1
] EXHIBIT 10.15
RESEARCH & DEVELOPMENT AND LICENSE AGREEMENT
THIS AGREEMENT ("Agreement") is made and entered into effective as of
the 16th day of June, 1995 ("Effective Date"), by and between XXXXXX
LABORATORIES, an Illinois corporation having a principal place of business at
000 Xxxxxx Xxxx Xxxx, Xxxxxx Xxxx, Xxxxxxxx 00000 ("Abbott") and ARQULE, INC., a
Delaware corporation having a principal place of business at 000 Xxxxxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxxxxxxxxxx 00000 ("ArQule").
RECITALS
WHEREAS, ArQule has expertise relating to the modification of
pharmaceutical compounds by use of combinatorial chemistry methods utilizing
rapid parallel synthesis;
WHEREAS, Abbott has expertise in the discovery, development, marketing
and sale of pharmaceuticals and other health care products;
WHEREAS, Abbott desires to have ArQule generate large numbers of
ArQule's own compounds as well as compounds derived from specifically targeted
parallel synthesis of Abbott provided compounds;
WHEREAS, Abbott desires to perform screening of ArQule's compounds and
compounds derived by ArQule from Abbott provided compounds for possible further
research and development by Abbott;
WHEREAS, as part of such research and development effort and contingent
upon ArQule performing research and development activities under a mutually
agreed upon research and development plan, Abbott shall provide certain funding
to ArQule for its research and development activities; and
WHEREAS, if Abbott commercially develops any such compounds, Abbott
shall pay ArQule milestone payments on such compounds which achieve certain
commercial milestones as well as royalties on commercial sales of pharmaceutical
products containing such compounds, all on the terms and conditions stated
below;
NOW, THEREFORE, in consideration of the foregoing premises and mutual
covenants contained herein, Abbott and ArQule hereby agree as follows:
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ARTICLE 1
DEFINITIONS
For the purposes of this Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:
1.1 "Abbott Compound" shall mean an Xxxxxx Core Compound (as defined
below) or an Abbott Derivative Compound (as defined below).
1.2 "Xxxxxx Core Compound" shall mean a core chemical compound supplied
to ArQule by Abbott pursuant to Section 2.1.
1.3 "Abbott Derivative Compound" shall mean a chemical compound
generated by ArQule for Abbott by use of chemical modification methods from an
Xxxxxx Core Compound pursuant to Section 2.1.
1.4 "Abbott Field" shall mean *
1.5 "Active ArQule Array" shall mean an ArQule Array (as defined below)
that contains at least one (1) Active ArQule Compound (as defined below).
1.6 "Active ArQule Compound" shall mean *
or such higher concentration level demonstrating significant
biological activity as the parties may mutually agree upon.
1.7 "Affiliate" shall mean, with respect to a party, any other business
entity which directly or indirectly controls, is controlled by, or is under
common control with, such party. A business entity or party shall be regarded as
in control of another business entity if it owns, or directly or indirectly
controls, more than fifty percent (50%) of the voting stock or other ownership
interest of the other business entity. For purposes of this Agreement, Abbott
Affiliates shall also include the following entities: Xxxxxx Laboratories
(India) Ltd. and Xxxxxx Laboratories Nigeria Limited.
1.8 "ArQule Array" shall mean a set of at least *
ArQule Core Compounds (as defined below) provided by ArQule to Abbott for
screening pursuant to Section 5.1.
1.9 "ArQule Compound" shall mean an ArQule Core Compound or an ArQule
Derivative Compound (as defined below).
1.10 "ArQule Core Compound" shall mean a core chemical compound from an
ArQule Array supplied by ArQule to Abbott pursuant to Section 5.1.
* Confidential treatment has been
requested for marked portions
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1.11 "ArQule Derivative Compound" shall mean a chemical compound
generated by ArQule for Abbott or by Abbott, its Affiliates or contractors by
use of chemical modification methods from an ArQule Core Compound.
1.12 "ArQule Field" shall mean *
1.13 "Array Screening Period" shall mean a period of three (3) Contract
Years (as defined below) commencing on the Effective Date.
1.14 "Array Transfer Period" shall mean a period of two (2) Contract
Years commencing on the Effective Date.
1.15 "Calendar Quarter" shall mean each of the three (3) month periods
beginning on January 1, April 1, July 1 and October 1 of each year.
1.16 "Combination Product" shall mean a pharmaceutical product
containing a Product (as defined below) and at least one (1) other
therapeutically active ingredient.
1.17 "Composition of Matter Patent" shall mean any national or European
Union patent(s) of either party or their Affiliates issued anywhere in the
Territory (as defined below) which claims an Abbott Derivative Compound or an
ArQule Compound, including any patent(s) issuing from any divisions,
continuations, continuations-in-part, reexaminations, or reissues thereof, and
any additions, renewals, and extensions of such patent(s).
1.18 "Contract Quarter" shall mean the three (3) month period beginning
on the Effective Date and each subsequent three (3) month period during the
Research Term.
1.19 "Contract Year" shall mean the twelve (12) month period beginning
on the Effective Date and each subsequent twelve (12) month period during the
term of this Agreement.
1.20 "FDA" shall mean the United States Food and Drug Administration or
any successor entity thereto.
1.21 "FTE" shall mean one (1) or more employees of a party who,
collectively, spend time and effort working on a specified project or task
equivalent to the time and effort of one (1 ) full-time employee of a party
working on such project or task.
1.23 "Licensed Final Compound" shall mean a specific ArQule Compound
from a Licensed Compound Set that Abbott commercially develops, markets and/or
sells pursuant to Section 5.9.
1.24 "Licensed Compound Set" shall mean a list of specific ArQule
Compounds licensed to Abbott by ArQule, in accordance with the procedures set
forth in Section 5.6, as well as all prodrugs, esters and salt forms of such
ArQule Compounds.
1.25 "Licensed Set Core" shall have the meaning set forth in Section
5.6(a).
* Confidential treatment has been
requested for marked portions
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1.26 "License Option Period" shall mean a period of ten (10) Contract
Years commencing on the Effective Date.
1.27 "NDA" shall mean a New Drug Application filed with the FDA with
respect to a Product.
1.28 "Net Sales" shall mean:
(a) With respect to a Product sold alone, the gross
invoiced sales of such Product by Abbott, its
Affiliates and/or sublicensees to unrelated third
parties, less the following deductions:
*
(b) With respect to a Combination Product, the gross
invoiced sales of such Combination Product in a
particular country by Abbott, its Affiliates and/or
sublicensees to unrelated third parties less the
deductions under (i) - (vi) above, multiplied by a
fraction (i) the numerator of which shall be the per
unit current wholesale selling price of the Product
contained in the Combination Product, as sold alone
in such country, and (ii) the denominator of which
shall be the sum of the per unit current wholesale
selling price in such country of each active
ingredient in such Combination Product (including the
Product) as sold alone as a pharmaceutical product.
If there is no established current wholesale selling
price of the Product contained in such Combination
Product or any other active ingredient of such
Combination Product in a particular country, then the
standard, fully-burdened manufacturing cost of the
Product and other active
* Confidential treatment has been
requested for marked portions
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ingredient(s) shall be used to determine the above
fraction, with such costs being determined in
accordance with United States generally accepted
accounting principles.
(c) With respect to a Product that is sold in a Premium
Delivery System (as defined below), an amount
calculated by multiplying (i) the total number of
milligrams of the ArQule Compound or Abbott
Derivative Compound, as applicable, in such Product
sold in Premium Delivery Systems in a particular
country by Abbott, its Affiliates and/or sublicensees
to unrelated third parties, by (ii) the average
selling price of one (1 ) milligram of the ArQule
Compound or Abbott Derivative Compound, as
applicable, in such Product sold in such country by
Abbott, its Affiliates and/or sublicensees to
unrelated third parties in the same reporting period,
which Product is not sold in Premium Delivery
Systems. For purposes of the foregoing sentence,
"average selling price" is the total Net Sales of
such Product not sold in Premium Delivery Systems
calculated pursuant to subparagraph (a) above divided
by the aggregate number of milligrams of the ArQule
Compound or Abbott Derivative Compound, as
applicable, contained in all such Products to which
such Net Sales apply. If such Product is only sold in
Premium Delivery Systems during the applicable
reporting period, then the "Net Sales" of the Product
sold in Premium Delivery Systems shall be determined
by multiplying the "Net Sales" of the Premium
Delivery System containing such Product calculated
pursuant to subparagraph (a) above by a fraction (A)
the numerator of which shall be the standard,
fully-burdened manufacturing cost of the Product and
(B) the denominator of which shall be the standard,
fully-burdened manufacturing cost of all of the
ingredients and components of the Premium Delivery
System (including such Product). As used herein,
"Premium Delivery System" means any drug delivery
system product which comprises a drug or drugs along
with a device(s), equipment, instrumentation, or
other components (but not solely containers or
packaging) designed to accomplish or assist in the
non-oral administration of such drug(s) and thereby
enhance the value of such drug(s), including but not
limited to the Abbott ADD-Vantage(R)System.
1.29 "Patent Rights" shall mean (a) all patent applications filed
anywhere in the Territory by either party or their Affiliates having claims
relating to a Product, Abbott Derivative Compound or ArQule Compound, or the
process of manufacture or use thereof, together with any patents issuing
therefrom (including but not limited to Composition of Matter Patents), and (b)
all divisions, continuations, continuations-in-part, reexaminations, reissues,
additions, renewals and extensions of such patent applications and patents.
Patent Rights owned by Abbott shall be referred to as "Abbott Patent Rights",
Patent Rights owned by ArQule shall be referred to as "ArQule Patent Rights",
and Patent Rights owned by ArQule and Abbott jointly shall be referred to as
"Joint Patent Rights", with ownership of Patent Rights to be determined in
accordance with United States patent laws and practice.
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1.30 "Phase III Studies" shall mean a program of clinical studies
approved by the FDA or other equivalent national or supranational regulatory
agencies outside of the United States which, if successfully completed to the
satisfaction of the FDA or equivalent agencies outside of the United States, is
intended to enable the sponsor of the studies to file an NDA and/or other
equivalent applications for Regulatory Approval (as defined below).
1.31 "Product" shall mean any product containing an Abbott Derivative
Compound or an ArQule Compound.
1.32 "R & D Committee" shall mean the Research and Development
Committee established by the parties pursuant to Article 3.
1.33 "R & D Plan" shall mean the twelve (12) month rolling plan of
ArQule research and development activities to be developed by the R & D
Committee pursuant to Article 3.
1.34 "R & D Program" shall mean the research and development program
funded by Abbott at ArQule as described in Article 3.
1.35 "Regulatory Approval" shall mean all governmental approvals
required to market and sell a Product in any given country or multinational
region in the Territory (e.g., the European Union), including but not limited
to, product registrations, medical approvals, and price/marketing approvals.
1.36 "Research Term" shall mean the two (2) year program of
collaborative research by Abbott and ArQule hereunder, which may be extended by
Abbott pursuant to Section 2.3 for up to three (3) additional successive one (1)
year periods.
1.37 "Reserved Array(s)" shall mean one (1) or more Active ArQule
Array(s) for which Abbott exercises a Target Reservation (as defined below) in
accordance with the procedures set forth in Section 5.5.
1.38 "Royalty Term" shall mean, with respect to each Product in each
country of the Territory where Xxxxxx'x obligation to pay royalties pursuant to
Section 6.3 is in effect, the period of time commencing with the first
commercial sale of such Product by Abbott, its Affiliates and/or sublicensees to
an unrelated third party in such country and continuing until Xxxxxx'x
obligation to pay royalties pursuant to Section 6.3 ceases in such country.
1.39 "Target" shall have the meaning set forth in Section 5.5.
1.40 "Target Reservation" shall mean an Xxxxxx'x designation of one (1)
or more Active ArQule Arrays as Reserved Arrays for a specified Target pursuant
to Section 5.5.
1.41 "Territory" shall mean the entire world.
1.42 "Valid Claim" shall mean a claim of an issued and unexpired
Composition of Matter Patent which neither has been held unenforceable or
invalid by a decision of a court or
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governmental agency of competent jurisdiction, unappealable or unappeased within
the time allowed for appeal, nor has been admitted by the holder of the
Composition of Matter Patent to be invalid or unenforceable through reissue,
reexamination, disclaimer, abandonment or otherwise.
Additional terms used in specific sections of this Agreement shall be
defined in such sections.
ARTICLE 2
R & D PROGRAM
2.1 ArQule Research and Development Activities. Under the direction of
the R & D Committee, during the Research Term ArQule shall synthesize Abbott
Derivative Compounds from Xxxxxx Core Compounds and/or other Abbott Derivative
Compounds supplied to ArQule by Abbott. ArQule shall deliver such Abbott
Derivative Compounds to Abbott in a format suitable for use by Abbott in
accordance with the R & D Plan, together with structure and purity information
and such other information and documentation as Abbott may reasonably request
concerning the structural changes ArQule has made to (a) Xxxxxx Core Compounds
to synthesize Abbott Derivative Compounds and/or (b) Abbott Derivative Compounds
to synthesize further Abbott Derivative Compounds. Except as otherwise agreed by
the parties or the R & D Committee, ArQule shall supply Abbott with all
quantities of Abbott Derivative Compounds synthesized by ArQule. ArQule shall
supply Abbott with mutually agreed upon quantities of each Abbott Derivative
Compound in accordance with the R & D Plan, as determined by the R & D
Committee, provided that Abbott has supplied ArQule with the necessary
quantities of Xxxxxx Core Compounds in accordance with the R & D Plan. ArQule
shall conduct the research and development activities described in this Section
in a good scientific manner and in compliance with all applicable federal, state
and local laws and regulations.
2.2 ArQule FTE Requirements. Unless otherwise agreed in writing by the
R & D Committee or the parties, within thirty (30) days after the Effective Date
and thereafter for the remainder of the Research Term, ArQule shall maintain a
minimum of * FTE scientists to perform research and development activities
for Abbott Derivative Compounds and such other activities as the R & D Committee
may designate in accordance with the R & D Plan. ArQule employees performing
such activities shall be competent, reasonably qualified and adequately trained
for their respective duties, and ArQule shall provide Abbott with such
information and documentation as Abbott may reasonably request concerning the
qualifications and job performance of such ArQule employees, as well as the time
they spend performing such activities. The number of FTEs may be increased or
decreased by mutual written agreement of the parties upon such terms as may be
mutually agreed upon.
2.3 Research Term. The Research Term shall commence on the Effective
Date and continue for a period of two (2) Contract Years thereafter. In
accordance with Section 2.4, Abbott may, at its option, extend the Research Term
for up to three (3) additional Contract Years, exercisable one (1) Contract Year
at a time, upon written notice to ArQule at least six (6) months prior to the
then scheduled expiration of the Research Term.
* Confidential treatment has been
requested for marked portions
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2.4 Research Term Payments. In consideration of the research and
development activities to be performed by ArQule pursuant to Section 2.1, Abbott
shall make the following payments to ArQule:
(a) A technology access fee of * Dollars
* for the first two (2) Contract Years,
payable within ten (10) business days of the
Effective Date;
(b) Additional technology access fees of *
Dollars * per Contract Year for each
extension of the Research Term by Abbott pursuant to
Section 2.3, payable on the second, third and fourth
anniversaries of the Effective Date, as applicable;
and
(c) Research and development funding of
* Dollars * per Contract
Year, payable in semi-annual installments of
* Dollars * at the beginning
of the first and third Contract Quarters of each
Contract Year, which funding is calculated at the
rate of * Dollars * per
ArQule FTE per Contract Year. ArQule shall use such
funding to support its research and development
activities hereunder.
ARTICLE 3
R & D COMMITTEE
3.1 Establishment. The parties hereby establish an R & D Committee to
monitor the ArQule research and development activities conducted under this
Agreement.
3.2 R & D Plan. The R & D Committee shall develop an initial R & D Plan
covering the first twelve (12) months of the Research Term within thirty (30)
days of the Effective Date and, thereafter for the remainder of the Research
Term, shall update the R & D Plan to provide for a rolling twelve (12) month R &
D Plan at least once per Contract Quarter. The R & D Plan shall contain
performance goals for ArQule's research and development activities under Section
2.1, including but not limited to minimum numbers of Abbott Derivative Compounds
to be developed from Xxxxxx Core Compounds and supplied to Abbott, a timetable
and budget for key research and development activities, and such other items as
may be agreed upon by the R & D Committee. ArQule shall use commercially
reasonable efforts to achieve the performance goals specified in the R & D Plan
.
3.3 Additional Responsibilities. In addition to developing and updating
the R & D Plan pursuant to Section 3.2, the R & D Committee shall also have the
following responsibilities during the Research Term: (a) monitoring ArQule's
research and development activities in accordance with the R & D Plan, (b)
recommending changes in the number of FTEs and Xxxxxx'x level of research and
development funding, if necessary or appropriate to accomplish the objectives of
the R & D Plan, provided that any such changes shall require the prior written
* Confidential treatment has been
requested for marked portions
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approval of both parties, and (c) reporting the status of ArQule's research and
development activities hereunder to both parties at least once per Calendar
Quarter.
3.4 Membership. The R & D Committee shall consist of six (6) members,
with three (3) members being appointed by each party. The initial R & D
Committee members are:
Abbott Members ArQule Members
----------------- --------------------
1. Xxxx Xxxxxxxxx 1. Xxxxxx Xxxxx, Xx.
2. Xxxx Xxxxxxxx 2. Xxxxx Xxxxxx
3. Xxxxxx Xxxxx 3. Xxxxxx Xxxxxxx
Each party may remove and replace its R & D Committee members at any time,
without cause, upon written notice to the other party. An alternate member
designated by a party in writing shall be entitled to vote only in the absence
of a permanent member designated by such party. All references to "members" in
this Agreement refer to the permanent members of the R & D Committee and any
alternate member when acting in the place of a permanent member, unless the
context requires otherwise.
3.5 Actions. Any action or decision by the R & D Committee must be
approved by a majority of the members present at a duly convened meeting of the
R & D Committee, including at least one (1) member appointed by each party, or,
pursuant to Section 3.8, approved by written consent of a majority of the
members, including at least one (1) member appointed by each party. If the R & D
Committee cannot agree on a particular matter within the scope of its
responsibilities, the matter shall be submitted for dispute resolution in
accordance with Article 12.
3.6 Meetings. The R & D Committee shall meet within thirty (30) days
after the Effective Date and, thereafter for the remainder of the Research Term,
according to a schedule of regular meetings established by the members of the R
& D Committee. In no event, however, shall the R & D Committee meet less
frequently than once every Contract Quarter during the Research Term. Additional
meetings of the R & D Committee may be called by any two (2) members, one (1) of
which shall have been appointed by each party. Notice of the date, time and
place of each regular or additional meeting and a proposed agenda for the
meeting shall be provided to the members, when practicable, at least fifteen
(15) days prior to the scheduled date of the meeting (unless notice is waived in
writing by a member or party).
3.7 Locations of Meetings. Except as otherwise provided in Section 3.8
or as otherwise mutually agreed by the parties, the regular and additional
meetings of the R & D Committee shall alternate between the principal business
locations of each party.
3.8 Conduct of Meetings. Any regular or additional meeting of the R & D
Committee may be conducted in person or by telephone conference. The R & D
Committee may act without a meeting if prior to such action a written consent to
the action is signed by a majority of the members, including at least one (1)
member appointed by each party. Minutes reflecting actions taken at meetings
shall be maintained at a mutually agreed upon location, together with any other
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books and records of the R & D Committee, and such minutes shall be distributed
to the parties upon request.
3.9 Cooperation of Parties. Each party shall furnish to the R & D
Committee all information and documentation that are reasonably required for
purposes of this Agreement, which disclosures shall be subject to the
confidentiality obligations specified in Section 8.1. In addition, it is
anticipated that the parties will engage in frequent informal communications
regarding the research and development activities conducted under this
Agreement.
3.10 Visits to ArQule Facilities. R & D Committee members shall have
the right to visit the facilities where ArQule's research and development
activities hereunder are being conducted at any time during ArQule regular
business hours upon reasonable prior notice. Other Abbott representatives may
also visit such facilities upon reasonable prior notice with ArQule's prior
written consent, which consent shall not be unreasonably withheld. Abbott shall
bear its own expenses relating to visits to such facilities by its
representatives.
ARTICLE 4
ABBOTT COMPOUND OWNERSHIP AND FURTHER DEVELOPMENT
4.1 Ownership of Xxxxxx Core Compounds. All Xxxxxx Core Compounds
supplied to ArQule hereunder shall be the sole and exclusive property of Abbott,
except to the extent of any rights held by third parties who have licensed or
supplied Xxxxxx Core Compounds to Abbott. ArQule shall not acquire any licenses
or intellectual property rights in or relating to Xxxxxx Core Compounds
hereunder, and ArQule, its Affiliates, employees and agents shall execute such
documents and take such other actions as Abbott deems appropriate to establish
or protect Xxxxxx'x proprietary rights in Xxxxxx Core Compounds. With respect to
any Xxxxxx Core Compounds that are not proprietary to Abbott, ArQule's
acceptance of such Xxxxxx Core Compounds and synthesis of Abbott Derivative
Compounds from such Xxxxxx Core Compounds shall not preclude ArQule from: (a)
entering into an agreement with a third party with respect to research,
development and commercialization of such Xxxxxx Core Compounds if they are
lawfully in the possession of such third party or (b) having an internal ArQule
program (including programs with academic collaborators) concerning the
research, development and commercialization of such Xxxxxx Core Compounds,
provided that ArQule does not use any Abbott Confidential Information (as
defined in Section 8.1 ) in connection with such research, development and
commercialization pursuant to (a) or (b) above.
4.2 Ownership of Abbott Derivative Compounds. All Abbott Derivative
Compounds synthesized by ArQule, its Affiliates or contractors hereunder shall
be the sole and exclusive property of Abbott, except to the extent of any rights
held by third parties who have licensed or supplied Xxxxxx Core Compounds to
Abbott. Ownership of intellectual property rights in or relating to Abbott
Derivative Compounds shall be determined in accordance with Article 10. ArQule
hereby grants Abbott a worldwide, royalty-free, irrevocable, exclusive license
(with the right to sublicense) under any ArQule Patent Rights and Joint Patent
Rights in or relating to any Abbott Derivative Compounds to make, have made,
use, import, offer to sell, and sell any product that contains an Abbott
Derivative Compound.
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4.3 Further Research and Development Activities. Abbott may perform
such further research and development activities on Abbott Compounds as Abbott
deems appropriate in its sole discretion. Except for payments of royalties and
milestone payments on Abbott Derivative Compounds pursuant to Article 6, Abbott
shall have no obligations to ArQule with respect to Abbott Compounds hereunder.
ARTICLE 5
ARQULE COMPOUND RESEARCH AND DEVELOPMENT LICENSES
5.1 Delivery of ArQule Arrays. During the Array Transfer Period, ArQule
shall deliver to Abbott * ArQule Arrays per Contract Year. ArQule may,
at its option, also deliver to Abbott additional ArQule Arrays. ArQule shall
select the ArQule Arrays to be delivered to Abbott hereunder and the ArQule Xxxx
Compounds within each such ArQule Array, provided that each ArQule Core Compound
shall appear only once in any ArQule Array delivered to Abbott hereunder. Except
as otherwise agreed by Abbott, ArQule shall supply Abbott with a minimum
quantity of * of each ArQule Compound in such ArQule Arrays or
* percent ( * ) of the material synthesized by ArQule of each ArQule Compound
in such ArQule Arrays, whichever is less. ArQule acknowledges that it is its
intention to synthesize approximately * of each ArQule Core
Compound, whenever ArQule determines that synthesis of such quantities of ArQule
Core Compounds is chemically feasible and commercially reasonable. ArQule shall
conduct the research and development activities described in this Section in a
good scientific manner and in compliance with all applicable federal, state and
local laws and regulations.
5.2 Screening of ArQule Compounds. During the Array Screening Period,
Abbott shall have the right, either directly or through Xxxxxx'x Affiliates or
third party contractors selected by Abbott, to perform such testing and
analytical work as Abbott deems appropriate on ArQule Core Compounds received
hereunder, provided that Xxxxxx shall have the right to perform composition and
structural analysis only after Xxxxxx'x receipt of confirmed chemical
composition and structure and purity information pursuant to Section 5.3, and
further provided that Xxxxxx shall not perform significant derivitization work
on ArQule Core Compounds until Xxxxxx makes a Target Reservation for the ArQule
Array containing such ArQule Core Compounds pursuant to Section 5.5. The parties
agree that "significant derivitization work" shall mean any derivitization work
beyond that which is reasonably necessary to allow Xxxxxx to determine whether
an ArQule Core Compound is sufficiently amenable to chemical modification to
warrant the exercise of a Target Reservation by Xxxxxx.
5.3 Identification of ArQule Compounds. Upon Xxxxxx'x written request
at any time during the Array Screening Period, ArQule shall provide Xxxxxx with
the confirmed chemical composition and structure and purity information for any
Active ArQule Compound in an ArQule Array upon presentation by Xxxxxx of
reasonably sufficient documentation of the biological activity for which Xxxxxx
is testing. Prior to revealing such documentation to ArQule, Xxxxxx shall remove
any reference to the type of biological activity detected and the assay used,
and Xxxxxx shall not identify in any other manner such biological activity or
assay except in accordance with Section 5.4. Upon Xxxxxx'x written request,
ArQule shall also provide Xxxxxx with the confirmed chemical composition and
structure and purity information for additional
* confidential treatment has been
requested for marked portions
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ArQule Compounds in the ArQule Array that contains the Active ArQule Compound,
but only if such ArQule Compounds exhibit biological activity less than or equal
to the Active ArQule Compound.
5.4 Additional Quantities of ArQule Compounds.
(a) ArQule Obligations. During the Array Transfer Period, ArQule
shall provide Xxxxxx with reasonable additional quantities of
Active ArQule Compounds for which Xxxxxx has received
confirmed chemical composition and structure and purity
information under Section 5.3. Such Active ArQule Compounds
shall be synthesized by ArQule in the course of the R & D
Program. Xxxxxx may elect to obtain reasonable additional
quantities of Active ArQule Compounds from ArQule for up to
twelve (12) months after the expiration of the Array Transfer
Period upon written notice to ArQule which is received at
least ninety (90) days prior to such expiration. In this
event, Xxxxxx shall pay ArQule the amount of *
Dollars * per ArQule FTE per year, up to a
maximum of * FTEs in four (4) equal quarterly
installments, with the first installment due upon the
expiration of the Array Transfer Period and each subsequent
installment due every three (3) months thereafter. ArQule
shall provide the Xxxxxx-funded FTE scientists to supply
Xxxxxx with reasonable quantities of Active ArQule Compounds,
as requested by Xxxxxx. Xxxxxx may discontinue this resupply
program upon ninety (90) days prior written notice to ArQule;
provided, however, that any payments previously received by
ArQule under this Section shall be nonrefundable.
(b) Suspension of ArQule Obligations. Notwithstanding anything to
the contrary set forth herein, if ArQule believes Xxxxxx has
failed to pay ArQule all or any portion of research and
development funding payments due under Section 2.4 or FTE
funding payments due under Section 5.4(a), ArQule may, at its
option, provide Xxxxxx with ten (10) business days prior
written notice stating the amount ArQule believes Xxxxxx owes,
which amount shall be calculated using the amounts and per FTE
rates specified in Sections 2.4 or 5.4(a), as applicable
("Disputed Amount"), and (ii) ArQule's intention to suspend
performance of its obligations pursuant to Section 5.4(a)
pending receipt of the Disputed Amount. If Xxxxxx pays ArQule
the Disputed Amount within the ten (10) business day notice
period, ArQule shall not suspend such performance, provided
that such payment by Xxxxxx shall not preclude Xxxxxx from
initiating dispute resolution proceedings pursuant to Article
12 to seek a refund of any portion of the Disputed Amount that
Xxxxxx believes was not owed to ArQule hereunder. If Xxxxxx
does not pay ArQule the Disputed Amount within the ten (10)
business day notice period, ArQule may suspend such
performance pending receipt of the Disputed Amount.
5.5 Target Reservations and Reserved Arrays.
(a) Determination of a Target. In the event that Xxxxxx desires to
make a Target Reservation for one (1) or more Active Arrays,
Xxxxxx shall provide written
* confidential treatment has been
requested for marked portions
- 12 -
13
notice to ArQule of the Active Array(s) of interest, the
identity of the Active ArQule Compound(s) therein, the type of
biological activity detected, and the assay in which the
activity was detected.
(i) Specific Target. If the type of activity and the detection
assay reveal a probable interaction of the Active ArQule
Compound(s) with a specific, identified biomolecule (such as a
protein, polynucleotide, carbohydrate, lipid, or any
combination thereof), then the term "Target" shall mean that
specific biomolecule and any related biomolecules that (A)
exhibit substantial structural homology with the identified
biomolecule, as measured by the degree of similarity in the
primary structure (i.e., amino acid sequence, nucleotide
sequence, monosaccharide linkages) and secondary structure
(i.e., three-dimensional structure) and (B) perform a
substantially similar function as the identified biomolecule.
(ii) General Target. In all other cases, the term "Target"
shall mean the narrowest definable element of an observed
biological activity in a non-specific assay (i.e., an in vitro
assay based on use of membranes, whole cells, or specific
animal tissues), as customarily used for lead screening
purposes by Xxxxxx, subject to further reduction in scope
based on the extent to which ArQule would be unreasonably
precluded from (A) granting rights to third parties to use the
Active Array(s) with specific, identified biomolecules and (B)
using the Active Array(s) in an internal ArQule program
(including programs with academic collaborators) with
specific, identified biomolecules. Based on the criteria set
forth in (i) and (ii) above, the parties shall determine in
good faith the exact scope of the Target by mutual written
agreement, subject to modification from time to time during
the License Option Period in the same manner. With respect to
Specific Targets, the parties shall make such modifications as
may be reasonably necessary to provide Xxxxxx with
substantially equivalent biological Target coverage. During
the Research Term, the R & D Committee shal; determine the
scope of the Target. After the expiration or termination of
the Research Term, the parties shall each designate one (1) or
more authorized representatives to meet at least once per
Contract Quarter to review and update the scope(s) of the
Target(s) .
(b) Designation of Reserved Arrays. Subject to availability, as
described below, Xxxxxx may make Target Reservations by
designating any Active Arrays as Reserved Arrays for specified
Targets up to a maximum of six (6) Target Reservations at any
time during the Array Screening Period. All such Target
Reservations shall expire upon expiration of the License
Option Period, unless earlier terminated as provided in this
Agreement. An Active Array shall be available for designation
as a Reserved Array for a Target unless ArQule can reasonably
demonstrate to Xxxxxx that ArQule has previously committed the
Active Array to (i) a bona fide, documented external program
on the same Target or (ii) a bona fide, documented internal
ArQule program (including programs with academic
collaborators) on the same Target. During the Array Screening
Period, Xxxxxx may, upon ten (10) days prior written notice to
ArQule, relinquish its rights in Reserved Arrays for up to
four (4) Target Reservations, in exchange
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14
for the right to designate Reserved Arrays with respect to one
(1) substituted Target Reservation for each relinquished
Target Reservation. In such event, Xxxxxx shall xxxxx ArQule a
royalty-free, world-wide, irrevocable, exclusive license (with
the right to sublicense) under all then-existing and
subsequently created Xxxxxx Patent Rights claiming ArQule
Compounds derived from ArQule Core Compounds in the
relinquished Reserved Arrays to make, have made, use, import,
sell and offer to sell such ArQule Compounds.
(c) Effect of Target Reservation. For as long as each Target
Reservation is in effect, Xxxxxx shall have the exclusive
right to derivatize ArQule Derivative Compounds from Active
ArQule Compounds in Reserved Arrays and to conduct such
synthesis, testing and analytical work as Xxxxxx deems
appropriate relating to such ArQule Derivative Compounds for
use with the Target, including but not limited to composition
and structural analysis. Such exclusive right shall be in
effect from the date Xxxxxx exercises each Target Reservation
until the end of the License Option Period, but only so long
as the Target Reservation remains in effect. Xxxxxx may elect
to conduct synthesis, testing and analytical work relating to
ArQule Derivative Compounds itself or to have such work
conducted by Xxxxxx Affiliates or contractors or, during the
Array Transfer Period, by ArQule pursuant to the R & D
Program.
(d) Maintenance of Target Reservations. For each Target
Reservation, Xxxxxx shall maintain an active development
program for at least one (1) Active ArQule Compound in any
Reserved Array for the relevant Target. Xxxxxx shall have
maintained such an active program if Xxxxxx commits to the
program at least Three Million Dollars ($3,000,000) FTE
synthetic chemists at either Xxxxxx or ArQule.
(e) Conflicting Target Reservations. If a third party or ArQule
itself, under a bona fide, documented internal ArQule program
(which may or may not involve an academic collaborator)
originated without use of or reference to Xxxxxx Confidential
Information, desires to reserve a Reserved Array subject to an
Xxxxxx General Target Reservation for a third party or ArQule
Specific Target Reservation or more narrowly defined General
Target Reservation and the requested third party or ArQule
Target Reservation, in ArQule's determination, actually or
potentially conflicts with Xxxxxx'x General Target
Reservation, then ArQule shall provide Xxxxxx with written
notice of such actual or potential conflict within thirty (30)
days of ArQule's discovery thereof.
(i) ArQule shall include in such notice the proposed Specific
Target or narrower General Target definition desired to be
reserved by such third party (if ArQule is legally permitted
to make such disclosure) or ArQule. Within ten (10) business
days of Xxxxxx'x receipt of such notice containing the
proposed Specific Target or narrower General Target
definition, Xxxxxx shall, at its option: (A) accept the
proposed third party or ArQule Target Reservation as Xxxxxx'x
new Target Reservation and release the remainder of Xxxxxx'x
original General Target Reservation; (B) retain Xxxxxx'x
original General Target Reservation excluding the proposed
third party or ArQule Target Reservation; (C) retain Xxxxxx'x
* confidential treatment has been
requested for marked portions
- 14 -
15
original General Target Reservation on a semi-exclusive basis
with the third party or ArQule with respect to the portion of
Xxxxxx'x original General Target Reservation that conflicts
with the proposed third party or ArQule Target Reservation and
on an exclusive basis for the remainder of Xxxxxx'x original
General Target Reservation; or (D) negotiate in good faith to
redefine Xxxxxx'x General Target Reservation so as to resolve
the area of conflict, provided that if the parties are unable
to agree on a redefined Xxxxxx General Target Reservation
within thirty (30) days, the matter shall be resolved by
Scientific Dispute Resolution ("SDR") proceedings as set forth
in Exhibit B. In any SDR proceedings pursuant to this Section
5.5(e)(i), if the neutrals in such SDR proceedings determine
that an actual conflict exists between Xxxxxx'x original
General Target Reservation and the proposed third party or
ArQule Target Reservation, then Xxxxxx shall at a minimum be
allowed to retain semi-exclusive rights to the portion of its
original General Target Reservation that conflicts with the
proposed third party or ArQule Target Reservation .
(ii) If ArQule is not legally permitted to disclose the
proposed Target Reservation definition desired to be reserved
by a third party, ArQule shall arrange for such dispute to be
resolved by SDR proceedings as set forth in Exhibit B. In any
SDR proceedings pursuant to this Section 5.5(e)(ii), if the
neutrals in such SDR proceedings determine that an actual
conflict exists between Xxxxxx'x original General Target
Reservation and the proposed third party Target Reservation,
then Xxxxxx shall at a minimum be allowed to retain
semi-exclusive rights to the portion of its original General
Target Reservation that conflicts with the proposed third
party Target Reservation.
5.6 License Rights.
(a) Exercise of Option. Subject to availability, as
described below, Xxxxxx shall have the option to
license a total of * Licensed Compound Sets
under the terms of this Agreement. Xxxxxx may
exercise such license options upon written notice to
ArQule at any time within the License Option Period,
whereupon the parties shall determine the compounds
comprising the Licensed Compound Set, in accordance
with the following procedures:
(i) Xxxxxx shall identify to ArQule a single
ArQule Compound that Xxxxxx has designated a
"PPCC posttoxicity" compound under Xxxxxx'x
then standard internal procedures ("Licensed
Set Core"). The Licensed Set Core shall be
identical to or derived from an Active
ArQule Compound in a Reserved Array. The
Licensed Set Core shall be included in the
Licensed Compound Set.
(ii) The other ArQule Compounds comprising
the Licensed Compound Set shall satisfy both
of the following criteria:
* confidential treatment has been
requested for marked portions
- 15 -
16
(A) The ArQule Compound shall exhibit at least *
percent * homology with the Licensed Set Core (as
measured by a widely accepted and used software
program, such as Daylight).
(B) The ArQule Compound shall exhibit biological activity
against the Target when the ArQule Compound is
present at a concentration of * or less in
the relevant assay, or such higher concentration
level demonstrating significant biological activity
against the Target as the parties may mutually agree
upon.
(iii) The ArQule Compound shall be available for inclusion in
the Licensed Compound Set unless ArQule can reasonably
demonstrate to Xxxxxx that ArQule has previously committed the
ArQule Compound to (A) a bona fide, documented external
program involving the same ArQule Compound or (B) a bona fide,
documented, internal program (including programs with academic
collaborators) involving the same ArQule Compound.
(b) License Grant. ArQule hereby grants Xxxxxx a worldwide,
royalty-bearing license (with the right to sublicense) under
ArQule Patent Rights to make, have made, use, import, offer to
sell, and sell in the Xxxxxx Field any Products that
incorporate any ArQule Compound in any of the Licensed
Compound Sets. Such license grant shall be exclusive to the
extent that ArQule may legally grant an exclusive license to
Xxxxxx; otherwise, ArQule shall xxxxx Xxxxxx a license with
the greatest degree of exclusivity that ArQule may legally
grant.
(c) Diligence Requirements. Xxxxxx shall maintain an active
clinical development program on at least one (1) ArQule
Compound in each Licensed Compound Set. Xxxxxx shall have
maintained such an active program if Xxxxxx expends at least
Three Million Dollars ($3,000,000) per year in direct costs
(including, but not limited to, costs attributable to external
services or material contracts) relating to clinical
development of one (1 ) or more ArQule Compounds within the
Licensed Compound Set during the period commencing on the date
upon which the Licensed Compound Set is determined and ending
on the date upon which Xxxxxx makes a milestone payment to
ArQule pursuant to Section 6.1 (a) for the initiation of Phase
III Studies for an ArQule Compound within the Licensed
Compound Set; provided, however, that this obligation shall be
suspended for a period not to exceed twelve (12) months during
any period that clinical trials are delayed or suspended
because of an unexpected negative result occurring for reasons
beyond the control of Xxxxxx. If clinical trials are delayed
or suspended because of such unexpected negative result for a
period in excess of twelve (12) months, the parties shall in
good faith negotiate appropriate modifications to Xxxxxx'x due
diligence obligations under this Section.
* confidential treatment has been
requested for marked portions
- 16 -
17
5.7 License from Xxxxxx. Xxxxxx hereby grants ArQule:
(a) a worldwide, royalty-free, non-exclusive license (with the
right to sublicense) under any Composition of Matter Patents
relating to ArQule Compounds that are included within the
Xxxxxx Patent Rights to make, have made, use, import, offer to
sell, and sell any ArQule Compounds in the ArQule Field, and
(b) a worldwide, royalty-free, exclusive license (with the of
right to sublicense) under any Xxxxxx Patent Rights relating
to ArQule Compounds that are not Composition of Matter Patents
to make, have made, use, import, offer to sell, and sell any
ArQule Compounds in the ArQule Field, excluding in each case
Xxxxxx Patent Rights relating to ArQule Compounds in any
Licensed Compound Set that are under active clinical
development by Xxxxxx.
5.8 Synthetic Support. During the Array Screening Period, at no cost to
Xxxxxx, ArQule shall provide Xxxxxx with reasonable technical support relating
to the synthesis of ArQule Derivative Compounds. Such technical support shall be
in the form of consultation and advice only, and shall not include any on-site
instruction or the performance of any chemical synthesis.
5.9 Further Development and Regulatory Approvals. Xxxxxx shall have the
sole discretion to determine which Licensed Final Compounds and Products, if
any, to develop or market, or to continue to develop or market, as well as those
Licensed Final Compounds and Products for which Regulatory Approvals may be
sought, and when, where, how and on what terms and conditions to market such
Licensed Final Compounds and Products in the Territory. All Regulatory Approvals
for Licensed Final Compounds and Products shall be owned solely by Xxxxxx.
5.10 Agreements With Third Parties. The parties acknowledge and agree
that ArQule may make ArQule Arrays available to third parties in addition to
Xxxxxx for screening and analytical work and possible further research and
development work. If ArQule enters into an agreement with any third party and
the general terms of such agreement relating to ArQule Arrays are substantially
similar to the terms of this Agreement relating to ArQule Arrays, except that
the financial terms of such third party agreement relating to ArQule Arrays,
considered in the aggregate, are more favorable than the financial terms
relating to ArQule Arrays under this Agreement, then Xxxxxx may, at its option,
elect to substitute the financial terms of such third party agreement relating
to ArQule Arrays for the financial terms of this Agreement relating to ArQule
Arrays in their entirety.
5.11 Other ArQule Compounds. ArQule acknowledges and agrees that Xxxxxx
shall have the right to commercially develop, market and sell ArQule Derivative
Compounds synthesized by Xxxxxx that are (a) not included in any Licensed
Compound Set and (b) not covered by any ArQule Patent Rights, subject to
Xxxxxx'x obligation to pay royalties and milestone payments to ArQule pursuant
to Article 6. Xxxxxx acknowledges and agrees that ArQule makes no warranties
with respect to such ArQule Derivative Compounds.
- 17 -
18
ARTICLE 6
MILESTONE AND ROYALTY PAYMENTS
6.1 Milestone Payments. In consideration of ArQule's entering into this
Agreement and the rights and licenses granted by ArQule to Xxxxxx hereunder,
Xxxxxx shall pay ArQule the following milestone payments with respect to each
Xxxxxx Derivative Compound and ArQule Compound commercially developed by Xxxxxx
hereunder:
(a) * Dollars * , payable within thirty (30) days after
* with respect to each
Xxxxxx Derivative Compound and ArQule Compound anywhere in the
Territory;
(b) * Dollars * , payable within thirty (30) days after
FDA acceptance of the initial NDA for each Xxxxxx Derivative Compound
and ArQule Compound filed by Xxxxxx;
(c) * Dollars * , payable within thirty, (30) days
after
*
(d) * Dollars * , payable within thirty (30) days after
* and
(e) * Dollars * , payable within thirty (30) days after
*
6.2 No Multiple Milestone Payments. If Xxxxxx determines, in its
business judgment, to commercially develop and/or seek Regulatory Approval of a
different Xxxxxx Derivative Compound or a different ArQule Compound in
substitution of an Xxxxxx Derivative Compound or ArQule Compound for which
Xxxxxx has paid one (1) or more milestone payments pursuant to Section 6.1, then
Xxxxxx shall not be required to pay the same milestone payment(s) for the
substituted Xxxxxx Derivative Compound or ArQule Compound, as applicable (e.g.,
if Xxxxxx has paid the * milestone payment referenced in Section 6.1
(a) after * with respect to Compound A and then
Xxxxxx subsequently substitutes Compound B for Compound A, Xxxxxx shall have no
obligation to pay a second * milestone payment for *
with respect to Compound B. However, Xxxxxx would still be obligated to
make the milestone payments referenced in Section 6.1 (b)-(e) for Compound B, if
applicable).
* confidential treatment has been
requested for marked portions
- 18 -
19
6.3 Royalty Rates and Payments. In further consideration of the rights
and licenses granted to Xxxxxx hereunder, Xxxxxx shall pay ArQule royalties on
Net Sales at the following royalty rates:
(a) For Products for which a Valid Claim is in effect, for as long as a
Valid Claim is in effect on a country-by-country basis, Xxxxxx shall pay
royalties as follows:
(i) For Products containing Xxxxxx Derivative Z Compounds (but not
containing ArQule Compounds), * percent
* of Net Sales during each calendar year; and
(ii) For Products containing ArQule Compounds (or both ArQule
Compounds and Xxxxxx Derivative Compounds), * percent *
of Net Sales during each calendar year.
(b) For Products other than Products referenced in Section 6.3(a) which
contain ArQule Compounds as a therapeutically active ingredient and for which no
Valid Claim held by ArQule is in effect, Xxxxxx shall pay ArQule royalties at
the rate of * percent * of Net Sales during each calendar year for a
period of ten (10) years from the date of the first commercial sale of each such
Product in the United States, or any European Union member country, or Japan;
provided, however, that Xxxxxx shall have no obligation to pay royalties or
milestone payments pursuant to this Article 6 if the ArQule Compound in question
is an ArQule Derivative Compound that was first actually synthesized after the
seventh anniversary of the Effective Date.
6.4 Lump Sum Royalty Payment. In addition to royalty payments pursuant
to Section 6.3, with respect to any Products containing an ArQule Compound as a
therapeutically active ingredient, Xxxxxx shall pay ArQule a lump sum royalty
payment of * Dollars * , payable within sixty (60)
days after the end of the first calendar year during the Royalty Term in which
Net Sales of any such Product are greater than * Dollars
* This lump sum royalty payment shall be payable only once per
Product during the term of this Agreement (i.e., no such payments shall be due
during any subsequent calendar years in which Net Sales of the same Product are
greater than *
6.5 Certain Compounds Previously in Xxxxxx'x Possession.
Notwithstanding anything to the contrary set forth herein, Xxxxxx shall have no
obligation to pay ArQule royalties or milestone payments pursuant to this
Article 6 with respect to any ArQule Core Compounds or Xxxxxx Derivative
Compounds that were in Xxxxxx'x possession (either by independent development or
acquisition from a third party) prior to receipt thereof from ArQule, as
evidenced by competent written records that Xxxxxx presents to ArQule within
sixty (60) days after Xxxxxx'x receipt of the chemical composition and structure
of such ArQule Core Compounds or Xxxxxx Derivative Compounds from ArQule.
6.6 Royalty Reports and Payments. Commencing with the first Calendar
Quarter in which Xxxxxx, its Affiliates or sublicensees make the first
commercial sale of any Product in the Territory, Xxxxxx shall provide ArQule
with a written report of Net Sales for each Product on a Product-by-Product,
country-by-country basis within forty-five (45) days after the last day of
* confidential treatment has been
requested for marked portions
- 19 -
20
March, June, September and December for royalties accruing on Net Sales in the
United States during the three (3) preceding calendar months and within
seventy-five (75) days after the last day of February, May, August and November
for royalties accruing on Net Sales in the Territory outside of the United
States during the three (3) preceding calendar months. Concurrently with the
submission of each such written report, Xxxxxx shall pay or cause to be paid to
ArQule the total amount of royalties shown to the due thereon.
6.7 Currency. Xxxxxx shall make all milestone and royalty payments to
ArQule pursuant to this Article 6 in U.S. Dollars. Royalty payments earned shall
be first determined by Xxxxxx in the currency of the country where the Net Sales
were made and then converted by Xxxxxx directly to its equivalent in U.S.
Dollars. The rates of exchange for converting the currencies involved to U.S.
Dollars as quoted by the Statistical Market Letter published by International
Reports, Inc. as Foreign Exchange Rates quoted in New York as market rate (bid)
on the last business day of the quarterly period in which the royalty payments
were earned shall be used by Xxxxxx to determine such conversion rates.
6.8 No Royalties Payable Between Affiliates. No royalties shall be
payable to ArQule on sales between Xxxxxx, its Affiliates or sublicensees, or
between Xxxxxx Affiliates and sublicensees.
6.9 No Multiple Royalties. No multiple royalties shall be payable
because any Product, its manufacture, import, use, offer for sale, or sale is or
shall be covered by multiple patents.
6.10 Sole License Payments; Fully Paid-up License. The parties
acknowledge and agree that the milestone payments under Section 6.1 and the
royalty payments under Sections 6.3 and 6.4 are the sole payments which may
become due and owing by Xxxxxx to ArQule in consideration for the license rights
and other rights granted to Xxxxxx by ArQule under Sections 4.2, 5.5(c), 5.6,
and 5.11. Except as otherwise expressly provided herein, upon expiration of the
Royalty Term for each Product such license rights and other rights shall become
fully paid-up and irrevocable.
ARTICLE 7
PAYMENTS, BOOKS AND RECORDS
7.1 Method of Payment. Payments by Xxxxxx to ArQule under this
Agreement shall be made, at Xxxxxx'x option, either by check or by bank wire
transfer to the address or bank account designated by ArQule.
7.2 Books and Records. Each party shall maintain complete and accurate
financial books and records in accordance with United States generally accepted
accounting principles, consistently applied and in sufficient detail to allow
verification of any amounts subject to payment or reimbursement hereunder,
including without limitation the calculation of Net Sales. Each party shall
retain such records at its principal place of business for three (3) years or
such other period as the parties may agree in writing.
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21
7.3 Audit Rights. Upon the written request of either party (but not
more frequently than once in any calendar year), the requesting party may retain
an independent certified public accountant, subject to approval by the other
party (which approval shall not be unreasonably withheld), to review such
records of the other party to verify the accuracy of the payments made or
payable hereunder. Such accountant shall be required to execute a
confidentiality agreement in a form reasonably acceptable to the audited party
and shall report to the auditing party (with a copy to the audited party) only
the amount of any underpayment or overcharge. Within ten (10) business days
after completion of such review, the parties shall reconcile any underpayment or
overcharge. The auditing party shall pay the cost of any review of records
conducted at its request under this Section, except that the audited party shall
bear such cost if the audit reveals an underpayment of ten percent (10%) or
greater. Such audit rights may be exercised by the parties only with respect to
records of the other party for the current calendar year and the preceding two
(2) calendar years.
ARTICLE 8
CONFIDENTIALITY, PUBLICITY AND PROPRIETARY MATERIALS
8.1 Confidentiality. During the term of this Agreement and for a period
of seven (7) years thereafter, each party (as such, a "Receiving Party") shall
keep in confidence any information and/or documentation received from or on
behalf of the other party (as such, a "Furnishing Party") that is in written or
tangible form and marked or otherwise identified as confidential or proprietary
or, if originally disclosed orally or visually, that is reduced to a written
document marked or otherwise identified as confidential or proprietary within
sixty (60) days of oral or visual disclosure ("Confidential Information"), and
the Receiving Party shall use the Confidential Information only for purposes of
this Agreement. Xxxxxx Confidential Information shall also include, but is not
limited to, any information disclosed to ArQule concerning Xxxxxx Compounds,
Targets and ArQule Arrays that Xxxxxx has reserved or requested to reserve, and
targets for which Xxxxxx is or may be screening Xxxxxx Compounds. ArQule
Confidential Information shall also include, but is not limited to, any
information disclosed to Xxxxxx concerning the identity of ArQule Compounds or
the commitment of any ArQule Compounds or ArQule Arrays to a third party or an
internal ArQule program. Except as expressly provided in this Agreement, the
Receiving Party shall not at any time use or permit others to use any
Confidential Information for any purposes, except as may be necessary for the
Receiving Party to perform its obligations hereunder. The foregoing obligations
shall not apply to, and the definition of "Confidential Information" does not
include:
(a) information that was already in the public domain or subsequent to
disclosure to the Receiving Party becomes part of the public domain other than
through the fault of the Receiving Party;
(b) information that was rightfully known by the Receiving Party (as
evidenced by its written records) prior to the date of disclosure by or on
behalf of the Furnishing Party in connection with this Agreement;
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22
(c) information that was received by the Receiving Party without
restriction of confidentiality from a third party having a lawful right to
disclose the same to the Receiving Party;
(d) information that the Receiving Party believes in good faith is
required to be disclosed to comply with any applicable law, regulation or order
of a government authority or court of competent jurisdiction (including, but not
limited to, any disclosures required by the FDA or any foreign equivalent
thereof and any securities laws applicable to a Receiving Party), in which event
the Receiving Party shall use commercially reasonable efforts to advise the
Furnishing Party in advance of the need for such disclosure; or
(e) information that is independently developed by or for the Receiving
Party (as evidenced by its written records) by employees, agents or contractors
of the Receiving Party who have not had access to Confidential Information.
Notwithstanding the foregoing, the Receiving Party may disclose
Confidential Information to its employees, agents, and contractors to the extent
reasonably necessary for the performance of this Agreement, provided that such
recipients are subject in writing to obligations of confidentiality and non-use
with respect to such information to substantially the same extent as the
Receiving Party is obligated hereunder. Further, Xxxxxx may disclose relevant
ArQule Confidential Information to appropriate government authorities without
the necessity of obtaining ArQule's approval to the extent Xxxxxx deems it
necessary or appropriate in connection with its applications for Regulatory
Approvals anywhere in the Territory, provided that Xxxxxx shall use commercially
reasonable efforts to consult with ArQule at least thirty (30) days prior to
such disclosure in order to provide ArQule with an opportunity to comment on (i)
the content, form and necessity of such disclosures and (ii) any potential
effect of such disclosures on ArQule Patent Rights and Joint Patent Rights, as
well as to provide ArQule with an opportunity to seek confidential treatment, if
available, of the ArQule Confidential Information to be disclosed.
8.2 Publicity. Neither party shall use the name of the other party or
reveal the terms of this Agreement in any publicity or advertising without the
prior written approval of the other party, except that (a) either party may use
the text of a written statement approved in advance by both parties without
further approval, and (b) either party shall have the right to identify the
other party and to disclose the terms of this Agreement as required by
applicable securities laws or other applicable federal, state or local laws or
regulations, provided that the disclosing party uses commercially reasonable
efforts to notify the other party of such disclosures and to consult with the
other party concerning the form and content of such disclosures prior to such
disclosures.
8.3 Proprietary Materials.
(a) Definition of Proprietary Materials. "Proprietary Materials" shall
mean any tangible chemical, biological, or physical research materials that are
furnished by or on behalf of one party (as such, a "Transferor") to the other
party (as such, a "Recipient") in connection with this Agreement regardless of
whether such materials are specifically designated as proprietary to the
Transferor in the case of biological materials, Proprietary Materials shall also
include other
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23
materials ordinarily engendered by the original materials, including, for
example, any progeny derived from a cell line (including naturally occurring
mutants), monoclonal antibodies produced by hybridoma cells, DNA or RNA
replicated from isolated DNA or RNA, recombinant proteins produced by a
recombinant cell line, recombinant proteins produced through use of isolated DNA
or RNA, and substances routinely purified from any source material included in
the original materials. Proprietary Materials shall also include, without
limitation, ArQule Compounds and Xxxxxx Compounds exchanged by the parties under
this Agreement. The Transferor shall furnish such Proprietary Materials, to the
Recipient in a mutually acceptable form, including appropriate labelling and
packaging.
(b) Limited Use. The Recipient shall use Proprietary Materials solely
for the purposes set forth in this Agreement. The Recipient shall use the
Proprietary Materials only in compliance with all applicable national, federal,
state and local laws and regulations. The Recipient assumes all liability for
damages that may arise from the use, storage, or disposal of any Proprietary
Materials, except for damages resulting from the Transferor's negligence,
willful misconduct or breach of this Agreement.
(c) Limited Disposition. Except as expressly authorized herein, the
Recipient shall not transfer or distribute any Proprietary Materials to any
third party without the prior written consent of the Transferor.
(d) Survival. The obligations of this Section shall remain in effect
during the term of this Agreement for a period of seven (7) years thereafter.
8.4 Return of Confidential information and Proprietary Materials. Upon
the termination of this Agreement, at the request of the Furnishing Party, the
Receiving Party shall return to the Furnishing Party all originals, copies, and
summaries of documents, materials, and other tangible manifestations of the
Furnishing Party's Confidential Information in the possession or control of the
Receiving Party, except that the Receiving Party may retain one (1) copy of the
Furnishing Party's Confidential Information in the possession of its legal
counsel solely for the purpose of monitoring its obligations under this
Agreement. Upon the termination of this Agreement, the Recipient shall at the
instruction of the Transferor either destroy or return any unused Proprietary
Materials of the Transferor.
ARTICLE 9
REPRESENTATIONS AND WARRANTIES
Each party hereby represents and warrants to the other party as follows:
9.1 Corporate Existence and Power. Such party (a) is a corporation duly
organized, validly existing and in good standing under the laws of the state in
which it is incorporated, (b) has the corporate power and authority and the
legal right to own and operate its property and assets, to lease the property
and assets it operates under lease, and to carry on its business as it is now
being conducted, and (c) is in compliance with all requirements of applicable
laws and regulations, except to the extent that any noncompliance would not have
a material adverse effect
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24
on the properties, business, financial or other condition of such party and
would not materially adversely affect such party's ability to perform its
obligations under this Agreement.
9.2 Authorization and Enforcement of Obligations. Such party (a) has
the corporate power and authority and the legal right to enter into this
Agreement and to perform its obligations hereunder, and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of this Agreement and the performance of its obligations hereunder. This
Agreement has been duly executed and delivered on behalf of such party, and
constitutes a legal, valid, binding obligation, enforceable against such party
in accordance with its terms.
9.3 Consents. All necessary consents, approvals and authorizations of
all governmental authorities and other persons required to be obtained by such
party in connection with the execution, delivery and performance of this
Agreement have been obtained.
9.4 No Conflict. The execution and delivery of this Agreement and the
performance of such party's obligations hereunder (a) do not conflict with or
violate any requirement of applicable laws or regulations and (b) do not
conflict with, violate or breach or constitute a default or require any consent
under, any contractual obligation of such party.
9.5 Compliance with Laws. Such party shall perform its activities under
this Agreement in compliance with all applicable national, federal, state and
local laws and regulations.
9.6 Patent Rights/Intellectual Property Infringement. To the best of
its knowledge based upon reasonably diligent investigation, the issued patents
included within its respective Patent Rights as of the Effective Date are and
shall be valid and enforceable. Neither party represents or warrants to the
other party that the exercise of the rights granted to the other party under
this Agreement shall not infringe any patent rights of any third party
(including, but not limited to, ArQule licensees).
ARTICLE 10
OWNERSHIP AND PROSECUTION OF PATENT RIGHTS
10.1 Xxxxxx Core Compounds. Xxxxxx may, at its own expense, take such
actions as it deems appropriate with respect to the preparation, filing,
prosecution, issuance, maintenance, extension, enforcement and/or defense of all
Patent Rights in or relating to Xxxxxx Core Compounds (including but not limited
to defending infringement suits and pursuing third party infringers). All Patent
Rights in or relating to Xxxxxx Core Compounds shall be in Xxxxxx'x name and
shall be owned solely by Xxxxxx.
10.2 Xxxxxx Derivative Compounds. Xxxxxx shall have sole control, at
its expense, over the preparation, filing, prosecution, issuance, maintenance,
extension, enforcement and/or defense of all Patent Rights in or relating to any
Xxxxxx Derivative Compounds. If any such Patent Rights constitute ArQule Patent
Rights or Joint Patent Rights, Xxxxxx shall use commercially reasonable efforts
to consult with ArQule prior to any deadline or action with the
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25
United States Patent and Trademark Office ("PTO") or any foreign patent office,
and to furnish ArQule with copies of all relevant documents in advance of such
consultation.
10.3 ArQule Compounds. ArQule shall have sole control, at its expense,
over the preparation, filing, prosecution, issuance, maintenance, extension,
enforcement and/or defense of any ArQule Patent Rights in or relating to ArQule
Compounds; provided that ArQule shall use commercially reasonable efforts to
consult with Xxxxxx prior to any deadline or action with the PTO or any foreign
patent office, and to furnish Xxxxxx with copies of all relevant documents in
advance of such consultation. Xxxxxx shall have sole control, at its expense,
over the preparation, filing, prosecution, issuance, maintenance, extension,
enforcement and/or defense of any Joint Patent Rights in or relating to ArQule
Compounds; provided that Xxxxxx shall use commercially reasonable efforts to
consult with ArQule prior to any deadline or action with the PTO or any foreign
patent office, and to furnish ArQule with copies of all relevant documents in
advance of such consultation. Xxxxxx shall have control, at its expense, over
the preparation, filing, prosecution, issuance, maintenance, extension,
enforcement and/or defense of any Xxxxxx Patent Rights in or relating to ArQule
Compounds.
10.4 Waiver and Abandonment. If a party decides not to seek or maintain
patent protection in any country for an invention for which such party controls
the preparation and filing of a patent application and/or patent, and if such
patent application and/or patent would constitute an ArQule Patent Right or a
Joint Patent Right, the other party, at its expense, may assume responsibility
for and control over such Patent Right in the relevant country. If a party
decides to terminate or abandon an ArQule Patent Right or a Joint Patent Right
with respect to which such party has control, then such party shall notify the
other party at least sixty (60) days prior to such event to enable the other
party, at its expense, to assume responsibility for and control over such Patent
Right in the relevant country.
10.5 Full Cooperation. Each party agrees to cooperate fully in the
preparation, filing, prosecution, issuance, maintenance. extension, enforcement
and/or defense of any Patent Rights in or relating to ArQule Compounds and
Xxxxxx Derivative Compounds. Such cooperation includes, but is not limited to:
(a) executing all papers and instruments, or requiring its
employees or agents, to execute such papers and instruments,
so as to enable the other party to apply for, prosecute or
defend patent applications or to oppose another party's patent
applications or patents in any country;
(b) promptly informing the other party of any matters coming to a
party's attention that may affect the validity,
enforceability, preparation, filing, prosecution, or issuance
of any such patent applications or maintenance of issued
patents; and
(c) undertaking no actions that are potentially deleterious to the
validity, enforceability, preparation, filing, prosecution or
issuance of such patent applications or patents.
10.6 Notification of Infringement. The parties shall promptly inform
each other of any information that comes to their attention involving actual or
possible infringement of Patent
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26
Rights by any third party anywhere in the Territory or claims of alleged
infringement made by any third party in the Territory against either party or
its Affiliates resulting from the manufacture, import, offer for sale, sale or
use of any Product.
10.7 Prosecution of Infringement Actions. Xxxxxx shall have the right,
under its own control and at its own expense, to pursue any third party
infringer of ArQule Patent Rights or Joint Patent Rights in or relating to
Xxxxxx Derivative Compounds or ArQule Compounds that are in any Licensed
Compound Set. Xxxxxx may prosecute any infringement action in the name of
ArQule, if so required by applicable law. If Xxxxxx fails to initiate an
infringement action within six (6) months after notification or knowledge of the
basis for such action relating to a material infringement, ArQule shall have the
right to prosecute such infringement, under its sole control and at its sole
expense. Neither party shall enter into any settlement, consent judgment, or
other voluntary final disposition of any infringement action without the prior
written consent of the other party, which consent shall not be unreasonably
withheld. Any recovery resulting from an infringement action brought under this
Section shall be distributed in the following manner:
(a) First, the parties shall be reimbursed for any costs and
expenses incurred in prosecuting the action.
(b) Second, ArQule shall receive an amount equal to the royalty
payments lost due to sales of Products by the infringer.
(c) Third, Xxxxxx shall receive an amount equal to the profits
lost due to sale of Products by the infringer.
(d) Fourth, any remaining recovery will be retained by the party
controlling the action at its conclusion.
10.8 Third Party Claims. In the event that any third party initiates a
declaratory judgment action alleging the invalidity or unenforceability of
ArQule Patent Rights or Joint Patent Rights in or relating to Xxxxxx Derivative
Compounds or ArQule Compounds that are in any Licensed Compound Set, or if any
third party brings an infringement action against Xxxxxx or its Affiliates or
sublicensees because of the exercise of the rights granted Xxxxxx under this
Agreement, then Xxxxxx shall have the right to defend such action under its own
control and at its own expense; provided, however, that in the case of a
declaratory judgment action involving ArQule Patent Rights, ArQule shall have
the right to intervene and assume sole control of such defense, at its own
expense. Neither party shall enter into any settlement, consent judgment, or
other voluntary final disposition of any action under this Section without the
consent of the other party, which consent shall not be unreasonably withheld.
Any recovery shall be retained entirely by the party controlling the action at
its conclusion.
10.9 Mutual Cooperation. In the event of any patent infringement
litigation in the Territory involving any Patent Rights and/or any Products, the
non-prosecuting or non-defending party, as applicable, shall render such
reasonable assistance as may be requested by the prosecuting or defending party
in connection with such infringement actions.
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ARTICLE 11
INDEMNIFICATION AND INSURANCE
11.1 General Indemnification. Each party shall defend, indemnify and
hold the other party, its Affiliates, contractors and sublicensees, and the
officers, directors, employees and agents of each, harmless from and against any
and all liabilities, damages, claims, demands, costs, or expenses (including
reasonable attorneys' fees) claimed by any third party for any harm suffered by
such third party to the extent such harm is determined to have been caused by
the negligence or willful misconduct of the indemnifying party or the
indemnifying party's manufacture or sale of any products, except to the extent
caused by the negligence or willful misconduct of the indemnified party or the
indemnified party's breach of this Agreement, and subject to the conditions of
indemnification set forth in Section 11.2.
11.2 Conditions of Indemnification. With respect to any indemnification
obligations of either party to the other party under this Agreement, the
following conditions must be met for such indemnification obligations to become
applicable:
(a) the indemnified party shall notify the indemnifying party
promptly in writing of any claim which may give rise to an
obligation on the part of the indemnifying party hereunder;
(b) the indemnifying party shall be allowed to undertake the sole
control of the defense of any such action and claim, including
all negotiations for the settlement, or compromise of such
claim or action at its sole expense; and
(c) the indemnified party shall render reasonable assistance,
information, co-operation and authority to permit the
indemnifying party to defend such action, provided that any
out-of-pocket expenses or other expenses incurred by the
indemnified party in rendering the same shall be borne or
reimbursed promptly by the indemnifying party.
11.3 Insurance. Each party shall maintain reasonably adequate insurance
or self-insurance coverage for its potential liabilities to the other party in
connection with the performance of this Agreement.
ARTICLE 12
DISPUTE RESOLUTION
Except for actions commenced by or involving third parties and disputes to be
resolved by Scientific Dispute Resolution pursuant to Exhibit B, all disputes
arising out of or in connection with this Agreement shall be resolved as
follows:
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12.1 Attempted Amicable Resolution. The parties shall promptly give
each other written notice of any disputes requiring resolution hereunder, which
written notice shall specify the Section(s) of this Agreement that the other
party is alleged to have breached or that are in dispute, and shall briefly
state the initiating party's claims. Thereafter, the parties shall use
reasonable efforts to resolve any such disputes in an amicable manner.
12.2 Reference to Designated Officers. Any disputes arising in
connection with this Agreement which cannot be resolved pursuant to Section 12.1
shall be referred, not later than thirty (30) days after initiation of dispute
resolution proceedings pursuant to Section 12.1, to the following corporate
officers of the parties for resolution:
For Xxxxxx:
Vice President, Pharmaceutical Products Research and
Development (or his or her designee)
For ArQule:
Chief Executive Officer (or his or her designee)
Such officers (or their designees) shall attempt to resolve the dispute and
shall communicate with each other by facsimile or telephone or in personal
meetings in an effort to resolve the dispute.
12.3 Alternate Dispute Resolution. Any disputes arising in connection
with this Agreement which cannot be resolved pursuant to Sections 12.1 or 12.2
within sixty (60) days after initiation of dispute resolution proceedings under
Section 12.1 shall be finally settled by binding Alternate Dispute Resolution
("ADR") in accordance with the attached Exhibit A. Judgment upon any award
rendered in such ADR proceedings may be issued and enforced by any court having
competent jurisdiction.
12.4 ADR Ruling. The neutral in any ADR proceeding under Section 12.3
shall determine and notify the parties in writing:
(a) Whether either party has committed a breach of any of its
obligations under this Agreement; and
(b) if either party has committed a breach, the appropriate remedy
for any such breach pursuant to Section 12.5.
12.5 ADR Remedies. The neutral in any ADR proceeding under Section 12.3
shall have the authority to award the non-breaching party the following relief:
(a) For any breach other than those specified in Section 12.5(b)
and (c), an award of damages and/or equitable relief;
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(b) For the second material breach and any subsequent material
breach of Xxxxxx'x obligations pursuant to Section 5.6(c), an
award of damages and/or equitable relief and/or termination of
Xxxxxx'x license rights related to the specific Licensed
Compound Set(s) to which such breach relates (but not any
other license rights of Xxxxxx hereunder); and
(c) For the second material breach and any subsequent material
breach of Xxxxxx'x obligations pursuant to Section 5.5(d), an
award of damages and/or equitable relief and/or termination of
Xxxxxx'x Target Reservation(s) to which such breach relates
(but not any other Target Reservations by Xxxxxx hereunder).
ARTICLE 13
TERM AND TERMINATION
13.1 Expiration. Unless terminated earlier by mutual written agreement
of the parties or pursuant to Section 13.2, this Agreement shall expire on the
later of: (a) the end of the License Option Period and (b) the date of
expiration of the last Royalty Term for any Product to expire in any country in
the Territory.
13.2 Early Termination. Either party shall have the right, without
prejudice to any other rights or remedies available to it, to terminate this
Agreement for cause by written notice to the other party in any of the following
events: (a) if the other party is adjudged bankrupt, applies for judicial or
extra-judicial settlement with its creditors, makes an assignment for the
benefit of its creditors, voluntarily files for bankruptcy or has a receiver or
trustee (or the like) in bankruptcy appointed by reason of its insolvency, or in
the event an involuntary bankruptcy action is filed against the other party and
not dismissed within sixty (60) days of filing, or if the other party becomes
the subject of liquidation or dissolution proceedings or otherwise discontinues
business, (b) if the other party commits a material breach of this Agreement and
the party alleged to be in breach fails to (i) cure such breach or (ii) commence
dispute resolution proceedings under Article 12 contesting whether a breach has
occurred and/or whether such breach is a material breach within sixty (60) days
after receipt of written notice from the party asserting the breach.
13.3 Escrow Payments. In the event that the alleged breaching party
commences dispute resolution proceedings pursuant to Article 12, and if the
dispute involves non-payment of funds under this Agreement, all payments that
would be due and payable under this Agreement in the absence of any dispute
shall be paid into an interest-bearing escrow account until the matter is
resolved and such escrow funds (plus interest) shall be distributed in
accordance with the decision reached in such dispute resolution proceedings.
13.4 Effect of Termination. Except as otherwise expressly provided
herein, termination or expiration of this Agreement through any means and for
any reason shall not result in the termination of any license rights hereunder,
shall not relieve the parties of any obligations accruing prior thereto, and
shall be without prejudice to the rights and remedies of either party with
respect to any prior breach of any of the provisions of this Agreement. Except
to the extent
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otherwise specified therein, the rights and obligations of the parties under the
following provisions shall survive expiration or termination of this Agreement:
Articles 7, 8 and 11.
ARTICLE 14
MISCELLANEOUS
14.1 Entire Agreement; Amendment. This Agreement contains the entire
understanding of the parties with respect to the subject matter thereof and
supersedes all previous verbal and written agreements, representations and
warranties with respect to such subject matter. This Agreement may be amended
only by a written agreement signed by authorized representatives of both
parties.
14.2 Force Majeure. Failure of either party to perform its obligations
under this Agreement (except the obligation to make payments) shall not subject
such party to any liability or constitute a breach of this Agreement if such
failure is caused by any event or circumstances beyond the reasonable control of
such nonperforming party, including 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. A party whose performance is affected by a force majeure
shall take reasonably prompt action to remedy the effects of the force majeure.
If the non-performing party fails to substantially remedy the effects of the
force majeure event within twelve (12) months after the date upon which the
force majeure event first occurred, the parties shall in good faith negotiate
such modifications to this Agreement as the parties deem appropriate to continue
performance of this Agreement notwithstanding such force majeure event. If the
parties are unable to agree upon such modifications within sixty (60) days after
the end of such twelve (12) month period and the non-performing party has still
failed to substantially remedy the effects of the force majeure event, the party
not affected by the force majeure event may terminate this Agreement upon thirty
(30) days prior written notice to the non-performing party, in which case
neither party shall have any liability to the other party with respect to any
failure to perform to the extent caused by the force majeure event.
14.3 Waiver. A failure by either party to enforce any rights under this
Agreement shall not be construed as a waiver of such rights nor shall a waiver
by either party in one or more instances by construed as constituting a
continuing waiver or as a waiver in other instances. Any waiver of breach
executed by either party shall affect only the specific breach and shall not
operate as a waiver of any subsequent or preceding breach.
14.4 No Assignment. Except as otherwise expressly provided herein,
neither party may sell, assign, pledge, delegate, subcontract or otherwise
dispose of all or any portion of its rights or obligations under this Agreement
except to an Affiliate or to a successor to all or substantially all of the
party's business to which this Agreement relates. Subject to the foregoing, this
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns. In the event ownership or
control of ArQule changes after the
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Effective Date as a result of a merger, an acquisition or otherwise, this
Agreement (including, but not limited to, Xxxxxx'x licenses and other rights
pursuant to Sections 4.2, 5.5(c), 5.6, and 5.11) shall continue in effect
notwithstanding such change of ownership or control.
14.5 Severability. If any clause or provision of this Agreement is
declared invalid or unenforceable by a court of competent jurisdiction, such
provision shall be severed and the remaining provisions of the Agreement shall
continue in full force and effect. The parties shall use all commercially
reasonable efforts to agree upon a valid and enforceable provision as a
substitute for the severed provision, taking into account the intent of this
Agreement.
14.6 Relationship of Parties. The parties shall have the status of
independent contractors under this Agreement and nothing in this Agreement shall
be construed as authorization for either of the parties to act as a joint
venturer with, agent for, or partner of, the other party.
14.7 Notices. Any notice, request or other communication required to be
given pursuant to the provisions of this Agreement shall be in writing and shall
be deemed to be given (a) when delivered in person or by overnight courier, (b)
five (5) days after being deposited in the United States mail, postage prepaid,
certified, return receipt requested, or (c) when received after being sent by
confirmed facsimile transmission to the parties, addressed as follows:
If to Abbott to:
President
Pharmaceutical Products Division
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
X-000, XX00
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
General Counsel
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
X-000, XX0X
Xxxxxx Xxxx, Xxxxxxxx 00000-0000
Tel: (000) 000-0000
Fax: (000) 000-0000
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If to ArQule to:
President
ArQule, Inc.
000 Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Either party may change its address or its fax number by giving the other party
written notice, delivered in accordance with this Section 14.7.
14.8 Further Instruments. Each party shall execute and deliver such
further instruments and do such further reasonable acts and things as reasonably
may be required to carry out the intent and purpose of this Agreement.
14.9 Governing Law. The validity, performance, construction, and effect
of this Agreement shall be governed by the laws of the State of Illinois,
without giving effect to conflict of law rules. The parties expressly disclaim
the applicability of the United Nations Convention on the International Sale of
Goods to this Agreement.
14.10 Counterparts. This Agreement shall become binding when any, one
or more counterparts hereof, individually or taken together, bears the signature
of each of the parties. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against the party whose
signature appears thereon, but all of which taken together shall constitute one
and the same instrument.
IN WITNESS WHEREOF, each party has caused this Agreement to be signed
by its duly authorized representative as of the Effective Date.
XXXXXX LABORATORIES ARQULE,.INC.
By: /s/ Xxxx X. Xxxxx
________________________________ By: /s/ Xxxx Xxxxxx
____________________________
Name: Name:
Title: Senior Vice President, Title:
Pharmaceuticals Operations
and President Product
Pharmaceuticals Products
Division
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EXHIBIT A
Alternative Dispute Resolution
The parties recognize that a bona fide dispute as to certain matters may arise
from time to time during the term of this Agreement which relates to either
party's rights and/or obligations. To have such a dispute resolved by this
Alternative Dispute Resolution ("ADR") provision, a party first must send
written notice of the dispute to the other party for attempted resolution by
good faith negotiations between the parties pursuant to Sections 12.1 and 12.2.
Any negotiations regarding a dispute shall be treated as settlement negotiations
for purposes of the Federal Rules of Evidence and any similar state rules of
evidence. Such negotiations shall not be admissible in any subsequent ADR
hearing.
If the matter has not been resolved within sixty (60) days after initiation of
dispute resolution proceedings pursuant to Section 12.1, either party may
initiate an ADR proceeding as provided herein (all references to todays" in this
ADR provision are to calendar days). The parties shall have the right to be
represented by counsel in such a proceeding.
1. To begin an ADR proceeding, a party shall provide written notice to the
other party of the issues to be resolved by ADR. Within fourteen (14)
days after its receipt of such notice, the other party may, by written
notice to the party initiating the ADR, add additional issues to be
resolved within the same ADR.
2. Within twenty-one (21) days following receipt of the original ADR
notice, the parties shall select a mutually acceptable neutral to
preside in the resolution of any disputes in this ADR proceeding. If
the parties are unable to agree on a mutually acceptable neutral within
such period, the parties shall request the President of the Center for
Public Resources ("CPR"), 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
to select a neutral pursuant to the following procedures:
(a) The CPR shall submit to the parties a list of not less
than five (5) candidates within fourteen (14) days after
receipt of the request from the parties, along with a
Curriculum Vitae for each candidate. No candidate shall be an
employee, director, or shareholder of either party or any of
their subsidiaries or affiliates.
(b) Such list shall include a statement of disclosure by each
candidate of any circumstances likely to affect his or her
impartiality.
(c) Each party shall number the Candidates in order of
preference (with the number one (1 ) signifying the greatest
preference) and shall deliver the list to the CPR within seven
(7) days following receipt of the list of candidates. if a
party believes a conflict of interest exists regarding any of
the candidates, that party shall provide a written explanation
of the conflict to the CPR along with its list showing its
order of preference for the candidates. Any party failing to
return a
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list of preferences on time shall be deemed to have no order
of preference.
(d) if the parties collectively have identified fewer than
three (3) candidates deemed to have conflicts, the CPR
immediately shall designate as the neutral the candidate for
whom the parties collectively have indicated the greatest
preference. If a tie should result between two candidates, the
CPR may designate either candidate. If the parties
collectively have identified three (3) or more candidates
deemed to have conflicts, the CPR shall review the
explanations regarding conflicts and, in its sole discretion,
may either (i) immediately designate as the neutral the
candidate for whom the parties collectively have indicated the
greatest preference, or (ii) issue a new list of not less than
five (5) candidates, in which case the procedures set for in
subparagraphs 2(a) - 2(d) shall be repeated.
3. No earlier than twenty-eight (28) days or later than fifty-six (56)
days after selection, the neutral shall hold a hearing to resolve each
of the issues identified by the parties. The ADR proceeding shall take
place at a location agreed upon by the parties. If the parties cannot
agree, the neutral shall designate a location other than the principal
place of business of either party or any of their subsidiaries or
affiliates.
4. At least seven (7) days prior to the hearing, each party shall submit
the following to the other party and the neutral:
(a) a copy of all exhibits on which such party intends to rely
in any oral or written presentation to the neutral;
(b) a list of any witnesses such party intends to call at the
hearing, and a short summary of the anticipated testimony of
each witness;
(c) a proposed ruling on each issue to be resolved, together
with a request for a specific damage award or other remedy for
each issue. The proposed rulings and remedies shall not
contain any recitation of the facts or any legal arguments and
shall not exceed one (1 ) page per issue.
(d) a brief in support of such party's proposed rulings and
remedies, provided that the brief shall not exceed twenty (20)
pages. This page limitation shall apply regardless of the
number of issues raised in the ADR proceeding.
Except as expressly set forth in subparagraphs 4(a) - 4(d), no discovery shall
be required or permitted by any means, including depositions, interrogatories,
requests for admissions, or production of documents.
5. The hearing shall be conducted on two (2) consecutive days and shall be
governed by the following rules:
(a) Each party shall be entitled to five (5) hours of hearing
time to present its case. The neutral shall determine whether
each party has had the five (5) hours
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to which it is entitled.
(b) Each party shall be entitled, but not required, to make an
opening statement, to present regular and rebuttal testimony,
documents or other evidence, to cross-examine witnesses, and
to make a closing argument. Cross-examination of witnesses
shall occur immediately after their direct testimony, and
cross-examination time shall be charged against the party
conducting the crossexamination.
(c) The party initiating the ADR shall begin the hearing and,
if it chooses to make an opening statement, shall address not
only issues it raised but also any issues raised by the
responding party. The responding party, if it chooses to make
an opening statement, also shall address all issues raised in
the ADR. Thereafter, the presentation of regular and rebuttal
testimony and documents, other evidence, and closing arguments
shall proceed in the same sequence.
(d) Except when testifying, witnesses shall be excluded from
the hearing until closing arguments.
(e) Settlement negotiations shall not be admissible under any
circumstances. Affidavits prepared for purposes of the ADR,
hearing also shall not be admissible. As to all other matters,
the neutral shall have sole discretion regarding the
admissibility of any evidence.
6. Within seven (7) days following completion of the hearing, each party may
submit to the other party and the neutral a post-hearing brief in support of its
proposed rulings and remedies (subject to the provisions of Sections 12.4 and
12.5 with respect to remedies), provided that such brief shall not contain or
discuss any new evidence and shall not exceed ten (10) pages. This page
limitation shall apply regardless of the number of issues raised in the ADR
proceeding.
7. The neutral shall rule on each disputed issue within fourteen (14) days
following completion of the hearing. Such ruling shall adopt in its entirety the
proposed ruling and remedy (subject to the provisions of Sections 12.4 and 12.5
with respect to remedies) of one of the parties on each disputed issue but may
adopt one party's proposed rulings and remedies on some issues and the other
party's proposed rulings and remedies on other issues. The neutral shall issue a
brief written opinion, not to exceed ten (10) pages, which sets forth the ruling
of the neutrals, the basis of ruling, and the remedy or remedies awarded.
Neither party shall use such written opinion as the basis for any legal action
that attempts to challenge or appeal such ruling or the remedy or remedies
awarded.
8. The neutral shall be paid a reasonable fee plus expenses. These fees and
expenses, along with the reasonable legal fees and expenses of the prevailing
party (including all expert witness fees and expenses), the fees and expenses of
a court reporter, and any expenses for a hearing room, shall be paid as follows:
(a) if the neutral rules in favor of one party on all disputed
issues in the ADR,
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36
the losing party shall pay 100% of such fees and expenses.
(b) if the neutral rules in favor of one party on some issues
and the other party on other issues, the neutral shall issue
with the rulings a written determination as to how such fees
and expenses shall be allocated between the parties. The
neutral shall allocate fees and expenses in a way that bears a
reasonable relationship to the outcome of the ADR, with the
party prevailing on more issues, or on issues of greater value
or gravity, recovering a relatively larger share of its legal
fees and expenses.
9. The rulings of the neutral and the allocation of fees and expenses shall be
binding, non-reviewable, and non-appealable, and may be entered as a final
judgment in any court having jurisdiction.
10. Except as provided in paragraph 9 or as required by law, the existence of
the dispute, any settlement negotiations, the ADR hearing, any submissions
(including exhibits, testimony, proposed rulings, and briefs), and the rulings
shall be deemed Confidential Information. The neutral shall have the authority
to impose sanctions for unauthorized disclosure of Confidential Information.
- 36 -
37
EXHIBIT B
Scientific Dispute Resolution
If the parties are unable to agree on a redefined, non-conflicting Target
pursuant to Section 5.5(e) within thirty (30) days of initiating negotiations,
the parties shall resolve such dispute through a Scientific Dispute Resolution
("SDR") proceeding as provided herein. (all references to "days" in this SDR
proceeding are to calendar days).
1. Within fourteen (14) days after the end of the above-referenced thirty (30)
day negotiation period each party shall designate one (1) neutral having the
following minimum scientific qualifications: a Ph.D. degree in chemistry or life
sciences and/or an M.D. degree plus at least ten (10) years of relevant business
or scientific research experience. These two (2) neutrals shall select a third
neutral having the same minimum scientific qualifications within fourteen (14)
days of the appointment of the first two (2) neutrals. None of the neutrals
shall be an employee, director or shareholder of either party or any of their
subsidiaries or affiliates, or otherwise have a materially conflicting interest
in the outcome of the SDR proceeding.
2. No earlier than fourteen (14) days or later than twenty-eight (28) days after
selection of the third neutral, the neutrals shall hold a hearing to determine a
redefined, non-conflicting Target. The SDR proceeding shall take place at a
location agreed upon by the parties. If the parties cannot agree, the neutrals
shall designate a location other than the principal place of business of either
party or any of their subsidiaries or affiliates.
3. At least seven (7) days prior to the hearing, each party shall submit the
following to the other party and the neutrals:
(a) a proposed redefined, non-conflicting Target; and
(b) a brief in support of such party's proposed redefined,
non-conflicting Target, provided that the brief shall not
exceed ten (10) pages (excluding references to published
scientific literature, not to exceed two (2) pages). No
discovery shall be required or permitted by any means,
including depositions, interrogatories, requests for
admissions, or production of documents.
4. The hearing shall be conducted on one (1) day and shall be governed by the
following rules:
(a) Each party shall be entitled to three (3) hours of hearing
time to present its case. The neutrals shall determine whether
each party has had the three (3) hours to which it is
entitled.
(b) ArQule shall make its presentation first, followed by
Abbott.
- 37 -
38
5. The neutrals, by majority vote, shall rule on each disputed issue within
seven (7) days following completion of the hearing. Such ruling shall adopt in
its entirety the redefined, non-conflicting Target proposed by one of the
parties. The neutrals shall issue a brief written opinion, not to exceed ten
(10) pages, which sets forth the ruling of the neutrals, the basis of ruling,
and the remedy or remedies awarded. Neither party shall use such written opinion
as the basis for any legal action that attempts to challenge or appeal such
ruling or the remedy or remedies awarded.
6. The neutrals shall be paid reasonable fees plus expenses. These fees and
expenses, the fees and expenses of a court reporter, and any expenses for a
hearing room, shall be shared equally by the parties.
7. The rulings of the neutrals shall be binding, non-reviewable, and
nonappealable.
8. Except as required by law, the existence of the dispute, any settlement
negotiations, the SDR hearing, any submissions of the parties therein, and the
rulings shall be deemed Confidential Information.
9. The parties may, by mutual written agreement, submit additional issues for
dispute resolution under SDR procedures.
- 38 -
39
AMENDMENT NO. 1 TO RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT
This Amendment No. 1 to Research, Development and License Agreement is
dated as of August 13, 1996 by and between Xxxxxx Laboratories, an Illinois
corporation having a principal place of business at 000 Xxxxxx Xxxx Xxxx, Xxxxxx
Xxxx, Xxxxxxxx ("Abbott") and ArQule, Inc., a Delaware corporation having a
principal place of business at 000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxxxxxxxxxx ("ArQule").
RECITALS
WHEREAS, Abbott and ArQule have entered into that certain Research,
Development and License Agreement, dated as of June 16, 1995 (the "License
Agreement"), pursuant to which ArQule agreed, INTER ALIA, to provide Abbott with
certain ArQule Compounds and Abbott Derivative Compounds (these and other
capitalized terms used herein without definition shall have the respective
meanings provided in the License Agreement) for screening in consideration of
the payment by Abbott to ArQule of certain license fees, milestone payments and
research funding payments on the terms and subject to the conditions set forth
in the License Agreement; and
WHEREAS, ArQule and Abbott desire to amend the License Agreement to enable
ArQule to supply Abbott with additional ArQule Compounds and to delete certain
aspects of the License Agreement having to do with reservation of Targets and
the Array Screening Period.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. The License Agreement is hereby amended as follows:
1.1. Definitions.
-----------
(a) The following definitions are hereby deleted from Article
1 of the License Agreement (and the remaining definitions in Article 1 are
renumbered accordingly):
(1) "1.26 License Option Period"
---------------------
(2) "1.37 Reserved Arrays"
---------------
(3) "1.39 Target"
------
(4) "1.40 Target Reservation"
------------------
(5) "1.14 Array Screening Period".
----------------------
(b) The definition of "ArQule Array" originally set forth in
Section 1.8 of the License Agreement (now renumbered as Section 1.10) is hereby
deleted in its entirety and replaced with the following:
40
"1.10 `ARQULE ARRAY' shall mean a set of structurally related
small organic chemical molecules that are synthesized by ArQule
using its proprietary technology arranged in a format such as a
microtiter screening plate."
(c) The definition of "Licensed Final Compound" originally set
forth in Section 1.23 of the License Agreement (now renumbered as Section 1.25)
is hereby deleted in its entirety and replaced with the following:
"1.25 `LICENSED FINAL COMPOUND' shall mean a specific ArQule
Compound from a Licensed Compound Set that Abbott commercially
develops, markets and/or sells pursuant to Section 5.4."
(d) The definition of "Licensed Compound Set" originally set
forth in Section 1.24 of the License Agreement (now renumbered as Section 1.26)
is hereby deleted in its entirety and replaced with the following:
"1.26 `LICENSED COMPOUND SET' shall mean, with respect to an
Active ArQule Compound, such Active ArQule Compound and any
Active ArQule Homolog thereto which have been licensed to Abbott
by ArQule pursuant to Section 5.4."
(e) The following definitions are hereby added to Article 1 of
the License Agreement (and the remaining definitions in Article 1 are renumbered
accordingly):
"1.7 `ACTIVE ARQULE HOMOLOG' shall mean
*
"1.9 `AMENDMENT DATE' shall mean August 13, 1996."
"1.17 `CHEMICAL THEME' shall mean the chemical or structural
characteristics shared by a group of ArQule Compounds in an
ArQule Array."
"1.22 `EXCLUSIVE DEVELOPMENT PERIOD' shall have the meaning
provided in Section 5.5(a)."
"1.27 `MINIMUM FTE REQUIREMENT' shall have the meaning provided
in Section 5.5(a)."
"1.28 `MUTUAL DISCLOSURE DATE' shall mean the date on which the
information described in Section 5.2 of this Agreement is first
disclosed by
* confidential treatment has been
requested for marked portions
- 2 -
41
each party to the other with respect to any Active ArQule
Compound and any Active ArQule Homolog thereto."
"1.41 `THIRD PARTY MAPPING ARRAY PARTNER' shall mean any third
party to whom ArQule provides ArQule Arrays."
1.2. The first two sentences of Section 5.1 are hereby deleted in their
entirety and replaced with the following:
"During the Array Transfer Period, ArQule shall deliver to Abbott
ArQule Core Compounds within ArQule Arrays as follows: (i) during the
initial Contract Year, ArQule shall deliver to Abbott at least *
ArQule Core Compounds within ArQule Arrays having not less than *
different Chemical Themes and (ii) during the second Contract
Year, ArQule shall deliver to Abbott at least * ArQule Core
Compounds within ArQule Arrays having not less than * different
Chemical Themes (with a minimum of * ArQule Core Compounds and a
maximum of * ArQule Core Compounds for each Chemical Theme).
Abbott hereby acknowledges that ArQule has delivered to Abbott, as of
the Amendment Date, * ArQule Core Compounds and hereby agrees that
such ArQule Core Compounds shall be, in all respects, subject to this
Agreement, as amended from time to time. ArQule may, at its option,
also deliver to Abbott additional ArQule Arrays. ArQule shall select
the ArQule Arrays to be delivered to Abbott hereunder and the ArQule
Core Compounds within each such ArQule Array; PROVIDED, HOWEVER, that
(i) each ArQule Core Compound shall appear only once in any ArQule
Array shipped to Abbott hereunder and (ii) no more than * percent
* of any shipment of ArQule Core Compounds delivered to Abbott
under this Agreement shall have been previously committed to a Third
Party Mapping Array Partner or a bona fide, documented internal ArQule
program as of the date of such shipment."
1.3. Section 5.2 of the License Agreement is hereby deleted in its entirety
and replaced with the following:
"5.2 SCREENING OF ARQULE COMPOUNDS. ArQule hereby grants to Abbott and
its Affiliates a nonexclusive, worldwide, royalty-free license
(without the right to sublicense or subcontract) during the term of
this Agreement and thereafter to perform such testing and analytical
work as Abbott deems appropriate on ArQule Core Compounds delivered by
ArQule hereunder. Notwithstanding the foregoing, Abbott may, during
the term of this Agreement and thereafter, deliver ArQule Core
Compounds to one or more third parties so as to allow such third
parties to perform testing and analytical work on such ArQule Core
Compounds provided that, prior to delivering any ArQule Core Compounds
to any such third party, Abbott, ArQule and each such third party
enter into a materials transfer agreement substantially in the form of
the attached EXHIBIT B or such other form as may be acceptable to
ArQule. At the time of delivery, ArQule will identify the Chemical
Theme of each ArQule Array delivered to Abbott but not the structures
of the
* confidential treatment has been
requested for marked portions
- 3 -
42
individual ArQule Core Compounds in such ArQule Arrays. Initially,
Xxxxxx will not disclose the targets against which such ArQule Arrays
are screened. If Abbott detects any Active ArQule Compound in an
ArQule Array, it will promptly notify ArQule. ArQule shall then
determine if such Active ArQule Compound and any Active ArQule Homolog
thereto have been previously committed to a Third Party Mapping Array
Partner or to a bona fide, documented internal ArQule program
(including programs with academic collaborators). ArQule will disclose
to Abbott (a) the structure of such Active ArQule Compound if it has
not been so committed and all Active ArQule Homologs thereto (if any)
that have not been so committed and (b) the structures, but not the
locations in the ArQule Array, of all other ArQule Compounds in such
ArQule Array and Abbott will disclose to ArQule (a) the identity of
the biological target as to which activity was detected and (b) the
level of activity exhibited by such Active ArQule Compound and such
Active ArQule Homolog (the date of such mutual disclosure being
referred to herein as the "Mutual Disclosure Date"). All such
disclosed information shall be treated as Confidential Information by
the receiving party in accordance with Article 8."
1.4. Sections 5.3 and 5.5 of the License Agreement are hereby deleted in
their entirety (and the remaining sections in Article 5 are renumbered
accordingly).
1.5. All references in Section 5.3(a) (as renumbered) of the License
Agreement to "Active ArQule Compounds" are hereby changed to "Active ArQule
Compounds and Active ArQule Homologs"; all references in Section 5.3(a) (as
renumbered) of the License Agreement to "Section 5.3" are hereby changed to
"Section 5.2."; and all references in Section 5.3(b) (as renumbered) of the
License Agreement to "Section 5.4(a)" are hereby changed to "Section 5.3(a)".
1.6. Sections 5.6(a) and (b) (as originally numbered) of the License
Agreement are hereby deleted in their entirety and replaced with the following:
"5.4 LICENSE RIGHTS. On the Mutual Disclosure Date for any Active
ArQule Compound and any Active ArQule Homolog thereto comprising the
Licensed Compound Set, ArQule shall grant to Abbott and its Affiliates
an exclusive, worldwide, royalty-bearing license (with the right to
sublicense), in the Abbott Field under ArQule Patent Rights and under
ArQule's interest in any Joint Patent Rights to develop, have
developed, make, have made, use, import, offer to sell, sell and have
sold in the Abbott Field Products incorporating any ArQule Compounds
within the Licensed Compound Set."
- 4 -
43
1.7. Section 5.6(c) (as originally numbered) of the License Agreement is
hereby deleted in its entirety and replaced with the following:
"5.5 Diligence Requirements.
----------------------
(a) DILIGENCE REQUIREMENTS DURING EXCLUSIVE DEVELOPMENT PERIOD.
During the one (1) year period commencing on the Mutual
Disclosure Date for any Licensed Compound Set and continuing
until the first anniversary thereof (such period being referred
to herein as the "Exclusive Development Period"), Abbott shall
maintain a minimum of * FTE scientist to perform
research and development activities on * or more ArQule
Compounds within such Licensed Compound Set (the "Minimum FTE
Requirement"). Abbott shall have the option to extend the
Exclusive Development Period for such Licensed Compound Set,
subject to the Minimum FTE Requirement, for up to four (4)
additional one year periods. The Exclusive Development Period
shall be deemed to be automatically extended by Abbott each year
through the end of the fourth additional one year period unless
Abbott gives ArQule written notice of termination no later than
thirty (30) days prior to any anniversary of the Mutual
Disclosure Date for such Licensed Compound Set; PROVIDED, that
Abbott must have complied with the Minimum FTE Requirement for
the immediately preceding year for any such extension to be
effective. Notwithstanding the foregoing, upon Xxxxxx'x request
and with ArQule's consent, which consent shall not be
unreasonably withheld, an extension to the Exclusive Development
Period may be made beyond five (5) years if Abbott reasonably
demonstrates to ArQule that Abbott has devoted appropriate
resources toward commercialization of at least *
within the Licensed Compound Set and is reasonably
likely to enter into an active clinical development program with
respect thereto. Upon expiration of the Exclusive Development
Period for any Licensed Compound Set, the license granted to
Abbott under Section 5.4 of this Agreement shall terminate
unless, within thirty (30) days of such date, Abbott commences
the clinical development program described in Section 5.5(b) for
* or more ArQule Compounds within such Licensed Compound
Set.
(b) DILIGENCE REQUIREMENTS AFTER EXCLUSIVE DEVELOPMENT PERIOD.
After the Exclusive Development Period, Abbott shall maintain an
active clinical development program on at least one (1) ArQule
Compound in each Licensed Compound Set. Abbott shall have
maintained such an active program if Abbott expends at least
Three Million Dollars ($3,000,000) per year in direct costs
(including, but not limited to, costs attributable to external
services or material contracts) relating to clinical development
of * or more ArQule Compounds within the Licensed Compound
Set during the period commencing at the end of the Exclusive
Development Period and ending on the date upon which Abbott makes
a milestone
* confidential treatment has been
requested for marked portions
- 5 -
44
payment to ArQule pursuant to Section 6.1 (a) for the initiation
of Phase III Studies for an ArQule Compound within the Licensed
Compound Set; provided, however, that this obligation shall be
suspended for a period not to exceed twelve (12) months during
any period that clinical trials are delayed or suspended because
of an unexpected negative result occurring for reasons beyond the
control of Abbott. If clinical trials are delayed or suspended
because of such unexpected negative result for a period in excess
of twelve (12) months, the parties shall in good faith negotiate
appropriate modifications to Xxxxxx'x due diligence obligations
under this Section."
1.8. All references to "Section 5.5(c)" and "Section 5.6" in Sections 6.10
and 14.4 of the License Agreement are hereby replaced by "Section 5.2" and
"Section 5.4", respectively, and all references to "Section 5.6(c)" in Section
12.5 of the License Agreement are hereby replaced by "Section 5.5".
1.9. Section 12.5(c) of the License Agreement is hereby deleted in its
entirety and "and (c)" is hereby deleted from Section 12.5(a) of the License
Agreement.
1.10. Section 13.1 of the License Agreement is hereby deleted in its
entirety and replaced with the following:
"13.1 EXPIRATION. Unless terminated earlier by mutual written
agreement of the parties or pursuant to Section 13.2, this Agreement
shall expire on the date of expiration of the last Royalty Term for
any Product to expire in any country in the Territory, subject to the
provisions of Section 5.2."
1.11. Section 14.7 of the License Agreement is hereby amended by replacing
the telephone and facsimile numbers for Abbott for purposes of notice with the
following:
Tel: (000) 000-0000
Fax: (000) 000-0000
1.12. EXHIBIT B to the License Agreement is hereby deleted in its entirety
and replaced with EXHIBIT B attached hereto.
2. Miscellaneous
-------------
2.1 GOVERNING LAW. This Amendment shall be governed in all respects by the
laws of the State of Illinois without giving effect to principles of conflicts
of law thereunder.
2.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, permitted assigns, heirs, executors and administrators of the
parties hereto.
- 6 -
45
2.3 LICENSE AGREEMENT. Except as specifically provided herein, the License
Agreement as previously executed shall remain in full force and effect.
2.4 COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
2.5 RESTATED AGREEMENT. Attached hereto as Exhibit C is a copy of the
Agreement, as amended by this Amendment, reflecting the terms of the Agreement,
as amended hereby, in effect as of the Amendment Date.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first above written.
XXXXXX LABORATORIES
By: /s/ Xxxx X. Xxxxx
-----------------------
Name:
Title: Senior Vice President,
Pharmaceuticals Operations
and President Product
Pharmaceuticals Products
Division
ARQULE, INC.
By: /s/
-----------------------
Xxxx X. Xxxxxx
President
- 7 -
46
EXHIBIT B
---------
FORM OF MATERIALS TRANSFER AGREEMENT
------------------------------------
35
47
EXHIBIT B
---------
FORM OF MATERIALS TRANSFER AGREEMENT
This Agreement, effective as of the date last written below, is by and among
ArQule, Inc. ("ArQule"), Xxxxxx Laboratories ("Abbott") and
______________________ ("Recipient").
[Set on left column of page]
WHEREAS, Abbott and ArQule have entered into that certain Research, Development
and License Agreement, dated as of June 16, 1995, as amended by Amendment No. 1
to Research, Development and License Agreement, dated as of August __, 1996 (as
so amended, the "License Agreement"), pursuant to which ArQule has agreed, INTER
ALIA, to provide Abbott with certain compounds for screening on the terms and
subject to the conditions set forth in the License Agreement; and
WHEREAS, pursuant to Section 5.2 of the License Agreement, Abbott is
permitted to deliver such compounds to third parties such as Recipient, provided
such parties execute and deliver this Agreement to ArQule.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. SUPPLY OF MATERIALS: Within _____ days after receiving an original of this
Agreement executed by all parties, Abbott will supply Recipient with the
compounds set forth on EXHIBIT A (the "Materials"). Upon written request, Abbott
may provide the Recipient with additional quantities of such Materials or with
additional compounds, which compounds shall also be considered Materials for the
purposes of this Agreement.
2. USE AND TRANSFER RESTRICTIONS: Recipient acknowledges and agrees that the
Materials are proprietary to and owned by ArQule and are or may be covered by
claims of U.S. and international patents or patent applications of ArQule.
Recipient agrees to use the Materials solely to screen them for potential
pharmacological activity for Abbott using the assay procedure [previously
disclosed to Abbott/set forth on EXHIBIT B]. Recipient agrees (i) not to
transfer such Materials to any third party without the prior written consent of
ArQule and Abbott, (ii) to permit access to the Materials only to its employees
and consultants requiring such access, (iii) to inform such employees and
consultants of the proprietary nature of the Materials, (iv) to take reasonable
precautions, at least as stringent as those observed by Recipient to protect its
own proprietary materials, to ensure that such employees and consultants observe
the obligations of Recipient pursuant to this Section and (v) to execute and
deliver any documents of assignment or conveyance that may be necessary to
effectuate the ownership rights of ArQule in the Materials. Upon the expiration
of this Agreement, Recipient shall, at the instruction of ArQule or Abbott,
either destroy or return any unused Materials.
3. COMPLIANCE WITH LAW: Recipient agrees to comply with all federal, state,
and local laws and regulations applicable to the use, testing, storage,
disposal, and transfer of the Materials, including without limitation the Toxic
Substances Control Act (15 USC 2601 ET SEQ.) and implementing regulations (in
particular, 40 CFR 720.36 [Research and Development Exemption]), the Food, Drug,
and Cosmetic Act (21 USC 301 ET SEQ.) and implementing regulations, and all
Export Administration Regulations of the Department of Commerce. Recipient
assumes sole responsibility for any violation of such laws or regulations by
Recipient or any of its affiliates or sublicensees.
4. TERMINATION: This Agreement shall commence on the date last written below
and continue for a period of ___________ months. Sections 3, 6 and 7 shall
survive termination of this Agreement.
5. NO WARRANTIES: Any Materials delivered pursuant to this Agreement are
understood to be experimental in nature and may have hazardous properties.
Recipient should assume that the Materials are dangerous and should use
appropriate precautions. NEITHER ABBOTT NOR ARQULE MAKES ANY REPRESENTATIONS, OR
EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT TO
THE COMPOUNDS. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE MATERIALS WILL NOT
INFRINGE ANY PATENT RIGHTS OF OTHERS.
[Set on right column of page]
6. ASSIGNMENT OF INVENTIONS: Recipient agrees promptly to disclose to Abbott
any and all ideas, concepts, discoveries, inventions, developments,
improvements, trade secrets, technical data, know-how or biological materials
that are conceived, devised, invented, developed or reduced to practice or
tangible medium by Recipient, or any of its agents or employees, or under its
direction, during the term of this Agreement and which arise out of its
screening or evaluation of the Materials (hereinafter "Inventions"). Recipient
hereby assigns to Abbott all of its right, title and interest in and to the
Inventions and any and all related patent rights, copyrights and applications
and registrations therefor. During and after the expiration of this Agreement,
Recipient shall cooperate with Abbott, at Xxxxxx'x expense, in obtaining
proprietary protection for the Inventions and shall execute all documents which
Abbott shall reasonably request in order to perfect Xxxxxx'x rights in the
Inventions.
7. INDEMNIFICATION: Recipient assumes all liability for, and agrees to
indemnify, defend, and hold harmless ArQule and Abbott and their respective
directors, officers, representatives, employees, and agents against, all losses,
expenses (including without limitation any legal expenses), claims, demands,
damages, judgments, suits, or other actions arising from the use, testing,
storage, or disposal of the Materials by Recipient and its agents or employees,
or from any breach of its obligations under Section 2 of this Agreement.
8. MISCELLANEOUS: This Agreement shall not be assigned or otherwise
transferred by Recipient without the prior written consent of ArQule and Abbott.
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts. This Agreement constitutes the entire understanding of the
parties and supersedes all prior agreements, written or oral, with respect to
the subject matter hereof.
Recipient
---------------------------------------
Signature:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Date:
---------------------------------------
Shipping Address:
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
Tel:
---------------------------------------
Fax:
---------------------------------------
ACCEPTED AND AGREED:
ArQule, Inc.
Signature:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Date:
---------------------------------------
Address:
ArQule, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
ACCEPTED AND AGREED:
Xxxxxx Laboratories
Signature:
---------------------------------------
Name:
---------------------------------------
Title:
---------------------------------------
Date:
---------------------------------------
Address:
Xxxxxx Laboratories
000 Xxxxxx Xxxx Xxxx
Xxxxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
48
EXHIBIT C
---------
See Exhibit 10.15 of the Registrant's Registration Statement.
