Exhibit 10.13
CONFIDENTIAL TREATMENT
AGREEMENT
This Agreement (the "Agreement") is entered into as of the last date of
signature appearing below (the "EFFECTIVE DATE") between NeoGenesis Drug
Discovery, Inc., a Delaware corporation ("NEOGENESIS") and Schering Corporation,
a New Jersey corporation ("SCHERING"), and sets forth the terms and conditions
that will apply to the provision by NeoGenesis to Schering of certain screening
and analysis services.
BACKGROUND
Schering is interested in identifying potential pharmaceutical products for
treatment of certain human diseases and wishes to identify compounds that
exhibit a high degree of chemical binding and functional activity to specific
protein targets. NeoGenesis has certain technology and know-how, including
screening processes of libraries of mass-encoded small molecule compounds,
relating to the identification, discovery, validation and optimization of novel
compounds which may be useful for development of novel therapeutics employing
targets implicated in a disease process. The parties wish to pursue a
collaborative screening process to identify compounds exhibiting a high degree
of chemical binding activity to targets designated by Schering from among the
NeoGenesis libraries of mass-encoded small molecule compounds and which have
activity in target-specific functional assays. The terms and conditions set
forth below shall govern the performance of such collaborative effort.
1. DEFINITIONS.
The following capitalized terms used in this Agreement, whether in the
singular or plural, shall have the meaning set forth below.
1.1 "ACTIVE COMPOUND" means any Compound identified as having binding
activity when tested against a Target pursuant to the Screening Program and
which (a) has Kd values of [*] and (b) has demonstrated bioactivity in
functional assays against the applicable Target as determined by the Steering
Committee following Schering's performance of the procedure specified in
Paragraph 3 of ATTACHMENT A.
1.2 "AFFILIATE" means with respect to either party, any Person that,
directly or indirectly, is controlled by, controls or is under common control
with such party. For purposes of this definition, control means, with respect to
any Person, the direct or indirect ownership of fifty percent (50%) or more of
the outstanding voting securities of an entity, or the right to receive fifty
percent (50%) or more of the profits or earnings of an entity, or the possession
otherwise, directly or indirectly, of the power to direct the management,
business and affairs of an entity.
1.3 "ALIS" means the Automated Ligand Identification System, an automated,
ultra-high throughput ligand selection system proprietary to NeoGenesis that is
used to identify multiple classes of chemical ligands against a target protein.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
1
1.4 "CHEMOTYPE" means a family or group of Compounds closely structurally
related to one or more Active Compounds.
1.5 "CIP" means "Carriage and Insurance Paid", as that expression is
defined in Incoterms 2000, ICC Publishing S.A.
1.6 "COMMERCIALLY REASONABLE EFFORTS" shall mean, with respect to (a) any
objective by either party, reasonable, diligent, good faith efforts to
accomplish such objective as such Party would normally use to accomplish a
similar objective under similar circumstances; and (b) with respect to any
objective relating to the development or commercialization of any Licensed
Product efforts and resources normally used by such party with respect to a
product owned by such party or to which such party has similar rights which is
of similar market potential at a similar stage in the development or life of
such product, taking into account issues of safety, efficacy, product profile,
the competitiveness of the marketplace, the proprietary position of the product,
the regulatory structure involved, profitability of the product and other
relevant commercial factors.
1.7 "COMPOUND" shall mean all proprietary compounds contained in the
NeoMorph Screening Library or any NeoMorph Focused Libraries which are screened
by NeoGenesis against one or more Targets in performance of the Screening
Program.
1.8 "COMPOUND PATENT RIGHTS" shall mean any Schering Patent Rights which
claim Selected Compounds, Derivative Compounds, Designated Compounds or Licensed
Product, or the manufacture or use thereof.
1.9 "CONFIDENTIAL INFORMATION" means any proprietary or confidential
information of either party (including but not limited to all Schering Know-How
and all NeoGenesis Know-How) disclosed to the other party pursuant to this
Agreement in written or other tangible medium and marked as confidential, or if
disclosed orally or displayed, confirmed in writing within thirty (30) days of
disclosure.
1.10 "DERIVATIVE COMPOUND" means a compound which is derived from a
Selected Compound or a Lead Compound by or on behalf of Schering, or by
NeoGenesis in performance of medicinal chemistry optimization pursuant to
Section 2.2(b), and having activity against the same Target as such Selected
Compound and/or Lead Compound. A compound will be deemed to have been "derived"
from a Selected Compound or a Lead Compound if it (i) is the result of a
chemical modification made to a Selected Compound or Lead Compound, (ii) is
otherwise derived from a chemical synthesis program based upon a Selected
Compound or Lead Compound, or (iii) is based on proprietary structure-function
data obtained from Selected Compounds or Lead Compounds. Derivative Compounds
will include, without limitation, all Compounds contained in the NeoMorph
Focused Library(ies).
1.11 "DESIGNATED COMPOUND" means any Selected Compound or Derivative
Compound which becomes the subject of a development program conducted by
Schering or its Affiliates, as further defined in Section 2.8(b) of the
Agreement.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
2
1.12 "EMEA" means the European Medicines Evaluation Authority, or any
successor thereto.
1.13 "FDA" means the United States Food and Drug Administration, or any
successor thereto.
1.14 "FD&C ACT" means the United States Federal Food, Drug and Cosmetic Act
of 1938, as amended.
1.15 "FIELD" means the treatment or prevention of any disease or condition
in humans or animals.
1.16 "FIRST COMMERCIAL SALE" means, with respect to a Licensed Product, the
first sale (or other transfer for value in an arms-length transaction) for end
use of such Licensed Product in a country within the Territory after obtaining
all necessary Regulatory Approvals for the marketing and sale of the Licensed
Product in such country.
1.17 "FTE" means the equivalent of a full time (12) months (including
normal vacations, sick days and holidays) work of an individual scientist,
carried out by one or more employees or agents of NeoGenesis, who devotes a
portion of his or her time to performing the Screening Program.
1.18 "GOOD CLINICAL PRACTICE" means the then current standards for clinical
trials for pharmaceuticals, as set forth in the FD&C Act and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good clinical practice as are required by the European Union and
other Regulatory Authorities in countries in which the Product is intended to be
sold, to the extent such standards are not in contravention with United States
Good Clinical Practices.
1.19 "GOOD LABORATORY PRACTICE" means the then current standards for
laboratory activities for pharmaceuticals, as set forth in the FD&C Act and
applicable regulations promulgated thereunder, as amended from time to time, and
such standards of good laboratory practice as are required by the European Union
and other Regulatory Authorities in countries in which the Product is intended
to be sold, to the extent such standards are not in contravention with United
States Good Laboratory Practices.
1.20 "GOOD MANUFACTURING PRACTICE" means the current standards for the
manufacture of pharmaceuticals, as set forth in the FD&C Act and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good manufacturing practice as are required by the European Union
and other Regulatory Authorities in countries in which the Product is intended
to be sold, to the extent such standards are not in contravention with United
States Good Manufacturing Practices.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
3
1.21 "IMPROVED ACTIVE COMPOUND" means any Compound identified as a result
of initial optimization of one or more Active Compounds by NeoGenesis (as
described in paragraph 4 of ATTACHMENT A) and having binding activity when
tested against a Target pursuant to the Screening Program with a Kd value of
[*].
1.22 "IND" means an investigational new drug application, as defined in the
FD&C Act and applicable regulations thereunder, or any equivalent document,
filed with the FDA and necessary for beginning clinical trials of any Licensed
Product in humans or any application or other documentation filed with any
Regulatory Authority of a country other than the United States prior to
beginning clinical trials of any Licensed Product in humans in that country.
1.23 "INTERNATIONAL AGREEMENT" means the contemporaneous Agreement entered
into by NeoGenesis and Schering's Affiliate, Schering-Plough Ltd. relating to
countries and territories outside of the Territory.
1.24 "INVENTIONS" means any and all discoveries, developments, inventions
and innovations (whether or not patentable) that are conceived and/or reduced to
practice (i) solely by one or more employees or consultants of NeoGenesis in
connection with the performance of the Screening Program; (ii) solely by one or
more employees or consultants of Schering in connection with the performance of
the Screening Program; or (iii) jointly by one or more employees or consultants
of NeoGenesis and one or more employees or consultants of Schering in connection
with the performance of the Screening Program.
1.25 "LEAD COMPOUNDS" means those Selected Compounds which are designated
by Schering as Lead Compounds (pursuant to Section 2.2(b) of the Agreement) for
the performance of medicinal chemistry optimization by NeoGenesis.
1.26 "LICENSED PRODUCT(S)" means any pharmaceutical product which contains
as an active ingredient a Selected Compound or Derivative Compound, and which is
covered by one or more claims of a NeoGenesis Patent Right and/or Compound
Patent Right.
1.27 "MAJOR MARKET COUNTRY" means the United States, Japan, or any three or
more of the following European countries, the United Kingdom, France, Germany,
Italy or Spain, as the case may be.
1.28 "NDA" means a new drug application or product license application,
each as defined in the FD&C Act and applicable regulations thereunder, seeking
approval to market and sell a Licensed Product in the United States.
1.29 "NEOGENESIS KNOW-HOW" means all proprietary information, data and
know-how relating to the NeoMorph Screening Library, NeoMorph Focused Libraries,
NeoMorph Chemistry, ALIS, QSCD, the Compounds, Active Compounds, Improved Active
Compounds, Selected Compounds, Derivative Compounds, Designated Compounds or
Licensed Products together with, where applicable, any analogs, derivatives or
fragments thereof, which is (i) owned
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
4
or controlled by NeoGenesis as of the Effective Date, or (ii) developed by or on
behalf of NeoGenesis during the term of this Agreement.
1.30 "NEOGENESIS PATENT RIGHTS" means any and all patents and patent
applications (which for the purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention) which during the term of this Agreement are owned by NeoGenesis
(and/or any of its Affiliates), or to which NeoGenesis (and/or any of its
Affiliates) through license or otherwise acquires rights, and which have claims
covering: (i) the NeoMorph Screening Library, the NeoMorph Focused Libraries,
NeoMorph Chemistry, ALIS or QSCD; or (ii) any Active Compounds, Improved Active
Compounds, Selected Compounds, Derivative Compounds, Designated Compounds or
Licensed Products, or the manufacture or use of any of the foregoing; or (iii)
NeoGenesis Inventions (as defined in Section 3.5(a)); or (iv) NeoGenesis' rights
in Joint Inventions (as defined in Section 3.5(b)), as well as all divisionals,
continuations, continuations-in-part, reissues, re-examinations, extensions,
renewals, registrations, supplementary protection certificates and/or foreign
counterparts of any of the foregoing which are owned or controlled by NeoGenesis
and its Affiliates during the term of this Agreement. The NeoGenesis Patent
Rights shall include those listed in ATTACHMENT B pursuant to Section 3.8.
1.31 "NEOMORPH CHEMISTRY" means the process, proprietary to NeoGenesis, of
forming libraries and sub-libraries of discrete compounds by coupling a broad
set of diverse cores with diverse sets of building blocks employing proprietary
mass-coding algorithms.
1.32 "NEOMORPH FOCUSED LIBRARIES" means any and all compounds or
collections of compounds synthesized by NeoGenesis which are derived from or
based upon Lead Compounds, and which are designed to optimize the structure of
such Lead Compounds with respect to activity against one or more specific
Targets.
1.33 "NEOMORPH SCREENING LIBRARY" means the entire collection of libraries
consisting of mass-encoded small molecule organic compounds owned by NeoGenesis
and developed with NeoMorph Chemistry, comprising at least twelve million
(12,000,000) different compounds.
1.34 "NET SALES" means the proceeds actually received by Schering or any of
its Affiliates or sub-licensees on all sales of a Product in the Territory to an
unaffiliated third party (whether an end-user, a distributor or otherwise), and
exclusive of intercompany transfers or sales, less the reasonable and customary
deductions from such gross amounts including: (i) normal and customary trade,
cash and quantity discounts, allowances and credits; (ii) credits or allowances
actually granted for damaged goods, returns or rejections of a Product and
retroactive price reductions; (iii) sales or similar taxes (including duties,
value added taxes or other governmental charges otherwise measured by the
billing amount, when included in billing); (iv) freight, postage, shipping,
customs duties and insurance charges; (v) charge back payments and rebates
granted to managed health care organizations or to federal, state and local
governments, their agencies, and purchasers and reimbursers or to trade
customers, including but not limited to, wholesalers and chain and pharmacy
buying groups; (vi) commissions paid to third parties other than sales personnel
and sale representatives or sales agents; and (vii) rebates (or equivalents
thereof) granted to or charged by national, state or local governmental
authorities in countries
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
5
other than the United States. If a Product is sold in the form of a combination
product with one or more other active ingredients, Net Sales for such
combination product with one or more active ingredients will be calculated by
multiplying actual Net Sales of such combination product by the fraction A/(A+B)
where:
"A" is the invoice price of the Product contained in the combination
product if sold separately by Schering or any of its Affiliates or
sub-licensee; and
"B" is the aggregate invoice price of any other active component(s)
in the combination product if sold separately by Schering or any of its
Affiliates or sub-licensee.
If one or more of the other active ingredients in the combination product are
not sold separately, then the above formula shall be modified such that:
"A" shall be the fully allocated manufacturing cost to Schering or any of
its Affiliates or sub-licensee of the Product, and
"B" shall be the fully allocated manufacturing cost to Schering or any of
its Affiliates or sub-licensee of any other active component(s) in the
combination,
such fully allocated manufacturing costs being determined in accordance with
generally accepted accounting principles.
1.35 "PERSON" means any individual, corporation, association, partnership
(general or limited), joint venture, trust, estate, limited liability company,
limited liability partnership, unincorporated organization, government (or any
agency or political subdivision thereof) or other legal entity or organization.
1.36 "PRELIMINARY COMPOUND" means any Compound identified as having binding
activity when tested against a Target pursuant to the Screening Program and
which has Kd values of [*] or such other binding affinity threshold for a
specific Target as shall be agreed upon by the parties in writing.
1.37 "QSCD" means Quantisized Surface Complimentary Diversity, a model
proprietary to NeoGenesis, in terms of which discrete chemical compliments to
the surfaces of a Target are defined.
1.38 "REGULATORY APPROVAL" means, for any country in the Territory, those
authorizations by the appropriate Regulatory Authority(ies) required for the
manufacture, importation, distribution, marketing, promotion, pricing and sale
of the Licensed Product(s) in such country, including, without limitation, any
NDAs, Health Registration Dossiers, supplements, amendments, pre- and
post-approvals, marketing authorizations based upon such approvals (including
any prerequisite manufacturing approvals or authorizations related thereto) and
pricing, third party reimbursement or labeling approval(s), technical, medical
and scientific licenses, registrations or authorizations.
1.39 "REGULATORY AUTHORITY" means any national, supra-national, regional,
state or local regulatory agency, department, bureau, commission, council or
other governmental entity in the Territory, including, without limitation, the
FDA and the EMEA.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
6
1.40 "SCHERING KNOW-HOW" means all information, data and know-how which is
owned or controlled by Schering or its Affiliates as of the Effective Date, or
developed by or on behalf of Schering or its Affiliates during the term of this
Agreement, related to the Screening Program, the Targets, Active Compounds,
Improved Active Compounds, Selected Compounds, Derivative Compounds, Designated
Compounds or Licensed Products. Schering Know-How includes, without limitation,
all processes, formulas, discoveries and inventions whether relating to
biological, chemical, pharmacological, toxicological, pharmaceutical, physical
and analytical safety, quality control and clinical data, including, without
limitation, clinical study data related to Designated Compounds and/or Licensed
Products. Schering Know-How also includes relevant medical information relating
to the Licensed Products (such as Regulatory Authority questions, responses
thereto and adverse drug event history) in the possession of Schering, its
Affiliates or sublicensees.
1.41 "SCHERING PATENT RIGHTS" means any and all patents and patent
applications (which for the purposes of this Agreement shall be deemed to
include certificates of invention and applications for certificates of
invention) which during the term of this Agreement are owned by Schering (and/or
any of its Affiliates), or to which Schering (and/or any of its Affiliates)
through license or otherwise acquires rights, which have claims covering: (i)
Selected Compounds, Derivative Compounds, Designated Compounds or Licensed
Products, or the manufacture or use of any of the foregoing; (ii) the Targets;
or (iii) Schering Inventions (as defined in Section 3.5(a)) or Joint Inventions
(as defined in Section 3.5(b)), as well as all divisionals, continuations,
continuations-in-part, reissues, re-examinations, extensions, renewals,
registrations, supplementary protection certificates and/or foreign counterparts
of any of the foregoing which are owned or controlled by Schering and its
Affiliates during the term of this Agreement.
1.42 "SELECTED COMPOUND" means any and all Active Compounds and/or Improved
Active Compounds which have demonstrated bioactivity in secondary functional
assays against the applicable Target as determined by Schering in accordance
with Section 2.7, and which are designated by Schering pursuant to Section
2.7(a) of the Agreement.
1.43 "SCREENING PROGRAM" means the screening program described in
ATTACHMENT A (including as it may be amended by the Steering Committee) to
identify Active Compounds and Improved Active Compounds against one or more
Targets.
1.44 "STEERING COMMITTEE" means the joint steering committee established by
the parties pursuant to Section 2.6 of the Agreement.
1.45 "SUCCESS CRITERIA" means the success criteria, to be defined by the
Steering Committee with respect to a given Target, for determining whether or
not Selected Compounds and/or Derivative Compounds have a certain desired degree
of chemical binding activity, activity in Target-based functional assays, and
other chemical, biological, pharmacological and toxicological properties,
suitable for drug development.
1.46 "TARGET" means a specific biological target (including, without
limitation, nucleic acids and proteins, and/or active fragments thereof) that a
small molecule is screened against in
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
7
order to determine whether the small molecule demonstrates a specific
biochemical or pharmaceutical effect, selected by Schering and accepted by
NeoGenesis in accordance with Section 2.1(b) for which NeoGenesis will perform
the Screening Program.
1.47 "TERRITORY" means the United States and all of its territories,
possessions and commonwealths, except for the Commonwealth of Puerto Rico.
1.48 "VALID CLAIM" means a composition-of-matter or method-of-use claim of
an issued and unexpired patent included within (i) the NeoGenesis Patent Rights
or (ii) Compound Patent Rights, and in each case which has not been revoked or
held unenforceable or invalid by a decision of a court or other governmental
agency of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been disclaimed, denied or admitted to be
invalid or unenforceable through reissue or disclaimer or otherwise.
2. SCREENING PROGRAM
2.1 DELIVERY OF TARGETS.
(a) Schering shall deliver one or more of the Targets listed in
ATTACHMENT A to NeoGenesis for screening within [*] following the Effective
Date. Schering shall provide the Targets in the quantities and formats specified
in ATTACHMENT A, along with a written description of the concentration and
volume of the Target.
(b) From time to time during the term of this Agreement, Schering may
select additional Targets for screening under the Screening Program. In such
event, Schering shall notify NeoGenesis in writing of the additional Target(s)
to be provided for screening. NeoGenesis shall notify Schering in writing within
[*] of such notice whether the Target is approved for inclusion in the Screening
Program. Subject to the terms of Section 2.1(c), the Target will be accepted for
inclusion in the Screening Program unless the proposed Target: (i) is subject to
an exclusivity period in an existing agreement between NeoGenesis and a third
party; or (ii) is the subject of an existing internal research program at
NeoGenesis. The parties shall promptly amend ATTACHMENT A to include each
additional Target added to the Screening Program pursuant to this Section
2.1(b). Schering shall thereafter provide the Targets to NeoGenesis in
appropriate quantities and formats for screening, along with a written
description of the concentration and volume of the Target. The Steering
Committee shall establish a schedule for delivery of the additional Targets to
NeoGenesis based on the time necessary to prepare and validate the approved
Target; PROVIDED, that such period shall not exceed nine (9) months from
NeoGenesis' notice to Schering that a Target is approved.
(c) The parties acknowledge and agree that the Screening Program will
be limited to active screening and/or optimization programs at NeoGenesis
directed to [*] distinct Targets, based upon research support for [*] FTEs at
NeoGenesis. In the event that the screening and optimization programs directed
to a specific Target are completed or discontinued, Schering shall have the
right to select an additional Target to replace such discontinued Target.
Further, in
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
8
the event that the number of FTEs working on the Screening Program is increased,
pursuant to Section 2.2(f), the limit on the number of active Targets shall be
increased proportionately.
(d) All Targets to be supplied by Schering hereunder shall be
delivered CIP to NeoGenesis' Cambridge facility using a carrier selected by
Schering. The Targets are and shall remain the sole and exclusive property of
Schering. NeoGenesis will only use the Targets for screening in performance of
the Screening Program and will not use the Targets for any other purpose without
Schering's prior written consent.
(e) Schering will identify to NeoGenesis all Targets provided by
Schering for use in the Screening Program. The identity of the Targets and any
other information related thereto will be considered Schering Confidential
Information. During the applicable Exclusivity Period (as defined below) for a
Target, NeoGenesis shall not screen the NeoMorph Screening Library for itself or
for any third party against the same Target, without Schering's prior written
approval. The "Exclusivity Period" for a given Target shall begin on the date
the Target is accepted for inclusion in the Screening Program pursuant to
Section 2.1(b) and shall expire:
(i) if NeoGenesis does not perform any medicinal chemistry
optimization activities pursuant to Section 2.2(b) to develop
NeoMorph Focused Libraries with respect to the Target, [*] after
NeoGenesis delivers to Schering the Final Target Report with
respect to such Target; or
(ii) if NeoGenesis does perform medicinal chemistry optimization
activities pursuant to Section 2.2(b) to develop NeoMorph Focused
Libraries with respect to such Target, [*] after the later of the
date upon which Schering files an IND for a Licensed Product
directed to the Target or discontinues the development of
Licensed Products against such Target.
Upon the expiration of the Screening Program, and annually thereafter, Schering
shall notify NeoGenesis in writing of the list of Targets with respect to which
Schering has ongoing programs to discover and develop Licensed Products.
Schering shall promptly notify NeoGenesis in writing in the event that it
discontinues the development of Licensed Products against a Target. For purposes
of this Section 2.1(e), Schering shall be deemed to have discontinued
development of Licensed Products against a Target if it ceases to maintain a
minimum of [*] FTEs assigned full time to work on the discovery and pre-clinical
development of Licensed Products against a Target. During the term of the
Screening Program, if NeoGenesis intends to screen the NeoMorph Screening
Libraries (including all newly created Compounds contained therein) for a third
party against a Target with respect to which Schering's Exclusivity Period has
expired pursuant to subsection (i), above, NeoGenesis shall first offer Schering
the opportunity to screen the NeoMorph Screening Libraries against the Target.
Schering shall have [*] in which to accept or reject such offer. If Schering
accepts the offer, such screening shall be conducted under the terms of this
Agreement and Schering shall have a renewed Exclusivity Period with respect to
such Target. If NeoGenesis does perform medicinal chemistry optimization
activities pursuant to Section 2.2(b) to develop NeoMorph Focused Libraries with
respect to a Target, then notwithstanding the expiration of the applicable
Exclusivity Period
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
9
pursuant subsection (ii), above, NeoGenesis shall be permanently prohibited
from screening the NeoMorph Screening Libraries against the Target for itself
and in such instance may only perform such screening for third parties. In
the event that NeoGenesis does screen the NeoMorph Screening Libraries
against a Target for itself or a third party as permitted under this Section
2.1(e), NeoGenesis shall not use (i) any Schering Know-How (including without
limitation any of Schering's proprietary information related to the existence
of or uses for the Target), or (ii) any NeoGenesis Know-How related to the
Target and developed in performance of the Screening Program, in connection
with such screening activities.
(f) For purposes of this Agreement, and in particular with respect to
the provisions of Sections 2.1(b) and 2.1(e), a Target identified by Schering
for screening under this Agreement will encompass the nucleic acid or amino acid
sequence of the actual Target to be provided by Schering, and in the case of a
Target which is a human biological molecule, shall be further defined by the
nucleic acid or protein encoded by the specified genomic location of origin
(which will be identified by Schering in the notification to NeoGenesis of a
proposed Target pursuant to Section 2.1(b)) and natural polymorphic variants
thereof such as SNP, insertion, deletion and splice variants or the synthetic
equivalent thereof. If a Target can not be distinguished from another biological
target based on the above, then the Target shall be considered the same as
another biological target if the other biological target comprises a contiguous
region of [*] residues that is [*] to the Target or is derived from such Target
by modification. If a Target is a biological molecule of non-human origin, then
the Target shall be considered the same as another target if they are both
derived from the comparable chromosomal location of related strains of the
applicable species. For example, a target defined by the [*] shall be considered
the same as a target specified by the [*] gene from any other strain of HCV
including targets derived by modification. Similarly, a target specified by a
chromosomal location in one particular strain of [*] shall be considered
identical to a target specified by the analogous location in a second strain of
bacteria. If the chromosomal locations of two targets can not be defined, then a
target shall be considered the same as a second target if it comprises a
contiguous region of [*] residues that is [*] to said second target or is
derived from such a second Target by modification. It is expressly understood
that a non-human target falling outside the criteria defined above may not be
screened using the NeoMorph Screening Libraries with the intent of developing a
product affecting the activity of a human target that would meet the identity
criteria. For clarity, a primate ortholog of a human gene or protein may not be
screened using the Neomorph Screening Libraries if the intent is to develop a
product for human use against an otherwise excluded target. Nothing in this
paragraph shall limit the screening of non-human targets for non-human usage.
2.2 SCREENING PROGRAM.
(a) During the term of the Screening Program, NeoGenesis will utilize its
proprietary technology and methods, including without limitation the ALIS
method, to screen the NeoMorph Screening Library for activity with respect to
each Target for purposes of identifying Active Compounds for further evaluation
and development. Screening will be performed pursuant to the protocol for the
Screening Program, as set forth in paragraphs 1-2 of ATTACHMENT A. With respect
to each accepted Target provided by Schering under Section 2.1, NeoGenesis shall
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
10
complete the screening of the NeoMorph Screening Library within [*] following
the date that the Target is delivered to NeoGenesis. The results of such
screening shall be provided to Schering through the Steering Committee in the
form of a Preliminary Target Report (as defined in ATTACHMENT A). NeoGenesis
shall provide Schering with samples of all Preliminary Compounds selected by the
Steering Committee for further evaluation by Schering pursuant to paragraph 3 of
ATTACHMENT A. Schering will evaluate such Preliminary Compounds in Target-based
functional assays and/or secondary assays to identify Active Compounds, and will
report the results of such evaluations to the Steering Committee, and NeoGenesis
will promptly thereafter provide Schering with all available structural
information for each Active Compound so identified. NeoGenesis will, at the
direction of the Steering Committee, conduct initial optimization activities, as
described in paragraph 4, of ATTACHMENT A, to identify Improved Active
Compounds. It is acknowledged that all compounds generated from such initial
optimization activities and having activity against the relevant Target shall be
deemed to be Improved Active Compounds; provided that such optimization
activities and all Improved Active Compounds arising therefrom shall not be
deemed to be optimization of Lead Compounds for purposes of Section 2.1(e) or
for determining Schering's financial obligations under Sections 4.3 and 4.4.
(b) NeoGenesis will, at the direction of the Steering Committee, conduct a
full program of medicinal chemistry optimization activities, based upon those
Selected Compounds identified as Lead Compounds that are suitable for
optimization. Such optimization activities shall include the design and
preparation of NeoMorph Focused Libraries based upon such Lead Compounds, and
the screening of the NeoMorph Focused Libraries against the relevant Target(s).
The parties acknowledge and agree that, subject to the terms of Sections 3.5(a),
and effective on the date that Schering acquires an exclusive license to the
relevant Selected Compound(s) pursuant to Sections 2.7(c), 3.1 and 3.2, any and
all Compounds which are included in NeoMorph Focused Libraries prepared against
the relevant Target shall be the exclusive property of Schering. NeoGenesis
shall not use the NeoMorph Focused Libraries, any Compounds contained therein,
or any structural information or other know-how related thereto, for any purpose
other than the performance of the Screening Program. NeoGenesis shall not
provide any NeoMorph Focused Libraries, any Compounds contained therein, or any
structural information or other NeoGenesis Know-How related thereto, to any
third party without the prior written consent of Schering. Notwithstanding the
foregoing limitations, it is expressly understood and agreed that NeoGenesis
may, through use of the NeoMorph Screening Library on behalf of third parties
independently generate results or data similar to the results or data generated
in the course of the Screening Program and that the use of such independently
generated results or data shall not constitute a breach of NeoGenesis'
obligations under this Section 2.2(b); PROVIDED, that NeoGenesis has complied
with its obligations to mask Compounds in accordance with Section 2.3 of this
Agreement.
(c) NeoGenesis shall not perform any tests on or using any of the Targets
that are outside the scope of the Screening Program, or attempt to modify the
Targets supplied by Schering, including, without limitation, the making of any
derivatives, analogs or components thereof. In the event that NeoGenesis does
not consume all of the Targets supplied by Schering in performance of the
Screening Program, NeoGenesis will upon completion of the Screening
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
11
Program promptly, return to Schering any quantities of such Target(s) and any
derivatives, analogs or components thereof.
(d) The term of the Screening Program shall begin on the Effective Date and
shall continue in effect for a period of two (2) years. Schering shall have the
right to extend the term of the Screening Program for up to three additional one
(1) year terms, by providing NeoGenesis with written notice to that effect at
least sixty (60) days prior to the expiration of the then current term of the
Screening Program and subject to the provisions of Section 4.1 concerning
research funding for such extension term. The Screening Program shall remain in
effect for the period specified in this Section 2.2(d), including as it may be
extended, unless sooner terminated in accordance with Section 8.2 or Section
9.5.
(e) During the term of the Screening Program, upon request, NeoGenesis
shall provide Schering with samples of Selected Compounds and Derivative
Compounds from NeoMorph Focused Libraries in a form and quantity suitable to
enable Schering to conduct additional testing to confirm the specific binding
activity of such Compounds and to evaluate and determine the functional activity
of the Selected Compounds and/or Derivative Compounds. Schering may also elect
to perform medicinal chemistry research using such Selected Compounds and/or
Derivative Compounds to discover and evaluate additional Derivative Compounds.
Schering shall keep NeoGenesis reasonably informed of the results of such
activities through the Steering Committee.
(f) During the term of the Screening Program NeoGenesis shall provide
appropriately trained dedicated scientific personnel to perform the Screening
Program in accordance with the terms of this Agreement. During the initial two
(2) year term of the Screening Program, NeoGenesis shall provide such support at
the level of [*] FTEs during each year of the Screening Program, it being
understood that NeoGenesis may allocate such FTE time within any calendar year
in a manner consistent with its obligations under the Screening Program based on
the workload for such Screening Program at any particular time during the
Screening Program. In addition, NeoGenesis will, upon written request by
Schering, provide additional FTE support for the Screening Program of up to an
additional [*] FTEs during the term of the Screening Program. In the event that
the term of the Screening Program is extended pursuant to Section 2.2(d), the
Steering Committee shall establish the number of FTEs to be provided by
NeoGenesis for performance of the Screening Program during the extended term.
(g) NeoGenesis shall monitor expenditures, in accordance with its corporate
policies, to ensure that the funds provided by Schering are spent in accordance
with this Agreement. NeoGenesis shall keep and maintain adequate books and
records to furnish information to Schering regarding calculation of the amounts
expended by NeoGenesis on the Screening Program according to the provisions of
this Agreement. During the Screening Program and for two (2) years following the
expiration of the Screening Program, NeoGenesis shall permit Schering to examine
such books and records during normal business hours, upon thirty (30) days
notice to NeoGenesis. Upon the expiration of the two (2) year period, the
calculation of the amounts expended on each year of the Screening Program shall
be binding and
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
12
conclusive upon the parties and NeoGenesis shall be released from any further
accountability with respect to the Screening Program.
(h) NeoGenesis will perform its screening obligations in accordance with
all applicable laws, rules and regulations.
2.3 COMPOUND MASKING.
(a) Upon the identification of Preliminary Compounds and Active
Compounds through screening of the NeoMorph Screening Library against a
particular Target, NeoGenesis shall mask such Preliminary Compounds and Active
Compounds from the NeoMorph Screening Library by removing such Compounds from
the compound resource information associated with the NeoMorph Screening Library
and shall take all other steps reasonably necessary to ensure that information
with regard to such Compounds is not available or accessible to any third party,
including third parties for which NeoGenesis is screening the NeoMorph Screening
Library against other biological targets. NeoGenesis shall similarly mask any
Improved Active Compounds which are discovered pursuant to Section 2.2(a).
(b) NeoGenesis shall have the right to unmask any Preliminary
Compounds which are not confirmed as Active Compounds and are not in the same
Chemotype as such Active Compounds. In addition, upon expiration of Schering's
right to designate Selected Compounds with regard to a specific Target, pursuant
to Section 2.7(a), NeoGenesis shall have the right to unmask any Active
Compounds and/or Improved Active Compounds identified through screening against
that Target which are not (i) Selected Compounds or (ii) Preliminary Compounds,
Active Compounds and/or Improved Active Compounds of the same Chemotype as such
Selected Compounds.
2.4 GRANT OF RESEARCH LICENSES.
(a) Schering hereby grants NeoGenesis a nonexclusive, nontransferable,
royalty-free license under the Schering Patent Rights and to use the Schering
Know-How solely for the purpose of conducting the Screening Program. NeoGenesis
will not use Schering Know-How or Schering Patent Rights for any other purpose,
and shall not offer or grant a sub-license to use Schering Know-How or Schering
Patent Rights to any third party, without the express prior written consent of
Schering.
(b) NeoGenesis hereby grants Schering a nonexclusive, nontransferable,
royalty-free license under the NeoGenesis Patent Rights and to use the
NeoGenesis Know-How solely for the purpose of conducting Schering's activities
under the Screening Program. Schering will not use NeoGenesis Know-How or
NeoGenesis Patent Rights for any other purpose, and shall not offer or grant a
sub-license to use NeoGenesis Know-How or NeoGenesis Patent Rights to any third
party, without the express prior written consent of NeoGenesis (not to be
unreasonably withheld).
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
13
(c) With respect to Selected Compounds identified pursuant to Section
2.7(a), NeoGenesis hereby grants Schering, during the relevant Option Period (as
defined in Section 2.7(b)), an exclusive, nontransferable, royalty-free license
under the NeoGenesis Patent Rights and to use the NeoGenesis Know-How solely for
the purpose of performing research and development work necessary to enable
Schering to determine whether or not to exercise its option to obtain an
exclusive license with respect to such Selected Compounds.
2.5 RECORD KEEPING AND REPORTS.
(a) NeoGenesis will keep and maintain complete and accurate records
of all laboratory data and results generated in the course of the Screening
Program, including records of all Preliminary Compounds, Active Compounds, and
Improved Active Compounds identified, and any Inventions discovered and/or
developed by NeoGenesis, during the Screening Program. All such written records
of NeoGenesis shall be open to inspection by Schering during normal business
hours upon reasonable prior written notice; provided, however, that except with
respect to (i) Improved Active Compounds, (ii) Active Compounds, and (iii)
Preliminary Compounds of the same Chemotype as such Improved Active Compounds or
Active Compounds, NeoGenesis shall not provide Schering with access to any
chemical structures or structural data.
(b) NeoGenesis shall provide Schering with reasonably-detailed written
reports describing the results of the research performed pursuant to the
Screening Program including all Preliminary Compounds, Active Compounds and
Improved Active Compounds identified in the Screening Program but shall not
include any chemical structures or structural data with respect to any Compounds
which are not (i) Improved Active Compounds, (ii) Active Compounds, and (iii)
Preliminary Compounds of the same Chemotype as such Improved Active Compounds or
Active Compounds. Such reports shall be delivered to Schering at least quarterly
during the term of the Screening Program. In addition, with respect to each
Target, promptly following the completion of screening of the entire NeoMorph
Screening Library against such Target, NeoGenesis will deliver to Schering a
Preliminary Target Report (as defined in ATTACHMENT A) with respect to any and
all Preliminary Compounds identified during the Screening Program as having
activity with respect to such Target. Each Preliminary Target Report shall
include the binding affinities for all such Preliminary Compounds, as well as
any information generated by NeoGenesis with regard to Target specificities and
functional activities of such Preliminary Compounds. NeoGenesis shall also
provide Schering with a Final Target Report (as defined in ATTACHMENT A) in
accordance with the provisions of Paragraph 4 of ATTACHMENT A. NeoGenesis shall
also provide Schering with reports at least one (1) week prior to each Steering
Committee Meeting detailing the results of any Lead Compound optimization
activities performed by NeoGenesis pursuant to Section 2.2(b) and ATTACHMENT A,
which reports shall include the chemical structures and binding affinities of
all Derivative Compounds contained in NeoMorph Focused Libraries prepared by
NeoGenesis based upon such Lead Compound(s) and other information generated by
NeoGenesis with respect thereto.
2.6 STEERING COMMITTEE.
(a) Promptly after the Effective Date, the parties shall establish a joint
committee (the "STEERING COMMITTEE") having oversight responsibility for the
day-to-day
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
14
management and performance of the Screening Program. The Steering Committee
shall consist of six (6) members, three (3) members to be appointed by each
of NeoGenesis and Schering. Each party shall notify the other party of the
names and contact information for its members of the Steering Committee, and
thereafter may with notice to the other substitute any of its members serving
on the Steering Committee. Each member of the Steering Committee will have
one vote and all decisions of the Steering Committee will be by unanimous
agreement. The quorum for Steering Committee meetings shall be two, provided
there is at least one member from each of NeoGenesis and Schering present.
The Steering Committee will render decisions by unanimous vote.
(b) The Steering Committee shall be responsible for the management and
conduct of the Screening Program and shall in particular: (i) consider, review
and amend the Screening Program from time to time in such manner as may be
appropriate; (ii) monitor progress of the Screening Program; (iii) report
regularly to the management of both parties upon the progress of the Screening
Program; and (iv) be the initial medium for transfer of information between the
parties. Schering shall keep the Steering Committee reasonably informed of the
status of Schering's activties with respect to the discovery and development of
Licensed Products against each Target.
(c) During the term of the Screening Program, the Steering Committee
shall hold meetings as mutually agreed by the parties (but in no event less
quarterly) to review the Screening Program. The first meeting of the Steering
Committee shall be held within forty-five (45) days of the Effective Date and
shall be held in Cambridge, MA. Thereafter, meetings may be held by telephone or
video conference if requested by either party in writing to the other, PROVIDED
THAT the parties shall meet in person at least four (4) times per year during
the term of the Screening Program. Minutes of all meetings setting forth
decisions of the Steering Committee relative to the Screening Program shall be
prepared by the host party and circulated to both parties within fifteen (15)
days after each meeting, but minutes shall not become official until approved
and countersigned by both parties (which approval the parties shall use
reasonable efforts to give within thirty (30) days of receipt of such minutes).
(d) In the event that the Steering Committee is unable to reach
agreement, the issue in dispute shall be referred to an "OVERSIGHT COMMITTEE"
consisting of the Executive Vice President, Discovery Research of the
Schering-Plough Research Institute (an Affiliate of Schering) and NeoGenesis'
Chief Executive Officer, or their respective designees, for resolution. If the
disagreement is not resolved by the Oversight Committee within thirty (30) days,
then Schering shall have the right to make the final decision on such matter;
PROVIDED, that in the event and to the extent that any dispute concerns whether
or not budgeted FTE funding for the Screening Program has been expended in
accordance with the provisions of this Agreement such matter shall be resolved
using the procedure specified in Section 9.1.
2.7 SELECTED COMPOUNDS.
(a) From time to time during the term of this Agreement, Schering may
designate, by written notice to NeoGenesis, one or more Active Compounds and/or
Improved
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
15
Active Compounds identified by screening of the NeoMorph Screening Libraries
pursuant to Section 2.2 as Selected Compounds; provided, that at any given time
Schering may not designate Active Compounds and Improved Active Compounds
representing more than [*] different Chemotypes against a given Target from the
NeoMorph Screening Library. The parties acknowledge and agree that the foregoing
limitation does not apply to the NeoMorph Focused Libraries. [*] Selected
Compounds that Schering may designate from the NeoMorph Focused Libraries. With
respect to each Target, Schering shall use diligent efforts to identify and
designate at least one Selected Compound within [*] following Schering's receipt
of the Final Target Report for all screening against such Target in accordance
with Section 2.5(b) and ATTACHMENT A. In the event that the Schering does not
designate any Selected Compounds with respect to such Target, then upon
expiration of the applicable [*] period, Schering's right to designate Selected
Compounds with respect to such Target shall expire. If the NeoMorph Screening
Library is subsequently re-screened against a given Target pursuant to Section
2.1(e) and new Active Compounds and/or Improved Active Compounds are identified
as a result of such re-screening, then to the extent Schering's right to
designate Selected Compounds against such Target has previously expired,
Schering shall have a renewed right to designate Selected Compounds arising from
such re-screening on the same terms as set forth above.
(b) Effective upon the date of receipt by NeoGenesis of notice from
Schering, pursuant to Section 2.7(a) that one or more Active Compounds and/or
Improved Active Compounds have been designated as Selected Compounds, NeoGenesis
grants to Schering an exclusive option to obtain the exclusive license provided
for in Article 3 with respect to such Selected Compounds and related Derivative
Compounds (including without limitation any Compounds contained in a NeoMorph
Focused Library prepared based upon such Selected Compound). The masking of the
Selected Compound(s) (and any Preliminary Compounds, Active Compounds and
Improved Active Compounds of the same Chemotype(s) as such Selected Compound(s))
from the NeoMorph Screening Library in accordance with Section 2.3 shall be
maintained during the applicable Option Period (as defined below). In addition,
within [*] following receipt of notification from Schering identifying Selected
Compounds, NeoGenesis shall amend ATTACHMENT B to identify any applicable
NeoGenesis Patent Rights not previously identified to Schering. The "OPTION
PERIOD" with respect to each Selected Compound identified pursuant to Section
2.7(a), shall extend until the later of: (i) the [*] anniversary of the
expiration of the Screening Program for the applicable Target, or (ii) in the
event that Schering is conducting an active internal medicinal chemistry
research program to identify Derivative Compounds based upon such Selected
Compound (as documented with written notice to NeoGenesis), a period of [*]
following the termination of such medicinal chemistry program. For purposes of
this Section 2.7(b), Schering shall be deemed to be conducting an active
medicinal chemistry program if at least [*] working full time on the design and
discovery of Derivative Compounds with respect to a given Selected Compound.
Schering shall provide NeoGenesis with written certification, [*] every [*],
during the performance of such medicinal chemistry program for purposes of
monitoring the expiration of the Option Period.
(c) Schering shall have the right to exercise the option granted to it
under Section 2.7(b) with respect to one or more Selected Compounds (and related
Derivative Compounds, including without limitation any Compounds contained in a
NeoMorph Focused
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
16
Library prepared based upon such Selected Compound) at any time prior to the
expiration of the applicable Option Period, by providing written notice to
NeoGenesis to that effect. The exclusive licenses granted to Schering pursuant
to Article 3 with respect to such Selected Compounds (and related Derivative
Compounds, including without limitation any Compounds contained in a NeoMorph
Focused Library prepared based upon such Selected Compound) shall become
effective upon NeoGenesis' receipt of such notice, and Schering shall pay the
applicable license fee under Section 4.2 to NeoGenesis within five (5) business
days of such notice. As of such date of such notice, the masking of the
applicable Selected Compound(s) (and related Derivative Compounds, including
without limitation any Compounds contained in a NeoMorph Focused Library
prepared based upon such Selected Compound), as well as any Preliminary
Compounds, Active Compounds and Improved Active Compounds of the same Chemotype
as such Selected Compound, from the NeoMorph Screening Library in accordance
with Section 2.3 shall become permanent, and during the term of this Agreement
NeoGenesis shall continue take such other steps as are reasonably necessary to
ensure that information with regard to the Selected Compounds and the relevant
Active Compounds, Improved Active Compounds and Preliminary Compounds of the
same Chemotype as such Selected Compounds are no longer available or accessible
to any third party.
(d) In the event that Schering fails to exercise its option rights
with respect to one or more Selected Compounds prior to the expiration of the
applicable Option Period, then upon expiration of the Option Period Schering's
option right shall expire with respect to the applicable Selected Compound(s),
the licenses provided for in Article 3 with respect to such Selected Compound(s)
shall be void and of no further force or effect, and NeoGenesis shall be free to
unmask such Selected Compound(s) in the NeoMorph Screening Library.
(e) In the event that during the applicable Option Period, one or more
Selected Compounds with respect to a given Target become Designated Compounds
and Schering has not, as of the effective date of such designation, exercised
the option and paid the license fee due under section 4.2 with respect to
Selected Compounds against such Target, then the license fee shall be paid
concurrently with the milestone payment due upon designation of such Designated
Compounds in accordance with Section 2.8.
(f) Schering shall not begin screening any Selected Compound or
related Derivative Compounds against any biological targets other than Targets
until such time as it has exercised its option in accordance with Section 2.7(c)
and paid the applicable licensee fee.
2.8 PRODUCT DEVELOPMENT.
(a) During the term of this Agreement, Schering shall, at its expense,
conduct a research and development program to evaluate Selected Compounds and
Derivative Compounds as potential candidates for commercial development as
Licensed Products. Such efforts may include the performance of further medicinal
chemical research based upon such Selected Compounds and Derivative Compounds,
as well as biological, pharmacokinetic and toxicology studies and other
preclinical research activities. Schering shall have sole discretion
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
17
over the scope of such research and development program, and the selection of
which Selected Compounds and Derivative Compounds will be the focus of such
activities.
(b) Schering shall notify NeoGenesis in writing in the event that
Schering, in its sole discretion (based on Schering's good faith evaluation of
the satisfaction of the applicable Success Criteria by such Selected Compound or
Derivative Compound), decides to proceed with a development program for any
Selected Compounds or Derivative Compounds as suitable candidates for drug
development (thereafter, each a "DESIGNATED COMPOUND"). A Selected Compound or
Derivative Compound will be deemed to be a Designated Compound upon the earlier
of that date on which (i) Schering (or its Affiliate) formally approves
proceeding with full development of such Compound, or (ii) Schering (or its
Affiliate) initiates IN VIVO toxicology trials necessary, and meeting U.S. FDA
(or corresponding European or Japanese) standards, for obtaining approval for
use of such Compound in human clinical trials, unless Schering sooner designates
such Selected Compound or Derivative Compound as a Designated Compound with
notice to NeoGenesis. Upon Schering's designation of a Designated Compound,
Schering shall thereafter, at its expense, use Commercially Reasonable Efforts
to develop and commercialize Licensed Products incorporating the Designated
Compound in the Territory. Schering shall be solely responsible for determining
in which countries in the Territory to develop and commercialize each Licensed
Product, provided that it shall use Commercially Reasonable Efforts to obtain
Regulatory Approval and to market and sell each Licensed Product in the Major
Market Countries.
(c) Subject to Schering's diligence obligations under this Agreement,
the Parties acknowledge and agree that all business decisions regarding
research, development and commercialization of Designated Compounds and Licensed
Products including, without limitation, decisions relating to the design,
development, manufacture, sale, price, distribution, marketing and promotion of
Licensed Products under this Agreement, and the decision of whether to develop a
particular Designated Compound, or to develop and commercialize a particular
Licensed Product, shall be within the sole discretion of Schering.
(d) Schering shall have no quotas or other minimum diligence
obligations with regard to the number of Designated Compounds and/or Licensed
Products to be developed and commercialized hereunder. The parties acknowledge
and agree that so long as Schering is using Commercially Reasonable Efforts to
discover, develop and commercialize [*] Licensed Product in the Territory,
Schering shall be deemed to be in compliance with its diligence obligations
under this Agreement.
2.9 COMMERCIALIZATION OF LICENSED PRODUCTS. With respect to each Licensed
Product developed and commercialized by Schering, or its designated Affiliates,
under this Agreement, Schering shall be solely responsible, at its sole expense,
for all aspects of the development and commercialization of the Licensed Product
in the Territory, including, without limitation:
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
18
(i) the manufacture of Designated Compounds and Licensed Products in
accordance with the applicable Regulatory Approvals, laws, Good
Laboratory Practices and Good Manufacturing Practices;
(ii) preparation, filing, obtaining, maintaining and supporting, in its
own name or that of its designated Affiliate, with the appropriate
regulatory authorities of all regulatory approvals, authorizations,
permits and licenses (including, without limitation, all Regulatory
Approvals) that are necessary to conduct clinical studies of Licensed
Products and/or to manufacture, import, distribute, market and sell
Licensed Products;
(iii) the reporting all adverse events associated with any Licensed Product
to the appropriate regulatory authorities in accordance with
applicable laws, rules and regulations in the Territory; and
(iv) the distribution, marketing, promotion and sale of Licensed Products.
Following the expiration of the Screening Program, Schering shall provide
NeoGenesis with semi-annual reports summarizing the status of Schering's
development and commercialization activities with respect to each Licensed
Product being developed under this Agreement. In addition, Schering shall notify
NeoGenesis in writing upon the filing of each application for Regulatory
Approval of a Licensed Product in the Territory.
2.10 DILIGENCE EXCEPTIONS. All of Schering's diligence obligations
hereunder with respect to each Licensed Product being developed or
commercialized hereunder are expressly conditioned upon the continuing absence
of any adverse condition or event which warrants a delay in commercialization of
the Licensed Product due to an adverse condition or event relating to the safety
or efficacy of such Licensed Product or unfavorable pricing, pricing
reimbursement, labeling or lack of regulatory approval, and Schering shall have
no obligation to develop or market any such Licensed Product so long as in
Schering's reasonable opinion any such condition or event exists.
2.11 THIRD PARTY LICENSES. Schering shall be solely responsible for (a)
obtaining any and all licenses from third parties necessary or desirable to
develop or commercialize any Licensed Product and (b) any and all consideration
payable with respect to such licenses. The decision as to whether or not to
obtain any such third party licenses relating to Licensed Products, and the
negotiation and acceptance of the terms and conditions for any such licenses,
shall be within the sole discretion and control of Schering, and nothing herein
shall be construed as obligating Schering to obtain any such third party
licenses.
2.12 COMPLIANCE WITH LAW. Schering shall be responsible for ensuring that
all activities related to the development and commercialization of Licensed
Products conducted by or on its behalf are performed in compliance with all
applicable laws, rules and regulations (including, but not limited to, those
related to occupational safety and health, public safety and
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
19
health, protecting the environment, the disposal of wastes, Good Clinical
Practices, Good Laboratory Practices and Good Manufacturing Practices, as
applicable).
3. LICENSES; INTELLECTUAL PROPERTY RIGHTS
3.1 LICENSE TO LICENSED PRODUCTS. NeoGenesis hereby grants to Schering, and
Schering hereby accepts, an exclusive (even as to NeoGenesis), right and license
in the Territory and within the Field under the NeoGenesis Patent Rights and to
use the NeoGenesis Know-How to make, have made, use, distribute, promote,
market, offer for sale, sell, import and export Licensed Products. The licenses
granted to Schering under this Section 3.1 include the right to grant
sublicenses to Affiliates or third parties in accordance with the provisions of
Section 3.3. Schering shall xxxx or have marked all containers or packages of
Licensed Products that are the subject of the license granted under this Section
3.1 in accordance with the patent marking laws of the jurisdiction in which such
Licensed Products are manufactured, used or sold. For purposes of clarity and
avoidance of doubt, it is acknowledged that the exclusive licenses granted
hereunder shall not be construed as encompassing Compounds other than Selected
Compounds (and Active Compounds, Improved Active Compounds and Preliminary
Compounds of the same Chemotype as such Selected Compounds), Derivative
Compounds and Designated Compounds.
3.2 LICENSE TO COMPOUNDS. NeoGenesis hereby grants to Schering, and
Schering hereby accepts, an exclusive (even as to NeoGenesis), right and license
in the Territory and within the Field under the NeoGenesis Patent Rights and to
use the NeoGenesis Know-How to research, develop, make, have made, import,
export and use the Selected Compounds (and Active Compounds, Improved Active
Compounds and Preliminary Compounds of the same Chemotype as such Selected
Compounds), Designated Compounds and Derivative Compounds, for research purposes
and to develop Licensed Products. The licenses granted to Schering under this
Section 3.2 include the right to grant sublicenses to Affiliates or third
parties in accordance with the provisions of Section 3.3. Schering shall xxxx or
have marked all containers or packages of Selected Compounds Derivative
Compounds and Designated Compounds that are the subject of the license granted
under this Section 3.1 in accordance with the patent marking laws of the
jurisdiction in which such Selected Compounds, Derivative Compounds and
Designated Compounds are manufactured, used or sold.
3.3 SUBLICENSING. Schering's shall have the right to grant sublicenses
under this Agreement to third parties and/or Affiliates; provided that all such
sublicenses shall be consistent with the terms and conditions of this Agreement,
and in particular shall include provisions to ensure that such sublicense is
subject to the obligations set forth in Section 3.1(last sentence), 4.4, 4.5,
4.6, 4.7 and 8.3(b) (last sentence) of this Agreement. Schering shall remain
responsible to NeoGenesis for all of its sublicensees financial and other
obligations under this Agreement. Schering's sublicensees shall have no further
right to grant sublicenses, and any sublicense granted by Schering under this
Agreement shall not be assigned, transferred or otherwise conveyed by the
sublicensee to any third party, as a matter of law or through any action by
sublicensee, without the prior written consent of NeoGenesis.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
20
3.4 RETAINED RIGHTS.
(a) Title to the NeoGenesis Know-How and NeoGenesis Patent Rights
shall at all times remain vested in NeoGenesis, and this Agreement does not
convey to Schering any ownership rights or other interest in any NeoGenesis
Know-How or NeoGenesis Patent Rights, by implication, estoppel or otherwise,
except for those rights and licenses expressly granted under this Agreement.
(b) Title to the Schering Know-How and Schering Patent Rights shall at
all times remain vested in Schering, and this Agreement does not convey to
NeoGenesis any ownership rights or other interest in any Schering Know-How or
Schering Patent Rights, by implication, estoppel or otherwise, except for the
rights and licenses expressly granted under this Agreement.
(c) The parties acknowledge and agree that notwithstanding the
exclusive licenses granted to Schering hereunder, with respect to the NeoGenesis
Know-How and NeoGenesis Patent Rights, NeoGenesis shall retain the right to
continue to use its NeoMorph Screening Library to screen target proteins (other
than Targets) for third parties; PROVIDED that NeoGenesis complies with all of
its obligations with respect to the masking of Preliminary Compounds, Active
Compounds, Improved Active Compounds and Selected Compounds from the NeoMorph
Screening Library.
3.5 INVENTIONS.
(a) Title to and ownership of all Inventions directly related to (i)
Selected Compounds, Derivative Compounds, Designated Compounds and Licensed
Products, or the manufacture or use thereof, or (ii) Targets provided to
NeoGenesis by Schering, in each case regardless of inventorship, as well as
those Inventions subject to Section 3.5(b)(ii), shall be the sole property of
Schering (hereinafter "SCHERING INVENTIONS") and are included in Schering
Know-How and/or Schering Patent Rights, as the case may be. NeoGenesis hereby
assigns and agrees to assign to Schering all of NeoGenesis' right, title and
interest in such Schering Inventions; such assignment to take effect with
respect to particular Selected Compounds (and related Derivative Compounds,
Designated Compounds and Licensed Products) upon the date NeoGenesis receives
notice from Schering pursuant to Section 2.7(c) that Schering has decided to
exercise its option to exclusively license the Selected Compounds and related
Derivative Compounds; and NeoGenesis shall use Commercially Reasonable Efforts
to perfect such assignment (at Schering's expense). Title to and ownership of
all Inventions directly related to the NeoMorph Screening Library, ALIS
screening technology or QSCD (regardless of inventorship), as well as those
Inventions subject to Section 3.5(b)(i) (hereinafter "NEOGENESIS INVENTIONS"),
shall be the sole property of NeoGenesis and are included in NeoGenesis Know-How
and/or NeoGenesis Patent Rights, as the case may be. Schering hereby assigns and
agrees to assign to NeoGenesis, all of Schering's right title and interest (if
any) in such NeoGenesis Inventions and Schering shall use Commercially
Reasonable Efforts to perfect such assignment (at the NeoGenesis' expense).
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
21
(b) Title to and ownership of all other Inventions arising from the
Screening Program and which are not covered by Section 3.5(a) shall be
determined as follows:
(i) Inventions made solely by one or more employees or agents of
NeoGenesis shall be the sole property of NeoGenesis are
NeoGenesis Inventions and are included in NeoGenesis Know-How
and/or NeoGenesis Patent Rights, as the case may be.
(ii) Inventions made solely by one or more employees or agents of
Schering shall be the sole property of Schering, are Schering
Inventions, and are included in Schering Know-How and/or
Schering Patent Rights, as the case may be.
(iii) Inventions made jointly by one or more employees or agents of
NeoGenesis and one or more employees or agents of Schering shall
be the joint property of NeoGenesis and Schering (hereinafter
"JOINT INVENTIONS").
In determining each party's contribution to Inventions arising under this
Agreement, inventorship shall be determined in accordance with United States
patent law.
3.6 PATENT PROTECTION FOR INVENTIONS. Each of NeoGenesis and Schering
shall promptly disclose to the other knowledge of any Inventions arising in
connection with the Screening Program. Responsibility for the preparation,
filing, prosecution and maintenance of any patent applications and patents
claiming such Inventions shall be determined based upon ownership of the
Inventions and shall be handled in accordance with the provisions of this
Section 3.6. Within forty five (45) days following disclosure of any
Invention(s), the parties shall classify such Invention as a Schering Invention,
a NeoGenesis Invention or a Joint Invention and shall update ATTACHMENT C to add
such Invention and reflect such classification.
(a) NeoGenesis shall have the right and responsibility to prepare,
file, prosecute, and maintain all patent applications and patent within the
NeoGenesis Patent Rights throughout the Territory at NeoGenesis sole expense,
including, without limitation, those with respect to NeoGenesis Inventions.
NeoGenesis shall have sole discretion as to all such activities with regard to
the NeoGenesis Patent Rights. NeoGenesis shall keep Schering currently advised
as to the status of all patents and patent applications with respect to the
NeoGenesis Patent Rights and shall supply Schering promptly with copies of all
patents, patent applications, substantive patent office actions, substantive
responses received or filed in connection with such applications. Schering may
offer comments and suggestions with respect to the matters that are the subject
of this Section 3.6(a) and NeoGenesis agrees to consider such comments and
suggestions; PROVIDED that nothing herein shall obligate NeoGenesis to adopt or
follow such comments or suggestions. In the event that NeoGenesis elects not to
file for patent protection for any NeoGenesis Inventions or elects not to
continue to prosecute or maintain a patent or patent application under the
NeoGenesis Patent Rights it shall notify Schering of such decision at least
forty-five (45) days prior to the due date of any action or payment due with
respect thereto.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
22
Schering shall have the right, but not the obligation to assume the
responsibility therefor at its own cost and expense.
(b) Schering and NeoGenesis, acting through the Steering Committee,
shall select and retain patent counsel mutually acceptable to each of them for
the purpose of preparing, prosecuting, issuing and maintaining appropriate
patent applications concerning Joint Inventions. NeoGenesis, in consultation
with Schering, shall be primarily responsible for the preparation, filing
(including foreign filing decisions), prosecution and maintenance of such patent
applications and patents relating to Joint Inventions. NeoGenesis shall furnish
or have furnished to Schering copies of documents relevant to the same and
provide Schering with the opportunity to review and comment on patent decisions
made by patent counsel. Any disagreements between NeoGenesis and Schering with
respect to preparation, filing, prosecution, issuance and maintenance matters
will be discussed and resolved to their mutual satisfaction using the procedures
specified in Section 9.1, if necessary; PROVIDED, that to the extent that any
disagreement regards only the costs associated with a particular proposed
action, NeoGenesis may assume responsibility for such costs and the requirement
that the parties mutually agree upon resolution of the matter shall not apply.
Each party shall be responsible for fifty percent (50%) of all expenses
associated with the preparation, filing, prosecution, issuance and maintenance
of patents or other intellectual property protection for Joint Inventions. In
the event that either party elects not to pursue a particular action with
respect to which the parties disagree regarding costs, the other party shall
have the right to assume such costs and to have such action taken; PROVIDED
FURTHER that the non-paying party's licenses hereunder shall exclude any
intellectual property rights that are the subject of such action (e.g., patent
coverage in a particular country) unless and until such party reimburses the
other party for one-half (50%) of the costs of such action.
(d) Schering shall have the sole right, but not the obligation, to
file, prosecute, and maintain, at Schering's sole expense, each of the Schering
Patent Rights throughout the Territory. Upon request, and at Schering's expense,
NeoGenesis will provide Schering with reasonable assistance to prepare, file,
prosecute, maintain and defend the Schering Patent Rights, and will take all
steps necessary to enable Schering to perfect its rights and title to the
Schering Patent Rights with respect to any Schering Inventions. Reasonable
assistance shall include, without limitation, providing Schering any data and
information relating to such Schering Inventions and access to the NeoGenesis
employees who are inventors of such Schering Inventions, as well as causing the
execution of any patent assignment or other documents.
3.7 ENFORCEMENT. Each party shall promptly notify the other of its
knowledge of any actual or potential infringement of the NeoGenesis Patent
Rights, the Schering Patent Rights or any Joint Inventions.
(a) NeoGenesis shall be solely responsible for defense and enforcement
of NeoGenesis Know-How and NeoGenesis Patent Rights. Schering shall be solely
responsible for the defense and enforcement of Schering Know-How and Schering
Patent Rights. In the event that either party recovers any sums in such
litigation by way of damages or in settlement thereof, such party shall have the
right to retain all such sums; PROVIDED that any recovery of ordinary
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
23
damages by Schering to the extent based upon third party sales of products that
infringe upon Compound Patent Rights shall be deemed to be Net Sales and
Schering shall pay NeoGenesis an amount calculated in accordance with Section
4.4 to reimburse NeoGenesis for royalties due on lost sales of Licensed Product
represented by such ordinary damages; PROVIDED FURTHER that this allocation
shall not apply with respect to special or punitive damages, and that Schering
shall be entitled to deduct all litigation costs incurred by it in connection
therewith from such settlement or award prior to calculating such royalties.
(b) Schering shall have the first option to pursue any enforcement or
defense of any patents claiming Joint Inventions within the Field and the
Territory ("JOINT PATENT RIGHTS"); PROVIDED, that Schering pays all costs and
expenses related thereto. Schering shall have three (3) months from the date it
receives notice of such infringement to obtain a discontinuance of such
infringement or bring suit against the third party infringer. Schering shall
keep NeoGenesis reasonably informed of the status of such activities. NeoGenesis
shall provide reasonable assistance to Schering in any suit for infringement of
a Joint Patent Right brought by Schering against a third party, and shall have
the right to consult with Schering and to participate in and be represented by
independent counsel in such litigation at its own expense. For purposes of this
Section 3.7(b), reasonable assistance shall mean providing Schering reasonable
access to information, materials and NeoGenesis personnel which Schering
reasonably determines is necessary to enable Schering to conduct the suit.
Schering shall periodically reimburse NeoGenesis for its out-of-pocket costs
(excluding the costs of retaining independent counsel) incurred in cooperating
with Schering. Schering shall incur no liability to NeoGenesis as a consequence
of such litigation or any unfavorable decision resulting therefrom, including
any decision holding any of the Joint Patent Rights invalid or unenforceable. In
the event that Schering recovers any sums in such litigation by way of damages
or in settlement thereof, Schering shall have the right to retain all such sums;
PROVIDED that any recovery of ordinary damages to the extent based upon third
party sales of products that infringe upon the Joint Patent Rights shall be
deemed to be Net Sales and Schering shall pay NeoGenesis an amount calculated in
accordance with Section 4.4 to reimburse NeoGenesis for royalties due on lost
sales of Licensed Product represented by such ordinary damages; PROVIDED FURTHER
that this allocation shall not apply with respect to special or punitive damages
and that Schering shall be entitled to deduct all litigation costs incurred by
it in connection therewith from such settlement or award prior to calculating
such royalties.
(c) If, after the expiration of the three (3) month period specified
in Section 3.6(b), Schering has not overcome the allegation of infringement,
obtained a discontinuance of such infringement, or brought suit against the
third party infringer, then, provided such infringement is substantial,
NeoGenesis shall have the right, but not the obligation, to bring suit against
such infringer under the Joint Patent Right, provided that NeoGenesis shall bear
all the expenses of such suit. Schering shall provide reasonable assistance to
NeoGenesis in any suit for infringement of a Joint Patent Right brought by
NeoGenesis against a third party, and shall have the right to consult with
NeoGenesis and to participate in and be represented by independent counsel in
such litigation at its own expense. For purposes of this Section 3.6(c),
reasonable assistance shall mean providing NeoGenesis reasonable access to
information, materials and Schering personnel which NeoGenesis reasonably
determines is necessary to enable NeoGenesis
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
24
to conduct the suit. NeoGenesis shall periodically reimburse Schering for its
out-of-pocket costs (excluding the costs of retaining independent counsel)
incurred in cooperating with NeoGenesis. NeoGenesis shall incur no liability to
Schering as a consequence of such litigation or any unfavorable decision
resulting therefrom, including any decision holding any of the Joint Patent
Rights invalid or unenforceable. In the event that NeoGenesis recovers any sums
in such litigation by way of damages or in settlement thereof, NeoGenesis shall
have the right to retain all such sums.
(d) Each party shall immediately give written notice to the other
of any certification of which it becomes aware filed pursuant to the
Xxxxxx-Xxxxx Act (21 U.S.C. Section 355(b)(2)(A), or Section
355(j)(2)(A)(vii)), or any amendment or successor statute thereto, at least
fourteen (14) days prior to expiration of the forty five (45) day period set
forth in 21 U.S.C. Section 355(c)(3)(c) (or any amendment or successor
statute thereto).
3.8 LIST OF NEOGENESIS PATENT RIGHTS. The NeoGenesis Patent Rights
exclusively licensed to Schering pursuant to Sections 3.1 and 3.2 shall be
listed in ATTACHMENT B, which shall be amended from time to time during the term
of this Agreement to reflect additions or changes to the NeoGenesis Patent
Rights in accordance with Section 2.7. For the avoidance of doubt, to the extent
that ATTACHMENT B is not updated to include any NeoGenesis Patent Rights that
are directly related to any Selected Compounds (and Active Compounds and
Improved Active Compounds of the same Chemotype as such Selected Compounds),
Designated Compounds, Derivative Compounds and/or Licensed Products within the
scope of an exclusive license granted to Schering under Sections 3.1 and 3.2,
NeoGenesis agrees that it shall not have any action against Schering in relation
thereto and shall automatically amend ATTACHMENT B to include such NeoGenesis
Patent Rights.
4. CONSIDERATION
4.0 ADDITIONAL PAYMENT OBLIGATIONS. The parties acknowledge that
Schering's payment obligations as set forth in Sections 4.1, 4.2, 4.3 and 4.4 of
this Agreement are in addition to the payment obligations of Schering-Plough
Ltd. set forth in Sections 4.1, 4.2, 4.3 and 4.4 of the International Agreement.
4.1 RESEARCH FUNDING. In consideration for the performance of the
Screening Program and activities related thereto by NeoGenesis, Schering shall
pay to NeoGenesis research funding during the term of the Screening Program at
the rate of [*] term of the Screening Program. Such payments constitute [*]
payment for FTEs at a rate of [*] per year per FTE, with [*] of such funding to
be paid by Schering-Plough Ltd. under the terms of the International Agreement.
The amount of such funding shall be based upon the actual number of FTEs
assigned by NeoGenesis to work on the Screening Program pursuant to Section
2.2(f), it being understood that except as otherwise agreed by the parties in
writing, research funding shall be paid based upon [*] FTEs. Research funding
shall be payable in equal quarterly installments during the term of the
Screening Program, with the first such payment due within [*] after the
Effective Date and each successive payment due quarterly in advance on the first
day of each calendar quarter starting on October 1, 2001. It is understood and
agreed by the parties that first
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
25
two research funding payments due under this Agreement [*] represents payment
for work performed by NeoGenesis in connection with the Screening Program during
the entire 2001 calendar year, including activities performed during the period
extending from January 1, 2001 until the Effective Date. In the event that the
term of the Screening Program is extended, the FTE rate payable under this
Section 4.1 in each such extension year shall be increased by the CPI (as
defined below). If Schering is unwilling to provide funding for such documented
cost increases and the parties are unable to resolve such funding matter to
their mutual satisfaction within forty five (45) days then the Screening Program
shall not be extended for such extension year. If in any quarterly funding
period, actual expenditures by NeoGenesis with respect to FTE's exceed the
amount budgeted for the period, the overrun will be carried forward for the next
period and paid for from the next payment(s); PROVIDED, that Schering payment
obligations for any year of the Screening Program shall not exceed the budgeted
amount for such year unless Schering has agreed to fund additional FTE work
beyond that budgeted for such year by means of a written amendment to this
Agreement approved in writing by the parties. For purposes of this Section 4.1,
"CPI" means the Consumer Price Index for [*], as published by the Bureau of
Labor Statistics of the United States Department of Labor. In the event that the
Bureau of Labor Statistics ceases to publish the CPI or substantially changes
its content or format in a manner that precludes its further use hereunder,
Schering and NeoGenesis shall substitute therefor another comparable measure
published by an agreed-upon source.
4.2 LICENSE FEES/EQUITY PURCHASE.
(a) In partial consideration for the licenses and other rights granted
to Schering hereunder, Schering shall pay to NeoGenesis a license fee of [*]
with respect to each Target for which one or more Selected Compounds are
designated pursuant to Section 2.7. Each such license fee shall be payable
within [*] after the effective date of the licenses to such Selected Compounds,
as provided under Section 2.7(b). The license fee shall be payable [*],
irrespective of the number of Selected Compounds, Designated Compounds or
Licensed Products which may be identified and/or developed with respect thereto.
Payment of any license fees under this Section 4.2(a) shall be made concurrently
with payment of the corresponding license fees under Section 4.2(a) of the
International Agreement.
(b) Schering agrees to subscribe for and purchase, and NeoGenesis
agrees to authorize and issue to Schering, an aggregate five million dollars and
thirty-seven cents ($5,000,000.37) worth of Series E (non-voting) Preferred
Stock, $.001 par value per share, at a price of five and 97/100's dollars
($5.97) per share. Such equity investment shall be made pursuant to a separate
Series E Preferred Stock Purchase Agreement containing mutually acceptable terms
(the "Stock Purchase Agreement"), which is attached hereto as ATTACHMENT F. Such
equity subscription shall be made within thirty (30) days following the
Effective Date unless the parties agree to extend the time for the consummation
of such subscription.
(c) Effective as of the first anniversary of the Effective Date and
subject to the applicable laws rules and regulations that restrict the ability
of NeoGenesis to permit purchases of shares in connection with its initial
public offering ("IPO"), including any Securities and Exchange Commission
regulations, Schering shall have the option, exercisable in its sole
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
26
discretion, to purchase from NeoGenesis, and in such event NeoGenesis shall sell
to Schering, additional shares of NeoGenesis common stock having an aggregate
value of five million dollars ($5,000,000). Such option may be exercised solely
in connection with NeoGenesis' IPO and shall be exercised at a price per share
for such Common Stock equal to the price at which such shares are offered to the
public in such initial public offering. The option set forth in this Section
4.2(c) shall expire and be of no further force or effect if: (i) NeoGenesis does
not complete an IPO by the third anniversary of the Effective Date or (ii) this
Agreement has been terminated prior to the completion of NeoGenesis' IPO.
4.3 MILESTONES. In partial consideration for the licenses and other rights
granted to Schering hereunder, Schering shall pay to NeoGenesis the following
payments upon the occurrence of the indicated milestone event.
(a) with respect to any Designated Compound (and any Licensed Products
based upon such Designated Compound) which is being developed based upon
activity with respect to a specific Target, and was discovered as a result of
optimization of one or more Lead Compounds by NeoGenesis pursuant to Section
2.2(b):
(i) [*] upon designation of such Designated Compound pursuant to
Section 2.8;
(ii) [*] upon initiating treatment of the first patient in a Phase I
clinical trial for the applicable Licensed Product under an
approved IND (or its equivalent);
(iii) [*] upon initiating treatment of the first patient in a Phase
III clinical trial for the applicable Licensed Product;
(iv) [*] upon filing and acceptance of the first NDA (or its European
or Japanese equivalent) for the applicable Licensed Product; and
(v) [*] upon receipt of the first Regulatory Approval for the
applicable Licensed Product in a Major Market Country.
(b) with respect to any Designated Compound (and any Licensed Products
based upon such Designated Compound) which is being developed based upon
activity with respect to a specific Target, but was not discovered as a result
of optimization of one or more Lead Compounds by NeoGenesis pursuant to Section
2.2(b):
(i) [*] upon designation of such Designated Compound pursuant to
Section 2.8;
(ii) [*] upon initiating treatment of the first patient in a Phase I
clinical trial for the applicable Licensed Product under an
approved IND (or its equivalent);
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
27
(iii) [*] upon initiating treatment of the first patient in a Phase
III clinical trial for the applicable Licensed Product;
(iv) [*] upon filing and acceptance of the first NDA (or its European
or Japanese equivalent) for the applicable Licensed Product; and
(v) [*] upon receipt of the first Regulatory Approval for the
applicable Licensed Product in a Major Market Country.
(c) All payments made to NeoGenesis by Schering pursuant to Section
4.3(a) or (b) shall be due within thirty (30) days after the achievement of the
corresponding milestone and shall be nonrefundable and not creditable against
other amounts due to NeoGenesis. The payments provided for under this Section
4.3 shall only be payable once upon the first achievement of the indicated
milestone with respect to Designated Compound and/or Licensed Product developed
against a particular Target and no additional payments shall be due on
subsequent or repeated achievement of the same milestone for another Designated
Compound and/or Licensed Product developed against the same Target. No
milestones shall be payable under this Section 4.3 with respect to (i) any
compounds or products other than Designated Compounds and Licensed Products, or
(ii) any Designated Compounds or Licensed Products being developed based upon
[*].
(d) In the event that Schering ceases all clinical development for a
Designated Compound/Licensed Product (a "Discontinued Product") for which one or
more milestones have been paid pursuant to this Section 4.3, no payment shall be
due under this Section 4.3 with respect to the achievement of the same
milestone(s) with respect to the another Designated Compound or Licensed Product
discovered or developed against the same Target as the Discontinued Product (a
"Back-up Product"). In the event that the Back-up Product achieves milestones
which were not previously achieved by the relevant Discontinued Product, such
milestone payments will be paid in accordance with this Section 4.3.
4.4 ROYALTIES. In partial consideration for the licenses and other rights
granted to Schering hereunder, Schering shall pay royalties to NeoGenesis based
upon Net Sales of Licensed Products in the Territory.
(a) The royalties payable to NeoGenesis on Net Sales of Licensed
Products in the Territory by Schering, its Affiliates and sublicensees, shall be
determined as follows:
(i) [*] of Net Sales of Licensed Products in the Territory where the
Designated Compound in such Licensed Product was discovered as a
result of optimization of one or more Lead Compounds by
NeoGenesis pursuant to Section 2.2(b); or
(ii) [*] of Net Sales of Licensed Products in the Territory where the
Designated Compound in such Licensed Product was not discovered
as a
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
28
result of optimization of one or more Lead Compounds by
NeoGenesis pursuant to Section 2.2(b); or
(iii) [*] of Net Sales of Licensed Products in the Territory where the
Designated Compound in such Licensed Product is a Derivative
Compound derived from an Selected Compound identified through
Schering's screening of a Selected Compound against a target
other than the specific Target(s) for which the Selected
Compound was screened by NeoGenesis.
(b) Starting with the First Commercial Sale of each Licensed Product
in the Territory, Schering shall provide NeoGenesis with quarterly reports of
Net Sales by country of each Licensed Product in the Territory. Each such
quarterly report shall be provided to NeoGenesis not later than sixty (60) days
following the close of the relevant calendar quarter, (i.e., following each
March 31, June 30, September 30 and December 31). Concurrently with the making
of such reports, Schering shall pay to NeoGenesis royalties due for such period
at the rates specified in Section 4.4(a). The report due for the quarter ending
December 31 of each year shall also include the aggregate royalties due
NeoGenesis for the entire year.
(c) Schering's obligation to pay royalties with respect to each
Licensed Product shall expire on a country-by-country basis upon the later of
(i) the expiration (or revocation or complete rejection) of the last to expire
(or to be revoked or to be completely rejected) of any NeoGenesis Patent Right
and/or Compound Patent Right having a Valid Claim covering such Licensed Product
in the country, or (ii) ten (10) years from the First Commercial Sale of the
Licensed Product in such country. No royalties shall accrue on the disposition
of any Licensed Product in reasonable quantities by Schering, its Affiliates or
its sublicenses at no charge as samples (promotional or otherwise) or as
donations (for example, to non-profit institutions or government agencies for a
non-commercial purpose) or for clinical studies.
4.5 REMITTANCE.
(a) All royalties, milestone and other payments required under this
Article 4 shall be made by bank wire transfer in United States dollars in
immediately available funds to an account designated by NeoGenesis. Royalties
shall be deemed payable by the entity making the Net Sales from the country in
which earned in local currency and subject to foreign exchange regulations then
prevailing. Royalty payments shall be made in United States dollars to the
extent that free conversion to United States dollars is permitted. The rate of
exchange to be used in any such conversion from the currency in the country
where such Net Sales occurs shall be in accordance with the policy set forth in
ATTACHMENT D attached hereto.
(b) In the event that any payment due NeoGenesis under this Agreement
is not made when due, the amount due shall accrue interest beginning on the
fifth day following the final date on which such payment was due, calculated at
the annual rate equal to two percent (2%) above the prime interest rate reported
in the WALL STREET JOURNAL for the due date, calculated
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
29
from the due date until paid in full. Such payment when made shall be
accompanied by all interest so accrued.
(c) If at any time legal restrictions or prohibitions imposed by
national or international authority prevent the conversion of the local currency
and such currency cannot be removed from such country such that prompt
remittance by Schering of any royalties owed by Schering to NeoGenesis in
respect of sales in such country is prevented, the parties shall consult with a
view to finding a prompt and acceptable solution, and Schering or its designated
Affiliates will make payment through any means as NeoGenesis may lawfully direct
at no additional out-of-pocket expense to Schering.. Notwithstanding the
foregoing, if royalties in any country cannot be remitted to NeoGenesis for any
reason within three (3) months after the end of the calendar quarter during
which they are earned, then Schering shall be obligated to pay NeoGenesis in the
local currency of such country and shall deposit the relevant royalties in a
bank account in such country designated by NeoGenesis and in the name of
NeoGenesis.
4.6 RECORDS. Schering, its Affiliates and sublicensees shall keep and
maintain complete, true and accurate books of account and records (prepared in
accordance with United States Generally Accepted Accounting Principles,
consistently applied) sufficient to determine the amounts of Net Sales and any
royalty payments due with respect thereto. All such books and records shall be
maintained in accordance with Schering's records retention policies consistently
applied but for a period of at least thirty six (36) months from the date of
each payment of royalties.
4.7 INSPECTION. Upon prior written notice Schering and its Affiliates
shall, within a period not to exceed forty-five (45) days, permit an independent
certified public accounting firm of nationally recognized standing selected by
NeoGenesis and reasonably acceptable to Schering, at NeoGenesis' expense, to
have access during regular business hours to examine pertinent books and records
of Schering and its Affiliates necessary to verify the accuracy of the royalty
reports and payments by Schering hereunder. The examination shall be limited to
pertinent books and records for any calendar year ending not more than
twenty-four (24) months prior to the date of such request. Such inspection right
shall not be exercised more than once in any calendar year. The accounting firm
employees shall sign confidentiality agreements reasonably acceptable to
Schering as a condition precedent to their inspection. Schering may designate
competitively sensitive information which such auditor may not disclose to
NeoGenesis; PROVIDED, HOWEVER, that such designation shall not encompass the
auditor's conclusions. The accounting firm shall disclose to NeoGenesis only
whether the royalty reports are correct or incorrect and the specific details
concerning any discrepancies. No other information shall be provided to
NeoGenesis. In the event that the accounting firm correctly concludes that a
variation or error has occurred resulting in an underpayment of royalties by
Schering of five percent (5%) or more of the amount actually due for the period
covered by the inspection, Schering shall pay to NeoGenesis in addition to such
underpayment, the costs relating to the inspection, within thirty (30) days of
receipt of an invoice for such amounts. Any overpayment of royalties by Schering
discovered through such audit shall be fully creditable against royalties
subsequently due hereunder. Schering shall include in each sublicense granted by
it pursuant to this Agreement a provision requiring the sublicensee to make
reports to Schering, to keep and maintain records of sales made
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
30
pursuant to such sublicense and to grant access to such records by NeoGenesis'
independent accountant to the same extent required of Schering under this
Agreement. Upon expiration of the twenty-four (24) month period immediately
following the receipt by NeoGenesis of Schering's fourth quarter royalty report
for a given calendar year, the calculation of royalties payable with respect to
such year shall be binding and conclusive upon NeoGenesis, and Schering, its
Affiliates and its sublicensees shall be released from any liability or
accountability with respect to royalties for such year, except for instances of
fraud or other intentional misconduct.
4.8 TAXES. If at any time, any jurisdiction within the Territory requires
the withholding of income taxes or other taxes imposed upon payments set forth
in this Article 4, Schering shall make such withholding payments as required and
subtract such withholding payments from the payments to be made to NeoGenesis as
set forth in this Article 4, or if applicable, NeoGenesis will promptly
reimburse Schering or its designee(s) of the amount of such withholding payments
that are not subtracted from the payments made to NeoGenesis as set forth in
this Article 4. Schering shall provide NeoGenesis with documentation of such
withholding and payment in a manner that is satisfactory for purposes of
reporting to the U.S. Internal Revenue Service. Any withholdings paid when due
hereunder shall be for the account of NeoGenesis. Withholding payments made by
Schering pursuant to this Section 4.8 shall be made based upon financial
information provided to Schering by NeoGenesis, and to the extent that such
information is incorrect, NeoGenesis shall be liable for any deficiency, and any
fine, assessment or penalty imposed by any taxing authority in the Territory for
any deficiency in the amount of any such withholding or the failure to make such
withholding payment. If Schering is required to pay any such deficiency, or any
fine, assessment or penalty for any such deficiency, NeoGenesis shall promptly
reimburse Schering for such payments.
5. CONFIDENTIALITY
5.1 PUBLICITY. Each of the parties hereto agrees not to disclose to any
third party the existence or the terms of this Agreement without the prior
written consent of the other party hereto. Notwithstanding the foregoing, the
parties may agree upon an initial press release to announce the execution of
this Agreement, together with a corresponding Q&A outline for use in responding
to inquiries about the Agreement. In the event of such agreed upon press
release, each party may thereafter disclose to third parties the specific
information contained in such press release and Q&A without the need for further
approval by the other party. Nothing in this Section 5.1 shall prohibit a party
from making such disclosures to the extent required under applicable federal or
state securities laws or any rule or regulation of any nationally recognized
securities exchange. In such event, however, the disclosing party shall use good
faith efforts to notify and consult with the other party prior to such
disclosure and, where applicable, shall diligently seek confidential treatment
to the extent such treatment is available under applicable securities laws.
5.2 CONFIDENTIALITY.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
31
(a) Confidential Information received by one party (the "RECEIVING
PARTY") from the other party (the "DISCLOSING PARTY") in connection with this
Agreement will be used by the Receiving Party solely for the performance of the
Screening Program or as otherwise expressly permitted by this Agreement. All
Confidential Information will be received and held in confidence by the
Receiving Party, and shall not be disclosed to any third party without the prior
written consent of the Disclosing Party. Each party acknowledges that, except as
expressly set forth herein, it will not obtain any rights of any sort in or to
the Confidential Information of the Disclosing Party as a result of such
disclosure.
(b) The Receiving Party will restrict disclosure of the Disclosing
Party's Confidential Information to those of the Receiving Party's and its
Affiliates' employees, officers, directors, consultants and agents to whom it is
necessary to disclose such Confidential Information in connection with the
performance of its obligations under this Agreement. The Receiving Party shall
use all reasonable efforts, which shall be at least fully commensurate with
those employed by the Receiving Party for the protection of its own Confidential
Information, to protect the Confidential Information of the Disclosing Party.
(c) The confidentiality and use restrictions set forth in this
Article 5 shall not apply to Confidential Information to the extent such
information:
(i) was already known to the Receiving Party, other than under
an obligation of confidentiality, at the time of
disclosure;
(ii) was generally available to the public or otherwise part of
the public domain at the time of its disclosure to the
Receiving Party;
(iii) became generally available to the public or otherwise part
of the public domain after its disclosure and other than
through any act or omission of the Receiving Party in
breach of this Agreement;
(iv) was independently developed by the Receiving Party without
the aid, application or use of the Disclosing Party's
Confidential Information, as demonstrated by documented
evidence prepared contemporaneously with such independent
development; or
(v) was subsequently lawfully disclosed to the Receiving Party,
other than under a duty of confidentiality, by a third
party that had the right to make such disclosure.
(d) Each party hereto may use or disclose Confidential Information
disclosed to it by the other party to the extent (i) such use or disclosure is
reasonably necessary and permitted in the exercise of the rights granted
hereunder in filing or prosecuting patent applications and prosecuting or
defending litigation, (ii) such disclosure is reasonably required to be made to
any institutional review board of any entity conducting clinical trials with
Designated
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
32
Compound(s) and/or Licensed Product(s), or to any governmental or other
regulatory agency, in order to gain approval to conduct clinical trials or to
market Designated Compound(s) and/or Licensed Products, (iii) such disclosure is
required by law, regulation, rule, act or order of any governmental authority,
court, or agency, or is made in connection with submitting required information
to tax or other governmental authorities, or (iv) such disclosure or use is
reasonably required in conducting clinical trials, or making a permitted
sublicense or otherwise exercising license rights expressly granted to it by the
other party pursuant to the terms of this Agreement; in each case, provided that
if the Receiving Party is required to make any such disclosure of the Disclosing
Party's Confidential Information, other than pursuant to a confidentiality
agreement, it will give reasonable advance notice to the Disclosing Party of
such disclosure and, except to the extent inappropriate in the case of patent
applications, will use its reasonable diligent efforts to secure confidential
treatment of such Confidential Information in consultation with the Disclosing
Party prior to its disclosure (whether through protective orders or otherwise)
and disclose only the minimum necessary to comply with such requirements.
(e) Following the termination of this Agreement, or at any time upon
written request by the Disclosing Party, the Receiving Party shall promptly
return to the Disclosing Party all of the Disclosing Party's Confidential
Information, including all copies thereof, in its possession; provided that the
Receiving Party's legal counsel may retain one (1) copy of the Disclosing
Party's Confidential Information in a secure location solely for the purpose of
determining its obligations under this Agreement.
5.3 PUBLICATION. Each of Schering and NeoGenesis acknowledges the other
party's interest in publishing its results to obtain recognition within the
scientific community and to advance the state of scientific knowledge. Each
party also recognizes the mutual interest in obtaining valid patent protection
and in protecting business interests and trade secret information. Consequently,
either party, its Affiliates, employees or consultants wishing to make a
publication relating to the results of the Screening Program shall deliver to
the other party a copy of the proposed written publication or an outline of an
oral disclosure at least sixty (60) days prior to submission for publication or
presentation. For purposes of this Agreement, the term "publication" shall
include, without limitation, abstracts and manuscripts for publication, slides
and texts of oral or other public presentations, and texts of any transmission
through any electronic media, any computer access system such as the internet,
world wide web, or similar medium. The reviewing party shall have the right to
(i) propose modifications to the publication for patent reasons, trade secret
reasons or business reasons or (ii) delay the publication or presentation in
order to protect patentable information. If the reviewing party requests a
delay, the publishing party shall delay submission or presentation for a period
not to exceed eighteen (18) months from the filing date of the first patent
application covering the information contained in the proposed publication, or
shall modify such Publication to eliminate such patentable information. If the
reviewing party requests modifications to the publication, the publishing party
shall edit such publication to prevent disclosure or trade secret or proprietary
business information prior to submission of the publication or presentation.
6. REPRESENTATIONS AND WARRANTIES.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
33
6.1 REPRESENTATIONS AND WARRANTIES OF EACH PARTY. Each of NeoGenesis
and Schering hereby represents, warrants and covenants to the other party
hereto as follows:
(a) it is a corporation or entity duly organized and validly
existing under the laws of the state or other jurisdiction of its incorporation
or formation;
(b) the execution, delivery and performance of this Agreement by such
party has been duly authorized by all requisite corporate action;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder;
(d) the execution, delivery and performance by such party of this
Agreement and its compliance with the terms and provisions hereof does not and
will not conflict with or result in a breach of any of the terms and provisions
of or constitute a default under (i) a loan agreement, guaranty, financing
agreement, agreement affecting a product or other agreement or instrument
binding or affecting it or its property; (ii) the provisions of its charter or
operative documents or bylaws; or (iii) any order, writ, injunction or decree of
any court or governmental authority entered against it or by which any of its
property is bound;
(e) except for the governmental and regulatory approvals required to
market the Licensed Product(s), the execution, delivery and performance of this
Agreement by such party does not require the consent, approval or authorization
of, or notice, declaration, filing or registration with, any governmental or
regulatory authority and the execution, delivery or performance of this
Agreement will not violate any law, rule or regulation applicable to such party;
(f) this Agreement has been duly authorized, executed and delivered
and constitutes such party's legal, valid and binding obligation enforceable
against it in accordance with its terms subject, as to enforcement, to
bankruptcy, insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to the availability of particular
remedies under general equity principles; and
(g) it shall comply with all applicable material laws and regulations
relating to its activities under this Agreement.
6.2 NEOGENESIS' REPRESENTATIONS. NeoGenesis hereby represents, warrants
and covenants to Schering as follows:
(a) to the best of NeoGenesis' knowledge, as of the Effective Date,
NeoGenesis is the sole and exclusive owner of the NeoMorph Screening Library,
the NeoGenesis Patent Rights and the NeoGenesis Know-How free and clear of all
liens, charges and encumbrances and no other person, corporate or other private
entity, or governmental entity or subdivision thereof, has or shall have any
claim of ownership with respect thereto;
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
34
(b) as of the Effective Date it has the full right, power and
authority to grant all of the right, title and interest in the licenses and
other rights granted to Schering under this Agreement;
(c) to the best of NeoGenesis' knowledge, as of the Effective Date the
NeoMorph Screening Library, NeoGenesis Patent Rights and NeoGenesis Know-How,
and the use thereof in performance of the Screening Program as contemplated
hereunder, do not infringe on any intellectual property rights owned or
possessed by any third party;
(d) during the term of this Agreement, NeoGenesis shall not grant or
attempt to grant any licenses, options or other rights to any third party that
are contrary to or otherwise inconsistent with the licenses and other rights
granted to Schering hereunder;
(e) as of the Effective Date there are no claims, judgments or
settlements against or owed by NeoGenesis or pending or, to the best of
NeoGenesis' knowledge, threatened claims or litigation against NeoGenesis
relating to the NeoMorph Screening Library, NeoGenesis Patent Rights and
NeoGenesis Know-How;
(f) as of the Effective Date, it is in compliance in all material
respects with any agreements with third parties, and during the term of this
Agreement (i) it will use diligent efforts not to diminish the rights under the
NeoGenesis Patent Rights and NeoGenesis Know-How granted to Schering hereunder,
including without limitation, by not committing or permitting any actions or
omissions which would cause the breach of any agreements between itself and
third parties which provide for intellectual property rights applicable to the
performance of the Screening Program, and (ii) it will provide Schering promptly
with notice of any such alleged breach; and
(g) during the term of this Agreement it will not use in any capacity,
in connection with any activities to be performed under this Agreement, any
individual who has been debarred pursuant to the United States Food, Drug and
Cosmetic Act.
6.3 SCHERING'S REPRESENTATIONS. Schering hereby represents, warrants and
covenants to NeoGenesis as follows:
(a) during the term of this Agreement it will not use in any
capacity, in connection with any services to be performed under this Agreement,
any individual who has been debarred pursuant to the United States Food, Drug
and Cosmetic Act;
(b) to the best of Schering's knowledge, as of the Effective Date it
is the sole and exclusive owner or licensee of the Schering Patent Rights and
the Schering Know-How, all of which is free and clear of any liens, charges and
encumbrances, and no other person, corporate or other private entity, or
governmental entity or subdivision thereof, has or shall have any claim of
ownership with respect thereto;
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
35
(c) to the best of Schering's knowledge, as of the Effective Date it
is the owner of the Targets and any other tangible materials to be provided to
NeoGenesis hereunder for use in the Screening Program;
(d) to the best of Schering's knowledge, as of the Effective Date, the
use of the Targets in performance of the Screening Program as contemplated
hereunder, does not infringe a valid and enforceable claim of any issued U.S.
patent owned or possessed by any third party; and
(e) as of the Effective Date, there are no claims, judgments or
settlements against or owed by Schering or pending or, to the best of Schering's
knowledge, threatened claims or litigation against Schering relating to the
Schering Patent Rights and Schering Know-How.
6.4 DISCLAIMER.
(a) EXCEPT FOR THE WARRANTIES EXPRESSLY MADE IN SECTIONS 6.1-6.3,
NEITHER PARTY MAKES ANY OTHER REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED (WHETHER WRITTEN OR ORAL), INCLUDING, WITHOUT LIMITATION ANY WARRANTY
AGAINST INFRINGEMENT OF ANY THIRD PARTY PATENT OR OTHER INTELLECTUAL PROPERTY
RIGHTS, ANY WARRANTY OF MERCHANTABILITY OR ANY WARRANTY OF FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT TO THE NEOMORPH SCREENING LIBRARY, THE NEOMORPH
FOCUSED LIBRARIES, QSCD, THE COMPOUNDS, THE ACTIVE COMPOUNDS, THE IMPROVED
ACTIVE COMPOUNDS, THE SELECTED COMPOUNDS, THE DESIGNATED COMPOUNDS, THE TARGETS,
THE LICENSED PRODUCTS, THE NEOGENESIS KNOW-HOW, THE SCHERING KNOW-HOW, THE
SCOPE, VALIDITY OR ENFORCEABILITY OF THE NEOGENESIS PATENT RIGHTS OR THE
SCHERING PATENT RIGHTS, OR SUCH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT.
(b) THE REPRESENTATIONS AND WARRANTIES OF EACH OF NEOGENESIS AND
SCHERING EXTEND ONLY TO THE OTHER PARTY. NEITHER PARTY WILL BE LIABLE FOR ANY
CLAIM OR DEMAND AGAINST SUCH OTHER PARTY BY A THIRD PARTY, EXCEPT TO THE EXTENT
PROVIDED IN SECTIONS 7.2-7.3.
7. INDEMNIFICATION.
7.1 INDEMNIFICATION BY SCHERING. Schering shall indemnify, defend and hold
harmless NeoGenesis and its Affiliates, and each of its and their respective
employees, officers, directors and agents from and against any and all
liability, loss, claims, damage, cost, and expense (including reasonable
attorneys' fees) arising out of or in connection with third party claims
relating to (i) the discovery, development, manufacture, use, testing,
marketing, sale or
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
36
other disposition of Designated Compounds and/or Licensed Products by or on
behalf of Schering or its Affiliates or sublicensees, (ii) performance of the
Screening Program by Schering, (iii) the use of any and all Targets with respect
to which screening or other research activities are conducted in the Screening
Program, or (iv) any breach by Schering of its representations and warranties
under this Agreement, except, in each case, to the extent such liability, loss,
claims, damage, cost or expense is caused by the negligence or willful
misconduct of NeoGenesis, its Affiliates, or any of their respective employees,
officers, directors or agents.
7.2 INDEMNIFICATION BY NEOGENESIS. NeoGenesis shall indemnify, defend and
hold harmless Schering and its Affiliates, and each of its and their respective
employees, officers, directors and agents from and against any and all
liability, loss, claims, damage, cost, and expense (including reasonable
attorneys' fees) arising out of or in connection with third party claims
relating to (i) the performance of the Screening Program by NeoGenesis, except
to the extent directly related to the use of Targets provided by Schering, (ii)
any breach of NeoGenesis' contractual obligations to third parties, or (iii) any
breach by NeoGenesis of its representations and warranties made under this
Agreement, except, in each case, to the extent such liability, loss, claims,
damage, cost, and expense is caused by the negligence or willful misconduct of
Schering, its Affiliates, or any of their respective employees, officers,
directors or agents.
7.3 PROCEDURE. As a condition to the indemnification provided for under
Sections 7.1 and 7.2, the indemnified party shall promptly notify the party from
whom indemnification is sought (the "INDEMNIFYING PARTY") in writing of any
claim or suit; PROVIDED, that failure to give such notice shall not relieve
Indemnifying Party of its indemnification obligations under this Article 7,
except to the extent such failure actually and materially prejudices the rights
of Indemnifying Party to defend against such claim or suit. The Indemnifying
Party shall have the right to assume the defense of any suit or claim related to
the liability if it has assumed responsibility for the suit or claim in writing;
however, if in the reasonable judgment of the indemnified party, such suit or
claim involves an issue or matter which could have a materially adverse effect
on the business operations or assets of the indemnified party, the indemnified
party may retain control of the defense or settlement thereof by providing
written notice of such effect to the Indemnifying Party, but in no event shall
such action or notice be construed as a waiver of any indemnification rights
that the indemnified party may have at law or in equity. If the Indemnifying
Party defends the suit or claim, the indemnified party may participate in (but
not control) the defense thereof at its sole cost and expense. If Indemnifying
Party elects to compromise or defend a claim that is the subject of this Article
7, it shall notify the indemnified party of its decision within thirty (30) days
after delivery of the notice described above (or sooner if the nature of the
third party claim requires). If Indemnifying Party elects not to defend the
indemnified party or fails to notify the indemnified party of its election as
provided in this Section 7.3, the indemnified party may pay, compromise or
settle such claim (subject to the provisions of Section 7.5) and the indemnified
party shall be free to pursue such remedies as may be available under applicable
law to recover from Indemnifying Party.
7.4 LIMITATIONS ON LIABILITY. With respect to any claim by one party
against the other arising out of the performance or failure of performance of
the other party under this Agreement, the parties expressly agree that the
liability of such party to the other party for such
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
37
breach shall be limited under this Agreement or otherwise at law or equity to
direct damages only and in no event shall a party be liable for punitive,
exemplary or consequential damages; PROVIDED that this limitation shall not
apply to the extent arising under third party claims which are subject to
indemnification under Section 7.1 or Section 7.2.
7.5 SETTLEMENTS. Neither party may settle a claim or action related to a
liability, loss, claims, damage, cost or expense arising in connection with this
Agreement without the consent of the other party, which consent shall not be
unreasonably withheld, if such settlement would impose any monetary obligation
on the other party or require the other party to submit to an injunction or
otherwise limit the other party's rights under this Agreement. Any payment made
by a party to settle any such claim or action shall be at its own cost and
expense; PROVIDED, that in the event and to the extent that an indemnified party
enters into a settlement of a matter with respect to which it believes it is
entitled to indemnification under this Article 7 after the other party has
refused to assume the defense of such matter, the provisions of this Section 7.5
shall not constitute a waiver of such party's right to seek remedies from the
other party concerning such matter.
7.6 INSURANCE. Each party acknowledges and agrees that during the term of
this Agreement it shall maintain adequate insurance and/or a self-insurance
program for liability insurance, including products liability and contractual
liability insurance, to cover such party's obligations under this Agreement.
Each party shall provide the other party with evidence of such insurance and/or
self-insurance program, upon request.
8. TERM AND TERMINATION
8.1 TERM. This Agreement shall take effect as the Effective Date and shall,
unless sooner terminated in accordance with Section 8.2 or Section 9.5(a),
expire on a Licensed Product-by -Licensed Product and country-by-country basis
upon the later of: (i) the expiration of the last-to-expire of the NeoGenesis
Patent Rights having a Valid Claim covering the Licensed Product in such
country, or (ii) ten (10) years following the First Commercial Sale of the
Licensed Product in such country. Upon expiration of this Agreement with respect
to a Licensed Product in a given country, the licenses granted to Schering
hereunder with respect to such Licensed Product in such country shall become
fully paid, royalty-free, irrevocable licenses.
8.2 TERMINATION.
(a) Schering shall have the right to terminate this Agreement, with or
without cause at any time following the first anniversary of the Effective Date
upon one hundred and eighty (180) days written notice.
(b) During the term of the Screening Program, either party may
terminate the Screening Program and this Agreement (i) upon thirty (30) days
written notice to the other party if the other party fails to pay any amounts
properly due and owing under this Agreement, unless such amount is paid prior to
the expiration of such thirty (30) day period, or (ii) upon ninety (90)
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
38
days written notice to the other party if the other party commits a material
breach of this Agreement (other than non-payment), unless such breach is cured
within the ninety (90) day notice period, or if such breach is not capable of
being cured within ninety (90) days unless such party during such ninety (90)
day period initiates actions reasonably expected to cure the breach and
thereafter diligently proceeds to cure the breach.
(c) Following completion of the Screening Program, either party may
terminate this Agreement (i) upon thirty (30) days written notice to the other
party if the other party fails to pay any amounts properly due and owing under
this Agreement, unless such amount is paid prior to the expiration of such
thirty (30) day period, or (ii) upon ninety (90) days written notice to the
other party if the other party commits a material breach of this Agreement
(other than non-payment), unless such breach is cured within the ninety (90) day
notice period, or if such breach is not capable of being cured within ninety
(90) days unless such party during such ninety (90) day period initiates actions
reasonably expected to cure the breach and thereafter diligently proceeds to
cure the breach. Notwithstanding the foregoing, in the event that the
non-payment or breach is related to a Licensed Product, any such termination
shall be effective only with respect to such Licensed Product and this Agreement
shall remain in full force and effect with respect to any other Licensed
Products being developed and commercialized by Schering under this Agreement.
(d) This Agreement may be terminated by either party upon the filing or
institution of bankruptcy, reorganization, liquidation or receivership
proceedings, or upon an assignment of a substantial portion of the assets for
the benefit of creditors by the other party, or in the event a receiver or
custodian is appointed for such party's business, or if a substantial portion of
such party's business is subject to attachment or similar process; provided,
however, that in the case of any involuntary bankruptcy proceeding such right to
terminate shall only become effective if the proceeding is not dismissed within
sixty (60) days after the filing thereof.
8.3 EFFECT OF TERMINATION.
(a) Upon termination of this Agreement pursuant to Section 8.2: (i)
NeoGenesis will terminate all tasks then in process in an orderly manner, as
soon as practical and in accordance with a schedule agreed to by Schering and
NeoGenesis; (ii) NeoGenesis shall deliver to Schering all materials developed
through the termination of this Agreement; (iii) Schering shall pay NeoGenesis
any monies due and owing NeoGenesis up to the time of termination for services
actually performed (including all work-in process), and (iv) within thirty (30)
days following termination (including expiration) of this Agreement, NeoGenesis
shall deliver to Schering a reasonably-detailed written report describing the
results of the research performed up to the date of such termination. In
addition, upon termination (including expiration) of this Agreement each party
shall return to the other party or certify in writing to the other party that it
has destroyed all Confidential Information of the other party in its possession.
(b) The licenses granted by NeoGenesis under Article 3 shall survive
any expiration or termination of the Screening Program or the termination of
this Agreement with respect to any Designated Compound or Licensed Product for
which the applicable service fees
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
39
and milestone fees and royalties have been paid (when due in accordance with the
terms of this Agreement) and Schering shall continue to have the right to
develop, have developed, make, have made, use, distribute, offer for sale,
import, export and sell Licensed Products relating to such Designated Compounds;
PROVIDED that Schering continues to pay NeoGenesis milestone fees and royalties
as required by Sections 4.3 and 4.4 and complies with Sections 4.5-4.8. In the
event the licenses granted to Schering under Article 3 terminates for any
reason, each of Schering's sublicensees at such time shall continue to have the
rights and license set forth in their sublicense agreements, PROVIDED such
sublicensee agrees in writing that NeoGenesis is entitled to enforce all
relevant provisions directly against such sublicensee.
(c) Nothing herein shall be construed to release either party of any
obligation which matured prior to the effective date of any termination.
Schering's liability for any charges, payments or expenses due to NeoGenesis
that accrued prior to the termination date shall not be extinguished by
termination, and such amounts (if not otherwise due on an earlier date) shall be
immediately due and payable on the termination date.
(d) Termination of this Agreement by either party pursuant to Section
8.2 or 9.5(a) hereof shall constitute termination of the International Agreement
under the corresponding provisions thereof.
8.4 SURVIVAL. Articles 1, 5, 6, 7 and 9 and Sections 2.2(b), 2.2(c),
2.2(g), 2.5, 3.4, 3.5, 3.6, 3.7, 4.6, 4.7, 4.8 and 8.3(a-c), and the second and
third sentences of Section 2.1(c), shall survive any termination or expiration
of this Agreement.
9. GENERAL PROVISIONS.
9.1 DISPUTE RESOLUTION. Any controversy or dispute that arises under or
relates to this Agreement (with the exception to disputes relating to the
performance of the Screening Program which are governed by the terms of Section
2.6(d)) shall be referred to the Oversight Committee (as defined in Section
2.6(d)) for resolution. If the Oversight Committee is unable to resolve the
dispute within thirty (30) days, the dispute shall be resolved by binding
arbitration pursuant to the provisions of Schedule 9.1 (attached hereto).
Nothing herein shall prevent the parties from settling any dispute by mutual
agreement at any time.
9.2 GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of New York without regard for any
conflict of laws rule or provision thereof that would result in the application
of the substantive laws of any other jurisdiction. Notwithstanding the
foregoing, the parties (and the arbitrators) shall use United States (Federal)
patent and copyright laws for purposes of governing and construing Sections 3.5,
3.6 or 3.7 of this Agreement. The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to the transactions contemplated by
this Agreement.
9.3 AMENDMENT AND WAIVER. This Agreement may only be modified or amended by
a written instrument signed by authorized representatives of each party. No
provision of or right
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
40
under this Agreement shall be deemed to have been waived by any act or
acquiescence on the part of either party, its agents or employees, but only by
an instrument in writing signed by an authorized officer of each party. No
waiver by either party of any breach of this Agreement by the other party shall
be effective as to any other breach, whether of the same or any other term or
condition and whether occurring before or after the date of such waiver.
9.4 INDEPENDENT CONTRACTORS. Each party represents that it is acting on
its own behalf as an independent contractor and is not acting as an agent for or
on behalf of any third party. This Agreement and the relations hereby
established by and between Schering and NeoGenesis do not constitute a
partnership, joint venture, franchise, agency or contract of employment. Neither
party is granted, and neither party shall exercise, the right or authority to
assume or create any obligation or responsibility on behalf of or in the name of
the other party or its Affiliates. NeoGenesis shall be solely responsible for
compensating all its personnel and for payment of all related FICA, workers'
compensation, unemployment and withholding taxes.
9.5 ASSIGNMENT. (a) This Agreement, and any of a party's rights and
obligations under this Agreement, may not be assigned, delegated, sold,
transferred, sublicensed (except as otherwise provided herein) or otherwise
disposed of, by operation of law or otherwise, to any third party without the
prior written consent of the other party; PROVIDED, that either party may assign
this Agreement to an Affiliate or in connection with the transfer or sale of all
or substantially all of its assets related to the division or the subject
business, or in the event of its merger or consolidation or change in control or
similar transaction PROVIDED, FURTHER, that in each instance the assignee
expressly assumes all obligations imposed on the assigning party by this
Agreement in writing. This Agreement shall be binding upon, and inure to the
benefit of, each party, its Affiliates, and its permitted successors and
assigns. Each party shall be responsible for the compliance by its Affiliates
with the terms and conditions of this Agreement.
(b) In the event that any (i) third party or "group" (within the
meaning of Section 13(d) or 14(d) of the Exchange Act of 1934, as amended) other
than the current officers and directors of NeoGenesis or Schering, as the case
may be, has acquired, directly or indirectly, the beneficial ownership, by way
of merger, consolidation or otherwise of 50% of the voting power of NeoGenesis
or Schering, as the case may be, on a fully-diluted basis or (ii) the sale,
lease or transfer of all or substantially all of the assets of NeoGenesis or
Schering to any third party or group not controlled directly or indirectly by
such party (each, a "CHANGE IN CONTROL") during the term of the Screening
Program causes either party's rights and obligations hereunder to pass to any
third party, the other party shall have the right to terminate the Screening
Program and this Agreement upon written notice within thirty (30) days of
receipt of actual knowledge of such Change of Control, without providing the
party that is the subject of such Change in Control any opportunity to cure.
Thereafter, such party shall also have the right to terminate this Agreement if
the assignee of the party that is the subject of such Change in Control does not
provide the writing required under Section 9.5(a). In addition, if the
beneficial ownership (in the manner described in Section 9.5(b)(i)-(ii)) of more
than fifty percent (50%) of the voting or income interest in NeoGenesis or
Schering, as applicable, on a fully diluted basis, is acquired by a third party
or group that is reasonably regarded as a competitor of the other party, such
determination being made with reference to the products and services that such
third party then
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
41
markets or for which it has made regulatory submissions with the FDA or an
equivalent Regulatory Authority in another Major Country or for which it has
publicly announced its intention to do either of the foregoing, the other party
shall have the right, but not the obligation, to terminate the Screening Program
with six (6) months notice to the party being acquired.
9.6 NOTICES. Any notice required or permitted to be given or sent under
this Agreement shall be hand delivered or sent by express delivery service or
certified or registered mail, postage prepaid, or by facsimile transmission
(with written confirmation copy by registered first-class mail) to the parties
at the addresses and facsimile numbers indicated below.
If to NeoGenesis, to:
NeoGenesis Drug Discovery, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxx, President and CSO
Fax: (000) 000-0000
If to Schering, to:
Schering Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President, Business Development
Facsimile No.: (000) 000-0000
with copies to:
Schering Corporation
0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Law Department - Staff Vice-President, Licensing
Facsimile No.: (000) 000-0000
Any such notice shall be deemed to have been received on the earlier of the date
actually received or the date five (5) days after the same was posted or sent.
Either party may change its address or its facsimile number by giving the other
party written notice, delivered in accordance with this Section 9.6.
9.7 PROVISIONS FOR INSOLVENCY.
(a) All rights and licenses granted under or pursuant to this
Agreement by NeoGenesis to Schering are, for all purposes of Section 365(n) of
Title 11 of the United States Code ("TITLE 11"), licenses of rights to
"intellectual property" as defined in Title 11. NeoGenesis
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
42
agrees during the term of this Agreement to create and maintain current copies
or, if not amenable to copying, detailed descriptions or other appropriate
embodiments, to the extent feasible, of all such intellectual property. If a
case is commenced by or against NeoGenesis under Title 11, then, unless and
until this Agreement is rejected as provided in Title 11, NeoGenesis (in any
capacity, including debtor-in-possession) and its successors and assigns
(including, without limitation, a Title 11 Trustee (as defined therein)) shall,
as Schering may elect in a written request, immediately upon such request:
(i) perform all of the obligations provided in this Agreement to be
performed by NeoGenesis including, where applicable and without
limitation, providing to Schering portions of such intellectual
property (including embodiments thereof) held by NeoGenesis and
such successors and assigns or otherwise available to them; or
(ii) provide to Schering all such intellectual property (including all
embodiments thereof) held by NeoGenesis and such successors and
assigns or otherwise available to them.
(b) If a Title 11 case is commenced by or against NeoGenesis, and
this Agreement is rejected as provided in Title 11, and Schering elects to
retain its rights hereunder as provided in Title 11, then NeoGenesis (in any
capacity, including debtor-in-possession) and its successors and assigns
(including, without limitation, a Title 11 Trustee) shall provide to Schering
all such intellectual property (including all embodiments thereof) held by
NeoGenesis and such successors and assigns, or otherwise available to them,
immediately upon Schering's written request. Whenever NeoGenesis or any of its
successors or assigns provides to Schering any of the intellectual property
licensed hereunder (or any embodiment thereof) pursuant to this Section 9.7,
Schering shall have the right to perform the obligations of NeoGenesis hereunder
with respect to such intellectual property, but neither such provision nor such
performance by Schering shall release NeoGenesis from any such obligation or
liability for failing to perform it.
(c) All rights, powers and remedies of Schering provided herein are in
addition to and not in substitution for any and all other rights, powers and
remedies now or hereafter existing at law or in equity (including, without
limitation, Title 11). In the event of the commencement of a Title 11 case by or
against NeoGenesis, Schering, in addition to the rights, power and remedies
expressly provided herein, shall be entitled to exercise all other such rights
and powers and resort to all other such remedies as may now or hereafter exist
at law or in equity (including, without limitation, Title 11) in such event. The
parties agree that they intend the foregoing Schering rights to extend to the
maximum extent permitted by law, including, without limitation, for purposes of
Title 11:
(i) the right of access to any intellectual property (including all
embodiments thereof) of NeoGenesis, or any third party with whom
NeoGenesis contracts to perform an obligation of NeoGenesis under
this Agreement, and, in the case of the third party, which is
necessary for the development,
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
43
registration, manufacture and marketing of Designated Compounds
and/or Licensed Products; and
(ii) the right to contract directly with any third party described in
(i) to complete the contracted work.
9.8 SEVERABILITY. In the event any provision of this Agreement shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other term or
provision hereof. The parties agree that they will negotiate in good faith to
replace any provision hereof so held invalid, illegal or unenforceable with a
valid provision which is as similar as possible in substance to the invalid,
illegal or unenforceable provision.
9.9 CAPTIONS. Captions of the sections and subsections of this Agreement
are for reference purposes only and do not constitute terms or conditions of
this Agreement and shall not limit or affect the meaning or construction of the
terms and conditions hereof.
9.10 ENTIRE AGREEMENT. This Agreement (including the Attachments or
Schedules hereto) constitutes the entire understanding of the parties with
respect to the transactions and matters contemplated hereby and supersedes all
previous communications, representations, agreements and understandings, whether
written or verbal, relating to the subject matter hereof. No representations,
inducements, promises or agreements, whether oral or otherwise, between the
parties not contained in this Agreement shall be of any force or effect.
9.11 RULES OF CONSTRUCTION. The parties agree that they have participated
equally in the formation of this Agreement and that the language and terms of
this Agreement shall not be construed against either party by reason of the
extent to which such party or its professional advisors participated in the
preparation of this Agreement.
9.12 COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
9.13 FORCE MAJEURE. Failure of any party to perform its obligations under
this Agreement (except the obligation to make payments when properly due) shall
not subject such party to any liability or place them in breach of any term or
condition of this Agreement to the other party if such failure is due to any
cause beyond the reasonable control of such non-performing party ("FORCE
MAJEURE"), unless conclusive evidence to the contrary is provided. Causes of
non-performance constituting force majeure shall include, without limitation,
acts of God, fire, explosion, flood, drought, war, riot, sabotage, embargo,
strikes or other labor trouble, failure in whole or in part of suppliers to
deliver on schedule materials, equipment or machinery, interruption of or delay
in transportation, a national health emergency or compliance with any order or
regulation of any government entity acting with color of right. The party
affected shall promptly notify the other party of the condition constituting
force majeure as defined herein and shall exert reasonable efforts to eliminate,
cure and overcome any such causes and to resume
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
44
performance of its obligations with all possible speed; provided that nothing
herein shall obligate a party to settle on terms unsatisfactory to such party
any strike, lockout or other labor difficulty, any investigation or other
proceeding by any public authority or any litigation by any third party. If a
condition constituting force majeure as defined herein exists for more than
ninety (90) consecutive days, the parties shall meet to negotiate a mutually
satisfactory resolution to the problem, if practicable. If the parties cannot in
good faith reach a satisfactory resolution to the problem within sixty (60) days
of meeting, the matter shall be referred to binding arbitration pursuant to
Section 9.1.
9.14 FURTHER ASSURANCES. Each party agrees that, subsequent to the
execution and delivery of this Agreement and without any additional
consideration, it will execute and deliver any further legal instruments and
perform any acts which are or may become reasonably necessary to effectuate the
purposes of this Agreement.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed on
their behalf by their duly authorized representatives.
NEOGENESIS DRUG DISCOVERY, INC. SCHERING CORPORATION
By: /s/ Xxxxxx Xxxxxx By: /s/ Xxxxx Xxxxxxx
-------------------------- ----------------------
Xxxxxx Xxxxxx Xxxxx Xxxxxxx, Ph.D.
President and CSO Vice President
Date: August 2, 2001 Date: August 2, 2001
------------------------ --------------------
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
45
ATTACHMENT A
SCREENING PROGRAM
The Screening Program to be performed by NeoGenesis with respect to the Targets
will screen up to [*] Compounds contained in the NeoGenesis NeoMorph Screening
Library against each Target using the protocol described below.
1. Schering will provide NeoGenesis with approximately [*] of each of the
purified functionally-active Target proteins. Control experiments will be
performed with each of the Targets to determine screening characteristics in
NeoGenesis' ALIS protocols. Follow-up control experiments will be performed
using Schering ligands (if available) to validate the retention of binding
activity of the Targets. Written Standard Operating Procedures ("SOPS") will be
established by the Steering Committee for ALIS screening based on the preceding
experiments.
2. Using the SOPs, NeoGenesis will perform ALIS screening of the NeoMorph
Screening Library against each Target. The ALIS screening will be carried out to
identify Target-specific Compounds that bind to the Schering Target with binding
affinities less than [*] micromolar (Kd < [*]), or such other binding affinity
threshold for a specific Target as shall be agreed upon by the parties in
writing (each, a Preliminary Compound as defined in Section 1.36).
3. NeoGenesis will deliver to Schering [*] of each of the discrete Preliminary
Compounds. Schering will evaluate the activity of these discrete compound(s) in
a Target-based functional assay and/or secondary assay and will notify
NeoGenesis of any such Preliminary Compound(s) which has demonstrated activity
in the Target-based functional assays (each, an Active Compound as defined in
Section 1.1) within [*] after completion of such assays and not later than [*]
after the discrete compounds are delivered by NeoGenesis. NeoGenesis will
prepare a report for all Preliminary Compound(s) that details the binding
affinities of such Preliminary Compound(s) (each, a "PRELIMINARY TARGET
REPORT"). NeoGenesis will deliver such Preliminary Target Report when it
delivers the discrete compounds.
4. Following identification of Active Compounds by Schering, NeoGenesis will
disclose to Schering the structures of all Active Compounds and Preliminary
Compounds of the same Chemotype. At the direction of the Steering Committee,
NeoGenesis will perform initial optimization of such Active Compounds to obtain
compounds with binding affinities of [*] micromolar or less (Kd < [*]) (each, an
Improved Active Compound as defined in Section 1.21) and NeoGenesis will provide
Schering with [*] of discrete Improved Active Compounds. Schering will evaluate
the activity of these discrete compound(s) in a Target-based functional assay
and/or secondary assay and will notify NeoGenesis of any such Improved Active
Compound(s) which has demonstrated activity in the Target-based functional
assays within [*] after completion of such assays and not later than [*] after
the discrete Improved Active Compounds are delivered by NeoGenesis. NeoGenesis
will prepare a report for all Improved Active Compound(s) that details the
chemical structures, binding affinities and competition analysis data for such
Improved Active Compound(s) (each, a "FINAL TARGET REPORT").
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
46
NeoGenesis will deliver such Final Target Report when it delivers the discrete
Improved Active Compounds. In the event and to the extent that the Steering
Committee determines that the aggregate amount of initial optimization
activities performed by NeoGenesis pursuant to this Paragraph 4 will adversely
effect the ability of NeoGenesis to perform initial screening activities for the
Targets that are the subject of the Screening program during a particular
funding period, the Screening Committee may determine that Schering rather than
NeoGenesis should perform certain optimization activities.
5. Schering will select those Improved Active Compounds with respect to each
Target that have demonstrated activity in the Target-based functional assay
and/or secondary assay and that it considers worthy of further study or
optimization as Selected Compounds in accordance with Section 2.7 of the
Agreement. In addition, those Selected Compounds which are to be optimized by
NeoGenesis as Lead Compounds pursuant to Section 2.2(b) of the Agreement will
also be identified by Schering at the time it designates Selected Compounds for
the applicable Target.
6. At the request of Schering in accordance with Section 2.2(b), NeoGenesis will
perform medicinal chemistry optimization on each Lead Compound.
LIST OF ACCEPTED TARGETS
1. [*]
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
47
ATTACHMENT B
NEOGENESIS PATENT RIGHTS
[TO BE SUPPLIED BY NEOGENESIS AS APPLICABLE]
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
48
ATTACHMENT C
INVENTIONS
[TO BE SUPPLIED AS DEVELOPED]
ATTACHMENT D
BOOKKEEPING EXCHANGE RATE POLICY
PURPOSE
To provide general guidelines for the establishment and communication of current
bookkeeping exchange rates by Corporate Treasury to divisions and subsidiaries.
APPLICATION
Applies to Schering-Plough Corporation, its divisions and all subsidiaries.
POLICY
ESTABLISHMENT OF RATES
The current bookkeeping exchange rates will be determined monthly by S-P
Corporate Treasury. The rates will be based on:
o The market rates for selling foreign currencies in New York on the
morning of the 25th of each month; the 31st in December; or
o In thinly traded currencies the local rate established in that country
for buying U.S. dollars.
If the 25th occurs on a holiday, Saturday or Sunday, the rates used are those of
the last business day prior to the 25th. If for any reason a rate established is
significantly different from the rate prevailing locally, the Chief Financial
Officer of the subsidiary should promptly telex Corporate Treasury.
NOTIFICATION
Rates will be communicated to subsidiaries on the last day of each accounting
period by Corporate Treasury (1st workday of ensuing year at year-end). The
communication will advise each subsidiary of all Corporate wide current rates,
regardless of whether or not they have changed from the prior accounting period.
As there is no January closing, January rates will not be issued and December
rates will remain in effect until the February month-end closing.
RECORDKEEPING OF RATES
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
49
At the beginning of each year, a worksheet will be sent to all subsidiaries by
Corporate Treasury. Each subsidiary will maintain a monthly record of all
exchange rates throughout the Corporate system which may affect its accounting
transactions and reporting.
The worksheet lists all countries in which subsidiaries are located and for each
country gives:
1. The cable code (based on country abbreviation) so as to identify the
country for which there is a change in exchange rate.
2. The average exchange rate used in the Operating Plan for the current
year and
3. The exchange rate established as of the end of the previous year.
Twelve columns are provided for the subsidiary to record changes in
exchange rates from communication received each month.
QUOTING OR RATES
To conform with practices generally prevailing in each country, and to avoid any
confusion, ALL exchange rates will be quoted in terms of the number of foreign
currency units per U.S. dollar. This means that for those foreign currency units
that are valued at more than one U.S. dollar, the exchange rates are quoted as a
decimal of the foreign currency unit.
For example, the pound sterling plan rate is quoted as (pound).571 per U.S.
dollar rather than U.S.$1.75 per pound sterling.
Exchange rates are generally quoted as follows:
o In THREE decimals for currencies with less than one unit per U.S.
dollar (e.g., UK .571)
o In TWO decimals for those with one or more but less than ten units
(e.g., France 5.70)
o In ONE decimal for those with ten or more but less than 100 units
(e.g., Austria 12.0) and
o With NO decimals for those with 100 or more units (e.g. Italy 1270)
Rates will be quoted in more than three digits only when necessary to conform to
rates required for official purposes locally or when the exchange rate exceeds
1,000 (e.g., Italy 1270). If the rate exceeds 1,000, it should be rounded to
three significant digits (e.g., rate of 4633 would be shown as 4630).
RESPONSIBILITY
The Corporate Treasury Department will:
A. Distribute the Current Bookkeeping Exchange rate Worksheet at the
beginning of each year to all divisions and subsidiaries.
B Establish and communicate the Current Bookkeeping Exchange rate as
stated in the above policy.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
50
The chief financial officer of each subsidiary will maintain monthly records of
communicated exchange rates.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
51
ATTACHMENT E
DISPUTE RESOLUTION
(a) SCOPE. Subject to and in accordance with the terms of this Agreement and
this Schedule 9.1, all differences, disputes, claims or controversies arising
out of or in any way connected or related to this Agreement, whether arising
before or after the expiration of the term of this Agreement, and including,
without limitation, its negotiation, execution, delivery, enforceability,
performance, breach, discharge, interpretation and construction, existence,
validity and any damages resulting therefrom or the rights, privileges, duties
and obligations of the parties under or in relation to this Agreement (including
any dispute as to whether an issue is arbitrable) shall be referred to binding
arbitration in accordance with the rules set forth herein and of the American
Arbitration Association, as in effect at the time of the arbitration. The time
frames set forth herein shall control the timing of the arbitration procedure.
(b) PARTIES TO ARBITRATION. For the purposes of each arbitration under this
Agreement, Schering shall constitute one party to the arbitration and NeoGenesis
shall constitute the other party to the arbitration.
(c) NOTICE OF ARBITRATION. A party requesting arbitration hereunder (the
"REQUESTING PARTY") shall give a notice of arbitration to the other party (the
"NON-REQUESTING PARTY") containing a concise description of the matter submitted
for arbitration (a "NOTICE OF ARBITRATION"). Notice of Arbitration shall be
delivered to the other party in accordance with Section 9.6 of the Agreement.
(d) RESPONSE. The Non-Requesting Party must respond in writing within thirty
(30) days of receiving a Notice of Arbitration with an explanation responding to
each issue raised, including references to the relevant provisions of the
Agreement. The Non-Requesting Party may add additional issues to be submitted to
arbitration by including a description of such issue in the response.
(e) MEETING. Within fifteen (15) days of receipt of the response from the
Non-Requesting Party pursuant to Paragraph (d), the parties shall meet and
discuss in good faith options for resolving the dispute. The Requesting Party
must initiate the scheduling of this resolution meeting. Each party shall make
available appropriate personnel to meet and confer with the other party during
such fifteen (15) day period.
(f) SELECTION OF ARBITRATOR. Any and all disputes that cannot be resolved
pursuant to Paragraphs (c), (d) and (e) shall be submitted to an arbitrator (the
"ARBITRATOR") to be selected by mutual agreement of the parties. The Arbitrator
shall be a retired judge of a state or federal court, to be chosen from a list
of such retired judges to be prepared jointly by the parties within fifteen (15)
days following the response, with each party entitled to submit the names of
three such retired judges for inclusion in the list, provided that to the extent
the dispute involves issues of
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
52
patent law the parties shall limit such list to judges retired from federal
courts having jurisdiction over patent law issues; PROVIDED FURTHER, that in the
event a dispute relates to matters that are the subject Section 3.4, 3.5 or 3.6
such judge shall be a retired federal judge with expertise in patent law. Upon
completion of the list, the parties shall decide within ten (10) days thereafter
which of the retired judges will be selected as the Arbitrator. No Arbitrator
appointed or selected hereunder shall be an employee, director or shareholder
of, or otherwise have any current or previous relationship with, any party or
its respective Affiliates. If the parties fail to agree on the selection of the
Arbitrator within the allotted time frame, the Arbitrator shall be designated by
the then President of the American Arbitration Association.
(g) POWERS OF ARBITRATOR. The Arbitrator may determine all questions of law and
jurisdiction (including questions as to whether a dispute is arbitrable) and all
matters of procedure relating to the arbitration, except that the Arbitrator
shall be bound by the time frames set forth herein in connection with such
arbitration. The Arbitrator shall have the right to grant legal and equitable
relief (including injunctive relief) and to award costs (including reasonable
legal fees and costs of arbitration) and interest. The Arbitrator is not
permitted to award punitive, exemplary or any similar damages.
(h) ARBITRATION PROCEDURE. The arbitration shall take place in the City and
State of New York at such place and time, consistent with the time frames set
forth herein, as the Arbitrator may fix for the purpose of hearing the evidence
and representations that the parties may present. The arbitration proceedings
shall be conducted in the English language. The law applicable to the
arbitration shall be the law of the State of New York.
(i) DISCOVERY AND HEARING. During the meeting referred to in Paragraph (e), the
parties shall negotiate in good faith the scope and schedule of discovery,
relating to depositions, document production and other discovery devices, taking
into account the nature of the dispute submitted for resolution. If the parties
are unable to reach agreement as to the scope and schedule of discovery, the
Arbitrator may order such discovery as it deems necessary. The parties and the
Arbitrator must adhere to the following schedule: (1) all discovery shall be
completed within forty-five (45) days from the date of the selection of the
Arbitrator, and (2) the arbitration hearing shall commence within fifteen (15)
days after completion of such discovery. At the arbitration hearing, the parties
may present testimony (either live witness or deposition), subject to
cross-examination, and documentary evidence. To the extent practicable taking
into account the nature of the dispute submitted for resolution and the
availability of the Arbitrator, the hearing shall be conducted over a period not
to exceed ten (10) consecutive calendar days, with each party entitled to one
half of the allotted time.
(j) WITNESS LISTS. At least twenty (20) calendar days prior to the date set for
the hearing, each party shall submit to each other party and the Arbitrator a
list of all documents on which such party intends to rely in any oral or written
presentation to the Arbitrator and a list of all witnesses, if any, such party
intends to call at such hearing and a brief summary of each witness' testimony.
Each party shall be given the opportunity to depose any such designated
witnesses not already deposed during the discovery phase. At least five (5)
calendar days prior to the hearing, each party must submit to the Arbitrator and
serve on each other party a proposed findings of fact
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
53
and conclusions of law on each issue to be resolved. Following the close of
hearings, the parties may each submit such post-hearing briefs to the Arbitrator
addressing the evidence and issues to be resolved as may be required or
permitted by the Arbitrator. No later than fifteen (15) calendar days after
hearing the representations and evidence of the parties, the Arbitrator shall
make its determination in writing and deliver one copy to each of the parties.
(k) CONFIDENTIALITY. The arbitration proceedings shall be confidential and,
except as required by law, no party shall make, or instruct the Arbitrator to
make, any public announcement with respect to the proceedings or decision of the
Arbitrator without the prior written consent of the other party. The existence
of any dispute submitted to arbitration and the award of the Arbitrator shall be
kept in confidence by the parties and the Arbitrator, except as required in
connection with the enforcement of such award or as otherwise required by law.
(l) AWARDS AND APPEAL. Subject to the provisions of this Schedule 9.1, the
decision of the Arbitrator shall be final and binding upon the parties in
respect of all matters relating to the arbitration, the conduct of the parties
during the proceedings, and the final determination of the issues in the
arbitration. There shall be no appeal from the final determination of the
Arbitrator to any court, except in the case of fraud or bad faith on the part of
the Arbitrator or any party to the arbitration proceeding in connection with the
conduct of such proceedings. Judgment upon any award rendered by the Arbitrator
may be entered in any court having jurisdiction thereof.
(m) COSTS OF ARBITRATION. The costs of any arbitration hereunder shall be borne
by the parties in the manner specified by the Arbitrator in its determination.
(n) PERFORMANCE OF THE AGREEMENT. During the pendency of the arbitration
proceedings, the parties shall continue to fully perform their respective
obligations under the Agreement; PROVIDED that if the matter which is the
subject of such arbitration proceeding is a matter relating to Schering's
development of Designated Compounds and/or Licensed Products, then the matter
shall be performed by Schering, in its sole discretion; and if the matter which
is the subject of such arbitration proceeding is a matter relating to payment
for the Screening Program services, then the Screening Program shall be
performed by NeoGenesis in its sole discretion. For purposes of this Paragraph
(n) the term "pendency of the arbitration proceeding" shall mean the period
starting on the date on which arbitration proceedings are commenced by a party
in accordance with Paragraph (c) of this Schedule 9.1 and ending on the date on
which the Arbitrator delivers its final determination in writing to the parties.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
54
ATTACHMENT F
STOCK PURCHASE AGREEMENT
SUBSCRIPTION AGREEMENT
July ___, 2001
NeoGenesis Drug Discovery, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Re: Private Placement (the "OFFERING") of 3,517,588 shares of
Series E Convertible Preferred Stock, $.001 par value per share
(the "SHARES" OR "SERIES E CONVERTIBLE PREFERRED STOCK") AT A
PRICE OF $5.97 PER SHARE
Gentlemen:
1. SUBSCRIPTION. Subject to the terms and conditions hereof, the
undersigned (the "SUBSCRIBER") hereby irrevocably subscribes for and agrees at
the Closing to purchase for $5.97 per share the number of Shares set forth on
the signature page of this Agreement. The Shares to be purchased by Subscriber
hereunder shall have the rights, restriction, privileges and preferences of
Series E Convertible Preferred Stock, as expressly set forth in the Third
Amended and Restated Certificate of Incorporation of NeoGenesis Drug Discovery,
Inc., a copy of which is attached hereto and is herein incorporated by reference
and made a part hereof.
2. CLOSING/TENDER OF CONSIDERATION. Subject to the terms and conditions
of this Agreement, the Subscriber hereby tenders to the Company by wire transfer
of immediately available funds to an account to be specified by the Company the
amount of five million dollars and thirty-seven cents ($5,000,000.37) (the
"CLOSING"). At the Closing, subject to the terms and conditions of this
Agreement, the Company will deliver to the Subscriber certificates representing
the number of Shares to be sold and purchased pursuant to Section 1, in proper
form for transfer to Subscriber and dated as of the date of the Closing.
3. ACKNOWLEDGEMENTS, REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
SUBSCRIBER. The Subscriber understands and acknowledges that the Shares are
being offered and sold under one or more of the exemptions from the registration
provided for in Section 4(2) of the Securities Act of 1933, as amended (the
"SECURITIES ACT"), including Regulation D promulgated thereunder, and any
applicable state securities laws. The Subscriber is purchasing the Shares
without being offered or furnished any formal offering literature or prospectus.
The Subscriber understands that this transaction has not been reviewed and
approved by the Securities and Exchange Commission (the "SEC") or by any state
regulatory authority. All documents pertaining to this investment have been made
available to the Subscriber and its representatives, and the books and records
of the Company are available upon reasonable notice for inspection by the
Subscriber during reasonable business hours at the Company's principal place of
business.
3.1 SUITABILITY. The Subscriber confirms that it understands and has
fully considered the risks of this investment and understands that (i) this
investment is suitable only for an
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
55
investor who is able to bear the economic consequences of losing its entire
investment, (ii) the purchase of the Shares is a speculative investment
which involves a high degree of risk, and (iii) there are substantial
restrictions on the transferability of, and there will be no immediate
public market for, the Shares, and accordingly, it may not be possible for
it to liquidate its investment in case of emergency. The Subscriber's
overall commitment to investments which are not readily marketable is not
disproportionate to the undersigned's net worth and the Subscriber's
investment in the Company will not cause such overall commitment to become
excessive.
3.2 LACK OF LIQUIDITY. The Subscriber confirms that it is able (i) to
bear the economic risk of this investment, and (ii) to hold the Shares for
an indefinite period of time. The Subscriber has sufficient liquid assets
so that the illiquidity associated with this investment will not cause any
undue financial difficulties or affect the undersigned's ability to provide
for its current needs and possible financial contingencies, and that its
commitment to all speculative investments is reasonable in relation to its
net worth and annual income. The Subscriber qualifies as an "accredited
investor" pursuant to Regulation D under the Securities Act and has
executed the Registration D Qualification Statement attached hereto as
EXHIBIT A.
3.3 KNOWLEDGE AND EXPERIENCE. The Subscriber has such knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of this investment and of making an
informed investment decision.
3.4 ACCESS TO MANAGEMENT. The Subscriber confirms that, in making its
decision to purchase the Shares, it has relied solely upon independent
investigations made by it, and that it has been given the opportunity to
ask questions of, and to receive answers from, management and other persons
acting on behalf of the Company concerning the Company and the terms and
conditions of the Offering.
3.5 INVESTMENT INTENT. The Shares are being acquired by the
undersigned solely for its own personal account, for investment purposes
only, and not with a view to, or in connection with, any resale or
distribution thereof. The Subscriber has no contract, undertaking,
understanding, agreement or arrangement, formal or informal, with any
person to sell, transfer or pledge to any person the Shares for which it
hereby subscribes, or any part thereof, or any interest therein or any
rights thereto. The Subscriber has no present plans to enter into any such
contract, undertaking, agreement or arrangement. The Subscriber must bear
the economic risk of the investment for an indefinite period of time
because the Shares have not been registered under the Securities Act and
applicable state securities laws and, therefore, cannot be sold unless they
are subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from such registration is available.
3.6 RESTRICTIVE LEGEND. The Subscriber consents to the placement of a
restrictive legend on the certificates for the Shares as required by
applicable securities laws.
3.7 LOCK-UP AGREEMENT FOR PUBLIC OFFERING. In connection with any
public offering of equity securities of the Company, the Subscriber agrees
not to sell, pledge, transfer or otherwise dispose of, or grant any option
or purchase right with respect to, any shares of capital stock then owned
by it and not otherwise offered in any public offering, or engage in any
short sale, hedging transaction or other derivative security transaction
involving the Shares, or any other Shares of common stock of the Company
held by it, for such period of time commencing thirty (30) days prior to
the proposed effective date of such public offering until such period of
time following such public offering as the Company and the managing
underwriter of such public
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
56
offering deem necessary in order to ensure a stable and orderly trading
market, provided however, that the period of time following such public
offering shall not exceed one hundred and eighty (180) days.
4. REPRESENTATIONS, WARRANTS AND COVENANTS OF THE COMPANY. By its
acceptance of this subscription, the Company hereby acknowledges,
represents and warrants to the Subscriber as follows:
4.1 ORGANIZATION. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own
and lease its properties, to carry on its business as presently
conducted and as proposed to be conducted and to carry out the
transactions contemplated hereby. The Company is qualified as a
foreign corporation in all jurisdictions wherein the character of the
property owned or leased or the nature of the activities conducted by
it makes such qualification necessary.
4.2 CAPITALIZATION. The Company has a total authorized
capitalization consisting of Thirty Eight Million Three Hundred Eighty
Thousand Seven Hundred Ninety (38,380,790) shares, of which (i) Twenty
Four Million Twenty One Thousand Six Hundred Forty Five (24,021,645)
shares are designated as Common Stock, and (ii) Fourteen Million Three
Hundred Fifty Nine Thousand One Hundred Forty Five (14,359,145) shares
are designated as preferred stock, $.001 par value per share, of which
(A) One Million Two Hundred Fifty Thousand (1,250,000) are designated
Series A Convertible Preferred Stock, (B) Five Hundred Thirty Thousand
Two Hundred Five (530,205) are designated Series B Convertible
Preferred Stock, (C) Four Million Four Hundred Thirty Seven Thousand
Eight Hundred Sixty Five (4,437,865) are designated Series C
Convertible Preferred Stock, (D) Four Million Six Hundred Twenty Three
Thousand Four Hundred Eighty Seven (4,623,487) are designated Series D
Convertible Preferred Stock and (E) Three Million Five Hundred
Seventeen Thousand Five Hundred Eighty Eight (3,517,588) are
designated Series E Convertible Preferred Stock. Immediately prior to
the Closing, the issued and outstanding capital stock of the Company
shall consist of 5,466,375 shares of Common Stock, 1,250,000 shares of
Series A Convertible Preferred Stock, 530,205 shares of Series B
Convertible Preferred Stock, 4,241,055 shares of Series C Convertible
Preferred Stock, 4,623,487 shares of Series D Convertible Preferred
Stock and 2,680,067 shares of Series E Convertible Preferred Stock.
4.3 AUTHORIZATION OF AGREEMENT. The execution, delivery and
performance of this Agreement by the Company has been duly authorized
by all requisite corporate action, and this Agreement constitutes the
legal, valid and binding obligation of the Company, enforceable
against it in accordance with its terms. The execution, delivery and
performance by the Company of this Agreement will not violate any
provision of law, any order of any court or other agency of
government, the organizational documents or By-Laws of the Company, or
any provision of any indenture, agreement or other instrument by which
the Company, or its respective properties or assets are bound or
affected, or conflict with or result in a breach of or constitute
(with due notice or lapse of time of both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever
upon any of the properties or assets of the Company.
4.4 OFFEREES. The offer, sale and issuance of the Shares in
conformity with the terms of the Agreement constitute transactions
exempt from Section 5 of the Securities Act and from any applicable
state qualification or registration requirements.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
57
4.5 NO CONSENT OR APPROVAL REQUIRED. (i) No consent of any person
and (ii) except for approvals required under state securities or blue
sky laws, no consent, approval or authorization of, or declaration to
or filing with, any governmental or regulatory authority is required
for the valid authorization, execution and delivery by the Company of
this Agreement, or for the valid authorization, issuance and delivery
of the Shares to the Subscriber pursuant to this Agreement other than
those consents, approvals, authorizations, declarations or filing
which have been obtained or made, as the case may be.
5. SURVIVAL OF ACKNOWLEDGMENTS REPRESENTATIONS, WARRANTIES AND
COVENANTS. The Subscriber agrees that the acknowledgements, representations,
warranties and covenants made in Section 3 hereof shall survive any purchase by
it of the Shares, as well as, investigation made by it or any acceptance or
rejection of this subscription. The Company agrees that the representations,
warranties and covenants made in Section 4 hereof shall survive for twelve
months subsequent to the date hereof.
6. AGREEMENT NOT TRANSFERABLE. The Subscriber understands that it
may not transfer or assign this Agreement or any of its rights hereunder.
7. EXECUTION OF FURTHER DOCUMENTATION. The Subscriber agrees to
execute any and all further documents necessary or advisable, in the sole
discretion of the Company, in connection with its proposed purchase of the
Shares.
8. IRREVOCABILITY OF SUBSCRIPTION. The Subscriber agrees that it may
not cancel, terminate or revoke this Agreement, which Agreement shall be binding
upon the Subscriber's successors and assigns.
9. COMPANY COVENANTS.
9.1 The Company covenants and agrees that, from the date of the
Closing under this Subscription Agreement and thereafter so long as
the Subscriber owns at least 500,000 shares of Series E Convertible
Preferred Stock, it will provide to the Subscriber within ninety (90)
days after the end of each fiscal year of the Company, a copy of the
financial statements for such year for the Company, including therein
a balance sheet of the Company as of the end of such fiscal year and
statements of income and stockholder's equity and of cash flows of the
Company for such fiscal year.
9.2 The covenant set forth above in 9.1 shall be of no further
force or effect upon the closing of any public offering of equity
securities of the Company.
10. MISCELLANEOUS.
10.1 All notices or other communications given or made hereunder
shall be in writing, and shall be delivered by hand or mailed by
overnight mail, registered or certified mail, return receipt
requested, postage prepaid, to the Subscriber or to the Company, at
the respective addresses set forth herein.
10.2 This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving
effect to the conflict of law principles thereof.
10.3 This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof, and may be
amended only by a written agreement executed by the party to be bound
thereby.
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
58
SIGNATURE PAGE FOR SUBSCRIPTION AGREEMENT
Dated: July ___, 2001
SCHERING CORPORATION
By:
--------------------------------
Name:
Title:
Number of Shares subscribed for: 837,521
Total Amount of Subscription: $5,000,000.37
Tax I.D. No.:
-----------------------------------
Address: 0000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
ACCEPTED by the Company this _____ day of July 2001
NEOGENESIS DRUG DISCOVERY,
INC.
By:
--------------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
59
EXHIBIT A
NEOGENESIS DRUG DISCOVERY, INC.
REGULATION D QUALIFICATION STATEMENT
(A) The undersigned qualifies as an "accredited investor" pursuant to
Regulation D under the Securities Act of 1933 as a result of its status as
(check the appropriate descriptions) [If you are NOT an Accredited Investor
please so indicate on the signature line below]:
___ 1. a natural person whose individual net worth, or joint net worth
with his or her spouse, exceeds $1,000,000;
___ 2. a natural person who had an individual income in excess of
$200,000 in each of the two most recent years, or joint income
with his or her spouse in excess of $300,000 in each of those
years, and who reasonably expects an income of the same level in
the current year;
___ 3. a bank as defined in Section 3(a)(2) of the Securities Act of 1933
or savings and loan association or other institution as defined in
Section 3(a)(S)(A) of the Securities Act of 1933, whether acting
in its individual or fiduciary capacity;
___ 4. a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934;
___ 5. an insurance company as defined in Section 2(13) of the
Securities Act of 1933;
___ 6. an investment company registered under the Investment Company Act
of 1940 or a business development company as defined in Section 2
(a)(48) of the Investment Company Act of 1940;
___ 7. a small business investment company licensed by the U.S. Small
Business Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958;
___ 8. an employee benefit plan within the meaning of Title I of the
Employee Retirement Income Security Act of 1974, if any of the
following apply:
___ a. the employee benefit plan has total assets in excess of
$5,000,000; or
___ b. the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank,
savings and loan association, insurance company, or registered
investment adviser; or
___ c. the plan is a self-directed plan in which the investment
decisions are made solely by persons who are accredited
investors. (Please put an "*" in the appropriate
description(s) to indicate how the person(s) making
investment decisions are "accredited");
___ 9. a private business development company as defined in Section 202
(a)(22) of the Investment Advisers Act of 1940;
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
60
___ 10. a charitable, educational, religious or other not-for-profit
organization described in Section 501(c)(3) of the Internal
Revenue Code with total assets in excess of $5,000,000 and not
formed for the specific purpose of acquiring the securities
offered;
___ 11. a corporation, Massachusetts or similar business trust, or
partnership with total assets in excess of $5,000,000 and not
formed for the specific purpose of acquiring the securities
offered;
___ 12. a trust with total assets greater than $5,000,000 not formed for
the purpose of acquiring the securities offered whose purchase is
directed by a person who has such knowledge and experience in
financial and business matters that he is capable of evaluating
the merits and risks of the investment;
___ 13. an entity in which all of the equity owners are "accredited
investors" under any one or more of the categories specified in
subparagraphs 1 through 12 above.
(B) IF THE UNDERSIGNED IS A CORPORATION, PARTNERSHIP OR TRUST (CHECK
1. OR 2.):
___ 1. it was not organized or reorganized for the purpose of making an
investment in NeoGenesis Drug Discovery, Inc. or
___ 2. if it was organized or reorganized for the purpose of making an
investment in NeoGenesis Drug Discovery, Inc., the number of
investors in the undersigned (all of whom are accredited
investors) is (Each such investor should complete and execute
its own Regulation D Qualification Statement.)
(C) The undersigned's state of residence is ______________________.
CHECK IF APPLICABLE: ____ I AM NOT AN ACCREDITED INVESTOR
SCHERING CORPORATION
Dated: July ___, 2001 Signature:
-----------------------------
Name:
----------------------------------
Title:
---------------------------------
*= CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
61
