Exhibit 10.13
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 [*] or more of the outstanding
voting securities of an entity, or the right to receive [*] or more of the
profits or earnings of an entity, or the possession otherwise, directly or
indirectly, of the power to direct the management, business and affairs of an
entity.
1.3 "ALIS" means the Automated Ligand Identification System, an
automated, ultra-high throughput ligand selection system proprietary to
NeoGenesis that is used to identify multiple classes of chemical ligands against
a target protein.
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SEPARATELY WITH THE COMMISSION.
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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.
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1.12 "EMEA" means the European Medicines Evaluation Authority, or any
successor thereto.
1.13 "FDA" means the United States Food and Drug Administration, or any
successor thereto.
1.14 "FD&C ACT" means the United States Federal Food, Drug and Cosmetic
Act of 1938, as amended.
1.15 "FIELD" means the treatment or prevention of any disease or
condition in humans or animals.
1.16 "FIRST COMMERCIAL SALE" means, with respect to a Licensed Product,
the first sale (or other transfer for value in an arms-length transaction) for
end use of such Licensed Product in a country within the Territory after
obtaining all necessary Regulatory Approvals for the marketing and sale of the
Licensed Product in such country.
1.17 "FTE" means the equivalent of a full time (12) months (including
normal vacations, sick days and holidays) work of an individual scientist,
carried out by one or more employees or agents of NeoGenesis, who devotes a
portion of his or her time to performing the Screening Program.
1.18 "GOOD CLINICAL PRACTICE" means the then current standards for
clinical trials for pharmaceuticals, as set forth in the FD&C Act and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good clinical practice as are required by the European Union and
other Regulatory Authorities in countries in which the Product is intended to be
sold, to the extent such standards are not in contravention with United States
Good Clinical Practices.
1.19 "GOOD LABORATORY PRACTICE" means the then current standards for
laboratory activities for pharmaceuticals, as set forth in the FD&C Act and
applicable regulations promulgated thereunder, as amended from time to time, and
such standards of good laboratory practice as are required by the European Union
and other Regulatory Authorities in countries in which the Product is intended
to be sold, to the extent such standards are not in contravention with United
States Good Laboratory Practices.
1.20 "GOOD MANUFACTURING PRACTICE" means the current standards for the
manufacture of pharmaceuticals, as set forth in the FD&C Act and applicable
regulations promulgated thereunder, as amended from time to time, and such
standards of good manufacturing practice as are required by the European Union
and other Regulatory Authorities in countries in which the Product is intended
to be sold, to the extent such standards are not in contravention with United
States Good Manufacturing Practices.
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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
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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
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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.
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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
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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
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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 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
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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 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
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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 Program promptly, return to Schering any quantities of such
Target(s) and any derivatives, analogs or components thereof.
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11
(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
conclusive upon the parties and NeoGenesis shall be released from any further
accountability with respect to the Screening Program.
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12
(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).
(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
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13
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 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
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14
serving on the Steering Committee. Each member of the Steering Committee will
have one vote and all decisions of the Steering Committee will be [*]. 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 [*].
(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 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
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15
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 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
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16
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 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
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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:
(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
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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 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
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19
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.
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.
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SEPARATELY WITH THE COMMISSION.
20
(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).
(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.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
21
(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. 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
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
22
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 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.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
23
(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 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.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
24
(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. Sections 355(b)(2)(A), or Sections
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. Sections 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 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
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
25
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
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.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
26
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);
(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
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
27
(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 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
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
28
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) [*] 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 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
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
29
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 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.
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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.
(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.
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(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 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
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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.
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;
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(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;
(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;
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(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;
(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
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(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 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.
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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 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
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impose any monetary obligation on the other party or require the other party to
submit to an injunction or otherwise limit the other party's rights under this
Agreement. Any payment made by a party to settle any such claim or action shall
be at its own cost and expense; PROVIDED, that in the event and to the extent
that an indemnified party enters into a settlement of a matter with respect to
which it believes it is entitled to indemnification under this Article 7 after
the other party has refused to assume the defense of such matter, the provisions
of this Section 7.5 shall not constitute a waiver of such party's right to seek
remedies from the other party concerning such matter.
7.6 INSURANCE. Each party acknowledges and agrees that during the
term of this Agreement it shall maintain adequate insurance and/or a
self-insurance program for liability insurance, including products liability
and contractual liability insurance, to cover such party's obligations under
this Agreement. Each party shall provide the other party with evidence of such
insurance and/or self-insurance program, upon request.
8. TERM AND TERMINATION
8.1 TERM. This Agreement shall take effect as the Effective Date
and shall, unless sooner terminated in accordance with Section 8.2 or Section
9.5(a), expire on a Licensed Product-by -Licensed Product and country-by-country
basis upon the later of: (i) the expiration of the last-to-expire of the
NeoGenesis Patent Rights having a Valid Claim covering the Licensed Product in
such country, or (ii) [*] following the First Commercial Sale of the Licensed
Product in such country. Upon expiration of this Agreement with respect to a
Licensed Product in a given country, the licenses granted to 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) 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
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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 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
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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 under this Agreement shall be deemed to have
been waived by any act or acquiescence on the part of either party, its agents
or employees, but only by an instrument in writing signed by an authorized
officer of each party. No waiver by either party of any breach of this Agreement
by the other party shall be effective as to any other breach, whether of the
same or any other term or condition and whether occurring before or after the
date of such waiver.
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9.4 INDEPENDENT CONTRACTORS. Each party represents that it is
acting on its own behalf as an independent contractor and is not acting as an
agent for or on behalf of any third party. This Agreement and the relations
hereby established by and between 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 markets or for which it has made regulatory submissions with
the FDA or an equivalent Regulatory Authority in another Major Country or for
which it has publicly announced its intention to do either of the foregoing, the
other party shall have the right, but not the obligation, to terminate the
Screening Program with six (6) months notice to the party being acquired.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
41
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 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
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
42
(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, 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.
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
43
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 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
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
44
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
----------------------------------- --------------------
297010_1
* = CONFIDENTIAL TREATMENT REQUESTED: MATERIAL HAS BEEN OMITTED AND FILED
SEPARATELY WITH THE COMMISSION.
45
