1
RESEARCH AND LICENSE AGREEMENT
between
ARQULE, INC.
and
AMERICAN HOME PRODUCTS CORPORATION
acting through its
WYETH-AYERST RESEARCH DIVISION
dated as of July 3, 1997
2
TABLE OF CONTENTS
PAGE
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1. DEFINITIONS............................................................ 1
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1.1. "ACTIVE HOMOLOG".............................................. 1
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1.2. "ACTIVE ARQULE COMPOUND"...................................... 1
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1.3. "ACTIVE COMPOUND"............................................. 1
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1.4. "ACTIVE WYETH-AYERST COMPOUND"................................ 1
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1.5. "AFFILIATE"................................................... 2
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1.6. "AGREEMENT"................................................... 2
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1.7. "ARQULE COMPOUND"............................................. 2
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1.8. "ARQULE DERIVATIVE COMPOUND".................................. 2
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1.9. "ARQULE INTERNAL DEVELOPMENT PROGRAM"......................... 2
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1.10. "ARQULE PATENT RIGHTS"........................................ 2
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1.11. "ARQULE TECHNOLOGY............................................ 2
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1.12. "ARRAY"....................................................... 2
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1.13. "CHEMICAL THEME".............................................. 2
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1.14. "CONFIDENTIAL INFORMATION".................................... 2
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1.15. "CONTRACT YEAR"............................................... 2
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1.16. "DERIVATIVE COMPOUND"......................................... 3
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1.17. "DIRECTED ARRAY(TM)".......................................... 3
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1.18. "DIRECTED ARRAY(TM) PROGRAM".................................. 3
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1.19. "DISCLOSING PARTY"............................................ 3
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1.20. "EFFECTIVE DATE".............................................. 3
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1.21. "EXTRAORDINARY EXPENSES"...................................... 3
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1.22. "FDA"......................................................... 3
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1.24. "IND-TRACK STATUS"............................................ 3
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1.25. "JOINT PATENT RIGHTS"......................................... 3
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1.26. "LICENSED COMPOUND"........................................... 3
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1.27. "LICENSED COMPOUND SET"....................................... 3
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1.28. "MAJOR MARKET COUNTRY"........................................ 4
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1.29. "MAPPING ARRAY(TM)"........................................... 4
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1.30. "MAPPING ARRAY(TM) PROGRAM"................................... 4
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1.31. "NET SALES"................................................... 4
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1.32. "NET SALES PRICE"............................................. 4
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1.33. "PARTY"....................................................... 5
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1.34. "PATENT RIGHTS"............................................... 5
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1.35. "PHASE I CLINICAL TRIALS"..................................... 5
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1.36. "PHASE II CLINICAL TRIALS".................................... 5
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1.37. "PHASE III CLINICAL TRIALS"................................... 5
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1.38. "PRECLINICAL COMPOUND"........................................ 5
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1.39. "PRECLINICAL DEVELOPMENT"..................................... 5
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1.40. "RECEIVING PARTY"............................................. 6
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1.41. "RESEARCH PERIOD"............................................. 6
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1.42. "RESEARCH PLAN"............................................... 6
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(i)
3
1.43. "RESEARCH PROGRAM"............................................ 6
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1.44. "ROYALTY-BEARING PRODUCT"..................................... 6
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1.45. "ROYALTY PERIOD".............................................. 6
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1.46. "RESEARCH COMMITTEE".......................................... 6
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1.47. "SUBLICENSEE.................................................. 6
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1.48. "TARGET"...................................................... 6
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1.49. "WYETH-AYERST COMPOUND"....................................... 6
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1.50. "WYETH-AYERST DERIVATIVE COMPOUND............................. 6
--------------------------------
1.51. "WYETH-AYERST PATENT RIGHTS".................................. 6
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2. MANAGEMENT OF RESEARCH PROGRAM......................................... 7
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2.1. COMPOSITION OF RESEARCH COMMITTEE............................. 7
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2.2. DUTIES OF THE RESEARCH COMMITTEE.............................. 7
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2.3. MEETINGS OF THE RESEARCH COMMITTEE............................ 8
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2.4. COOPERATION................................................... 8
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2.5. VISITS TO FACILITIES.......................................... 8
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3. MAPPING ARRAY(TM) PROGRAM.............................................. 8
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3.1. CONDUCT OF MAPPING ARRAY(TM) PROGRAM.......................... 8
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3.2. MUTUAL DISCLOSURE............................................. 9
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3.3. RESERVATION OF ACTIVE ARQULE COMPOUNDS........................ 9
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3.4. MAPPING ARRAY(TM) PROGRAM PAYMENTS........................... 10
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3.5. TERM OF MAPPING ARRAY(TM) PROGRAM............................ 10
---------------------------------
3.6. PERFORMANCE OF MAPPING ARRAY(TM) PROGRAM..................... 10
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4. DIRECTED ARRAY(TM) PROGRAM............................................ 11
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4.1. DESCRIPTION OF DIRECTED ARRAY(TM) PROGRAM.................... 11
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4.2. COMPOUNDS EXCLUDED FROM THE DIRECTED ARRAY(TM) PROGRAM....... 12
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4.3. CONDUCT OF DIRECTED ARRAY(TM) PROGRAM........................ 12
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4.4. DIRECTED ARRAY(TM) PROGRAM PAYMENTS.......................... 13
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4.4.1. DELIVERY FEE................................ 13
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4.4.2. EXPENSES.................................... 13
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4.5. TERM OF DIRECTED ARRAY(TM) PROGRAMS.......................... 14
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4.6. PERFORMANCE OF DIRECTED ARRAY(TM) PROGRAM.................... 14
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5. LICENSE GRANTS; REVERSION OF RIGHTS................................... 14
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5.1. SCREENING LICENSES........................................... 14
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5.2. COMMERCIALIZATION LICENSE.................................... 14
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5.3. REVERSION OF RIGHTS; RETURN OF MATERIALS..................... 15
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5.4. DIRECT LICENSES TO AFFILIATES................................ 15
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6. OWNERSHIP OF COMPOUNDS................................................ 16
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6.1. WYETH-AYERST COMPOUNDS; WYETH-AYERST DERIVATIVE COMPOUNDS.... 16
---------------------------------------------------------
6.2. ARQULE COMPOUNDS; ARQULE DERIVATIVE COMPOUNDS................ 16
---------------------------------------------
(ii)
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7. INTELLECTUAL PROPERTY RIGHTS.......................................... 16
----------------------------
7.1. OWNERSHIP OF PATENT RIGHTS................................... 16
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7.2. MANAGEMENT OF JOINT PATENT RIGHTS............................ 17
---------------------------------
7.3. COOPERATION OF THE PARTIES................................... 17
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7.4. INFRINGEMENT BY THIRD PARTIES................................ 17
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7.5. INFRINGEMENT OF THIRD PARTY RIGHTS........................... 18
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7.6. TRADEMARKS................................................... 19
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8. PAYMENTS, REPORTS, AND RECORDS........................................ 19
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8.1. ACCESS FEE................................................... 19
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8.2. RESEARCH AND DEVELOPMENT PAYMENTS............................ 19
---------------------------------
8.3. MARGINAL ROYALTIES........................................... 20
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8.4. REPORTS AND PAYMENTS......................................... 21
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8.5. INVOICES; PAYMENTS IN U.S. DOLLARS........................... 21
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8.6. PAYMENTS IN OTHER CURRENCIES................................. 21
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8.7. RECORDS...................................................... 22
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8.8. TERM OF ROYALTY OBLIGATION................................... 22
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8.9. THIRD PARTY ROYALTIES........................................ 22
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9. CONFIDENTIAL INFORMATION.............................................. 22
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9.1. DEFINITION OF CONFIDENTIAL INFORMATION....................... 22
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9.2. DESIGNATION OF CONFIDENTIAL INFORMATION...................... 23
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9.3. OBLIGATIONS.................................................. 23
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9.4. EXCEPTIONS................................................... 23
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9.5. RETURN OF CONFIDENTIAL INFORMATION........................... 24
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9.6. PUBLICATIONS................................................. 24
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9.7. SURVIVAL OF OBLIGATIONS...................................... 24
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10. REPRESENTATIONS AND WARRANTIES........................................ 24
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10.1. AUTHORIZATION................................................ 24
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10.2. INTELLECTUAL PROPERTY........................................ 24
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11. INDEMNIFICATION AND INSURANCE......................................... 25
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11.1. WYETH-AYERST INDEMNITY OBLIGATIONS........................... 25
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11.2. CROSS-INDEMNITY OBLIGATIONS.................................. 25
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11.3. PROCEDURE.................................................... 25
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11.4. INSURANCE.................................................... 26
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12. TERM AND TERMINATION.................................................. 26
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12.1. TERM......................................................... 26
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12.2. BREACH OF PAYMENT OBLIGATIONS................................ 26
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12.3. MATERIAL BREACH.............................................. 26
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12.4. INSOLVENCY................................................... 26
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12.5. CHANGE OF CONTROL............................................ 27
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12.6. EFFECT OF TERMINATION........................................ 27
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(iii)
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13. MISCELLANEOUS......................................................... 28
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13.1. RELATIONSHIP OF PARTIES....................................... 28
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13.2. PUBLICITY..................................................... 28
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13.3. GOVERNING LAW................................................. 28
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13.4. DISPUTE RESOLUTION PROCEDURES................................. 28
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13.5. COUNTERPARTS.................................................. 29
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13.6. HEADINGS...................................................... 29
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13.7. BINDING EFFECT................................................ 29
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13.8. ASSIGNMENT.................................................... 29
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13.9. NOTICES....................................................... 29
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13.10. AMENDMENT AND WAIVER.......................................... 30
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13.11. SEVERABILITY.................................................. 30
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13.12. ENTIRE AGREEMENT.............................................. 30
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13.13. FORCE MAJEURE................................................. 30
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13.14. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT......................................... 31
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EXHIBIT A................................................................. 33
EXHIBIT B................................................................. 34
(iv)
6
RESEARCH AND LICENSE AGREEMENT
This Agreement, dated as of July 3, 1997, is between ArQule, Inc.
("ArQule"), a Delaware corporation, and American Home Products Corporation,
acting through its Wyeth-Ayerst Research division ("Wyeth-Ayerst"), a Delaware
corporation.
R E C I T A L S
- - - - - - - -
WHEREAS, ArQule has developed certain technology that has applications in
the discovery and optimization of pharmaceutical compounds;
WHEREAS, Wyeth-Ayerst desires that ArQule apply its technologies to the
research and optimization of pharmaceutical compounds for Wyeth-Ayerst; and
WHEREAS, in exchange for payment by Wyeth-Ayerst of research funds and
royalties, ArQule is willing to perform certain research and compound
optimization activities for Wyeth-Ayerst, subject to the terms and conditions of
this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, the Parties hereby agree as follows:
1. DEFINITIONS.
1.1. "ACTIVE HOMOLOG" shall mean any ArQule Compound within the same
Chemical Theme as an Active ArQule Compound that exhibits substantial structural
homology with such Active ArQule Compound and exhibits minimal functional
activity. The criteria for determining "substantial structural homology" and
"minimal functional activity" for each Active ArQule Compound are established by
the Research Committee acting in accordance with Section 2.
1.2. "ACTIVE ARQULE COMPOUND" shall mean any ArQule Compound or ArQule
Derivative Compound which exhibits confirmed significant functional activity
against a Target. The criteria for determining "significant functional activity"
for each Target is established by the Research Committee acting in accordance
with Section 2.
1.3. "ACTIVE COMPOUND" shall mean any Active ArQule Compound or Active
Wyeth-Ayerst Compound.
1.4. "ACTIVE WYETH-AYERST COMPOUND" shall mean any Wyeth-Ayerst Compound or
Wyeth-Ayerst Derivative Compound which exhibits confirmed significant functional
activity against a Target. The criteria for determining "significant functional
activity" for each Target is established by the Research Committee acting in
accordance with Section 2.
7
1.5. "AFFILIATE" shall mean a corporation or other legal entity that
controls, is controlled by, or is under common control with such party. For
purposes of this definition, "control" means the ownership, directly or
indirectly, of fifty percent (50%) or more of the outstanding equity securities
of a corporation which are entitled to vote in the election of directors or a
fifty percent (50%) or greater interest in the net assets or profits of an
entity which is not a corporation. For the purposes of this definition, Immunex
Corporation shall not be deemed a Wyeth-Ayerst Affiliate.
1.6. "AGREEMENT" shall mean this Research and License Agreement, together
with EXHIBIT A and EXHIBIT B hereto.
1.7. "ARQULE COMPOUND" shall mean any chemical that is synthesized by
ArQule using its proprietary technology and provided by ArQule to Wyeth-Ayerst
under the Mapping Array(TM) Program.
1.8. "ARQULE DERIVATIVE COMPOUND" shall mean a Derivative Compound
synthesized by ArQule from an ArQule Compound under a Directed Array(TM) Program
described in Section 4.
1.9. "ARQULE INTERNAL DEVELOPMENT PROGRAM" shall mean any testing or
screening activity fully funded and performed by ArQule itself with the primary
purpose of determining the functional activity in the Field of ArQule Compounds
or ArQule Derivative Compounds.
1.10. "ARQULE PATENT RIGHTS" shall mean Patent Rights controlled or owned
by ArQule as of the Effective Date or during the term of this Agreement.
1.11. "ARQULE TECHNOLOGY" shall mean all information and data which is
owned by ArQule or licensed by third parties to ArQule prior to or during the
Research Program and is necessary or useful to conduct the screening to discover
Active ArQule Compounds and Active Homologs thereto or to develop, make, use,
sell or seek regulatory approval in any country to market a product containing a
Licensed Compound; all to the extent and only to the extent that ArQule now has
or hereafter will have the right to grant licenses, immunities or other rights
thereunder.
1.12. "ARRAY" shall mean a set of samples of structurally related chemical
compounds arranged in a format such as a microtiter screening plate.
1.13. "CHEMICAL THEME" shall mean the chemical or structural
characteristics shared by a group of compounds as determined by the Research
Committee acting in accordance with Section 2.
1.14. "CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 9.1.
1.15. "CONTRACT YEAR" shall mean each twelve (12) month calendar year of
the Research Period commencing on January 1 and ending on December 31 of each
such year. Notwithstanding the foregoing, the "Initial Contract Year" shall mean
the stub period beginning on the Effective Date and ending on December 31, 1997,
and, with respect to the
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Directed Array(TM) Programs, the "Final Contract Year" shall mean the Contract
Year ending on December 31, 2000.
1.16. "DERIVATIVE COMPOUND" shall mean a chemical compound structurally
derived in one or more steps from another by a process of modification or
partial substitution of at least one component wherein at least one structural
feature is retained at each process step. The number of intermediate steps or
compounds is not relevant to the classification of a compound as a Derivative
Compound. A compound need not have structural similarity to another compound in
order to be classified as a Derivative Compound.
1.17. "DIRECTED ARRAY(TM)" shall mean an Array comprised of ArQule
Derivative Compounds or Wyeth-Ayerst Derivative Compounds, as the case may be,
synthesized by ArQule under a Directed Array(TM) Program described in Section 4.
1.18. "DIRECTED ARRAY(TM) PROGRAM" shall mean a lead optimization program
based around a single Chemical Theme and conducted by ArQule as set forth in
Section 4.
1.19. "DISCLOSING PARTY" shall mean that Party disclosing Confidential
Information to the other Party under Section 9.
1.20. "EFFECTIVE DATE" shall mean the date first written above.
1.21. "EXTRAORDINARY EXPENSES" shall mean those unusual expenses incurred
by ArQule required solely to further the Directed Array(TM) Program in
accordance with the Research Plan as approved by the Research Committee and
which are not contemplated by the Research Plan.
1.22. "FDA" shall mean the United States Food and Drug Administration (or
its foreign equivalent in a Major Market Country).
1.23. "FIELD" shall mean, with respect to a Target, all human therapeutic
and diagnostic pharmaceutical uses of a Licensed Compound.
1.24. "IND-TRACK STATUS" shall mean the designation by the Wyeth-Ayerst
Discovery Council that a Licensed Compound meets the criteria set forth in
EXHIBIT B.
1.25. "JOINT PATENT RIGHTS" shall mean any Patent Rights that are jointly
owned by the Parties, as set forth in Section 7.1(b).
1.26. "LICENSED COMPOUND" shall mean any Active ArQule Compound or Active
Homologs thereto which the Research Committee has designated as such pursuant to
Section 3.2 or Section 4.3 hereof.
1.27. "LICENSED COMPOUND SET" shall mean the set of Licensed Compounds
comprising at least one Active ArQule Compound and the Active Homologs thereto
which the Research Committee has designated as such pursuant to Section 3.2 or
Section 4.3 hereof. For the purposes of this Agreement, any reference made to a
Licensed Compound
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applies to all compounds in the Licensed Compound Set to which the Licensed
Compound belongs.
1.28. "MAJOR MARKET COUNTRY" shall mean the *****
1.29. "MAPPING ARRAY(TM)" shall mean an Array of ArQule Compounds
synthesized by ArQule under the Mapping Array(TM) Program set forth in
Section 3.
1.30. "MAPPING ARRAY(TM) PROGRAM" shall mean the Mapping Array(TM)
component of the Research Program as set forth in Section 3.
1.31. "NET SALES" shall mean the aggregate Net Sales Price of
Royalty-Bearing Products in any Royalty Period.
1.32. "NET SALES PRICE" shall mean with respect to a Royalty-Bearing
Product, the ****** invoiced by Wyeth-Ayerst, its Affiliates, Sublicensees
and/or Direct Licensees as appropriate, on sales or other dispositions of the
Royalty-Bearing Product to unrelated third parties, less the following items:
*****
*****
*****
*****
Such amounts shall be determined from the books and records of Wyeth-Ayerst, its
Affiliates and/or its Sublicensees, maintained in accordance with generally
accepted accounting principles, consistently applied.
If a Royalty-Bearing Product is sold in bulk (as distinguished from
packaged pharmaceutical form) for resale in packaged or finished form, Net Sales
shall be calculated ***** . If a Royalty-Bearing Product is sold, or otherwise
commercially disposed of for value (including, without limitation, disposition
in connection with the delivery of other products or services), in a
transaction that is not an outright arm's length sale to an independent third
party, then the
* Confidential Treatment has been requested for the marked portions of this
agreement.
4
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********** invoiced in such transaction shall be deemed to be the ***** that
would have been paid had there been such a sale at the ***** of such
Royalty-Bearing Product during the applicable royalty reporting period. Net
Sales Price shall not include any consideration received by Wyeth-Ayerst, its
Affiliates or its Sublicensees in respect of the sale, use or other disposition
of a Royalty-Bearing Product in a country as part of a clinical trial prior to
the receipt of all regulatory approvals required to commence full commercial
sales of such Royalty-Bearing Product in such country, except ***** pursuant to
which Wyeth-Ayerst, its Affiliates or Sublicensees is/are entitled, under
applicable regulatory policies, to recover costs incurred in providing such
products to the patients.
1.33. "PARTY" means ArQule or Wyeth-Ayerst or their respective Affiliates;
"PARTIES" means ArQule and Wyeth-Ayerst and their respective Affiliates.
1.34. "PATENT RIGHTS" shall mean all Valid Claims of all issued patents and
reissues, reexaminations, extensions and supplementary protection certificates
thereof, and all patent applications and any divisions, continuations, or
continuations-in-part thereof or patents issuing thereon. For the purposes of
this Section, "Valid Claim" shall mean either (a) a claim of an issued patent
that has not been held unenforceable or invalid by an agency or a court of
competent jurisdiction in any unappealable or unappealed decision or (b) a claim
of a pending patent application that has not been abandoned or finally rejected
without the possibility of appeal or refiling and that has been pending for less
than ***** years from its priority date.
1.35. "PHASE I CLINICAL TRIALS" shall mean clinical trials in a small
number of patients to determine the metabolism and pharmacologic actions of a
product in humans, the side effects associated with increasing doses and to
gather evidence on effectiveness and meeting the requirements established by the
FDA for Phase I clinical trials.
1.36. "PHASE II CLINICAL TRIALS" shall mean clinical trials in a small
sample of the intended patient population to assess the efficacy for a specific
indication of a compound proposed to be used as a therapeutic or diagnostic
pharmaceutical product, to determine dose tolerance and the optimal dose range
as well as to gather additional information relating to safety and potential
adverse effects, and meeting the requirements established by the FDA for Phase
II clinical trials.
1.37. "PHASE III CLINICAL TRIALS" shall mean clinical trials designed to
demonstrate safety and efficacy of a compound proposed to be used as a
therapeutic or diagnostic pharmaceutical product in an expanded patient
population at geographically dispersed study sites, meeting the requirements
established by the FDA for Phase III clinical trials.
1.38. "PRECLINICAL COMPOUND" shall mean any Licensed Compound selected by
Wyeth-Ayerst or an Affiliate of Wyeth-Ayerst to enter into Preclinical
Development.
1.39. "PRECLINICAL DEVELOPMENT" shall mean, with respect to any Preclinical
Compound, the commencement of IND-enabling toxicology studies.
* Confidential Treatment has been requested for the marked portions of this
agreement.
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1.40. "RECEIVING PARTY" shall mean that Party receiving Confidential
Information under Section 9.1.
1.41. "RESEARCH PERIOD" shall mean the period during which the Research
Program, or any part thereof, remains in effect.
1.42. "RESEARCH PLAN" shall mean a plan of research for each Directed
Array(TM) Program covering a minimum of a six-month period, which shall be
updated periodically as agreed to by the Parties pursuant to Section 2.2. The
initial Research Plan shall be developed by the Parties within thirty (30) days
of the Effective Date and be attached to this Agreement as EXHIBIT A.
1.43. "RESEARCH PROGRAM" shall mean, collectively and individually, each of
the Directed Array(TM) Programs and the Mapping Array(TM) Program.
1.44. "ROYALTY-BEARING PRODUCT" shall mean a product containing *****
1.45. "ROYALTY PERIOD" shall mean, with respect to each Royalty-Bearing
Product, every calendar quarter, or partial calendar quarter, commencing with
the first commercial sale of such Royalty-Bearing Product in any country and
ending on the later to occur of (i) the end of the quarter during which all
Patent Rights covering one or more active components per se of such
Royalty-Bearing Product expire in the applicable country, or (ii) ***** years
after such first commercial sale in the applicable country.
1.46. "RESEARCH COMMITTEE" shall have the meaning set forth in Section 2.1.
1.47. "SUBLICENSEE" shall mean any non-Affiliate third party licensed by
Wyeth- Ayerst to make, use (except where the right to use accompanies the sale
of any Royalty- Bearing Product by Wyeth-Ayerst or its Affiliates, Sublicensees
or Direct Licensees) or sell any Royalty-Bearing Product pursuant to any rights
granted hereunder.
1.48. "TARGET" shall mean any biological target selected by Wyeth-Ayerst.
1.49. "WYETH-AYERST COMPOUND" shall mean any chemical compound provided by
Wyeth-Ayerst or its Affiliates to ArQule under a Directed Array(TM) Program
described in Section 4.
1.50. "WYETH-AYERST DERIVATIVE COMPOUND" shall mean a Derivative Compound
synthesized by ArQule from a Wyeth-Ayerst Compound under a Directed Array(TM)
Program described in Section 4.
1.51. "WYETH-AYERST PATENT RIGHTS" shall mean Patent Rights controlled or
owned by Wyeth-Ayerst as of the Effective Date or during the Research Period.
* Confidential Treatment has been requested for the marked portions of this
agreement.
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1.52. The above definitions are intended to encompass the defined terms in
both the singular and plural tenses.
2. MANAGEMENT OF RESEARCH PROGRAM.
2.1. COMPOSITION OF RESEARCH COMMITTEE. The Parties hereby establish a
Research Committee comprised of six (6) members, with three (3) representatives
appointed by each Party. The members of the Research Committee shall be as
follows:
ArQule Representatives Wyeth-Ayerst Representatives
---------------------- ----------------------------
***** *****
***** *****
***** *****
A Party may change one or more of its representatives to the Research Committee
at any time upon notice to the other Party. Each Party will designate one of its
representatives as its team leader.
2.2. DUTIES OF THE RESEARCH COMMITTEE. The Research Committee shall direct
and administer the Research Program. With respect to each Directed Array(TM)
Program, the Research Committee shall specifically determine the following: (i)
the appropriate number and type of Chemical Themes, to be submitted to the
Directed Array(TM) Program, subject to ArQule's right to exclude certain
compounds as set forth in Section 4.2 below; (ii) the appropriate number of
compounds that ArQule should generate in a Directed Array(TM) for a particular
Chemical Theme; and (iii) the appropriate amount of each compound in a Directed
Array(TM) that ArQule should deliver to Wyeth-Ayerst for further research and
development. The scope of each Chemical Theme will be determined on the basis of
the following criteria: (i) the specific reaction or reaction sequence used to
combine members of two or more discrete chemical units in which each chemical
unit bears the functional group(s) required for the specific reaction(s) that
result in the combination of the chemical units; and (ii) the extent to which a
class of compounds is related by a recurring structural motif associated with a
particular biological activity. In addition, the Research Committee shall (i)
determine the criteria of substantial structural homology and minimal functional
activity necessary to identify Active Homologs of an Active Compound, (ii)
determine the criteria of significant functional activity necessary to identify
an Active Compound, (iii) determine whether any Active ArQule Compound and any
Active Homolog thereto should be designated as a Licensed Compound and included
in a Licensed Compound Set pursuant to Section 3.2 or Section 4.3 hereof; (iv)
determine and update the list of Licensed Compounds; (v) revise and extend the
Research Plan periodically as agreed to by the Parties; (vi) allocate personnel
resources to be utilized by the parties under the Agreement; and (vii) resolve
all matters involving scientific questions.
* Confidential Treatment has been requested for the marked portions of this
agreement.
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2.3. MEETINGS OF THE RESEARCH COMMITTEE. The Research Committee shall
conduct monthly telephone conferences and shall prepare and deliver a brief
written report describing the significant issues and discussions that take place
during such telephone conferences. A representative of the Research Committee
jointly appointed by its members shall provide each member with ***** *****
days notice of the time of any such telephone conferences and the proposed
agenda with respect thereto, unless waived by all members. The Research
Committee shall meet at least once each quarter alternately at the Parties'
locations, or at such other times and locations as the Research Committee
determines. A representative of the Research Committee jointly appointed by its
members shall provide each member with ***** days notice of the time
and location of meetings, unless such notice is waived by all members. If a
designated representative of a Party cannot attend a meeting of the Research
Committee, such Party may designate a different representative for that meeting
without notice to the other Party, and the substitute member will have full
power to vote on behalf of the permanent member. Except as otherwise provided
in this Section 2, all actions and decisions of the Research Committee will
require the unanimous consent of all of its members. If the Research Committee
fails to reach agreement upon any matter, the dispute will be resolved in
accordance with the procedures set forth in Section 13.4 below. Within *****
days following each quarterly meeting of the Research Committee, the Research
Committee shall prepare and deliver, to both Parties, a written report
describing the decisions made, conclusions and actions agreed upon.
2.4. COOPERATION. Each Party agrees to provide the Research Committee with
information and documentation as reasonably required for the Research Committee
to fulfill its duties under this Agreement. In addition, each Party agrees to
make available its employees and consultants as reasonably requested by the
Research Committee. The Parties anticipate that members of the Research
Committee will communicate informally with each other and with employees and
consultants of the Parties on matters relating to the Directed Array(TM)
Program.
2.5. VISITS TO FACILITIES. Members of the Research Committee shall have
reasonable access to the facilities of each Party where activities under this
Agreement are in progress, but only during normal business hours and with
reasonable prior notice. Each Party shall bear its own expenses in connection
with such site visits.
3. MAPPING ARRAY(TM) PROGRAM.
3.1. CONDUCT OF MAPPING ARRAY(TM) PROGRAM. ArQule will supply Wyeth-Ayerst
with its Mapping Array(TM) Program containing approximately ***** each of not
less than ***** different ArQule Compounds during the Initial Contract Year of
1997, ***** and approximately ***** different ArQule Compounds during the
subsequent Contract Years for the term of the Mapping Array(TM) Program
provided for in Section 3.5. Each Mapping Array(TM) Program shall be based on
approximately ***** Chemical Themes. *****, ArQule shall confirm that the
ArQule Compounds within the Mapping Arrays(TM) are, on average, at least *****
pure.
* Confidential treatment has been requested for the marked portions of this
agreement.
8
14
Promptly upon its receipt of any such Mapping Arrays(TM), Wyeth-Ayerst shall
commence testing of such Mapping Arrays(TM) for activity against Targets within
the Field. Upon the completion by Wyeth-Ayerst of its testing of any such
Mapping Arrays(TM), Wyeth-Ayerst shall promptly provide the ArQule team leader
with a telefax communication detailing the discovery of Active Compounds, which
telefax shall be followed by a confirmatory letter, PROVIDED, HOWEVER, that
Wyeth-Ayerst may withhold any Confidential Information it deems appropriate to
prevent disclosure of the Targets. At Wyeth-Ayerst's request, and subject to the
availability of such Active Compound(s) as Licensed Compound(s) in accordance
with the provisions of Section 3.2 hereof, ArQule shall resynthesize any Active
Compound(s) and will promptly supply Wyeth-Ayerst with an appropriate amount of
such Active Compound(s) for a second evaluation as determined by the Research
Committee.
3.2. MUTUAL DISCLOSURE. Initially, ArQule will identify the Chemical Theme
of each Mapping Array(TM) but not the structures of the individual ArQule
Compounds in the Mapping Arrays(TM). Wyeth-Ayerst may screen the Mapping
Arrays(TM) against any Targets within the Field during the term of this
Agreement and thereafter. Initially, Wyeth-Ayerst will not disclose the Targets
screened. When Wyeth-Ayerst detects any Active ArQule Compound in a Mapping
Array(TM), ArQule will initially disclose whether such Active Compound or Active
Homolog thereto (i) is included within a Directed Array(TM) Program for a third
party for development in the Field, (ii) is being optimized by a third party
from a Mapping Array(TM) Program for development in the Field, (iii) is licensed
by a third party for development in the Field, or (iv) is included in an
existing ArQule Internal Discovery Program, in which case such Active ArQule
Compound and such Active Homologs thereto may not be reserved as per Section 3.3
or designated as Licensed Compounds. If such Active ArQule Compound and Active
Homologs may be reserved or designated as Licensed Compounds, ArQule will
disclose (a) the structure of each Active ArQule Compound and (b) the
structures, but not the locations in the Mapping Array(TM), of all Active
Homologs thereto, and Wyeth-Ayerst will disclose (a) the identity of the Target
and (b) the level of activity. All such disclosed information shall be treated
as Confidential Information by both Parties. The Parties agree that all Active
ArQule Compounds and Active Homologs thereto which exhibit significant
functional activity against Targets shall, subject to the approval of the
Research Committee, be submitted to the Directed Array(TM) Program under Section
4. Wyeth- Ayerst, at its discretion, may request that the Research Committee
designate any such Active ArQule Compound and Active Homologs thereto as
Licensed Compounds comprising a Licensed Compound Set if such Active ArQule
Compound and Active Homologs are still available as Licensed Compounds. Subject
to the foregoing, (a) ArQule shall notify the Research Committee that such
Active ArQule Compound and Active Homologs thereto are properly designated as
Licensed Compounds, and (b) provide Wyeth-Ayerst with the confirmed chemical
composition, structure, purity information and location of all Active ArQule
Compounds and Active Homologs thereto so designated as Licensed Compounds
belonging to such Licensed Compound Set.
3.3. RESERVATION OF ACTIVE ARQULE COMPOUNDS. Prior to designating any
Active ArQule Compounds and Active Homologs thereto as Licensed Compounds
pursuant to Section 3.2 hereof, Wyeth-Ayerst, at its discretion, may notify
ArQule of its intent to license such Active ArQule Compounds and Active
Homologs, and request a reservation of such Active ArQule Compounds and Active
Homologs thereto (collectively the "Reserved
9
▇▇
▇▇▇▇▇▇▇▇▇"). ▇▇▇▇ ▇▇▇▇▇▇ receiving from Wyeth-Ayerst (i) a written request to
reserve such Reserved Compounds, and (ii) disclosure of the Target and activity
information pursuant to Section 3.2 hereof, ArQule shall reserve such Reserved
Compounds for subsequent designation by Wyeth-Ayerst as Licensed Compounds for a
period ending upon the earlier to occur of (i) *****, or (ii) ***** days.
3.4. MAPPING ARRAY(TM) PROGRAM PAYMENTS. In consideration of the
performance by ArQule of the Mapping Array(TM) Program during the term provided
for in Section 3.5, Wyeth- Ayerst shall pay ArQule an annual subscription fee of
*****. Each subsequent annual subscription fee after the 1998 Contract Year
shall be as follows:
1999 Contract Year Annual Subscription Fee = *****
2000 Contract Year Annual Subscription Fee = *****
2001 Contract Year Annual Subscription Fee = *****
Beginning in 1998, any such annual subscription fee is payable *****. The
payment schedule for annual subscription fees shall be as follows:
In 1997 Contract Year: ******
In 1998 Contract Year: ******
In 1999 Contract Year: ******
In 2000 Contract Year: ******
In 2001 Contract Year: ******
3.5. TERM OF MAPPING ARRAY(TM) PROGRAM. The Mapping Array(TM) Program shall
commence on the Effective Date and continue until December 31, 2001, unless
earlier terminated as provided in Article 12 below. Wyeth-Ayerst may renew the
term of the Mapping Array(TM) Program at its option for additional periods of
***** on terms and conditions to be mutually agreed upon by the Parties.
Termination of the Mapping Array(TM) Program shall have no effect on the
continuation of any Directed Array(TM) Program.
3.6. PERFORMANCE OF MAPPING ARRAY(TM) PROGRAM. During the term of the
Mapping Array(TM) Program, any Active ArQule Compound selected by Wyeth-Ayerst
from the Mapping Array(TM) Program for re-synthesis pursuant to this Agreement
shall be reproducible by ArQule in quantities of at least ***** or such other
reasonable quantity as determined by the Research Committee. The Parties agree
that the failure of ArQule to meet these performance criteria
* Confidential Treatment has been requested for the marked portions of this
agreement.
10
16
of this section shall not constitute a material breach of the Agreement
sufficient for termination pursuant to Section 12.3 hereof. *****
4. DIRECTED ARRAY(TM) PROGRAM.
4.1. DESCRIPTION OF DIRECTED ARRAY(TM) PROGRAMS. Subject to the approval of
the Research Committee and the provisions of Section 4.2, ArQule will
synthesize, under the direction of the Research Committee and in accordance with
the Research Plan, multiple Directed Arrays(TM) of compounds derived from (i)
each Wyeth-Ayerst Compound provided to ArQule by Wyeth-Ayerst for inclusion in a
Directed Array(TM) Program, and/or (ii) each Active ArQule Compound or Active
Homolog thereto provided by ArQule to Wyeth-Ayerst under the Mapping Array(TM)
Program for inclusion in a Directed Array(TM) Program. The Parties agree that,
during the period provided for in Section 4.5, ArQule will produce such Directed
Arrays(TM) in no less than ***** separate Directed Array(TM) Programs as
follows:
(i) ***** Directed Array(TM) Programs during the Initial Contract
Year of 1997,
(ii) ***** Directed Array(TM) Programs during each of the Contract
Years of 1998 and 1999, and
(iii) ***** Directed Array(TM) Programs commenced during the Final
Contract Year.
The Research Committee will determine which Active ArQule Compounds or Active
Homologs thereto, and which Wyeth-Ayerst Compounds are actually submitted to
the Directed Array(TM) Programs. Subject to Research Committee approval and
oversight, it is expected that each Directed Array(TM) Program should take
***** to complete, with an average of ***** for the Directed Array(TM) Programs
commenced in any Contract Year. In the event that such average exceeds ***** in
any Contract Year, the matter will be referred to the Research Committee to
develop a plan to accelerate the Directed Array(TM) Programs. Failure to
average ***** or less to complete the Directed Array(TM) Programs for any
Contract Year shall not be a material breach sufficient to terminate this
Agreement pursuant to Section 12.3. Each Directed Array(TM) program shall
result in the production of approximately ***** compounds per Chemical Theme
per Directed Array(TM) Program resulting in approximately ***** compounds
generated for the ***** Directed Array(TM) Programs, PROVIDED, HOWEVER, that
the number of Chemical Themes actually submitted to the Directed Array(TM)
Program and the number of ArQule Derivative Compounds or Wyeth-Ayerst
Derivative Compounds actually produced per Chemical Theme will be determined by
the Research Committee. ArQule shall devote the resources necessary to produce
such Directed Array(TM) Program commensurate with the payments received by
* Confidential Treatment has been requested for the marked portions of this
agreement.
11
17
ArQule for such Directed Array(TM) Program and ArQule agrees that the
determination of the actual numbers of compounds developed per Directed
Array(TM) Program shall be determined on a strict scientific basis to accomplish
the goals of such Directed Array(TM) Program rather than on the basis of
allocation of resources among ArQule's corporate collaborators. The Parties
intend that ArQule will produce approximately ***** of each such Derivative
Compound in the Directed Arrays(TM), and in the case of Wyeth-Ayerst Derivative
Compounds, subject to the availability of the original Wyeth-Ayerst Compounds;
PROVIDED, HOWEVER, that the amount of each Derivative Compound that ArQule
actually produces will ultimately be determined by the Research Committee.
4.2. COMPOUNDS EXCLUDED FROM THE DIRECTED ARRAY(TM) PROGRAM. ArQule shall
have the right, at the time Wyeth-Ayerst seeks to include any (i) Active ArQule
Compound or Active Homolog thereto, or (ii) Wyeth-Ayerst Compound, in any
Directed Array(TM) Program, to exclude from such Directed Array(TM) Program any
such Active ArQule Compound, Active Homolog thereto, or Wyeth-Ayerst Compound
that is at that time (i) included within a Directed Array(TM) Program for a
third party for development in the Field, (ii) being optimized by a third party
from a Mapping Array(TM) Program for development in the Field, (iii) previously
licensed by a third party for development in the Field, or (iv) is included in
an existing ArQule Internal Discovery Program. In the event that ArQule excludes
a compound from a Directed Array(TM) Program pursuant to Subsection (iv) of this
Section, and to the extent ArQule may be permitted to do so in respect of
agreements with third parties, ***** .
4.3. CONDUCT OF DIRECTED ARRAY(TM) PROGRAM. Each Directed Array(TM) Program
shall be conducted in a good scientific manner and in compliance with all
applicable legal requirements. The conduct of the Directed Array(TM) Program
shall be the primary responsibility of ArQule with participation by
Wyeth-Ayerst. Directed Arrays(TM) may be produced by ArQule in one or more
iterations as directed by the Research Committee. Wyeth-Ayerst shall propose
Chemical Themes to the Research Committee for inclusion in a Directed Array(TM)
Program. If the Research Committee approves the inclusion of the proposed
Chemical Theme, Wyeth-Ayerst shall provide ArQule with the requisite amount and
purity of Wyeth-Ayerst Compounds for that Chemical Theme, as directed by the
Research Committee. ArQule shall thereupon diligently synthesize Directed
Arrays(TM) of ArQule Derivative Compounds or Wyeth-Ayerst Derivative Compounds,
as the case may be, in accordance with the Research Plan. Wyeth-Ayerst shall, in
its discretion, be responsible for conducting screening for binding affinity
and/or functional activity of all compounds in the Directed Arrays(TM). The
Parties shall continue the procedure described in this Section 4.3 for each
Active Compound until the earliest to occur of (i) the determination by the
Research Committee, in accordance with Section 2.2, to designate any such Active
ArQule Compound and any Active Homolog thereto as Licensed Compounds belonging
to a Licensed Compound
* Confidential Treatment has been requested for the marked portions of this
agreement.
12
18
Set, (ii) the determination by the Research Committee to cease further testing
of such Active Compound, (iii) the termination of such Directed Array(TM)
Program pursuant to Section 4.5, or (iv) termination of this Agreement in
accordance with Section 12. In the event that the Research Committee cannot
agree on a determination to be made by the Research Committee hereunder, then
such determination shall be resolved pursuant to Section 13.4. Notwithstanding
the foregoing, all Active ArQule Compounds and Active Homologs thereto arising
from the Directed Array(TM) Program and designated as Licensed Compounds, shall
remain exclusive to Wyeth-Ayerst, and ArQule or any of its licensees or its
pharmaceutical partners shall have no rights thereto except as otherwise
provided for in this Agreement.
4.4. DIRECTED ARRAY(TM) PROGRAM PAYMENTS.
4.4.1. DELIVERY FEE. In consideration of the performance by ArQule of
the Directed Array(TM) Program, Wyeth-Ayerst shall pay ArQule a delivery fee
equal to ***** for each Directed Array(TM) Program commenced during the 1997
and 1998 Contract Years. Wyeth-Ayerst shall make the following delivery fee
payment to ArQule for the Directed Array(TM) Programs commenced during
subsequent Contract Years:
1999 Contract Year Delivery Fee =*****
2000 Contract Year Delivery Fee = *****
All such delivery fees are payable *****. The annual payment schedule for such
fees is expected to be as follows:
In 1997 Contract Year: ***** / commence * Directed Array(TM)Programs.
In 1998 Contract Year: ***** / commence * and complete * Directed
Array(TM) Programs.
In 1999 Contract Year: ***** / commence and complete * Directed Array(TM)
Programs.
In 2000 Contract Year: ***** / commence and complete * Directed Array(TM)
Programs.
The parties agree that due to the uncertain scientific nature of any Directed
Array(TM) Program, the completion of the expected number of Directed Array(TM)
Programs in any one year may not occur in the same year that they are initiated,
and in such case, Wyeth-Ayerst will not be obligated to make the payments
scheduled in that year, but only to make the remaining payments when the
Directed Array(TM) Programs are actually completed.
4.4.2. EXPENSES. In addition to the amounts payable pursuant to
Section 4.4.1 above, Wyeth-Ayerst shall pay any and all Extraordinary Expenses
of ArQule, as required and approved by the Research Committee which shall
approve such Extraordinary Expenses before they are incurred.
* Confidential Treatment has been requested for the marked portions of this
agreement.
13
19
4.5. TERM OF DIRECTED ARRAY(TM) PROGRAMS. The term of each Directed
Array(TM) Program shall begin upon the commencement of such Directed Array(TM)
Program and, unless earlier terminated as provided in Article 12 below,
terminate on the first anniversary of such commencement date unless extended by
the Research Committee because of extraordinary circumstances. The period for
completing all Directed Array(TM) Programs commenced pursuant to Section 4.1
hereof shall terminate at the end of the Final Contract Year, PROVIDED, HOWEVER,
that such period may be extended for additional periods of ***** years at
***** on terms and conditions to be mutually agreed upon by the Parties.
4.6. PERFORMANCE OF DIRECTED ARRAY(TM) PROGRAM. During the term of the
Directed Array(TM) Program, any ArQule Derivative Compound and any Wyeth-Ayerst
Derivative Compound selected for resynthesis pursuant to this Agreement shall be
reproducible by ArQule in quantities of at least ***** or such other reasonable
quantity as determined by the Research Committee. In the event that ArQule is
unable to reproduce such compound in accordance with the performance criteria
set forth in this section, the Parties agree to submit the matter to the
Research Committee for development of a plan to achieve such performance
criteria and to ultimately resolve the matter in accordance with this Agreement.
The Parties agree that the failure of ArQule to meet the performance criteria of
this section shall not constitute a material breach of the Agreement sufficient
for termination pursuant to Section 12.3 hereof.
5. LICENSE GRANTS; REVERSION OF RIGHTS.
5.1. SCREENING LICENSES. ArQule hereby grants to Wyeth-Ayerst, under ArQule
Patent Rights and ArQule Technology (a) a nonexclusive, royalty-free license
***** to test each Mapping Array(TM) for significant functional activity
against Targets; and (b) an exclusive, royalty-free license to test each
Directed Array(TM) for significant functional activity against Targets.
5.2. COMMERCIALIZATION LICENSE. Upon the designation of Wyeth-Ayerst and
upon the designation by the Research Committee of any Active ArQule Compound or
any Active Homolog thereto as a Licensed Compound, ArQule shall grant to
Wyeth-Ayerst, under any intellectual property rights owned solely by ArQule or
jointly with Wyeth-Ayerst or controlled by ArQule, including ArQule Patent
Rights, Joint Patent Rights and ArQule Technology, covering the composition,
manufacture or use of any such Licensed Compound selected by Wyeth-Ayerst for
Preclinical Development, an exclusive, worldwide royalty-bearing license
***** subject to Section 5.3 (i) to develop or have developed Royalty-Bearing
Products incorporating Licensed Compounds for use in the Field (ii) to make or
have made Royalty- Bearing Products incorporating Licensed Compounds for use,
distribution and sale in the Field, and (iii) to distribute for sale and sell
in the Field Royalty-Bearing Products incorporating Licensed Compounds,
PROVIDED, HOWEVER, *****.
* Confidential Treatment has been requested for the marked portions of this
agreement.
14
20
5.3. REVERSION OF RIGHTS; RETURN OF MATERIALS. With respect to an Active
ArQule Compound and Active Homologs thereof composing a Licensed Compound Set
identified by Wyeth-Ayerst from a Mapping Array(TM) Program, in the event that
***** In such event, ArQule shall thereafter be free to
offer such Active ArQule Compounds and Active Homologs thereto belonging to such
Licensed Compound Set to third parties pursuant to a Mapping Array Program,
including the right to grant licenses covering such reverted Active ArQule
Compounds and Active Homologs to third parties for development and
commercialization resulting from independent discoveries arising from such
Mapping Array(TM) Program. Upon termination of such license by ArQule,
Wyeth-Ayerst shall (i) grant to ArQule an exclusive license, with the right to
grant sublicenses, to manufacture, use or sell such Active ArQule Compounds and
Active Homologs thereto under any Joint Patent Rights covering the composition
or use of such Active ArQule Compounds and Active Homologs and (ii) return to
ArQule all Proprietary Materials and Confidential Information supplied by ArQule
which relate to such Active ArQule Compounds and Active Homologs. ArQule agrees
not to disclose any Wyeth-Ayerst Confidential Information to any third party
regarding such reverted Active ArQule Compounds and Active Homologs in
accordance with Article 9 hereof. ***** . Notwithstanding the foregoing,
pursuant to Section 4.3 hereof, all Active ArQule Compounds and Active Homologs
thereto arising from the Directed Array(TM) Program and designated as Licensed
Compounds, shall remain exclusive to Wyeth-Ayerst, and ArQule or any of its
licensees or its pharmaceutical partners shall have no rights thereto except as
otherwise provided for in this Agreement.
5.4. DIRECT LICENSES TO AFFILIATES. Wyeth-Ayerst may, at any time,
request from ArQule, and ArQule agrees to grant directly to Wyeth-Ayerst
Affiliates in any country other than the United States equivalent rights as
granted to Wyeth-Ayerst on equivalent terms and conditions as agreed to by
Wyeth-Ayerst under this Agreement. Accordingly, upon receipt of Wyeth-Ayerst's
request, ArQule shall enter into and sign a direct license agreement or
agreements with such Wyeth-Ayerst Affiliates designated by Wyeth-Ayerst in the
request. All direct license agreements coming into force under this section
shall contain terms and conditions which are equivalent with those in this
Agreement, subject only to such modifications, as may be required by the laws
or regulations of the country to be demonstrated by Wyeth-Ayerst in which such
direct license may still be exercised, but only to the extent such
modifications are outside Wyeth-Ayerst's or its Affiliates' direct or indirect
* Confidential Treatment has been requested for the marked portions of this
agreement.
15
21
control, including, but not limited to, restrictions against the remittance of
royalties and limitations upon the term or duration of said direct license
agreement. In those countries in which the validity of such a direct license
agreement requires prior government approval or registration, such direct
license agreement shall not be binding or have force or effect until the
required governmental approval or registration has been granted.
6. OWNERSHIP OF COMPOUNDS.
6.1. WYETH-AYERST COMPOUNDS; WYETH-AYERST DERIVATIVE COMPOUNDS. All Wyeth-
Ayerst Compounds and Wyeth-Ayerst Derivative Compounds shall be owned by Wyeth-
Ayerst or its Affiliates, except, and only to the extent that any such compound
(i) was under development by ArQule (including programs with academic
collaborators or corporate partners) before such compound was proposed to be
included in the Directed Array(TM) Program; (ii) was independently developed by
ArQule employees who had no access to Wyeth-Ayerst Confidential Information
regarding the particular compound as evidenced by sufficient written
documentation, or (iii) was already within a screening array before such
compound was proposed to be included in the Directed Array(TM) Program.
6.2. ARQULE COMPOUNDS; ARQULE DERIVATIVE COMPOUNDS. All ArQule Compounds
and ArQule Derivative Compounds shall be owned by ArQule except, and only to the
extent that, any such compound (i) was under development by Wyeth-Ayerst before
such compound was proposed to be included in the Directed Array(TM) Program;
(ii) was independently developed by Wyeth-Ayerst employees who had no access to
ArQule Confidential Information regarding the particular compound as evidenced
by sufficient written documentation, or (iii) was already in the possession of
Wyeth-Ayerst before it was provided by ArQule to Wyeth-Ayerst or its Affiliates.
7. INTELLECTUAL PROPERTY RIGHTS.
7.1. OWNERSHIP OF PATENT RIGHTS.
(a) ARQULE PATENT RIGHTS. Any Patent Rights covering Active ArQule
Compounds only will be owned solely by ArQule except as provided in Section
7.1(b).
(b) JOINT PATENT RIGHTS. Any Patent Rights filed by either Party (i)
covering both Active ArQule Compounds and Active Wyeth-Ayerst Compounds,
(ii) claiming an Active ArQule Compound and uses thereof discovered by
Wyeth-Ayerst; and/or (iii) claiming an Active Wyeth-Ayerst Compound and
uses thereof discovered by ArQule, shall be owned jointly by ArQule and
Wyeth-Ayerst.
(c) WYETH-AYERST PATENT RIGHTS. Any Patent Rights covering Active
Wyeth-Ayerst Compounds only will be owned solely by Wyeth-Ayerst except as
provided in Section 7.1(b).
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22
(d) PATENT RIGHTS GENERALLY. Any Patent Rights arising out of or
related to this Agreement, the ownership of which cannot be determined from
Subsections (a), (b) or (c) of this Section 7.1, will be owned by the
Party(ies) having inventorship under the patent laws of the United States.
7.2. MANAGEMENT OF JOINT PATENT RIGHTS. The Parties shall agree upon a
mutually acceptable independent patent attorney who will be responsible, at
Wyeth-Ayerst's expense, for the preparation, filing, prosecution, and
maintenance of any Joint Patent Rights claiming such inventions. In the event of
any disagreement concerning any Joint Patent Rights, the matter shall be
resolved in accordance with Section 13.4. Wyeth-Ayerst shall consult with ArQule
as to the preparation, filing, prosecution, and maintenance of such Joint Patent
Rights reasonably prior to any deadline or action with the U.S. Patent &
Trademark Office or its foreign equivalent in a Major Market Country, and shall
furnish to ArQule copies of all relevant documents reasonably in advance of such
consultation. In the event that Wyeth- Ayerst desires to abandon such Joint
Patent Rights or later declines responsibility for such Joint Patent Rights,
Wyeth-Ayerst shall provide reasonable prior written notice to ArQule of such
intention to abandon or decline responsibility, and ArQule shall have the right,
at its expense, to prepare, file, prosecute, and maintain such Joint Patent
Rights.
7.3. COOPERATION OF THE PARTIES. Each Party agrees to cooperate fully in
the preparation, filing, and prosecution of any Patent Rights under this
Agreement. Such cooperation includes, but is not limited to:
(a) executing all papers and instruments, or requiring its
employees or agents, to execute such papers and instruments, so as to
effectuate the ownership of Patent Rights set forth in Section 7.1
above and to enable the other Party to apply for and to prosecute
patent applications in any country;
(b) promptly informing the other Party of any matters coming
to such Party's attention that may affect the preparation, filing, or
prosecution of any such patent applications; and
(c) undertaking no actions that are potentially deleterious
to the preparation, filing, or prosecution of such patent
applications.
7.4. INFRINGEMENT BY THIRD PARTIES. ArQule and Wyeth-Ayerst shall each
promptly notify the other in writing of any alleged or threatened infringement
by a third party of any ArQule Patent Right, Wyeth-Ayerst Patent Right or Joint
Patent Right of which they become aware. ArQule may elect, but is under no
obligation, to initiate legal action with respect to an ArQule Patent Right
against such third party in its sole discretion, and Wyeth-Ayerst shall
cooperate fully with ArQule in any such action at its own out-of-pocket
expenses, further provided that Wyeth-Ayerst shall have the right to join as a
party. Wyeth-Ayerst shall have the right to be represented by legal counsel of
its own choosing at its sole expense. If ArQule, within ***** months of receipt
of such notice or such lesser period of time if a further delay would result
in material harm, or the loss of a material right, has not commenced legal
action against an infringer whose infringing product has a market share larger
than ***** of the sales of a product competing with a Royalty-Bearing
* Confidential Treatment has been requested for the marked portions of this
agreement.
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23
Product and embraced by a Valid Claim of such ArQule Patent Rights licensed to
Wyeth-Ayerst hereunder, upon written notice from Wyeth-Ayerst, ArQule, in its
sole discretion, shall either (i) initiate such action, or (ii) authorize
Wyeth-Ayerst to commence such action. Wyeth-Ayerst may elect, but is under no
obligation, to initiate legal action with respect to a Wyeth-Ayerst Patent
Rights or Joint Patent Rights against such third party in its sole discretion,
and ArQule shall cooperate fully with Wyeth-Ayerst in any such action at its own
out-of-pocket expenses, further provided that ArQule shall have the right to
join as a party. ArQule shall have the right to be represented by legal counsel
of its own choosing at its sole expense. If Wyeth-Ayerst, within ***** months
of receipt of such notice or such lesser period of time if a further delay would
result in material harm, or the loss of a material right, has not commenced
legal action against an infringer whose infringing product has a market share
larger than ***** of the sales of a product competing with a Royalty-Bearing
Product and embraced by a Valid Claim in that country of such Wyeth-Ayerst
Patent Rights or Joint Patent Rights, upon written notice from ArQule,
Wyeth-Ayerst, in its sole discretion, shall either (i) initiate such action, or
(ii) authorize ArQule to commence such action. Notwithstanding anything to the
contrary, any settlement of such legal action by the initiating Party shall
require the consent of the non-initiating Party, which consent shall not be
unreasonably withheld. The Party whose Patent Rights allegedly are being
infringed, if they initiate such action, shall not be required to bring or
maintain more than one such suit at any time with respect to claims directed to
any one method of manufacture or composition of matter. All monies recovered
upon the final judgment or settlement of any such suit shall be shared, after
reimbursement of expenses, by ArQule and Wyeth-Ayerst pro rata according to the
respective percentages of costs borne by each Party in the suit pursuant to the
Section 7.4. Notwithstanding the foregoing, ArQule and Wyeth-Ayerst shall fully
cooperate with each other in the planning and execution of any action to
enforce the Patent Rights, and shall join suit if required by law to do so in
order to bring such action.
7.5. INFRINGEMENT OF THIRD PARTY RIGHTS.
(a) If Wyeth-Ayerst should be of the reasonable opinion that it
cannot make, import, use, market and/or sell a Royalty-Bearing Product without
infringing a third party's patent, and where such infringement arises solely and
directly from the use or sale of an ArQule Compound or ArQule Derivative
Compound (but not a Wyeth-Ayerst Derivative Compound), it shall notify ArQule.
Both Parties then shall seek an opinion of patent counsel acceptable to both
Parties and shall share the costs thereof. If such patent counsel concurs with
Wyeth-Ayerst's opinion, the Parties shall jointly or independently endeavor to
secure a license from the third party on terms that are acceptable to both
Parties.
(b) If, in the opinion of patent counsel selected under
Subsection (a) hereof, the third party patent, if litigated, would be found to
be invalid or not infringed by the manufacture or sale of Royalty-Bearing
Products, or if the Parties otherwise mutually agree to obtain a license to such
third party patent, the Parties shall proceed in accordance with the terms of
this Agreement, unless an action for infringement is brought against one or both
Parties.
(c) If either Party is sued for patent infringement of any third
party patents arising out of the manufacture, use, sale or importation of
Royalty-Bearing Products, and
* Confidential Treatment has been requested for the marked portions of this
agreement.
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where such infringement arises solely and directly from the use or sale of an
ArQule Compound or ArQule Derivative Compound (but not a Wyeth-Ayerst Derivative
Compound), the Parties shall promptly meet to discuss the course of action to be
taken to resolve or defend any such infringement litigation. In such event,
Wyeth-Ayerst shall determine the course of action with regard to such
infringement litigation in its sole discretion, and ArQule shall provide
Wyeth-Ayerst with such assistance as is reasonably necessary and shall cooperate
in the defense of any such action.
(d) Subject to Section 8.9, Wyeth-Ayerst shall bear all the costs
and expenses arising in connection with any of the activities described in
Sections 7.5(b) and 7.5(c).
7.6. TRADEMARKS. Royalty-Bearing Products shall be marketed and sold under
the trademark of Wyeth-Ayerst. Upon the termination of this Agreement,
Wyeth-Ayerst shall continue to use its trademarks with respect to
Royalty-Bearing Products.
8. PAYMENTS, REPORTS, AND RECORDS.
8.1. ACCESS FEE. In partial consideration for Wyeth-Ayerst obtaining access
to ArQule's Mapping Array(TM) Program and Directed Array(TM) Program as provided
herein, Wyeth-Ayerst shall pay to ArQule a technology access fee equal to
***** (the "Access Fee") payable ***** , and for which Wyeth-Ayerst shall
receive from ArQule a number of shares of ArQule Common Stock, determined in
accordance with and subject to the terms and conditions of a certain Common
Stock Purchase Agreement entered into by the Parties of even date hereof.
8.2. RESEARCH AND DEVELOPMENT PAYMENTS. In partial consideration of the
rights granted Wyeth-Ayerst under this Agreement, Wyeth-Ayerst shall pay ArQule
the following amounts within ***** days after each occurrence of the following
milestones:
Payment for Royalty-
Bearing Products Events
---------------- ------
***** *****
***** *****
***** *****
***** *****
* Confidential Treatment has been requested for the marked portions of this
agreement.
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***** *****
***** *****
***** *****
***** *****
As used in this Section 8.2, ***** .
Such Research and Development payments shall be non-refundable and shall not be
credited against royalties payable to ArQule under this Agreement. Research and
Development payments shall be paid for the first occurrence of each Event listed
above with respect to each Royalty-Bearing Product. Wyeth-Ayerst shall promptly
notify ArQule of each occurrence of any of the foregoing Events.
8.3. MARGINAL ROYALTIES. In consideration of the licenses granted to
Wyeth-Ayerst hereunder, for each Royalty Period, Wyeth-Ayerst shall pay to
ArQule a royalty for each Royalty-Bearing Product of:
Annual Net Sales Marginal Royalty Rate
---------------- (Percentage Of Net Sales)
-------------------------
***** *****
***** *****
* Confidential Treatment has been requested for the marked portions of this
agreement.
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8.4. REPORTS AND PAYMENTS. Within ***** days after the conclusion of each
Royalty Period, Wyeth-Ayerst shall deliver to ArQule a report containing the
following information:
(a) A report of the gross sales of Royalty-Bearing Products
by Wyeth-Ayerst, its Affiliates, Sublicensees and Direct Licensees
during the applicable Royalty Period in each country of sale in
sufficient detail to permit confirmation of the accuracy of the
royalty payment made;
(b) adjustments and calculation of Net Sales for the
applicable Royalty Period in each country of sale; and
(c) total Net Sales in U.S. dollars, together with the
exchange rates used for conversion.
All such reports shall be maintained in confidence by ArQule. If no royalties
are due to ArQule for any reporting period, the report shall so state.
Concurrent with this report, Wyeth-Ayerst shall remit to ArQule any payment due
for the applicable Royalty Period. The method of payment shall be mutually
agreed to. All amounts payable to ArQule under this Section will first be
calculated in the currency of sale and then converted into U.S. dollars in
accordance with Section 8.5, and such amounts shall be paid without deduction of
any withholding taxes, value-added taxes, or other charges applicable to such
payments.
8.5. INVOICES; PAYMENTS IN U.S. DOLLARS. With the exception of Access Fee,
Research and Development and royalty payments due under Sections 8.1, 8.2 and
8.3, respectively, ArQule shall submit invoices to Wyeth-Ayerst for each payment
due ArQule hereunder (including without limitation all payments due pursuant to
Section 3.4), and Wyeth-Ayerst shall pay such invoices within ***** days of
receipt thereof. All payments due under this Agreement shall, except as provided
in Section 8.6 below, be payable in United States dollars. Conversion of foreign
currency to U.S. dollars shall be made at the conversion rate existing in the
United States (as reported in the WALL STREET JOURNAL) on the last working day
of the calendar quarter preceding the applicable calendar quarter. Such payments
shall be without deduction of exchange, collection, or other charges.
8.6. PAYMENTS IN OTHER CURRENCIES. If by law, regulation, or fiscal policy
of a particular country, conversion into United States dollars or transfer of
funds of a convertible currency to the United States is restricted or forbidden,
Wyeth-Ayerst shall give ArQule prompt written notice of such restriction, which
notice shall satisfy the ***** day payment deadline described in Section 8.5.
Wyeth-Ayerst shall pay any amounts due ArQule through whatever lawful methods
ArQule reasonably designates; provided, however, that if ArQule fails to
designate such payment method within ***** days after ArQule is notified of the
restriction, then Wyeth-Ayerst may deposit such payment in local currency to
the credit of ArQule in a recognized banking institution selected by
Wyeth-Ayerst and identified by written notice to ArQule, and such deposit shall
fulfill all obligations of Wyeth-Ayerst to ArQule with respect to such payment.
* Confidential Treatment has been requested for the marked portions of this
agreement.
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8.7. RECORDS. Wyeth-Ayerst and its Affiliates shall maintain complete and
accurate records of Royalty-Bearing Products made, used or sold by them or their
Sublicensees or Direct Licensees under this Agreement, and any amounts payable
to ArQule in relation to such Royalty-Bearing Products, which records shall
contain sufficient information to permit ArQule to confirm the accuracy of any
reports delivered to ArQule in accordance with Section 8.4. Wyeth-Ayerst shall
retain such records relating to a given Royalty Period for at least ***** years
after the conclusion of that Royalty Period. ArQule shall have the right, at
its own expense, to cause an independent certified public accountant reasonably
acceptable to Wyeth-Ayerst at a date and time mutually agreed upon by both
Parties and after giving Wyeth-Ayerst at least ***** days written notice to
inspect such records during normal business hours for the sole purpose of
verifying any reports and payments delivered under this Agreement. Such
accountant shall not disclose to ArQule any information other than information
relating to accuracy of reports and payments delivered under this Agreement and
shall provide the Wyeth-Ayerst with a copy of any report given to ArQule. The
Parties shall reconcile any underpayment or overpayment within ***** days after
the accountant delivers the results of the audit. In the event that any audit
performed under this Section reveals an underpayment in excess of ***** in any
Royalty Period, Wyeth-Ayerst shall bear the full cost of such audit. ArQule may
exercise its rights under this Section only once every year and only with
reasonable prior notice to the other Party.
8.8. TERM OF ROYALTY OBLIGATION. Wyeth-Ayerst shall be obligated to pay
royalties on each Royalty-Bearing Product on a country-by-country basis for the
Royalty Period. Thereafter, Wyeth-Ayerst shall have a fully paid up license
from ArQule with respect to such Royalty-Bearing Product.
8.9. THIRD PARTY ROYALTIES. If Wyeth-Ayerst is required to pay royalties to
a non-Affiliate third party in order to make, use or sell a Royalty-Bearing
Product for which Wyeth-Ayerst is then paying royalties to ArQule, to avoid
infringing such third party's patent rights, or where such royalties are payable
to such third party as a result of adjudication of an infringement action or
settlement thereof, and where such infringement arises solely and directly from
the use or sale of an ArQule Compound or ArQule Derivative Compound (but not a
Wyeth-Ayerst Derivative Compound), Wyeth-Ayerst may deduct up to ***** of such
third party royalty payments from royalties thereafter payable to ArQule;
PROVIDED, HOWEVER, that *****
9. CONFIDENTIAL INFORMATION.
9.1. DEFINITION OF CONFIDENTIAL INFORMATION. Confidential Information shall
mean any technical or business information furnished by the Disclosing Party to
the Receiving
* Confidential Treatment has been requested for the marked portions of this
agreement.
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Party in connection with this Agreement and specifically designated as
confidential. Such Confidential Information may include, without limitation, the
identity of a chemical compound, the use of a chemical compound, trade secrets,
know-how, inventions, technical data or specifications, testing methods,
business or financial information, research and development activities, product
and marketing plans, and customer and supplier information.
9.2. DESIGNATION OF CONFIDENTIAL INFORMATION. Confidential Information that
is disclosed in writing shall be marked with a legend indicating its
confidential status. Confidential Information that is disclosed orally or
visually shall be documented in a written notice prepared by the Disclosing
Party and delivered to the Receiving Party within thirty (30) days of the date
of disclosure; such notice shall summarize the Confidential Information
disclosed to the Receiving Party and reference the time and place of disclosure.
9.3. OBLIGATIONS. The Receiving Party agrees that it shall:
(a) maintain all Confidential Information in strict
confidence, except that the Receiving Party may disclose or permit the
disclosure of any Confidential Information to its, and its Affiliates,
directors, officers, employees, consultants, and advisors who are
obligated to maintain the confidential nature of such Confidential
Information and who need to know such Confidential Information for the
purposes set forth in this Agreement;
(b) use all Confidential Information solely for the purposes
set forth in, or as permitted by, this Agreement; and
(c) allow its directors, officers, employees, consultants,
and advisors to reproduce the Confidential Information only to the
extent necessary to effect the purposes set forth in this Agreement,
with all such reproductions being considered Confidential Information.
9.4. EXCEPTIONS. The obligations of the Receiving Party under Section 9.3
above shall not apply to the extent that the Receiving Party can demonstrate
that certain Confidential Information:
(a) was in the public domain prior to the time of its
disclosure under this Agreement;
(b) entered the public domain after the time of its
disclosure under this Agreement through means other than an
unauthorized disclosure resulting from an act or omission by the
Receiving Party;
(c) was independently developed or discovered by the
Receiving Party without use of the Confidential Information;
(d) is or was disclosed to the Receiving Party at any time,
whether prior to or after the time of its disclosure under this
Agreement, by a third party having no fiduciary relationship with the
Disclosing Party and having no obligation of
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confidentiality to the Disclosing Party with respect to such
Confidential Information; or
(e) is required to be disclosed to comply with applicable
laws or regulations (such as disclosure to the FDA or the United
States Patent and Trademark Office or to their foreign equivalents),
or to comply with a court or administrative order, provided that the
Disclosing Party receives prior written notice of such disclosure and
that the Receiving Party takes all reasonable and lawful actions to
obtain confidential treatment for such disclosure and, if possible, to
minimize the extent of such disclosure.
9.5. RETURN OF CONFIDENTIAL INFORMATION. Upon the termination of this
Agreement, at the request of the Disclosing Party, the Receiving Party shall
destroy or return to the Disclosing Party all originals, copies, and summaries
of documents, materials, and other tangible manifestations of Confidential
Information in the possession or control of the Receiving Party, except that the
Receiving Party may retain one copy of the Confidential Information in the
possession of its legal counsel (for ArQule) and its Legal Department (for
Wyeth-Ayerst) solely for the purpose of monitoring its obligations under this
Agreement.
9.6. PUBLICATIONS. ArQule shall not publish any scientific publications
with respect to Active ArQule Compounds, Active Homologs, ArQule Derivative
Compounds, Wyeth- Ayerst Compounds or Wyeth-Ayerst Derivative Compounds without
the prior written permission of Wyeth-Ayerst, which may be withheld in its sole
discretion.
9.7. SURVIVAL OF OBLIGATIONS. The obligations set forth in this Article
shall remain in effect for a period of ***** years after termination of this
Agreement, except that the obligations of the Receiving Party to destroy or
return Confidential Information to the Disclosing Party shall survive until
fulfilled.
10. REPRESENTATIONS AND WARRANTIES.
10.1. AUTHORIZATION. Each Party represents and warrants to the other that
it has the legal right and power to enter into this Agreement, to extend the
rights and licenses granted to the other in this Agreement, and to fully perform
its obligations hereunder, and that the performance of such obligations will not
conflict with its charter documents or any agreements, contracts, or other
arrangements to which it is a Party.
10.2. INTELLECTUAL PROPERTY. Each Party further represents that it (a) owns
or is the licensee in good standing of all Patent Rights, trade secrets and
other intellectual property to be used by it in connection with the Research
Program, except to the extent that such use is to be based upon patents,
trademarks and other intellectual property furnished by the other Party; (b) has
received no notice of infringement or misappropriation of any alleged rights
asserted by any third party in relation to any technology to be used by it in
connection with the Research Program; (c) is not in default with respect to any
license agreement related to the Research Program; and (d) its directors,
officers and employees responsible for intellectual property matters are not
aware of any patent, trade secret or other right of any
* Confidential Treatment has been requested for the marked portions of this
agreement.
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third party which could materially adversely affect its ability to carry out its
responsibilities under the Research Program or the other Party's ability to
exercise or exploit any license granted to it under this Agreement. Such Party
agrees to immediately notify the other Party in writing in the event such Party
hereafter receives a notice of the type referred to in (b) above, becomes in
default under any license agreement referred to in (c) above, or becomes aware
of any patent, trade secret or other right of the nature referred to in (d)
above.
11. INDEMNIFICATION AND INSURANCE.
11.1. WYETH-AYERST INDEMNITY OBLIGATIONS. Wyeth-Ayerst (the "Indemnitor")
agrees to defend, indemnify and hold ArQule, its Affiliates and their respective
directors, officers, employees and agents (the "Indemnitee") harmless from all
costs, judgments, liabilities and damages assessed by a court of competent
jurisdiction arising from claims asserted by a third party against ArQule, its
Affiliates or their respective directors, employees or agents as a result of:
(a) actual or asserted violations of any applicable law or regulation by Wyeth-
Ayerst, its Affiliates, sublicensees or third party manufacturers by virtue of
which the Royalty-Bearing Products manufactured, distributed or sold shall be
alleged or determined to be adulterated, misbranded, mislabeled or otherwise not
in compliance with such applicable law or regulation; (b) claims for bodily
injury, death or property damage attributable to the manufacture, distribution,
sale or use of the Royalty-Bearing Products by Wyeth-Ayerst, its Affiliates,
sublicensees or third party manufacturers; or (c) a recall ordered by a
governmental agency, or required by a confirmed failure, of Royalty-Bearing
Products manufactured, distributed, or sold by Wyeth-Ayerst, its Affiliates,
sublicensees or third party manufacturers as reasonably determined by the
Parties hereto.
11.2. CROSS-INDEMNITY OBLIGATIONS. Each Party (the "Indemnitor") agrees to
defend, indemnify and hold the other Party, its Affiliates and their respective
directors, officers, employees and agents (the "Indemnitee") harmless from all
costs, judgments, liabilities and damages assessed by a court of competent
jurisdiction arising from claims asserted by a third party against the
Indemnitee as a result of a breach by the Indemnitor of any of its respective
representations and warranties made pursuant to Section 10.1 or 10.2 hereof.
11.3. PROCEDURE. In the event that an Indemnitee or any of its Affiliates
or their respective employees or agents intends to claim indemnification under
this Article 11, such Party shall promptly notify the Indemnitor of any loss,
claim, damage, liability or action in respect of which the Indemnitee intends to
claim such indemnification, and the Indemnitor shall assume the defense thereof
with counsel mutually satisfactory to the Parties; provided, however, that an
Indemnitee shall have the right to retain its own counsel, with the fees and
expenses to be paid by Indemnitor, if representation of such Indemnitee by the
counsel retained by the Indemnitor would be inappropriate due to actual or
potential differing interests between such Indemnitee and any other Party
represented by such counsel in such proceedings. The indemnity agreement in this
Article 11 shall not apply to amounts paid in settlement of any loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Indemnitor, which consent shall not be withheld unreasonably. The failure
to deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve the Indemnitor of
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any liability to the Indemnitee under this Article 11, but the omission so to
deliver notice to the Indemnitor will not relieve it of any liability that it
may have to any Indemnitee otherwise than under this Article 11. The Indemnitee
under this Article 11, its employees and agents, shall cooperate fully with the
Indemnitor and its legal representatives in the investigation of any action,
claim or liability covered by this indemnification.
11.4. INSURANCE. Wyeth-Ayerst shall maintain appropriate product liability
insurance or self-insurance with respect to development, manufacture and sales
of the Royalty-Bearing Products by Wyeth-Ayerst in such amount as Wyeth-Ayerst
customarily maintains with respect to sales of its other products. Wyeth-Ayerst
shall each maintain such insurance for so long as it continues to manufacture or
sell the Royalty-Bearing Products, and thereafter for so long as Wyeth-Ayerst
maintains insurance for itself covering such manufacture or sales.
12. TERM AND TERMINATION.
12.1. TERM. This Agreement shall commence on the Effective Date and shall
remain in effect until the expiration of the last Royalty Period covering any
Royalty-Bearing Product, unless earlier terminated as provided in this Article
12.
12.2. BREACH OF PAYMENT OBLIGATIONS. In the event that Wyeth-Ayerst fails
to make timely payment of any amounts due to ArQule under this Agreement, ArQule
may terminate this Agreement upon ***** days written notice to Wyeth-Ayerst,
unless Wyeth-Ayerst pays all past-due amounts within such ***** notice period.
12.3. MATERIAL BREACH. In the event that either Party commits a material
breach of any of its obligations under this Agreement (other than as provided in
Section 12.2) and such Party fails (i) to remedy that breach within ***** days
after receiving written notice thereof from the other Party or (ii) to commence
dispute resolution pursuant to Section 13.4, within ***** after receiving
written notice of that breach from the other Party, the other Party may
immediately terminate this Agreement upon written notice to the breaching Party.
In the event that a satisfactory resolution of a clear pattern of false positive
screening results attributable to the quality of Mapping Array(TM) Compounds,
and/or consistent inability to reproduce Active ArQule Compounds in accordance
with the Mapping Array(TM) resynthesis performance criteria as set forth in
Section 3.6, cannot be achieved, then Wyeth-Ayerst shall have the right to
terminate the Mapping Array(TM) Program in accordance with this Section 12.3. In
the event that ArQule fails to complete, except under circumstances not
reasonably within ArQule's control, by the end of the 1998 Contract Year at
least ***** Directed Array(TM) Programs out of the sum of (a) the ***** Directed
Array(TM) Programs commenced during the 1997 Contract Year, and (b) the *****
Directed Array(TM) Programs commenced during the 1998 Contract Year, all *****
of which had been timely approved by the Research Committee, then Wyeth-Ayerst
shall have the right to terminate the Directed Array(TM) Program in accordance
with this Section 12.3.
12.4. INSOLVENCY. Either Party may terminate this Agreement immediately
upon notice to the other Party in the event of (i) the filing by the other Party
of a petition in
* Confidential Treatment has been requested for the marked portions of this
agreement.
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bankruptcy or for liquidation; (ii) the request for or appointment of a receiver
for the other Party; (iii) execution upon any portion of the other Party's
business or assets; (iv) the other Party's arrangement with or assignment for
the benefit of creditors; or (v) the other Party becoming unable to meet its
obligations as they become due.
12.5. CHANGE OF CONTROL. In the event that ArQule is acquired by a
competitor of Wyeth-Ayerst, Wyeth-Ayerst may (i) terminate the Mapping Array(TM)
Program upon ***** months written notice to ArQule, and/or (ii) terminate any
Directed Array Program upon ***** months written notice to ArQule, subject to
the payment of all accrued and unpaid payments, including, without limitation,
Mapping Array(TM) Program (as provided for in this Section 12.5), Directed(TM)
Array Program, Research, and royalty payments accrued or accruing in the future.
In the event Wyeth-Ayerst terminates the Mapping Array(TM) Program pursuant to
this Section 12.5, then Wyeth-Ayerst shall pay ArQule a pro-rated Mapping
Array(TM) subscription fee equal to the sum of ***** . In the event that
Wyeth-Ayerst terminates the Directed Array(TM) Program pursuant to this Section
12.5, Wyeth-Ayerst shall be under no obligation to begin any new Directed
Array(TM) Programs after giving notice of such termination. In the event of
such acquisition, ArQule will keep confidential Wyeth-Ayerst Confidential
Information, including, without limitation, the identity and number of the
Directed Array Targets and Licensed Compounds, from its parent company, and any
employee or consultant thereof (except former ArQule employees and consultants)
for a period of ***** years.
12.6. EFFECT OF TERMINATION. Termination of this Agreement shall not
relieve the Parties of any obligation accruing prior to such termination. The
provisions of Article 6, Sections 7.1, 7.3, 7.6, Article 8 (with respect only to
the payment of milestone payments and royalties accrued at the time of or after
termination), Article 9, Article 11 and Article 13 shall survive the expiration
or termination of this Agreement. Wyeth-Ayerst shall have the right to reserve
or license pursuant to Article 3 or 4, any Active Compound disclosed to ArQule
pursuant to Section 3.1 prior to termination of this Agreement, subject to all
applicable terms and conditions of this Agreement, which shall also survive
termination of this Agreement with respect to such compound. All licenses
granted pursuant to Section 5.2 with respect any Licensed Compound shall survive
termination of this Agreement subject to all applicable terms and conditions of
this Agreement, which shall also survive termination of this Agreement with
respect to such Licensed Compound. Upon termination of this Agreement, the
Parties shall be obliged to take, maintain, and update an inventory of all
payments due ArQule under Articles 3, 4 and 8 of this Agreement.
* Confidential treatment has been requested for the marked portions of this
agreement
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13. MISCELLANEOUS.
13.1. 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 therein.
13.2. PUBLICITY. Neither Party shall use the name of the other Party or
reveal the terms of this Agreement in any publicity or advertising without the
prior written approval of the other Party, except that (i) either Party may use
the text of a written statement approved in advance by both Parties without
further approval, (ii) either Party shall have the right to identify the other
Party and to disclose the terms of this Agreement as required by applicable
securities laws or other applicable law or regulation, and (iii) either Party
may use the name of the other Party and reveal the existence of this Agreement
as long as such statements do not disclose the terms of this Agreement. In any
disclosure of this Agreement to a government agency under the preceding
sentence, the disclosing party shall request confidential treatment of the
sensitive terms and conditions hereof, such as the financial terms of this
Agreement, and shall provide such confidential treatment request to the other
party for review and comment prior to filing.
13.3. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts without regard to
its conflict of laws provisions.
13.4. DISPUTE RESOLUTION PROCEDURES.
(a) The Parties hereby agree that they will attempt in good faith
to resolve any controversy, claim or dispute ("Dispute") arising out of or
relating to this Agreement promptly by negotiations between the ***** .
Any such Dispute which is not settled by the Parties within fifteen (15)
days after notice of such Dispute is given by one Party to the other in
writing shall be referred to the ***** *** *** ***** who are authorized
to settle such Disputes on behalf of their respective companies ("*****").
The ***** will meet for negotiations within fifteen (15) days of the end
of the 15 day negotiation period referred to above, at a time and place
mutually acceptable to both ***** . If the Dispute has not been resolved
within thirty (30) days after the end of the 15 day negotiation period
referred to above (which period may be extended by mutual agreement),
subject to any rights to injunctive relief and unless otherwise
specifically provided for herein, any Dispute will be settled first by
non-binding mediation as described in subsection (b) below.
(b) Any Dispute which is not resolved by the Parties within the
time period described in subsection (a) shall be submitted to an
alternative dispute resolution process ("ADR"). Within five (5) business
days after the expiration of the
* Confidential Treatment has been requested for the marked portions of this
agreement.
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thirty (30) day period set forth in subsection (a), each Party shall select
for itself a representative with the authority to bind such Party and shall
notify the other Party in writing of the name and title of such
representative. Within ten (10) business days after the date of delivery of
such notice, the representatives shall schedule a date for engaging in
non-binding ADR with a neutral mediator or dispute resolution firm mutually
acceptable to both representatives. Any such mediation shall be held in
Boston, Massachusetts. Thereafter, the representatives of the Parties shall
engage in good faith in an ADR process under the auspices of such
individual or firm. If the representatives of the Parties have not been
able to resolve the Dispute within thirty (30) business days after the
conclusion of the ADR process, the Parties shall be free to bring an action
in any court of competent jurisdiction to settle the Dispute. If the
representatives of the Parties resolve the dispute within the thirty (30)
day period set forth above, then such resolution shall be binding upon the
Parties.
(c) Nothing contained in this Section or any other provisions of
this Agreement shall be construed to limit or preclude a Party from
bringing any action in any court of competent jurisdiction for injunctive
or other provisional relief to compel the other Party to comply with its
obligations hereunder. The Parties hereby irrevocably consent to submit to
the jurisdiction of the courts of the Commonwealth of Massachusetts and/or
any other court having jurisdiction for this purpose.
13.5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
13.6. HEADINGS. All headings in this Agreement are for convenience only and
shall not affect the meaning of any provision hereof.
13.7. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the Parties, their Affiliates, and their respective lawful
successors and assigns.
13.8. ASSIGNMENT. This Agreement may not be assigned by either Party
without the prior written consent of the other Party, except that either Party
may assign this Agreement to a successor in connection with the merger,
consolidation, or sale of all or substantially all of its assets or that portion
of its business pertaining to the subject matter of this Agreement.
13.9. NOTICES. All notices, requests, demands and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given upon the date of receipt if
delivered by hand, recognized international overnight courier, confirmed
facsimile transmission, or registered or certified mail, return receipt
requested, postage prepaid to the following addresses or facsimile numbers:
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If to Wyeth-Ayerst: If to ArQule:
Wyeth-Ayerst Laboratories ArQule, Inc.
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with a copy to:
with a copy to:
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5 Giralda Farms ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Associate Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
General Counsel Esquire
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Either Party may change its designated address and facsimile number by
notice to the other Party in the manner provided in this Section.
13.10. AMENDMENT AND WAIVER. This Agreement may be amended, supplemented,
or otherwise modified only by means of a written instrument signed by both
Parties. Any waiver of any rights or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an agreement to waive
any rights or fail to act in any other instance, whether or not similar.
13.11. SEVERABILITY. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and the Parties shall negotiate in good faith to modify the Agreement to
preserve (to the extent possible) their original intent.
13.12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the Parties relating to the subject
matter hereof.
13.13. FORCE MAJEURE. Neither Party shall be held liable or responsible to
the other Party, nor be deemed to be in breach of this Agreement, for failure or
delay in fulfilling or performing any provisions of this Agreement when such
failure or delay is caused by or results from any cause whatsoever outside the
reasonable control of the Party concerned including, but not limited to, fire,
explosion, breakdown of plant, strike, lock-out, labor disputes, casualty or
accident, lack or failure of transportation facilities, flood, lack or failure
of sources of supply or of labor, raw materials or energy, civil commotion,
embargo, any law, regulation, decision, demand or requirement of any national or
local government or authority. The Party claiming relief shall, without delay,
notify the other Party by registered
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airmail or by telefax of the interruption and cessation thereof and shall use
its best efforts to remedy the effects of such hindrance with all reasonable
dispatch. The onus of proving that any such Force Majeure event exists shall
rest upon the Party so asserting. During the period that one Party is prevented
from performing its obligations under this Agreement due to a Force Majeure
event, the other Party may, in its sole discretion, suspend any obligations that
relate thereto. Upon cessation of such Force Majeure event the Parties hereto
shall use their best efforts to make up for any suspended obligations. If such
Force Majeure event is anticipated to continue, or has existed for nine (9)
consecutive months or more, this Agreement may be forthwith terminated by either
Party by registered airmail or by telefax. In case of such termination the
terminating Party will not be required to pay to the other Party any indemnity
whatsoever.
13.14. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ ACT. If required by law, the parties will, at
their own expense, prepare and make appropriate filings under Title II of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976, as amended, and the rules
and regulations promulgated thereunder (16 C.F.R. 801.1 et. seq.) (the "Act") as
soon as reasonably practicable. The parties shall co-operate in the antitrust
clearance process and agree to furnish promptly to the FTC and the Antitrust
Division of the Department of Justice any additional information reasonably
requested by them in connection with such filings.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as a sealed instrument effective as of the date first above written.
AMERICAN HOME PRODUCTS CORPORATION ARQULE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------ --------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President Title: President and
Chief Executive Officer
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EXHIBIT A
Research Plan
-------------
Pursuant to Section 1.42 hereof, the initial Research Plan shall be developed by
the Parties within ***** days of the Effective Date and be attached to this
Agreement as EXHIBIT A.
* Confidential Treatment has been requested for the marked portions of this
agreement.
39
EXHIBIT B
Process for Progressing Lead Compounds from Discovery Research to an Approved
-----------------------------------------------------------------------------
IND-Track Compound
------------------
Biological Compounds
--------------------
*****
* Confidential Treatment has been requested for the marked portions of this
agreement.
40
*****
Chemical Criteria
-----------------
******
* Confidential Treatment has been requested for the marked portions of this
agreement.
41
Other Criteria
--------------
*****
* Confidential Treatment has been requested for the marked portions of this
agreement.
42
IND-TRACK PROPOSAL DOCUMENT
---------------------------
*****
* Confidential Treatment has been requested for the marked portions of this
agreement.
43
IND-TRACK COMPOUND PROCESS FLOW
-------------------------------
*****
* Confidential Treatment has been requested for the marked portions of this
agreement.
44
*****
* Confidential Treatment has been requested for the marked portions of this
agreement.
