1
Portions of this Exhibit 10.1 have been redacted and are the subject of
a confidential treatment request filed with the Secretary of the Securities and
Exchange Commission.
2
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EPO COLLABORATIVE
RESEARCH AND LICENSE AGREEMENT
BY AND BETWEEN
HOECHST XXXXXX XXXXXXX, INC.
AND
ONCOGENE SCIENCE, INC.
EFFECTIVE AS OF JANUARY 1, 1997
================================================================================
3
TABLE OF CONTENTS
Page
1. Definitions ...................................................................... 2
1.1 "Affiliate" ...................................................................... 2
1.2 "Allocated Overhead" ............................................................. 3
1.3 "Compound" ....................................................................... 3
1.4 "Confidential Information" ....................................................... 3
1.5 "Contract Period" ................................................................ 3
1.6 "Contract Period Research Plan" .................................................. 3
1.7 "Contract Period Research Program" ............................................... 4
1.8 "Development Phase" .............................................................. 4
1.9 "Development Phase Plan" ......................................................... 4
1.10 "Development Phase Program" ...................................................... 4
1.11 "Effective Date" ................................................................. 4
1.12 "EPO" ............................................................................ 4
1.13 "Event of Default" ............................................................... 4
1.14 "FDA" ............................................................................ 4
1.15 "Funding Payments" ............................................................... 4
1.16 "HMRI Compound" .................................................................. 5
1.17 "HMRI Confidential Information" .................................................. 5
1.18 "HMRI Improvements" .............................................................. 5
1.19 "HMRI Patents" ................................................................... 5
1.20 "HMRI Product" ................................................................... 5
1.21 "HMRI Technology" ................................................................ 6
1.22 "Improvements" ................................................................... 6
1.23 "Joint Improvements" ............................................................. 7
1.24 "Joint Patent" ................................................................... 7
1.25 "Materials" ...................................................................... 7
1.26 "NDA" ............................................................................ 7
1.27 "Net Sales" ...................................................................... 7
1.28 "Option Period" .................................................................. 9
1.29 "Option Period Research Plan" .................................................... 9
1.30 "Option Period Research Program" ................................................. 9
1.31 "OSI Compound" ................................................................... 9
1.32 "OSI Confidential Information" ................................................... 9
1.33 "OSI Improvements" ............................................................... 10
1.34 "OSI Patents" .................................................................... 10
1.35 "OSI Product" .................................................................... 10
1.36 "OSI Technology" ................................................................. 10
1.37 "Products" ....................................................................... 11
1.38 "Research Management Committee" .................................................. 11
1.39 "Research Plans" ................................................................. 11
1.40 "Research Programs" .............................................................. 11
4
1.41 "Target" ................................................................ 11
1.42 "Technology" ............................................................ 11
1.43 "Third Party" ........................................................... 12
1.44 "Valid Claim" ........................................................... 12
2. Collaborative Research Programs and Development Phase Program .................... 12
2.1 Research Plans and Development Phase Plan ............................... 12
2.2 Exclusivity ............................................................. 14
2.3 Research Management Committee ........................................... 16
2.4 Reports and Materials ................................................... 18
2.5 Laboratory Facilities and Personnel ..................................... 19
2.6 Diligent Efforts ........................................................ 19
3. Funding of the Research Program .................................................. 20
3.1 Option Period Funding ................................................... 20
3.2 Contract Period Funding ................................................. 21
3.3 Milestone Payments ...................................................... 24
3.4 Success Fees ............................................................ 25
4. Treatment of Confidential Information ............................................ 26
4.1 Confidentiality ......................................................... 26
4.2 Publication ............................................................. 27
4.3 Publicity ............................................................... 28
4.4 Disclosure of Inventions 28
4.5 Restrictions on Transferring Materials .................................. 28
4.6 Permitted Use of Confidential Information ............................... 29
5. Licenses and Royalties ........................................................... 30
5.1 Grant of Licenses ....................................................... 30
5.2 Paid-Up License ......................................................... 32
5.3 Obligations ............................................................. 32
5.4 Sublicenses ............................................................. 32
5.5 Ownership of Improvements ............................................... 33
5.6 Rights to Product Improvements .......................................... 34
5.7 Technical Assistance .................................................... 35
5.8 Royalties, Payments of Royalties, Accounting for Royalties, Records ..... 35
6. Provisions Concerning the Filing, Prosecution and Maintenance of Patent
Rights ........................................................................... 43
6.1 OSI Filing, Prosecution and Maintenance ................................. 43
6.2 HMRI Filing, Prosecution and Maintenance ................................ 44
6.3 Joint Filing, Prosecution and Maintenance ............................... 45
6.4 Reimbursement of Expenses ............................................... 47
6.5 Patent Extensions ....................................................... 48
6.6 Legal Action ............................................................ 48
iii
5
7. Acquisition of Rights from Third Parties ......................................... 52
8. Term, Termination and Disengagement .............................................. 53
8.1 Term .................................................................... 53
8.2 Termination of the Agreement During the Option Period ................... 54
8.3 Termination of Research Funding ......................................... 54
8.4 Termination Upon an Event of Default .................................... 55
8.5 Change of Control ....................................................... 57
8.6 Survival ................................................................ 58
9. Representations and Warranties ................................................... 58
9.1 Status .................................................................. 58
9.2 Authority ............................................................... 58
9.3 Binding Obligation ...................................................... 59
9.4 No Conflicting Obligations .............................................. 59
9.5 Good Title .............................................................. 59
9.6 Right to Grant Licenses ................................................. 59
10. Covenants of OSI ................................................................. 60
10.1 Affirmative Covenants of OSI Other Than Reporting Requirements .......... 60
11. Dispute Resolution ............................................................... 60
11.1 Mediation Committee ..................................................... 60
11.2 Non-Arbitrable Issues ................................................... 61
11.3 Scope of Arbitration .................................................... 61
11.4 Arbitration Panel ....................................................... 61
11.5 Designation of Rules, Situs, Governing Law .............................. 62
11.6 Procedure ............................................................... 63
11.7 Authority of Arbitrators ................................................ 66
11.8 Awards .................................................................. 66
12. Notices .......................................................................... 67
13. Governing Law .................................................................... 67
14. Miscellaneous .................................................................... 68
14.1 Binding Effect .......................................................... 68
14.2 Headings ................................................................ 68
14.3 Counterparts ............................................................ 68
14.4 Amendment; Waiver; etc. ................................................. 68
14.5 No Third Party Beneficiaries ............................................ 68
14.6 Assignment and Successors ............................................... 68
14.7 Compliance with Antitrust/Competition Law ............................... 69
EXHIBIT A OPTION PERIOD RESEARCH PLAN ..................................................... 71
iv
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EPO COLLABORATIVE RESEARCH AND LICENSE AGREEMENT
This EPO COLLABORATIVE RESEARCH AND LICENSE AGREEMENT (the
"Agreement") effective as of January 1, 1997, by and between HOECHST XXXXXX
XXXXXXX, INC. ("HMRI"), a Delaware corporation, with offices at Route 202-206,
X.X. Xxx 0000, Xxxxxxxxxxx, Xxx Xxxxxx 00000-0000, and ONCOGENE SCIENCE, INC.
("OSI"), a Delaware corporation, with its principal office at 000 Xxxxxxx
Xxxxxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
WHEREAS, OSI has certain proprietary technology for
identifying the effect of compounds on genes and gene products which is useful
in the process of developing products for the treatment of human diseases, and
in particular has discovered compounds from both the OSI and HMRI libraries
which induce expression of the EPO gene directed to the Target;
WHEREAS, HMRI has the capability to undertake research for the
discovery and evaluation of agents for the treatment of disease and also the
capability for clinical development, manufacturing and marketing of such drugs,
including agents directed to the Target;
WHEREAS, the Agreement provides for an Option Period Research
Program, a Contract Period Research Program, a Development Phase, the grant of
licenses in certain events and other provisions which are applicable to some or
all of the periods and activities provided for in this Agreement; and
7
WHEREAS, HMRI and OSI wish to collaborate in research and
development of orally active, small molecule inducers of EPO gene expression
from the Compounds discovered by OSI to increase the expression of EPO.
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements contained in this Agreement and intending to
be legally bound, the parties agree as follows:
1. Definitions
Whenever used in this Agreement, the terms defined in this
Article 1 shall have the meanings specified.
1.1 "Affiliate" means any corporation or other legal
entity owning, directly or indirectly, more than fifty percent (50%) of the
voting capital shares or similar voting securities of HMRI or OSI; any
corporation or other legal entity more than fifty percent (50%) of the voting
capital shares or similar voting rights of which is owned, directly or
indirectly, by HMRI or OSI; or any corporation or other legal entity more than
fifty percent (50%) of the voting capital shares or similar voting rights of
which is owned, directly or indirectly, by a corporation or other legal entity
which owns, directly or indirectly, more than fifty percent (50%) of the voting
capital shares or similar voting securities of HMRI or OSI. Notwithstanding the
foregoing, an Affiliate shall not be a corporation or other legal entity which
is not actually controlled by HMRI or its Affiliates, on the one hand (for
example, without limitation, Xxxxxx Pharmaceuticals, Inc. or its subsidiaries),
or OSI or its Affiliates, on the other hand.
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1.2 "Allocated Overhead" means the amount of
overhead, including general and administrative costs, determined in accordance
with generally accepted accounting principles, incurred by OSI and allocated to
the Research Programs in the same proportion that the total person-hours of work
performed by OSI employees in the Research Programs bears to the total
person-hours of work performed by OSI employees in all OSI research programs, or
such other customary allocation basis or overhead recovery basis that may be
agreed in writing between the parties.
1.3 "Compound" means any compound or its derivatives
from OSI's library or HMRI's library so designated from time to time by the
Research Management Committee, including, without limitation: (a) ** and its
derivatives, a novel, patentable small molecule synthetic discovered from the
OSI library; (b) ** and its derivatives, a small molecule synthetic discovered
from the HMRI compound library; and (c) ** and its derivatives, a novel,
patentable small molecule natural product discovered from the OSI library.
1.4 "Confidential Information" means HMRI
Confidential Information and OSI Confidential Information, either separately or
collectively, as may be applicable.
1.5 "Contract Period" has the meaning set forth in
Section 8.1.2 hereof.
1.6 "Contract Period Research Plan" means the written
research plan to be carried out during the Contract Period by HMRI and OSI
pursuant to this Agreement as described in Section 2.1.3 hereof.
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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1.7 "Contract Period Research Program" means the
collaborative research program conducted by HMRI and OSI during the Contract
Period pursuant to this Agreement as described in Section 2.1.3 hereof, with the
goals of studying the mechanism of action and conducting other research
necessary to profile a Compound, if such is deemed necessary by the parties.
1.8 "Development Phase" has the meaning set forth in
Section 8.1.3 hereof.
1.9 "Development Phase Plan" means the written plan
to be carried out during the Development Phase by HMRI pursuant to this
Agreement as described in Section 2.1.4 hereof.
1.10 "Development Phase Program" means the
development program conducted by HMRI during the Development Phase pursuant to
the Agreement as described in Section 2.1.4, with the goals of demonstrating
proof-of-principle in humans and developing Compounds into Products.
1.11 "Effective Date" means January 1, 1997.
1.12 "EPO" means the Erythropoietin protein.
1.13 "Event of Default" has the meaning set forth in
Section 8.4.1 hereof.
1.14 "FDA" means the United States Food and Drug
Administration.
1.15 "Funding Payments" has the meaning set forth in
Section 3.2 hereof.
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1.16 "HMRI Compound" means ** and its derivatives and
any other compound and its derivatives from HMRI's library so designated from
time to time by the Research Management Committee.
1.17 "HMRI Confidential Information" means all
information about any element of HMRI Technology which is disclosed by HMRI to
OSI and designated "Confidential" in writing at the time of such disclosure,
subject to the exceptions set forth in Section 4.6 hereof. The HMRI Confidential
Information shall also include all HMRI Improvements.
1.18 "HMRI Improvements" has the meaning set forth in
Section 5.5 hereof.
1.19 "HMRI Patents" means the patents and patent
applications owned or filed by HMRI, both foreign and domestic, arising in the
course of conducting the Research Programs or the Development Phase Program,
which relate to the research, development, manufacture, composition,
derivatives, use or sale of HMRI Compounds or HMRI Products, including, without
limitation, all substitutions, extensions, Supplementary Protection
Certificates, reissues, renewals, divisions, continuations, continuations in
part, utility models and certificates of invention thereof, all of which shall
be from time to time identified to the Research Management Committee.
1.20 "HMRI Product" means a product derived from the
Research Programs or the Development Phase Program containing a HMRI Compound
sold for the
---------------------
** This portion redacted pursuant to a request for confidential treatment.
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treatment or management of any disease state in a human patient or any other
human therapeutic indication, in each case directed to the Target.
1.21 "HMRI Technology" means Technology owned or
licensed as of the date hereof or acquired during the term of the Option Period,
the Contract Period or the Development Phase as set forth in Sections 8.1.1,
8.1.2 and 8.1.3 hereof by (i) HMRI or (ii) the pharmaceutical or biotechnology
business of any entity within the Hoechst AG pharmaceuticals group or any
successor thereof, that is useful for work on the Target and that is applicable
to the objectives of the Research Programs or the Development Phase Program, but
only to the extent that HMRI is legally entitled to disclose such acquired
Technology and use it in the Research Programs or the Development Phase Program.
1.22 "Improvements" means any and all inventions and
patents, discoveries, methods, ideas, works of authorship, know-how, show-how,
data, clinical and preclinical results, information, and any physical, chemical
or biological material, including any replication or any part of such material,
techniques and Technology, whether or not patentable or subject to other forms
of protection, which (i) are made, created, developed, written, conceived, or
reduced to practice, or which are licensed or otherwise acquired from Third
Parties (to the extent the agreeing party is legally enabled to disclose and use
the same in the Research Programs or the Development Phase Program), in the
course of, arising out of, or as a result of either party's research in the
course of conducting the Research Programs or the Development Phase Program, and
(ii) are related to the Target. Improvements include all rights relating to the
protection of trade secrets and confidential information, and any right
analogous
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to those set forth herein, which relate to, are embodied in or are appurtenant
to such discoveries, methods, ideas, etc.
1.23 "Joint Improvements" has the meaning set forth
in Section 5.5 hereof.
1.24 "Joint Patent" means the patents and patent
applications owned or filed jointly by HMRI and OSI, both foreign and domestic,
arising in the course of conducting the Research Programs or the Development
Phase Program, including patents and patent applications arising from Joint
Improvements, which relate to the research, development, manufacture,
composition, derivative, use or sale of HMRI Compounds or HMRI Products or OSI
Compounds or OSI Products and which are not HMRI Patents nor OSI Patents,
including, without limitation, all substitutions, extensions, Supplementary
Protection Certificates, reissues, renewals, divisions, continuations,
continuations in part, utility models and certificates of invention thereof, all
of which shall be from time to time identified to the Research Management
Committee.
1.25 "Materials" has the meaning set forth in Section
2.4.2 hereof.
1.26 "NDA" shall mean any and all applications (New
Drug Applications) submitted to the FDA under Sections 505, 507 or 512 of the
Food, Drug & Cosmetic Act and applicable regulations related to a Product,
including without limitation, full NDA's, "paper" NDA's and abbreviated NDA's
(ANDA's).
1.27 "Net Sales" shall mean the gross revenues from
the first sales of a Product by a party, its Affiliates and/or its sublicensees
to Third Parties, less deductions for:
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(a) standard transportation charges,
including insurance, consistent with custom in the industry;
(b) import, export, sales, use and excise
taxes, tariffs and duties paid or allowed by a selling party and any other
governmental charges imposed upon the production, importation, use or sale of a
Product;
(c) normal and customary quantity discounts
(including volume or formulary or other positioning discounts paid or credited
to any wholesaler, purchaser or Third Party payor or other contractee as a
result of a contractual arrangement specific to a Product), cash discounts
(including discounts for prompt payment), and customary trade promotional
allowances and credits, in the ordinary course of a party's, its Affiliates' or
its sublicensees' business;
(d) discounts (including retroactive price
reductions or a statutorily required reimbursement) mandated by or granted in
response to state, provincial or federal law or regulation;
(e) allowances or credits to customers on
account of recalls, rejection or return (including for spoiled, damaged and
outdated goods) in the ordinary course of business;
(f) rebates paid or credited to any
government or agency or any Third Party payor, administrator or contractee;
(g) wholesaler charge-backs allowed and
taken in amounts customary in the trade;
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(h) deductions for uncollectible accounts;
and
(i) broker's or agent's commissions.
The computation of Net Sales shall not include sales
between or among a party and its Affiliates or sublicensees, except where such
Affiliates or sublicensees are end users.
1.28 "Option Period" has the meaning set forth in
Section 8.1.1 hereof.
1.29 "Option Period Research Plan" means the written
research plan to be carried out during the Option Period by HMRI and OSI
pursuant to this Agreement as described in Section 2.1.1 hereof.
1.30 "Option Period Research Program" means the
collaborative research program to be carried out during the Option Period by
HMRI and OSI pursuant to this Agreement as described in Section 2.1.1 hereof
with the goal of identifying one or more clinical development candidates
directed to the Target.
1.31 "OSI Compound" means ** or ** and their
derivatives and any other compound and its derivatives from OSI's library so
designated from time to time by the Research Management Committee.
1.32 "OSI Confidential Information" means all
information about any element of OSI Technology which is disclosed by OSI to
HMRI, and designated "Confidential"
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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in writing by OSI at the time of such disclosure, subject to the exceptions set
forth in Section 4.6 hereof. OSI Confidential Information shall also include all
OSI Improvements.
1.33 "OSI Improvements" has the meaning set forth in
Section 5.5 hereof.
1.34 "OSI Patents" means the patents and patent
applications owned or filed by OSI, both foreign and domestic, arising in the
course of conducting the Research Programs or the Development Phase Program,
which relate to the research, development, manufacture, composition,
derivatives, use or sale of OSI Compounds or OSI Products, including, without
limitation, all substitutions, extensions, Supplementary Protection
Certificates, reissues, renewals, divisions, continuations, continuations in
part, utility models and certificates of invention thereof, all of which shall
be from time to time identified to the Research Management Committee.
1.35 "OSI Product" means a product derived from the
Research Programs or the Development Phase Program containing an OSI Compound
sold for the treatment or management of any disease state in a human patient or
any other human therapeutic indication, in each case directed to the Target.
1.36 "OSI Technology" means Technology owned or
licensed as of the date hereof or acquired during the term of the Option Period,
the Contract Period or the Development Phase as set forth in Sections 8.1.1,
8.1.2 and 8.1.3 hereof by OSI or its Affiliates, that is useful for work on the
Target and that is applicable to the objectives of the Research Programs or the
Development Phase Program, but only to the extent that OSI is legally entitled
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to disclose such acquired Technology and use it in the Research Programs or the
Development Phase Program.
1.37 "Products" means the HMRI Products and the OSI
Products, collectively.
1.38 "Research Management Committee" has the meaning
specified in Section 2.3 hereof.
1.39 "Research Plans" means the Option Period
Research Plan and the Contract Period Research Plan, collectively.
1.40 "Research Programs" means the Option Period
Research Program and the Contract Period Research Program, collectively.
1.41 "Target" means ** .
1.42 "Technology" means and includes all tangible or
intangible know- how, trade secrets, inventions (whether or not patentable),
data, clinical and preclinical results and any physical, chemical or biological
material that pertain to the development of human therapeutic products,
including all laboratory notebooks, research plans, cultures, strains, vectors,
genes and gene fragments and their sequences, cell lines, hybridoma cell lines,
monoclonal and polyclonal antibodies, proteins and protein fragments,
non-protein chemical structures and methods for synthesis, structure-activity
relationships, computer models of
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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chemical structures, computer software, assay methodology, processes, materials
and methods for production, recovery and purification of nature products,
formulas, plans, specifications, characteristics, equipment and equipment
designs, marketing surveys and plans, business plans and experience.
1.43 "Third Party" means any individual, estate,
trust, partnership, joint venture, association, firm, corporation, company or
other entity, other than the parties hereto and their respective Affiliates and
predecessors.
1.44 "Valid Claim" means a claim of an issued patent
so long as such claim shall not have been disclaimed by both (i) HMRI and (ii)
OSI, or shall not have been held invalid or unenforceable in a final decision
rendered by a tribunal of competent jurisdiction from which no appeal has been
or can be taken.
2. Collaborative Research Programs and Development Phase
Program
2.1 Research Plans and Development Phase Plan.
2.1.1 The first two quarters of the Option
Period Research Program will be conducted pursuant to the Option Period Research
Plan annexed as Exhibit A. The third, fourth and fifth quarters of the Option
Period Research Program shall be conducted pursuant to a further Option Period
Research Plan prepared and approved by the Research Management Committee in
accordance with the funding stipulations set forth in Section 3.1 hereof and set
forth with the minutes of the Research Management Committee.
2.1.2 No later than forty-five (45) days
before the end of the Option Period, HMRI will notify OSI in writing whether
HMRI elects (a) to participate in the
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Contract Period Research Program and, accordingly, fund the Contract Period
Research Program in accordance with Section 3.2 hereof, and (b) to participate
in the Development Phase Program. If HMRI elects to participate in the Contract
Period Research Program and the Development Phase Program, the parties will
implement the Contract Period Research Plan and HMRI will implement the
Development Phase Plan following the completion of the Option Period Research
Program. As more fully set out in Sections 5.1.2 and 8.3, if HMRI (i) elects not
to participate in the Contract Period Research Program, (ii) commences
participation in the Contract Period Research Program and thereafter
discontinues such participation by ceasing funding of the Contract Period
Research Program in accordance with the provisions of Section 3.2 hereof, or
(iii) elects not to continue its participation in the Development Phase Program,
HMRI will offer OSI the license rights set forth in Section 5.1.2 hereof. If OSI
accepts such a license, OSI shall (x) notify HMRI in writing within forty-five
(45) days after receipt of (A) HMRI's notification of HMRI's election not to
participate in the Contract Period Research Program, or (B) HMRI's election not
to continue its participation in the Contract Period Research Program, or (C)
HMRI's election not to continue its participation in the Development Phase
Program, and (y) pay HMRI the licensing fees and royalties set forth in Sections
5.8.3 and 5.8.4 hereof. If OSI does not accept such a license, then the parties
shall use reasonable best efforts to license any Compounds and/or Product(s) to
a Third Party and to equally share the proceeds from such licenses.
2.1.3 The Contract Period Research Program
will be conducted pursuant to the Contract Period Research Plan. The Contract
Period Research Plan for the
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months following the expiration of the Option Period until December 31 of such
year shall be prepared and approved by the Research Management Committee and set
forth with the minutes of a meeting of the Research Management Committee, which
shall be held before the end of the Option Period. Thereafter, the Contract
Period Research Plan for each succeeding calendar quarter shall be prepared and
approved by the Research Management Committee at a meeting of the Research
Management Committee held prior to the end of the period referred to immediately
above and each succeeding quarter until the end of the Contract Period and shall
be set forth within the minutes of such meeting.
2.1.4 The Development Phase Program will be
conducted pursuant to the Development Phase Plan which shall be the sole
responsibility of HMRI to prepare during the Development Phase. All pre-clinical
and clinical development shall likewise be the sole responsibility of HMRI to be
carried out, with HMRI solely responsible for all costs related thereto. HMRI
shall furnish to OSI written status reports within thirty (30) days of July 1
and the end of each calendar year describing the work accomplished by HMRI under
the Development Phase Program during such period.
2.2 Exclusivity.
2.2.1 OSI agrees that during the Option
Period and, if HMRI elects to participate in the Contract Period Research
Program and the Development Phase Program, the Contract Period and the
Development Phase, neither OSI nor any of its Affiliates shall conduct research
itself, sponsor any other research, or engage in any research sponsored by any
Third Party if such research relates to the Target, unless agreed to and
confirmed in
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writing by the Research Management Committee. If OSI becomes aware during the
Option Period, the Contract Period or the Development Phase of an opportunity
which it desires to pursue to sponsor other research having any of the
objectives of the Research Programs or the Development Phase Program or to
engage in such research sponsored by a Third Party, it shall promptly notify
HMRI of such opportunity, and HMRI and OSI shall consider whether such
opportunity can be incorporated into the Research Programs or the Development
Phase Program or otherwise used to further the purposes of the Research Programs
or the Development Phase Program to their mutual advantage.
2.2.2 HMRI agrees that during the Option
Period and, if HMRI elects to participate in the Contract Period Research
Program and the Development Phase Program, the Contract Period and the
Development Phase, neither HMRI nor any of its Affiliates shall sponsor any
other research, or engage in any research involving any Third Party if such
research relates to the Target, unless agreed to and confirmed in writing by the
Research Management Committee. If HMRI becomes aware during the Option Period,
the Contract Period or the Development Phase of an opportunity which it desires
to pursue to sponsor other research having any of the objectives of the Research
Programs or the Development Phase Program or to engage in such research
involving a Third Party, it shall promptly notify OSI of such opportunity, and
HMRI and OSI shall consider whether such opportunity can be incorporated into
the Research Programs or the Development Phase Program or otherwise used to
further the purposes of the Research Programs or the Development Phase Program
to their mutual advantage.
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2.3 Research Management Committee.
2.3.1 The parties shall establish a Research
Management Committee, which shall exist so long as HMRI is funding the Research
Programs under this Agreement and which may co-exist with any other committees
which may be formed pursuant to Section 2.3.9 hereof, for the following purposes
and for any other purpose specifically set forth in this Agreement:
(a) to prepare and approve (i) the
Option Period Research Plan for the third, fourth and fifth quarters of the
Option Period and (ii) the Contract Period Research Plan for each calendar
quarter in advance of the beginning of such calendar quarter during the Contract
Period in accordance with the provisions of Section 2.1.3 hereof;
(b) to review and evaluate progress
under the Research Plans;
(c) to direct the implementation of
the Research Plans; and
(d) to modify the Research Plans as
appropriate, and to coordinate and monitor publication of research results
obtained from the exchange of information and materials that relate to the
Research Programs.
2.3.2 Membership. HMRI and OSI each shall
appoint, in its sole discretion, three members to the Research Management
Committee. Substitutes may be appointed at any time. The members initially shall
be:
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HMRI Appointees OSI Appointees
** **
2.3.3 Co-Chairs. The Research Management
Committee shall be co-chaired by one of the members appointed by HMRI and by one
of the members appointed by OSI. The co-chairs shall together establish the
agenda for meetings and coordinate the Research Programs and follow-up actions.
2.3.4 Meetings. The Research Management
Committee shall meet at least four times per year, at places and on dates
selected by each party in turn. Representatives of HMRI or OSI or both, in
addition to members of the Research Management Committee, may attend such
meetings at the invitation of either party.
2.3.5 Minutes. The Research Management
Committee shall keep accurate minutes of its deliberations and shall record all
proposed decisions and all actions recommended or taken. The minutes shall be
delivered in draft form to all Research Management Committee members within ten
(10) working days after each meeting. The party hosting the meeting shall be
responsible for the preparation of the minutes. Draft minutes shall be edited by
the co-chairs and shall be issued in final form only with the co-chairs'
approval and agreement. The minutes shall include the approved Contract Period
Research Plan for the next succeeding calendar quarter and, from time to time as
provided for herein, reports on progress
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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under the Option Period Research Plan or Contract Period Research Plan, as the
case may be, then in effect.
2.3.6 Decisions. All decisions or actions of
the Research Management Committee shall be made by majority of the members. In
the event of a tie vote of the Research Management Committee which cannot be
broken by the mutual agreement of the chairs, the dispute resolution provisions
of Section 11 hereof shall apply.
2.3.7 Expenses. HMRI and OSI shall each bear
all expenses of their respective members related to the participation on the
Research Management Committee.
2.3.8 Subcommittees. The Research Management
Committee shall have authority to appoint subcommittees (which may include
persons who are not members of the Research Management Committee) and delegate
to such subcommittees powers and duties determined by the Research Management
Committee.
2.3.9 Future Committees. During the term of
this Agreement, the parties will discuss the necessity for and composition of
other committees.
2.4 Reports and Materials.
2.4.1 Reports. During the Research Programs,
HMRI and OSI shall each furnish to the Research Management Committee:
(a) summary written reports within
fifteen (15) days after the end of each calendar quarter, commencing on the
Effective Date, describing its progress under the Research Programs; and
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(b) comprehensive written reports
within thirty (30) days after the end of each calendar year, describing in
detail the work accomplished by it under the Research Programs during the year
and discussing and evaluating the results of such work.
2.4.2 Materials. OSI and HMRI shall, during
the Option Period and the Contract Period, as a matter of course as described in
the Research Plans or upon the written request of a party, furnish to the
requesting party samples of biochemical, biological or synthetic chemical
materials ("Materials") which are part of the Joint Improvements, OSI Technology
or HMRI Technology, and which are necessary for such party to carry out its
responsibilities under the Research Plans.
2.5 Laboratory Facilities and Personnel. OSI and
HMRI shall each provide suitable laboratory facilities, equipment and personnel
for the work to be done by each of them diligently to carry out their respective
activities under the Research Programs. Initially, it is contemplated that OSI
will assign duties under the Research Plans to the full-time equivalent of (a)
five (5) chemists and (b) eight (8) biologists, and HMRI will assign duties
under the Research Plans to the full-time equivalent of (i) five (5) chemists
and (ii) four (4) pharmacologists or biologists.
2.6 Diligent Efforts. HMRI and OSI each shall use
commercially reasonable diligent efforts to achieve the objectives of the
Research Programs and the Development Phase Program. Specifically, to achieve
the objectives of the Research Programs and the Development Phase Program, HMRI
will use diligent and good faith efforts and standard
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procedures consistent with those used with HMRI's own internal compounds and
products of like potential and consistent with reasonable commercial judgment:
(a) to advance the pharmacological
assessment of the Compounds in order to select those worthy of further
investigation;
(b) to make derivatives related to
the Compounds to determine the relationship between structure and activity, and
to identify potential clinical development candidates;
(c) to select clinical development
candidates;
(d) to assess safety and efficacy of
the selected development candidates in animals and in human patients under
conditions designed to yield data suitable for inclusion in submission(s)
necessary to obtain market authorization; and
(e) to develop manufacturing methods
and pharmaceutical formulations for those selected candidates.
3. Funding of the Research Program.
3.1 Option Period Funding. During the Option Period,
HMRI shall pay OSI ** to implement OSI's portion of the Option Period Research
Plan. The Research Management Committee may determine, at its discretion, to
increase the payment to OSI during the Option Period from ** to an amount which
shall not exceed ** . HMRI shall make its payments to OSI during the Option
Period quarterly in advance on the first day of the calendar
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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quarter, in an amount equal to ** of the total sum due OSI during the Option
Period. Within forty-five (45) days following the end of each such calendar
quarter, OSI shall submit to HMRI a statement setting forth the date, nature and
amount of the expenses incurred during such quarter.
3.2 Contract Period Funding. If HMRI elects to
participate in the Contract Period Research Program, HMRI shall pay OSI's total
actual research costs in carrying out the Contract Period Research Plan, plus
Allocated Overhead (the "Funding Payments"). The total amount of Funding
Payments shall not be less than ** in the first twelve (12) month period of the
Contract Period, nor less than ** in the second twelve (12) month period of the
Contract Period, unless, in each instance, the Research Management Committee,
which shall supervise the conduct of the research and the expenditure of the
funds, determines that such amounts cannot be effectively expended, in which
event the total amount of Funding Payments in either or both such twelve (12)
month periods may be less than the amounts stated above as determined by the
Research Management Committee.
3.2.1 Prior to the beginning of each calendar year
(or part thereof) during the Contract Period, the Research Management Committee
shall approve a budget which shall set forth the work to be accomplished during
each calendar quarter and the payment to be made. The budget so created will be
in form and detail as the Research Management Committee
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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shall determine and shall be delivered to both parties in time to be included in
each party's internal budgeting process.
3.2.2 HMRI shall make prepayments to OSI of
the Funding Payments quarterly in advance for work scheduled to be performed by
OSI during any calendar quarter. The amounts of such prepayments shall be based
upon the budget described in Section 3.2.1 hereof. Adjustments as necessary to
reflect the work actually performed by OSI shall be made at the end of each
calendar quarter. Within thirty (30) days of the close of a calendar quarter,
OSI shall invoice HMRI for the amount actually spent by OSI during the calendar
quarter plus Allocated Overhead for such quarter. If actual expenditures plus
Allocated Overhead during such quarter are less than the prepayment (and in the
case of the first and second twelve (12) month periods of the Contract Period,
less than ** and ** respectively), OSI shall pay HMRI on the date of the invoice
the difference between the prepayment and the actual expenditures. If actual
expenditures as approved by the Research Management Committee exceed the
prepayment, HMRI shall pay OSI the difference within thirty (30) days of the
date of the invoice.
3.2.3 The amount of the Funding Payment for
each calendar quarter shall be based on the work in progress pursuant to the
Contract Period Research Plan and the associated annual budget.
3.2.4 OSI shall keep for three (3) years
from the expiration of this
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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Agreement complete and accurate records of its expenditures of Funding Payments
received by it. The records shall conform to generally accepted accounting
principles as applied to a similar company similarly situated. HMRI shall have
the right at its own expense during the term of this Agreement and during the
subsequent three (3) year period to obtain from the independent certified public
accountant employed by OSI for public reporting purposes an audit of said
records to verify the accuracy of such expenditures, pursuant to the Contract
Period Research Plan. OSI shall make its records available for inspection by the
independent certified public accountant during regular business hours at the
place or places where such records are customarily kept, upon reasonable notice
from HMRI, to the extent reasonably necessary to verify the accuracy of the
expenditures and required reports. This right of inspection shall not be
exercised more than once in any calendar year and not more than once with
respect to records covering any specific period of time, unless a subsequent
inspection reveals discrepancies which may have also occurred during such prior
period of time. HMRI agrees to hold in strict confidence all information
concerning such expenditures, other than their total amounts, and all
information learned in the course of any audit or inspection, except to the
extent that it is necessary for HMRI to reveal the information in order to
enforce any rights it may have pursuant to this Agreement or if disclosure is
required by law. The failure of HMRI to request verification of any expenditures
before the expiration of the three (3) year period referred to above shall be
considered acceptance of the accuracy of the invoices for such expenditures, and
OSI shall have no obligation to maintain any records pertaining to such
expenditures beyond the three-year period. The results of the inspection shall
be binding on both parties. If the results
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of the audit indicate that HMRI overpaid OSI with respect to such expenditures,
OSI shall immediately pay to HMRI in cash the amount of such discrepancy.
3.2.5 The parties agree that all payments
made to OSI pursuant to Section 3.2 constitute contract research expenses under
Section 41 of the Internal Revenue Code of 1986.
3.2.6 The parties agree to use good faith
efforts to conduct the research contemplated under this Agreement efficiently so
as to minimize the expenditures made under this Agreement.
3.3 Milestone Payments.
3.3.1 Option Period Milestones. Subject to
the provisions of Section 5.8.11, on the date of execution of this Agreement,
HMRI will pay OSI ** as an initiation fee. Subject to the provisions of Section
5.8.11 hereof, upon first demonstration of a Compound having in vivo efficacy in
a rat model or in vitro efficacy in primary primates' liver or kidney cells with
respect to the Target, HMRI will pay OSI ** . For purposes of this Section
3.3.1, the Research Management Committee shall determine the efficacy criteria
for each of the in vivo milestone and the in vitro milestone.
3.3.2 Contract Period Milestones. Subject to
the provisions of Section 5.8.11, if HMRI elects to participate in the Contract
Period Research Program, at the
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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commencement of the Contract Period, HMRI shall make a milestone payment to OSI
of an additional ** . If the Contract Period and/or Development Phase is
continuing, subject to the provisions of Section 5.8.11, upon initiation of
Phase III clinical trials, HMRI shall make an additional milestone payment to
OSI of ** . If the Contract Period and/or Development Phase is continuing,
subject to the provisions of Section 5.8.11 hereof, upon approval of an NDA by
the FDA or equivalent European marketing approval for any Product, HMRI shall
pay OSI an additional ** milestone fee.
3.3.3 Each milestone payment referred to in
Sections 3.3.1 and 3.3.2 is to be paid by HMRI only once even though there may
be more than one (1) agent, Compound, derivative, etc. which may be involved in
the Research Programs or Development Phase Program or submissions to/approvals
by the FDA. In addition, if HMRI elects to discontinue its participation in
either of the Research Programs, HMRI's obligations hereunder to make milestone
payments shall cease.
3.4 Success Fees. If HMRI should
commercialize the Products, upon cumulative Net Sales of HMRI, its Affiliates
and sublicensees of all Products reaching:
(a) ** in the aggregate worldwide, HMRI
shall pay OSI a one (1) time fee of ** ;
(b) ** in the aggregate worldwide, HMRI
shall pay OSI an additional one (1) time fee of ** ; and
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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(c) ** in the aggregate worldwide, HMRI
shall pay OSI an additional one (1) time fee of ** .
4. Treatment of Confidential Information
4.1 Confidentiality.
4.1.1 Subject to the disclosure obligations
set forth in Sections 4.3 and 4.4 hereof and publication rights set forth in
Section 4.2 hereof, (i) HMRI agrees that during the period of the Research
Programs and the Development Phase and for five (5) years following termination
of the Agreement, it will keep confidential, and will cause its Affiliates to
keep confidential, all OSI Confidential Information, and neither HMRI nor any of
its Affiliates shall use OSI Confidential Information except as expressly
permitted in this Agreement and (ii) OSI agrees that during the period of the
Research Programs and the Development Phase and for five (5) years following
termination of the Agreement, it will keep confidential, and will cause its
Affiliates to keep confidential, all HMRI Confidential Information, and neither
OSI nor any of its Affiliates shall use HMRI Confidential Information except as
expressly permitted in this Agreement.
4.1.2 HMRI and OSI acknowledge that the OSI
Confidential Information and HMRI Confidential Information is highly valuable,
proprietary, confidential information, and each party agrees that any disclosure
of the other party's Confidential Information to any officer, employee or agent
of such party or of any of its Affiliates shall be
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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made only if and to the extent necessary to carry out its responsibilities under
this Agreement and shall be limited to the maximum extent possible consistent
with such responsibilities. Subject to Section 4.6 hereof, each party agrees not
to disclose the other party's Confidential Information to any Third Parties
under any circumstance without written permission. Each party shall take such
action, and shall cause its Affiliates to take such action, to preserve the
confidentiality of each other party's Confidential Information as they would
customarily take to preserve the confidentiality of their own confidential
information.
4.1.3 Each party represents that all of its
employees participating in the Research Programs and the Development Phase
Program who shall have access to the other party's Confidential Information are
bound by agreement to maintain such information in confidence. Consultants will
be similarly bound.
4.2 Publication. Section 4.1 hereof to the contrary
notwithstanding, the results obtained in the course of the Research Programs or
the Development Phase Program may be submitted for publication following
scientific review by the Research Management Committee or any other committee
charged with such review and subsequent approval by OSI's and HMRI's
managements. After receipt of the proposed publication by HMRI's and OSI's
managements, written approval or disapproval shall be provided within thirty
(30) days for a manuscript, within fourteen (14) days for an abstract for
presentation at, or inclusion in the proceedings of, a scientific meeting, and
within fourteen (14) days for a transcript of an oral presentation to be given
at a scientific meeting. The contribution of each party shall be noted in all
publications or presentations by acknowledgement or coauthorship, whichever is
appropriate.
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4.3 Publicity. Except as required by law, no party
may disclose the existence of this Agreement nor the research described in it
except with the written consent of the other party, which consent shall not be
unreasonably withheld. Neither party will issue a press release with regard to
matters relating to this Agreement without the other party's consent, which
consent shall not be unreasonably withheld. The party desiring to make any such
public announcement or other disclosure shall provide the other party with a
written copy of the proposed announcement or disclosure in sufficient time prior
to the proposed public release to allow such other party to comment upon the
nature, text and timing of such announcement or disclosure prior to the proposed
public release.
4.4 Disclosure of Inventions. Each party shall
promptly inform the other party about all Improvements concerning the Target
that are conceived, made or developed in the course of carrying out the Research
Programs and the Development Phase by employees of, or consultants to, that
party solely or jointly with employees of, or consultants to, the other party.
This Agreement shall not be construed to obligate a party to disclose to the
other party any Improvements which do not concern the Target.
4.5 Restrictions on Transferring Materials. HMRI and
OSI recognize that the Materials which are part of OSI Technology, HMRI
Technology, or Joint Improvements represent valuable commercial assets.
Therefore, throughout the Option Period and, if HMRI elects to participate in
the Contract Period Research Program and the Development Phase Program, the
Contract Period and the Development Phase and for five (5) years after
termination of the Agreement (unless the other party consents thereto, which
consent shall not be
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unreasonably withheld), each of OSI and HMRI agree not to transfer to any Third
Party any such Materials which constitute Technology owned solely by the other
party to this Agreement. Additionally, throughout the Option Period and, if HMRI
elects to participate in the Contract Period Research Program and the
Development Phase Program, the Contract Period and the Development Phase and for
five (5) years following termination of the Agreement, OSI and HMRI agree not to
transfer to any Third Party any Materials which are part of the Joint
Improvements, unless prior consent for any such transfer is obtained from the
other party, which consent shall not be unreasonably withheld, and unless such
Third Party agrees as a condition of any such transfer not to transfer the
Materials further and to use the Materials only for research purposes not
directed toward the development of Compounds or Products.
4.6 Permitted Use of Confidential Information.
Nothing contained herein will in any way restrict or impair any party's right to
use, disclose or otherwise deal with any Confidential Information which:
(a) at the time of disclosure is properly in
the public domain or thereafter becomes part of the public domain by publication
or otherwise through no breach of this Agreement by the party receiving such
information;
(b) the party receiving such information can
establish by competent evidence that such information was properly in its
possession prior to the time of the disclosure;
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(c) is independently and properly made
available as a matter of right to the party receiving such information by a
Third Party who is not thereby in violation of a confidential relationship;
(d) is information which is required to be
included in patent applications filed under Article 6 or required to be provided
to a government agency in order for HMRI to obtain approvals to market Products,
or for OSI to make a Product for HMRI hereunder; provided, however, that HMRI
Confidential Information or OSI Confidential Information shall not be disclosed
in any such patent application or otherwise without the prior written consent of
HMRI or OSI, respectively, which consent shall not be unreasonably withheld;
(e) is information which is required to be
disclosed to customers, users and prescribers of a Product, or which is
reasonably necessary to disclose in connection with the ethical marketing of a
Product; provided, however, that no OSI Confidential Information or HMRI
Confidential Information will be so disclosed without the prior written consent
of OSI or HMRI, respectively, which consent will not be unreasonably withheld;
or
(f) is information required to be disclosed
by law or by a court order, in each of which cases the disclosing party shall
timely inform the other and use its best efforts to limit the disclosure and
maintain confidentiality to the extent possible and will permit the other party
to limit such disclosure.
5. Licenses and Royalties
5.1 Grant of Licenses.
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5.1.1 License to HMRI. OSI hereby grants to
HMRI a worldwide exclusive license, including the right to sublicense, under the
OSI Technology, the OSI Patents, the OSI Improvements, and OSI rights in the
Joint Improvements and Joint Patents to develop, make, have made, use, sell and
have sold Products, which license shall be exclusive (even as to OSI) (a) for so
long as HMRI is obligated to pay a royalty under Sections 5.8.1 or 5.8.2 and (b)
thereafter in accordance with Section 5.2 hereof. HMRI agrees that OSI shall be
identified on the packaging of all Products on which HMRI is obligated to pay
royalties, subject to legal and commercial requirements on a country-by-country
basis and in a manner in accordance with such legal and commercial requirements.
5.1.2 License to OSI. In the event that HMRI
(a) elects not to participate in the Contract Period Research Program, or (b)
discontinues its participation in the Contract Period Research Program prior to
the end of the Contract Period by ceasing funding of the Contract Period
Research Program in accordance with the provisions of Section 3.2 hereof, or (c)
elects not to continue its participation in the Development Phase Program, HMRI
will offer to OSI, and OSI may accept (in each case in accordance with Section
1.1.2 hereof), a worldwide non-exclusive license under the HMRI Technology, the
HMRI Patents, the HMRI Improvements and the HMRI rights in the Joint
Improvements and Joint Patents to develop, make, have made, use and sell
Products, and such license shall be exclusive, with the right to sublicense, to
the extent that it relates to HMRI Patents or Joint Patents having claims which
cover Compounds used in research and development as well as Products approved by
the FDA or equivalent authority outside the U.S. and (a) for so long as OSI is
obligated to pay a royalty
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under Section 5.8.3 or 5.8.4 hereof and (b) thereafter in accordance with
Section 5.2 hereof.
5.2 Paid-Up License. Provided that HMRI or OSI, as
the case may be, has satisfied all of its obligations to pay royalties hereunder
with respect to a particular Product, such party shall have a paid-up exclusive
royalty-free license to manufacture, have manufactured, use, sell and have sold
such Product in each country after the expiration of such party's last
obligation to pay royalties on its Net Sales of such Product in such country.
5.3 Obligations.
5.3.1 Either HMRI or OSI, as the case may
be, shall use commercially reasonably diligent efforts to exploit the Products
commercially. This requirement shall be deemed satisfied if such party uses
substantially the same degree of diligence it uses with respect to products of
similar commercial potential developed by such party outside of this Agreement.
5.3.2 If HMRI elects to discontinue
development of a Compound, it shall so notify OSI and shall offer in writing to
OSI the right of first refusal to license the Compound. OSI shall exercise such
right by notifying HMRI in writing, within ninety (90) days of receipt from HMRI
of the terms of such a license, of its intent to enter into such license. If OSI
fails to respond within such ninety (90) day period or determines within such
ninety (90) day period not to enter into such a license with HMRI, HMRI may
license such Compound to a Third Party.
5.4 Sublicenses. If either HMRI or OSI grants a
sublicense pursuant to Article 5, such party shall guarantee that any
sublicensee fulfills all of its obligations under
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this Agreement. In the event HMRI or OSI grants sublicenses under Article 5 to
others to make, have made, use, sell or have sold Compounds or Products, such
sublicenses shall include an obligation of the sublicensees to account for and
report all Net Sales of Compounds or Products on the same basis as if such sales
were Net Sales of Products by such party, and such party shall pay royalties to
the other party under this Agreement as if the Net Sales of the sublicensee were
Net Sales of the sublicensor.
5.5 Ownership of Improvements. In accordance with the
United States laws of inventorship, OSI and HMRI shall each own the entire
right, title and interest in and to any Improvements made or discovered solely
by its respective employees ("OSI Improvements," and "HMRI Improvements,"
respectively) and OSI and HMRI shall own jointly all Improvements made or
discovered jointly by their respective employees during the Research Programs or
the Development Phase Program ("Joint Improvements"). Each party represents and
agrees that all employees and other persons acting on its behalf in performing
its obligations under this Agreement shall be obligated to assign to such party
or as such party shall direct (to the extent the agreeing party is legally
enabled to disclose and use the same in the Research Programs and the
Development Phase Program), all Improvements made or developed by such employee
or other person. In the case of Joint Improvements, OSI and HMRI each agree to
undertake to enforce such obligations (to the extent the agreeing party is
legally enabled to disclose and use the same in the Research Programs and the
Development Phase Program) (including, where appropriate, by legal action)
considering, among other things, the commercial value of such Joint
Improvements. The foregoing "obligations to assign" shall not be deemed to
impose on either
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party an obligation with respect to future agreements with Third Parties
requiring the use or disclosure of technology obtained or developed pursuant to
such Third Party agreement in connection with this Agreement.
5.6 Rights to Product Improvements. For a period of
five (5) years from the termination of the Research Programs, provided that HMRI
shall have fully performed its obligations thereunder, HMRI shall be deemed to
have acquired an exclusive (non-exclusive in the countries of the world in which
this section might otherwise be deemed to violate restrictive trade practices
laws), worldwide, royalty-free license to any OSI Improvements to any Compounds
or Products. Thereafter, HMRI shall have the sole (i.e., exclusive except as to
use only by OSI), worldwide, royalty-free license to any OSI Improvements to any
Compounds or Products. OSI shall promptly and fully notify HMRI of any such OSI
Improvements. All such OSI Improvements shall be included within the scope of
this Agreement. In the event that HMRI (a) elects not to participate in the
Contract Period Research Program or (b) discontinues its participation in the
Contract Period Research Program prior to the end of the Contract Period by
ceasing funding of the Contract Period Research Program in accordance with the
provisions of Section 3.2 hereof, or (c) elects not to continue its
participation in the Development Phase Program, and OSI accepts the license
offered by HMRI upon any of the events listed above, for a period of five (5)
years from the date of acceptance of such license by OSI, OSI shall be deemed to
have acquired an exclusive (non-exclusive in the countries of the world in which
this section might otherwise be deemed to violate restrictive trade practices
laws), worldwide, royalty-free license to any HMRI Improvements to any Compounds
or Products. Thereafter,
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OSI shall have the sole (i.e., exclusive except as to use only by HMRI),
worldwide, royalty-free license to any HMRI Improvements to any Compounds or
Products. HMRI shall promptly and fully notify OSI of any such HMRI
Improvements. All such HMRI Improvements shall be included within the scope of
this Agreement.
5.7 Technical Assistance. HMRI or OSI, as the case
may be, shall provide to the other party or any Affiliate or sublicensee of the
other party, at the other party's request and expense, any assistance reasonably
necessary to enable the other party or such Affiliate or sublicensee to
manufacture, have manufactured, use, sell or have sold each Product and to enjoy
fully all the rights granted to the other party pursuant to this Agreement.
5.8 Royalties, Payments of Royalties, Accounting for
Royalties, Records.
5.8.1 License to HMRI - Royalties - Patented
Products. HMRI shall pay OSI a royalty at the rate of ** of the Net Sales by
HMRI, its Affiliates and sublicensees of each Product, the manufacture, use, or
sale of which is covered by a Valid Claim of an OSI Patent, an HMRI Patent, or a
Joint Patent, if any such OSI Patent, HMRI Patent or Joint Patent covers (a) the
active ingredient of a Product or (b) the use of the active ingredient in a
Product if such use is approved for marketing by the FDA or equivalent authority
outside the U.S., only if the OSI Patent, HMRI Patent or Joint Patent and the
approval are in the country where the marketing of such Product occurs. HMRI
shall continue to pay such royalty
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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on Net Sales of each Product in each country so long as the manufacture, use
and/or sale of such Product would infringe on a Valid Claim of an OSI Patent,
HMRI Patent or a Joint Patent with respect to such Product in such country. The
obligation for HMRI to pay royalties in each such country shall cease at the
time such infringement no longer occurs.
5.8.2 License to HMRI - Royalties -
Technology. Only if royalties have never been payable pursuant to Section 5.8.1
hereof with regard to a Product in a particular country, HMRI shall pay OSI a
royalty at ** of the rate set forth in Section 5.8.1 hereof on the Net Sales by
HMRI, its Affiliates and sublicensees of each such Product which would not
infringe a Valid Claim of an OSI Patent, an HMRI Patent or a Joint Patent or
which may be covered by an OSI Patent, an HMRI Patent or a Joint Patent if such
OSI Patent, HMRI Patent or Joint Patent does not cause the royalty payment set
forth in Section 5.8.1 to apply to the sale of such Product. Such royalty shall
be paid in each country of the world for ten (10) years from the date of first
commercial sale of such Product in each such country, except that in the case of
countries that are member states of the European Union such obligation to pay
royalties shall terminate on the earlier of the termination of said ten (10)
year period or the date on which such Improvements enter the public domain.
5.8.3 License to OSI - Royalties - Patented
Products. If HMRI elects not to participate in the Contract Period Research
Program and/or the Development Phase Program and OSI accepts the grant of
license set forth in Section 5.1.2 hereof, OSI shall pay
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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HMRI a royalty at the rate of ** of Net Sales by OSI, its Affiliates and
sublicensees of each Product, the manufacture, use, or sale of which is covered
by a Valid Claim of an OSI Patent, an HMRI Patent, or a Joint Patent, if any
such OSI Patent, HMRI Patent or Joint Patent covers (a) the active ingredient of
a Product or (b) the use of the active ingredient in a Product if such use is
approved for marketing by the FDA or equivalent authority outside the U.S., only
if the OSI Patent, HMRI Patent or Joint Patent and the approval are in the
country where the marketing of such Product occurs. If (a) HMRI commences
participation in the Contract Period Research Program and subsequently
discontinues its participation prior to the termination of the Contract Period
by ceasing funding of the Contract Period Research Program in accordance with
the provisions of Section 3.2 hereof or discontinues its participation in the
Development Phase Program, and (b) OSI accepts the grant of license set forth in
Section 5.1.2 hereof, OSI shall pay HMRI royalties at the following rates on the
Net Sales by OSI, its Affiliates and sublicensees of each Product, the
manufacture, use, or sale of which is covered by a Valid Claim of an OSI Patent,
an HMRI Patent, or a Joint Patent, if any such OSI Patent, HMRI Patent or Joint
Patent covers (a) the active ingredient of a Product or (b) the use of the
active ingredient in a Product if such use is approved for marketing by the FDA
or equivalent authority outside the U.S., only if the OSI Patent, HMRI Patent or
Joint Patent and the approval are in the country where the marketing of such
Product occurs:
-----------------------
** This portion redacted pursuant to a request for confidential treatment.
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(i) ** if HMRI's discontinuance occurred
following commencement of the Contract Period but prior to commencement of Phase
I clinical trials with regard to such Product;
(ii) ** if HMRI's discontinuance occurred
after commencement of Phase I clinical trials with regard to such Product but
prior to commencement of Phase II clinical trials with regard to such Product;
(iii) ** if HMRI's discontinuance occurred
after commencement of Phase II clinical trials with regard to such Product but
prior to commencement of Phase III clinical trials with regard to such Product;
and
(iv) ** if HMRI's discontinuance occurred
after commencement of Phase III clinical trials with regard to such Product.
OSI shall continue to pay such royalty on
Net Sales of each Product in each country so long as the manufacture, use and/or
sale of such Product would infringe on a Valid Claim of an OSI Patent, HMRI
Patent or a Joint Patent with respect to such Product in such country. The
obligation for OSI to pay royalties in each such country shall cease at the time
such infringement no longer occurs..
5.8.4 License to OSI - Royalties -
Technology. Only if royalties have never been payable pursuant to Section 5.8.3
hereof with regard to a Product in a particular country, OSI shall pay HMRI a
royalty at ** of the rate set forth in Section 5.8.3 hereof on
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** This portion redacted pursuant to a request for confidential treatment.
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the Net Sales by OSI, its Affiliates and sublicensees of each such Product which
would not infringe a Valid Claim of an OSI Patent, an HMRI Patent or a Joint
Patent or which may be covered by an OSI Patent, an HMRI Patent or a Joint
Patent if such OSI Patent, HMRI Patent or Joint Patent does not cause the
royalty payment set forth in Section 5.8.3 to apply to the sale of such Product.
Such royalty shall be paid in each country of the world for ten (10) years from
the date of first commercial sale of such Product in each such country, except
that in the case of countries that are member states of the European Union such
obligation to pay royalties shall terminate on the earlier of the termination of
said ten (10) year period or the date on which such Improvements enter the
public domain.
5.8.5 License to OSI - Licensing Fee. In addition to
the royalties set forth in Sections 5.8.3 and 5.8.4 above, if OSI accepts the
grant of license set forth in Section 5.1.2 hereof, OSI shall pay HMRI at the
time of such acceptance a one (1) time ** licensing fee.
5.8.6 Third Party Royalties.
(a) For Technology used in the
Research Programs and/or the commercialization of any Product directed to the
Target, any royalty payable to any Third Party, including, without limitation,
royalties paid for licensed compounds (other than royalties arising out of OSI
Technology or HMRI Technology) and any lump sum payment made to a Third Party as
a license fee or otherwise shall be borne first (as between HMRI and OSI)
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** This portion redacted pursuant to a request for confidential treatment.
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by the party holding the license, under Section 5.1.1 or 5.1.2, to develop,
make, have made, use, sell and have sold Products, provided that an amount equal
to twenty-five percent (25%) of any such Third Party royalty or payment may be
offset against any royalties due to the party entitled to royalties under
Section 5.8.1, 5.8.2 , 5.8.3 or 5.8.4, as the case may be, but only to the
extent that the amount paid to such party is equal to or greater than fifty
percent (50%) of the total royalty that would otherwise be due to such party
under Section 5.8.1, 5.8.2, 5.8.3 or 5.8.4, as the case may be, for the relevant
period.
(b) Any royalty payable to any Third
Party arising out of OSI Technology or HMRI Technology shall be payable solely
by OSI or HMRI, respectively.
5.8.7 Payment Dates. Royalties shall be paid
by HMRI or OSI, as the case may be, on Net Sales within ninety (90) days after
the end of each calendar quarter in which such Net Sales are made. Such payments
shall be accompanied by a statement showing the Net Sales of each Product in
each country and a calculation of the amount of royalty due.
5.8.8 Accounting. The Net Sales used for
computing the royalties payable to OSI by HMRI, or to HMRI by OSI, as the case
may be, shall be computed and paid in U.S. Dollars. For purposes of determining
the amount of royalties due with respect to Net Sales in any foreign currency,
the amount shall be computed generally by converting the foreign currency amount
into U.S. Dollars using for each month's calculation the foreign currency
exchange rate on the last day of the preceding month or such other method as is
consistent with internal foreign currency translation procedures of the party
paying the royalties, as actually used by such party on a consistent basis in
preparing its audited financial statements.
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5.8.9 Records. HMRI or OSI, as the case may
be, shall keep for three (3) years from the date of each payment of royalties
complete and accurate records of Net Sales by such party, its Affiliates and
sublicensees of each Product in sufficient detail to allow the accruing
royalties to be determined accurately. The party to whom royalties are due shall
have the right for a period of three (3) years after receiving any report or
statement with respect to royalties due and payable to obtain at its expense
from the independent certified public accountant used by the other party for
public reporting an audit of the relevant records of the other party to verify
such report or statement. The party owing royalties shall make its records
available for inspection by such independent certified public accountant during
regular business hours at such place or places where such records are
customarily kept, upon reasonable notice from the other party, to the extent
reasonably necessary to verify the accuracy of the reports and payments. Such
inspection right shall not be exercised more than once in any calendar year nor
more than once with respect to sales in any given period, unless a subsequent
inspection reveals discrepancies which may have also occurred during such
period. Such independent certified public accountant shall report to the party
to whom royalties are due only as to the accuracy of the Net Sales computation
and royalty payments. Such party agrees to hold in strict confidence all
information concerning royalty payments and reports, and all information learned
in the course of any audit or inspection, except to the extent necessary for
such party to reveal such information in order to enforce its rights under this
Agreement or disclosure is required by law. The failure of such party to request
verification of any report or statement during the three (3) year period shall
be considered acceptance of the accuracy of such report, and the party
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owing royalties shall have no obligation to maintain records pertaining to such
report or statement beyond the three (3) year period. The results of the
inspection shall be binding on both parties.
5.8.10 Withholding Taxes. All amounts owing
to a party entitled to royalties as specified in this Agreement shall be paid
net of all applicable taxes, fees, and other charges excluding only taxes on the
income of the party owing royalties. The party owing royalties will assist the
other party in minimizing the withholding tax applicable to any payment made by
the party owing royalties hereunder and in claiming tax refunds at the other
party's request.
5.8.11 Credit Against Royalty. HMRI shall
have as a credit against its royalty obligation of ** of the amounts of the
initiation fee and milestone payments set forth in Section 3.3 hereof up to a
maximum credit of ** .
5.8.12 Other Forms of Remuneration. If
either party receives compensation from sales of Products which includes lump
sum payments or payments in a manner other than one for which royalties based on
Net Sales would be the appropriate measure, such as compensation through a
co-marketing or joint venture arrangement, the parties will negotiate in good
faith an appropriate compensation arrangement by which the party which
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** This portion redacted pursuant to a request for confidential treatment.
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otherwise would be entitled to royalties will be remunerated for the licenses
granted in Section 5.1 hereof.
6. Provisions Concerning the Filing, Prosecution and
Maintenance of Patent Rights. The following provisions relate to the filing,
prosecution and maintenance of OSI Patents, patents involving Joint
Improvements, and HMRI Patents:
6.1 OSI Filing, Prosecution and Maintenance. OSI
shall have the exclusive right and obligation:
(a) to file applications for letters patent
on any patentable invention included in OSI Improvements, or in Joint
Improvements which relate to cell lines, cloning of cell lines and methodologies
for determining the effect of compounds on biochemical processes; provided,
however, that OSI shall provide to HMRI copies of all patent applications prior
to filing for the purpose of obtaining substantive comment of HMRI patent
counsel, consult with HMRI regarding countries in which such patent applications
should be filed, and shall file patent applications in those countries where
HMRI requests that OSI file; and further provided, that OSI, at its option and
expense, may file in countries where HMRI does not request that OSI file;
(b) to prosecute all pending and new patent
applications involving OSI Compounds or included within OSI Improvements, or
Joint Improvements which relate to cell lines, cloning of cell lines and
methodologies for determining effect of compounds on biochemical processes, and
to respond to oppositions filed by Third Parties against the grant of letters
patent for such applications, provided that OSI shall also provide to HMRI
copies of
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all documents relating to prosecution of all patent applications and/or
oppositions filed by Third Parties in a timely manner for the purpose of
obtaining substantive comment of HMRI patent counsel;
(c) to maintain in force any letters patent
included in OSI Patents by duly filing all necessary papers and paying any fees
required by the patent laws of the particular country in which such letters
patent were granted;
(d) to notify HMRI in a timely manner of any
decision to abandon a pending patent application or an issued patent included in
OSI Patents. Thereafter, HMRI shall have the option, at its expense, of
continuing to prosecute any such pending patent application or of keeping the
issued patent in force; and
(e) to provide to HMRI every six (6) months
a report detailing the status of all patent applications that are part of OSI
Patents.
6.2 HMRI Filing, Prosecution and Maintenance. HMRI
shall have the exclusive right and obligation:
(a) to file applications for letters patent
on any patentable invention included in HMRI Improvements, or in Joint
Improvements which relate to new compounds and therapeutic uses or manufacturing
processes of known compounds; provided, however, that HMRI provide to OSI copies
of all patent applications prior to filing for the purpose of obtaining
substantive comment of OSI patent counsel, consult with OSI regarding countries
in which such patent applications should be filed, and shall file patent
applications in
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those countries where OSI requests that HMRI file; and further provided, that
HMRI, at its option and expense, may file in countries where OSI does not
request that HMRI file;
(b) to prosecute all pending and new patent
applications involving HMRI Compounds or included within HMRI Improvements, or
Joint Improvements which relate to new compounds and therapeutic uses or
manufacturing processes of known compounds, and to respond to oppositions filed
by Third Parties against the grant of letters patent for such applications;
provided that HMRI shall also provide to OSI copies of all documents relating to
prosecution of all patent applications and/or oppositions filed by Third Parties
in a timely manner for the purpose of obtaining substantive comment of OSI
patent counsel;
(c) to maintain in force any letters patent
included in HMRI Patents by duly filing all necessary papers and paying any fees
required by the patent laws of the particular country in which such letters
patent were granted;
(d) to notify OSI in a timely manner of any
decision to abandon a pending patent application or an issued patent included in
HMRI Patents. Thereafter, OSI shall have the option, at its expense, of
continuing to prosecute any such pending patent application or of keeping the
issued patent in force; and
(e) to provide to OSI every six (6) months a
report detailing the status of all patent applications that are part of HMRI
Patents.
6.3 Joint Filing, Prosecution and Maintenance. OSI
and HMRI shall jointly have the right and obligation:
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(a) to file applications for letters patent
on any patentable invention which are not the subject of applications filed by
either OSI or HMRI pursuant to Section 6.1 or 6.2, and which arise in the course
of conducting the Research Programs or the Development Phase Program; and the
parties shall determine with respect to each such application the party
("Responsible Party") which shall have the primary responsibility as to such
application; provided, however, that the Responsible Party shall provide to the
other party copies of all patent applications prior to filing for the purpose of
obtaining substantive comment of the other party's patent counsel, consult with
the other party regarding countries in which such patent applications should be
filed, and shall file patent applications in those countries where the other
party requests that the Responsible Party file; and further provided, that the
Responsible Party, at its option and expense, may file in countries where the
other party does not request that the Responsible Party file;
(b) to prosecute all pending and new patent
applications involving Joint Improvements which are not the subject of
applications prosecuted pursuant to Sections 6.1 or 6.2, and to respond to
oppositions filed by Third Parties against the grant of letters patent for such
applications; provided that the Responsible Party shall also provide to the
other party copies of all documents relating to prosecution of all patent
applications and/or oppositions filed by Third Parties in a timely manner for
the purpose of obtaining substantive comment of the other party's patent
counsel;
(c) to maintain in force any letters patent
included in Joint Patents by duly filing all necessary papers and paying any
fees required by the patent laws of
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the particular country in which such letters patent were granted; and the
Responsible Party shall have primary responsibility to do so;
(d) to decide to abandon a pending patent
application or an issued patent included in Joint Patents; if the parties cannot
reach agreement on a decision to abandon a pending patent application or an
issued patent included in Joint Patents, the party opposing abandonment shall
have the option, at its expense, of continuing to prosecute any such pending
patent application or of keeping the issued patent in force, and the party
proposing abandonment shall assign to the other party its rights in such pending
patent application or issued patent; and
(e) to have the Responsible Party prepare
every six (6) months a report detailing the status of all patent applications
that are part of Joint Patents.
6.4 Reimbursement of Expenses.
6.4.1 HMRI will reimburse OSI for its
reasonable out-of-pocket costs incurred after the Effective Date to file,
prosecute, issue, maintain and extend patent applications and patents within the
OSI Patents or within those Joint Patents for which OSI is the Responsible Party
in countries in which HMRI has requested OSI to file that OSI would not have
otherwise filed.
6.4.2 OSI agrees to utilize the in-house
patent services and capabilities of HMRI wherever practicable. OSI will
reimburse HMRI for its reasonable out-of-pocket costs incurred after the
Effective Date to file, prosecute, issue, maintain and extend patent
applications and patents within HMRI Patents or within those Joint Patents for
which
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HMRI is the Responsible Party in countries in which OSI has requested HMRI to
file that HMRI would not have otherwise filed.
6.5 Patent Extensions. In the event any patent in the
Joint Patents, OSI Patents or HMRI Patents is eligible for extension or
Supplementary Protection Certificate, the Research Management Committee shall
determine for which patents, applications for extension shall be filed.
6.6 Legal Action.
6.6.1 Actual or Threatened Disclosure or
Infringement. When information comes to the attention of either HMRI or OSI to
the effect that an HMRI Patent, OSI Patent or Joint Patent or Joint Improvement
relating to a Compound or Product have been or are threatened to be unlawfully
disclosed or that any of the rights granted by this Agreement has been or is
threatened to be unlawfully infringed, such party shall notify the other party
in writing and HMRI shall have the right at its expense to take such action as
it may deem necessary to prosecute or prevent such unlawful disclosure or
infringement, including the right to bring or defend any suit, action or
proceeding involving any such disclosure or infringement. HMRI shall notify OSI
promptly of the receipt of any such information and of the commencement of any
such suit, action or proceeding. If HMRI determines that it is necessary or
desirable for OSI to join any such suit, action, or proceeding, OSI shall
execute all papers and perform such other acts as may be reasonably required to
permit HMRI to act in OSI's name. In the event that HMRI brings a suit, it shall
have the right first to reimburse itself out of any sums recovered in such suit
or in its settlement for all reasonable costs and expenses of every kind and
character,
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including reasonable attorney's fees, involved in the prosecution of any suit,
and twenty-five percent (25%) of any funds that shall remain from said recovery
shall be distributed to OSI and the balance of such funds shall be retained by
HMRI.
If HMRI does not, within one hundred twenty
(120) days after giving notice to OSI of the above-described information, notify
OSI of HMRI's intent to bring suit against any infringer, OSI shall have the
right to bring suit for such alleged infringement, but it shall not be obligated
to do so, and may cause HMRI to be joined as a party plaintiff, if appropriate,
in which event OSI shall hold HMRI free, clear, and harmless from any and all
costs and expenses of such litigation, including attorney's fees, and any sums
recovered in any such suit or in its settlement shall belong to OSI. However,
twenty-five percent (25%) of any such sums received by OSI, after deduction of
the costs and expenses of litigation, including attorney's fees paid, shall be
paid to HMRI. Each party shall always have the right to be represented by
counsel of its own selection and at its own expense in any suit instituted by
the other for infringement, under the terms of this Section. If HMRI lacks
standing to bring any such suit, action, or proceeding, then OSI shall do so at
the request of HMRI and at HMRI's expense.
6.6.2 Defense of Infringement Claims. If OSI
or HMRI, or any of their respective licensees or their customers, shall be sued
by a Third Party for infringement of a patent because of the research,
development, manufacture, use or sale of Products, the party which has been sued
shall promptly notify the other in writing of the institution of such suit. HMRI
shall have the right (including the right to exclusive control of the defense of
any such suit, action, or proceeding and the exclusive right to compromise,
litigate, settle, or otherwise
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dispose of any such suit, action, or proceeding), but not the obligation, to
defend or settle any such suit, action, or proceeding and OSI shall furnish to
HMRI all necessary information and assistance in connection therewith. The
parties shall share the expenses (including the amount of any settlement, or any
final judgment finding infringement) of implementing the agreed defense on the
following basis:
(a) If the alleged infringement is due to
the use of OSI Technology, then the expenses shall be borne equally by HMRI and
OSI.
(b) Notwithstanding Section 6.6.2(a), if the
alleged infringement is due to the sale of a Product by either HMRI or OSI, as
the case may be, then the party making such sale shall bear seventy-five percent
(75%) of the expense and the other party (i.e., the party entitled to a royalty)
shall bear twenty-five percent (25%) of the expense; provided that the sole
obligation of the party entitled to a royalty will be paid in the form of a
fifty percent (50%) reduction during the pendency of the action (but not after
it has been concluded) in the royalty otherwise payable to such party or a fifty
percent (50%) credit against future royalties until such party's share of the
expenses of such suit are recovered. If such suit results in any award or
settlement paid in favor of HMRI or OSI, such amount shall be shared in the same
proportion as the expenses of such suit have been actually borne. The share of
the expenses of any suit of any party entitled to a royalty shall be limited to
the foregoing royalty reduction and if the royalty reduction and such party's
share of any award shall not be sufficient to cover its share of the expenses of
such suit, such party shall not be obligated to make up the shortfall. If it is
agreed that if one party shall conduct the defense, the other shall have the
right to be
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represented by advisory counsel of its own selection, at its own expense, and
shall cooperate fully in the defense of such suit and furnish to the other all
evidence and assistance in its control.
6.6.3 Hold Harmless. OSI agrees to defend,
protect, indemnify, and hold harmless HMRI and any sublicensee of HMRI, from and
against any loss or expense arising from any proven claim of a Third Party that
it has been granted rights by OSI, and that HMRI or any sublicensee of HMRI in
exercising their rights granted to HMRI by OSI pursuant to this Agreement, has
infringed upon such rights granted to such Third Party by OSI. If HMRI grants to
OSI a license hereunder, OSI agrees to defend, protect, indemnify and hold
harmless HMRI from and against any liability, claim, loss, cost or expense
arising from any claim for product liability based upon OSI's manufacture, use,
or sale of any Product, except to the extent such liability, claim, loss, or
expense also results from the negligence or willful misconduct of HMRI, its
employees and agents. If OSI grants to HMRI a license hereunder, HMRI agrees to
defend, protect, indemnify, and hold harmless OSI from and against any
liability, claim, loss, cost, or expense arising from any claim for product
liability based upon HMRI's manufacture, use, or sale of any Product except to
the extent such liability, claim, loss or expense also results from the
negligence or willful misconduct of OSI, its employees and agents.
6.6.4 Third Party Licenses. If HMRI and OSI
agree that the manufacture, use, or sale by HMRI or OSI, as the case may be, of
a Product in any country would infringe a patent owned by a Third Party, the
party holding the license under Section 5.1.1 or 5.1.2 to develop, make, have
made, use, sell and have sold such Product shall attempt to obtain a license
under such patent. If such party obtains a license under such patent, then fifty
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percent (50%) of any payments made by such party to such Third Party shall be
deductible from royalty payments due from such party to the party entitled to
royalties pursuant to this Agreement; provided, however, that in no event shall
royalties payable to the party entitled to royalties be reduced by more than
twenty-five percent (25%) as a result of all such deductions. All such
computations, payments, and adjustments shall be on a country by country and
patent by patent basis. If either HMRI or OSI is of the opinion that such
manufacture, use, or sale would not infringe such patent owned by a Third Party,
the party holding the license under Section 5.1.1 or 5.1.2 to develop, make,
have made, use, sell and have sold such Product may, at its election and
expense, bring suit against such Third Party seeking a declaration that such
patent is invalid or not infringed by such party's manufacture, use or sale of
such Product, or may bring opposition, nullity, or other proceedings against
such patent, as appropriate. If the party holding the license does not bring
such suit, or is successful in such suit, such party shall continue to pay
royalties in such country as provided in Article 5. If such party is
unsuccessful in such suit, it shall join the other party in an attempt to obtain
a license under such patent, and royalty payments made to such Third Party for
such license shall be as provided in this Section.
7. Acquisition of Rights from Third Parties. During the Option
Period, the Contract Period and the Development Phase, OSI and HMRI shall
promptly notify each other in writing of any and all opportunities to acquire in
any manner from Third Parties, technology
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or patents which may be useful in, or may relate to the Research Programs or the
Development Phase Program. The notifying party shall decide if such rights
should be acquired and, if so, whether it desires to make the acquisition or (if
agreeable to the other party) whether (a) the other party should make the
acquisition or (b) such acquisition should be made jointly. If acquired, such
rights shall be deemed part of the Technology of the party making the
acquisition or if jointly acquired, then part of Joint Improvements.
8. Term, Termination and Disengagement
8.1 Term.
8.1.1 Term of Option Period. The term of the
Option Period shall commence on the Effective Date and shall terminate on March
31, 1998, unless extended or sooner terminated by mutual written agreement of
the parties, or as otherwise provided in this Agreement.
8.1.2 Term of Contract Period. The term of
the Contract Period shall commence at the end of the Option Period upon notice
from HMRI to OSI pursuant to Section 2.1.2 hereof that HMRI elects to
participate in the Contract Period Research Program, and shall continue for
twenty-four (24) months, unless extended or sooner terminated by mutual written
agreement of the parties, or as otherwise provided in this Agreement.
8.1.3 Term of Development Phase. The
Development Phase of this Agreement shall commence at the end of the Option
Period upon notice from HMRI to OSI pursuant to Section 2.1.2 hereof that HMRI
elects to participate in the Development Phase Program (and, for a period of
time, may be coexistent with the Contract Period) and shall
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continue for as long as HMRI is continuing development activities with regard to
a Compound or Product. The Development Phase shall not commence if HMRI
unilaterally elects not to participate in the Contract Period Research Program.
8.1.4 Term of This Agreement. The term of
this Agreement shall continue until the expiration of the last obligation of
either party to pay royalties in a country.
8.2 Termination of the Agreement During the Option
Period. If, during the Option Period, HMRI and OSI determine by mutual written
agreement to discontinue activity under this Agreement, this Agreement shall
terminate, subject to Section 8.6 hereof, and the respective rights brought to
the collaboration by each party shall revert to such party and the parties shall
negotiate in good faith with respect to the division of any joint rights (i.e.,
Joint Improvements and Joint Patents) created under this Agreement.
8.3 Termination of Research Funding.
8.3.1 Termination of Research Funding by
HMRI at End of Option Period. If HMRI does not elect to participate in the
Contract Period Research Program at the end of the Option Period, HMRI will
offer to OSI a worldwide license as more fully set forth in Section 5.1.2
hereof. This Agreement shall thereupon terminate, subject to the provisions of
Section 8.6 hereof.
8.3.2 Termination of Research Funding by
HMRI During Contract Period. If, at the end of the Option Period, HMRI exercises
its option to participate in the Contract Period Research Program and,
thereafter, during the Contract Period, either discontinues its participation in
the Contract Period Research Program by ceasing funding of the
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Contract Period Research Program in accordance with the provisions of Section
3.2 hereof, or otherwise does not diligently continue its efforts to develop a
Compound or Product, OSI shall have the option to be granted a worldwide license
by HMRI on the terms set forth in Section 5.1.2 of this Agreement. The Contract
Period and this Agreement shall thereupon terminate, subject to the provisions
of Section 8.6 hereof. If HMRI does diligently continue its development efforts
throughout the Contract Period, this Agreement shall continue and HMRI shall be
granted the license provided for in Section 5.1.1 as set forth therein.
8.3.3 Termination by HMRI During Development
Phase. If, at the end of the Option Period, HMRI exercises its option to
participate in the Development Phase Program and, thereafter, during the
Development Phase, either discontinues its participation in the Development
Phase Program or otherwise does not diligently continue its efforts to develop a
Compound or Product, OSI shall have the option to be granted a worldwide license
by HMRI on the terms set forth in Section 5.1.2 of this Agreement. The
Development Phase and this Agreement shall thereupon terminate, subject to the
provisions of Section 8.6 hereof. If HMRI does diligently continue its
development efforts throughout the Development Phase, this Agreement shall
continue and HMRI shall be granted the license provided for in Section 5.1.1 as
set forth therein.
8.3.4 Termination Not Deemed a Breach. The
parties acknowledge that none of the activities of HMRI referred to in this
Section 8.3 shall be deemed to be a breach of this Agreement by HMRI.
8.4 Termination Upon an Event of Default.
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8.4.1 The following events shall constitute
events of default ("Events of Default"):
(a) Any material representation or
warranty by OSI or HMRI, or any of their officers, under or in connection with
this Agreement shall prove to have been incorrect in any material respect when
made.
(b) OSI or HMRI shall fail in any
material respect to perform or observe any material term, covenant or
understanding contained in this Agreement or in any of the other documents or
instruments delivered pursuant to, or concurrently with, this Agreement, and any
such failure shall remain unremedied for thirty (30) days after written notice
to the failing party.
8.4.2 Upon the occurrence of an Event of
Default, the party not responsible may, by notice to the other party, terminate
this Agreement subject to compliance with the terms of Article 11 (Dispute
Resolution). If HMRI is the terminating party, at HMRI's option (a) the license
in Section 5.1.1 (if in effect at such time) and the obligation to pay royalties
as provided in Sections 5.8.1 and 5.8.2 shall continue or (b) the license in
Section 5.1.2 (if in effect at such time) and the obligation to pay royalties as
provided in Sections 5.8.3 and 5.8.4 shall continue, as the case may be. If OSI
is the terminating party, at OSI's option (i) the license in Section 5.1.1 (if
in effect at such time) and the obligation to pay royalties as provided in
Sections 5.8.1 and 5.8.2 shall continue or (ii) the license in Section 5.1.2 (if
in effect at such time) and the obligation to pay royalties provided in Sections
5.8.3 and 5.8.4 shall continue, as the case may be.
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8.5 Change of Control.
8.5.1 A "Change of Control" shall be deemed
to have occurred if, after the date of this Agreement, (i) any Third Party
acquires a majority of the shares of a party or acquires a right to control the
voting of a majority of shares of a party, (ii) any Third Party acquires
sufficient shares or the right to control the votes of sufficient shares to
enable such Third Party to elect a majority of the board of directors of a
party, or (iii) any Third Party acquires the power through share ownership or
otherwise to designate a majority of the board of directors of a party.
8.5.2 Upon a Change of Control during the
Option Period, the respective rights brought to the collaboration by each party
shall revert to such party and the parties shall negotiate in good faith with
respect to the division of any joint rights (i.e., Joint Improvements and Joint
Patents) created under this Agreement and this Agreement shall thereupon
terminate, subject to the provisions of Section 8.6 hereof.
8.5.3 Upon a Change of Control during the
Contract Period or the Development Phase, thereafter for a period of six (6)
months after such Change of Control, either party may terminate this Agreement
upon three (3) months' written notice to the other party. If HMRI is the
terminating party and such termination occurs prior to the expiration of the
Contract Period, OSI shall have the option to be granted a worldwide license by
HMRI on the terms set forth in Section 5.1.2 hereof. If OSI is the terminating
party or if HMRI is the terminating party and such termination occurs following
the expiration of the Contract Period, HMRI shall have the option to be granted
the license provided for in Section 5.1.1 hereof.
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8.6 Survival. Upon termination pursuant to Section
8.1.4 or 8.2 hereof, the following sections of this Agreement shall survive such
termination: Sections 1, 4, 12 and 13. Upon termination pursuant to Sections
8.3, 8.4 or 8.5 hereof, the following sections of this Agreement shall survive
such termination if OSI has (or exercises its option to obtain) a worldwide
license as provided in Section 5.1.2 hereof: Sections 1, 4, 5.1.2, 5.2, 5.3.1,
5.4, 5.5, 5.6, 5.7, 5.8.3, 5.8.4, 5.8.5, 5.8.6, 5.8.7, 5.8.8, 5.8.9, 5.8.10,
5.8.12, 6, 9.6, 11, 12, 13 and 14.7. Upon termination pursuant to Section 8.4 or
8.5 hereof, the following sections of this Agreement shall survive such
termination if HMRI has a worldwide license as provided in Section 5.1.1 hereof:
Sections 1, 4, 5.1.1, 5.2, 5.3.1, 5.4, 5.5, 5.6, 5.7, 5.8.1, 5.8.2, 5.8.6,
5.8.7, 5.8.8, 5.8.9, 5.8.10, 5.8.11, 5.8.12, 6, 9.6, 11, 12, 13 and 14.7. Upon
termination pursuant to Section 8.3, 8.4 or 8.5 if neither party has (or
exercises its option to obtain) a worldwide license as provided in Section 5.1
hereof, the following sections of this Agreement shall survive: 1, 2.1.2 (last
sentence), 4, 6, 12, 13 and 14.7.
9. Representations and Warranties. OSI and HMRI each
represents and warrants as follows:
9.1 Status. It is a corporation, validly existing and
in good standing under the laws of Delaware, and has all requisite power and
authority, corporate or otherwise, to conduct its business as now being
conducted, to own, lease and operate its properties and to execute, deliver and
perform this Agreement.
9.2 Authority. The execution, delivery and
performance by it of this Agreement have been duly authorized by all necessary
corporate action and do not and will not
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(a) require any consent or approval of its stockholders, (b) violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect having applicability to it or
any provision of its charter or by-laws or (c) result in a breach of or
constitute a default under any material agreement, mortgage, lease, license,
permit or other instrument or obligation to which it is a party or by which it
or its properties may be bound or affected.
9.3 Binding Obligation. This Agreement is a legal,
valid and binding obligation of it enforceable against it in accordance with its
terms and conditions, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws, from time to
time in effect, affecting creditor's rights generally.
9.4 No Conflicting Obligations. It is not under any
obligation to any Third Party, contractual or otherwise, that is conflicting or
inconsistent in any respect with the terms of this Agreement or that would
impede the diligent and complete fulfillment of its obligations.
9.5 Good Title. It has good and marketable title to
or valid leases or licenses for, all of its properties, rights and assets
necessary for the fulfillment of its responsibilities hereunder and the Research
Programs and the Development Phase Program, subject to no claim of any Third
Party other than the relevant lessors or licensors.
9.6 Right to Grant Licenses. It has the right to
grant to the other the licenses granted pursuant to this Agreement, and that the
licenses so granted do not conflict with or violate the terms of any agreement
between either of them and any Third Party.
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10. Covenants of OSI
10.1 Affirmative Covenants of OSI Other Than
Reporting Requirements. From and after the Effective Date, OSI shall:
(a) maintain and preserve its corporate
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified as a foreign corporation in good
standing in each jurisdiction in which such qualification is from time to time
necessary or desirable in view of its business and operations or the ownership
of its properties.
(b) comply in all material respects with the
requirements of all applicable laws, rules, regulations and orders of any
government authority to the extent necessary to conduct the Research Programs.
11. Dispute Resolution.
11.1 Mediation Committee. The Chief Executive Officer
of OSI and the Chief Scientific Officer of HMRI shall constitute the Mediation
Committee. In the event OSI or HMRI believes that the other has breached the
Agreement or failed to meet a condition or milestone required to be met, or a
dispute has arisen between the parties, the parties agree that, before any party
initiates arbitration proceedings pursuant to Section 11.6, it shall give the
other party notice and shall demand that the members of the Mediation Committee
attempt to resolve the matter amicably. If the Mediation Committee is unable to
resolve a matter via telephone, telefax or other written or oral contact within
five (5) days of submission of the matter to it, the Mediation Committee shall
meet in person, not later than fifteen (15) days following submission
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of the matter to it, at a mutually convenient place to attempt in good faith to
resolve the dispute. If the Mediation Committee is unable to resolve a dispute
on any matter other than those set forth in Section 11.2 herein, unless a
mutually acceptable extension is agreed upon by the Mediation Committee, either
side shall have the right, but not the obligation, to initiate arbitration
proceedings respecting the matter under review, in accordance with Section 11.6.
11.2 Non-Arbitrable Issues. Matters relating to
modification of the Research Programs and the Development Phase Program shall
not be submitted to arbitration.
11.3 Scope of Arbitration. The parties agree that all
disputes except those set forth in Section 11.2 above arising under this
Agreement shall be resolved by arbitration in accordance with the provisions of
this Article 11; provided, however, that during the period of arbitration on any
dispute the parties shall continue to fulfill their obligations as set forth in
this Agreement.
11.4 Arbitration Panel. The arbitration shall be held
before a panel of three (3) persons ("Arbitration Panel").
11.4.1 Selection. Within fifteen (15) days
of the appointment of the two initial arbitrators, the two arbitrators so
appointed shall appoint the third arbitrator, who shall be an attorney and shall
act as chair of the Arbitration Panel.
11.4.2 Qualifications. The two arbitrators
selected by the parties hereto shall have experience in the pharmaceutical
and/or biotechnology industry. None of the arbitrators shall be employed or
retained by or otherwise related to OSI or HMRI.
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11.4.3 Failure to Name. If a party fails to
name its arbitrator within thirty (30) days of the receipt of the Notice of
Arbitration, then the arbitrator already named shall immediately select the
second arbitrator. The two arbitrators so appointed shall appoint the third
arbitrator, who shall be an attorney and shall act as chair of the Arbitration
Panel.
11.4.4 Right to Select Replacement. In the
event that an arbitrator refuses or is otherwise unable to serve as such, the
party or the other arbitrator(s) as the case may be, who selected such
arbitrator shall have the right to select his/her replacement. Such replacement
shall be selected within fifteen (15) days of the refusal or inability by such
arbitrator to serve.
11.5 Designation of Rules, Situs, Governing Law.
11.5.1 Designation of Rules. The parties
agree that the arbitrators shall apply the Federal Rules of Evidence as they are
applied in cases tried to a court sitting without a jury; unless the parties
agree otherwise, the opinions of expert witnesses shall not be admissible. The
parties agree that discovery proceedings shall be limited to: (a) the dispute;
(b) depositions of those persons having direct knowledge of the dispute; and (c)
submission of all documents which relate to the dispute.
11.5.2 Situs. The arbitration hearing shall
be held in New York unless otherwise mutually agreed.
11.5.3 Governing Law. The arbitrators shall
interpret the Agreement in accordance with the laws of New York.
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11.6 Procedure.
11.6.1 Conciliation Period. No party shall
send a Notice of Arbitration in connection with a dispute under this Article 11
unless at least thirty (30) days prior to the date of such Notice of
Arbitration, such party shall have furnished to the other parties written notice
of its intent to send a Notice of Arbitration in connection with a dispute. Such
30-day period is referred to as the "Conciliation Period." During the
Conciliation Period, the parties shall attempt in good faith to settle the
dispute.
11.6.2 Notice of Arbitration. The party
seeking to institute arbitration ("Claimant") shall do so by sending the other
party ("Respondent") a written notice of arbitration ("Notice of Arbitration").
The Notice of Arbitration shall set forth in detail the nature of the dispute.
The Notice of Arbitration shall also designate the arbitrator appointed by the
Claimant and set forth a full Curriculum Vitae or resume showing that the
arbitrator meets the qualifications set forth in Section 11.4 2.
11.6.3 Response. Within thirty (30) days of
the Notice of Arbitration, the Respondent shall send the Claimant a written
Response including any counterclaims ("Response"). The Response shall also
designate the arbitrator appointed by the Respondent and set forth a full
Curriculum Vitae or resume showing that the arbitrator meets the qualifications
set forth in Section 11.4.2. If the Response sets forth a counterclaim, the
Claimant may, within fifteen (15) days of the receipt of the Response, deliver
to the Respondent and the arbitrators a Rejoinder ("Rejoinder") answering such
counterclaim.
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11.6.4 Discovery. Within sixty (60) days of
the date of the Response, each party shall submit to the other party and to the
arbitrators one (1) copy of all documents in the possession, custody or control
of the party or its Affiliates, which are relevant for a settlement of the
dispute set forth in the Notice of Arbitration, Response or Rejoinder. Within
forty-five (45) days of the date of the Response, each party shall submit to the
other party a list of all witnesses intended to be called at the hearing. Each
party shall use its best efforts to make available for deposition within thirty
(30) days after the delivery of the list of witnesses at each party's respective
location of its operations, all of its agents, employees, and Affiliates who
have direct knowledge of the dispute at such times and places that shall not
unreasonably disrupt the business of the other party. The Chair of the
Arbitration Panel shall determine all discovery disputes and may enforce a
decision by imposing appropriate sanctions on the non-complying party(s).
11.6.5 Record. A stenographic record of all
proceedings shall be made and oaths administered by a duly licensed and
qualified court reporter. The court reporter shall prepare five (5) copies of
the stenographic record of such proceeding and shall send one (1) copy to each
of the arbitrators and to each of the parties within seven (7) days of the
relevant proceeding under this Section.
11.6.6 Attendance at Hearing. Each party may
be represented by an attorney at all hearings before the Arbitration Panel. The
Arbitration Panel shall have the power to require the exclusion of any witness,
other than a party or other essential person, during the testimony of any other
witness. Unless the law provides to the contrary, the
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arbitration may proceed in the absence of any party or representative who, after
due notice, fails to be present or fails to obtain a postponement. An award
shall not be made solely on the default of a party; the Arbitration Panel shall
require the party who is present to submit such evidence as it may require for
the making of an award.
11.6.7 Postponement of Hearing. The
Arbitration Panel, for good cause shown, may postpone any hearing under any of
the following conditions: (i) upon the request of a party, (ii) upon its own
initiative, and (iii) upon mutual agreement by the parties.
11.6.8 Post-Hearing Filings. Any
post-hearing briefs shall be made by the parties to the Arbitration Panel and
the other party within fourteen (14) business days following the hearing. Each
party shall be afforded an opportunity to examine any post-hearing filings and
to provide a response to the Arbitration Panel within seven (7) business days of
the receipt of a post-hearing filing.
11.6.9 Award Opinion. The Arbitration Panel
shall issue an opinion with respect to any dispute and may formulate its own
remedy and need not select the position of either party. The arbitrators shall
issue a Final Decision within one (1) month from the final hearing on any
dispute. Such opinion shall be written in the form of "Findings of Fact" and
"Conclusions of Law," and shall include the reasons for a decision. A Final
Decision shall be binding on both parties and non-appealable.
11.6.10 Rehearing. The parties agree that a
rehearing shall only be allowed in the event that the Chair of the Arbitration
Panel is unable or unwilling to continue performance of the duties of an
arbitrator.
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11.6.11 Confidentiality. All arbitration
proceedings hereunder shall be conducted on a confidential basis. The parties
and the arbitrators shall not disclose or otherwise make public any information
revealed during the proceedings or any Final Decision which may result from the
proceedings.
11.6.12 Waiver. Any arbitration proceeding
hereunder must be instituted within two (2) years after the controversy or claim
arose. Failure to send a Notice of Arbitration within such two-year period shall
constitute an absolute bar to the institution of any proceedings respecting such
controversy or claim, and a waiver thereof.
11.7 Authority of Arbitrators.
11.7.1 Awards. The arbitrators shall have
the power to award money damages and equitable relief such as rescission,
specific performance and injunctive relief. The arbitrators shall not award
punitive or exemplary damages nor any damages based on a claim for tortious
conduct.
11.7.2 Modification of Article 11. The
Arbitration Panel shall not have the power to amend, change or alter any
provision of this Article 11 without the express written consent of all parties.
11.8 Awards.
11.8.1 Judgment. Judgment upon the award
rendered by the arbitrators shall be enforceable in any court of competent
jurisdiction. Each party agrees to submit to the personal jurisdiction of that
court for purposes of the enforcement of any such award.
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11.8.2 Fees and Expenses. All fees of the
arbitrators and the court stenographer shall be paid by the party who does not
prevail in the arbitration as determined by the arbitrators. In the event a
settlement occurs before the issuance of a Final Decision, the parties shall
unless otherwise agreed, each pay an equal portion of any fees of the
arbitrators and the court stenographer and the cost of any transcripts. All
other arbitration-related expenses shall be borne by the party incurring such
expenses.
12. Notices. All notices shall be mailed via certified mail,
return receipt requested, telecopy or courier addressed as follows, or to such
other address as may be designated from time to time:
If to HMRI: At its address as set forth at the beginning of
this Agreement.
Attention: Senior Vice President, Business
Development & Strategic Planning
Telecopy: (000) 000-0000
with copy to: Office of the General Counsel
Telecopy: (000) 000-0000
If to OSI: At its address as set forth at the beginning of
this Agreement
Telecopy:
Attention: Chief Executive Officer
Notices shall be deemed given as of the date of receipt.
13. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, except those laws relating to
choice of law or conflicts of law.
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14. Miscellaneous.
14.1 Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective legal
representatives, successors and permitted assigns.
14.2 Headings. Paragraph headings are inserted for
convenience of reference only and do not form a part of this Agreement.
14.3 Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original.
14.4 Amendment; Waiver; etc. This Agreement may be
amended, modified, superseded or canceled, and any of the terms may be waived,
only by a written instrument executed by each party or, in the cause of waiver,
by the party or parties waiving compliance. The delay or failure of any party at
any time or times to require performance of any provision shall in no manner
affect the rights at a later time to enforce the same.
14.5 No Third Party Beneficiaries. No person not a
party to this Agreement, including any employee of any party to this Agreement,
shall have or acquire any rights by reason of this Agreement. Nothing contained
in this Agreement shall be deemed to constitute the parties partners with each
other or any Third Party.
14.6 Assignment and Successors. This Agreement may
not be assigned by either party, except that the parties may assign this
Agreement and their rights and interests, in whole or in part, to any of their
Affiliates, or any purchaser of all or substantially all of its assets or to any
successor corporation resulting from any merger or consolidation with or into
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such corporation, provided that such assignor shall remain primarily liable for
its obligations hereunder.
14.7 Compliance with Antitrust/Competition Law. The
parties acknowledge and undertake that they shall use commercially reasonable
efforts to comply with all applicable antitrust/competition laws which may
relate to this Agreement from time to time, including, without limitation,
requirements of the European Union pursuant to Article 85 of the Treaty of Rome.
Without limiting the generality of the foregoing:
(a) the parties shall cooperate in good
faith to notify this Agreement with the Commission of the European Union for
individual exemption from the application of Article 85 of the Treaty of Rome,
or otherwise undertake appropriate actions, upon the reasonable request of HMRI,
to ensure compliance with applicable European Union law, including, without
limitation, in the event that (i) the parties' production of the Products and
products which are considered by users to be equivalent in view of their
characteristics, price and intended use exceeds ten percent (10%) of the market
in the European Union or a substantial part thereof, or (ii) HMRI determines to
distribute products manufactured by Third Parties which are competitive with the
Products;
(b) in the event of the amendment or
substitution of Regulation 418/85 (19 December 1984, OJ 1985 L53/5) by the
European Union or any other relevant change in applicable European Union law, or
in the event that HMRI reasonably determines or is advised by legal counsel that
the provisions of this Agreement are not in compliance with applicable European
Union law or other applicable antitrust or competition laws, the parties shall
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negotiate in good faith to amend this Agreement pursuant to HMRI's reasonable
request to comply with applicable European Union law or such other laws; and
(c) each party and its Affiliates hereby
releases the other party and its Affiliates for any claim or liability arising
out of or related to the non-compliance of the provisions of this Agreement with
any applicable antitrust or competition law.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their duly authorized representatives.
HOECHST XXXXXX XXXXXXX, INC.
By:________________________________________________
Name: Xxxxx Xxxxxxx
Title: Executive Vice President
Research and Development
ONCOGENE SCIENCE, INC.
By:________________________________________________
Name: Xxxxxx Xxx Xxxxxxxx
Title: Vice President and Chief Financial Officer
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