Exhibit 10.1
[Note: Certain portions of this document have been marked with "[c.i.]" to
indicate confidential information for which confidentiality has been requested.
The confidential portions have been omitted and filed separately with the
Securities and Exchange Commission.]
RESEARCH COLLABORATION
AND
LICENSE AGREEMENT
BETWEEN
CADUS PHARMACEUTICAL CORPORATION
AND
SMITHKLINE XXXXXXX
DATED AS OF FEBRUARY 25th, 1997
TABLE OF CONTENTS
1. DEFINITIONS...................................................................2
2. REPRESENTATIONS AND WARRANTIES...............................................14
3. COLLABORATIVE RESEARCH PROGRAM...............................................16
4. DEVELOPMENT AND COMMERCIALIZATION............................................31
5. GRANT OF LICENSES............................................................38
6. ROYALTIES AND MILESTONE PAYMENTS.............................................41
7. PAYMENT AND REPORTS..........................................................46
8. INFRINGEMENT ACTIONS BY THIRD PARTIES;
PATENT ENFORCEMENT......................................................48
9. OWNERSHIP OF INVENTIONS; PATENTS.............................................50
10. INDEMNIFICATION..............................................................51
11. PUBLICATION; CONFIDENTIALITY.................................................52
12. TERM; TERMINATION OF LICENSES................................................56
13. FORCE MAJEURE AND HARDSHIP...................................................58
14. MISCELLANEOUS................................................................59
2
RESEARCH COLLABORATION
AND
LICENSE AGREEMENT
RESEARCH COLLABORATION AND LICENSE AGREEMENT (the "Agreement"), dated as of
February 25th, 1997, by and among SmithKline Xxxxxxx Corporation, a Pennsylvania
corporation with its principal offices at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxxxx,
Xxxxxxxxxxxx 00000, U.S.A., SmithKline Xxxxxxx p.l.c., a corporation organized
under the laws of England and having a place of business at Xxxxx Xxxx Xxxx,
Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx (collectively "SB" as defined below) and CADUS
Pharmaceutical Corporation, a corporation duly organized and existing under the
laws of the state of Delaware, and having offices at 000 Xxx Xxx Xxxx Xxxxx
Xxxx, Xxxxxxxxx, Xxx Xxxx 00000-0000 ("CADUS" as defined below).
PRELIMINARY STATEMENTS
A. CADUS is the owner of, and has all right, title and interest in, or has
acquired the rights to, certain technology involving the transfection and
expression of certain Targets into yeast, the identification of Surrogate
Ligands and Natural Ligands for certain Targets, and the development of yeast
strains suitable for drug discovery research.
B. CADUS has research facilities, experienced personnel and other
capabilities conducive to further development of the technology and wishes to
obtain funding therefor, so the technology can be applied commercially.
C. SB recognizes such technology of CADUS represents a valuable resource
for the identification of gene function and for the discovery of potential
products, and SB is interested in the further development of CADUS Technology
and in obtaining a license for use of Screens in SB's research and development.
1
D. CADUS and SB are entering into this Agreement to provide for CADUS to
conduct further research and development involving CADUS Technology in exchange
for certain funding by SB and for CADUS to license, and SB and its Affiliates to
obtain a license for, the use and practice of Screens in SB's research and
development.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants and agreements of the Parties contained in this Agreement, the Parties
agree as follows:
1. DEFINITIONS
As used in this Agreement, the following terms will have those meanings set
forth in this Section 1 unless the context dictates otherwise.
"Active Substructure" shall mean the minimum pharmacophore that is
responsible for the activity of a Lead Compound or Analog.
"Affiliate", with respect to any Party, shall mean any Person
controlling, controlled by, or under common control with, such Party. For these
purposes, "control" shall refer to (a) the possession, directly or indirectly,
of the power to direct the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise or (b) the
ownership, directly or indirectly, of at least 50% of the voting securities or
other ownership interest of a Person.
"Analog" of any compound, or of an active component of any
extract, broth or other screening sample, shall mean a compound, or an active
component of any extract, broth or other screening sample, each of which was
derived from a Lead Compound or from knowledge of the structure of a Lead
Compound and in which the Active Substructure of such compound, or such active
component of any extract, broth or other screening sample is conserved with
respect to the Lead Compound.
2
"Annual Research Plan" shall mean the research plan prepared
annually and amended quarterly, if necessary, during the term of the Research
Program as provided in Paragraph 3.1(b).
"CADUS" shall mean Cadus Pharmaceutical Corporation and any of its
respective Affiliate(s) to which any rights and/or obligations of it shall be
assigned and/or delegated pursuant to this Agreement.
"CADUS Patents" shall mean all patents and patent applications to
the extent they claim CADUS Technology, which are or become owned by CADUS or to
which CADUS otherwise has, now or in the future, the right to grant licenses.
Included within the definition of CADUS Patents are all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals,
extensions, registrations, confirmations, reexaminations thereof and any
provisional applications and all SPCs.
"CADUS Technology" shall mean (a) prior to the Effective Date, all
proprietary inventions, improvements, discoveries, claims, formulae, processes,
trade secrets, technologies, owned by CADUS or to which CADUS has the rights to
grant licenses or sublicenses (including any academic collaborations), and
relating to technology involving the transfection and expression of Targets into
yeast cells and the development of such yeast cells as Screens for the discovery
of potential products; and (b) after the Effective Date, all proprietary
inventions, improvements, discoveries, claims, formulae, processes, trade
secrets, technologies, owned by CADUS or to which CADUS has the rights to grant
licenses or sublicenses, and utilized or arising under the Research Program,
provided CADUS Technology shall not include any SB Technology as defined in
subparagraph (2) of the definition of SB Technology. For the purposes of
clarity, the identity, sequence information, and structure of the Natural Ligand
for any Third Party Target, or other information on the biological function of
such Third Party Target are not CADUS Technology and may be provided by SB to
Third Parties.
3
"CADUS's Therapeutic Areas of Interest" shall mean the following
with respect to humans: cancer, autoimmune, allergic and inflammatory diseases.
"Compound" shall mean any Lead Compound or any Analog of any
Lead Compound.
"Constitutively active mutant target" shall mean a mutant form
of a receptor that is unlike its naturally occurring counterpart in that it
activates a G protein-mediated signal transduction pathway in the absence of a
ligand at levels significantly above that of its naturally occurring counterpart
at comparable expression levels in yeast.
"Co-Promotion" shall mean those activities undertaken by a
pharmaceutical company's sales and marketing personnel to implement marketing
plans and strategies aimed at encouraging the appropriate use of a particular
prescription pharmaceutical product and to maximize its commercial value in the
market place. When used as a verb, "Co-Promote" shall mean to engage in such
activities.
"Effective Date" shall mean the date of this Agreement as set
forth at the beginning of this Agreement.
"FDA" shall mean the United States Food and Drug Administration,
or the successor thereto.
"First Commercial Sale" shall mean, with respect to any Product,
the first sale for use or consumption by the general public of such Product.
4
"Gross Profit" shall mean the gross receipts from sales of a Value
Added Product in the Co-Promotion country less (a) normal and customary trade,
quantity and cash discounts actually paid or accrued in accordance with
generally accepted accounting principles consistently applied and allowances or
credits paid to customers on account of rejection or return of the Value Added
Product in accordance with SB's returned goods policy (collectively, "RAR"), (b)
the Local Cost of Goods, and (c) any royalties paid or payable by SB to CADUS or
any other Third Party in connection with the sale of the Value Added Product in
the CoPromotion country. Any accruals for RAR deductions shall be reconciled
with actual results on a quarterly basis and any adjustments shall be reflected
in the subsequent quarter's computation of Gross Profit.
"IND" shall mean a Notice of Claimed Investigational Exemption for
a New Drug.
"Invention" shall mean any new or useful process, compound or
composition of matter, patentable or unpatentable, or any improvement thereof,
conceived or first reduced to practice, or demonstrated to have utility during
and in the framework of the conduct of the Research Program.
"Joint Invention" shall mean any Invention for which it is
determined, in accordance with applicable law, that (i) one or more employees,
consultants or agents of CADUS or any other persons obliged to assign such
Invention to CADUS, and (ii) one or more employees, consultants or agents of SB
or any other persons obliged to assign such Invention to SB, are joint inventors
of such Invention.
"Key Check Point" shall mean (a) identification by CADUS [c.i.];
and (b) demonstration that CADUS Technology [c.i.]; and (c) demonstration that
[c.i.], each of (a), (b), and (c) being completed by the Key Check Point Date.
5
"Key Check Point Date" shall mean the later of (a) the second
anniversary of the Effective Date, or (b) one year after the earlier of (i) the
date SB has performed its obligations under Paragraph 3.5(a) hereof or (ii)
the date the RC has accepted into the Research Program clones of [c.i.]
Targets inserted into appropriate vectors (according to specifications set by
the RC) together with information verifying that the sequence of the Targets
contained in the vectors are correct.
"Lead Compound" shall mean any compound, an active component of
any extract, broth or other screening sample (including a Surrogate Ligand or
Natural Ligand) identified, or whose biological activity is identified or
confirmed, through the use by SB (or on behalf of SB) or CADUS (pursuant to
Paragraph 3.9(b) or 5.4(a)) of any Screen and which Lead Compound is
biologically active against such Screen and which may be developed for a
therapeutic indication based on the biological activity demonstrated in such
Screen, provided any of the CADUS Technology incorporated in such Screen is
proprietary to CADUS at the time of such use by SB or CADUS as the case may be.
"Local Cost of Goods" shall mean SB's local cost of goods for
finished packaged stock of the Value Added Product as reported in its local
accounts in the Co-Promotion country (and auditable by independent Third Party
auditors if required) and made up of the transfer price and other related
expenses for the Value Added Product from SB's manufacturing site, provided
always that any such calculations shall have been made in accordance with
generally accepted accounting principles and in accordance with standards
consistently applied by SB for other products in the same category as, or
largely similar to, the Value Added Product.
"Make, have made, use, and sell" shall mean all exclusionary
rights now or in the future conferred by a patent or equivalent of a patent
(e.g., a SPC), copyright, or trade secret law of each applicable respective
jurisdiction of the world, including but not limited to the right to make, have
made, use, sell, license, import, copy, display, and distribute.
6
"Natural Ligand" shall mean a ligand produced by a human cell or a
human pathogen whose biological activity is identified or confirmed through the
use by SB (or on behalf of SB) or CADUS (pursuant to Paragraphs 3.9(b) or
5.4(a)) of CADUS Technology, which ligand is biologically active against a
Target thereby causing a cellular response and which is reasonably confirmed to
be a ligand for the Target, provided any of such CADUS Technology is proprietary
to CADUS at the time of such use by SB or CADUS as the case may be.
"NDA" shall mean a New Drug Application.
"Net Sales" shall mean the gross receipts from sales of Product in
the Territory by SB or sublicensees ("the Selling Party") to Third Parties
(excluding CADUS and its Affiliates):
(a) in finished product form (i.e., packaged and labeled for sale to the
ultimate consumer); or
(b) in any product form other than finished product form (such as final
stage bulk material ready for conversion to final form, or bulk tablets, bulk
capsules, bulk ampoules or bulk vials) to distributors who subsequently convert
such product into finished product form and sell to Third Parties, provided that
such distributors shall not be considered sublicensees for purposes of this Net
Sales definition, and further provided that for purposes of this Net Sales
definition, such sales of Product in final stage bulk material form shall only
be deemed to occur where such sales are due to local country requirements as
such requirements are determined by SB; less deductions actually allowed or
specifically allocated to Product by the Selling Party using generally accepted
accounting standards for the following (but for items (i) and (ii) only to the
extent that they were included in the gross invoice price):
(i) transportation charges, including insurance, for
transporting Product;
7
(ii) sales and excise taxes and duties paid or allowed by the
Selling Party and any other governmental charges imposed upon
the production, importation, use or sale of such Product and
paid by the Selling Party;
(iii) trade, quantity and cash discounts actually allowed on
Product;
(iv) allowances or credits to customers on account of
rejection or return of Product in accordance with SB's
returned goods policy or on account of retroactive price
reductions affecting such Product; and
(v) Product rebates and Product charge backs including those
granted to managed care entities (including Medicaid rebates).
Any accruals for the foregoing deductions shall be reconciled with
actual results on a quarterly basis and any adjustments shall be
reflected in the subsequent quarter's computation of Net Sales.
Sales between SB and its sublicensees (other than sublicensees that
are end-users) shall be excluded from the computation of Net Sales
and no royalties will be payable on such sales. Notwithstanding the
immediately preceding sentence, it is understood that any transactions
between SB or any of its or their sublicensees on the one hand and a
PSB on the other hand will be deemed to be transactions with Third
Parties for the purposes of computing Net Sales, provided that the
conditions of such sales to the PSB, including any and all rebates and
discounts allocated to transactions with the PSB, shall be on an arms
length basis and such rebates and discounts shall be fully deductible
in the computation of Net Sales. In the event that any PSB type
activity is within SB or within any of its Affiliates or its or their
sublicensees as only part of its or their total activities rather than
in a separate Affiliate, a notional Net Sales figure will be calculated
on an arms length basis to cover such activities. The term "PSB" as
used in this definition shall mean any present or future Affiliate of
SB or its sublicensees which conducts a pharmaceutical service business
for or on behalf of Third Parties, including pharmaceutical benefits
management services (hereinafter "PBM"), wholesaler distribution,
pharmacy distribution, managed-care services, disease-management
services, hospital
8
services, or mail-order prescription pharmacy services. As of the
Effective Date, Affiliates of SB which are included within the
definition of PBM are Diversified Pharmaceutical Services and
Diversified Prescription Delivery llc.
"Operating Profit" shall mean Gross Profit less deductions for
(i) the cost to SB for distribution services, (ii) SB's cost for
providing medical information services in support of the Value Added
Product; (iii) SB's cost for providing quality control and quality
assurance services in support of the Value Added Product; (iv) SB's
cost for providing bids and tender management, formulary listing and
managed care field force services in support of the Value Added
Product, and; (vi) the costs incurred by SB in connection with SB's
provision of physician level sales and marketing data and information
for the Value Added Product as extracted from SB's data warehouse.
Salary, salary related expenses or direct costs associated with either
party's field force shall not be deducted from Gross Profit in
computing Operating Profit.
"Party" shall mean CADUS or SB and, when used in the plural,
shall mean CADUS and SB.
"Person" shall mean any natural person, corporation, firm,
business trust, joint venture, association, university, organization,
company, partnership or other business entity, or any government or any
agency or political subdivision thereof.
"Post-Term CADUS Technology/CADUS Patents" shall mean CADUS
Technology which are Screens transferred to SB during the term of
the Research Program and CADUS Patents covering such transferred CADUS
Technology, the license to each of which was granted to SB pursuant to
Paragraph 5.1 and has expired.
"PLA" shall mean a Product License Application.
9
"Project Compound" shall mean a Compound that has received
approval as a pre-clinical development candidate pursuant to the then
applicable internal policies and procedures of SB.
"Product" shall mean any product which uses as one of its
active ingredients a Compound which is developed by or on behalf of SB,
each developed for a therapeutic indication based on the biological
activity demonstrated by the relevant Lead Compound or the Natural
Ligand in the relevant Screen.
"Promotional Expenses" shall mean any actual pre or post
Value Added Product launch out of pocket promotional expenses
(including the cost of the Value Added Product samples calculated at
the Local Cost of Goods) by either party, which are set forth in any
annual Marketing Plan, accounted for according to generally accepted
accounting principles and approved by the Marketing Committee related
to the marketing and Co-Promotion of the Value Added Product in the
Co-Promotion country. Promotional Expenses shall include, among other
things, actual costs for printing of promotional and training
materials, services provided by third parties (e.g. advertising);
symposia; the cost of any Phase IV post-marketing clinical studies,
compassionate use program and/or indigent patient programs (including
the cost of the Value Added Product samples calculated at the Local
Cost of Goods).
"Proprietary" shall mean, with respect to intellectual
property, intellectual property that is (in whole or in part) a trade
secret, covered by the claims of an issued patent or covered by the
claims of a patent application at the relevant time.
"Research Committee" shall have the meaning set forth in
Section 3.2 hereof.
10
"Research Program" shall mean all of the research
activities conducted by CADUS, or by CADUS in collaboration with SB and
its Affiliates for the benefit of SB and its Affiliates, which are
undertaken pursuant to Section 3 of this Agreement.
"Royalty Term" shall mean, with respect to each Product in
each country in the Territory, the period of time commencing on the
date of the First Commercial Sale of such Product in such country and
ending on the later of (i) ten (10) years from such date, and (ii) the
date on which the last to expire of Valid Claims covering such Product
in such country expires.
"SB" shall mean, collectively, SmithKline Xxxxxxx
Corporation, SmithKline Xxxxxxx p.l.c, and any of their respective
Affiliate(s) to which any rights and/or obligations of either of them
shall be assigned and/or delegated pursuant to this Agreement.
"SB Patents" shall mean all patents and patent
applications to the extent they claim SB Technology, which are or
become owned by SB or to which SB otherwise has, now or in the future,
the right to grant licenses. Included within the definition of SB
Patents are all continuations, continuations-in-part, divisions,
patents of addition, reissues, renewals, extensions, registrations,
confirmations, reexaminations thereof and any provisional applications
and all SPCs.
"SB Technology" shall mean (1) any and all proprietary
data, substances, processes, materials, formulas, know-how, inventions
and information derived from the use of CADUS Technology by SB,
provided such data, substances, processes, materials, formulas,
know-how, inventions and information are not included in subparagraph
(2) of this definition ; (2) Third Party Targets, Substances associated
with such Third Party Targets, and any and all data, substances,
processes, materials, formulas, know-how, inventions and information
based on the
11
use of or derived from the use of Third Party Targets and/or Substances
associated with such Third Party Targets developed by or for either
party arising out of the performance of the Research Program; and (3)
SB Targets and Substances (except those Substances in subparagraph (2))
provided to CADUS by SB pursuant to the Research Program.
"Screen" shall mean any screening assay which incorporates
a Target and which was developed by CADUS, alone or with any
collaboration by SB, during the term of the Research Program, or
otherwise provided to SB by CADUS and accepted by SB as a screening
assay during the term of the Research Program.
"SPCs" shall mean a right based upon a patent to exclude
others from making, using or selling a product, process, substance,
composition or service, such as a Supplementary Protection Certificate.
"Stock Purchase Agreement" shall mean the Stock Purchase
Agreement, dated as of the Effective Date, between CADUS and SmithKline
Xxxxxxx Corporation.
"Substances" shall have the meaning set forth in Section
3.10 hereof.
"Surrogate Ligand" shall mean any agonist molecule whose
biological activity is identified or confirmed by CADUS through the use
of CADUS Technology or SB Technology licensed to CADUS pursuant to
Paragraph 5.3 or 5.4 and which is biologically active against a Target
thereby causing a cellular response and which is not a Natural Ligand
or Analog of such Natural Ligand for such Target.
"Takeda" shall mean Takeda Chemical Industries, Ltd., a
corporation organized under the laws of Japan, having a principal place
of business at 0-0, Xxxxxxxxxx 0-Xxxxx, Xxxx-xx, Xxxxx, 000, Xxxxx, and
its Affiliates.
12
"Target" shall mean any confirmed or putative orphan G
protein-coupled receptor and shall include only such SB Targets, Third
Party Targets, CADUS Targets or Other Targets as are actually included
in the Research Program pursuant to Paragraph 3.1(c) and which have not
been excluded or withdrawn by CADUS or SB pursuant to Paragraph 3.1(c).
(a) "SB Target" shall mean a Target which is proprietary
in whole or in part to SB and that is provided by SB to CADUS for use
in the Research Program pursuant to this Agreement and which is not a
Third Party Target.
(b) "Third Party Target" shall mean a Target which is
proprietary in whole or in part to a Third Party and to which SB has
obtained from each such Third Party the right to use in the Research
Program and that is provided by SB to CADUS for use in the Research
Program pursuant to this Agreement. For the purposes of this Agreement,
all Third Party Targets are deemed to be proprietary to a Third Party.
(c) "Other Target" shall mean a Target, other than an SB
Target, Third Party Target, or CADUS Target, that is provided by SB to
CADUS or is provided by CADUS to SB for use in the Research Program
pursuant to this Agreement.
(d) "CADUS Target" shall mean a Target which is
proprietary in whole or in part to CADUS and that is provided by CADUS
to SB for use in the Research Program pursuant to this Agreement.
"Territory" shall mean the entire world.
"Third Party" shall mean any Person who or which is
neither a Party nor an Affiliate of a Party.
13
"Valid Claim" shall mean a claim of any SB Patent or CADUS
Patent, as the case may be, which has not been held invalid or
unenforceable by final decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which is not admitted to be invalid or
unenforceable through reissue, disclaimer or otherwise.
"Value Added Product" shall mean individually or
collectively Value Added Target Product, Value Added Peptide Product,
and Value Added CADUS Product.
(a) "Value Added Target Product" shall mean a Product
wherein the relevant Screen incorporated a CADUS Target.
(b) "Value Added Peptide Product" shall mean a Product
which is a peptide Surrogate Ligand, a rationally designed peptide
analog of such peptide Surrogate Ligand, or a rationally designed
non-peptide Analog of such peptide Surrogate Ligand, provided that such
Value Added Peptide Product does not include a Natural Ligand to the
Target used in the screen or any Analog of such Natural Ligand.
(c) "Value Added CADUS Product" shall mean a Product
(other than a Value Added Peptide Product) where the Compound was
provided to SB by CADUS pursuant to Paragraphs 3.9(b)(1) and 5.4(b).
2. REPRESENTATIONS AND WARRANTIES.
2.1 Representations and Warranties of Both Parties
Each Party represents and warrants to the other Party that: (i) it is
free to enter into this Agreement; (ii) in so doing, it will not
violate any other agreement to which it is a party
14
that would materially and adversely affect its ability to perform under
this Agreement; (iii) it has taken all corporate action necessary to
authorize the execution and delivery of this Agreement and the
performance of its obligations under this Agreement; and (iv) this
Agreement constitutes a valid and binding obligation of such Party and
is enforceable against it in accordance with its terms.
2.2 Representations and Warranties of CADUS
CADUS hereby represents and warrants to SB that:
(a) It is the owner, or licensee, of the CADUS Technology
existing on the Effective Date and has the right to grant licenses
therefor;
(b) All CADUS Patents have been maintained to date and, to
the best of its knowledge, all CADUS Patents licensed to CADUS have
been maintained to date;
(c) During the term of the Research Program it shall
maintain the licenses to CADUS Technology licensed to it and referred
to in subparagraph (a) and it shall maintain the licenses to CADUS
Patents licensed to it and referred to in subparagraph (b);
(d) It is not aware of any asserted or unasserted claim or
demand which it believes can be enforced against such CADUS Patents;
(e) To the best of its knowledge, the practice of such
CADUS Patents during the conduct of the Research Program does not
infringe upon or conflict with any patent or other enforceable
proprietary rights of any Third Party, except that SIBIA Neurosciences,
Inc. has commenced a patent infringement litigation claiming that CADUS
is infringing U.S. Patent No. 5,401,629 owned by SIBIA Neurosciences,
Inc.
15
(which also owns a related patent U.S. Patent No. 5,436,128) (although
neither Party acknowledges infringement or validity of such patents);
(f) During the Research Program, it shall use its
reasonable best efforts to take licenses to patents and technology of
Third Parties (other than the patents referred to in subparagraph (e))
which patents are reasonably necessary in order to use the CADUS
Technology in the conduct of the Research Program, provided such
licenses are available to CADUS on commercially reasonable terms and in
no event shall this Paragraph 2.2(f) be construed as an obligation of
CADUS to take any licenses to Targets or Compounds; and
(g) It has not entered into any agreement with any Third
Party which is in conflict with any of the rights granted to SB and its
Affiliates pursuant to this Agreement.
2.3 Representations and Warranties of SB
SB hereby represents and warrants to CADUS that it is the owner of, or
has the rights to include in the Research Program, all SB Targets and
Third Party Targets.
3. COLLABORATIVE RESEARCH PROGRAM
3.1 Scope of Research Program
(a) The Research Program is a program for collaborative research
under which CADUS and SB will carry out the research agreed upon by the
Parties directed at Targets during the term of the Research Program (as
defined in Paragraph 3.8). SB has the right, under the Research
Program, to have CADUS conduct research on [c.i.] during the initial
term of the Research Program and [c.i.] any extension of the Research
Program pursuant to Paragraph 3.8. Promptly after the Effective Date SB
shall have the right to submit to CADUS [c.i.] confirmed or putative
orphan G protein-coupled
16
receptors for inclusion into the Research Program and such receptors
shall be Targets provided they are not excluded or withdrawn as
provided in this Section 3. SB shall have the right to replace any of
such [c.i.] receptors which are excluded or withdrawn as provided in
this Section 3.
(b) Prior to the commencement of the Research Program and
thereafter prior to the commencement of each calendar year, the
Research Committee shall prepare and provide to each Party, in form and
substance mutually acceptable to each Party, an outline of the goals
and scope of the research to be undertaken during the upcoming year,
together with a detailed description of the specific research
activities to be undertaken (an "Annual Research Plan"). The Parties
intend that the Annual Research Plan will also contain a list of
selected Targets (specifying, to the extent possible, whether they are
SB Targets, Third Party Targets, CADUS Targets or Other Targets).
(c) The Annual Research Plan for the period commencing on the
Effective Date and ending on one (1) year after the Effective Date will
be prepared by the Research Committee as soon as possible after the
Effective Date and provided to each party. The Research Committee may
revise each Annual Research Plan quarterly. The Annual Research Plan
and the Key Check Point may be amended only with the unanimous consent
of the Research Committee. If the Research Committee cannot reach
unanimity as to whether or not to amend an Annual Research Plan or Key
Check Point, it shall not be amended. SB, in consultation with CADUS,
will decide the Targets to be included (the RC shall finally select the
Targets to be included pursuant to Paragraph 3.2) and the priorities
within the Research Program. CADUS shall have the right to exclude from
the Research Program Targets CADUS has previously committed to a Third
Party (i.e., prior to being proposed by SB pursuant to Paragraph
3.1(a)) on an exclusive basis. CADUS shall also have the right to
exclude from the Research Program Targets CADUS has previously
committed to a Third Party on a non-exclusive basis, unless SB
specifically indicates in writing that it accepts inclusion of such
Target on a non-
17
exclusive basis. SB can withdraw a Target from the Research Program
at any time provided CADUS has not begun to make a Screen
incorporating such Target (i.e., has not initiated a search for a
Surrogate Ligand for such Target), in which event CADUS will have the
right to conduct research on such Target for itself or a Third Party as
if such Target had never been included in the Research Program provided
CADUS does not use any SB Technology other than that licensed to CADUS
pursuant to Paragraph 5.3. SB or CADUS can exclude or withdraw a Target
from the Research Program at any time if it reasonably believes the use
of such Target infringes a valid patent of a Third Party, in which
event CADUS will have the right to conduct research on such Target for
such Third Party provided SB and not CADUS was the one to withdraw the
Target and CADUS does not use any SB Technology other than that
licensed to CADUS pursuant to Paragraph 5.3.
(d) If the Research Committee fails to agree on an Annual Research
Plan the matter shall be referred for further review and resolution to
the Sr. Vice President of Biopharmaceutical Research & Development of
SB, or such other similar position designated by SB from time to time,
and the Chief Executive Officer of CADUS, or such other similar
position designated by CADUS from time to time. Until the Sr. Vice
President of Biopharmaceutical Research & Development of SB and the
Chief Executive Officer of CADUS make a joint decision, and in the
absence of such a decision, SB shall continue to provide funding to
CADUS for the Research Program at the same level of funding as provided
during the previous year, in accordance with Paragraph 3.3, and CADUS
shall continue to conduct the Research Program in accordance with the
goals and scope of the research described therein and shall continue
staffing and non-staffing resource levels consistent with previous
staffing and non-staffing resource levels.
18
3.2 Research Committee
(a) The Parties shall establish a Research Committee (the
"Research Committee" or "RC"), which shall be comprised of eight (8)
members: (I) four (4) SB representatives designated by SB promptly
after the Effective Date, (ii) the Vice President of Research at CADUS,
or such other similar position designated by CADUS from time to time,
and (iii) three (3) additional CADUS representatives designated by
CADUS. Members of the Research Committee may be represented at any
meeting by a designee appointed by such member for such meeting, if
such member is unable to attend such meeting. The chairperson of the
Research Committee shall be designated annually on an alternating basis
between the Parties. The Party not designating the chairperson shall
designate one (1) of its representative members as secretary to the
Research Committee for such year. Each Party shall be free to change
its representative members, on written notice to the other Party,
provided that it does so in compliance with this Paragraph 3.2. The
Research Committee shall exist until the termination or expiration of
the term of the Research Program. Each party may bring additional nonRC
representatives to meetings as appropriate.
(b) Responsibilities. The Research Committee shall be responsible
for preparing the Annual Research Plan (based on priorities set by SB
and taking into account CADUS's views as to the feasibility of the
scope and timing of research activities and objectives), monitoring and
adapting the Annual Research Plan based on the results and progress of
the Research Program, establishing long-term objectives for the
Research Program and evaluating the progress of the Research Program in
accordance with Paragraph 3.1(b), including, without limitation:
(1) Deciding the direction and objectives of the Research
Program;
19
(2) Promptly determining if the research milestones of
Paragraph 3.3(g) have been met after notice to the RC by CADUS that
such research milestone has been met;
(3) Providing ongoing scientific guidance to the Research
Program;
(4) Providing a forum for the exchange of scientific
information among the scientists participating in the Research Program;
and
(5) Finally selecting which receptors that are submitted
by SB pursuant to Paragraph 3.1(a) are to be included in the Research
Program. It is understood that any disputes under this subparagraph (5)
are subject to the dispute resolution mechanism set forth under
Paragraph 3.2(d) and not Paragraph 3.1(d).
(c) Meetings. During the term of the Research Program, the
Research Committee shall meet at least twice per year, and more
frequently as the Parties deem appropriate, on such dates and at such
times as the Parties shall agree. In addition, the parties will meet at
SB for an annual review of the Research Program. At such meetings, the
Research Committee shall, among other things, discuss the progress of
and plans for the Research Program and seek to agree on the specific
research activities to be undertaken. The meetings shall be held at
locations that are agreed upon by the Parties. The chairperson shall be
responsible for sending notices of meetings to all members. The
Research Committee may also convene or be polled or consulted from time
to time by means of telecommunications or correspondence. If, at SB's
request, a meeting of the Research Committee is held at a location that
is further from CADUS than SB's King of Prussia R&D facilities, SB
shall reimburse CADUS for the reasonable travel and lodging expenses of
CADUS personnel who attend such meeting, promptly upon receipt of
appropriate invoices therefor.
20
(d) Decisions of the Research Committee.
(1) All decisions of the Research Committee shall be made
by unanimous agreement of the members (or their designees) present in
person or by telephone at any meeting; provided that at least two (2)
representatives of each Party are present at such meeting.
(2) In the event that unanimity cannot be reached by the
Research Committee with respect to a matter that is subject to its
decision-making authority (other than a decision whether or not to
amend the Annual Research Plan or the Key Check Point, which decision
is specifically covered by Section 3.1(c) hereof), then the decision
shall be referred for further review and resolution to the Sr. Vice
President of Biopharmaceutical Research & Development at SB, or such
other similar position designated by SB from time to time, and the
Chief Executive Officer at CADUS, or such other similar position
designated by CADUS from time to time. If they cannot resolve the
decision at issue within thirty (30) days, the matter will be referred
to arbitration pursuant to Section 14.14, unless the matter is the
failure to agree on an Annual Research Plan (which matter is governed
by Section 3.1(d) hereof).
(e) Reports. Within thirty (30) days after each Research Committee
meeting, the secretary of the Research Committee shall prepare and
distribute minutes of the meeting which shall provide a description in
reasonable detail of the discussions had at the meeting and a list of
any actions, decisions or determinations approved by the Research
Committee. Such reports shall be distributed to the members of the
Research Committee and the Chief Executive Officer of CADUS and the Sr.
Vice President of Biopharmaceutical Research & Development at SB.
21
3.3 Funding of the Research Program
(a) SB shall pay to CADUS a one time, non-refundable Two Million
US Dollar (US$2,000,000.00) CADUS Technology development fee in one
installment on February 15, 1998.
(b) SB shall provide funding to CADUS for the conduct of the
Research Program in the amount of Two Million Five Hundred Thousand
Dollars ($2,500,000), as adjusted as set forth below, each year during
the term of the Research Program (as defined in Paragraph 3.8); and
CADUS shall use such funding for the conduct of the Research Program.
The annual level of funding to be provided by SB shall be adjusted
annually commencing with calendar year 1998 to reflect a four (4%)
percent increase per annum.
(c) SB shall provide the funding in Paragraph 3.3(b) in quarterly
installments equal to twenty-five percent (25%) of the then annual
level of funding, in advance on the first day of January, April, July
and October of each year. However, the first payment shall be made in
the amount of $243,056 within thirty (30) days of the Effective Date of
this Agreement (in lieu of any payment on January 1, 1997), which
amount is $625,000 multiplied by a fraction the numerator of which is
the number of days from the Effective Date through March 31, 1997 and
the denominator of which is 90.
(d) SB shall also pay to CADUS an amount equal to twenty percent
(20%) of each payment due under Paragraph 3.3 (b) payable as follows:
(1) On January 1, 1998, SB shall pay to CADUS an amount
equal to twenty percent (20%) of all payments due under Paragraph
3.3(c) through and including January 1, 1998; and
22
(2) The remaining payments due to CADUS under this
Paragraph 3.3(d) shall be due quarterly at the same time as the
quarterly payments due under Paragraph 3.3(c).
(e) CADUS shall pay for all out-of-pocket expenses it incurs in
connection with the Research Program other than the following which
shall be paid by SB: (1) the cost of material, processes or equipment
obtained or licensed by CADUS from Third Parties at the specific
written request of SB, (2) the out-of-pocket cost of synthesizing
peptides, except for initial testing quantities of such peptides, if
synthesis of such peptides by or for CADUS is requested by SB in
writing; and (3) travel and lodging expenses incurred by CADUS
employees, consultants or advisors in connection with travel requested
by SB pursuant to Paragraphs 3.2(c), 3.7 or otherwise if such travel is
to a location that is further from CADUS than SB's King of Prussia R&D
facilities. CADUS shall have the right to use, for its own purposes
that are unrelated to the Research Program, any such material,
processes or equipment obtained or licensed by it from Third Parties at
the request of SB, provided that CADUS shall pay for any additional
expenses arising from such use. CADUS shall not request SB, and SB
shall not be obligated, to pay for material or equipment CADUS
ordinarily employs in the use of CADUS Technology and ordinarily
expects to employ during the term of the Research Program.
(f) Funding for use of CADUS Technology after the term of the
Research Program
If SB wishes to use Post-Term CADUS Technology/CADUS Patents after
the term of the Research Program pursuant to Paragraph 5.2, SB shall so
notify CADUS at least forty-five (45) days prior to each year during
which it wishes to use it. SB shall pay to CADUS a fee of One Million
US Dollars (US $1,000,000) (within thirty (30) days of invoice of such
fee from CADUS) for each year that SB wishes to use such Post-Term
CADUS Technology/CADUS Patents up to a maximum of Five Million US
Dollars (US
23
$5,000,000). Such fee shall be due and payable within thirty (30) days
after CADUS delivers to SB an invoice therefore, but no earlier than
the first day of such year. After SB has paid to CADUS Five Million US
Dollars (US $5,000,000) pursuant to this Paragraph 3.3(f), SB shall
have a perpetual, fully paid-up license to use Post-Term CADUS
Technology/CADUS Patents pursuant to Paragraph 5.2.
(g) Research Milestone Payments
SB shall pay to CADUS the following research milestone payments
within thirty (30) days of the occurrence of each event (as determined
by the Research Committee pursuant to Paragraph 3.2(b) (2)) set forth
below:
(1) [c.i.] each time that SB receives from CADUS a
Surrogate Ligand for each of [c.i.] separate Targets (i.e. [c.i.]
Surrogate Ligands) each of which (i) [c.i.]; or (ii) does not meet the
criteria of subparagraph 3.3(g)(1)(i) but which is used by SB, provided
SB successfully establishes a Screen with such Surrogate Ligand and
that SB directs (through the RC) that CADUS cease efforts to generate a
Surrogate Ligand for that Target that meets the requirements of
subparagraph 3.3(g)(1)(i); and
(2) [c.i.] received by SB from CADUS, provided a payment
for such Target has not been made under subparagraph (1) above and
further provided that the SB has directed in writing the preparation of
such [c.i.]; and
(3) [c.i.] upon the first identification by SB of a
Natural Ligand for each of [c.i.] different Targets (i.e. [c.i.]
Natural Ligands) (SB being obligated to promptly notify CADUS of each
such identification); and
(4) [c.i.] upon the identification by SB of a Natural
Ligand for each subsequent set of [c.i.] Targets (SB being obligated to
promptly notify CADUS of each
24
such identification) provided such [c.i.] Targets are different than
the Targets included in subparagraph (3) and any Targets previously
included in this subparagraph (4); and
The total payments made by SB under subparagraphs 3.3 (g)(1) - (4)
shall not exceed Fifteen Million US Dollars (US$15,000,000.00).
Further, once SB has paid to CADUS Five Million US Dollars
(US$5,000,000.00) under subparagraphs 3.3(g)(1), (2), (3), and/or (4),
SB at its option, in lieu of paying the next Five Million US Dollars
(US$5,000,000.00) due under subparagraphs 3.3(g)(1), (2), (3), and/or
(4), may from time to time (as such payments become due) purchase from
CADUS in private placements up to Five Million US Dollars
(US$5,000,000) worth of CADUS common stock under the terms of the Stock
Purchase Agreement.
(h) Stock Purchase
SB has granted to CADUS the right to sell CADUS common stock to SB in
private placements pursuant to the terms of the Stock Purchase
Agreement.
3.4 Conduct of Research Program by CADUS
During the term of the Research Program, so long as SB is providing
funding pursuant to Section 3.3, CADUS shall:
(a) diligently perform its obligations under the Research Program,
as set forth in any Annual Research Plan and in good faith pursue
generation of Screens for Targets as accepted and prioritized by the
RC, and such other activities which, from time to time, the Research
Committee decides is necessary for the success of the Research Program;
(b) use all reasonable efforts and proceed diligently to perform
the work set out for CADUS to perform in the Annual Research Plan,
using personnel with sufficient qualifications, skills and experience,
together with sufficient equipment and facilities, to
25
carry out its obligations under the Research Program and to accomplish
the objectives of the Research Program and in furtherance thereof,
CADUS intends [c.i.] provided Targets have been accepted in to the
Research Program on a timely basis.;
(c) conduct the Research Program in a good scientific and
professional manner, and in compliance with all requirements of
applicable laws, rules and regulations, and all other requirements of
any applicable good laboratory practices to attempt to achieve its
objectives efficiently and expeditiously;
(d) furnish SB with all Screens arising from the Research Program;
(e) within thirty (30) days following the end of each calendar
quarter during the term of the Research Program (commencing with the
calendar quarter ending June 30, 1997), furnish SB with written reports
summarizing all activities under the Research Program during such
quarter;
(f) provide to the Research Committee at each meeting thereof a
written report summarizing all of the material activities of CADUS
using the Screens since the period covered by the previous report;
(g) as soon as practicable provide an invention disclosure report
to SB with respect to any Joint Invention;
(h) allow representatives of SB, upon reasonable notice and during
normal business hours, to (1) visit the facilities where the Research
Program is being conducted, and (2) consult informally, during such
visits and by telephone, with CADUS personnel performing work on the
Research Program;
26
(i) maintain liability insurance with respect to the work it is
performing under the Research Program in such amounts as it customarily
maintains with respect to similar research programs, which insurance
shall designate SB as an "insured", and to pay the premiums due
thereunder; and
(j) not submit receptors for use in the Research Program that such
party knows infringes or conflicts with a patent or other enforceable
proprietary right of a Third Party in the United States.
3.5 Conduct of Research Program by SB
During the term of the Research Program (and thereafter with respect to
Paragraph 3.5(g) only), SB shall:
(a) by one (1) year from the Effective Date (1) provide to CADUS
clones of [c.i.] Targets inserted into appropriate vectors (according
to specifications set by the RC but in no event more than [c.i.]
vectors per clone unless otherwise specified by the RC for a particular
Target) together with available quantities of the oligonucleotides used
(if any) by SB to accomplish this; and (2) verify that the sequences of
the Targets contained in the vectors are correct and provide to CADUS
this information together with any sequencing oligonucleotides (as may
be available) created for such Targets.
(b) use all reasonable efforts to perform the work and provide the
Substances set out for SB to perform and provide in any Annual Research
Plan, and undertake such other activities which, from time to time, the
Research Committee decides is necessary for the success of the Research
Program;
27
(c) not submit receptors for use in the Research Program that such
party knows infringes or conflicts with a patent or other enforceable
proprietary right of a Third Party in the United States.
(d) as soon as practicable provide an invention disclosure report
to CADUS with respect to any Joint Invention;
(e) provide to the Research Committee at each meeting thereof a
written report summarizing all of the material activities of SB using
the Screens since the period covered by the previous report;
(f) allow representatives of CADUS, upon reasonable notice and
during normal business hours, to (1) visit the facilities where the
Screens are being used, and (2) consult informally, during such visits
and by telephone, with SB personnel performing work in connection with
the Research Program; and
(g) notify CADUS when a Compound becomes a Project Compound and
update CADUS with respect to such at reasonable intervals thereafter
3.6 Records
(a) CADUS shall maintain records, in sufficient detail and in good
scientific manner, which shall be complete and accurate and shall fully
and properly reflect all work done and results achieved in the
performance of the Research Program (including all data in the form
required under all applicable laws and regulations).
(b) SB shall have the right, during normal business hours and upon
reasonable notice, to inspect and copy all records of CADUS referred to
in Section 3.6(a) above. SB shall maintain such records and the
information of CADUS contained therein in
28
confidence in accordance with Section 11 and shall not use such records
or information except to the extent otherwise permitted by this
Agreement.
3.7 Training
During the term of the Research Program and if requested in writing by
SB, CADUS shall provide training to SB personnel to enable them to use
the Screens provided to SB by CADUS pursuant to the Research Program;
provided, however, that CADUS shall not be obligated to train more than
two (2) SB personnel at its site at any one time and that CADUS shall
not be responsible to pay the travel, lodging, and other expenses of SB
personnel.
3.8 Term of Research Program
(a) The term of the Research Program shall commence on the
Effective Date, and shall continue, except as otherwise provided in
this Agreement, until the fifth anniversary of the Effective Date. SB
shall have the right, in its sole discretion, to extend the term of the
Research Program for such number of whole calendar years as shall not
exceed five (5) years and as shall not be less than two (2) years. SB
may so extend the term of the Research Program by sending written
notice to CADUS specifying the number of years by which the term is
being extended, prior to the fourth anniversary of the Effective Date.
(b) Upon termination of the Research Program under this Paragraph,
CADUS shall return to SB or destroy all Substances transferred to CADUS
by SB, SB Targets and Third Party Targets and all Screens in its
possession or control that incorporate such Substances, SB Targets
and/or Third Party Targets including sequence and other related
information and will cease all use thereof.
3.9 Exclusivity
29
(a) During the term of the Research Program, CADUS shall not
develop or make available, with or for the benefit of any Third Party,
any Screens or any screens involving any Targets or conduct any other
work with respect to such Targets worked on under the Research Program
or included in the Research Program pursuant to this Agreement, except
as otherwise consented to in writing by SB. Notwithstanding the
foregoing and subject to Paragraph 5.1, if SB extends the term of the
Research Program, CADUS shall have the right, after the fifth
anniversary of the Effective Date, to develop or make available, with
or for the benefit of any Third Party, any Screen involving any Other
Targets or CADUS Targets worked on under the Research Program, provided
SB is not actively using such Screens or has not identified or
confirmed the biological activity of any Compound or Product using such
Screens that SB or one of its Affiliates is actively researching,
developing, marketing or having marketed. For the purposes of this
Paragraph 3.9(a), a Target shall include, without limitation, [c.i.].
(b) (1) CADUS may initiate screening using Targets pursuant to the
Research Program on behalf of SB upon the written approval of SB on a
Target by Target basis.
(2) CADUS shall have the right to use Screens, without the
prior written approval of SB, solely for the purpose of identifying
Surrogate Ligands under the Research Program pursuant to Paragraph
5.4(a)(1).
3.10 Material Transfer
In order to facilitate the Research Program, either Party may provide
to the other Party certain biological materials or chemical compounds
including, but not limited to, Targets (collectively, "Substances")
owned by or licensed to the supplying Party (other than under this
Agreement) for use by the other Party in furtherance of the Research
Program. Except as otherwise provided under this Agreement, all such
Substances delivered to the other Party (1) shall remain the sole
property of the supplying Party, (2) shall be used only in furtherance
of the Research Program and solely under the control
30
of the other Party, (3) shall not be used or delivered to or for the
benefit of any Third Party without the prior written consent of the
supplying Party, and (4) shall not be used in research or testing
involving human subjects by the receiving party. The Substances
supplied under this Paragraph 3.10 must be used with prudence and
appropriate caution in any experimental work, since not all their
characteristics may be known. THE SUBSTANCES ARE PROVIDED "AS IS"
AND WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY
OR OF FITNESS FOR ANY PARTICULAR PURPOSE OR ANY WARRANTY THAT THE USE
OF THE SUBSTANCES WILL NOT INFRINGE OR VIOLATE ANY PATENT OR OTHER
PROPRIETARY RIGHTS OF ANY THIRD PARTY.
3.11 Liability
During the Research Program, each Party shall be responsible for, and
hereby assumes, any and all risks of personal injury, death or property
damage caused by the negligent or willful acts or omissions of that
Party or its Affiliates, and their respective directors, officers,
employees or agents.
3.12 Termination of Research Program by SB
(a) In the event that the Key Check Point is not achieved by the
Key Check Point Date, SB shall have the right to give notice to CADUS
of such failure. SB shall be entitled, without prejudice to any of its
other rights conferred on it by this Agreement, in addition to any
other remedies available to it by law or in equity, to terminate the
rights and obligations of the Parties set forth in Section 3 (other
than those in Paragraph 3.3(f) and 3.3(g)) of this Agreement by giving
written notice within ninety (90) days of such date to take effect
immediately upon delivery of such notice.
(b) After the Key Check Point Date, if CADUS fails to perform its
obligations under Paragraph 3.4 hereof in any material respect, SB
shall have the right to give
31
notice to CADUS of such default. If such default is not cured within
sixty (60) days after such notice is given, SB shall be entitled,
without prejudice to any of its other rights conferred on it by this
Agreement, in addition to any other remedies available to it by law or
in equity, to terminate the rights and obligations of the Parties set
forth in Section 3 (other than those in Paragraph 3.3(f) and 3.3(g)) of
this Agreement by giving written notice of termination to take effect
immediately upon delivery of such notice.
(c) Upon such termination under Paragraph 3.12(a) or (b), (1)
CADUS shall have no further obligation to conduct the Research Program;
(2) SB shall have no further obligations to fund the Research Program
under Paragraphs 3.3(b), 3.3(d) and 3.3(e); and (3) CADUS shall return
to SB or destroy all Substances transferred to CADUS by SB, SB Targets
and Third Party Targets and all Screens in its possession or control
that incorporate such Substances, SB Targets or Third Party Targets
including sequence and other related information, and will cease all
use thereof.
4. DEVELOPMENT AND COMMERCIALIZATION
4.1 Research and Development by SB
(a) SB shall have sole and absolute discretion to determine the
means and methods by which it will conduct screening, assays and other
research and development using the Screens, provided that the Screens
and CADUS Technology will not be made available by SB to Third Parties
except as provided in Paragraph 5.4(b). For the purposes of clarity,
the identity, sequence information, and structure of the Natural Ligand
for any Third Party Target, or other information on the biological
function of such Third Party Target are not CADUS Technology and may be
provided by SB to Third Parties.
(b) Subject to the terms of this Agreement, SB shall have the sole
and absolute discretion to make all decisions relating to the research,
development, marketing and other commercialization activities with
respect to any Compound or Product derived
32
by it from its use of the Screens or from CADUS activities under
Paragraphs 3.9(b) and 5.4(b).
(c) Neither SB nor any Affiliate thereof shall disassemble or seek
to reverse engineer the Substances (excluding any Compounds, Products,
or Natural Ligands or Surrogate Ligands) or Screens provided by CADUS
to SB.
(d) Determination by SB Not To Develop a Project Compound
(1) In the event that (i) SB makes a good faith
determination that it is not interested in pursuing or continuing to
pursue the development of a Project Compound in any way; and (ii) SB in
its sole discretion seeks to license such Project Compound to a Third
Party, then SB shall promptly notify CADUS to that effect and such
Project Compound shall be subject to CADUS's option as provided in
Paragraph 4.1(e). SB's obligations under this Paragraph to xxxxx XXXXX
the option provided in Paragraph 4.1(e)(1) shall not apply to any
Project Compound which is active in a screen under active use at SB, or
where such Project Compound is active in the same screen as any other
compound in development at SB, or where SB is unable to xxxxx XXXXX
such option due to obligations (including options) to a Third Party
existing as of the Effective Date.
(2) Until the later of (i) the termination of the Research
Program; or (ii) the fifth anniversary of the Effective Date, Compounds
which have not reached Project Compound status and for which SB makes a
good faith determination that it is not interested in pursuing or
continuing to pursue the development of a Project Compound therefrom in
any way and for which SB in its sole discretion seeks to license to a
Third Party are subject to CADUS's option as provided in Paragraph
4.1(e). SB's obligations under this subparagraph to xxxxx XXXXX the
option provided in Paragraph 4.1(e) shall
33
not apply to any Compound if SB is unable to xxxxx XXXXX such option
due to obligations (including options) to a Third Party existing as of
the Effective Date.
(3) SB's obligations under this Paragraph 4.1(d) shall not
apply to Project Compounds or Compounds as the case may be, which SB
seeks to license to a Third Party without providing such Third Party
any CADUS Technology or information derived therefrom in connection
with such license.
(e) CADUS Option
(1) In the event that SB is required and is able, as
provided in Paragraph 4.1(d), to xxxxx XXXXX an option under this
Paragraph 4.1(e) with respect to any Project Compound or Compound as
the case may be and so long as CADUS is not in material breach of this
Agreement at such time, then SB hereby grants to CADUS an exclusive
option to acquire an exclusive, worldwide license to the SB Technology,
SB Patents and any other patents and know-how relating to such Project
Compound or Compound as the case may be, each as necessary to make,
have made, use, and sell such Project Compound or Compound (or Product
incorporating it) as the case may be. Such license shall be
sublicenseable so long as CADUS is involved in developing and/or
marketing such Compound. The term of each such option grant shall be
for a period of thirty (30) days commencing on the date SB provides
written notice of such option grant to CADUS and sufficient information
and data related thereto or reasonably requested by CADUS to allow
CADUS to determine its interest in acquiring an exclusive license
therefor. CADUS shall be deemed to have effectively exercised any such
option if CADUS sends written notice of its exercise of such option to
SB within the applicable thirty (30) day option period, provided that
the Parties reach a definitive agreement for such license within [c.i.]
after the date of the notice of such exercise. During such [c.i.]
period, SB and CADUS shall negotiate in good faith to reach definitive
agreements for the commercially reasonable exclusive license. During
the
34
thirty (30) day option period and the [c.i.] negotiation period, SB
shall not seek to negotiate a similar license for such Project Compound
or Compound as the case may be with any Third Party. In the event that
SB and CADUS do not enter into such license within such [c.i.] period
for any reason whatsoever, SB shall be free at any time thereafter to
negotiate any license with a Third Party with respect to such Project
Compound or Compound as the case may be.
(2) Each such exclusive license pursuant to subparagraph
(1) shall provide for (i) royalties and milestone payments to be paid
to SB; (ii) additional royalties to be paid by CADUS to SB in the
amount of any royalties that SB may owe to any Third Party with respect
to any product; (iii) additional compensation to be paid by CADUS to
SB, to compensate SB for its expenditures, based on its fully allocated
costs, for development of the Project Compound or Compound as the case
may be through the date of such option exercise; and (iv) such other
terms as are commercially reasonable. In the event that CADUS fails to
exercise its option with such thirty (30) day period, the exclusive
right to such Project Compound or Compound as the case may be shall
remain with SB.
(3) SB shall not be obligated under any circumstances to
xxxxx XXXXX the option provided in Paragraph 4.1(e) for any Project
Compound which (i) has entered Phase II(b); or (ii) for any Project
Compound or Compound as the case may be, in the event that SB
determines not to pursue such Project Compound or Compound as the case
may be at any time for safety reasons or for want of efficacy.
(f) CADUS Co-Promotion
(i) In the event that SB seeks marketing approval for any Value Added
Product in the United States, Canada or Mexico, then promptly upon SB's
receipt of notice of acceptance for filing of the NDA for such Value
Added Product, with respect to the FDA in the United States, or any
equivalent receipt of notice of filing from any like
35
agency in Canada or Mexico, SB shall provide written notice to CADUS
specifying the therapeutic indication for which SB is seeking marketing
approval in each applicable country and whether SB intends to itself
(or through an Affiliate) sell and distribute such Value Added Product
in such applicable country. CADUS shall have the option, exerciseable
in writing within sixty (60) days following its receipt of such written
notice from SB, to elect to Co-Promote such Value Added Product with SB
in the United States, Canada and/or Mexico, as applicable, subject to
the terms and conditions outlined below. For the avoidance of doubt,
CADUS' option shall only apply to those Value Added Products in
countries (the United States, Canada or Mexico) in which SB itself (or
through an Affiliate) sells and distributes such Value Added Product.
(ii) In the event that CADUS elects to Co-Promote a Value Added Product
with SB pursuant to (i) above, then the parties shall promptly
negotiate and execute a definitive Co-Promotion Agreement, but CADUS
shall have the right to rescind its election at any time if a
definitive Co-Promotion Agreement is not executed by SB and CADUS
within ninety (90) days of CADUS's election. The definitive
Co-Promotion Agreement, at a minimum, shall contain the following
terms and conditions:
(A) SB shall be solely responsible for (1) all pricing and
pricing-related activities, including without limitation applying for
pricing approval if necessary, (2) performing all distribution and
related services, (3) all promotion, sales and marketing activities to
all managed care organizations, including without limitation health
maintenance organizations and hospitals.
(B) The term of such Co-Promotion Agreement shall be for the lesser of
five (5) years or the expiration of the relevant patents in the
applicable co-promotion country.
36
(C) The parties shall Co-Promote a single brand of Value Added Product
in the Co-Promotion country, using a trademark owned, selected and
controlled by SB.
(D) A Marketing Committee shall be formed comprised of two (2) members
each from SB and CADUS. An SB designated member shall chair the
Marketing Committee. The decision of the Chairperson shall be final and
binding. The Marketing Committee shall be responsible for deciding all
issues with respect to the Co-Promotion of Value Added Product in any
Co-Promotion territory. Such responsibility shall include, without
limitation, establishing an annual marketing plan covering all
activities in support of the Co-Promotion of the Value Added Product;
developing the strategy, sales forecasts and budgets for the Value
Added Product; establishing detailing levels and targeted physicians
and other health care personnel; developing all promotional literature
and materials; developing journal schedules; establishing promotional
and detailing efforts for both parties; determining quantities of
samples; determining journal schedules; overseeing advertising, press
releases and other public relations; supervising health education for
the Value Added Product; planning symposia and other educational
program strategy; planning and conducting the appropriate clinical
trials to support the marketing of the Value Added Product; planning
for the sharing of medical information; monitoring, supervising and
reviewing implementation of marketing plans and budgets, field force
performance and marketing research.
(E) CADUS shall provide twenty-percent (20%) of the total Co-Promotion
effort in support of the Value Added Product in any Co-Promotion
territory, consistent with each annual marketing plan. CADUS shall
also fund the portion of the Promotional Expenses in connection with
the Value Added Product, equal to the percentage of Co-Promotion
effort that CADUS provides.
(F) In consideration for its Co-Promotion of the Value Added Product,
CADUS will receive a percentage of the Operating Profit from the Value
Added Product equal
37
to the percentage of Co-Promotion support that CADUS provides, which
share shall in no event exceed 20% of Operating Profit.
(G) All labels, labeling and package inserts for the Value Added
Products shall be printed in accordance with SB's standard labeling
format and shall contain sole reference to SB. The names of CADUS and
SB shall appear on all Value Added Product educational and promotional
materials in the manner determined by the Marketing Committee.
(H) CADUS Co-Promotion option and rights shall be non-assignable and
non-transferable except as provided in Paragraph 14.3.
(iii) This option granted pursuant to this Paragraph 4.1(f) shall not
apply to Value Added Products subject to co-promotion obligations
(including options) to a Third Party existing as of the Effective Date.
(g) CADUS Notification
(1) During the term of the Research Program and any extensions
thereof, SB intends to notify CADUS in the event SB in its sole determination SB
seeks to outlicense to a Third Party (without existing rights (including an
option) to the relevant product) in North America a pharmaceutical product in
CADUS's Therapeutic Areas of Interest that is not a monoclonal antibody,
radioactive agent, protein therapeutic, or gene therapy, and that has not been
designated by SB as a candidate for outlicensing to a Third Party as part of a
product exchange. The purpose of such notice shall be to provide CADUS with a
reasonable opportunity to seek such a license from SB. Notwithstanding the
foregoing, if SB inadvertently fails to provide such notice to CADUS, SB shall
not be in breach of this Agreement and shall have no liability to CADUS.
38
(2) During the term of the Research Program and any extensions
thereof, SB shall use its reasonable best efforts to notify CADUS in the event
SB in its sole determination seeks to outlicense a Project Compound (or Product
incorporating it) subject to the exemptions in subparagraph 4.1(e)(3) above in
North America in CADUS's Therapeutic Areas of Interest. The purpose of such
notice shall be to provide CADUS with a reasonable opportunity to seek such a
license from SB. Notwithstanding the foregoing, if SB inadvertently fails to
provide such notice to CADUS, SB shall not be in breach of this Agreement and
shall have no liability to CADUS.
5. GRANT OF LICENSES
5.1 License Grant for Screens
Subject to the terms and conditions of this Agreement, CADUS hereby grants to SB
an exclusive right and license (including as to CADUS, except as otherwise
consented to in writing by SB and except as specifically provided in Paragraphs
3.9(b) and 5.3), in the Territory, under CADUS Technology and CADUS Patents, to
use and practice the Screens (including, without limitation, the right to grow
sufficient amounts of Screens provided by CADUS to SB) to identify and confirm
potential human therapeutics during the term of the Research Program.
Furthermore, SB shall in any event have the exclusive right and license
conferred under this Paragraph for all Screens for a minimum of twelve (12)
months after SB receives substances and information from CADUS enabling SB to
use such Screen. SB shall also retain such exclusive right and license after the
term of the Research Program if SB has identified and/or confirmed a Compound or
Compounds using such Screen during the Research Program but only so long as SB
actively pursues research and/or development of such Compound or any Analog
thereof. Upon the expiration or termination of its license to use and practice a
Screen, SB shall return to CADUS or destroy any such Screen in its possession or
control.
39
5.2 License Grant for Post Term CADUS Technology/CADUS Patents
Subject to the payment of the fee to CADUS provided for in Paragraph 3.3 (f),
CADUS hereby grants to SB, a non-exclusive, world-wide, right and license,
under Post Term CADUS Technology/CADUS Patents, to use and practice such Post
Term CADUS Technology/CADUS Patents (including, without limitation, the right
to grow sufficient amounts of such Screens provided by CADUS to SB) to
identify and confirm potential human therapeutics after the term of the
Research Program, provided such license shall be exclusive for Screens
incorporating SB Targets or Third Party Targets. Upon the expiration or
termination of its license to use and practice a Screen, SB shall return to
CADUS or destroy any such Screen in its possession or control.
5.3 License Grant for Certain SB Technology
SB hereby grants to CADUS an exclusive (except for SB) license, in the
Territory, to make, have made, use and sell SB Technology only to the extent
that such SB Technology involves improvements to proprietary CADUS Technology
relating to the transfection and expression of targets into yeast cells or
involves the improvements to proprietary CADUS Technology relating to use of
yeast cells as screens, provided such SB Technology is not specific to a
particular Target and such SB Technology is not SB Technology as defined in
subpart (2) of the definition of SB Technology. Notwithstanding the preceding
sentence, such license shall become non-exclusive after the later of the end of
the term of the Research Program or the date the CADUS Technology to which it is
an improvement ceases to be proprietary to CADUS.
5.4 Use by CADUS of Screens
(a) Subject to Paragraphs 5.1, 5.4(b) and 3.9(b), CADUS reserves for itself
the rights to use CADUS Technology and CADUS Patents, and SB grants to CADUS
under SB Patents and SB Technology the rights to the extent necessary, on behalf
of SB, to make, use and practice Screens solely at CADUS's facilities pursuant
to Paragraph 3.9(b). In addition:
40
(1) CADUS shall have the right to use Screens, without the prior
written approval of SB, solely for the purpose of identifying Surrogate Ligands
under the Research Program.
(2) Notwithstanding Paragraphs 5.1 and 3.9(b), CADUS shall have
the right to use Screens for the purpose of determining the specificity of
potential therapeutics that are being developed as a result of their activity
against targets that are not within the Research Program, provided that SB is
not precluded from granting CADUS such rights due to existing obligations to a
Third Party. CADUS acknowledges that SB does not expect to be able to xxxxx
XXXXX these rights for any Screen incorporating a Third Party Target.
(b) In the event that CADUS identifies or confirms a Lead Compound using a
Screen pursuant to Paragraphs 3.9(b) and/or 5.4(a), SB shall have the exclusive
sublicenseable right to make, have made, use, and sell such Lead Compound, or
any Compounds or Products developed therefrom, in the Territory under any CADUS
Technology and CADUS Patents and any other CADUS patents and technology related
thereto and necessary to make, have made, use and sell such Lead Compound,
Compound, or any Products developed therefrom.
5.5 Rights to Use Technology
(a) Except for the specific licenses to use and practice Screens set forth
in Sections 5.1 and 5.2 hereof and the license granted in Paragraph 5.4(b)
hereof, CADUS is not granting to SB any other license to use the CADUS
Technology under this Agreement. Accordingly, (1) SB shall not use the CADUS
Technology other than the Screens (as permitted by this Agreement for any
purpose whatsoever) and (2) CADUS is retaining all rights to the CADUS
Technology and CADUS Patents that are not specifically being licensed to SB
pursuant to Sections 5.1, 5.2 and 5.4(b) hereof.
(b) Except as set forth in Paragraphs 3.9(b), 5.3, and 5.4(a) hereof, SB is
not granting to CADUS any right to use SB Technology and SB Patents under this
Agreement. Accordingly, (1)
41
CADUS shall not use SB Technology and SB Patents, and (2) SB is retaining all
rights to the SB Technology and SB Patents, both (1) and (2) except as provided
pursuant to Paragraph 3.9(b), 5.3, and 5.4(a).
5.6 No Right to Sublicense
(a) SB shall not have any right to sublicense to any Third Party any
license granted by CADUS pursuant to Paragraph 5.1 or 5.2.
(b) CADUS shall have the right to sublicense to any Third Party or
Affiliate any right granted by SB pursuant to Paragraph 5.3 hereof.
(c) CADUS shall not have any right to sublicense to any Third Party or any
Affiliate any right granted by SB pursuant to Paragraphs 3.9(b) and 5.4(a)
hereof.
6. ROYALTIES AND MILESTONE PAYMENTS.
6.1 Royalties
(a) During the Royalty Term, SB shall pay the following royalties on Net
Sales in the United States of each Product which is sold by SB or SB licensees,
which royalty shall be calculated on a product by product basis, with the
applicable royalty rate for each such Product in a calendar year being based on
United States (U.S.) Net Sales for such Product in the calendar year and this
determined royalty rate being applied to all United States Net Sales of such
Product in such calendar year:
[c.i.]
42
(b) During the Royalty Term, SB shall pay a royalty of [c.i.] of Net Sales
outside of the United States of each Product which is sold by SB or SB
licensees.
(c) During the Royalty Term, for Value Added Products, SB shall pay to
CADUS an additional royalty to that otherwise due under Paragraph 6.1 (a) and
(b) as follows:
[c.i.]
(d) The royalties under this Paragraph 6.1 shall be calculated by adding
together the royalty in Paragraph 6.1 (a) or (b) together with the applicable
royalty for Value Added Product in Paragraph 6.1(c) [c.i.].
6.2 Limitation on Royalties
(a) SB's royalty payment to CADUS pursuant to this Section 6 shall not
exceed [c.i.] of Net Sales nor shall it exceed [c.i.] of Net Sales for a Product
based on a Compound or a Natural Ligand identified or confirmed by a Screen
which incorporates a Third Party Target.
(b) SB shall have no obligation to pay CADUS royalties on Net Sales of a
Product by CADUS in the event CADUS is an SB licensee for such Product.
6.3 Effect of Co-Promotion Agreement
The royalties set forth in Paragraph 6.1(c) shall not apply to Net Sales of
Value Added Product in the countries and for the Value Added Products with
respect to which CADUS has exercised its right to co-promote pursuant to
Paragraph 4.1(f), but only after a definitive Co-Promotion Agreement has been
executed by SB and CADUS with respect thereto and during the term of such
Co-Promotion Agreement.
43
6.4 Expiration of Royalty Obligations
Upon expiration of SB's obligation to pay royalties with respect to a Product
pursuant to Paragraph 6.1, SB shall have the royalty-free, perpetual right to
continue to make, have made, use and sell such Product in the Territory.
6.5 Third Party Royalties
SB, at its sole expense, shall pay all royalties owing to any Third Party in
order to exercise its rights hereunder to make, have made, use, sell or have
sold any Product. However, SB shall be entitled to a credit against royalties
payable to CADUS for a Product in an amount equal to fifty (50%) percent of any
royalties paid by SB to a Third Party for such Product pursuant to obligations
required to be incurred by SB during the term of the Research Program in order
to use CADUS Technology in the conduct of the Research Program, but in no event
shall such credit (i) in the aggregate exceed fifty percent (50%) of the
royalties due CADUS in the aggregate; and (ii) in any calendar quarter exceed
fifty (50%) of the royalties due in such quarter for such Product. SB shall not
be entitled to such credit in any country of the Territory in the event SB
incurs such obligations to a Third Party where (1) CADUS has not consented to
such obligation; and (2) the patent(s) of such Third Party for which such
obligations have been incurred are held invalid or unenforceable.
6.6 Clinical Milestone Payments
SB shall pay to CADUS the following clinical milestone payments within thirty
(30) days of the first occurrence of each event below with respect to each
Product:
[c.i.]
6.7 Credit Against Royalties
SB shall be entitled to a credit against royalties payable with respect to a
Product in an amount equal to fifty (50%) percent of the clinical milestone
payments made under Paragraph 6.6(d)
44
with respect to such Product, but in no event shall such credit in any calendar
quarter exceed fifty (50%) percent of the royalties due in such quarter.
6.8 Single Clinical Milestone Payments
The obligation to pay for each clinical milestone under Paragraph 6.6 is imposed
only once per Product and shall not be made in the case of improvements or
modifications such as, but not limited to, changed forms, formats, salts,
formulations, indications, processes or protocols of a Product for which a
clinical milestone payment was previously made.
6.9 Obligation to Pay Royalties
The obligation to pay royalties under this Section 6 is imposed only once with
respect to the same unit of Product regardless of the number of patents
pertaining thereto. There shall be no obligation to pay royalties under this
Section 6 on sales of Products among a Party, its Affiliates, its licensees
and/or sublicensees but in such instances the obligation to pay royalties shall
arise upon the sale by a Party, its Affiliates, its licensees or sublicensees to
Third Parties.
6.10 Takeda, Synthelabo and Merck KGaA
Notwithstanding anything else to the contrary, SB shall have no obligation to
CADUS to pay royalties on Net Sales of Products:
(a) by Takeda for Products which are subject to Takeda's rights to
co-promote and/or co-market pursuant to the Restated SB-Takeda Collaboration and
License Agreement dated June 28, 1996; and
(b) by Takeda, Synthelabo and/or Merck KGaA for Products which include a
Natural Ligand (or an Analog of such Natural Ligand developed by Takeda,
Sythelabo and/or Merck KGaA) pursuant to the SB-Takeda Collaboration and License
Agreement dated June 28, 1996, Synthelabo/SB/HGS Collaboration and License
Agreement dated June 30, 1996 or the Merck/SB/HGS Collaboration and License
Agreement dated July 10, 1996 as the case may be.
45
7. PAYMENTS AND REPORTS
7.1 Payment
All payments required under this Agreement shall be payable in U.S. dollars. If
SB fails to make a payment in full to CADUS on the date any payment hereunder is
due, for any reason whatsoever other than if governmental regulations prevent
remittances from a foreign country with respect to sales made in that country,
the obligation to pay royalties on sales in that country shall be suspended
until such remittances are possible. Each party shall have the right, upon
giving written notice to the other, to receive payment in that country in local
currency.
7.2 Payment of Royalties
All royalty payments due hereunder shall be paid quarterly within sixty (60)
days of the end of each calendar quarter. Each such payment shall be accompanied
by a statement, Product-byProduct and country-by-country, of the amount of Net
Sales during such quarter and the amount of royalties due on such Net Sales.
Monetary conversions from the currency of a foreign country, in which a Product
is sold, into United States currency shall be made at the official exchange rate
in force in that country for financial transactions on the last business day of
the calendar quarter or half year for which the royalties are being paid. If
there is no such official exchange rate, the conversion shall be made at the
conversion rate for such remittances on that date as certified by Citibank,
N.A., New York, New York, U.S.A.
7.3 Records Retention
SB, its Affiliates, its licensees and its sublicensees shall keep complete and
accurate records (specifically including originals or copies of documents
supporting entries in the books of account) pertaining to the sale of Products
in the Territory and covering all transactions from which Net Sales are derived
for a period of three (3) calendar years after the year in which such sales
occurred, and in sufficient detail to permit CADUS to confirm the accuracy of
royalty calculations hereunder.
46
7.4 Audit Request
At the request and expense of CADUS, SB, its Affiliates, its licensees and its
sublicensees shall permit an independent, certified public accountant appointed
by CADUS, at reasonable times (not to exceed once per calendar year) and upon
reasonable notice, to examine those records and all other material documents
relating to or relevant to the computation of Net Sales in the possession or
control of SB, its Affiliates, its licensees or its sublicensees, for a period
of two (2) years after such royalties have accrued, as may be necessary to: (i)
determine the correctness of any report or payment made under this Agreement; or
(ii) obtain information as to the royalties payable for any calendar quarter in
the case of SB's failure to report or pay pursuant to this Agreement. Results of
any such examination shall be made available to both Parties. CADUS shall bear
the full cost of the performance of any such audit except as hereinafter set
forth. If, as a result of any inspection of the books and records of SB, its
Affiliates, its licensees or its sublicensees, it is shown that SB's royalty
payments under this Agreement were less than the amount which should have been
paid, then SB shall make all payments required to be made to eliminate any
discrepancy revealed by said inspection within thirty (30) days after CADUS's
demand therefor.
7.5 Taxes
In the event that SB is required to withhold and remit any tax to the revenue
authorities in any country in the Territory regarding any milestone payment or
royalties payable to CADUS due to the laws of such country, such amount shall be
deducted by SB, and it shall notify CADUS and promptly furnish CADUS with copies
of any tax certificate or other documentation evidencing such withholding.
7.6 Notice of Milestones
SB shall provide CADUS with written notice of each of the milestone events
listed in Paragraphs 3.3(g) and 6.6 within 30 days of its occurrence:
47
8. INFRINGEMENT ACTIONS BY THIRD PARTIES; PATENT ENFORCEMENT
8.1
In the event of the institution of any suit by a Third Party against CADUS, SB
or its licensees for patent infringement involving the manufacture, use, sale,
distribution or marketing of Product (including the use of Screens and Targets),
the party sued shall promptly notify the other party in writing. The other party
shall have the right, to the extent of its interest, but not the obligation to
defend or participate in the defense of such suit at its own expense. CADUS and
SB shall assist one another and cooperate in any such litigation at the other's
request without expense to the requesting party.
8.2
(a) In the event that CADUS or SB becomes aware of actual or threatened
infringement of a SB Patent or CADUS Patent anywhere in the Territory, that
party shall promptly notify the other party in writing. The owner of the SB
Patent or CADUS Patent shall have the first right but not the obligation to
bring, at its own expense, an infringement action against any Third Party and to
use the other party's name in connection therewith. CADUS and SB shall assist
one another and cooperate in any such litigation at the other's request without
expense to the requesting party.
(b) If CADUS does not commence a material infringement action with respect
to a CADUS Patent covering a Product for which CADUS is aware of actual
infringement within ninety (90) days, SB, after notifying CADUS in writing,
shall be entitled to bring such infringement action at its own expense to the
extent that SB is licensed thereunder and in its own name and/or in the name of
CADUS. The foregoing notwithstanding, in the event that an alleged infringer
certifies pursuant to 21 USC 355(b)(2)(A)(vii)(IV) or (j)(2)(A)(iv) against an
issued CADUS Patent covering a Product, the party receiving notice of such
certification shall immediately notify the other party of such certification,
and if fourteen (14) days prior to expiration of the forty-five (45) day period
set forth in 21 USC 355(c)(3)(C) or (j)(4)(B)(iii), the owner of the CADUS
Patent fails to commence an
48
infringement action, the party receiving notice, in its sole discretion, at its
own expense and to the extent that it is licensed under the CADUS Patent, shall
be entitled to bring such infringement action in its own name and/or in the name
of the owning party and shall have full control over its conduct, including
settlement thereof provided such settlement shall not be made without the prior
written consent of CADUS if it would adversely affect the patent rights of
CADUS. In any event, CADUS shall assist SB and cooperate in any such litigation
at SB's request without expense to SB.
8.3
CADUS and SB shall recover their respective actual out-of-pocket expenses, or
equitable proportions thereof, associated with any litigation or settlement
thereof from any recovery made by any party. Fifty percent (50%) of any excess
amount shall be paid to the owner of the infringed patent and the remaining
fifty (50%) shall be shared between SB and CADUS in an amount proportional to
their respective expenses.
8.4
The parties shall keep one another informed of the status of and of their
respective activities regarding any such litigation or settlement thereof.
8.5
The owner of a SB Patent or CADUS Patent shall have the first right to seek
extensions of the terms of the patent and to seek to obtain SPCs, provided that
if SB is developing, selling or planning to sell a product covered by a CADUS
patent, SB shall have the second right. Each party shall assist the other in the
obtaining of such extensions or SPCs including by authorizing the other party to
act as its agent.
49
9. OWNERSHIP OF INVENTIONS; PATENTS
9.1 Ownership of Inventions
(a) The entire right and title in all CADUS Technology and CADUS Patents,
shall be owned solely by CADUS. The cost for patent applications and patent
maintenance for such CADUS Patents shall be borne by CADUS.
(b) The entire right and title in all SB Technology and SB Patents, shall
be owned solely by SB. The cost for patent applications and patent maintenance
for such SB Patents shall be borne by SB.
9.2 Joint Inventions
(a) The Parties recognize that, as a result of the collaboration between SB
and CADUS during the conduct of the Research Program hereunder, certain
Inventions may be deemed to be Joint Inventions. In that event, the Parties
shall jointly own Patents and inventor's certificates covering such Joint
Invention, provided the cost for patent applications and patent maintenance for
such Joint Inventions shall be borne by the Parties on an equal basis (unless a
party wishes to abandon its rights therein). Notwithstanding the foregoing, the
Parties acknowledge that joint inventions which are SB Technology as defined in
subparagraph (2) of such definition are governed by Paragraph 9.1 (b) and not by
Paragraph 9.1(a) and are not Joint Inventions.
(b) The parties shall provide each other with copies of patent applications
filed for Joint Inventions under Paragraph 9.2(a).
(c) The parties agree that Joint Inventions with respect to anything that
is not a human therapeutic and arising from (1) the use of an SB Target shall be
deemed SB Technology and owned by SB; (2) the use of a CADUS Target shall be
deemed to be CADUS Technology and owned by CADUS; and (3) the use of an Other
Target shall be deemed to be both CADUS Technology and SB Technology and owned
jointly by CADUS and SB.
50
10. INDEMNIFICATION
10.1 Indemnification
Each Party shall indemnify, defend and hold the other Party, its Affiliates, its
licensees and its sublicensees, and their respective directors, officers,
employees and agents, harmless from and against any and all liabilities,
damages, losses, penalties, costs and expenses (including the fees of attorneys
and other professionals) arising out of or resulting from:
(a) negligence, recklessness or intentional acts or omissions of the
indemnifying Party, its Affiliates or sublicensees, and their respective
directors, officers, employees and agents, in connection with the work performed
by such party under the Research Program; and
(b) any warranty claims, Product recalls or any claims of personal injury
or property damage relating to the manufacture, use, distribution or sale of any
Product developed or marketed by it.
10.2 Notice
In the event that either Party is seeking indemnification under Paragraph 10.1,
such Party shall inform the indemnifying Party of a claim as soon as reasonably
practicable after it receives notice of the claim, shall permit the indemnifying
Party to assume direction and control of the defense of the claim (including the
right to settle it at the sole discretion of the indemnifying Party), and shall
cooperate as requested (at the expense of the indemnifying Party) in the defense
of the claim.
11. PUBLICATION; CONFIDENTIALITY
11.1 Notification
Both Parties recognize that each may wish to publish the results of their work
relating to the Research Program. However, both parties also recognize the
importance of acquiring patent
51
protection on inventions and that publication restrictions do exist on SB
Technology or CADUS Technology received from a Third Party. Consequently, any
proposed publication including the other's technology by either Party shall
comply with this Section 11. At least thirty (30) days before a manuscript is to
be submitted to a publisher, the publishing Party will provide the other Party
with a copy of the manuscript. If the publishing Party wishes to make an oral
presentation, it will provide the other Party with a copy of the abstract (if
one is submitted) at least thirty (30) days before it is to be submitted. The
publishing Party will also provide to the other Party a copy of the text of the
presentation, including all slides, posters, and any other visual aids, at least
thirty (30) days before the presentation is made. For the purposes of clarity,
CADUS may not publish anything that is included in subparagraph (2) of the
definition of SB Technology.
11.2 Review of Proposed Publications
The receiving Party will review the manuscript, abstract, text or any other
material provided under Section 11.1 to determine if patentable subject matter
is disclosed. The reviewing Party will notify the publishing Party within
fifteen (15) working days of receipt of the proposed publication if the
reviewing Party, in good faith, determines that patentable subject matter is or
may be disclosed, or if the reviewing Party, in good faith, believes
confidential or proprietary information is or may be disclosed. If it is
determined by the reviewing Party that patent applications should be filed, the
publishing Party shall delay its submission for publication or presentation for
a period not to exceed thirty (30) days from the reviewing Party's receipt of
the proposed publication to allow time for the filing of patent applications
covering patentable subject matter. In the event that the delay needed to
complete the filing of any necessary patent application will exceed the thirty
(30) day period, the Parties will discuss the need for obtaining an extension of
the publication delay beyond the thirty (30)-day period. If it is determined in
good faith by the reviewing Party that confidential or proprietary information
of it is being disclosed, the Parties will consult in good faith to arrive at an
agreement on mutually acceptable modifications to the proposed publication to
avoid such disclosure. The publishing Party of any manuscript, text or oral
presentation will acknowledge the other Party for its
52
contribution to the material being published or presented and to the Research
Program. Each party shall be named as a co-author on such publications
disclosing the information of the other Party.
11.3 Confidentiality; Exceptions
Except to the extent expressly authorized by this Agreement or otherwise agreed
in writing, the Parties agree that, for the term of the Research Program and for
five (5) years thereafter the receiving Party, its Affiliates, its licensees and
its sublicensees shall keep, and shall ensure that its officers, directors,
employees and consultants keep, completely confidential and shall not publish or
otherwise disclose and shall not use for any purpose any information furnished
to it by the other Party, its Affiliates, its licensees or its sublicensees or
developed under any Research Program pursuant to this Agreement, except to the
extent that it can be established by the receiving Party by competent proof that
such information: (i) is or hereafter becomes generally available to the public
other than by reason of any default with respect to a confidentiality
obligation; (ii) was already known to the recipient as evidenced by prior
written documents in its possession; or (iii) is disclosed to the recipient by a
Third Party who is not in default of any confidentiality obligation to the
disclosing Party ("Confidential Information"). Notwithstanding the above, (1) SB
may disclose SB Technology (other than SB Technology subject to Paragraph 5.3 as
long as CADUS is the exclusive licensee thereof) to Third Parties; and (2) CADUS
may disclose SB Technology licensed to it under Paragraph 5.3 and Compounds
licensed to it pursuant to Paragraph 4.1(e).
11.4 Exceptions
The restrictions contained in Paragraph 11.3 shall not apply to Confidential
Information that (i) is submitted by the recipient to governmental authorities
to facilitate the issuance of marketing approvals for a Product, provided that
reasonable measures shall be taken to assure confidential treatment of such
information; (ii) is provided by the recipient to Third Parties under
appropriate terms and conditions, including confidentiality provisions
equivalent to those in this Agreement, for consulting, development,
manufacturing, external testing and
53
marketing trials; or (iii) is otherwise required to be disclosed in compliance
with applicable laws or regulations or order by a court or other regulatory body
having competent jurisdiction; provided that if a Party is required to make any
such disclosure of the other Party's Confidential Information it will, except
where impracticable for necessary disclosures, for example to physicians
conducting studies or to health authorities, give reasonable advance notice to
the other Party of such disclosure requirement and, except to the extent
inappropriate in the case of patent applications, will use its best efforts to
secure confidential treatment of such Confidential Information required to be
disclosed.
11.5 Confidentiality Obligation of CADUS
Subject to Paragraphs 11.1 and 11.2, CADUS agrees that, for the term of the
Research Program it shall keep completely confidential and shall not publish or
otherwise disclose confidential information pertaining to CADUS Technology,
except to the extent that CADUS can establish by competent proof that such
information:
(a) was or became generally available to the public or otherwise part of
the public domain other than through any act or omission of CADUS in breach of
this Agreement;
(b) was disclosed under requirement of law or by order or regulation of a
governmental agency or a court of competent jurisdiction, including without
limitation any requirement to disclose such information to any governmental
agency for purposes of obtaining approval to market the Products;
(c) is only information for which CADUS has sought patent or equivalent
protection, including the filing of a patent application; or
(d) was disclosed to any Third Party under an obligation of
confidentiality, including consultants of CADUS, other licensees or potential
licensees of CADUS or potential investors in or business partners of CADUS.
54
11.6 Limitations on Use
Each Party shall use, and cause each of its Affiliates, its licensees and its
sublicensees to use, any Confidential Information obtained by it from the other
Party, its Affiliates, its licensees or its sublicensees, pursuant to this
Agreement or otherwise, solely in connection with the covered activities or the
transactions contemplated hereby.
11.7 Remedies
Each Party shall be entitled, in addition to any other right or remedy it may
have, at law or in equity, to an injunction, without the posting of any bond or
other security, enjoining or restraining the other Party, its Affiliates, its
licensees and/or its sublicensees from any violation or threatened violation of
this Section 11.
11.8 Survival
The provisions of this Section 11 shall be in addition to, and not in limitation
of, the provisions of separate Confidentiality Agreements between CADUS and
SmithKline Xxxxxxx Corporation, dated July 16, 1993 and September 14, 1995 (the
Confidentiality Agreements), which shall survive in full force and effect except
to the extent they are fundamentally inconsistent with this Agreement, in which
case, the terms of this Agreement shall control. SmithKline Xxxxxxx p.l.c.
hereby agrees to bound by the terms and conditions of the Confidentiality
Agreements.
12. TERM; TERMINATION OF LICENSES
12.1 Term
This Agreement shall become effective as of the Effective Date and shall remain
in full force and effect unless earlier terminated as provided in this Section
12.
12.2 Termination of Licenses
(a) Failure by either Party or its Affiliates to comply with any of the
material obligations contained in this Agreement shall entitle the other Party
to give to the defaulting
55
Party notice specifying the nature of the default and requiring it to cure such
default. If such default is not cured within sixty (60) days after the receipt
of such notice (or, if such default cannot be cured within such sixty (60)-day
period, if the Party in default does not commence and diligently continue
actions to cure such default), the notifying Party shall be entitled, without
prejudice to any of its other rights conferred on it by this Agreement, in
addition to any other remedies available to it by law or in equity, to terminate
the licenses it granted to the defaulting Party and its Affiliates pursuant to
Section 5 (other than the license granted to SB under Paragraph 5.4(b) hereof)
of this Agreement by giving written notice to take effect immediately upon
delivery of such notice. The right of either Party to terminate such licenses,
as hereinabove provided, shall not be affected in any way by its waiver or
failure to take action with respect to any previous default. Neither the failure
by CADUS to achieve the Key Check Point nor the failure to agree on an Annual
Research Plan pursuant to Paragraph 3.1 shall give SB the right to exercise its
termination rights under this Paragraph 12.2(a). The failure by SB to meet the
requirements of Paragraphs 3.5(a) or 4.1(g) shall not give CADUS the right to
exercise its termination rights under this Paragraph 12.2(a).
(b) Termination by CADUS, pursuant to this Paragraph 12.2, of the licenses
it granted to SB under Section 5 (other than the licenses granted to SB under
Paragraph 5.4(b) hereof) of this Agreement shall also terminate the rights and
obligations of the Parties set forth in Section 3 (other than Paragraphs 3.3(f)
and (g), 3.8(b), and 3.12(c) thereof) of this Agreement but shall not terminate
any other rights and obligations of the Parties under this Agreement. Within ten
(10) working days after such termination, SB shall pay to CADUS the amount of
funding it would have provided to CADUS pursuant to Paragraphs 3.3(a), (b), and
(d) hereof through the end of the term of the Research Program. Upon such
termination, (i) CADUS shall have no further obligation to conduct the Research
Program, (ii) SB shall deliver to CADUS all data, reports and records in SB's
possession or control which relate to the Research Program and (iii) SB shall
return to CADUS or destroy all Screens and Substances developed under the
Research Program in its possession or control.
56
(c) Termination by SB, pursuant to this Section 12.2, of the licenses it
granted to CADUS under Section 5 of this Agreement shall also terminate the
rights and obligations of the Parties set forth in Section 3 (other than
Paragraphs 3.3(f) and (g), 3.8(b), and 3.12(c) thereof) of this Agreement but
shall not terminate any other rights and obligations of the parties under this
Agreement. Upon such termination, (i) CADUS shall have no further obligations to
conduct the Research Program, (ii) SB shall have no further obligation to fund
the Research Program under Paragraphs 3.3(b) and (d), and (iii) CADUS shall
return to SB or destroy all SB Targets and Third Party Targets and all Screens
in its possession or control that incorporate SB Targets and/or Third Party
Targets.
12.3
Either party may terminate the licenses granted under this Agreement if, at any
time, the other party shall file in any court or agency pursuant to any statute
or regulation of any state or country, a petition in bankruptcy or insolvency or
for reorganization or for an arrangement or for the appointment of a receiver or
trustee of the party or of its assets, or if the other party proposes a written
agreement of composition or extension of its debts, or if the other party shall
be served with an involuntary petition against it, filed in any insolvency
proceeding, and such petition shall not be dismissed within sixty (60) days
after the filing thereof, or if the other party shall propose or be a party to
any dissolution or liquidation, or if the other party shall make an assignment
for the benefit of creditors.
12.4
Notwithstanding the bankruptcy of CADUS or SB, or the impairment of performance
by CADUS or SB of its obligations under this Agreement as a result of bankruptcy
or insolvency of CADUS or SB, the other party shall be entitled to retain the
licenses granted herein, and SB licensees shall be entitled to retain their
rights as provided in this Agreement, subject to rights of a party to terminate
such licenses for reasons other than bankruptcy or insolvency as expressly
provided in this Agreement.
57
12.5
Neither party shall have the right to terminate the licenses under this
Agreement except pursuant to Paragraphs 12.2(a), 12.2(b), 12.2(c), and 12.3,
provided however that nothing in this Agreement shall limit any remedies for
breach which may be available pursuant to a judgment of a court, in law or
equity, including termination of this Agreement or of any or all rights
hereunder.
13. FORCE MAJEURE AND HARDSHIP
13.1 Events of Force Majeure
Neither Party shall be held liable or responsible to the other Party nor be
deemed to be in default under or in breach of any provision of this Agreement
for failure or delay in fulfilling or performing any obligation of this
Agreement (other than its payment and reporting obligations set forth in Section
6 hereof) when such failure or delay is due to force majeure, and without the
fault or negligence of the Party so failing or delaying. For purposes of this
Agreement, force majeure is defined as causes beyond the control of the Party,
including, without limitation, acts of God; acts, regulations, or laws of any
government; war; civil commotion; destruction of production facilities or
materials by fire, flood, earthquake, explosion or storm; labor disturbances;
epidemic; and failure of public utilities or common carriers. In such event SB
or CADUS, as the case may be, shall immediately notify the other Party of such
inability and of the period for which such inability is expected to continue.
The Party giving such notice shall thereupon be excused from such of its
obligations under this Agreement as it is thereby disabled from performing
(other than its payment and reporting obligations set forth in Section 6 hereof)
for so long as it is so disabled (but not beyond the period of twelve (12)
months following its giving of such notice) and the thirty (30) days thereafter.
58
14. MISCELLANEOUS
14.1 Relationship of Parties
Nothing in this Agreement is intended or shall be deemed to constitute a
partnership, agency, employer-employee or joint venture relationship between the
Parties. No Party shall incur any debts or make any commitments for the other,
except to the extent, if at all, specifically provided herein.
14.2 Covenant Not to Solicit Employees
Neither Party shall at any time during the term of the Research Program and for
a period of two (2) years thereafter, directly or indirectly, in any manner or
under any circumstances or conditions whatsoever solicit, induce or attempt to
induce any management employee or scientist of the other Party or of any
Affiliate of the other Party to terminate his or her employment with such Party
or such Affiliate.
14.3 Assignment
Neither Party shall be entitled to assign its rights or transfer its obligations
hereunder without the express written consent of the other Party hereto, except
that both SB and CADUS may otherwise assign their respective rights and transfer
their respective obligations hereunder to any assignee of all or substantially
all of their respective businesses or in the event of their respective merger or
consolidation or similar transaction, provided that the right conferred by
Paragraph 4.1(f) shall not be assigned by CADUS if the assignee of all or
substantially all of CADUS's business is a pharmaceutical company (having
world-wide pharmaceutical sales in excess of the equivalent of One Billion US
Dollars) or in the event CADUS merges, consolidates or enters into a similar
transaction with a pharmaceutical company (having world-wide pharmaceutical
sales in excess of the equivalent of One Billion US Dollars) in which event such
right shall immediately terminate. No assignment and transfer shall be valid and
effective unless and until the assignee/transferee shall agree in writing to be
bound by the provisions of this Agreement. Notwithstanding the preceding,
SmithKline Xxxxxxx Corporation and SmithKline Xxxxxxx p.l.c. may assign and/or
delegate any rights and/or obligations
59
hereunder to an Affiliate of either of them without the consent of CADUS;
provided however that such assignment shall not relieve SmithKline Xxxxxxx
Corporation and SmithKline Xxxxxxx p.l.c. of any of their obligations hereunder.
14.4 Further Actions
Each Party agrees to execute, acknowledge and deliver such further instruments,
and to do all such other acts, as may be necessary or appropriate in order to
carry out the purposes and intent of this Agreement.
14.5 Notice
Any notice or request required or permitted to be given under or in connection
with this Agreement shall be deemed to have been sufficiently given if in
writing and personally delivered or sent by registered or certified mail (return
receipt requested), facsimile transmission (receipt verified), express courier
service (signature required), or telegram, prepaid, to the Party for which such
notice is intended, at the address set forth for such Party below:
(a) In the case of SB, to:
Xx. Xxxxx X Xxxxxxxxxx
Xx. Vice President
Biopharmaceuticals R&D
New Frontiers Science Park (North)
Xxxxx Xxxxxx
Xxxxxx
Xxxxx
XX00 0XX
Facsimile No.: 011441279627213
60
With a copy to:
Dr. Xxxx Xxxxxx
Director
Alliance and Technologies Group
000 Xxxxxxxxx Xxxx
Xxxx xx Xxxxxxx, XX 00000
Facsimile No.: 000-000-0000
(b) In the case of CADUS, to:
CADUS Pharmaceutical Corporation
000 Xxx Xxx Xxxx Xxxxx Xxxx
Xxxxxxxxx, Xxx Xxxx 00000-0000
Attention: President
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxxx Xxxxx Singer & Xxxxxxxxx, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address for such Party as it shall have specified by like
notice to the other Party, provided that notices of a change of address shall be
effective only upon receipt thereof. If sent by mail, facsimile transmission,
express courier service, or telegram, the date of mailing or transmission shall
be deemed to be the date on which such notice or request has been given.
61
14.6 Use of Name
Except as otherwise provided herein, neither Party shall have any right, express
or implied, to use in any manner the name or other designation of the other
Party or any other trade name or trademark of the other Party for any purpose in
connection with the performance of this Agreement.
14.7 Public Announcements
Except as required by law, neither Party shall make any public announcement
concerning this Agreement or the subject matter hereof without the prior written
consent of the other, which shall not be unreasonably withheld. In the event of
a required public announcement, the Party making such announcement shall provide
the other Party with a copy of the proposed text prior to such announcement.
Notwithstanding the foregoing, either Party may publicly disclose previously
disclosed non-confidential information without the consent of the other.
14.8 Waiver
A waiver by either Party of any of the terms and conditions of this Agreement in
any instance shall not be deemed or construed to be a waiver of such term or
condition for the future, or of any subsequent breach hereof. All rights,
remedies, undertakings, obligations and agreements contained in this Agreement
shall be cumulative and none of them shall be in limitation of any other remedy,
right, undertaking, obligation or agreement of either Party.
14.9 Compliance with Law
Nothing in this Agreement shall be deemed to permit a Party to export, reexport
or otherwise transfer any Product sold under this Agreement without compliance
with applicable laws.
14.10 Severability
When possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law,
such provision will be ineffective only to the
62
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement, and the Parties shall negotiate in good faith to modify this
Agreement to preserve (to the extent possible) their original intent.
14.11 Amendment
No amendment, modification or supplement of any provisions of this Agreement
shall be valid or effective unless made in writing and signed by a duly
authorized officer of each Party.
14.12 Governing Law
This Agreement shall be governed by and construed in accordance with the laws of
New York, without regard to its choice of law principles.
14.13 Arbitration
The Parties agree that they shall use their best efforts to settle amicably any
disputes, differences or controversies arising between them out of or in
connection with this Agreement. However, the Parties irrevocably agree that any
dispute arising out of or in connection with this Agreement, including but not
limited to any question regarding its existence, validity or termination, if not
so settled within thirty (30) days after occurrence thereof, shall be finally
determined by arbitration. Unless the Parties otherwise agree, arbitration shall
be held in New York if the request is made by SB and in Pennsylvania if the
request is made by CADUS. The arbitration shall be conducted by three
arbitrators who are appointed and who shall conduct such arbitration in
accordance with the commercial rules of the American Arbitration Association
then obtaining. The award rendered by the arbitrators shall be final and binding
upon the Parties. Judgment upon the award rendered may be entered in any court
having jurisdiction or application may be made to such court for a judicial
acceptance of the award and an order of enforcement, as the case may be.
14.14 Entire Agreement
63
So far as permitted by law and except in the case of fraud or misrepresentation,
this Agreement, the Stock Purchase Agreement and the Confidentiality Agreements
set forth the entire agreement and understanding between the Parties as to the
subject matter hereof and merges all prior discussions and negotiations between
them, and neither of the Parties shall be bound by any conditions, definitions,
warranties, understandings or representations with respect to such subject
matter other than as expressly provided herein or as duly set forth on or
subsequent to the date hereof in writing and signed by a proper and duly
authorized officer or representative of the Party to be bound thereby. In the
event of any conflict between this Agreement and the Stock Purchase Agreement on
the price of shares, the Stock Purchase Agreement controls.
14.15 Counterparts
This Agreement may be executed simultaneously in any number of counterparts, any
one of which need not contain the signature of more than one Party but all such
counterparts taken together shall constitute one and the same agreement.
14.16 Descriptive Headings
The descriptive headings of this Agreement are for convenience only and shall be
of no force or effect in construing or interpreting any of the provisions of
this Agreement.
14.17 Further Collaboration
After the Effective Date, the parties intend to discuss developments of
technology related to CADUS Technology and other enhancements of the Research
Program. However, the parties are under no obligation to enter into any
agreements regarding such developments and enhancements.
64
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed by its duly authorized officer as of the day and year first above
written.
SMITHKLINE XXXXXXX CORPORATION
By: /s/ Xxxx-Xxxxxx Xxxxxxx
------------------------------
Name: Xxxx-Xxxxxx Xxxxxxx
------------------------------
Title: Chief Operating Officer
------------------------------
SMITHKLINE XXXXXXX p.l.c.
By: /s/ Xxxx-Xxxxxx Xxxxxxx
------------------------------
Name: Xxxx-Xxxxxx Xxxxxxx
------------------------------
Title: Chief Operating Officer
------------------------------
CADUS PHARMACEUTICAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Name: Xxxxxx X. Xxxxx
------------------------------
Title: Chief Executive Officer
------------------------------
