EXHIBIT 10.31
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CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT,
MARKED BY BRACKETS AND ASTERISKS, IS FILED WITH THE SECRETARY OF
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
MAY, 1996
CIBA-GEIGY Limited
and
SYNAPTIC PHARMACEUTICAL CORPORATION
RESEARCH & LICENSE AGREEMENT
concerning [***]
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RESEARCH AND LICENSE AGREEMENT
THIS AGREEMENT is made as of the day of May, 1996 between: CIBA-GEIGY Limited, a
Swiss corporation having its principal place of business at Xxxxxxxxxxxxxx 000,
XX-0000 Xxxxx, Xxxxxxxxxxx (hereinafter referred to as "CIBA-GEIGY"), and
SYNAPTIC PHARMACEUTICAL CORPORATION, a Delaware corporation having its principal
place of business at 000 Xxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx 00000-0000, XXX
(hereinafter referred to as "SYNAPTIC").
RECITALS
(A) Pursuant to a Research and License Agreement made between the parties
hereto and dated as of the 4th August, 1994 ("the 1994 Agreement")
CIBA-GEIGY and SYNAPTIC have been collaborating in a research programme
(the "PP Project") directed to discovering and developing compounds
useful for treating obesity and eating disorders starting with the
modulation of PP Receptors.
(B) Due to progress made in the PP Project, CIBA-GEIGY and SYNAPTIC are
interested in collaborating in an additional research programme to
discover and develop compounds which, [***] are also useful in treating
obesity and eating disorders, as well as other metabolic disorders, and
in connection therewith, desire to reallocate between the PP Project
and the new research programme SYNAPTIC scientists originally dedicated
to the PP Project and funded by CIBA-GEIGY under the 1994 Agreement.
(C) CIBA-GEIGY is willing to fund the scientists reallocated from the PP
Project to the new research programme and SYNAPTIC is willing to
reallocate such scientists and accept such funding in accordance with
the terms of this Agreement and of the 1994 Agreement as supplemented
by Supplement No. 1 to such Agreement of even date herewith
("Supplement No.1"). In return for this research support, SYNAPTIC
will grant CIBA-GEIGY
the right to use [***] for the discovery of such compounds for ultimate
manufacture and sale, and an exclusive world-wide right to develop,
manufacture, use and sell such compounds.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set out, the parties agree as follows:
SECTION 1
Definitions
1.0 General. Capitalised terms used and not defined herein shall have the
meanings ascribed to them in the 1994 Agreement. When used in this
Agreement, each of the following terms shall have the meanings set out
below:
1.1 "Affiliate" means, with respect to any entity, any other entity
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controlling, controlled by or under common control with that entity,
but only for so long as such control exists. One entity shall be deemed
to control another entity if it holds not less than fifty (50) percent
of the voting stock of that other entity or, if lower, the maximum
percentage of voting stock of the other entity permitted to be held
under the laws of any country in which such entity is registered.
1.2 "Assay" means a proprietary assay for [***]
1.3 "Early Development Compound" means a compound accepted by CIBA-GEIGY
for pre-clinical development and approved for the carrying out of Phase
I and Phase II trials.
1.4 "Effective Date" shall mean the 4th August, 1995.
1.5 "Full Development Compound" means a compound which has been approved by
CIBA-GEIGY for Phase III clinical development.
1.6 "Field" means [***]
1.7 "FTE" means a researcher employed by SYNAPTIC or CIBA-GEIGY and
assigned to work on the Project with such time and effort to constitute
one scientist working on the Project on a full time basis consistent
with normal business and scientific practice (e.g. at least forty (40)
hours per week of dedicated effort for at least 48 weeks per year).
1.8 "Half-Year" means a period of six (6) calendar months commencing on the
1st January or the 1st July in any Year.
1.9 "Net Sales" means the total amount invoiced to un-licensed third
parties for sales of Products in each Half-Year by CIBA-GEIGY, its
Affiliates or sublicensees, less all trade, quantity and cash discounts
actually allowed, credits or allowances actually granted on account of
rejections, returns, billing errors, or retroactive price reductions,
and duties, taxes and other governmental charges determined in
accordance with CIBA- GEIGY's normal accounting procedures.
1.10 [***]
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[***]
1.11 "Patent Rights" means patents and patent applications owned or
controlled by SYNAPTIC and/or CIBA-GEIGY [***] and all divisions,
continuations, continuations-in-part, reissues, extensions (which shall
be deemed to include Supplementary Protection Certificates) and foreign
counterparts thereof, at least one claim of which covers the
manufacture, use or sale of Products.
1.12 "Product" means any commercial form of a Project Compound (including,
specifically, acids, esters, salts and pro-drug forms, enantiomers,
metabolites, solvates, polymorphs and special formulations) or Project
Technology, including diagnostic testing services and/or products,
made, used or sold for a Project Use.
1.13 "Project" means a collaborative research and development project to be
carried out by SYNAPTIC and CIBA-GEIGY in the Field in accordance with
the terms of this Agreement and directed to the design and development
of compounds for Project Uses.
1.14 "Project Compound" means [***]
1.15 "Project Funds" means financial support provided to SYNAPTIC by
CIBA-GEIGY to support the Project. All Project Funds will be spent at
SYNAPTIC, except in the event of termination as described in Sections
5.2 through 5.5.
1.16 "Post-Project Term" means the period of thirty-six months immediately
following the Project Term.
1.17 "Project Team" means a committee, comprising [***] which will have
responsibility for planning and directing the operational aspects of
the Project subject to the provisions of Section 2.6.
1.18 "Project Technology" means [***]
1.19 "Project Term" means a period commencing as of the Effective Date and
ending on (i) the 3rd August, 1998 or, if extended pursuant to Section
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5.1, the 3rd August, 1999; or (ii) the date of termination of the
Project pursuant to any of Sections 5.2 through 5.5, if earlier.
1.20 "Project Use" means and includes the treatment in humans of eating or
metabolic disorders, or obesity, and/or the diagnosis of any such
disorders or conditions.
1.21 "Steering Committee" means the joint steering committee comprising
[***] which, subject to the provisions of Section 2.5, will have
responsibility for monitoring and directing the activities of the
Project Team.
1.22 "Year" means any period of twelve (12) calendar months commencing on
the 1st January in any calendar year.
SECTION 2
Planning and Execution of Project
2.0 The Project. Not later than the 31st May, 1996 the Project Team will
establish an initial Research Plan which will be submitted to the
Steering Committee for approval within two months after the date of
signature of this Agreement. Thereafter, during the Project Term the
parties shall engage in the Project in accordance with the terms of the
Research Plan, as modified from time to time in accordance with Section
2.1.
2.1 Planning and Review. During the Project Term the Project Team will meet
at least [***] to plan and direct the operational phases of the
Project, and the Steering Committee will meet at least [***] to monitor
the progress of the Project and to provide strategic direction to the
Project Team. [***]
The Research Plan may be modified at any time by [***] in the light of
experience gained in the course of the Project. The Project Team shall
endeavour to assign specific tasks to both SYNAPTIC and CIBA-GEIGY so
as to maximise progress of the Project and to avoid any duplication of
research efforts.
2.2 Conduct of Studies. All studies done in connection with the Project
shall be carried out in strict compliance with all applicable laws,
regulations, or guidelines governing the conduct of research at the
site where such studies are being conducted. SYNAPTIC and CIBA-GEIGY
shall both comply with all laws and regulations applicable to the care
and use of experimental animals at the site where the studies are
conducted. In addition, all animals utilised in the Project shall be
provided humane care and treatment in accordance with the most
acceptable current veterinary practices.
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2.3 Personnel of Steering Committee. The Steering Committee shall be formed
promptly following execution of this Agreement, but in no case later
than thirty (30) days after the Effective Date. Each party shall be
entitled to appoint [***] to act as its representatives on the Steering
Committee. Both CIBA-GEIGY and SYNAPTIC shall have the ability to
change their representation on the Steering Committee as deemed
appropriate, but will notify the other party promptly of any such
change.
2.4 Personnel of Project Team. The Project Team shall be formed promptly
following execution of this Agreement. Each party shall be entitled to
appoint [***] to act as its representatives on the Project Team. Both
CIBA-GEIGY and SYNAPTIC shall have the ability to change their
representation on the Project Team as deemed appropriate, but will
notify the other party promptly of any such change. The Project Team
shall report to and operate under the overall direction of the Steering
Committee.
2.5 Responsibilities of Steering Committee. The Steering Committee shall
monitor and direct the activities of the Project Team, approve and
decide on the direction of the Project (within the terms of this
Agreement), and ensure high performance by both parties.
Any issues which cannot be resolved by the Steering Committee shall be
referred to a Management Committee, comprising [***], for resolution.
The members of the Management Committee are currently, from
CIBA-GEIGY: [***] and from SYNAPTIC: [***]
2.6 Responsibilities of the Project Team. The Project Team shall elaborate
and coordinate action plans and will be responsible for the economic
use of capacities and for the fulfilment of the Research Plan approved
by the Steering Committee. It reports to the Steering Committee.
2.7 Exclusivity of Research. [***] For the avoidance of doubt, for the
purposes of this Section 2.7 any entity other than Sandoz Limited, of
Basle, Switzerland, or any company acquiring the pharmaceuticals
business of CIBA-GEIGY as part of the merger of Sandoz Limited and
CIBA-GEIGY, which at the Effective Date was not an Affiliate of a party
shall remain a third party notwithstanding that it may later become an
Affiliate. Any such third party shall be bound by obligations of
confidentiality no less stringent than those set out in this Agreement,
and, unless otherwise agreed to by the other party, shall be obliged to
transfer the results of its research to the parties to this Agreement
as though the work had been undertaken by the party on whose behalf the
research is being carried out.
2.8 Joint Project Team and Steering Committee Meetings. It is contemplated
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that members of the Project Team and Steering Committee may also be members of
the Project Team and Steering Committee for the PP Project. In view of this
potential overlap in membership, as well as the potential value perceived by
both parties in having the two Project Teams and Steering Committees interact
and share scientific data and observations regarding their respective projects,
it is also contemplated that the two Project Teams and Steering Committees may
hold joint meetings, prepare single sets of minutes reflecting such meetings and
prepare joint reports such as those required by Section 4.0.
SECTION 3
Funding of Project
3.0 Funding. In consideration of the research performed by SYNAPTIC as part
of the Project, CIBA-GEIGY shall provide Project Funds to SYNAPTIC
during the Project Term as follows:
3.1 Amount. For each period of twelve (12) months from first anniversary of
the Effective Date Project Funds shall be an amount equal to [***] (as
adjusted for inflation pursuant to the Bureau of Labor Statistics
Consumer Price Index for Urban Consumers, New York, N.E. New Jersey
Metropolitan Region Price Index ("the CPI")) multiplied by the number
of SYNAPTIC FTEs which the Steering Committee has decided should be
employed on the Project during such period in accordance with Section
3.3. This figure shall be subject to further adjustment for inflation
pursuant to the CPI on each subsequent anniversary of the Effective
Date.
3.2 Payment. Project Funds shall be paid to SYNAPTIC by CIBA-GEIGY in
substantially equal quarterly instalments in advance on or before the
first day of each calendar quarter, namely: January 1, April 1, July 1,
and October 1 of each Year during the Project Term; PROVIDED HOWEVER
that the first payment, which shall be made at least thirty (30) days
prior to the first anniversary of the Effective Date, shall be equal to
(a) the quarterly payment plus (b) a pro-rated portion of the quarterly
payment (based on the number of days between the first anniversary of
the Effective Date and the beginning of the first complete calendar
quarter following such anniversary) but no additional quarterly payment
shall be payable on the first day of such complete calendar quarter;
AND PROVIDED FURTHER that the final payment shall be reduced pro rata
according to the number of days between the end of the preceding
calendar quarter and the date of expiry hereof, so that the amount of
the first and last payments hereunder are equal to the sum of the
instalments for two complete calendar quarters except only for
adjustment of the last payment in accordance with Section 3.1.
3.3 Allocation of Resources by SYNAPTIC. SYNAPTIC shall at substantially
all times during the Project Term assign such number of FTEs to work on
the Project as shall be agreed from time to time by the Steering
Committee, which number shall be equal to [***] less the number of FTEs
assigned from time to time to work on the PP Project in accordance with
the 1994 Agreement as supplemented by Supplement No. 1. While the level
of training and research experience of these FTEs may vary from time to
time, SYNAPTIC will use its best reasonable efforts to ensure that at
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least [***] of the aggregate number of FTE's assigned to the Project and the PP
Project will have educational degrees of Ph.D. or M.D., or research experience
of greater than ten (10) years in a relevant scientific field that qualifies
them as equivalent to a Ph.D. or M.D. level researcher. SYNAPTIC shall keep
accurate records showing manpower utilisation on the Project and shall produce
such records to CIBA-GEIGY at any time on request.
3.4 Allocation of Resources by CIBA-GEIGY. CIBA-GEIGY shall at all times
reasonably required for the purposes of the Project allocate sufficient
resources of suitably qualified and experienced scientists to perform
those tasks assigned to it by the Project Team. If it should fail to do
so, or if there should be a dispute between the parties as to whether
CIBA-GEIGY is fulfilling its obligations in this regard which the
Management Committee is not able to resolve, [***]
SECTION 4
Results of Project
4.0 Reports. The Project Team shall prepare or cause to be prepared
confidential comprehensive written reports at least [***] during the
Project Term. These reports shall describe in detail the progress of
the Project, [***] and shall be distributed to the members of the
Steering Committee.
4.1 Experimental Techniques. During the Project Term both SYNAPTIC and
CIBA- GEIGY shall disclose Project Technology to each other so far as
necessary for the purposes of the Project. Such disclosure may include
limited visits by CIBA-GEIGY and SYNAPTIC to the facilities of the
other to permit discussion and observation of Project Technology and
Assays, on a frequency and duration to be mutually agreed by the
Project Team. During the Project Term SYNAPTIC shall provide assistance
as reasonably necessary to enable [***]. In the event that SYNAPTIC
uses the services of any third party to develop equipment required for
an Assay, such equipment shall be supplied to CIBA-GEIGY at cost of
manufacture. Development costs shall not be charged.
4.2 Samples. During the Project Term both SYNAPTIC and CIBA-GEIGY shall
provide each other with samples of materials which embody Project
Technology and Assays, and may provide other samples as well, including
Project Compounds, for use in the Project as reasonably requested and
approved by the Steering Committee. (Such samples shall be cared for by
the receiving party as described in Clause 4.7.)
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4.3 Responsibilities of the Parties.
(a) Responsibilities of SYNAPTIC:
During the Project Term SYNAPTIC will provide, insofar as it
is relevant to the Project, molecular biology expertise [***],
and the development of the relevant functional Assays and
[***].
(b) Responsibilities of CIBA-GEIGY:
1. During the Project Term and for so long as CIBA-GEIGY shall
have a license under Section 6.0(a) it will [***].
2. During the Project Term and the Post-Project Term
CIBA-GEIGY will:- (i) use no less efforts than it employs with
regard to its own compounds that are being actively pursued,
to develop and commercialise the Products; (ii) promptly
notify SYNAPTIC of the selection of a particular Project
Compound as an Early Development Compound; and (iii) provide
SYNAPTIC with [***] report summarising the efforts devoted to
any such Early Development Compound during the [***] preceding
such report. CIBA-GEIGY's obligation to provide such reports
shall continue with respect to each Early Development Compound
until development thereof is terminated or upon the first sale
of a Product consisting of or containing such Project
Compound, whichever is the later.
4.4 Patentable Inventions. In the event that a patentable invention is
conceived or reduced to practice in the course, and within the scope,
of the Project by SYNAPTIC or CIBA-GEIGY, the party making the
invention shall disclose sufficient details thereof to the other party
in sufficient time for the other party to comment thereon before any
application for a patent therefor is filed, it being understood,
however, that the party making the invention shall make the final
decision with respect to any such filing. The party whose employees are
inventors of patentable technology shall have the right to file or
cause to have filed a patent application covering such invention. In
the event SYNAPTIC or CIBA-GEIGY chooses not to file a patent
application for an invention made by its employees, the other party
will be given the opportunity to pursue patent protection on that
invention at its own expense; PROVIDED, HOWEVER, that in this event
ownership in the patent will be assigned to the party that pursues the
patent, and the inventing party shall be granted a royalty-free,
non-exclusive license to practice the patented invention.
SYNAPTIC shall own any such patent application and any patent
or patents
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maturing therefrom on inventions made by SYNAPTIC employees, and CIBA-GEIGY
shall own any such patent applications and any patent or patents maturing
therefrom on inventions made by CIBA-GEIGY employees. Each party shall bear the
expenses incurred in the filing, prosecution, or maintenance of patent
applications or patents which are owned by or assigned to it, in accordance with
the foregoing provisions of this Section.
4.5 [***]
4.6 Filing and Prosecution of Patent Applications on [***].
[***]
4.7 Assistance.
(a) If so requested by the party filing a patent application
pursuant to Sections 4.4 or 4.6, the other party will provide
reasonable assistance to the filing party if such assistance
is necessary or desirable in order to obtain the optimum
patent protection for the invention.
(b) Each party agrees to notify the other party promptly if it
should become aware of any infringement or threatened
infringement of the Patent Rights by a third party, and in the
event that the owner of the Patent Rights institutes
proceedings against the third party to restrain or prevent the
infringement, the other party will, if so requested, provide
reasonable assistance to the owner at the owner's expense.
4.8 Confidentiality. Except as otherwise expressly provided in this
Agreement, both SYNAPTIC and CIBA-GEIGY, and their employees, agents,
consultants and others having access to Project Technology, Assays,
information and samples including but not limited to the Steering
Committee and its individual members, shall use their best efforts to
retain in confidence all Project Technology, information and samples
received from each other prior to or during the course of the Project.
A party receiving such Project Technology shall handle it with the same
degree of care as regards confidentiality as it does its own
proprietary technology, information and samples. Such information may,
however, be
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disclosed if and to the extent reasonably necessary to allow SYNAPTIC
or CIBA-GEIGY and its respective Affiliates, their employees, agents,
consultants and others having access to Project Technology, Assays,
information and samples received from each other prior to or during the
course of the Project, including but not limited to the Project Team,
the Steering Committee, the Management Committee, and their individual
members, to prosecute or defend against litigation with third parties,
to file and prosecute patent applications, or to comply with
governmental regulations. Moreover, SYNAPTIC and CIBA-GEIGY may
disclose confidential Project Technology to third parties to the extent
needed to fulfil the objectives of the Project, with the prior written
approval of the other party.
Such obligation of confidentiality, as to SYNAPTIC, CIBA-GEIGY and
third parties, shall be waived as to information which (i) is in the
public domain at the time of disclosure; (ii) comes into the public
domain through no fault of the party claiming waiver; (iii) was known
to the party claiming waiver prior to its disclosure by the other; or
(iv) is disclosed to the party claiming waiver by a third party having
a lawful right to make such disclosure.
The above obligation of confidentiality shall be modified after expiry
of the Post-Project Term, such that SYNAPTIC and CIBA-GEIGY can pursue
exploitation of the Project Technology with third parties, to the
extent of the rights licensed to them respectively hereunder, after
expiry of the Post-Project Term. Should CIBA-GEIGY terminate the
Agreement prematurely in accordance with Section 5.2, SYNAPTIC's
obligation of confidentiality as to CIBA-GEIGY's Project Technology
shall be eliminated.
In the event of a breach, or threat of breach, of the obligations of
confidentiality provided herein, the course of action or remedies
available to the damaged party shall include, but not be limited to,
injunctive relief.
4.9 Publications. While it is understood that both CIBA-GEIGY and SYNAPTIC
shall be free to publish the results of their respective studies
carried out under this Agreement, both SYNAPTIC and CIBA-GEIGY agree to
provide the other the opportunity to review any proposed abstracts,
posters and other material or information to be published or presented
at a scientific meeting, and any manuscripts at least thirty (30) days
prior to their intended presentation or submission for publication and,
at either party's request, shall delay presentation or submission for a
period sufficient to permit adequate steps to be taken to secure patent
protection for any patentable subject matter referred to therein. The
reviewing party shall carry out its review with reasonable promptness
and approval for publication shall not be unreasonably withheld.
SYNAPTIC and CIBA-GEIGY will delay or refrain from publication if
either party can demonstrate this to be contrary to its interests or
damaging to the Project.
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SECTION 5
Term and Termination
5.0 Term. This Agreement shall come into operation as of the Effective Date
and shall remain in force until the expiration of all royalty
obligations pursuant to Section 6, unless sooner terminated in
accordance with the provisions of Section 5.2.
5.1 Extension. CIBA-GEIGY may extend the Project Term for a further period
of twelve (12) months provided it serves on SYNAPTIC notice of its wish
to do so not later than the 4th August, 1997. Such extension shall be
on substantially the same terms as set out herein, mutatis mutandis,
with such extension contemplating additional funding by CIBA-GEIGY at
the same index-adjusted rate per FTE per year in accordance with
Section 3.1 and continuing studies on the Project pursuant to direction
by the Steering Committee. Any extensions beyond the fourth year would
be by mutual agreement.
5.2 Termination for Breach. If either party shall be in material default of
any of its obligations under this Agreement and shall fail to remedy
such default within sixty (60) days after written notice thereof
specifying the nature of such default then, notwithstanding anything to
the contrary contained in this Agreement, the party not in default
shall have the option of terminating this Agreement by giving written
notice of termination to the party in default, which option, if it is
to be exercised, must be exercised within thirty (30) days of the
expiry of the sixty (60) days allowed to correct the default.
5.3 Termination of the Project for Bankruptcy. Either party shall have the
right, at its option, to terminate the Project forthwith in the event
that the other party shall become involved in insolvency, dissolution,
bankruptcy or receivership proceedings affecting the operation of that
other party's business to such an extent that it is incapable of
fulfilling its obligations hereunder, except that in the event of an
involuntary bankruptcy filing against either party, that party shall
have sixty (60) days to remedy the situation before the Project may be
terminated.
5.4 Change of Control. Either party may terminate the Project twelve months
after the other party merges with or is taken over by another entity if
the terminating party can demonstrate to the reasonable satisfaction of
the other party that such merger or change of ownership or control is
adversely affecting, or has adversely affected, its interests (e.g.
because such other entity is a competitor of the terminating party,
because the other party would not be in a position to continue the
Project, etc.) provided that it serves written notice of termination on
the other party not less than three months before the date of
termination. It is expressly agreed that this right shall not be
exercised by SYNAPTIC on the merger of CIBA-GEIGY and Sandoz Limited,
Basel, Switzerland.
5.5 Third Party Patents. If CIBA-GEIGY or SYNAPTIC is prevented from
effectively pursuing the Project with the use of SYNAPTIC Project
Technology as a result of an issued patent owned by a third party, the
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party so prevented shall have the option of terminating the Project by
giving written notice of termination to the other. Should CIBA-GEIGY or
SYNAPTIC become aware of a blocking patent, or be notified that by
practicing Project Technology or Assays it is infringing a third party
patent, it will immediately inform the other party.
5.6 Effect of Termination or Expiry. Termination or expiry of this
Agreement shall not affect the rights and obligations of the parties
accrued under this Agreement prior to termination or expiry, all of
which shall survive such termination or expiry. In addition the
liabilities of the parties for any breach of this Agreement shall
survive any such termination or expiry. Sections 1.0 through 1.22, 4.2
(the last sentence only) 4.4 (the second paragraph only),4.5, 4.6, 4.7,
4.8, 5.4, 6.1 through 6.6, 7, 8.3 and 8.5 shall, except to the extent
expressly limited by their terms or by other provisions of this
Agreement, also survive any such termination or expiry. Any Project
Funds paid by CIBA-GEIGY but not committed by SYNAPTIC at termination
shall be refunded to CIBA-GEIGY, and CIBA-GEIGY shall have no further
obligation to pay Project Funds.
Notwithstanding anything to the contrary contained in this Agreement,
if this Agreement is terminated by either party pursuant to Section
5.2, then, in addition to the provisions referred to in the preceding
paragraph, the provisions hereof pursuant to which the non-terminating
party grants any license to the terminating party shall survive such
termination to the extent provided therein.
5.7 Cooperation during the Post-Project Term: During the Post-Project Term
the Steering Committee will meet at least once per year at a venue to
be mutually agreed to exchange information concerning Project
Compounds.
SECTION 6
Commercial Rights and Payments
6.0 (a) SYNAPTIC hereby grants to CIBA-GEIGY the following licences:
(i) during the Project Term and the Post-Project Term: an
exclusive, worldwide licence to use, for the sole purpose of
discovering and/or developing Project Compounds to be employed
for Project Uses, all SYNAPTIC Project Technology and Assays
and all SYNAPTIC Patent Rights which would be infringed by the
exercise by CIBA-GEIGY of its rights under this Agreement,
subject to the reservation in favour of SYNAPTIC of the right
to use all the said Project Technology, Assays and Patent
Rights for the purposes of this Agreement and for other
purposes not falling within the scope
of the licence hereby granted; and
(ii) following the Post-Project Term, a non-exclusive,
worldwide, licence to use, for the sole purpose of identifying
or discovering and developing compounds to be employed for
Project Uses and negative testing of compounds for Project
Uses, all such SYNAPTIC Project Technology and Assays and all
SYNAPTIC Patent Rights which would be infringed by
CIBA-GEIGY's exercise of its rights under this Agreement. Such
licence shall be royalty-free unless the compound
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being developed is a Project Compound, in which case royalties
shall be payable in respect of such Project Compound in
accordance with the provisions of this Section 6.
(iii) an exclusive, worldwide, royalty-bearing licence under
SYNAPTIC's Patent Rights for the life of those patents to
manufacture, have manufactured, use and sell Products
developed from Project Compounds or Project Technology
identified or discovered during the Project Term or existing
as at the Effective Date.
(b) CIBA-GEIGY hereby grants to SYNAPTIC the following licences:
(i) during the Project Term a sole, worldwide, royalty-free
licence to use exclusively for the purposes of the Project all
CIBA- GEIGY Project Technology in the Field and all
CIBA-GEIGY's Patent Rights which would be infringed by
SYNAPTIC's performance of its obligations under this
Agreement; and
(ii) following the Project Term a non-exclusive royalty-free
licence to use all CIBA-GEIGY Project Technology and all
CIBA-GEIGY Patent Rights (not being Patent Rights in respect
of CIBA-GEIGY compounds) for uses that are neither Project
Uses nor uses for indications the subject of an agreement
concluded between CIBA-GEIGY and SYNAPTIC following the
exercise by CIBA-GEIGY of the rights set out in Section 6.0
(d) below.
(c) The licences granted pursuant to Section 6.0(a) above shall
not be sub-licensable by CIBA-GEIGY except so far as necessary
to enable Products to be manufactured, used and/or sold by
CIBA-GEIGY's Affiliates and/or third party sub-licensees.
(d) If as a result of the Project, and during the Project Term SYNAPTIC
should discover uses for [***] other than a Project Use, SYNAPTIC will
report such discovery to CIBA-GEIGY together with all scientific
evidence available to it to support the hypothesis that such use could
be of therapeutic importance. Within one hundred and twenty (120) days
of receipt of such information, CIBA-GEIGY will notify SYNAPTIC
whether it wishes to exercise rights of first negotiation for rights
to such discovery, and shall, if it chooses to exercise such rights,
conclude an agreement to that effect with SYNAPTIC within a further
ninety (90) days.
(e) Should CIBA-GEIGY fail to exercise its rights of first negotiation
within the one hundred and twenty (120) day period referred to in
sub-section (d) above, or fail to conclude an agreement with SYNAPTIC
during the ninety (90) day period referred to in that sub- section,
SYNAPTIC shall be free to pursue the exploitation of such discovery on its
own or with other partners, subject to payment to CIBA-GEIGY of
compensation to be negotiated in good faith for the core research funding
by CIBA-GEIGY under this Agreement, such compensation to be paid only out
of sums received by SYNAPTIC either from the sale of products consisting of
or containing compounds discovered or developed using such discovery and/or
received by
[*** CONFIDENTIAL TREATMENT REQUESTED] 13
SYNAPTIC either as a lump sum or as royalties from any third
party on sales of such products. In assessing what, if any,
compensation should be paid to CIBA-GEIGY regard shall be had
to the extent of CIBA-GEIGY's financial or other contribution
to the discovery and to the amount of further research and
development effort required to be invested by SYNAPTIC and/or
the third party.
(f) If during the Post-Project Term SYNAPTIC should identify or discover a
Project Compound (hereinafter referred to as a "Post-Project
Compound") it will notify CIBA-GEIGY promptly and supply CIBA-GEIGY
with a sample of the compound and as much information relating to the
compound as SYNAPTIC has available to it to support the hypothesis
that such compound could be of therapeutic importance. CIBA-GEIGY
shall notify SYNAPTIC within one hundred and twenty (120) days of the
date of receipt of the sample and information whether it wishes to
negotiate for rights to the compound. On receipt of notice from
CIBA-GEIGY that it wishes to negotiate for a licence of the rights to
the compound SYNAPTIC shall as soon as practicable notify CIBA-GEIGY
of the terms on which it is prepared to grant a licence to CIBA-GEIGY.
The parties will then negotiate the terms of the licence in good
faith. If the parties fail to reach agreement on the principal terms
of the licence within ninety (90) days, or if CIBA-GEIGY should
decline the compound or fail to notify SYNAPTIC within the one hundred
and twenty (120) day period that it wishes to negotiate for a licence
to the compound SYNAPTIC shall be free to offer rights to the compound
to a third party. However, if CIBA-GEIGY had notified SYNAPTIC that it
wished to negotiate for a licence, SYNAPTIC shall not thereafter
license or offer to license the compound to a third party on terms
more favourable to the third party than those offered to CIBA-GEIGY
without first offering the same terms to CIBA-GEIGY. Notwithstanding
anything hereinbefore contained SYNAPTIC shall not offer a
Post-Project Compound to a third party nor itself develop a
Post-Project Compound for a Project Use if such Post-Project Compound
is an analog of a Project Compound which is under development by
CIBA-GEIGY or of which CIBA-GEIGY notifies SYNAPTIC it intends to
commence development during the Post-Project Term unless and until
CIBA-GEIGY subsequently discontinues development of such Post-Project
Compound. CIBA-GEIGY will advise SYNAPTIC promptly in the event of it
discontinuing development of such a Post-Project Compound.
6.1 Royalties. In further consideration of the collaboration with SYNAPTIC
and of the licenses granted to CIBA-GEIGY hereunder:
(a) CIBA-GEIGY shall pay to SYNAPTIC a royalty on Net Sales of
Products in countries where the sale of such Products is
covered by a claim of the Patent Rights ("Patented Products")
as follows:
(i) In each Year [***] per cent of the first Five hundred
million US Dollars (US $500,000,000) of Net Sales in
such Year; and
[*** CONFIDENTIAL TREATMENT REQUESTED]
14
(ii) thereafter in such Year, [***] per cent of Net Sales
in such Year in excess of Five hundred million US
Dollars (US $500,000,000).
(b) In the case of Net Sales of Products in countries where the
sale of the Products is not covered by a claim of the Patent
Rights ("Unpatented Products") the rate of the royalty payable
in respect of such Net Sales shall be reduced to one half of
the royalty rate payable pursuant to Section 6.1 (a).
(c) If the aggregate Net Sales of Patented Products and Unpatented
Products in any Year should exceed five hundred million US dollars
($500,000,000), sales of each category of Products shall be deemed to
have taken place in the same proportions throughout the Year. (For
example, if Net Sales of Products in any year totalled $900 million of
which $600 million were of Patented Products and $300 million were of
Unpatented Products the royalties due on such sales would be
calculated as follows:
Patented Products:
$500 million x 2/3 at [***] million
$400 million x 2/3 at [***] million
Unpatented Products:
$500 million x 1/3 at [***] million
$400 million x 1/3 at [***] million
Total royalties = [***]
(d) CIBA-GEIGY's obligation to pay SYNAPTIC royalties under this Agreement
shall commence on the first commercial launch of a Product for a
Project Use and shall continue, for Patented Products until expiry of
the last to expire of the Patent Rights and for Unpatented Products
for a period of ten (10) years from the date of first commercial
launch, in each case on a country-by-country basis. Only one royalty
will be due on the sale of a specific Product, regardless of the
number of patent claims covering such Product. If the patents relating
to a Patented Product expire, lapse or are revoked before the expiry
of ten (10) years from the launch date in any country, the Product
shall be treated as an Unpatented Product for the remainder of the ten
(10) year period.
6.2 Payment. Royalty payments shall be calculated for each Half-Year, and
made within ninety (90) days of the end of such Half-Year. CIBA-GEIGY
shall provide a statement and accounting with each payment, including a
breakdown of Net Sales during the applicable Half-Year and the
calculation of the royalty.
6.3 Blocked Currency. In each country in which the local currency is
blocked and cannot be removed from the country, at CIBA-GEIGY's
election royalty accrued in each such country shall be paid to SYNAPTIC
in local currency by deposit in a local bank designated by SYNAPTIC.
[*** CONFIDENTIAL TREATMENT REQUESTED] 15
6.4 Royalty Reduction. In the event that CIBA-GEIGY must obtain a separate
license from a third party in order to practice SYNAPTIC Project
Technology or use an Assay, the amount of royalty payable to SYNAPTIC
pursuant to Section 6.1 with respect to any Half-Year shall be reduced
by an amount equal to that paid or to be paid to the third party with
respect to the same period, but in no case shall the royalty amount
paid to SYNAPTIC with respect to any such period be less than one half
of the amount of the royalty otherwise due with respect to such period.
Each party shall notify the other as soon as practicable after it
becomes aware of the existence of any third party patent rights which
would prevent CIBA-GEIGY from practicing SYNAPTIC Project Technology.
Thereafter the parties will meet to discuss the action to be taken in
relation to any such blocking patent rights. CIBA-GEIGY shall be
entitled to approach the owner of such patent rights to negotiate for
an unblocking license. If it does so, it shall negotiate with such
owner in good faith with a view to obtaining the best possible license
terms from such owner, and shall keep SYNAPTIC informed of the progress
of such negotiations. SYNAPTIC shall have the right to participate with
CIBA- GEIGY in such negotiations.
6.5 Audit Rights. Either party shall have the right to audit the books of
the other party once a Year to verify the accuracy of the royalty
payments. Such audit will be performed by an independent certified
public accountant at the expense of the party seeking the audit, unless
the audit reveals a greater than five percent (5%) discrepancy in the
royalty amount that should have been paid in comparison to that
actually paid, in which case the expense of the audit will be borne by
the other party. Both SYNAPTIC and CIBA-GEIGY shall keep fair and
accurate records on the use of Project Technology and Assays in drug
discovery and compound research.
6.6 Milestone Payments.
(a) Subject to the last sentence of this Section 6.6, CIBA-GEIGY will pay
to SYNAPTIC milestone payments as follows:
(i) On acceptance by CIBA-GEIGY of each Project Compound as an Early
Development Compound: [***]
(ii) On acceptance by CIBA-GEIGY of each Project Compound as a Full
Development Compound: [***]
(iv) Upon approval for marketing of each Project Compound (including
approval of the price and approval for reimbursement, if
applicable) in one of the following countries, namely: the US; a
key country in Europe (UK,
[*** CONFIDENTIAL TREATMENT REQUESTED] 16
Germany, or France); or Japan: [***]
(b) [***] PROVIDED ALWAYS that the amount creditable against
royalties in any Half-Year shall not exceed fifty per cent of
the royalties due in respect of such period, the balance being
carried forward to be credited against royalties due in
respect of future periods.
(c) If a Project Compound fails during development and is replaced
by another Project Compound ("the New Project Compound") and
if the New Project Compound has the same mechanism of action
[***] as that of the failed Project Compound, then
notwithstanding anything to the contrary contained herein,
milestones already paid with respect to the failed Project
Compound will be credited against milestones payable with
respect to the New Project Compound.
SECTION 7
Disclosure of Agreement
7.0 Disclosure of Agreement. Except as required by law, neither SYNAPTIC
nor CIBA-GEIGY shall release to any third person or publish in any way
any non-public information with respect to the terms of this Agreement
or concerning their cooperation without the prior written consent of
the other, which consent will not be unreasonably withheld. The form,
content and timing of any such announcement shall be agreed by the
parties in advance.
The text of any press release to be issued by SYNAPTIC and/or
CIBA-GEIGY concerning the conclusion of this Agreement as well as the
precise date and timing of the press release shall be agreed by the
parties in writing in advance, such agreement not to be unreasonably
withheld or delayed.
SECTION 8
Miscellaneous Provisions
8.0 No Agency. It is understood and agreed that SYNAPTIC and CIBA-GEIGY
shall each have the status of an independent contractor under this
Agreement and that nothing in this Agreement shall be construed as
authorisation for either party to act as agent for the other. SYNAPTIC
members of the Project Team, Steering Committee, and Management
Committee shall be and shall remain employees of SYNAPTIC, and
CIBA-GEIGY members of the Project Team, Steering Committee, and
Management Committee shall be and shall remain employees of CIBA-GEIGY,
and neither party shall incur any liability for any act or failure to
act by employees of the other party.
8.1 Force Majeure. The obligations of each party hereto shall be suspended
during such time and to the extent that fulfillment of any such
obligation shall be prevented by acts beyond the reasonable control of
the party affected thereby.
[*** CONFIDENTIAL TREATMENT REQUESTED] 17
8.2 Amendment. This Agreement may not be amended, supplemented, or
otherwise modified except by an instrument in writing signed by both
parties.
8.3 Entire Agreement. This Agreement together with the PP Agreement as
supplemented by Supplement No. 1, represents the entire agreement and
understanding between the parties relating to the subject matter
hereof, and supersedes all written or oral agreements, consents or
understandings (if any) with respect thereto given or made between the
parties prior to the date hereof.
8.4 Waivers. Any obligation of either party hereunder may be waived by a
written instrument signed by the other party. Any delay or omission on
the part of any party in the exercise of its strict rights hereunder
will not impair those rights nor will it constitute a renunciation or
waiver of those rights. Any waiver by any party of any term or
condition of this Agreement in any one instance shall not be deemed or
construed to be a waiver of such term or condition for any other
instance in the future (whether similar or dissimilar) or of any
subsequent breach hereof.
8.5 Applicable Law. This Agreement shall be construed and the rights of the
parties determined in accordance with the laws of the State of New York
without regard to the principles of conflict of laws. The venue of any
legal proceedings to resolve any dispute between the parties shall be
New York, New York State.
8.6 Headings. The headings of the Sections of this Agreement are for
general information and reference only, and this Agreement shall not be
construed by reference to such titles.
8.7 Notices. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been
sufficiently given for all purposes hereof if mailed by first class
certified or registered mail, postage prepaid, addressed to the party
to be notified at its address shown below or such other address as may
have been furnished in writing to the notifying party.
To CIBA-GEIGY:
CIBA-GEIGY Limited
Legal Department
Xxxxxxxxxxxxxx 000
XX-0000 Xxxxx
Xxxxxxxxxxx
Attention : The Head of Legal Department
To SYNAPTIC:
Synaptic Pharmaceutical Corporation
000 Xxxxxxx Xxxx
Xxxxxxx
Xxx Xxxxxx 00000-0000
XXX
Attention: The President
[*** CONFIDENTIAL TREATMENT REQUESTED] 18
AS WITNESS the signatures of the authorised representatives of the parties
hereto the day and year first above written.
SYNAPTIC PHARMACEUTICAL CORPORATION
Signature: /s/Xxxxxxxx X. Xxxxxxxx
-----------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: President
CIBA-GEIGY Limited
Signatures:/s/Xx. X.X. Xxxxxxx /s/R.E. Xxxxxx
------------------- ----------------
Names: Xx. X.X. Xxxxxxx R.E. Xxxxxx
Titles: R & D Alliances Division Counsel
19
