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COMPOUND SUPPLY AND LICENSE AGREEMENT
This Compound Supply and License Agreement dated as of December 15,
1998 (the "Effective Date") is between the X.X. Xxxxxxx Pharmaceutical Research
Institute ("PRI"), a division of Ortho-XxXxxx Pharmaceutical, Inc, a Delaware
corporation, having a business address of X.X.Xxxxx 000, Xxxxxxx, XX 00000, and
ArQule, Inc. ("ArQule"), a Delaware corporation, having a business address of
000 Xxxxxx Xxxxxx, Xxxxxxx, XX 00000.
R E C I T A L S
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WHEREAS, ArQule has expertise relating to the design and synthesis of
libraries of chemical compounds in Mapping Array Sets using rapid parallel
synthesis methods, including its AMAP(TM) chemical synthesis system;
WHEREAS, PRI desires to access compound libraries produced by ArQule to
identify lead molecules by subscribing to the ArQule Mapping Array Program
pursuant to which ArQule will synthesize and deliver to PRI at least *
small organic molecules each year in a collection of Mapping Array Sets
representing at least * Chemical Themes; and
WHEREAS, ArQule is willing to provide its compound libraries comprising
ArQule Compounds in Mapping Array Sets delivered as individual compounds in a
spatially addressable array format in a microtiter plate wherein the ArQule
Compounds within each Mapping Array Set are, on average, at least * pure; and
WHEREAS, ArQule and PRI desire that the implementation of the Mapping
Array Program be managed by a joint Research Committee; and
WHEREAS, PRI desires to screen the ArQule Compounds against biological
targets in the Screening Field in order that PRI may obtain an exclusive license
to Available Compounds in the Development Field whereby PRI will pay ArQule
success fees and royalties on Royalty-Bearing Products; and
WHEREAS, PRI also desires to receive a non-exclusive license to
practice certain ArQule Patent Rights outside of the Mapping Array Program.
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, PRI and ArQule hereby agree as follows:
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1. DEFINITIONS.
1.1. "ACTIVE COMPOUND" means an ArQule Compound that exhibits activity
against a Target, as determined by PRI according to a predetermined threshold
set by PRI for each Target consistent with the manner it treats other compounds
resulting from its drug discovery program.
1.2. "AFFILIATE" means any legal entity (such as a corporation,
partnership, or limited liability company) that is controlled by, controls or is
under common control with a party. For the purposes of this definition, the term
"control" means (i) beneficial ownership of at least fifty percent (50%) of the
voting securities of a corporation or other business organization with voting
securities or (ii) a fifty percent (50%) or greater interest in the net assets
or profits of a partnership or other business organization without voting
securities.
1.3. "ANALOG" means a chemical compound (i) that exhibits significant
structural similarity to an ArQule Compound, (ii) was discovered or developed
using information obtained by screening ArQule Compounds, or (iii) was
structurally derived in one or more steps from a parent ArQule Compound by a
process of modification or partial substitution of at least one component
wherein at least one structural feature is retained at each process step.
1.4. "ARQULE COMPOUND" means a chemical compound provided by ArQule to
PRI pursuant to this Agreement, and specifically includes all compounds in the
Mapping Array Sets provided to PRI under the Mapping Array Program.
1.5. "AVAILABLE COMPOUND" means an Active Compound that, as of the date
PRI reports activity to ArQule, (i) ArQule has the right to grant to PRI the
licenses set forth under Section 4.1. and (ii) is not committed to an internal
ArQule program, as evidenced by written or electronic records, in the
Development Field.
1.6. "CHEMICAL THEME" means the chemical or structural characteristics
that define the compounds in a Mapping Array Set.
1.7. "CONFIDENTIAL INFORMATION" means any technical or business
information furnished by one party (the "Disclosing Party") to the other party
(the "Receiving Party") in connection with this Agreement or generated pursuant
to this Agreement as more fully defined in Article 9. Such Confidential
Information may include, without limitation, the identity or use of a chemical
compound, the identity or use of a biological target, trade secrets, know-how,
inventions, technical data or specifications, testing methods, business or
financial information, research and development activities, Research Committee
reports, royalty reports, product and marketing plans, clinical development
plans, and customer and supplier information.
1.8. "DEVELOPMENT FIELD" means applications in * .
1.9. "EMEA" means the European Medicine Evaluation Agency.
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1.10. "FDA" means the United States Food and Drug Administration or any
successor agency.
1.11. "IND" means an investigational new drug application filed with
the FDA prior to beginning clinical trials in humans as more fully defined in 21
C.F.R. 312.3 or any comparable application filed with the regulatory authorities
of a country other than the United States, prior to beginning clinical trials in
humans in that country.
1.12. "LICENSED COMPOUND" means an Available Compound for which PRI has
elected to obtain an exclusive license, as further described in Section 3.3.
below.
1.13. "LICENSED COMPOUND GROUP" means a group of from two to four
Licensed Compound Sets that contain Licensed Compounds and Analogs which exhibit
activity for the same Target, as further described in Section 7.2.
1.14. "LICENSED COMPOUND SET" means a set of Licensed Compounds that
are from the same Mapping Array Set and which are Active Compounds with respect
to the same Target, as well as Analogs of those Licensed Compounds that
demonstrate biological activity with respect to the same Target, as further
described in Section 7.1.
1.15. "MAJOR MARKET COUNTRY" means any of the United States, United
Kingdom, France, Germany, Italy, or Japan.
1.16. "MAPPING ARRAY(TM) PROGram" means an annual program under which
ArQule provides its collaborators with a certain number of ArQule Compounds
organized in Mapping Array Sets and grants its collaborators a non-exclusive
right to screen the ArQule Compounds against any Target in the Screening Field,
as further described in Article 3 below.
1.17. "MAPPING ARRAY(TM) Set" means a set of ArQule Compounds
consisting of diverse, structurally related small organic chemical compounds
arranged in a spatially addressable format such as a microtiter screening plate
and having the same Chemical Theme, which are provided to PRI under the Mapping
Array Program.
1.18. "NDA" means a New Drug Application and all supplements thereto
filed with the FDA, including all documents, data, and other information
concerning a Royalty-Bearing Product, which are necessary for, or included in,
FDA approval to market such Royalty-Bearing Product, as more fully defined in 21
C.F.R. 314.5 et seq.
1.19. "NET SALES" means * .
1.20. "PATENT RIGHTS" means any United States and foreign patent
application and any divisional, continuation, or continuation-in-part of such
patent application (to the extent the
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claims are directed to subject matter specifically described therein), as well
as any patent issued thereon and any reissue or reexamination of such patent,
and any foreign counterparts to such patents and patent applications, including
those arising out of this Agreement. "ARQULE PATENT RIGHTS" means Patent Rights
that are either (i) invented solely by ArQule employees or assigned solely to
ArQule, (ii) invented jointly by ArQule employees and employees of a party other
than PRI or assigned jointly to ArQule and a party other than PRI, or (iii)
licensed to or otherwise controlled by ArQule, in each case to the extent that
ArQule has the ability to license or sublicense the rights required under this
Agreement. "PRI PATENT RIGHTS" means Patent Rights developed or discovered
solely in connection with this Agreement that are either (i) invented solely by
employees of PRI or assigned solely to PRI, (ii) invented jointly by PRI
employees and employees of a party other than ArQule or assigned jointly to PRI
and a party other than ArQule, or (iii) licensed to or otherwise controlled by
PRI, in each case to the extent that PRI has the ability to license or
sublicense the rights required under this Agreement. "JOINT PATENT RIGHTS" means
Patent Rights developed or discovered solely in connection with this Agreement
assigned to both ArQule and PRI as joint owners.
1.21. "PHASE I CLINICAL TRIAL" shall mean that portion of the FDA
submission and approval process which provides for the first introduction into
humans of a product with the purpose of determining human toxicity, metabolism,
absorption, elimination and other pharmacological action as more fully defined
in 21 C.F.R. ss. 312.21(a).
1.22. "PHASE II CLINICAL TRIAL" shall mean that portion of the FDA
submission and approval process which provides for the initial trials of product
on a limited number of patients for the purposes of determining dose and
evaluating safety and efficacy in the proposed therapeutic indication as more
fully defined in 21 C.F.R. ss. 312.21(b).
1.23. "PHASE III CLINICAL TRIAL" shall mean that portion of the
clinical development program which provides for continued trials of a product on
sufficient numbers of patients to establish the safety and efficacy of a product
and generate, if required, pharmacoeconomics data to support regulatory approval
in the proposed therapeutic indication as more fully defined in 21 C.F.R. ss.
312.2(c).
1.24. "PROPRIETARY MATERIALS" means any tangible research materials,
whether biological, chemical, physical, or otherwise, that one party (the
"Provider") furnishes to the other party (the "Recipient") under this Agreement
and designates as proprietary or confidential, including without limitation all
ArQule Compounds.
1.25. "POP" means the internal PRI proof of principal program in which
a clinical candidate is selected, produced in quantity under GMP conditions,
pre-clinical toxicology studies are performed, and first administration to human
subjects is performed. PRI formally selects a compound as a clinical candidate
for POP according to its internal procedures. * .
1.26. "RESEARCH COMMITTEE" means the joint Research Committee described
in
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Section 2.1.
1.27. "ROYALTY PERIOD" means the partial calendar quarter commencing on
the date on which the first Royalty-Bearing Product is sold and every complete
or partial calendar quarter thereafter during which PRI has the obligation to
pay a royalty pursuant to Section 5.3.1.
1.28. "ROYALTY-BEARING PRODUCT" means* .
1.29. "SCREENING FIELD" means *.
1.30. "TARGET" means any biological target in the Screening Field that
PRI selects for screening against ArQule Compounds.
1.31. "TECHNOLOGY" means any proprietary development, idea, design,
concept, technique, process, invention, compound, discovery, or improvement,
whether or not patentable or copyrightable, including those arising out of this
Agreement. "ARQULE TECHNOLOGY" means Technology that is either (i) assigned
solely to ArQule, (ii) assigned jointly to ArQule and a party other than PRI, or
(iii) licensed to or otherwise controlled by ArQule, in each case to the extent
that ArQule has the ability to license or sublicense the rights required under
this Agreement. "PRI TECHNOLOGY" means Technology developed or discovered solely
in connection with this Agreement that is either (i) assigned solely to PRI,
(ii) assigned jointly to PRI and a party other than ArQule, or (iii) licensed to
or otherwise controlled by PRI, in each case to the extent that PRI has the
ability to license or sublicense the rights required under this Agreement.
"JOINT TECHNOLOGY" means Technology that is developed or discovered jointly by
one or more employees or consultants of PRI and one or more employees or
consultants of ArQule solely in connection with this Agreement.
1.32. "UNBLINDED ARQULE COMPOUND" means (i) an Available Compound for
which PRI has received the structure under Subsection 3.3.1, (ii) all ArQule
Compounds within a Mapping Array Set containing a Licensed Compound for which
PRI has received structures under Subsection 3.3.3, or (iii) any other ArQule
Compounds for which PRI has received structures from ArQule under this
Agreement.
1.33 "VALID CLAIM" means either (i) a claim of an issued patent that
has not been held unenforceable or invalid by an agency or a court of competent
jurisdiction in any unappealable or unappealed decision or (ii) a claim of
patent application that has been pending for less than five (5) years from the
earliest filing date of a non-provisional application and that has not been
abandoned or finally rejected without the possibility of appeal or refiling.
2. MANAGEMENT OF MAPPING ARRAY PROGRAM.
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2.1. ESTABLISHMENT OF RESEARCH COMMITTEE. The parties hereby establish
a Research Committee comprised of four (4) members or such other number as the
parties may agree, with
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an equal number of representatives appointed by each party. The parties shall
designate the initial members of the Research Committee within thirty (30) days
after the Effective Date. A party may change any of its representatives to the
Research Committee at any time upon written notice to the other party.
2.2. DUTIES OF RESEARCH COMMITTEE. The Research Committee shall
monitor, manage, and administer the Mapping Array Program under this Agreement.
In general, the Research Committee will have responsibility for all issues of a
scientific or technical nature (e.g., scheduling, quality, and delivery
formats). Specifically, the Research Committee will discuss which Chemical
Themes to include in the Mapping Array Program for each calendar year, verify
that Active Compounds exhibit the required activity against a specific Target,
and resolve all matters involving scientific questions. The Research Committee
may have other responsibilities as expressly set forth in this Agreement.
2.3. MEETINGS OF RESEARCH COMMITTEE. Unless otherwise determined by the
Research Committee, the Research Committee shall meet at least once each
calendar quarter alternately at the location of each party, or at other times,
locations, or manner (e.g., telephone conferences) determined by the Research
Committee. A representative of the Research Committee jointly appointed by its
members shall provide each member with five (5) business days notice of the time
and location of each quarterly meeting, unless such notice is waived by all
members. If a designated representative of a party cannot attend a meeting of
the Research Committee, such party may designate a different representative for
that meeting without notice to the other party, and the substitute member will
have all the powers of the permanent member. Except as otherwise provided in
this Agreement, all actions and decisions of the Research Committee will require
the unanimous consent of all of its members. If the Research Committee fails to
reach agreement upon any matter, the dispute will be resolved in accordance with
the procedures set forth in Article 12 below. Within ten (10) business days
following each quarterly meeting of the Research Committee, a representative of
the Research Committee jointly appointed by its members shall prepare and
deliver, to both parties, a written report describing the program status and the
issues, decisions, conclusions, and other actions taken by the Research
Committee.
2.4. COOPERATION. Each party agrees to provide the Research Committee
with information and documentation as reasonably required for the Research
Committee to fulfill its duties under this Agreement. In addition, each party
agrees to make available its employees and consultants as reasonably requested
by the Research Committee. The parties anticipate and intend that members of the
Research Committee will communicate informally with each other and with
employees and consultants of the parties on matters relating to the Mapping
Array Program.
3. CONDUCT OF MAPPING ARRAY PROGRAM.
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3.1. DELIVERY OF MAPPING ARRAY SETS. During calendar year 1998, ArQule
will supply PRI with approximately * ArQule Compounds, representing at
least * Chemical Themes, produced in its 1996, 1997, and 1998 Mapping
Array Programs. ArQule shall deliver a duplicate of these Mapping Array Sets on
a date requested by PRI between * . Thereafter,
in each calendar year during the term of this Agreement, ArQule
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will supply PRI with at * different Mapping Array Sets (in
duplicate) containing in the aggregate approximately * ArQule Compounds
produced in the Mapping Array Program for that calendar year. In general, each
Mapping Array Set will contain a minimum of * and a maximum of * ArQule
Compounds. In this regard, beginning in 1999, ArQule shall deliver the ArQule
Compounds to PRI spread out throughout the calendar year, it being the intention
of the parties that ArQule will deliver approximately * ArQule Compounds in
duplicate per quarter. The ArQule Compounds within each Mapping Array Set
delivered under the 1998 Mapping Array Program and thereafter shall have an
average purity level of at least * as measured by
standard analytical chemistry methods used at ArQule. Unless otherwise
determined by the Research Committee, ArQule shall deliver *
solution of each ArQule Compound in duplicate in DMSO solution in 96 well
microtiter plates (representing approximately * of each ArQule Compound
per well). The ArQule Compounds are organized and shipped in Mapping Array Sets.
ArQule will identify the Chemical Theme for each Mapping Array Set upon
shipment. Except as provided in Section 3.3 below, ArQule shall have no
obligation to identify the individual ArQule Compounds in the Mapping Array Sets
and PRI shall have no obligation to identify its Targets. During the planning
process to select Chemical Themes for each annual Mapping Array Program, PRI
shall have an opportunity to suggest Chemical Themes which ArQule will consider
for inclusion in the Mapping Array Program, and PRI shall have the opportunity
to comment on Chemical Themes proposed by ArQule for inclusion in the Mapping
Array Program.
3.2. SCREENING OF MAPPING ARRAY SETS. Subject to the terms and
conditions of this Agreement, ArQule hereby grants PRI and its Affiliates a
nonexclusive, worldwide license (without the right to sublicense) under the
ArQule Patent Rights and other rights in ArQule Technology to screen the ArQule
Compounds in the Mapping Array Sets against any Targets within the Screening
Field. PRI agrees to use efforts consistent with its normal scientific practices
to screen the ArQule Compounds in the Mapping Array Sets against its Targets in
the Screening Field.
3.3. DESIGNATION OF LICENSED COMPOUNDS.
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3.3.1. DETERMINATION OF AVAILABILITY. PRI shall disclose to
ArQule the array plate number and well number of any Active Compounds by
facsimile transmission followed by a confirmatory letter. ArQule will promptly
determine whether the Active Compounds are Available Compounds and notify PRI of
such determination within ten (10) business days. ArQule will also inform PRI if
an Available Compound is licensed outside the Development Field or is a reverted
Licensed Compound under any other agreement with another ArQule collaborator. If
an Active Compound is not an Available Compound, PRI shall have no rights with
respect to that Active Compound. If an Active Compound is an Available Compound,
ArQule shall disclose to PRI the chemical composition and theoretical structure
of the Active Compound within * . At the request of PRI, ArQule shall (i)
internally designate that Active Compound as a Licensed Compound (subject to the
annual maintenance fee in accordance with Section 5.5) and (ii) no longer
identify that Active Compound as an Available Compound in the
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Development Field to any other third party or ArQule collaborator. The Research
Committee may verify that ArQule Compounds meet the criteria of Active
Compounds.
3.3.2. CONFIRMATION SAMPLES AND RESYNTHESIZED COMPOUNDS. If
PRI requests confirmation samples of a Licensed Compound, ArQule shall resupply
PRI with * of the Licensed Compound for confirmation of activity within * from
the date requested, subject to a maximum of * confirmation requests per month
and a maximum number of * per ArQule Compound during the term of this Agreement.
Within * after receiving the resupplied Licensed Compound from ArQule, subject
to extension by the Research Committee, PRI shall notify ArQule whether the
activity is confirmed. If PRI confirms activity, then PRI shall disclose to
ArQule the Target and the level of activity. If PRI requests resynthesized
samples of a Licensed Compound, ArQule will supply PRI with a sufficient
quantity (determined by the Research Committee) of the resynthesized Licensed
Compound to confirm activity and perform secondary assays within * from the date
requested, unless synthesis starting materials are unavailable for such
resynthesized Active Compound, subject to a maximum of * such resynthesis
requests per quarter (i.e., *) and no more than * such requests in any one
month. Within * after receiving the resynthesized Active Compound from ArQule to
confirm activity, subject to extension by the Research Committee, PRI shall
notify ArQule whether activity is confirmed. If PRI confirms activity and has
not previously confirmed activity with a confirmation sample, then PRI shall
disclose to ArQule the Target and level of activity. In the event that PRI (i)
requests resupply of more than * per month, (ii) exceeds the * total resupply
quantity, or (iii) requests resynthesis of more than * in a given calendar
quarter, ArQule shall have no obligation to supply the excess compounds unless
PRI and ArQule establish a mutually acceptable fee for such excess services.
3.3.3. ACTIVATION OF DEVELOPMENT LICENSES. If PRI does not
confirm activity within the applicable confirmation period for a resupplied or
resynthesized Licensed Compound, or if PRI has no further interest in that
Licensed Compound for any other reason, the Licensed Compound shall revert to
ArQule as provided in Section 7.5. If PRI confirms activity of a resynthesized
Licensed Compound within the applicable confirmation period and desires to
retain that Licensed Compound, then (i) ArQule shall remove the Licensed
Compound from future shipments of its Mapping Array Set in the Development
Field, (ii) ArQule shall provide to PRI the chemical composition and theoretical
structures (but not the locations) for all of the ArQule Compounds within the
Mapping Array Set containing the Licensed Compound, and (iii) subject to
disclosure to ArQule by PRI of the Target and level of activity, the licenses
set forth in Section 4.1. shall immediately become effective with respect to
that Licensed Compound. The Research Committee shall verify that ArQule
Compounds have been confirmed by PRI as Active Compounds under Subsection 3.3.2.
Any disagreements regarding whether ArQule Compounds are Active Compounds or
confirmed Active Compounds shall be submitted to the scientific dispute
resolution procedures set forth in Article 12. All information disclosed by
ArQule and PRI under this Section shall be deemed Confidential Information and,
as such, is subject to the restrictions set forth in Article 9.
4. LICENSE GRANT.
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4.1. DEVELOPMENT AND COMMERCIALIZATION LICENSE. Subject to disclosure
to ArQule by PRI of the Target and the level of activity of a Licensed Compound
and confirmation of activity in accordance with Subsection 3.3.2. above, and
subject to the other terms and conditions of this Agreement, ArQule hereby
grants to PRI and its Affiliates the following licenses:
(i) an exclusive, worldwide license (with the right to sublicense)
under the ArQule Patent Rights, Joint Patent Rights, and other
rights in ArQule Technology and Joint Technology to conduct
development of Licensed Compounds in the Development Field,
including the right to make and have made Analogs of Licensed
Compounds;
(ii) an exclusive, worldwide license (with the right to sublicense)
under the ArQule Patent Rights, Joint Patent Rights, and other
rights in ArQule Technology and Joint Technology to make, have
made, use, sell, have sold, and import Licensed Compounds in
the Development Field; and
(iii) a non-exclusive, worldwide license (with the right to
sublicense) under the ArQule Patent Rights and other rights in
ArQule Technology to use chemical synthesis methods within the
ArQule Patent Rights and ArQule Technology to make
Royalty-Bearing Products.
ArQule shall not grant to any third party any rights under Joint Patent Rights
to make, have made, use, sell, have sold, or import Analogs. The parties
understand and agree that this limitation applies only to the Joint Patent
Rights; accordingly, ArQule has no obligation to grant to PRI any other legal
rights that ArQule may obtain in Analogs, and ArQule may license such other
legal rights to any third party.
PRI and ArQule acknowledge that the exclusive license granted under this Section
prohibits ArQule from granting any third party any right or license to use
Licensed Compounds to develop Analogs in the Development Field. Since PRI has a
non-exclusive screening license under Section 3.2. and since ArQule has granted
other such non-exclusive licenses, it is possible that other ArQule partners may
make analogs of their licensed compounds which overlap in scope with Analogs
made by PRI. Accordingly, ArQule makes no representation that PRI will have the
exclusive right to Analogs of Licensed Compounds. PRI acknowledges and agrees
that the license grant in clause (iii) above is subject to the terms,
conditions, and limitations of any agreement under which ArQule has acquired
rights in a chemical synthesis method from a third party and, in such event, PRI
may need to enter into a separate license agreement with the third party or
sublicensee agreement with ArQule before such license grant shall take effect.
As of the Effective Date, ArQule has entered into such third-party agreements
with * . After the licenses set forth above take effect for a Licensed Compound,
and at the written request of PRI, ArQule will notify PRI if any such
third-party agreements apply to the synthesis of that Licensed Compound as a
Royalty-Bearing Product. In the event that PRI decides to sublicense its rights
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under this Section to a third party, PRI shall furnish ArQule with written
notice of the sublicense grant and shall ensure that all sublicense agreements
conform to this Agreement.
4.2. RIGHTS OUTSIDE THE DEVELOPMENT FIELD. PRI acknowledges that its
rights in Licensed Compounds under this Agreement are limited to the Development
Field. PRI further acknowledges that, as a direct result of its rights to screen
ArQule Compounds and develop Licensed Compounds pursuant to this Article 4, PRI
may obtain PRI Patent Rights, Joint Patent Rights, or other rights in PRI
Technology and Joint Technology that may have effect outside the Development
Field and thereby limit the rights of ArQule collaborators who may have
exclusive rights to develop and commercialize ArQule Compounds outside the
Development Field. PRI hereby grants to ArQule and its Affiliates an exclusive,
worldwide, royalty-free license (with the right to sublicense) under the PRI
Patent Rights, Joint Patent Rights, and other rights in PRI Technology and Joint
Technology to develop, manufacture, use, sell, and import Licensed Compounds
outside of the Development Field.
4.3. NON-EXCLUSIVE PATENT LICENSE. In connection with this Agreement,
ArQule has granted to PRI a non-exclusive license to practice certain of its
United States patents. The terms and conditions of this patent license are set
forth on EXHIBIT A.
5. PAYMENTS.
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5.1. TECHNOLOGY ACCESS FEE. In consideration of the licenses granted
PRI as set forth on EXHIBIT A and in partial consideration of PRI obtaining
access to the Mapping Array Program as set forth in this Agreement, PRI shall
pay to ArQule a technology access fee in the amount of * , payable within thirty
(30) days of the Effective Date, but not later than December 31, 1998.
5.2. DELIVERY FEES. In partial consideration of the delivery by ArQule
of the duplicate Mapping Array Sets under the Mapping Array Program and certain
compound resupply and resynthesis services as set forth in Section 3.3. of this
Agreement, PRI shall pay to ArQule (i) an initial delivery fee in the amount of
*, payable within thirty (30) days of the Effective Date, but no later than
December 31, 1998, for the first copy of Mapping Array Sets containing 300,000
ArQule Compounds from the 1996, 1997, and 1998 Mapping Array Programs, (ii) a
delivery fee in the amount of *, payable not later than March 31, 1999, for the
second copy of the ArQule Compounds delivered in 1998, and (iii) the annual
delivery fee set forth below during each subsequent calendar year in which this
Agreement remains in effect, payable in four equal quarterly installments which
shall be invoiced by ArQule on or about January 1, April 1, July 1, and October
1 of each such calendar year and payable by PRI thirty (30) days thereafter. The
annual delivery fee payable to ArQule in 1999 shall be * and the annual delivery
fee payable in each year after calendar year 1999 shall be determined as
follows:
Annual Delivery Fee = * x (1 + CPI)
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Where CPI is a fraction, the numerator of which is the difference
between the Consumer Price Index (CPI-U; U.S. City Average for all
items; 1982-84 = 100) as of the last month of the immediately preceding
calendar year and the Consumer Price Index as of the month immediately
preceding the Effective Date, and the denominator of which is the
Consumer Price Index as of the month immediately preceding the
Effective Date.
The parties acknowledge that the base annual delivery fee of * represents an
aggregate of three component payments: *. It is the intention of the parties
that ArQule will deliver to PRI approximately * ArQule Compounds per
quarter. *.
5.3. PRODUCT ROYALTIES.
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5.3.1. EARNED ROYALTIES; ROYALTY TERM. In partial
consideration of the performance by ArQule of the Mapping Array Program, PRI
shall pay to ArQule the following royalties on Net Sales of Royalty-Bearing
Products in accordance with the procedures set forth in Article 6.
*
*
This royalty obligation shall commence with the first commercial sale of a
Royalty-Bearing Product in any country and shall continue on a
country-by-country basis for a period of * after the first commercial sale of
the Royalty-Bearing Product in such country. Upon expiration of the * royalty
payment obligations in a country, PRI shall thereafter have, in perpetuity, a
fully paid up license under Section 4.1. of this Agreement.
5.3.2. THIRD PARTY ROYALTIES. PRI shall be responsible for
procuring such licenses as it deems, in its sole discretion, appropriate for the
manufacture, use, marketing, sale or distribution of Royalty-Bearing Products by
PRI and its Affiliates and sublicensees, and for the payment of any amounts due
third parties under such licenses; *.
5.4. MILESTONE PAYMENTS. In partial consideration of the performance by
ArQule of the Mapping Array Program, PRI shall pay ArQule the following
milestone payments within thirty (30) days after each occurrence of each event
for each Royalty-Bearing Product:
*
*
5.5. ANNUAL MAINTENANCE FEE. PRI shall pay ArQule an annual license
maintenance fee in the amount of * for each Licensed Compound Set on each
anniversary of the first date upon which ArQule provided PRI with the structure
of a Licensed Compound within that Licensed
------------
*Confidential treatment has been requested for the marked portion.
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Compound Set, as described in Section 3.3. For the convenience of the parties,
PRI may pay this fee for all affected Licensed Compound Sets on the last day of
the calendar quarter in which said anniversary occurs. *.
5.6. PAYMENT FOR USE OF SYNTHETIC METHODS. Under Section 4.1 of this
Agreement, ArQule granted to PRI a non-exclusive, worldwide license under the
ArQule Patent Rights and ArQule Technology to use chemical synthesis methods
within the ArQule Patent Rights and ArQule Technology to make Royalty-Bearing
Products. PRI acknowledges that ArQule may have acquired or may, in the future,
acquire such methods from a third party and that, in such event, PRI may need to
execute a separate license agreement with the third party or sublicense
agreement with ArQule before the license grant may take effect. ArQule has
notified PRI of all such third-party agreements as of the Effective Date. After
the licenses set forth in Section 4.1. above take effect for a Licensed
Compound, and at the written request of PRI, ArQule will notify PRI if any such
third-party agreements apply to the synthesis of that Licensed Compound as a
Royalty-Bearing Product. To the extent that use of a chemical synthesis method
requires payment to a third party, PRI agrees to make such payments under the
terms of the separate license or sublicense agreement. ArQule represents that
there are no such agreements which, under the terms of this Agreement, would
require payment to a third party as of the Effective Date hereof.
5.7. * .
6. REPORTS, RECORDS, AND PAYMENT PROCEDURES.
----------------------------------------
6.1. ROYALTY REPORTS AND PAYMENTS. Within sixty (60) days after the
conclusion of each Royalty Period, PRI shall deliver to ArQule a written report
setting forth the Net Sales of Royalty Bearing Products sold and the royalty due
and payable on a product-by-product and country-by-country basis (including all
deductions taken from the gross sales price in determining Net Sales). If no
payment is due to the other party for any reporting period, the report shall so
state. All such reports shall be considered Confidential Information under this
Agreement. Concurrent with this report, PRI shall remit to ArQule any payment
due for the applicable Royalty Period.
6.2. METHOD AND CURRENCY OF PAYMENT. The remittance of royalties
payable on Net Sales will be payable in U.S. dollars to ArQule at a bank and to
an account designated by ArQule using a rate of exchange of the currency of the
country from which the royalties are payable in accordance with the rate of
exchange published in THE WALL STREET JOURNAL as of the last business day of the
month immediately preceding the month during which payment of such royalties is
required to be made to ArQule hereunder. All references to dollars hereunder are
references to U.S. dollars.
6.3. BLOCKED CURRENCY. Where royalties are due for Net Sales in a
country where by reason of currency regulations of any kind or taxes of any kind
it is impossible to make royalty
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*Confidential treatment has been requested for the marked portion.
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payments for that country's Net Sales in accordance with Section 5.3., said
royalties shall be deposited in whatever currency is allowable for the benefit
or credit of ArQule in any accredited bank in that country as shall be
acceptable to ArQule. Moreover, in order to facilitate payments from countries
other than the United States, when requested by PRI, ArQule shall enter into
direct license agreements with PRI Affiliates or sublicensees designated by PRI,
whereby such Affiliate or sublicensee will be obligated to remit royalty
payments due for Net Sales in such country directly to ArQule. If such Affiliate
or sublicensee fails to deposit or remit royalty payments as provided herein,
PRI will make such deposits or remittances. Each such license agreement shall
recite specifically the applicable terms of this Agreement insofar as such terms
are lawful under applicable laws and regulations of the particular country.
6.4. LATE PAYMENTS. Any payments by PRI that are not paid on or before
the date such payments are due under this Agreement shall bear interest, to the
extent permitted by law, at two percentage points above the Prime Rate of
interest as reported in the WALL STREET JOURNAL on the date payment is due, with
interest calculated based on the number of days that payment is delinquent.
6.5. TAXES. Any tax required to be withheld by PRI or any Affiliate or
sublicensee under the laws of any foreign country for the account of ArQule
under this Article 6 shall be promptly paid by PRI or said Affiliate or
sublicensee for and on behalf of ArQule to the appropriate governmental
authority, and PRI or the Affiliate or sublicensee shall furnish ArQule with
proof of payment of such tax together with official or other appropriate
evidence issued by the appropriate governmental authority sufficient to enable
ArQule to support a claim for income tax credit in respect of any sum so
withheld.
6.6. RECORDS. PRI shall maintain, and shall require its Affiliates and
other authorized sellers of Royalty-Bearing Products to maintain, complete and
accurate records of the sales of Royalty-Bearing Products with respect to which
a royalty is payable according to this Agreement. PRI shall retain such records
relating to a given Royalty Period for at least * after the conclusion of that
Royalty Period (and access to such records shall not be denied thereafter, if
such records are reasonably available). ArQule shall have the right, at its own
expense, to cause an independent certified public accountant reasonably
acceptable to PRI to inspect such records during normal business hours for the
sole purpose of verifying any reports and payments delivered under this
Agreement. The accountant shall conduct the audit at a date and time reasonably
acceptable to PRI but not later than fifteen (15) business days after ArQule
notifies PRI of the audit. Such accountant shall not disclose to ArQule any
information other than information relating to accuracy of reports and payments
delivered under this Agreement and shall provide PRI with a copy of any report
given to ArQule. The parties shall reconcile any underpayment or overpayment
within sixty (60) days after the accountant delivers the results of the audit.
In the event that any audit performed under this Section reveals an underpayment
in excess of five percent (5%) in any Royalty Period, PRI shall bear the full
cost of such audit.
------------
*Confidential treatment has been requested for the marked portion.
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7. DILIGENCE AND REVERSION.
-----------------------
7.1. ESTABLISHMENT OF LICENSED COMPOUND SET. Licensed Compound Sets
shall be established automatically to include (i) each Licensed Compound and
(ii) all Analogs of the Licensed Compound that are synthesized by PRI and
exhibit biological activity for the same Target. In the event that two or more
Licensed Compounds from the same Mapping Array Set exhibit activity for the same
Target, the Research Committee will establish one Licensed Compound Set for
those related Licensed Compounds and all Analogs of the Licensed Compounds that
are synthesized by PRI and exhibit biological activity for the same Target.
7.2. DILIGENCE. PRI shall use efforts consistent with its normal
business practices to develop, manufacture, market, and sell a Royalty-Bearing
Product based on at least one Licensed Compound or Analog within a Licensed
Compound Group, the Licensed Compound Sets of which are selected by PRI and
reported to the Research Committee. PRI shall satisfy its diligence obligations
under this Article 7 so long as one Licensed Compound or Analog within a
Licensed Compound Group is being developed as a Royalty-Bearing Product. At any
time, PRI may add a Licensed Compound Set to a Licensed Compound Group or
substitute a new Licensed Compound Set for a Licensed Compound Set within a
Licensed Compound Group, effective immediately upon notice to the Research
Committee. In the event of a substitution, the Licensed Compounds in the
replaced Licensed Compound Set shall revert to ArQule as set forth in Section
7.5. below.
7.3. STATUS REPORTS. PRI will furnish ArQule with a brief semi-annual
statement, within sixty (60) days after the conclusion of each calendar six (6)
month period, that describes the status of each Licensed Compound or Analog
which remains under development by PRI as a Royalty-Bearing Product. A status
report will meet the requirements of this Section 7.3. if it states the
development phase of the Licensed Compound or Analog and outlines the future
development plans for the upcoming six (6) months. After PRI completes
development of a Royalty-Bearing Product, PRI will promptly notify ArQule of the
first commercial sale of that Royalty-Bearing Product in each country.
7.4. REVERSION. In certain limited circumstances, as described in
Sections 7.5 and 7.6, Licensed Compound(s) may revert to ArQule, whereupon (i)
PRI shall exclusively license to ArQule, without payment, any PRI Patent Rights,
Joint Patent Rights, and other rights to PRI Technology and Joint Technology
that claim the composition or use of the Licensed Compound(s) but only insofar
as said PRI Patent Rights, Joint Patent Rights, and other rights in PRI
Technology and Joint Technology claim the Licensed Compound(s) (i.e., PRI does
not grant ArQule a license with respect to Analogs), and (ii) PRI shall return
to ArQule all ArQule Confidential Information and ArQule Proprietary Materials
relating to the Licensed Compound(s). Thereafter, PRI shall have no further
right or interest in the reverted Licensed Compound(s) under Section 4.1. of
this Agreement, but shall retain rights to screen such ArQule Compounds pursuant
to Section 3.2. PRI Technology and Joint Technology licensed to ArQule hereunder
shall not include any PRI data or NDAs or foreign equivalents relating to such
reverted Licensed Compound(s). Under no circumstances will PRI be required to
grant to
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ArQule any rights to the composition or use of Analogs of Licensed Compound(s).
PRI shall retain the right, with regard to any Analogs of reverted Licensed
Compounds, to screen, develop, and commercialize such Analogs for activity
against Targets; however, PRI may screen but shall not develop or commercialize
such Analogs for activity against the Target for which the reverted Licensed
Compound exhibited activity without the consent of ArQule, which consent shall
not be unreasonably withheld.
7.5. VOLUNTARY REVERSION. PRI agrees that Licensed Compounds will
revert to ArQule in accordance with Section 7.4. in the event that (i) PRI does
not confirm the biological activity of a Licensed Compound within the *
confirmation period(s), as may be extended by the Research Committee, or if PRI
has no further interest in that Licensed Compound for any other reason, as
described in Section 3.3. above, (ii) PRI substitutes a Licensed Compound Set in
accordance with Section 7.2. or if PRI notifies the Research Committee that PRI
has no further interest in a Licensed Compound Set for any reason, or (iii) PRI
notifies the Research Committee that PRI will cease the development of all
Licensed Compounds and Analogs within an individual Licensed Compound Set or, if
applicable, within all Licensed Compound Sets of a Licensed Compound Group.
7.6. INVOLUNTARY REVERSION. In the event that ArQule reasonably
believes that PRI has not met its diligence obligations under Section 7.2. or
reporting obligations under Section 7.3 with regard to an individual Licensed
Compound Set or the Licensed Compound Sets within a Licensed Compound Group,
ArQule shall furnish PRI with written notice to that effect and PRI shall have a
period of ninety (90) days to furnish ArQule with a written response. ArQule may
exercise this right only once in each calendar year for all such affected
Licensed Compound Sets. If PRI fails to answer within the ninety-day response
period, ArQule may institute the dispute resolution procedure according to
Article 12. If PRI furnishes ArQule with an answer within the ninety-day
response period, but ArQule reasonably determines that PRI has not met its
obligations under Section 7.2 or 7.3, ArQule shall furnish PRI with a written
request to meet, whereupon the parties shall meet to discuss the matter and
shall establish measurable diligence objectives that are reasonably acceptable
to both parties. If PRI does not meet with ArQule within sixty (60) days after
PRI receives the meeting request, or if the parties fail to establish diligence
objectives within six (6) months after PRI receives the meeting request, then
ArQule may institute the dispute resolution procedure under Article 12. If the
dispute resolution procedure under Article 12 finds that PRI did not meet its
diligence or reporting obligations under Sections 7.2 or 7.3, respectively, then
such Licensed Compound(s) shall revert to ArQule in accordance with Section 7.4.
7.7. NON-REVERSION. In the event that ArQule is entitled to reversion
of Licensed Compound(s) under Section 7.4 either by Voluntary Reversion under
Section 7.5 or Involuntary Reversion under Section 7.6, PRI shall, at its sole
discretion, be entitled to cease development of such Licensed Compound(s) but
maintain all rights under Section 4.1. to all such Licensed Compound(s) within a
Licensed Compound Set by payment of a license fee in the following amounts:
------------
*Confidential treatment has been requested for the marked portion.
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*
PRI may cease payment of this annual license fee with respect to a given
Licensed Compound Set at any time by effecting a voluntary reversion of the
Licensed Compounds in that Licensed Compound Set as set forth in Section 7.5.
above. Upon expiration of the * license fee payment obligations for a Licensed
Compound Set hereunder, PRI shall thereafter have, in perpetuity, a fully paid
up license to the applicable Licensed Compounds under Section 4.1. of this
Agreement. If PRI desires to resume development of the applicable Licensed
Compounds at any time, the payment provisions of Article 5 shall resume.
8. INTELLECTUAL PROPERTY.
---------------------
8.1. OWNERSHIP OF INTELLECTUAL PROPERTY. Other than as specifically
provided for herein, neither party shall have any rights in Patent Rights and
Technology that is invented, developed or discovered by the other party prior to
the Effective Date or outside the research performed under this Agreement.
Ownership of Patent Rights and Technology arising from the research performed
under this Agreement shall be allocated in the following manner:
(i) ArQule shall have sole ownership of all right, title, and
interest in ArQule Patent Rights and ArQule Technology;
(ii) PRI shall have sole ownership of all right, title, and
interest in PRI Patent Rights and PRI Technology; and
(iii) ArQule and PRI shall have joint ownership of all right, title,
and interest in Joint Patent Rights and Joint Technology.
8.2. MANAGEMENT OF PATENT RIGHTS.
---------------------------
8.2.1. PATENT RIGHTS IN LICENSED COMPOUNDS. PRI shall have the
primary right and responsibility, at its own expense, for the preparation,
filing, prosecution, and maintenance of Patent Rights claiming the composition
or use of a Licensed Compound. PRI shall use outside patent counsel reasonably
acceptable to ArQule. The outside counsel will keep both parties informed of all
actions in the course of its work and provide adequate opportunity for both
parties to comment on any decisions or actions undertaken. The parties will
cooperate reasonably in filing and prosecuting Patent Rights claiming the
composition or use of a Licensed Compound with such outside counsel and with
each other and will share all material information relating thereto promptly
after receipt. In the event the parties, working with the outside counsel, are
unable to agree as to any action or decision in regard to the preparation,
filing, prosecution, or maintenance of any such United States Patent Rights,
then ArQule will have final say on the matter with the basis for such decision
being effective and broad coverage of discoveries and inventions. PRI shall have
the final say with respect to the preparation, filing,
------------
*Confidential treatment has been requested for the marked portion.
16
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prosecution, and maintenance of such Patent Rights outside the United States. In
the event that PRI screens Analogs in the PRI compound collection but not the
Unblinded ArQule Compounds, and PRI prepares a patent application claiming such
Analogs, PRI shall not exclude the Unblinded ArQule Compounds from such Patent
Rights in order to circumvent the provisions of this Section 8.2.1. or to
circumvent the payment provisions under Sections 5.3. and 5.4. by eliminating a
compound or product from the definition of Royalty-Bearing Product.
8.2.2. OTHER PATENT RIGHTS. Except as otherwise provided in
Subsection 8.2.1., PRI shall have sole responsibility for and control over the
management of PRI Patent Rights, and ArQule shall have sole responsibility for
and control over the management of ArQule Patent Rights. Each party will bear
its own expenses in connection with such Patent Rights. In the case of Joint
Technology not subject to Subsection 8.2.1., the Research Committee will decide
whether to seek Joint Patent Rights claiming that Technology. If the Research
Committee decides to seek any Joint Patent Rights under this Subsection, the
parties shall jointly prepare, file, prosecute, and maintain such Patent Rights,
and all related expenses shall be borne equally by the parties. If the Research
Committee decides not to seek such Joint Patent Rights and has not decided to
maintain the relevant Joint Technology as a trade secret, and if one of the
parties desires to seek such Joint Patent Rights, then that party may prepare,
file, prosecute, and maintain such Joint Patent Rights, and all related expenses
shall be borne by such party. In the event that a party declines to pay or
desires to cease further payment of patent-related expenses for such a Joint
Patent Right in any country and the other party desires to maintain the Joint
Patent Right, the withdrawing party may assign or exclusively license to the
continuing party all rights in that Joint Patent Right in such country and
thereafter have no further obligation to pay such expenses.
8.3. COOPERATION. Each party agrees to cooperate fully in the
preparation, filing, and prosecution of any Joint Patent Rights and other Patent
Rights claiming the composition or use of a Licensed Compound. Such cooperation
includes, but is not limited to:
(i) executing all papers and instruments, or requiring its
employees or agents, to execute such papers and instruments,
so as to effectuate the ownership of Patent Rights as
established under this Agreement and to enable the other party
to apply for and to prosecute patent applications in any
country;
(ii) promptly informing the other party of any matters coming to
such party's attention that may affect the preparation,
filing, or prosecution of any such patent applications; and
(iii) undertaking no actions that are potentially deleterious to the
preparation, filing, or prosecution of such patent
applications.
8.4. INFRINGEMENT
8.4.l. OFFENSIVE ACTIONS. With respect to infringement of any
Patent Right claiming the composition or use of a Licensed Compound, Analog, or
Royalty-Bearing Product,
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PRI shall have the primary right, but not the obligation, to enforce such Patent
Right under its sole control and at its sole expense. In such event, PRI shall
be exclusively entitled to all proceeds or recoveries resulting therefrom, but
from such proceeds or recoveries PRI shall pay ArQule a royalty in accordance
with Subsection 5.3.1. on sales lost to the infringer. In the event that PRI
declines to enforce such Patent Right with respect to a Royalty-Bearing Product
where the sales of the alleged infringer are at least twenty percent (20%) of
the market for said product, then ArQule shall have the secondary right to
enforce such Patent Right under its sole control and at its sole expense. In
such event, ArQule shall be exclusively entitled to all proceeds or recoveries
resulting therefrom.
8.4.2. DEFENSIVE ACTIONS. PRI will indemnify, defend, and hold
harmless ArQule, its Affiliates, and their respective officers, directors,
employees, and agents from any and all loss, damage, cost, and expense
(including reasonable attorneys fees) and amounts paid in settlement arising
from any actual or alleged infringement claim brought by a third party, in law
or in equity, based on activities undertaken pursuant to this Agreement (except
for claims based solely on the practice of an ArQule Patent Right or the use of
an ArQule Technology) or based on the manufacture or sale of a Royalty-Bearing
Product. In the event that ArQule intends to claim indemnification under this
Subsection, ArQule shall promptly notify PRI of the infringement action and PRI
shall assume the defense of the action under its sole control, including the
right to effect a settlement. A failure to deliver notice to PRI within a
reasonable time shall relieve PRI of its indemnity obligation under this
Subsection to the extent such failure prejudices the ability of PRI to defend
such action. ArQule shall cooperate fully with PRI and its legal representatives
in the investigation and defense of the action. In the event of a settlement,
PRI shall obtain the prior consent of ArQule before agreeing to any settlement
that imposes restrictions which are inconsistent with the rights and obligations
of the parties under this Agreement.
9. CONFIDENTIAL INFORMATION.
------------------------
9.1. DESIGNATION OF CONFIDENTIAL INFORMATION. Confidential Information
that is disclosed in writing shall be marked with a legend indicating its
confidential status. Confidential Information that is disclosed orally or
visually shall be documented in a written notice prepared by the Disclosing
Party and delivered to the Receiving Party within thirty (30) days of the date
of disclosure; such notice shall summarize the Confidential Information
disclosed to the Receiving Party and reference the time and place of disclosure.
9.2. OBLIGATIONS. The Receiving Party agrees that it shall:
-----------
(i) maintain all Confidential Information in strict
confidence, except that the Receiving Party may disclose or
permit the disclosure of any Confidential Information to its,
and its Affiliates, directors, officers, employees,
consultants, and advisors who are obligated to maintain the
confidential nature of such Confidential Information and who
need to know such Confidential Information for the purposes
set forth in this Agreement; ArQule will not allow any
directors who are employees of pharmaceutical companies to
have access to Confidential Information of PRI except for
Confidential Information they reasonably need to
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perform their function as directors (e.g., general status of
collaboration but not specific targets, compounds, or disease
indications);
(ii) use all Confidential Information solely for the purposes set
forth in, or as permitted by, this Agreement; and
(iii) allow its directors, officers, employees, consultants, and
advisors to reproduce the Confidential Information only to the
extent necessary to effect the purposes set forth in this
Agreement, with all such reproductions being considered
Confidential Information.
9.3. EXCEPTIONS. The obligations of the Receiving Party under
Section 9.2. above shall not apply to the extent that the Receiving
Party can demonstrate that certain Confidential Information:
(i) was in the public domain prior to the time of its
disclosure under this Agreement;
(ii) entered the public domain after the time of its disclosure
under this Agreement through means other than an unauthorized
disclosure resulting from an act or omission by the Receiving
Party;
(iii) was independently developed or discovered by the Receiving
Party without use of the Confidential Information as evidenced
by written records of the Receiving Party;
(iv) is or was disclosed to the Receiving Party at any time,
whether prior to or after the time of its disclosure under
this Agreement, by a third party having no fiduciary
relationship with the Disclosing Party and having no
obligation of confidentiality to the Disclosing Party with
respect to such Confidential Information; or
(v) is required to be disclosed to comply with applicable laws or
regulations (such as disclosure to the FDA or the United
States Patent and Trademark Office or to their foreign
equivalents), or to comply with a court or administrative
order, provided that the Disclosing Party receives prior
written notice of such disclosure in order that the Disclosing
Party shall have an opportunity to intervene to limit or
prevent such disclosure; in any event, Receiving Party shall
disclose only the minimum Confidential Information required to
be disclosed in order to comply with its disclosure
obligations.
9.4. RETURN OF CONFIDENTIAL INFORMATION. Upon the termination of this
Agreement, at the request of the Disclosing Party, the Receiving Party shall
destroy or return to the Disclosing Party all originals, copies, and summaries
of documents, materials, and other tangible manifestations of Confidential
Information in the possession or control of the Receiving Party, except that the
Receiving Party may retain one copy of the Confidential Information in the
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possession of its Legal Department solely for the purpose of monitoring its
obligations under this Agreement.
9.5. SURVIVAL OF OBLIGATIONS. The obligations set forth in this Article
shall remain in effect for a period of five (5) years after termination of this
Agreement, except that the obligations of the Receiving Party to destroy or
return Confidential Information to the Disclosing Party shall survive until
fulfilled.
10. PROPRIETARY MATERIALS.
---------------------
10.1. OWNERSHIP. PRI acknowledges and agrees that the ArQule Compounds
and any other ArQule Proprietary Materials provided to PRI and its Affiliates
under this Agreement are and shall remain the property of ArQule. ArQule
acknowledges and agrees that any PRI Analogs of an ArQule Compound that are
synthesized by PRI and its Affiliates and any other Proprietary Materials
provided to ArQule under this Agreement are and shall remain the property of
PRI. The foregoing notwithstanding, the parties agree that ownership of any
intellectual property rights in ArQule Compounds, and Analogs of ArQule
Compounds, and other Proprietary Materials shall be determined in accordance
with Article 8.
10.2. RESTRICTIONS ON USE AND TRANSFER. PRI shall use the ArQule
Compounds only for the purposes contemplated by this Agreement, and shall not
transfer the ArQule Compounds to any third party other than PRI Affiliates
without the prior written consent of ArQule. PRI may, however, transfer Licensed
Compounds to third parties for any purpose and may transfer Active Compounds to
third parties for the purpose of conducting research on behalf of PRI. PRI shall
not attempt to identify the chemical structure of the ArQule Compounds in the
Mapping Array Sets. In the case of Proprietary Materials other than ArQule
Compounds, each Recipient agrees to use such Proprietary Materials only for the
purposes indicated by the Provider, and shall not transfer the Proprietary
Materials to any third party without the prior written consent of the Provider.
Each Recipient further agrees to inform its employees and consultants about the
proprietary nature of the Proprietary Materials and 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 under this Section.
10.3. DISPOSITION OF UNUSED MATERIALS. At the request of Provider,
Recipient will return or destroy any unused Proprietary Materials furnished by
Provider other than ArQule Compounds.
10.4. DISPOSITION OF ARQULE COMPOUNDS. Except in the case of a material
breach of this Agreement by PRI, PRI shall be entitled to retain and continue to
screen all ArQule Compounds in PRI's possession.
10.6. COMPLIANCE WITH LAW. Recipient agrees to comply with all federal,
state, and local laws and regulations applicable to the use, storage, disposal,
and transfer of Proprietary Materials furnished by Provider, including without
limitation the Toxic Substances Control Act (15 USC 2601 ET SEQ.) and
implementing regulations (in particular, 40 CFR 720.36 [Research and
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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.
10.7. LIMITATION OF LIABILITY. Any Proprietary 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. PROVIDER MAKES NO
REPRESENTATIONS, AND EXTENDS NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, WITH RESPECT TO THE PROPRIETARY MATERIALS FURNISHED TO RECIPIENT. THERE
ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE. PROVIDER DISCLAIMS ANY WARRANTY, EXPRESS OR IMPLIED, THAT
THE USE OF ANY PROPRIETARY MATERIALS WILL NOT INFRINGE ANY PATENT OR OTHER
INTELLECTUAL PROPERTY RIGHTS OF A THIRD PARTY, AND PROVIDER SHALL HAVE NO
LIABILITY RELATING THERETO.
11. TERM AND TERMINATION.
--------------------
11.1. TERM. This Agreement shall commence on the Effective Date and
shall remain in effect until the expiration of PRI's obligation to pay royalties
for all Royalty-Bearing Products, unless earlier terminated as provided in this
Article 11.
11.2. TERM OF ARQULE COMPOUND SUPPLY. ArQule's obligation to supply
ArQule Compounds to PRI pursuant to this Agreement shall commence on the
Effective Date and shall remain in effect until December 31, 2001, unless
earlier terminated as provided in this Article 11; provided, however, that if
ArQule continues to offer the Mapping Array Program during the year 2002, PRI
may extend on the same terms the supply of ArQule Compounds through December 31,
2002 upon written notice to ArQule which is received by ArQule not later than
July 1, 2001. Upon expiration of the term of the ArQule Compound supply, PRI
shall be entitled to retain and continue to screen all ArQule Compounds in PRI's
possession (except as otherwise provided in Section 11.5.).
11.3. MATERIAL BREACH. In the event that either party commits a
material breach of any of its obligations under this Agreement and such
breaching party fails (i) to remedy that breach within sixty (60) days after
receiving written notice thereof from the non-breaching party or (ii) to
commence dispute resolution pursuant to Article 12, within sixty (60) days after
receiving written notice of that breach from the non-breaching party, the
non-breaching party may immediately terminate this Agreement upon written notice
to the breaching party.
11.4. FORCE MAJEURE. Neither party will be responsible for delays
resulting from acts beyond the control of such party, provided that the
nonperforming party uses commercially reasonable efforts to avoid or remove such
causes of nonperformance and continues performance hereunder with reasonable
dispatch whenever such causes are removed.
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11.5. EFFECT OF TERMINATION. Termination of this Agreement shall not
relieve the parties of any obligation accruing prior to such termination. The
following provisions shall survive the expiration or termination of this
Agreement: Articles 6, 7, 8, 9, 10, 12 and 13; Sections 3.2., 3.3., 4.1., 4.2.,
5.3., 5.4., 5.5., 5.6., 11.5., 14.8., 14.10., and 14.13. * .
12. DISPUTE RESOLUTION.
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12.1. PROCEDURES MANDATORY. The parties agree that any dispute arising
out of or relating to this Agreement shall be resolved solely by means of the
procedures set forth in this Article, and that such procedures constitute
legally binding obligations that are an essential provision of this Agreement;
provided, however, that all procedures and deadlines specified in this Article
may be modified by written agreement of the parties. If either party fails to
observe the procedures of this Article, as modified by their written agreement,
the other party may bring an action for specific performance in any court of
competent jurisdiction.
12.2. DISPUTE RESOLUTION PROCEDURES.
-----------------------------
12.2.1. NEGOTIATION. In the event of any dispute arising out
of or relating to this Agreement, the affected party shall notify the other
party, and the Research Committee shall attempt to resolve the matter, subject
to the approval of the senior management of both parties, within ten (10) days
after the date such notice is received by the other party (the "Notice Date").
Any disputes not resolved by discussions by the Research Committee shall be
referred to the Chief Executive Officer of ArQule and the President of PRI
(collectively, the "Senior Executives"), who shall meet at a mutually acceptable
time and location within thirty (30) days after the Notice Date and attempt to
negotiate a settlement. If the Senior Executives fail to meet within the
thirty-day period, or if the matter remains unresolved for a period of sixty
(60) days after the Notice Date, then either party may submit the dispute to
arbitration as provided in this Section 12.2.
12.2.2. ARBITRATION. Any dispute, controversy, or claim
arising out of or relating to this Agreement or the breach, termination, or
invalidity thereof, shall be finally settled by binding arbitration in New York,
New York in accordance with the then-existing rules (the "Rules") of the
American Arbitration Association ("AAA"), except as otherwise provided in this
Subsection. Any award or decision by the arbitrators shall be final and binding
upon the parties, and judgment thereon may be entered in any court having
jurisdiction thereof. All disputes involving issues of a scientific or technical
nature, such as whether an ArQule Compound is an Active Compound or confirmed
Active Compound or whether the Mapping Array Sets have the requisite average
purity levels, and disputes involving intellectual property issues, such as the
legitimate scope of a claim in a Patent Right, shall be decided by a sole
arbitrator who is an experienced medicinal chemist (in the case of scientific or
technical issues) or an experienced patent attorney with reasonable expertise in
the technological subject matter at issue (in the case of intellectual property
issues). The arbitrator shall be appointed by the parties. If the parties fail
to agree on an arbitrator within thirty (30) days after the date upon which a
party first demanded
------------
*Confidential treatment has been requested for the marked portion.
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arbitration, then each party shall designate a neutral representative who
together shall appoint an arbitrator within thirty (30) days, failing which the
arbitrator shall be appointed by the AAA in accordance with the Rules. All other
disputes shall be decided by a majority of the members of the Board of
Arbitration consisting of three (3) members, one (1) of whom shall be appointed
by each party and the third of whom shall be the chairman of the panel and be
appointed by mutual agreement of the two (2) party appointed arbitrators. In the
event of failure of the two (2) arbitrators to agree within sixty (60) days
after the commencement of the arbitration proceeding upon the appointment of the
third arbitrator, the third arbitrator shall be appointed by the AAA in
accordance with the Rules. An arbitration proceeding under this Section shall be
deemed to commence upon request or demand for arbitration filed with the AAA.
The arbitrator(s) shall apply the law as set forth in Section 14.10. below. The
arbitrator(s) shall provide for discovery by the parties not to exceed six (6)
months from the filing date of the arbitration demand. The arbitrator(s) shall
be required to render a brief written decision, which shall set forth the
rationale underlying the decision, within thirty (30) days after the hearings
are completed. The arbitrator(s) may award the prevailing party its costs and
reasonable attorneys fees, in addition to any other award granted to such party.
12.3. PRESERVATION OF RIGHTS PENDING RESOLUTION.
-----------------------------------------
12.3.1. PERFORMANCE TO CONTINUE. Each party shall continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out or relating to this Agreement; provided, however, that a
party may suspend performance of its obligations during any period in which the
other party fails or refuses to perform its obligations.
12.3.2. PROVISIONAL REMEDIES. Although the procedures
specified in this Article are the sole and exclusive procedures for the
resolution of disputes arising out of relating to this Agreement, either party
may seek a preliminary injunction or other provisional equitable relief if, in
its reasonable judgment, such action is necessary to avoid irreparable harm to
itself or to preserve its rights under this Agreement.
12.3.3. STATUTE OF LIMITATIONS. The parties agree that all
applicable statutes of limitation and time-based defenses (such as estoppel and
laches) shall be tolled while the procedures set forth in Subsections 12.2.1.
and 12.2.2. are pending. The parties shall take any actions necessary to
effectuate this result.
13. INDEMNIFICATION AND INSURANCE.
-----------------------------
13.1. INDEMNIFICATION. PRI agrees to defend, indemnify and hold ArQule,
its Affiliates and their respective directors, officers, employees, and agents
(the "Indemnitees") harmless from all costs, judgments, liabilities, and damages
assessed by a court of competent jurisdiction arising from claims asserted by a
third party against ArQule, its Affiliates, or their respective directors,
officers, employees, or agents as a result of: (i) actual or asserted violations
by PRI or its Affiliates, sublicensees, or third party manufacturers of any
applicable law or regulation that relates to the manufacture, distribution, or
sale of any product containing an ArQule Compound, Analog, or Royalty-Bearing
Product, including without any alleged or actual claim that such
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product was adulterated, misbranded, or mislabeled; (ii) claims for bodily
injury, death, or property damage attributable to the manufacture, distribution,
sale, or use by PRI or its Affiliates, sublicensees, or third party
manufacturers of any product containing an ArQule Compound, Analog, or
Royalty-Bearing Product; or (iii) a recall ordered by a governmental agency, or
required by a confirmed failure, of any product containing an ArQule Compound,
Analog, or Royalty-Bearing Product that is manufactured, distributed, or sold by
PRI, its Affiliates, sublicensees, or third party manufacturers; provided,
however, that such indemnification shall not apply to any liability, damage,
loss or expense to the extent directly attributable to (i) the negligent
activities or intentional misconduct of the Indemnitees or (ii) the settlement
of a claim, suit, action, or demand by the Indemnitees without the prior written
approval of PRI.
13.2. PROCEDURE. The Indemnitees agree to provide PRI with prompt
written notice of any claim, suit, action, demand, or judgment for which
indemnification is sought under this Agreement. PRI agrees, at its own expense,
to provide attorneys reasonably acceptable to ArQule to defend against any such
claim. The Indemnitees shall cooperate fully with PRI in such defense and will
permit PRI to conduct and control such defense and the disposition of such
claim, suit, or action (including all decisions relative to litigation, appeal,
and settlement); provided, however, that any Indemnitee shall have the right to
retain its own counsel, at the expense of PRI, if representation of such
Indemnitee by the counsel retained by PRI would be inappropriate because of
actual or potential differences in the interests of such Indemnitee and any
other party represented by such counsel. PRI agrees to keep ArQule informed of
the progress in the defense and disposition of such claim and to consult with
ArQule with regard to any proposed settlement.
13.3. INSURANCE. During any period in which PRI makes any ArQule
Compound, Analog, or Royalty-Bearing Product available for administration to a
human subject, PRI shall maintain policies of commercial general liability
insurance and product liability insurance in an amount not less than $5 million
per occurrence.
14. MISCELLANEOUS.
-------------
14.1. PUBLICITY. Neither party shall reveal the terms of this Agreement
or use the name of the other party in connection with any promotional statements
to the public about the work performed under this Agreement or the relationship
between the parties, whether in a press release, advertisement, promotional
sales literature, or other promotional oral or written statements, without the
prior written approval of the other party, except for restatements of
previously-approved statements and disclosures required by applicable law or
regulation.
14.2. RELATIONSHIP OF PARTIES. For the purposes of this Agreement, each
party is an independent contractor and not an agent or employee of the other
party. Neither party shall have authority to make any statements,
representations, or commitments of any kind, or to take any action which shall
be binding on the other party, except as may be explicitly provided for herein
or authorized in writing.
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14.3. REPRESENTATIONS AND WARRANTIES. Each party represents and
warrants to the other party (i) that it has the legal right, power, and
authority to enter into this Agreement, to extend the rights and licenses
granted to the other party in this Agreement, and to fully perform its
obligations under this Agreement, and (ii) that the performance of such
obligations will not conflict with its charter documents or any agreements,
contracts, or other arrangements to which it is a party. In the event that a
party becomes aware that any of its representations and warranties under this
Section become untrue during the term of this Agreement, such party shall
immediately furnish the other party with written notice which describes the
facts in reasonable detail.
14.4. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
14.5. HEADINGS. All headings in this Agreement are for convenience only
and shall not affect the meaning of any provision hereof.
14.6. BINDING EFFECT. This Agreement shall inure to the benefit of and
be binding upon the parties and their respective lawful successors and assigns.
14.7. ASSIGNMENT. Neither party may assign this Agreement without the
prior written consent of the other party, except that a party may assign this
Agreement to an Affiliate or to a successor in connection with the merger,
consolidation, or sale of all or substantially all of its assets or that portion
of its business pertaining to the subject matter of this Agreement.
14.8. NOTICES. All notices, requests, demands and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given upon the date of receipt if
delivered by hand, recognized national overnight courier, confirmed facsimile
transmission, or registered or certified mail, return receipt requested, postage
prepaid, to the following addresses or facsimile numbers:
If to PRI:
The X.X. Xxxxxxx Pharmaceutical Research Institute
920 U.S. Xxxxx 000 Xxxxx
X.X. Xxx 000
Raritan, New Jersey 08869-0602
Attention: President
Facsimile: 000-000-0000
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With a copy to: Office of General Counsel
Xxxxxxx & Xxxxxxx
Xxx Xxxxxxx & Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
If to ArQule:
ArQule, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: President
Tel: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
ArQule, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Legal Department
Tel: (000) 000-0000
Fax: (000) 000-0000
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section.
14.9. AMENDMENT AND WAIVER. This Agreement may be amended,
supplemented, or otherwise modified at any time, but only by means of a written
instrument signed by both parties. Any waiver of any rights or failure to act in
a specific instance shall relate only to such instance and shall not be
construed as an agreement to waive any rights or fail to act in any other
instance, whether or not similar.
14.10. GOVERNING LAW. This Agreement and the legal relations among the
parties shall be governed by and construed in accordance with the laws of the
State of Delaware irrespective of any conflict of laws principles.
14.11. XXXX-XXXXX-XXXXXX ACT. If required by law, the parties shall, at
their own expense, prepare and make appropriate filings under Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended, and the rules
and regulations promulgated thereunder (16 C.F.R. 801.1 et. seq.) (the "Act") as
soon as reasonably practicable. The parties shall co-operate in the antitrust
clearance process and agree to furnish promptly to the FTC and the Antitrust
Division of the Department of Justice any additional information reasonably
requested by them in connection with such filings.
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14.12. SEVERABILITY. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and this Agreement shall be construed as if such invalid or unenforceable
provision had not been included herein.
14.13. NON-SOLICITATION. During the term of the ArQule compound supply
as set forth in Section 11.2. and thereafter for a period of two (2) years, PRI
shall not persuade or induce, or attempt to persuade or induce, any ArQule
employee to discontinue his or her employment with ArQule in order to become
employed by or associated with PRI; its Affiliates; or any other business,
enterprise, or effort that is associated with PRI.
14.14. RIGHTS UPON INSOLVENCY. All rights and licenses to Patent Rights
granted under or pursuant to this Agreement by ArQule to PRI are, for all
purposes of Section 365(n) of Title 11 of the U.S. Code ("Title 11"), licenses
of rights to "intellectual property" as defined under Section 101(60) of Title
11. The parties agree that PRI shall retain and may fully exercise all of its
rights and elections under Title 11. ArQule agrees during the term of this
Agreement to create and maintain current copies or, if not amenable to copying,
detailed descriptions or other appropriate embodiments, of all such Patent
Rights. If a case is commenced by or against ArQule under Title 11, then ArQule
(in any capacity, including debtor-in-possession) and its successors and assigns
(including, without limitation, a Title 11 trustee) shall either (i) provide PRI
access to, or if appropriate provide PRI with a duplicate copy of, all such
intellectual property (including all embodiments thereof) held by ArQule and
such successors and assigns, as PRI may elect in a written request, immediately
upon such request, or (ii) perform all of the obligations provided in this
Agreement to be performed by ArQule; provided, however, that ArQule shall
fulfill the obligations set forth in clause (i) above in the event that this
Agreement is rejected as provided in Title 11 and PRI elects to retain its
rights hereunder as provided in Title 11. All rights, powers and remedies of
PRI, as a licensee hereunder, provided herein are in addition to and not in
substitution for any and all other rights, powers and remedies now or hereafter
existing at law or in equity (including, without limitation, Title 11) in the
event of the commencement of a Title 11 case by or against ArQule. PRI, in
addition to the rights, powers and remedies expressly provided herein, shall be
entitled to exercise all other such rights and powers and resort to all other
such remedies as may now or hereafter exist at law or in equity (including Title
11) in such event.
14.15. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any and all prior or contemporaneous oral and prior written
agreements and understandings.
14.16. ADVICE OF COUNSEL. PRI and ArQule have each consulted counsel of
their choice regarding this Agreement, and each acknowledges and agrees that
this Agreement shall not be deemed to have been drafted by one party or another
and will be construed accordingly.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.
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X.X. XXXXXXX PHARMACEUTICAL
RESEARCH INSTITUTE
By: /s/ Per X. Xxxxxxxx
------------------------------------------------
Per X. Xxxxxxxx
President
ARQULE, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------
Xxxx X. Xxxxxx
President and Chief Executive Officer
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EXHIBIT A
---------
TERMS AND CONDITIONS OF PATENT LICENSE
The following terms and conditions supplement the provisions of the Agreement.
1. DEFINITIONS.
-----------
1.1. "COMPOUND ARRAY" means a plurality of chemical compounds arranged
in a spatially addressable format.
1.2. "LICENSED ARRAY" means any Compound Array that cannot be
developed, manufactured, used, or sold without infringing one or more claims
under the Licensed Patents, excluding (i) the specific Compound Array and
individual chemical compounds disclosed in the example in the Licensed Patents
and (ii) Compound Arrays and individual chemical compounds that incorporate the
specific chemistries disclosed in the Licensed Patents (e.g., aminimide- and
oxazolone-based chemistries).
1.3. "LICENSED PATENTS" means U.S. Patent Nos. 5,712,171 and 5,736,412
entitled "Method of Generating a Plurality of Chemical Compounds in a Spatially
Arranged Array" and any divisional, continuation, reissue, or reexamination of
such patents, and any foreign counterparts to such patents.
1.4. "LICENSED PROCESS" means a process used to produce a Compound
Array if the process cannot be developed or performed without infringing one or
more claims under the Licensed Patents.
2. GRANT OF RIGHTS.
---------------
During the term of this Agreement, ArQule hereby grants to PRI and its
Affiliates a non-exclusive, worldwide license (without the right to sublicense)
under the Licensed Patents to develop, make, and use Licensed Arrays and to
develop and perform Licensed Processes for its own internal research and
development efforts. This license grant is expressly limited to the Licensed
Patents and does not extend to any other current or future issued patents within
ArQule Patent Rights.
3. INDEMNIFICATION.
---------------
3.1. INDEMNIFICATION. PRI agrees to defend, indemnify and hold ArQule,
its Affiliates and their respective directors, officers, employees, and agents
(the "Indemnitees") harmless from all costs, judgments, liabilities, and damages
assessed by a court of competent jurisdiction arising from claims asserted by a
third party against ArQule, its Affiliates, or their respective directors,
officers, employees, or agents as a result of: (i) actual or asserted violations
by PRI or its Affiliates, sublicensees, or third party manufacturers of any
applicable law or regulation that relates to the manufacture, distribution, or
sale of any Licensed Array or other product developed
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or discovered using the Licensed Process, including without any alleged or
actual claim that such product was adulterated, misbranded, or mislabeled; (ii)
claims for bodily injury, death, or property damage attributable to the
manufacture, distribution, sale, or use by PRI or its Affiliates, sublicensees,
or third party manufacturers of any Licensed Array or other product developed or
discovered using the Licensed Process; or (iii) a recall ordered by a
governmental agency, or required by a confirmed failure, of any Licensed Array
or other product developed or discovered using the Licensed Process that is
manufactured, distributed, or sold by PRI, its Affiliates, sublicensees, or
third party manufacturers; provided, however, that such indemnification shall
not apply to any liability, damage, loss or expense to the extent directly
attributable to (i) the negligent activities or intentional misconduct of the
Indemnitees or (ii) the settlement of a claim, suit, action, or demand by the
Indemnitees without the prior written approval of PRI.
3.2. PROCEDURE. The Indemnitees agree to provide PRI with prompt
written notice of any claim, suit, action, demand, or judgment for which
indemnification is sought under this Agreement. PRI agrees, at its own expense,
to provide attorneys reasonably acceptable to ArQule to defend against any such
claim. The Indemnitees shall cooperate fully with PRI in such defense and will
permit PRI to conduct and control such defense and the disposition of such
claim, suit, or action (including all decisions relative to litigation, appeal,
and settlement); provided, however, that any Indemnitee shall have the right to
retain its own counsel, at the expense of PRI, if representation of such
Indemnitee by the counsel retained by PRI would be inappropriate because of
actual or potential differences in the interests of such Indemnitee and any
other party represented by such counsel. PRI agrees to keep ArQule informed of
the progress in the defense and disposition of such claim and to consult with
ArQule with regard to any proposed settlement.
4. MISCELLANEOUS.
-------------
4.1. MARKING OF LICENSED ARRAYS. To the extent commercially feasible
and consistent with prevailing business and legal practices, PRI shall xxxx, and
shall cause its Affiliates to xxxx, all Licensed Arrays that are produced under
this Agreement with the number of each issued patent under the Licensed Patents
that applies to such Licensed Array.
4.2. COMPLIANCE WITH LAW. PRI shall comply with, and shall ensure that
its Affiliates comply with, all local, state, federal, and international laws
and regulations relating to the development, manufacture, use, and sale of
Licensed Arrays. PRI expressly agrees that PRI and its Affiliates shall comply
with all United States laws and regulations controlling the export of certain
commodities and technical data, including without limitation all Export
Administration Regulations of the United States Department of Commerce.
30
