EXHIBIT 10.19
PHYTERA, INC.
and
CHIRON CORPORATION
________________________________________________________________________________
COLLABORATION
AGREEMENT
________________________________________________________________________________
THIS AGREEMENT is made on May 20, 1998 between:
1. PHYTERA, INC., incorporated in Delaware, and located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("PHYTERA") and
2. CHIRON CORPORATION, incorporated in Delaware, and located at ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("CHIRON").
RECITALS
Phytera has an extensive library of natural product extracts derived from
plants and marine organisms, including, without limitation, the ExPAND and
uMARINE extracts.
Chiron is an international pharmaceutical company experienced in
discovering, developing, registering and marketing pharmaceutical products and
is able to facilitate the research and development of such products.
Chiron wishes to collaborate with Phytera in the area of identifying
healthcare products associated with the Targets referenced herein with both
parties participating in the proceeds of commercialization of such products.
IT IS AGREED as follows.
1. DEFINITIONS AND INTERPRETATION
The following definitions apply unless the context requires otherwise.
1.1 "ADDITIONAL EXTRACTS" has the meaning referenced in Section 3.6.
1.2 "AFFILIATE" means, with respect to any party hereto, any entity that
directly or indirectly controls, is controlled by, or under common control with,
that party. For such purpose the terms "control" means ownership or control of
at least 50% of the voting interest in the entity in question. Without limiting
the generality of the foregoing, the Affiliates of Chiron expressly exclude
Novartis AG, a Switzerland corporation, or any Affiliates of Novartis AG, or any
successors in interest thereof, ("Novartis"), unless and until such time as
Novartis exercises its rights to control Chiron in accordance with the terms and
conditions of the November 20, 1994 Governance Agreement between Chiron and
Novartis' predecessor Ciba Geigy Limited.
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1.3 "AGREEMENT TERM" has the meaning referenced in Section 14.4.
1.4 "ASSAYS" means the assays to be utilized for identification of
molecules by screening against targets in the Research Field, including any
primary or secondary assay or test proposed by Chiron for the purposes of this
Agreement.
1.5 "COLLABORATION TERM" shall have the meaning referenced in Section
14.1.
1.6 "DERIVATIVE COMPOUND SERIES" means homologs, isomers, analogs and
derivatives, substitutions or formulations of a Licensed Compound, as those
terms are defined below in this Section. "Homolog" means a compound differing
by one to three (1-3) R groups (e.g., ethyl, propyl, methylene group or ethylene
group, or similar or equivalent combinations thereof). "Isomer" means a
compound differing by position isomery, geometric isomery, or stereochemical
isomery. "Analog" shall have the meaning generally understood by practitioners
of the art (e.g., a compound differing by removal of one or two (1 or 2)
individual small elements or one larger element thereof and/or addition of zero
to three (0-3) suggested small elements). Small elements include substituent
groups such as OH, ▇▇▇▇, ▇▇▇, NH2, halogen, S03H and similar groups. A larger
element may include up to 10 carbons and up to 3 heteroatoms. "Derivative"
means a compound derived by one to three (1-3) substitutions, deletions or
additions or simple oxidations or reductions made to a Licensed Compound or any
compound within a Derivative Compound Series. Salts, formulations and prodrugs
of a Licensed Compound or any compound within a Derivative Compound Series shall
also be included within the Derivative Compound Series.
1.7 "EFFECTIVE DATE" means the date of signing of this Agreement.
1.8 "EXEMPT PRODUCT" means a compound which is based on a Licensed
Compound, which arises as a result of the activities referenced in this
Agreement, which is not a Tertiary Product, and which is discovered more than
five (5) years after the LC Declaration Date for the relevant Licensed Compound
in question, irrespective of whether such compound is inside or outside the
Derivative Compound Series for such Licensed Compound, and for which Chiron, its
Affiliate or licensee has received governmental health regulatory approval to
market and sell in a country(s).
1.9 "EXTRACT" means a solution or suspension of chemicals derived from
fermenting a plant or marine microorganism, or the residue remaining from the
evaporation of solvent from such a solution or suspension.
1.10 "INFORMATION" has the meaning set out in Article 12.
1.11 "INITIAL EXTRACTS" has the meaning referenced in Section 3.1.
1.12 "LICENSE" has the meaning set forth in Section 5.2.
1.13 "LICENSED COMPOUND" OR "LC" means a compound within a Licensed
Compound Series.
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1.14 "LICENSED COMPOUND SERIES" OR "LCS" means all compounds contained
within a Optioned Validated Lead Structure Series, and analogues or derivatives
thereof, which are the subject of Chiron's Licensed Compound Declaration in
accordance with Section 5. 1.
1.15 "LC DECLARATION DATE" shall mean, with respect to any Licensed
Compound Series (and any Licensed Compounds within such Series), the date upon
which Chiron declares its intent to secure a License to such Licensed Compound
Series pursuant to Section 5. 1.
1.16 "NET SALES" means, in relation to a Product, the actual invoiced
price at which the Product is sold by Chiron or any of its sub-licensees to an
independent third party in a bona fide arms length transaction less the
following deductions to the extent actually allowed and taken:
(i) all trade, cash and quantity credits, discounts, refunds or rebates;
and
(ii) allowances or credits for returns; and
(iii) packaging and handling fees (if charged separately); and
(iv) prepaid freight and insurance; and
(v) sales tax and other governmental charges (including a value added
tax) actually paid in connection with the sale (but excluding what
are commonly known as income taxes).
In the event that Products are sold in combination with another product or
active component, (a "Combination Product") for a single price, Net Sales from
sales of Combination Product for purposes of calculating royalties due under
this Agreement shall be calculated by multiplying the Net Sales of that
Combination Product by the fraction A/(A+B), where A is the gross selling price
of the Product sold separately in the country of sale and B is the gross selling
price of the other product(s) or component(s) sold separately in the country of
sale. In the event that no such separate sales are made, Net Sales, for purposes
of determining royalty payments on such Combination Products, shall be a
reasonable apportionment of the gross amount invoiced therefor based upon the
relative contribution of the Products to the price of the Combination Product.
Such apportionment shall be negotiated in good faith between the parties and
such apportionment shall be established prior to the time that a party hereto
shall have the right to sell such Combination Products.
1.17 "NATURAL PRODUCTS CHEMISTRY ISOLATION AND IDENTIFICATION" OR "NPCH"
means the process whereby Extracts agreed upon by Chiron and Phytera pursuant to
Section 3.3 are analyzed by Phytera for the identification of Validated Lead
Structures.
1.18 "OPTIONED VALIDATED LEAD STRUCTURE" OR "OVLS" means a compound as to
which the parties have identified a Validated Lead Structure, and is contained
within a Optioned Validated Lead Structure Series.
1.19 "OPTIONED VALIDATED LEAD STRUCTURE SERIES" OR "OVLSS" means the
compound series which contains all Validated Lead Structures for any Target,
which compound series is the subject of Chiron's OVLS Declaration referenced in
Article 5.
1.20 "OVLS EVALUATION LICENSE AND OPTION TERM" shall have the meaning
referenced in Article 5 and Section 14.3 herein.
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1.21 "PATENT" means a governmental grant in any country, and any
provisional or regular application therefor and any divisions or continuations
in whole or in part thereof, of exclusive rights to the practice of an invention
or discovery. Any subsequent addition, extension, registration, confirmation,
reexamination, reissue, supplementary protection certificate or renewal of such
governmental grant is included. Patents include any Patent owned, licensed or
otherwise acquired by Phytera which is useful or necessary in the development or
commercialization of Optioned Validated Lead Structures, Licensed Compounds or
Products, including, without limitation, Pre-LC Declaration Patents, Post-LC
Declaration Patents, or Phytera Independent Patents. Expressly excluded from
Patents are any patents claiming inventions discovered or reduced to practice by
Chiron outside of this Agreement and the collaboration contemplated herein,
including, without limitation, Chiron patents covering libraries or compounds
outside the scope of this Agreement.
1.22 "POST-LC DECLARATION PATENTS" means, with respect to any Licensed
Compound, all Patents claiming Products or Licensed Compounds, and any and all
derivatives thereof, and methods of making or using Licensed Compounds or
formulations of Licensed Compounds and Products, which are filed after the LC
Declaration Date, regardless of inventorship.
1.23 "PRE-LC DECLARATION PATENT" means, with respect to any Licensed
Compound and its precursor or related compounds and any analogues or derivatives
thereof (including, without limitation, Optioned Validated Lead Structures), all
Patents claiming such precursor or related compounds and any analogues or
derivatives thereof and methods of making or using Licensed Compounds or
formulations of Licensed Compounds filed prior to the LC Declaration Date,
regardless of inventorship.
1.24 "PRIMARY PRODUCT" means a compound which is a Licensed Compound or a
compound within the Derivative Compound Series of such Licensed Compound, which
arises as a result of the activities referenced in this Agreement and is
discovered within five years after the LC Declaration Date for the Licensed
Compound in question, for which Chiron, its Affiliate or licensee has received
governmental health regulatory approval to market and sell in a country(s).
1.25 "PRODUCT" means a Primary Product, Secondary Product, Tertiary
Product or Exempt Product.
1.26 "PRODUCT PATENT" means, with respect to a Product, an issued Patent
containing valid issued claims directed to such Product or methods of making or
using a Product or formulations of a Product, which patent claims are directed
to subject matter conceived or reduced to practice as a result of the activities
referenced in this Agreement.
1.27 "RESEARCH FIELD" means the screening of natural products against
Targets, for the identification and commercialization of compounds useful as
healthcare products.
1.28 "SCIENTIFIC COMMITTEE" means the committee referenced in Article 11.
1.29 "SECONDARY PRODUCT" means a compound which is based on a Licensed
Compound but which is outside the Derivative Compound Series for such Licensed
Compound, which arises as a result of the activities referenced in this
Agreement and which is discovered within five (5) years after the LC Declaration
Date for the relevant Licensed Compound in
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question, for which Chiron, its Affiliate or licensee has received governmental
health regulatory approval to market and sell in a country(s).
1.30 "PHYTERA INDEPENDENT PATENT" means an issued patent owned by Phytera
which contains issued valid claims directed to a process, method or composition
of matter practiced by Chiron in making or using a Tertiary Product, which
process, method or composition of matter was discovered by Phytera independently
of this Agreement.
1.31 "TERTIARY PRODUCT" means a compound which is not a Primary or
Secondary Product, but which is covered by a Phytera Independent Patent.
1.32 "TARGETS" means the Targets referenced in Exhibit A.
1.33 "VALIDATED HIT EXTRACT" OR "VHE" means an Extract with appropriate
evidence of biological activity in an Assay sufficient to warrant progression to
NPCII as determined by the Scientific Committee from time to time.
1.34 "VALIDATED LEAD STRUCTURE" means an individual compound as to which
Phytera (or, if applicable, Chiron) has completed NPCII, has identified the
compound's chemical structure and verified its biological activity in primary
and secondary screens.
1.35 "VLS EVALUATION TERM" shall have the meaning referenced in Section
14.2 herein.
2. SCOPE OF THE COLLABORATION
2.1 Exclusive Collaboration.
During the Collaboration Term, Phytera shall collaborate exclusively with
Chiron in the Research Field. Further, Phytera agrees that its rights to (a)
undertake any natural product screening or other drug discovery and development
activity against Targets in the Research Field for any third party or on its own
behalf, or (b) supply any Extracts to or undertake any screening activities for
any third party for screening against any Targets in the Research Field shall be
subject to the Non-Competition Covenants referenced in Article 9 herein.
3. COLLABORATION WORKPLAN
This Article 3 outlines the schedule of activities associated with Extract
delivery, screening, compound identification, structural analysis, reporting of
compound data and other activities to be undertaken by the parties hereto, which
schedule shall be reviewed and updated by the Scientific Committee from time to
time. Phytera shall notify Chiron of any problems or projected delays in
meeting the timelines referenced herein.
3.1 DELIVERY OF EXTRACTS.
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No later than [ ]* after the Effective Date Phytera will deliver to
Chiron for natural product screening [ ]* ExPAND and uMARINE Extracts (the
"Initial Extracts") with appropriate corresponding documentation. With respect
to ExPAND Extracts, such documentation shall indicate the number of extracts
from various plant orders (as represented on a phylogenic tree) and the number
of species represented in the Extracts. With respect to uMARINE Extracts, the
documentation shall indicate the geographic locations from which the samples
used to derive the Extracts were sourced and the type of microorganisms (e.g.,
fungus, actinomycetes or eubacterium) represented in the Extracts. Such
Extracts shall be selected by Phytera from its library of existing Extracts in
an effort to achieve the broadest possible chemical diversity, taking into
consideration phylogenic and habitat characteristics. Extracts selected by
Phytera shall be supplied in a form generally compatible with Chiron's assay
protocols based on Chiron's test of controls previously supplied by Phytera.
3.2 SCREENING AND SECONDARY TESTS.
(a) Chiron shall conduct primary screening of the Initial Extracts
against the Targets. The parties agree that Chiron shall have
the right to screen any or all of the Extracts provided by
Phytera hereunder against any or all of the Targets. It is
anticipated that Chiron will use commercially reasonable efforts
to conclude primary screening within [ ]* following Chiron's
receipt of the Initial Extracts, and shall attempt to conclude
primary screening of approximately [ ]* of the Initial Extracts
against [ ]* Targets within [ ]* following Chiron's receipt of
the Initial Extracts.
(b) Chiron shall conduct secondary in vitro or in vivo evaluation of
the Initial Extracts, or fractions thereof as necessary, to
better define activity and specificity parameters for the
selection of Validated Hit Extracts for submission to NPCII.
(c) When necessary and mutually agreed, Chiron will transfer
appropriate assays, protocols, and reagents to Phytera, solely
for Phytera's internal use in carrying out NPCH pursuant to this
Agreement. In the event that both parties agree to a transfer
pursuant to this Section 3.2(c), Chiron shall reimburse
Phytera's fairly allocable out of pocket travel and equipment
costs (e.g., excluding FTE costs under Section 6.2) attributable
to such transfer and subsequent performance of assays and NPCH
activities conducted by Phytera pursuant to this Agreement. As a
condition of such reimbursement, Phytera shall submit its
estimate of such costs prior to such transfer. Further, Phytera
shall deliver extracts and other necessary reagents to Chiron's
facilities, and Chiron shall have the right to conduct assays in
support of NPCII activities at its own facilities, in the event
that Chiron determines in its reasonable discretion that the
costs associated
________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
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with the transfer of assays, protocols and reagents to Phytera
referenced in this Section 3.2 (c) are unreasonable or
unacceptable to Chiron. Chiron grants Phytera no other right or
license to any Chiron materials, Patents or Information.
3.3 NPCHII.
(a) In conjunction with Chiron's conduct of the activities
referenced in Section 3.2 above with respect to other Targets,
Chiron and Phytera shall review the screening data generated
pursuant to Section 3.2 for each Target, and the parties shall
jointly select [ ]* Extracts which demonstrate sufficient
activity, specificity or other characteristics for entry into
NPCH ("Validated Hit Extracts.")
(b) On a Target by Target basis, with respect to the Validated Hit
Extracts, Phytera shall undertake all activities reasonably
necessary to obtain Validated Lead Structures for each of the [
]* Validated Hit Extracts, which activities shall commence
subsequent to the joint selection of Validated Hit Extracts from
[ ]* Targets. Phytera shall provide up to [
]* to perform such activities, subject to receipt of the R&D FTE
Support payment referenced in Section 6.2(a). It is anticipated
that the activities referenced in this Section 3.3 (b) shall be
completed within the Collaboration Term. The parties will
mutually agree to extend the Collaboration as reasonably
necessary to complete these activities.
3.4 REPORTING.
As soon as practicable, but in no event less than thirty (30) days after
the completion of each phase of the Collaboration Workplan referenced above for
each Target, each party shall provide the other party with a written report in
reasonable detail summarizing the activities undertaken during that phase. In
the case of Phytera, such reports shall include documentation describing the
biological sources of hit extracts under review, along with available
information describing the chemical characterization of such extracts, fractions
or isolates thereof. The parties shall confer together through the Scientific
Committee by mutually acceptable means, including, including, without
limitation, by telephone or by means of a video conference facility for the
purpose of discussing the report and recommending further activities.
3.5 OTHER DELIVERABLES.
________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
7
(a) At any time during the Collaboration Term, in addition to the
reports referenced in Section 3.4 Phytera will, if requested by
Chiron, exercise best efforts to provide to Chiron reasonable
additional quantities of Validated Hit Extracts for Chiron's use
in (i) confirming activity in primary and secondary assays; and
(ii) confirming selectivity and other pharmacologically relevant
characteristics, subject to Chiron's reimbursement of Phytera's
fairly allocable costs.
(b) At any time prior to expiration of the VLS Evaluation Term,
Phytera will, if requested by Chiron, exercise best efforts to
provide larger amounts of Validated Lead Structures or Validated
Hit Extracts, subject to Chiron's reimbursement of Phytera's
fairly allocable costs.
(c) At any time prior to expiration of the OVLS Evaluation License
and Option Term, if requested by Chiron, Phytera shall transfer
to Chiron its cell culture materials and protocols necessary for
scale-up and production of OVLS, solely for Chiron's evaluation
purposes, subject to Chiron's reimbursement of Phytera's fairly
allocable costs and Chiron's compliance with the confidentiality
provisions of Article 12 herein. Phytera grants Chiron no other
rights or licenses to materials referenced in this Section 3.5
(c).
3.6 PURCHASE OF ADDITIONAL EXTRACTS.
At any time prior to the expiration of the OVLS Evaluation License and
Option Term, on a Target by Target basis, Chiron shall have the right to order
and screen, and Phytera shall have the obligation to deliver additional ExPAND
and uMARINE Extracts (the "Additional Extracts"), subject to availability of
such Extracts. Such Additional Extracts shall be subject to the terms of this
Agreement as if included in the Initial Extracts, subject to the provisions of
Section 6.4 regarding payment for the Additional Extracts.
4. OPTIONED VALIDATED LEAD STRUCTURES
4.1 Declaration of Optioned Validated Lead Structure Series by Chiron..
For a period of [ ]* after Chiron receives from
Phytera a complete report detailing all information relevant to the Validated
Lead Structures for the Target in question, (the "VLS EVALUATION TERM") Chiron
shall have the right to undertake whatever activities it deems necessary to
determine the suitability of the Validated Lead Structures for its commercial
activities, and shall have the right to declare by notice to Phytera that it
wishes to acquire the OVLS Evaluation
_________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
8
License referenced in Section 4.2 below with respect to any or all Validated
Lead Structures for the given Target (the "OVLS DECLARATION"). Upon Chiron's
exercise of the OVLS Declaration, and subject to Section 4. 1 (a) and Chiron's
payment obligations referenced in Section 6.5, the entire series of compounds
which are the subject of such OVLS Declaration, and any analogs or derivatives
thereof, shall be deemed the Optioned Validated Lead Structures Series, and all
compounds contained within the Optioned Validated Lead Structure Series shall be
deemed Optioned Validated Lead Structures.
(a) In the event that Phytera or a third party collaborator of
Phytera independently of this Agreement discovers verifiable
biological activity for a Validated Lead Structure declared by
Chiron, and such discovery has occurred before the discovery of
biological activity for the VLS by Phytera or Chiron under this
Agreement (a "Prior Discovery"), and such VLS is therefore
encumbered, either by virtue of a pre-existing obligation to a
third party or under an internal Phytera discovery program,
Chiron shall not have the right to obtain an OVLS Evaluation
License with respect to such Validated Lead Structure(s) (an
"Exempt VLS"), provided that:
(1) Phytera shall notify Chiron in writing within [
]* following Phytera's characterization of such VLS
that any such Exempt VLS is the subject of a Prior
Discovery, and
(2) Phytera shall provide Chiron a written report which
identifies when such Prior Discovery occurred, and which
otherwise substantiates Phytera's claim that such compound
is an Exempt VLS (e.g., a structural data as shown by NMR or
HPLC analysis in a report showing the date such data was
discovered.)
4.2 OVLS EVALUATION LICENSE.
Once Chiron has made the OVLS Declaration pursuant to Section 4. 1, Phytera
shall grant Chiron an exclusive worldwide license, with right to suublicense,
under all Patents and Information owned, licensed, acquired or controlled by
Phytera, to undertake research and development activities with respect to all
Optioned Validated Lead Structures which are the subject of the OVLS Declaration
and derivatives and analogues thereof (the "OVLS EVALUATION LICENSE") for a
period of [ ]* after the OVLS Declaration (the "OVLS EVALUATION LICENSE AND
OPTION TERM") During such OVLS Evaluation License Option Term, and any relevant
term of non-competition referenced in Article 9, Phytera shall not engage in any
screening, research or development activities with respect to any Optioned
Validated Lead Structures on its own or enter into any third party agreements
with respect to such activities, or grant any other parties rights to any
Optioned Validated Lead Structures.
_____________________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately wiht the Securities and Exchange
Commission.
9
5. LICENSED COMPOUNDS
5.1 CHIRON'S LICENSED COMPOUND DECLARATION AND EXERCISE OF OPTION TO
LICENSED COMPOUND.
(a) At any time within the OVLS Evaluation License and Option
Term., Chiron may secure the License referenced in Section
5.2 with respect to any or all compounds contained within a
Optioned Validated Lead Structure Series by notifying
Phytera of Chiron's interest in obtaining the License
referenced in Section 5.2 (the "LC DECLARATION") Chiron's
provision of the LC Declaration to Phytera shall constitute
Chiron's exercise of its option to the Optioned Validated
Lead Structure Series in question, and upon Phytera's
receipt of Chiron's LC Declaration (the "LC DECLARATION
DATE"), any and all compounds which are the subject of
Chiron's LC Declaration will be deemed to be a Licensed
Compound(s) subject to the License referenced in Section
5.2.
(b) Phytera shall execute (and shall ensure that any of its
employees execute and that any third party involved in the
discovery or invention over whom they have control executes)
all necessary documents to perfect Chiron's rights pursuant
to this Article 5.
5.2 LICENSED COMPOUND AND PRODUCT LICENSE.
(a) In consideration of the License Fee referenced in Section
6.6, upon Phytera's receipt of the LC Declaration referenced
in Section 5.1, Phytera shall immediately grant and does
hereby grant to Chiron an exclusive worldwide license, with
right to sublicense, to make, have made, use, import, offer
for sale, sell, have sold or otherwise commercialize any
Product based on or derived from a Licensed Compound and any
analogues or derivatives thereof under any and all Patents,
other intellectual property and Information owned, licensed,
acquired or controlled by Phytera as of the LC Declaration
Date, and any other Patent(s) or Information owned,
licensed, acquired or controlled by Phytera before or after
the LC Declaration Date (the "LICENSE").
6. PAYMENTS
Chiron shall make payments to Phytera as follows:
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6.1 EXTRACT DELIVERY PAYMENT. For Phytera's delivery to Chiron of the
Initial Extracts referenced in Section 3.1, [ ]* payable within
[ ]* following such delivery.
6.2 R&D FTE SUPPORT. Subject to Sections 6.2(a)(b) and (c), for Phytera's
provision of [ ]* in Phytera's performance of the NPCII Program
(the "Total FTE Payment"), Chiron shall pay Phytera a total of up to [
]*, as follows:
(a) Chiron shall pay Phytera [ ]* of the Total FTE
Payment within [ ]* after the parties have selected
Validated Hit Extracts pursuant to Section 3.3
(b) Chiron shall pay to Phytera [ ]* of FTE Payment
upon [
]*
(c) Phytera shall keep and provide Chiron with accounting
records for its FTE efforts undertaken pursuant to this
Section 6.2. In the event that Phytera does not utilize
[ ]* in its performance of the NPCII Program,
Chiron may elect to apply such unused FTE effort to other
activities performed by Phytera under this Agreement, as
mutually agreed by the parties. In the event that the
parties are unable to mutually agree upon other activities
to be performed by Phytera, Phytera shall provide Chiron
with a cash payment equivalent to such unused FTE effort
within [ ]* following the conclusion of the Collaboration
Term.
6.3 SCALE-UP. In the event that Phytera engages in scale up manufacturing
of VHEs or OVLSs pursuant to Section 3.5, Chiron shall reimburse Phytera for its
fairly allocated costs associated with such scale up manufacturing.
6.4 ADDITIONAL EXTRACTS. In the event that Chiron purchases Additional
Extracts pursuant to Section 3.6, Phytera shall deliver such Extracts to Chiron.
For each Additional Extract delivered by Phytera to Chiron, and the right to
screen such Additional Extract against one (1) Target, Chiron shall pay Phytera
[ ]*. Chiron shall have the right to screen any and all such Additional
Extracts against any and all of the Targets, but shall pay Phytera an additional
[ ]* for each additional Target (i.e, second, third, fourth and fifth
Targets) against which the Additional Extract is screened. All payments made by
Chiron under this Section 6.4 shall be creditable, on a Target by Target basis,
against the non-competition fee referenced in Section 9.4.
__________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
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6.5 OVLS EVALUATION LICENSE AND OPTION FEE.
Within [ ]* following the OVLS Declaration by Chiron referenced
in Section 4. 1, Chiron shall pay to Phytera a non-refundable fee of [ ]*
(the "OVLS Evaluation License and Option Fee") for the exclusive right to
evaluate such Optioned Validated Lead Structure(s) and derivatives and analogues
thereof as a potential Licensed Compound until the conclusion of the OVLS
Evaluation License and Option Term. Such fee shall be a one time only obligation
per Optioned Validated Lead Structure Series and shall not be credited against
any royalty or other payment payable by Chiron to Phytera under this Agreement.
6.6 LICENSE FEE.
With respect to each Licensed Compound Series for which Chiron has taken a
License by making the LC Declaration referenced in Section 5.1, Chiron shall pay
Phytera within [ ]* after procuring such License a fee of [ ]* (the
"License Fee"). The License Fees paid by Chiron for Licensed Compounds shall not
be credited against any royalty payable by Chiron to Phytera under this
Agreement.
6.7 PAYMENT TERMS AND ARRANGEMENTS. All payments due by Chiron to Phytera
pursuant to this Agreement shall be (a) made payable to Phytera; and (b) made by
bank draft or telegraphic transfer to a bank account nominated by Phytera; and
(c) payable in United States currency, converted in accordance with Chiron's
standard accounting procedures, as modified by Chiron from time to time and (d)
unless otherwise agreed pursuant to this Agreement paid within [ ]* of any
notification or declaration pursuant to this Agreement.
___________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
12
7. MILESTONE PAYMENTS
7.1 MILESTONE PAYMENTS.
Chiron shall pay to Phytera the milestone payments referenced below in
Section 7.2 with respect to the Licensed Compounds, subject to the foregoing:
(a) Chiron's milestone payment obligations shall apply only to
Licensed Compounds which are submitted as a product for an
indication which is separate and distinct from indications for
which other Licensed Compounds were submitted (e.g., in the event
that two Licensed Compounds are submitted to clinical evaluation
for the same indication, the second Licensed Compound shall not
be subject to additional milestone payments).
(a) With respect to the [ ]* Licensed Compounds
submitted to clinical evaluation as separate and distinct
products which satisfy the conditions referenced in Section
7.1(a), Chiron's milestone payments shall be [ ]* of the
payments referenced in Section 7.2. With respect to the [ ]*
Licensed Compound submitted to clinical evaluation as a separate
product for separate indication, the milestones payments
referenced in Section 7.2 shall be reduced by [ ]*. With
respect to the [ ]* Licensed Compound submitted to clinical
evaluation as a separate product for a separate indication, and
[ ]* Licensed Compounds submitted to clinical evaluation
as separate products for separate indications, the milestone
payments referenced in Section 7.2 shall be reduced by [ ]*.
(b) In the event that any Licensed Compound has been submitted to
clinical evaluation once for any indication, Chiron shall have no
obligation to pay any milestone fees in the event that the same
Licensed Compound is submitted to any subsequent clinical
evaluations for any indication.
(b) With respect to derivative compounds of Licensed Compounds which
are discovered more than [ ]* after the Declaration Date for the
Licensed Compound in question, Chiron shall have no obligation to
make the milestone payments referenced in this Article 7.
7.2 Subject to Sections 7.1 and 7.3, Chiron shall make the following
milestone payments within [ ]* of the occurrence of the following events:
___________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
13
(a) [ ]* upon either (a) the [
]* or (b) the [
]* whichever occurs first; and
(b) [ [ * upon [
]*; and
(c) [ ]* upon [
]*; and
(d) [ ]* upon [
]*; and
(e) [ ]* at such time as [
]*.
7.3 APPLICATION OF MILESTONE PAYMENTS AS CREDITS AGAINST ROYALTIES.
(a) [
]*, and;
(b) [
]*.
8. ROYALTIES
8.1 PAYMENTS ON NET SALES OF PRODUCTS. Chiron shall pay to Phytera
royalties on the Net Sales of Products sold by Chiron, its Affiliates or any of
its sublicensees on a country by country basis, during the royalty terms
specified in Section 8.2, at the following royalty rates:
(a) [ ]* of Net Sales of [ ]*;
(b) [ ]* of Net Sales of [ ]*; and
(c) [ ]* of Net Sales of [ ]*.
___________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
14
No royalty shall be payable by Chiron with respect to Exempt Products.
Chiron's payment obligations under this Section 8.1 shall be due concurrently
with the statement referenced in Section 8.3.
8.2 TERM OF ROYALTY OBLIGATION.
(a) Subject to Section 8.2(b) and 8.2(c), Chiron's royalty
obligations to Phytera as to each Primary Product, Secondary
Product or Tertiary Product (excluding Exempt Products) as
provided in Section 8.1 shall terminate on a country-by-
country basis, on the [
]*.
(b) Subject to Section 8.2(d), Chiron shall pay royalties on
Primary Products and Secondary Products pursuant to Section
8.1 in any country(s) where no Product Patent has issued,
regardless of whether or not there are pending unissued
Product Patent claims in such country, provided that
Chiron's royalty obligations to Phytera as to each Primary
Product and Secondary Product sold in such country shall
terminate on the [ ]*. If, and at such time as, a
Product Patent issues in such country after such [ ]*,
Chiron's royalty obligation shall be revived and shall
thereafter terminate with respect to Primary Product(s) and
Secondary Product(s) sold in such country upon the [
(c) If no Product Patent including at least one claim covering
the Primary Product or Secondary Product has been granted in
the country of sale within [ ]* from the filing date
of such Product Patent in that country, and at such time any
product is sold in that country which (i) would infringe a
claim of the Product Patent(s) or (ii) has the same or
closely related chemical formula as the Product
("Competitive Product"), then the royalties owing to Phytera
with respect to the Primary Product or Secondary Product
shall be reduced by [ ]* (the "Reduced Royalty"). If no
Product Patent issues in such country prior to the [ ]*,
upon such anniversary Chiron's obligation to pay the Reduced
Royalty on Net Sales of Primary Product or Secondary Product
in such country shall terminate, unless and until such time
as a Product Patent issues in such
___________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
15
country, in which case Chiron's royalty obligation shall
terminate upon [
]*.
Upon expiration of Chiron's royalty obligations referenced in this Section
8.2 on a Product by Product and country by country basis, Chiron shall have a
fully paid up license under all Patents and intellectual property of Phytera
with respect to such Product in such country.
8.3 STATEMENT RELATING TO ROYALTIES.
For the purpose of notifying and paying royalties under Section 8.1 Chiron
shall, within [ ]* after each six month period from the date of the first
sale of each Product, furnish to Phytera a statement showing the Net Sales of
Products sold by Chiron, Affiliates of Chiron or its sublicensees during the six
months immediately preceding the end of such six month period and the royalties
and their method of calculation. The amount due as royalty in accordance with
the statement referred to in this Section 8.3 shall be paid by bank draft
accompanying the statement or by telegraphic transfer to an account nominated by
Phytera and shall be paid to Phytera by Chiron in United States currency.
8.4 RETENTION OF RECORDS.
At its usual place of business, Chiron shall keep true and accurate records
of all matters connected with the manufacture and sale of Products and shall
also keep proper books of account relating to money payable to Phytera hereunder
containing such true entries complete in every particular as may be necessary
for enabling the amount of such money to be conveniently ascertained.
8.5 RIGHT OF INSPECTION.
Phytera shall have the right at its own expense to appoint an independent
certified public accounting firm reasonably acceptable to Chiron and under
customary confidentiality obligations to Chiron, to audit the records and books
of account referred to in Section 8.4 solely for the purpose of verifying the
royalty payments made by Chiron to Phytera. Chiron shall give such accounting
firm all necessary assistance, including access to facilities and other
documents, subject to reasonable prior notice and during normal business hours,
to enable the amount of any royalty payable under this Agreement to be
ascertained or verified. Phytera's right of audit may be exercised no more
frequently than once in any calendar year. The accounting firm shall disclose to
Phytera only information relating solely to the accuracy of the royalties paid
and associated royalty reports.
9. NON-COMPETITION COVENANTS
9.1 During the Collaboration Term Phytera shall, without the payment of any
additional consideration by Chiron, refrain from engaging in research and
development activities, internally
___________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
16
or in collaboration with other parties, with respect to the use of any Phytera
Extracts against any Targets.
9.2 Until the expiration of the VLS Evaluation Term, on a Target by Target
basis, Phytera shall, without the payment of any additional consideration from
Chiron, refrain from engaging in research and development activities, internally
or in collaboration with other parties, with respect to the use of any Extracts
purchased by Chiron pursuant to Article 3 against any Targets for which Chiron
is evaluating Validated Lead Extracts or Validated Lead Structures.
9.3 During the OVLS Evaluation License and Option Term, on a Target by
Target basis, Phytera shall:
(a) without payment of additional consideration from Chiron,
refrain from engaging in research and development activities, internally or in
collaboration with other parties, with respect to the use of any Extracts
purchased by Chiron pursuant to Article 3 against any Targets for which Chiron
has exercised its OVLS Declaration, and
(b) refrain from engaging in research and development
activities, internally or in collaboration with other parties, with respect to
the use of any and all Phytera extracts against a specified Target, on a Target
by Target basis, for which Chiron has exercised its OVLS Declaration pursuant to
Article 4, provided that Chiron paid Phytera a non-competition fee of [ ]* in
lieu of the OVLS Evaluation License and Option Fee referenced in Section 6.5
(the "OVLS Non-Competition Covenant").
9.4 Following the conclusion of the OVLS Evaluation License and Option
Term, on a Target by Target basis, Phytera shall for a period of [ ]* refrain
from engaging in research and development activities, internally or in
collaboration with other parties, with respect to the use of any and all Phytera
extracts against any specified Target, on a Target by Target basis, for which
Chiron has exercised its OVLS Declaration/Option, provided that Chiron pays
Phytera a non-competition fee in the amount of [ ]*, which fee shall be
in lieu of the License Fee referenced in Section 6.6 and shall be subject to the
credit referenced in Section 6.4 herein (the "Commercial Non-Competition
Covenant").
10. PATENTS
10.1 FILING AND PROSECUTION OF PATENTS.
(a) Ownership of Patents and Prosecution of Pre-LC Declaration
----------------------------------------------------------
Patents. All Patents, including Pre-LC Declaration Patents and
--------
Post-LC Declaration
___________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
17
Patents, shall be owned by and filed in the name of the party to
whom inventorship is attributed under United States Patent Law
(i.e., patents claiming sole Phytera inventions shall be in the
name of Phytera, patents claiming sole Chiron inventions shall be
in the name of Chiron, and patents claiming joint inventions
shall be in the name of Phytera and Chiron), subject to any
assignment obligations referenced herein. The owner of any Pre-LC
Declaration Patent shall be responsible for preparing, filing,
prosecuting and maintaining its Pre-LC Declaration Patents.
(b) Assignment of Pre-LC Declaration Patents. Within thirty (30) days
----------------------------------------
following the LC Declaration Date Phytera shall assign to Chiron
at Chiron's cost all of Phytera's interest in any Pre-LC
Declaration Patents which claim compositions of matter or uses
which relate primarily to Licensed Compounds, or which claim
methods of manufacturing compounds which relate exclusively to
Licensed Compounds.
(c) Assignment of Post-LC Declaration Patents. After the LC
-----------------------------------------
Declaration Date, initial ownership of all inventions relating to
the Licensed Compound shall be based upon inventorship as
determined by U.S. Patent Law, and Post-LC Declaration Patents
shall initially be owned by and filed in the name of the party to
whom inventorship is attributed under United States Patent Law.
After the LC Declaration Date, and upon Chiron's request, Phytera
shall assign to Chiron all of Phytera's interest in any and all
Post-LC Declaration Patents which claim compositions of matter or
uses which relate primarily to Licensed Compounds, or which claim
methods of manufacturing compounds which relate exclusively to
Licensed Compounds.
(d) Prosecution of Post-LC Declaration Patents. Chiron shall be
------------------------------------------
responsible for preparing, filing, prosecuting to grant and
maintaining any Post-LC Declaration Patents claiming inventions
invented solely by Chiron, and any Post-LC Declaration Patents
which are assigned to Chiron, including, without limitation,
Post-LC Declaration Patents claiming inventions invented solely
by Phytera or jointly invented by Chiron and Phytera. Chiron
shall be obligated to pay for the preparation, filing,
prosecution or maintenance of any Patents which are assigned to
Chiron or exclusively licensed to Chiron under this Agreement, to
the extent provided in Section 10.1(g).
(e) It is the intent of the parties that intellectual property shall
be protected as effectively as possible for the mutual benefit of
Phytera and Chiron and in support of such intent each party shall
supply to the other party any and all data generated by either
party in respect of any compound to which Chiron has rights under
this Agreement.
18
(f) The parties shall collaborate so that the most effective
patenting strategy is implemented to give Chiron exclusivity in
respect of any Optioned Validated Lead Structure, Licensed
Compound, Licensed Compound or Product, both in respect of time
before publication and scope of patent claims. Further, to
facilitate the assignment of Phytera Patents to Chiron pursuant
to Section 10. 1 (b) and 10. 1 (c), in the event a Phytera Patent
contains subject matter directed to the composition, use or
making of Licensed Compounds, and also contains subject matter
not directed to the Licensed Compounds (i.e., subject matter
which relates generally to Phytera's business activities outside
the scope of this Agreement) the patent counsels of Phytera and
Chiron shall, where possible and practical, cooperate to develop
patenting strategies to generate a set of Patent(s) which contain
only subject matter directed to the composition, use or making of
Licensed Compounds (e.g., divisional practice and the like) which
patent(s) shall be assigned to Chiron in accordance with this
Section, and a set of patent(s) which claim the subject matter
not directed to the Licensed Compounds. In the event that (1) a
Post LC Declaration Patent or Pre-LC Declaration Patent contains
claims directed to compositions of matter or uses or
manufacturing methods which relate to Licensed Compounds, and
also contains claims which do not relate to Licensed Compounds;
(a "Mixed Patent") and (2) it is not practical or feasible to
divide the Mixed Patent to generate a set of Patents which
contain only subject matter directed to the composition, use or
making of Licensed Compounds; and (3) the claims of the Mixed
Patent which do not relate to the Licensed Compound are of
importance or relevance to Phytera's business activities and
third party obligations outside of this Agreement; and (4) there
is a good faith dispute between the parties as to whether the
claims of such Mixed Patent is subject to an assignment
obligation pursuant to Sections 10.1(b) and (c), (i.e, whether
the claims of such Mixed Patent relate primarily to Licensed
Compounds) (the "Mixed Patent Assignment Dispute") the parties
shall discuss in good faith whether such Mixed Patent should be
assigned to Chiron, and Phytera shall have no obligation to
assign such Mixed Patent unless both parties have agreed to such
assignment, provided that Phytera shall not unreasonably withhold
its agreement to such assignment.
(g) Responsibility for Patent Prosecution Costs. Chiron shall
-------------------------------------------
reimburse Phytera for its costs incurred in prosecuting Phytera
owned Pre-LC Declaration Patents pursuant to Section 10.1(a),
provided that:
(1) Such Phytera owned Pre-LC Declaration Patents relate
primarily to the Licensed Compounds (i.e., the claims of
such Patents are directed primarily to the composition, uses
or methods of making the Licensed Compounds, and are not
directed primarily to methods of making compounds which have
broad applicability to Phytera's business outside the scope
of this Agreement).
19
(2) Phytera shall consult with Chiron prior to undertaking
significant patent prosecution activities which would incur
significant expense; and
(3) Phytera shall submit to Chiron customary invoices setting
forth in reasonable detail the patent prosecution expenses
for which Phytera seeks reimbursement; and
(4) Chiron's obligation to pay for patenting activities for any
Pre-LC Declaration Patent shall cease at such time as
Chiron's right to acquire a License to such Pre-LC
Declaration Patent under this Agreement expires, or Chiron
indicates to Phytera that it does not wish to obtain a
License to such Pre-LC Declaration Patent. After the LC
Declaration Date, Chiron shall bear the costs of patenting
activities with respect to any Pre-LC Declaration Patents or
Post-LC Declaration Patents which are assigned to Chiron
(5) Further, Chiron shall bear the costs of patenting activities
with respect to Pre-LC Declaration Patents or Post-LC
Declaration Patents which are exclusively licensed to Chiron
and which relate primarily to the Licensed Compounds (i.e.,
Patents in which the claims are directed primarily to the
composition, uses or methods of making the Licensed
Compounds, and are not directed primarily to methods of
making compounds which have broad applicability to Phytera's
business outside the scope of this Agreement).
10.2 INFRINGEMENT.
(a) Each party shall promptly notify the other party in writing of
any alleged or threatened infringement of an issued Patent of
which such party becomes aware, provided that Chiron is
commercializing a Product under such Patent. Chiron shall have
the right to bring and control any action or proceeding with
respect to such alleged or threatened infringement (a
"PROCEEDING") at its own expense and represented by legal
advisers of its own choice.
(b) In the event Chiron brings a Proceeding, Phytera shall reasonably
cooperate with Chiron including, if required, undertaking any
action or agreeing to be joined as a party to such Proceeding,
the reasonable costs of which shall be at Chiron's expense.
(c) In the event Chiron commences a Proceeding, and the subject of
such Proceeding is a Product Patent, any recovery realized as a
result of such Proceeding which is directly attributable to
infringement of the Product Patent, after reimbursement of any
and all litigation expenses and reasonable costs of Chiron, shall
be treated as Net Sales under this Agreement.
20
(d) With respect to an actual infringement, if within one hundred
twenty (120) days following the notice of infringement referenced
in Section 10.2(a), Chiron has not brought a Proceeding or
commenced licensing negotiations to ▇▇▇▇▇ such actual
infringement, Phytera shall have the. following rights:
(1) In the event that Chiron possesses a sole or joint ownership
interest in the Patent which is the subject of such
infringement, or such Patent is solely owned by Phytera but
covers (i.e., contains claimsdirected to) a Chiron Product
(a "Phytera Owned Product Patent"), Phytera may propose to
Chiron that Chiron and Phytera participate in such
Proceeding as partners, with the understanding that Phytera
and Chiron shall share equally all costs and all recoveries
arising from the Proceeding unless otherwise mutually
agreed(the "Joint Proceeding"). If Chiron does not elect to
proceed with Phytera in a Joint Proceeding within sixty (60)
days after receiving Phytera's Joint Proceeding proposal,
Phytera may undertake a Proceeding on its own with respect
to a Phytera Owned Product Patent, provided that Phytera
shall consult with Chiron and shall obtain Chiron's consent
prior to undertaking any actions which would affect Chiron's
commercial interests with respect to such Phytera Owned
Product Patent, such consent not to be unreasonably withheld
or delayed, provided that Chiron shall be under no
obligation to consent to actions which would materially
affect Chiron's commercial interests.
10.3 INFRINGEMENT OF THIRD PARTY RIGHTS.
In the event that any allegation of infringement of any third party patent
rights is raised by a third party by reason of the exercise by Chiron or any of
its sub-licensees of any rights pursuant to this Agreement ("Third Party
Infringement Action") Chiron, or any sub-licensee of Chiron, as may be
determined by Chiron, shall have the right to control any defense of any such
Third Party Infringement Action at its own expense and represented by legal
advisers of its own choice. In the event that Phytera is named as a defendant or
otherwise becomes involved in such Third Party Infringement Action, Phytera
shall have the right, at its own expense, to be represented in any such action
by legal advisers of its own choice. In the event of such Third Party
Infringement Action, Phytera shall cooperate in good faith with Chiron or any
sub-licensee of Chiron (as the case may be) on a reasonable basis to negotiate
and settle any dispute with a Third Party in relation to such infringement or
alleged infringement of any Alleged Third Party Patent Rights and otherwise
resolve any such infringement or alleged infringement and secure Chiron's
continued rights to the Alleged Third Party Patent Rights, if necessary or
desirable.
10.4 COOPERATION IN CONNECTION WITH INFRINGEMENT DISPUTES.
In any suit or dispute involving infringement or alleged infringement by a
third party of a Product Patent (including Pre-LC Declaration Patents and Post-
LC Declaration Patents), or Third Party Infringement Action, the parties shall
cooperate fully and, upon the request and at the reasonable expense of Chiron,
Phytera shall make available to Chiron or its sub-licensees at reasonable times
and under appropriate conditions all relevant personnel, and the like which are
in its possession or control provided, however, that Phytera shall not be
obliged to provide such assistance if to do so would materially disrupt its
normal business activities.
11. SCIENTIFIC COMMITTEE AND REPORTING
11.1 ESTABLISHMENT AND PURPOSES.
21
Phytera and Chiron shall coordinate the activities to be undertaken
pursuant to this Agreement by means of a joint committee consisting of an agreed
equal number of representatives from Chiron and Phytera (the "Scientific
Committee"). Decisions of the Scientific Committee shall be by consensus. The
Scientific Committee will meet at least during the Collaboration Term, VLS
Evaluation Term, or OVLS Evaluation License and Option Term at such times or at
such other locations as may be determined by Phytera and Chiron (including by
means of telephone or video conference) for the purpose of:
(a) reviewing the progress and the results of screening, NPCII and
related information and collaboration activities;
(b) discussing inventions arising from the collaboration and
patenting strategy for the benefit of both parties;
(c) discussing any reports made in the previous six months in
connection with any activities undertaken under this Agreement.
11.2 MINUTES OF SCIENTIFIC COMMITTEE.
Minutes of any meeting of the Scientific Committee shall be taken by a
representative of Phytera and/or Chiron and shall be circulated promptly after
the meeting for any comment by Phytera and Chiron. Once consensus has been
reached as to the contents of the minutes, the minutes shall represent the
formal decisions of the Scientific Committee.
12. CONFIDENTIALITY AND PUBLICATIONS
12.1 CONFIDENTIAL INFORMATION.
Except as otherwise provided in this Article 12, during the Agreement
Term, and thereafter for [ ]*, both parties shall maintain in confidence
and use only for purposes of this Agreement all information and data (herein
referred to as "Information") resulting from or related to or arising from the
activities of the parties hereunder which is supplied by the other party under
this Agreement.
The obligations of confidentiality shall not apply to any part of such
Information that:
(a) is or becomes published or otherwise part of the public domain
other than by acts of the party obligated not to disclose such
Information in the contravention of this Agreement;
(b) is disclosed to the receiving party by a third party, provided
such Information was not obtained by such third party directly or
indirectly from the other party under this Agreement;
___________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
22
(c) prior to disclosure under this Agreement, was already in the
possession of the receiving party, provided such Information was
not obtained directly or indirectly from the other party under
this Agreement;
(d) is developed independently of the Information obtained from the
disclosing party, as demonstrated by written evidence;
(e) is required to be disclosed under any applicable legislation or
other legal requirement or under the rules or regulations of any
recognized stock exchange which are applicable to the disclosing
party or any of its Affiliates but only to the extent required;
or
(f) is disclosed by a party with the prior written consent of the
other party; or
(g) is otherwise agreed by the Parties can be disclosed.
12.2 PERMITTED DISCLOSURES.
To the extent it is reasonably necessary or appropriate to fulfill its
obligations or exercise its rights under this Agreement, a party may disclose
Information it is otherwise obligated under this Article not to disclose, to a
Affiliate or a potential licensee or sub-licensee on a need-to-know basis on
condition that such entities or persons agree to keep the Information
confidential for the same time periods and to the same extent as such party is
required to keep the Information confidential; and a party or any potential
licensee may disclose such Information to government or other regulatory
authorities to the extent that such disclosure is reasonably necessary to obtain
a Patent, or to secure authorization to conduct a clinical trial, or to market a
Product commercially.
12.3 PUBLICATION.
Notwithstanding the confidentiality obligations contained in this Article
12, each party recognizes the interest of the other in publishing results of its
scientific research to obtain recognition within the scientific community and to
advance the state of scientific knowledge. Both Parties also recognize their
mutual interest in obtaining valid Patent protection. Consequently, during the
term of this Agreement and thereafter until the date of expiration of the last
of the Patents, if any employee of a party (the Publishing Party) wishes to make
a publication (including any oral disclosure made without obligation of
confidentiality) relating to or arising out of the performance of that party's
obligations under this Agreement, the Publishing Party shall transmit to the
other party (the Reviewing Party) a copy of the proposed written publication at
least 60 days prior to submission for publication, or a summary in writing of
such oral disclosure at least 30 days prior to presentation. The Reviewing Party
shall have the right:
(a) to request modifications to the publication for Patent reasons;
and
(b) to request a delay in the proposed publication or oral
presentation in order to protect patentable information. If the
Reviewing Party requests such a delay, the Publishing Party shall
delay submission or presentation of the publication for a period
of 90 days to enable Patent applications protecting such
information to be filed. If the Reviewing Party reasonably claims
that such information, whether or not patentable, may have
significant commercial value and can be maintained as a trade
secret, the Publishing
23
Party shall publish or disclose only such Information which would
not adversely affect such commercial value.
Upon the expiration of sixty (60) days from transmission to the Reviewing
Party, the Publishing Party shall be free to proceed with the written
publication or the presentation, respectively, unless the Reviewing Party has
requested the delay described above.
13. INDEMNITY BY CHIRON
13.1 Indemnity by Chiron.
Chiron shall indemnify and hold harmless Phytera and the officers,
directors employees and agents of Phytera from and against any and all
liability, loss, and damages they may suffer as the result of claims, demands,
costs or judgments which may be made or instituted against them arising directly
from the manufacture, use or sale by Chiron of Optioned Validated Lead
Structures, Licensed Compounds, or Products, or any negligent acts or omissions
by Chiron or third parties who are Chiron sub-licensees of the License
referenced in Section 5.2.
14. TERM AND EARLY TERMINATION
14.1 Collaboration Term. The Collaboration Term shall commence on [ ]*
and shall conclude on the date [ ]* after such date of delivery, unless
otherwise mutually agreed.
14.2 VLS EVALUATION TERM. With respect to each Target and on a Target by
Target basis, the VLS Evaluation Term shall commence on the date [ ]* and shall
conclude [ ]* after such date, unless otherwise mutually agreed.
14.3 OVLS EVALUATION LICENSE AND OPTION TERM. With respect to each Target,
and on a Target by Target basis, the OVLS Evaluation License and Option Term
shall commence on the date [ ]*, and shall conclude [ ]* after such date, unless
otherwise mutually agreed.
14.4 AGREEMENT TERM. Subject to Section 14.8 (Survival), and on a Target
by Target basis, this Agreement shall terminate upon [ ]* (the "AGREEMENT
TERM").
14.5 EXTENSION OF TERM.
_____________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
24
In the event that the Parties agree to extend the Term of this Agreement,
or any of the terms referenced in Sections 14.1, 14.2, 14.3 or 14.4, the parties
will negotiate mutually agreed terms and conditions to govern the relationship
during the period of any extension.
14.6 EARLY TERMINATION FOR BREACH.
During the Term, either party may terminate this Agreement upon the
occurrence of any of the following:
(a) upon or after the bankruptcy, insolvency, dissolution or winding
up of the other party (other than dissolution or winding up for
the purposes of reconstruction or amalgamation); or
(b) upon or after the breach of any material provision of this
Agreement by the other party if the breaching party has not
commenced to cure such breach within [ ]* after written notice
thereof by the other party and thereafter proceeded diligently to
cure such breach within a reasonable time. In no event shall such
reasonable time to cure such breach exceed [ ]* from the date
of such notice.
14.7 VOLUNTARY TERMINATION OF AGREEMENT.
Chiron shall be entitled to terminate this Agreement at any time after the
conclusion of the Collaboration Term. Such termination shall be effective [
]* after Chiron provides Phytera notice of its intent to terminate. Chiron
shall pay costs incurred by Phytera pursuant to this Agreement prior to
Phytera's receipt of Chiron's termination notice. Chiron shall also pay costs
associated with noncancellable commitments undertaken by Phytera prior to
Chiron's receipt of Chiron's termination notice, provided such costs are
reasonable and Phytera undertakes best efforts to mitigate such costs.
14.8 SURVIVAL OF ACCRUED OBLIGATIONS.
Expiration or termination of this Agreement shall not relieve the parties
of any obligation accruing prior to such expiration or termination. In addition
Articles 5, 7, 8, 9, 10, 12, 13, 14.9, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24
and 25 shall survive termination of this Agreement, where applicable in
accordance with their respective terms.
14.9 BANKRUPTCY.
All rights and licenses granted under or pursuant to this Agreement by
Phytera to Chiron are, and shall otherwise be deemed to be, for purposes of
Section 365(n) of the Bankruptcy Code, licenses of rights to "intellectual
property" as defined under Section 101(52) of the Bankruptcy Code. The parties
agree that Chiron, as licensee of such rights under this Agreement, shall retain
and may
____________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
25
fully exercise all of its rights and elections under the Bankruptcy Code. The
parties further agree that, in the event of the commencement of a bankruptcy
proceeding by or against Phytera under the Bankruptcy Code, Chiron shall all be
entitled to a complete duplicate of all embodiments of such intellectual
property, and same, if not already in its possession, shall be promptly
delivered to Chiron (i) upon any such commencement of a bankruptcy proceeding
unless Phytera elects to continue to perform all of its obligations under this
Agreement, or (ii) if not delivered under (i) above, immediately upon the
rejection of this Agreement by or on behalf of Phytera.
14.10 FORCE MAJEURE.
Neither party shall be liable or considered in breach of this Agreement for
delays which are the direct result of acts or events beyond the control of such
party, (i.e., delays occasioned by acts of God, industrial disputes, war
declared or undeclared, civil disturbance, acts or omissions of Government or
other competent authority, fire, lightning, earthquake, explosion or flood)
provided that the nonperforming party is in compliance with this Section 14.10.
(a) In the event that either party wishes to claim Force Majeure,
such party shall provide the other party prompt notice of the
Force Majeure with a description of the cause of the Force
Majeure and, wherever possible, an estimate of the extent and
duration in its delay in performance, or its inability to
perform; and
(b) The party claiming Force Majeure shall use all possible diligence
to remove the Force Majeure and/or the impairment in its
performance as quickly as possible; and
(c) If the delay caused by the Force Majeure continues beyond fifteen
(15) days after provision of the notice referenced in Section 14.
10(a), the parties shall meet to discuss in good faith a mutually
satisfactory resolution of the problem. If the parties are
unable to reach such a resolution within a further forty five
(45) days, the other party may elect to terminate this Agreement
subject to the provision of thirty (30) days prior written
notice, provided that such termination shall not be effective if
the Force Majeure is removed prior to the effective date of such
termination.
26
15. RESOLUTION OF DISPUTES
15.1 EXCLUSIVE DISPUTE RESOLUTION MECHANISM.
The parties further agree that matters of business judgment shall be
resolved between the parties without recourse to arbitration. The parties agree
the procedures set forth in this Article 15 shall be the exclusive mechanism for
resolving any non-business judgment bona fide disputes that arise from time to
time pursuant to this Agreement relating to any party's rights and/or
obligations hereunder that cannot be resolved through good faith negotiation
between the parties.
15.2 SCIENTIFIC COMMITTEE MEDIATION.
Any such dispute must first be submitted to the Scientific Committee or
their successors, for attempted resolution by good faith negotiations for a
period of at least thirty (30) days. In the event the designated Scientific
Committee members are not able to resolve such dispute within such thirty (30)
day period, the dispute shall be referred to Executive Mediation as referenced
in Section 15.3 below.
15.3 EXECUTIVE MEDIATION.
In the event that the dispute can not be resolved by mediation at the
Scientific Committee pursuant to Section 15.2, such dispute shall be submitted
to the appropriate designated officers of each party, for attempted resolution
by good faith negotiation for a period of at least thirty (30) days. In the
event the designated officers are not able to resolve such dispute within such
thirty (30) day period, and such dispute does not relate to a matter of business
judgment, any party may invoke the mediation provisions of Section 15.4 below.
15.4 MEDIATION.
If the dispute cannot be resolved by the mechanism referenced in Section
15.3, the dispute shall be referred to non-binding mediation. The
mediation shall be conducted by an independent mediator acceptable to both
parties. Subject to Section 15.2 and Section 15.3, either party may serve
upon the other a written demand for mediation. Such mediation shall
commence within thirty (30) days following the other party's receipt of
such demand, unless otherwise agreed in writing by the parties. Each party
shall make available to the mediation an authorized representative with the
capacity to bind such party, and the mediation shall be conducted as deemed
appropriate by the mediator.
15.5 INITIATION OF ARBITRATION.
In the event that such dispute is not resolved within thirty (30) days
after the matter is referred to mediation pursuant to Section 15.4, and if a
party intends to initiate an arbitration (or other ADR mechanism) to resolve a
dispute, such party shall provide written notice (the "ADR Request") to counsel
for the other party informing such other party of such intention and the issues
to be resolved. From the date of the ADR Request and until such time as any
matter has been finally settled by ADR, the running of the time periods
contained in this Agreement within which party must cure a breach of this
Agreement shall be suspended as to the subject matter of the dispute.
27
15.6 ARBITRATION.
If it is not otherwise possible to settle a dispute within thirty (30) days
from the referral of the dispute then either party shall have the right to
submit the same to binding arbitration in accordance with, and subject to the
American Arbitration Association. If initiated by Chiron, such arbitration
shall be conducted in Worcester, Massachusetts. If initiated by Phytera, such
arbitration shall be conducted in San Francisco, California.
15.7 BINDING NATURE OF DECISION.
The decision of the arbitrator shall be binding upon the Parties and
judgment upon the award rendered by the arbitrator may be enforced in accordance
with the provisions hereof.
16. WARRANTY
16.1 POWER TO ENTER AGREEMENT.
Phytera and Chiron warrant to the other that it has the power to enter into
and perform its obligations under this Agreement. Phytera represents and
warrants no third party possesses any option or license rights with respect to
any intellectual property which would impair Chiron's rights under this
Agreement.
16.2 PHYTERA WARRANTY TO CHIRON.
Phytera warrants to Chiron that:
(a) it is the legal and beneficial owner of the Extracts;
(b) to the best of its information knowledge and belief Phytera has
the necessary rights in respect to satisfy its obligations under
this Agreement.
16.3 ACKNOWLEDGMENTS BY PHYTERA.
With respect to any agreements executed prior to the Effective Date of this
Agreement which relate to Phytera Patents which are the subject of Chiron's
rights hereunder (the "Original Agreements") including, without limitation,
Phytera agreements with third party providers of material, including, without
limitation, rights to plant and organism samples and protocols, or intellectual
property embodied or contained in Phytera's extracts (the "Original Parties")
Phytera warrants, acknowledges and agrees that as of the Effective Date:
(a) there are no outstanding breaches of the Original Agreements;
(b) there are no acts, facts, circumstances or omissions of which it
is presently aware, which would give the Original Parties, either
presently or with the passage of time, the right to terminate the
Original Agreements.
16.4 GENERAL WARRANTIES.
Each party represents and warrants to the other that:
28
(a) this agreement does not contravene any law, regulation or
official directive or any obligations or undertakings by which it
or any of its assets are bound or cause a limitation on its
powers to be exceeded; and
(b) it is not a party to any pending or threatened action or
proceeding affecting it or any of its assets before a court,
governmental agency, commission or arbitrator where an adverse
outcome could reasonably be expected to adversely impact upon the
performance of its obligations under this agreement; and
(c) it has no immunity from the jurisdiction of a court or from legal
process (whether through service of notice, attachment prior to
judgment, attachment in aid of execution, execution or
otherwise).
17. NOTICES
Any notice, demand, consent or other communication (the Notice) given or
made under this Agreement other than communications made under Article 11
hereof:
(a) must be in writing and signed by a person duly authorized by the
sender;
(b) must either be delivered to the intended recipient by prepaid
post (if posted to an address in another country, by airmail) or
by hand or fax to the address or fax number below or the address
or fax number_last notified by the intended recipient to the
sender:
(1) to Phytera: Phytera Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Attention:
Fax Number:
(2) to Chiron: Chiron Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ of America
Attention: President, Chiron Technologies
Fax Number: (▇▇▇) ▇▇▇ ▇▇▇▇; and
with copies to: General Counsel
Fax No: (▇▇▇) ▇▇▇-▇▇▇▇
(c) will be taken to be duly given or made:
(1) in the case of delivery in person, when delivered;
(2) in the case of delivery by post, two business days after the
date of posting (if posted to an address in the same
country) or seven business days after the date of posting
(if posted to an address in another country); and
29
(3) in the case of fax, on receipt by the sender of a
transmission control report from the dispatching machine
showing the relevant number of pages and the correct
destination fax machine number or name of recipient and
indicating that the transmission has been made without
error, but if the result is that a Notice would be taken to
be given or made on a day that is not a business day in the
place to which the Notice is sent or is later than 4:00 p.m.
local time) it will be taken to have been duly given or made
at the commencement of business on the next business day in
that place.
18. ENTIRE AGREEMENT
This Agreement contains the entire agreement between the Parties with
respect to its subject matter and supersedes all prior agreements,
understandings and communications between the Parties in connection with it.
19. AMENDMENT
No amendment or variation of this Agreement is valid or binding on a party
unless made in writing executed by all parties.
20. ASSIGNMENT
Neither party may, or will have the power to, assign this Agreement without
the prior written consent of the other, except that either party may assign its
rights and obligations under this Agreement without the approval of the other,
to a successor in interest or any of its Affiliates which expressly assumes such
party's obligations and responsibilities hereunder, provided that the assigning
party remains fully liable for and shall not be relieved from the full
performance of all obligations under this Agreement.
21. NO WAIVER
No failure to exercise nor any delay in exercising any right, power or
remedy by a party operates as a waiver. A single or partial exercise of any
right, power or remedy does not preclude any other or further exercise of that
or any other right, power or remedy. A waiver is not valid or binding on the
party granting that waiver unless made in writing.
22. FURTHER ASSURANCES
Each party agrees to do all things and execute all deeds, instruments,
transfers or other documents as may be necessary or desirable to give full
effect to the provisions of this Agreement and the transactions contemplated by
it.
23. GOVERNING LAW AND JURISDICTION
This Agreement is governed by the laws of California, and subject to
Article 15, the parties submit to the non-exclusive jurisdiction of the courts
of that state.
30
24. INTERPRETATION
Headings are for convenience only and do not affect interpretation. The
following rules apply unless the context requires otherwise.
(a) The singular includes the plural and conversely.
(b) A gender includes all genders.
(c) If a word or phrase is defined, its other grammatical forms have
a corresponding meaning.
(d) A reference to an agreement or document (including, without
limitation, a reference to this Agreement) is to the agreement or
document as amended, varied, supplemented, novated or replaced,
except to the extent prohibited by this Agreement or that other
agreement or document.
(e) A reference to a party to this Agreement or another agreement or
document includes the party's successors, permitted substitutes
and permitted assigns (and, where applicable, the party's legal
personal representatives).
(f) A reference to legislation or to a provision of legislation
includes a modification or re-enactrnent of it, a legislative
provision substituted for it and a regulation or statutory
instrument issued under it.
(g) A reference to an agreement includes any undertaking, deed,
agreement and legally enforceable arrangement, and a reference to
a document includes an agreement (as so defined) in writing and
any certificate, notice, instrument and document of any kind.
A reference to dollars and $ is to United States currency.
31
25. COUNTERPARTS
This Agreement may be executed in any number of counterparts. All
counterparts together will be taken to constitute one instrument.
IN WITNESS HEREOF, the parties have executed this Agreement of the Effective
Date.
SIGNED FOR AND BEHALF OF SIGNED FOR AND BEHALF OF
PHYTERA, INC. CHIRON CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ [ILLEGIBLE SIGNATURE]
-------------------------- ----------------------------------
Name:_________________________ Name:________________________________
Title: President Title: PRESIDENT, CHIRON TECHNOLOGIES
------------------------ ------------------------------
32
EXHIBIT A
---------
Targets
-------
[
]*
_________________________
* This portion of the Exhibit has been omitted pursuant to a Request for
Confidential Treatment under Rule 406 of the Securities Act of 1933, as amended.
The complete Exhibit, including the portions for which confidential treatment
has been requested, has been filed separately with the Securities and Exchange
Commission.
33
