developed based upon
[*].
(d) In the event that SPL ceases all clinical development for
a Designated Compound/Licensed Product (a "Discontinued Product") for which one
or more milestones have been paid pursuant to this Section 4.3, no payment shall
be due under this Section 4.3 with respect to the achievement of the same
milestone(s) with respect to the another Designated Compound or Licensed Product
discovered or developed against the same Target as the Discontinued Product (a
"Back-up Product"). In the event that the Back-up Product achieves milestones
which were not previously achieved by the relevant Discontinued Product, such
milestone payments will be paid in accordance with this Section 4.3.
4.4 ROYALTIES. In partial consideration for the licenses and other
rights granted to SPL hereunder, SPL shall pay royalties to NeoGenesis based
upon Net Sales of Licensed Products in the Territory.
(a) The royalties payable to NeoGenesis on Net Sales of
Licensed Products in the Territory by SPL, its Affiliates and sublicensees,
shall be determined as follows:
(i) [*] of Net Sales of Licensed Products in the
Territory where the Designated Compound in such
Licensed Product was discovered as a result of
optimization of one or more Lead Compounds by
NeoGenesis pursuant to Section 2.2(b); or
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
27
(ii) [*] of Net Sales of Licensed Products in the
Territory where the Designated Compound in such
Licensed Product was not discovered as a result of
optimization of one or more Lead Compounds by
NeoGenesis pursuant to Section 2.2(b); or
(iii) [*] of Net Sales of Licensed Products in the
Territory where the Designated Compound in such
Licensed Product is a Derivative Compound derived
from an Selected Compound identified through SPL's
screening of a Selected Compound against a target
other than the specific Target(s) for which the
Selected Compound was screened by NeoGenesis.
(b) Starting with the First Commercial Sale of each Licensed
Product in the Territory, SPL shall provide NeoGenesis with quarterly reports of
Net Sales by country of each Licensed Product in the Territory. Each such
quarterly report shall be provided to NeoGenesis not later than sixty (60) days
following the close of the relevant calendar quarter, (i.e., following each
March 31, June 30, September 30 and December 31). Concurrently with the making
of such reports, SPL shall pay to NeoGenesis royalties due for such period at
the rates specified in Section 4.4(a). The report due for the quarter ending
December 31 of each year shall also include the aggregate royalties due
NeoGenesis for the entire year.
(c) SPL's obligation to pay royalties with respect to each
Licensed Product shall expire on a country-by-country basis upon the later of
(i) the expiration (or revocation or complete rejection) of the last to expire
(or to be revoked or to be completely rejected) of any NeoGenesis Patent Right
and/or Compound Patent Right having a Valid Claim covering such Licensed Product
in the country, or (ii) [*] from the First Commercial Sale of the Licensed
Product in such country. No royalties shall accrue on the disposition of any
Licensed Product in reasonable quantities by SPL, its Affiliates or its
sublicenses at no charge as samples (promotional or otherwise) or as donations
(for example, to non-profit institutions or government agencies for a
non-commercial purpose) or for clinical studies.
4.5 REMITTANCE.
(a) All royalties, milestone and other payments required
under this Article 4 shall be made by bank wire transfer in United States
dollars in immediately available funds to an account designated by NeoGenesis.
Royalties shall be deemed payable by the entity making the Net Sales from the
country in which earned in local currency and subject to foreign exchange
regulations then prevailing. Royalty payments shall be made in United States
dollars to the extent that free conversion to United States dollars is
permitted. The rate of exchange to be used in any such conversion from the
currency in the country where such Net Sales occurs shall be in accordance with
the policy set forth in ATTACHMENT D attached hereto.
(b) In the event that any payment due NeoGenesis under this
Agreement is not made when due, the amount due shall accrue interest beginning
on the fifth day following the final date on which such payment was due,
calculated at the annual rate equal to two percent (2%) above the prime interest
rate reported in the WALL STREET JOURNAL for the due date, calculated from the
due date until paid in full. Such payment when made shall be accompanied by all
interest so accrued.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
28
(c) If at any time legal restrictions or prohibitions imposed
by national or international authority prevent the conversion of the local
currency and such currency cannot be removed from such country such that prompt
remittance by SPL of any royalties owed by SPL to NeoGenesis in respect of sales
in such country is prevented, the parties shall consult with a view to finding a
prompt and acceptable solution, and SPL or its designated Affiliates will make
payment through any means as NeoGenesis may lawfully direct at no additional
out-of-pocket expense to SPL.. Notwithstanding the foregoing, if royalties in
any country cannot be remitted to NeoGenesis for any reason within three (3)
months after the end of the calendar quarter during which they are earned, then
SPL shall be obligated to pay NeoGenesis in the local currency of such country
and shall deposit the relevant royalties in a bank account in such country
designated by NeoGenesis and in the name of NeoGenesis.
4.6 RECORDS. SPL, its Affiliates and sublicensees shall keep and
maintain complete, true and accurate books of account and records (prepared in
accordance with United States Generally Accepted Accounting Principles,
consistently applied) sufficient to determine the amounts of Net Sales and any
royalty payments due with respect thereto. All such books and records shall be
maintained in accordance with SPL's records retention policies consistently
applied but for a period of at least thirty six (36) months from the date of
each payment of royalties.
4.7 INSPECTION. Upon prior written notice SPL and its Affiliates
shall, within a period not to exceed forty-five (45) days, permit an independent
certified public accounting firm of nationally recognized standing selected by
NeoGenesis and reasonably acceptable to SPL, at NeoGenesis' expense, to have
access during regular business hours to examine pertinent books and records of
SPL and its Affiliates necessary to verify the accuracy of the royalty reports
and payments by SPL hereunder. The examination shall be limited to pertinent
books and records for any calendar year ending not more than twenty-four (24)
months prior to the date of such request. Such inspection right shall not be
exercised more than once in any calendar year. The accounting firm employees
shall sign confidentiality agreements reasonably acceptable to SPL as a
condition precedent to their inspection. SPL may designate competitively
sensitive information which such auditor may not disclose to NeoGenesis;
PROVIDED, HOWEVER, that such designation shall not encompass the auditor's
conclusions. The accounting firm shall disclose to NeoGenesis only whether the
royalty reports are correct or incorrect and the specific details concerning any
discrepancies. No other information shall be provided to NeoGenesis. In the
event that the accounting firm correctly concludes that a variation or error has
occurred resulting in an underpayment of royalties by SPL of five percent (5%)
or more of the amount actually due for the period covered by the inspection, SPL
shall pay to NeoGenesis in addition to such underpayment, the costs relating to
the inspection, within thirty (30) days of receipt of an invoice for such
amounts. Any overpayment of royalties by SPL discovered through such audit shall
be fully creditable against royalties subsequently due hereunder. SPL shall
include in each sublicense granted by it pursuant to this Agreement a provision
requiring the sublicensee to make reports to SPL, to keep and maintain records
of sales made pursuant to such sublicense and to grant access to such records by
NeoGenesis' independent accountant to the same extent required of SPL under this
Agreement. Upon expiration of the twenty-four (24) month period immediately
following the receipt by NeoGenesis of SPL's fourth quarter royalty report for a
given calendar year, the calculation of royalties payable with respect to such
year shall be binding and conclusive upon NeoGenesis, and SPL, its Affiliates
and its sublicensees shall be released from any liability or accountability with
respect to royalties for such year, except for instances of fraud or other
intentional misconduct.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
29
4.8 TAXES. If at any time, any jurisdiction within the Territory
requires the withholding of income taxes or other taxes imposed upon payments
set forth in this Article 4, SPL shall make such withholding payments as
required and subtract such withholding payments from the payments to be made to
NeoGenesis as set forth in this Article 4, or if applicable, NeoGenesis will
promptly reimburse SPL or its designee(s) of the amount of such withholding
payments that are not subtracted from the payments made to NeoGenesis as set
forth in this Article 4. SPL shall provide NeoGenesis with documentation of such
withholding and payment in a manner that is satisfactory for purposes of
reporting to the U.S. Internal Revenue Service. Any withholdings paid when due
hereunder shall be for the account of NeoGenesis. Withholding payments made by
SPL pursuant to this Section 4.8 shall be made based upon financial information
provided to SPL by NeoGenesis, and to the extent that such information is
incorrect, NeoGenesis shall be liable for any deficiency, and any fine,
assessment or penalty imposed by any taxing authority in the Territory for any
deficiency in the amount of any such withholding or the failure to make such
withholding payment. If SPL is required to pay any such deficiency, or any fine,
assessment or penalty for any such deficiency, NeoGenesis shall promptly
reimburse SPL for such payments.
5. CONFIDENTIALITY
5.1 PUBLICITY. Each of the parties hereto agrees not to disclose to
any third party the existence or the terms of this Agreement without the prior
written consent of the other party hereto. Notwithstanding the foregoing, the
parties may agree upon an initial press release to announce the execution of
this Agreement, together with a corresponding Q&A outline for use in responding
to inquiries about the Agreement. In the event of such agreed upon press
release, each party may thereafter disclose to third parties the specific
information contained in such press release and Q&A without the need for further
approval by the other party. Nothing in this Section 5.1 shall prohibit a party
from making such disclosures to the extent required under applicable federal or
state securities laws or any rule or regulation of any nationally recognized
securities exchange. In such event, however, the disclosing party shall use good
faith efforts to notify and consult with the other party prior to such
disclosure and, where applicable, shall diligently seek confidential treatment
to the extent such treatment is available under applicable securities laws.
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5.2 CONFIDENTIALITY.
(a) Confidential Information received by one party (the
"RECEIVING PARTY") from the other party (the "DISCLOSING PARTY") in connection
with this Agreement will be used by the Receiving Party solely for the
performance of the Screening Program or as otherwise expressly permitted by this
Agreement. All Confidential Information will be received and held in confidence
by the Receiving Party, and shall not be disclosed to any third party without
the prior written consent of the Disclosing Party. Each party acknowledges that,
except as expressly set forth herein, it will not obtain any rights of any sort
in or to the Confidential Information of the Disclosing Party as a result of
such disclosure.
(b) The Receiving Party will restrict disclosure of the
Disclosing Party's Confidential Information to those of the Receiving Party's
and its Affiliates' employees, officers, directors, consultants and agents to
whom it is necessary to disclose such Confidential Information in connection
with the performance of its obligations under this Agreement. The Receiving
Party shall use all reasonable efforts, which shall be at least fully
commensurate with those employed by the Receiving Party for the protection of
its own Confidential Information, to protect the Confidential Information of the
Disclosing Party.
(c) The confidentiality and use restrictions set forth in
this Article 5 shall not apply to Confidential Information to the extent such
information:
(i) was already known to the Receiving Party, other
than under an obligation of
confidentiality, at the time of disclosure;
(ii) was generally available to the public or otherwise
part of the public domain at
the time of its disclosure to the Receiving Party;
(iii) became generally available to the public or
otherwise part of the public domain after its
disclosure and other than through any act or
omission of the Receiving Party in breach of
this Agreement;
(iv) was independently developed by the Receiving
Party without the aid, application or use of the
Disclosing Party's Confidential Information, as
demonstrated by documented evidence prepared
contemporaneously with such independent
development; or
(v) was subsequently lawfully disclosed to the
Receiving Party, other than under a duty of
confidentiality, by a third party that had the
right to make such disclosure.
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(d) Each party hereto may use or disclose Confidential
Information disclosed to it by the other party to the extent (i) such use or
disclosure is reasonably necessary and permitted in the exercise of the rights
granted hereunder in filing or prosecuting patent applications and prosecuting
or defending litigation, (ii) such disclosure is reasonably required to be made
to any institutional review board of any entity conducting clinical trials with
Designated Compound(s) and/or Licensed Product(s), or to any governmental or
other regulatory agency, in order to gain approval to conduct clinical trials or
to market Designated Compound(s) and/or Licensed Products, (iii) such disclosure
is required by law, regulation, rule, act or order of any governmental
authority, court, or agency, or is made in connection with submitting required
information to tax or other governmental authorities, or (iv) such disclosure or
use is reasonably required in conducting clinical trials, or making a permitted
sublicense or otherwise exercising license rights expressly granted to it by the
other party pursuant to the terms of this Agreement; in each case, provided that
if the Receiving Party is required to make any such disclosure of the Disclosing
Party's Confidential Information, other than pursuant to a confidentiality
agreement, it will give reasonable advance notice to the Disclosing Party of
such disclosure and, except to the extent inappropriate in the case of patent
applications, will use its reasonable diligent efforts to secure confidential
treatment of such Confidential Information in consultation with the Disclosing
Party prior to its disclosure (whether through protective orders or otherwise)
and disclose only the minimum necessary to comply with such requirements.
(e) Following the termination of this Agreement, or at any
time upon written request by the Disclosing Party, the Receiving Party shall
promptly return to the Disclosing Party all of the Disclosing Party's
Confidential Information, including all copies thereof, in its possession;
provided that the Receiving Party's legal counsel may retain one (1) copy of the
Disclosing Party's Confidential Information in a secure location solely for the
purpose of determining its obligations under this Agreement.
5.3 PUBLICATION. Each of SPL and NeoGenesis acknowledges the other
party's interest in publishing its results to obtain recognition within the
scientific community and to advance the state of scientific knowledge. Each
party also recognizes the mutual interest in obtaining valid patent protection
and in protecting business interests and trade secret information. Consequently,
either party, its Affiliates, employees or consultants wishing to make a
publication relating to the results of the Screening Program shall deliver to
the other party a copy of the proposed written publication or an outline of an
oral disclosure at least sixty (60) days prior to submission for publication or
presentation. For purposes of this Agreement, the term "publication" shall
include, without limitation, abstracts and manuscripts for publication, slides
and texts of oral or other public presentations, and texts of any transmission
through any electronic media, any computer access system such as the internet,
world wide web, or similar medium. The reviewing party shall have the right to
(i) propose modifications to the publication for patent reasons, trade secret
reasons or business reasons or (ii) delay the publication or presentation in
order to protect patentable information. If the reviewing party requests a
delay, the publishing party shall delay submission or presentation for a period
not to exceed eighteen (18) months from the filing date of the first patent
application covering the information contained in the proposed publication, or
shall modify such Publication to eliminate such patentable information. If the
reviewing party requests modifications to the publication, the publishing party
shall edit such publication to prevent disclosure or trade secret or proprietary
business information prior to submission of the publication or presentation.
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6. REPRESENTATIONS AND WARRANTIES.
6.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each of
NeoGenesis and SPL hereby represents, warrants and covenants to the other
party hereto as follows:
(a) it is a corporation or entity duly organized and
validly existing under the laws of the state or other jurisdiction of its
incorporation or formation;
(b) the execution, delivery and performance of this
Agreement by such party has been duly authorized by all requisite corporate
action;
(c) it has the power and authority to execute and deliver
this Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such party of
this Agreement and its compliance with the terms and provisions hereof does not
and will not conflict with or result in a breach of any of the terms and
provisions of or constitute a default under (i) a loan agreement, guaranty,
financing agreement, agreement affecting a product or other agreement or
instrument binding or affecting it or its property; (ii) the provisions of its
charter or operative documents or bylaws; or (iii) any order, writ, injunction
or decree of any court or governmental authority entered against it or by which
any of its property is bound;
(e) except for the governmental and regulatory approvals
required to market the Licensed Product(s), the execution, delivery and
performance of this Agreement by such party does not require the consent,
approval or authorization of, or notice, declaration, filing or registration
with, any governmental or regulatory authority and the execution, delivery or
performance of this Agreement will not violate any law, rule or regulation
applicable to such party;
(f) this Agreement has been duly authorized, executed and
delivered and constitutes such party's legal, valid and binding obligation
enforceable against it in accordance with its terms subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to the availability
of particular remedies under general equity principles; and
(g) it shall comply with all applicable material laws
and regulations relating to its activities under this Agreement.
6.2 NEOGENESIS' REPRESENTATIONS. NeoGenesis hereby
represents, warrants and covenants to SPL as follows:
(a) to the best of NeoGenesis' knowledge, as of the Effective
Date, NeoGenesis is the sole and exclusive owner of the NeoMorph Screening
Library, the NeoGenesis Patent Rights and the NeoGenesis Know-How free and clear
of all liens, charges and encumbrances and no other person, corporate or other
private entity, or governmental entity or subdivision thereof, has or shall have
any claim of ownership with respect thereto;
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(b) as of the Effective Date it has the full right, power and
authority to grant all of the right, title and interest in the licenses and
other rights granted to SPL under this Agreement;
(c) to the best of NeoGenesis' knowledge, as of the Effective
Date the NeoMorph Screening Library, NeoGenesis Patent Rights and NeoGenesis
Know-How, and the use thereof in performance of the Screening Program as
contemplated hereunder, do not infringe on any intellectual property rights
owned or possessed by any third party;
(d) during the term of this Agreement, NeoGenesis shall not
grant or attempt to grant any licenses, options or other rights to any third
party that are contrary to or otherwise inconsistent with the licenses and other
rights granted to SPL hereunder;
(e) as of the Effective Date there are no claims, judgments
or settlements against or owed by NeoGenesis or pending or, to the best of
NeoGenesis' knowledge, threatened claims or litigation against NeoGenesis
relating to the NeoMorph Screening Library, NeoGenesis Patent Rights and
NeoGenesis Know-How;
(f) as of the Effective Date, it is in compliance in all
material respects with any agreements with third parties, and during the term of
this Agreement (i) it will use diligent efforts not to diminish the rights under
the NeoGenesis Patent Rights and NeoGenesis Know-How granted to SPL hereunder,
including without limitation, by not committing or permitting any actions or
omissions which would cause the breach of any agreements between itself and
third parties which provide for intellectual property rights applicable to the
performance of the Screening Program, and (ii) it will provide SPL promptly with
notice of any such alleged breach; and
(g) during the term of this Agreement it will not use in any
capacity, in connection with any activities to be performed under this
Agreement, any individual who has been debarred pursuant to the United States
Food, Drug and Cosmetic Act.
6.3 SPL'S REPRESENTATIONS. SPL hereby represents, warrants and
covenants to NeoGenesis as follows:
(a) during the term of this Agreement it will not use in any
capacity, in connection with any services to be performed under this Agreement,
any individual who has been debarred pursuant to the United States Food, Drug
and Cosmetic Act;
(b) to the best of SPL's knowledge, as of the Effective Date
it is the sole and exclusive owner or licensee of the Schering Patent Rights and
the Schering Know-How, all of which is free and clear of any liens, charges and
encumbrances, and no other person, corporate or other private entity, or
governmental entity or subdivision thereof, has or shall have any claim of
ownership with respect thereto;
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(c) to the best of SPL's knowledge, as of the Effective
Date it is the owner of the Targets and any other tangible materials to be
provided to NeoGenesis hereunder for use in the Screening Program;
(d) to the best of SPL's knowledge, as of the Effective
Date, the use of the Targets in performance of the Screening Program as
contemplated hereunder, does not infringe a valid and enforceable claim
of any issued U.S. patent owned or possessed by any third party; and
(e) as of the Effective Date, there are no claims, judgments
or settlements against or owed by SPL or pending or, to the best of SPL's
knowledge, threatened claims or litigation against SPL relating to the Schering
Patent Rights and Schering Know-How.
6.4 DISCLAIMER.
(a) EXCEPT FOR THE WARRANTIES EXPRESSLY MADE IN SECTIONS
6.1-6.3, NEITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY, EITHER
EXPRESS OR IMPLIED (WHETHER WRITTEN OR ORAL), INCLUDING, WITHOUT LIMITATION ANY
WARRANTY AGAINST INFRINGEMENT OF ANY THIRD PARTY PATENT OR OTHER INTELLECTUAL
PROPERTY RIGHTS, ANY WARRANTY OF MERCHANTABILITY OR ANY WARRANTY OF FITNESS FOR
A PARTICULAR PURPOSE WITH RESPECT TO THE NEOMORPH SCREENING LIBRARY, THE
NEOMORPH FOCUSED LIBRARIES, QSCD, THE COMPOUNDS, THE ACTIVE COMPOUNDS, THE
IMPROVED ACTIVE COMPOUNDS, THE SELECTED COMPOUNDS, THE DESIGNATED COMPOUNDS, THE
TARGETS, THE LICENSED PRODUCTS, THE NEOGENESIS KNOW-HOW, THE SCHERING KNOW-HOW,
THE SCOPE, VALIDITY OR ENFORCEABILITY OF THE NEOGENESIS PATENT RIGHTS OR THE
SCHERING PATENT RIGHTS, OR SUCH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT.
(b) THE REPRESENTATIONS AND WARRANTIES OF EACH OF NEOGENESIS
AND SPL EXTEND ONLY TO THE OTHER PARTY. NEITHER PARTY WILL BE LIABLE FOR ANY
CLAIM OR DEMAND AGAINST SUCH OTHER PARTY BY A THIRD PARTY, EXCEPT TO THE EXTENT
PROVIDED IN SECTIONS 7.2-7.3.
7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY SPL. SPL shall indemnify, defend and hold
harmless NeoGenesis and its Affiliates, and each of its and their respective
employees, officers, directors and agents from and against any and all
liability, loss, claims, damage, cost, and expense (including reasonable
attorneys' fees) arising out of or in connection with third party claims
relating to (i) the discovery, development, manufacture, use, testing,
marketing, sale or other disposition of Designated Compounds and/or Licensed
Products by or on behalf of SPL or its Affiliates or sublicensees, (ii)
performance of the Screening Program by SPL, (iii) the use of any and all
Targets with respect to which screening or other research activities are
conducted in the Screening Program, or (iv) any breach by SPL of its
representations and warranties under this Agreement, except, in each case, to
the extent such liability, loss, claims, damage, cost or expense is caused by
the negligence or willful misconduct of NeoGenesis, its Affiliates, or any of
their respective employees, officers, directors or agents.
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7.2 INDEMNIFICATION BY NEOGENESIS. NeoGenesis shall indemnify, defend
and hold harmless SPL and its Affiliates, and each of its and their respective
employees, officers, directors and agents from and against any and all
liability, loss, claims, damage, cost, and expense (including reasonable
attorneys' fees) arising out of or in connection with third party claims
relating to (i) the performance of the Screening Program by NeoGenesis, except
to the extent directly related to the use of Targets provided by SPL, (ii) any
breach of NeoGenesis' contractual obligations to third parties, or (iii) any
breach by NeoGenesis of its representations and warranties made under this
Agreement, except, in each case, to the extent such liability, loss, claims,
damage, cost, and expense is caused by the negligence or willful misconduct of
SPL, its Affiliates, or any of their respective employees, officers, directors
or agents.
7.3 PROCEDURE. As a condition to the indemnification provided for
under Sections 7.1 and 7.2, the indemnified party shall promptly notify the
party from whom indemnification is sought (the "INDEMNIFYING PARTY") in writing
of any claim or suit; PROVIDED, that failure to give such notice shall not
relieve Indemnifying Party of its indemnification obligations under this Article
7,except to the extent such failure actually and materially prejudices the
rights of Indemnifying Party to defend against such claim or suit. The
Indemnifying Party shall have the right to assume the defense of any suit or
claim related to the liability if it has assumed responsibility for the suit or
claim in writing; however, if in the reasonable judgment of the indemnified
party, such suit or claim involves an issue or matter which could have a
materially adverse effect on the business operations or assets of the
indemnified party, the indemnified party may retain control of the defense or
settlement thereof by providing written notice of such effect to the
Indemnifying Party, but in no event shall such action or notice be construed as
a waiver of any indemnification rights that the indemnified party may have at
law or in equity. If the Indemnifying Party defends the suit or claim, the
indemnified party may participate in (but not control) the defense thereof at
its sole cost and expense. If Indemnifying Party elects to compromise or defend
a claim that is the subject of this Article 7, it shall notify the indemnified
party of its decision within thirty (30) days after delivery of the notice
described above (or sooner if the nature of the third party claim requires). If
Indemnifying Party elects not to defend the indemnified party or fails to notify
the indemnified party of its election as provided in this Section 7.3, the
indemnified party may pay, compromise or settle such claim (subject to the
provisions of Section 7.5) and the indemnified party shall be free to pursue
such remedies as may be available under applicable law to recover from
Indemnifying Party.
7.4 LIMITATIONS ON LIABILITY. With respect to any claim by one party
against the other arising out of the performance or failure of performance of
the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such breach shall be limited
under this Agreement or otherwise at law or equity to direct damages only and in
no event shall a party be liable for punitive, exemplary or consequential
damages; PROVIDED that this limitation shall not apply to the extent arising
under third party claims which are subject to indemnification under Section 7.1
or Section 7.2.
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7.5 SETTLEMENTS. Neither party may settle a claim or action related
to a liability, loss, claims, damage, cost or expense arising in connection with
this Agreement without the consent of the other party, which consent shall not
be unreasonably withheld, if such settlement would impose any monetary
obligation on the other party or require the other party to submit to an
injunction or otherwise limit the other party's rights under this Agreement. Any
payment made by a party to settle any such claim or action shall be at its own
cost and expense; PROVIDED, that in the event and to the extent that an
indemnified party enters into a settlement of a matter with respect to which it
believes it is entitled to indemnification under this Article 7 after the other
party has refused to assume the defense of such matter, the provisions of this
Section 7.5 shall not constitute a waiver of such party's right to seek remedies
from the other party concerning such matter.
7.6 INSURANCE. Each party acknowledges and agrees that during the
term of this Agreement it shall maintain adequate insurance and/or a
self-insurance program for liability insurance, including products liability and
contractual liability insurance, to cover such party's obligations under this
Agreement.Each party shall provide the other party with evidence of such
insurance and/or self-insurance program, upon request.
8. TERM AND TERMINATION
8.1 TERM. This Agreement shall take effect as the Effective Date and
shall, unless sooner terminated in accordance with Section 8.2 or Section
9.5(a), expire on a Licensed Product-by -Licensed Product and country-by-country
basis upon the later of: (i) the expiration of the last-to-expire of the
NeoGenesis Patent Rights having a Valid Claim covering the Licensed Product in
such country, or (ii) [*] following the First Commercial Sale of the Licensed
Product in such country. Upon expiration of this Agreement with respect to a
Licensed Product in a given country, the licenses granted to SPL hereunder with
respect to such Licensed Product in such country shall become fully paid,
royalty-free, irrevocable licenses.
8.2 TERMINATION.
(a) SPL shall have the right to terminate this Agreement,
with or without cause at any time following the first anniversary of the
Effective Date upon one hundred and eighty (180) days written notice.
(b) During the term of the Screening Program, either party
may terminate the Screening Program and this Agreement (i) upon thirty (30) days
written notice to the other party if the other party fails to pay any amounts
properly due and owing under this Agreement, unless such amount is paid prior to
the expiration of such thirty (30) day period, or (ii) upon ninety (90) days
written notice to the other party if the other party commits a material breach
of this Agreement (other than non-payment), unless such breach is cured within
the ninety (90) day notice period, or if such breach is not capable of being
cured within ninety (90) days unless such party during such ninety (90) day
period initiates actions reasonably expected to cure the breach and thereafter
diligently proceeds to cure the breach.
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(c) Following completion of the Screening Program, either
party may terminate this Agreement (i) upon thirty (30) days written notice to
the other party if the other party fails to pay any amounts properly due and
owing under this Agreement, unless such amount is paid prior to the expiration
of such thirty (30) day period, or (ii) upon ninety (90) days written notice to
the other party if the other party commits a material breach of this Agreement
(other than non-payment), unless such breach is cured within the ninety (90) day
notice period, or if such breach is not capable of being cured within ninety
(90) days unless such party during such ninety (90) day period initiates actions
reasonably expected to cure the breach and thereafter diligently proceeds to
cure the breach. Notwithstanding the foregoing, in the event that the
non-payment or breach is related to a Licensed Product, any such termination
shall be effective only with respect to such Licensed Product and this Agreement
shall remain in full force and effect with respect to any other Licensed
Products being developed and commercialized by SPL under this Agreement.
(d) This Agreement may be terminated by either party upon the
filing or institution of bankruptcy, reorganization, liquidation or receivership
proceedings, or upon an assignment of a substantial portion of the assets for
the benefit of creditors by the other party, or in the event a receiver or
custodian is appointed for such party's business, or if a substantial portion of
such party's business is subject to attachment or similar process; provided,
however, that in the case of any involuntary bankruptcy proceeding such right to
terminate shall only become effective if the proceeding is not dismissed within
sixty (60) days after the filing thereof.
8.3 EFFECT OF TERMINATION.
(a) Upon termination of this Agreement pursuant to Section
8.2: (i) NeoGenesis will terminate all tasks then in process in an orderly
manner, as soon as practical and in accordance with a schedule agreed to by SPL
and NeoGenesis; (ii) NeoGenesis shall deliver to SPL all materials developed
through the termination of this Agreement; (iii) SPL shall pay NeoGenesis any
monies due and owing NeoGenesis up to the time of termination for services
actually performed (including all work-in process), and (iv) within thirty (30)
days following termination (including expiration) of this Agreement, NeoGenesis
shall deliver to SPL a reasonably-detailed written report describing the results
of the research performed up to the date of such termination. In addition, upon
termination (including expiration) of this Agreement each party shall return to
the other party or certify in writing to the other party that it has destroyed
all Confidential Information of the other party in its possession.
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(b) The licenses granted by NeoGenesis under Article 3 shall
survive any expiration or termination of the Screening Program or the
termination of this Agreement with respect to any Designated Compound or
Licensed Product for which the applicable service fees and milestone fees and
royalties have been paid (when due in accordance with the terms of this
Agreement) and SPL shall continue to have the right to develop, have developed,
make, have made, use, distribute, offer for sale, import, export and sell
Licensed Products relating to such Designated Compounds; PROVIDED that SPL
continues to pay NeoGenesis milestone fees and royalties as required by Sections
4.3 and 4.4 and complies with Sections 4.5-4.8. In the event the licenses
granted to SPL under Article 3 terminates for any reason, each of SPL's
sublicensees at such time shall continue to have the rights and license set
forth in their sublicense agreements, PROVIDED such sublicensee agrees in
writing that NeoGenesis is entitled to enforce all relevant provisions directly
against such sublicensee.
(c) Nothing herein shall be construed to release either party
of any obligation which matured prior to the effective date of any termination.
SPL's liability for any charges, payments or expenses due to NeoGenesis that
accrued prior to the termination date shall not be extinguished by termination,
and such amounts (if not otherwise due on an earlier date) shall be immediately
due and payable on the termination date.
(d) Termination of this Agreement by either party pursuant to
Section 8.2 or 9.5(a) hereof shall constitute termination of the U.S. Agreement
under the corresponding provisions thereof.
8.4 SURVIVAL. Articles 1, 5, 6, 7 and 9 and Sections 2.2(b), 2.2(c),
2.2(g), 2.5, 3.4, 3.5, 3.6, 3.7, 4.6, 4.7, 4.8 and 8.3(a-c), and the second and
third sentences of Section 2.1(c), shall survive any termination or expiration
of this Agreement.
9. GENERAL PROVISIONS.
9.1 DISPUTE RESOLUTION. Any controversy or dispute that arises under
or relates to this Agreement (with the exception to disputes relating to the
performance of the Screening Program which are governed by the terms of Section
2.6(d)) shall be referred to the Oversight Committee (as defined in Section
2.6(d)) for resolution. If the Oversight Committee is unable to resolve the
dispute within thirty (30) days, the dispute shall be resolved by binding
arbitration pursuant to the provisions of Schedule 9.1 (attached hereto).
Nothing herein shall prevent the parties from settling any dispute by mutual
agreement at any time.
9.2 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard for any
conflict of laws rule or provision thereof that would result in the application
of the substantive laws of any other jurisdiction. Notwithstanding the
foregoing, the parties (and the arbitrators) shall use United States (Federal)
patent and copyright laws for purposes of governing and construing Sections 3.5,
3.6 or 3.7 of this Agreement. The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to the transactions contemplated by
this Agreement.
9.3 AMENDMENT AND WAIVER. This Agreement may only be modified or
amended by a written instrument signed by authorized representatives of each
party. No provision of or right under this Agreement shall be deemed to have
been waived by any act or acquiescence on the part of either party, its agents
or employees, but only by an instrument in writing signed by an authorized
officer of each party. No waiver by either party of any breach of this Agreement
by the other party shall be effective as to any other breach, whether of the
same or any other term or condition and whether occurring before or after the
date of such waiver.
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9.4 INDEPENDENT CONTRACTORS. Each party represents that it is acting
on its own behalf as an independent contractor and is not acting as an agent for
or on behalf of any third party. This Agreement and the relations hereby
established by and between SPL and NeoGenesis do not constitute a partnership,
joint venture, franchise, agency or contract of employment. Neither party is
granted, and neither party shall exercise, the right or authority to assume or
create any obligation or responsibility on behalf of or in the name of the other
party or its Affiliates. NeoGenesis shall be solely responsible for compensating
all its personnel and for payment of all related FICA, workers' compensation,
unemployment and withholding taxes.
9.5 ASSIGNMENT. (a) This Agreement, and any of a party's rights and
obligations under this Agreement, may not be assigned, delegated, sold,
transferred, sublicensed (except as otherwise provided herein) or otherwise
disposed of, by operation of law or otherwise, to any third party without the
prior written consent of the other party; PROVIDED, that either party may assign
this Agreement to an Affiliate or in connection with the transfer or sale of all
or substantially all of its assets related to the division or the subject
business, or in the event of its merger or consolidation or change in control or
similar transaction PROVIDED, FURTHER, that in each instance the assignee
expressly assumes all obligations imposed on the assigning party by this
Agreement in writing. This Agreement shall be binding upon, and inure to the
benefit of, each party, its Affiliates, and its permitted successors and
assigns. Each party shall be responsible for the compliance by its Affiliates
with the terms and conditions of this Agreement.
(b) In the event that any (i) third party or "group" (within
the meaning of Section 13(d) or 14(d) of the Exchange Act of 1934, as amended)
other than the current officers and directors of NeoGenesis or SPL, as the case
may be, has acquired, directly or indirectly, the beneficial ownership, by way
of merger, consolidation or otherwise of 50% of the voting power of NeoGenesis
or SPL, as the case may be, on a fully-diluted basis or (ii) the sale, lease or
transfer of all or substantially all of the assets of NeoGenesis or SPL to any
third party or group not controlled directly or indirectly by such party (each,
a "CHANGE IN Control") during the term of the Screening Program causes either
party's rights and obligations hereunder to pass to any third party, the other
party shall have the right to terminate the Screening Program and this Agreement
upon written notice within thirty (30) days of receipt of actual knowledge of
such Change of Control, without providing the party that is the subject of such
Change in Control any opportunity to cure. Thereafter, such party shall also
have the right to terminate this Agreement if the assignee of the party that is
the subject of such Change in Control does not provide the writing required
under Section 9.5(a). In addition, if the beneficial ownership (in the manner
described in Section 9.5(b)(i)-(ii)) of more than fifty percent (50%) of the
voting or income interest in NeoGenesis or SPL, as applicable, on a fully
diluted basis, is acquired by a third party or group that is reasonably regarded
as a competitor of the other party, such determination being made with reference
to the products and services that such third party then markets or for which it
has made regulatory submissions with the FDA or an equivalent Regulatory
Authority in another Major Country or for which it has publicly announced its
intention to do either of the foregoing, the other party shall have the right,
but not the obligation, to terminate the Screening Program with six (6) months
notice to the party being acquired.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
40
9.6 NOTICES. Any notice required or permitted to be given or sent
under this Agreement shall be hand delivered or sent by express delivery service
or certified or registered mail, postage prepaid, or by facsimile transmission
(with written confirmation copy by registered first-class mail) to the parties
at the addresses and facsimile numbers indicated below.
If to NeoGenesis, to:
NeoGenesis Drug Discovery, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, President and CSO
Fax: (000) 000-0000
If to SPL, to:
Schering-Plough Ltd.
Xxxxxxxxxxxxxx 0
XX 0000 Xxxxxxx
Xxxxxxxxxxx
Attention: President
Facsimile No.: (011) (41) (00) 000 00 00
with copies to:
Schering Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President, Business Development
Facsimile No.: (000) 000-0000
and
Schering Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Law Department - Staff Vice-President,
Licensing
Facsimile No.: (000) 000-0000
Any such notice shall be deemed to have been received on the earlier of the date
actually received or the date five (5) days after the same was posted or sent.
Either party may change its address or its facsimile number by giving the other
party written notice, delivered in accordance with this Section 9.6.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
41
9.7 PROVISIONS FOR INSOLVENCY.
(a) All rights and licenses granted under or pursuant to this
Agreement by NeoGenesis to SPL are, for all purposes of Section 365(n) of Title
11 of the United States Code ("TITLE 11"), licenses of rights to "intellectual
property" as defined in Title 11. NeoGenesis agrees during the term of this
Agreement to create and maintain current copies or, if not amenable to copying,
detailed descriptions or other appropriate embodiments, to the extent feasible,
of all such intellectual property. If a case is commenced by or against
NeoGenesis under Title 11, then, unless and until this Agreement is rejected as
provided in Title 11, NeoGenesis (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without
limitation, a Title 11 Trustee (as defined therein)) shall, as SPL may elect in
a written request, immediately upon such request:
(i) perform all of the obligations provided in this
Agreement to be performed by NeoGenesis including,
where applicable and without limitation, providing to
SPL portions of such intellectual property (including
embodiments thereof) held by NeoGenesis and such
successors and assigns or otherwise available to
them; or
(ii) provide to SPL all such intellectual property
(including all embodiments thereof) held by
NeoGenesis and such successors and assigns or
otherwise available to them.
(b) If a Title 11 case is commenced by or against NeoGenesis,
and this Agreement is rejected as provided in Title 11, and SPL elects to retain
its rights hereunder as provided in Title 11, then NeoGenesis (in any capacity,
including debtor-in-possession) and its successors and assigns (including,
without limitation, a Title 11 Trustee) shall provide to SPL all such
intellectual property (including all embodiments thereof) held by NeoGenesis and
such successors and assigns, or otherwise available to them, immediately upon
SPL's written request. Whenever NeoGenesis or any of its successors or assigns
provides to SPL any of the intellectual property licensed hereunder (or any
embodiment thereof) pursuant to this Section 9.7, SPL shall have the right to
perform the obligations of NeoGenesis hereunder with respect to such
intellectual property, but neither such provision nor such performance by SPL
shall release NeoGenesis from any such obligation or liability for failing to
perform it.
(c) All rights, powers and remedies of SPL provided herein
are in addition to and not in substitution for any and all other rights, powers
and remedies now or hereafter existing at law or in equity (including, without
limitation, Title 11). In the event of the commencement of a Title 11 case by or
against NeoGenesis, SPL, in addition to the rights, power and remedies expressly
provided herein, shall be entitled to exercise all other such rights and powers
and resort to all other such remedies as may now or hereafter exist at law or in
equity (including, without limitation, Title 11) in such event. The parties
agree that they intend the foregoing SPL rights to extend to the maximum extent
permitted by law, including, without limitation, for purposes of Title 11:
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
42
(i) the right of access to any intellectual property
(including all embodiments thereof) of NeoGenesis, or
any third party with whom NeoGenesis contracts to
perform an obligation of NeoGenesis under this
Agreement, and, in the case of the third party, which
is necessary for the development, registration,
manufacture and marketing of Designated Compounds
and/or Licensed Products; and
(ii) the right to contract directly with any third party
described in (i) to complete the
contracted work.
9.8 SEVERABILITY. In the event any provision of this Agreement shall
for any reason be held to be invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other term
or provision hereof. The parties agree that they will negotiate in good faith to
replace any provision hereof so held invalid, illegal or unenforceable with a
valid provision which is as similar as possible in substance to the invalid,
illegal or unenforceable provision.
9.9 CAPTIONS. Captions of the sections and subsections of this
Agreement are for reference purposes only and do not constitute terms or
conditions of this Agreement and shall not limit or affect the meaning or
construction of the terms and conditions hereof.
9.10 ENTIRE AGREEMENT. This Agreement (including the Attachments or
Schedules hereto) constitutes the entire understanding of the parties with
respect to the transactions and matters contemplated hereby and supersedes all
previous communications, representations, agreements and understandings, whether
written or verbal, relating to the subject matter hereof. No representations,
inducements, promises or agreements, whether oral or otherwise, between the
parties not contained in this Agreement shall be of any force or effect.
9.11 RULES OF CONSTRUCTION. The parties agree that they have
participated equally in the formation of this Agreement and that the language
and terms of this Agreement shall not be construed against either party by
reason of the extent to which such party or its professional advisors
participated in the preparation of this Agreement.
9.12 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
43
9.13 FORCE MAJEURE. Failure of any party to perform its obligations
under this Agreement (except the obligation to make payments when properly due)
shall not subject such party to any liability or place them in breach of any
term or condition of this Agreement to the other party if such failure is due to
any cause beyond the reasonable control of such non-performing party ("FORCE
MAJEURE"), unless conclusive evidence to the contrary is provided. Causes of
non-performance constituting force majeure shall include, without
limitation,acts of God, fire, explosion, flood, drought, war, riot, sabotage,
embargo,strikes or other labor trouble, failure in whole or in part of suppliers
to deliver on schedule materials, equipment or machinery, interruption of or
delay in transportation, a national health emergency or compliance with any
order or regulation of any government entity acting with color of right. The
party affected shall promptly notify the other party of the condition
constituting force majeure as defined herein and shall exert reasonable efforts
to eliminate, cure and overcome any such causes and to resume performance of its
obligations with all possible speed; provided that nothing herein shall obligate
a party to settle on terms unsatisfactory to such party any strike, lockout or
other labor difficulty, any investigation or other proceeding by any public
authority or any litigation by any third party. If a condition constituting
force majeure as defined herein exists for more than ninety (90) consecutive
days, the parties shall meet to negotiate a mutually satisfactory resolution to
the problem, if practicable. If the parties cannot in good faith reach a
satisfactory resolution to the problem within sixty (60) days of meeting, the
matter shall be referred to binding arbitration pursuant to Section 9.1.
9.14 RELATIONSHIP TO US AGREEMENT, CONTROLLING PROVISIONS. The parties
acknowledge that this Agreement and the US Agreement are intended to operate
together as a single worldwide agreement governing the rights and obligations of
NeoGenesis, SPL and Schering Corporation. For purposes of clarity and avoidance
of doubt, the parties agree that rights and obligations of the parties under
Sections 2.1, 2.2, 2.3, 2.4, 2.5, 2.6, 2.7 and 2.8 of this Agreement shall be
controlled by the corresponding provisions of the U.S. Agreement. The parties
further agree that SPL's rights and obligations under Sections 3.5, 3.6 and 3.7
of this Agreement shall be exercised and performed by the employees and/or
agents of Schering Corporation having responsibility for Schering Corporation's
rights and obligations under Sections 3.5, 3.6 and 3.7 of the US Agreement, and
that all such activities will be performed in a coordinated manner.
9.15 FURTHER ASSURANCES. Each party agrees that, subsequent to the
execution and delivery of this Agreement and without any additional
consideration, it will execute and deliver any further legal instruments and
perform any acts which are or may become reasonably necessary to effectuate the
purposes of this Agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed on
their behalf by their duly authorized representatives.
NEOGENESIS DRUG DISCOVERY, INC. SCHERING-PLOUGH LTD.
BY: /S/ XXXXXX XXXXXX BY: /S/ XXXXX XXXXXXX
------------------------------- ------------------------
Xxxxxx Xxxxxx Xxxxx Xxxxxxx, Ph.D.
President and CSO Prokurist
Date: AUGUST 2, 2001 Date: AUGUST 2, 2001
------------------------------------- -----------------------
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
44
