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EXHIBIT 10.26
ARIAD PHARMACEUTICALS, INC. HAS OMITTED FROM THIS EXHIBIT 10.26 PORTIONS OF THE
AGREEMENT FOR WHICH ARIAD PHARMACEUTICALS, INC. HAS REQUESTED CONFIDENTIAL
TREATMENT FROM THE SECURITIES AND EXCHANGE COMMISSION. THE PORTIONS OF THE
AGREEMENT FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED ARE MARKED WITH AN
ASTERISK AND SUCH CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION.
JOINT VENTURE MASTER AGREEMENT
BETWEEN
HOECHST XXXXXX XXXXXXX, INC.
AND
ARIAD PHARMACEUTICALS, INC.
MARCH 4, 1997
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JOINT VENTURE MASTER AGREEMENT
This JOINT VENTURE MASTER AGREEMENT (the "Agreement") is entered into
as of March 4, 1997 by and between HOECHST XXXXXX XXXXXXX, INC., a Delaware
corporation, having its offices at Route 202-206, X.X. Xxx 0000, Xxxxxxxxxxx,
Xxx Xxxxxx 00000-0000, X.X.X. ("HMRI"), and ARIAD PHARMACEUTICALS, INC., a
Delaware corporation, having its principal office at 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxxxxx 00000, X.X.X. ("ARIAD").
WHEREAS, the parties desire to enter into a joint venture in the form
of a limited liability company (the "Joint Venture" or "LLC") for the purposes
of combining and further developing their respective technologies in the area of
Functional Genomics in order to identify Candidate Genes, Validated Targets and
Validated Proteins for use in drug discovery; and
WHEREAS, the Joint Venture will perform research and will license the
results of such research to one or both of the parties and/or to other
licensees; and
WHEREAS, in order to implement the Joint Venture, the parties wish to
agree upon the terms thereof and to describe the agreements to be executed to
set forth in detail the terms and conditions of the Joint Venture.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and for other good and valuable consideration, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. DEFINITIONS
Whenever used in this Agreement with an initial capital letter, the
terms defined in this Section 1 shall have the meanings specified.
1.1 "ACQUISITION" has the meaning set forth in Section 9.6.3.
1.2 "ADDITIONAL CAPITAL CONTRIBUTIONS" has the meaning set forth in Section
2.9.2(a).
1.3 "ADMINISTRATIVE SERVICES" has the meaning set forth in the Administrative
Services Agreement.
1.4 "ADMINISTRATIVE SERVICES AGREEMENT" has the meaning set forth
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in Section 4.1.1.
1.5 "AFFILIATE" means any corporation, firm, partnership or other entity which
directly or indirectly controls or is controlled by or is under common control
with a party to this Agreement. "Control" means ownership, directly or through
one or more Affiliates, of more than fifty percent (50%) of the shares of stock
entitled to vote for the election of directors, in the case of a corporation, or
more than fifty percent (50%) of the equity interests in the case of any limited
liability company or other type of legal entity, status as a general partner in
any partnership, or any other arrangement whereby a party controls or has the
right to control the Board of Directors or equivalent governing body of a
corporation or other entity.
1.6 "ANALOG PROTEIN DRUG" means a Protein or polypeptide, the discovery of which
was based on the identification of a Validated Protein or the Candidate Gene of
such Validated Protein, and which has been modified through a change in its
primary structure or sequence resulting in a functionally significant change.
1.7 "ANNUAL RESEARCH PLAN" means the written plan describing the scientific
activities to be carried out by the Joint Venture during each year pursuant to
this Agreement. Each Annual Research Plan will be set forth in a written
document prepared and approved by the Management Committee.
1.8 "ANTIBODY DRUG" means an antibody (monoclonal or polyclonal) or fragments or
constructs thereof.
1.9 "ANTISENSE DRUG" means any nucleic acid or a functional analog, derivative
or homologue thereof which is complementary to a segment of DNA of a Gene or
such Gene's cognate RNA, the discovery of which was based on the identification
of a Validated Target or the Candidate Gene of such Validated Target, and which,
upon delivery by any means, alters the transcription, processing, elaboration,
RNA expression, or protein production of or by such Gene.
1.10 "ARIAD BACKGROUND TECHNOLOGY" means Technology owned or
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licensed by ARIAD or its Affiliates that exists as of the date hereof or is
acquired by ARIAD or its Affiliates during the Term, that is useful in
Functional Genomics and that is applicable to the objectives of the Research
Program. ARIAD Background Technology is listed or described as such on Schedule
I to the ARIAD License Agreement, as such Schedule is amended from time to time.
1.11 "ARIAD LICENSE AGREEMENT" has the meaning set forth in Section 7.1.1.
1.12 "BIOINFORMATICS" means genomics software and databases (including, without
limitation, databases containing information pertaining to the sequence,
function and relationship of genomic information) and methods and tools for
creation, maintenance and analysis thereof (including, without limitation,
source and object code, maintenance files and documentation for software, and
computer systems).
1.13 "CANDIDATE GENE" means a Gene whose [*] cDNA sequence is known and whose
function has been determined, in whole or in part, in accordance with criteria
to be determined by the Management Committee.
1.14 "CERTIFICATE" has the meaning set forth in Section 2.1.
1.15 "CHANGE OF CONTROL" has the meaning set forth in Section 9.6.3.
1.16 "CLOSING" has the meaning set forth in Section 8.1.
1.17 "CLOSING DATE" has the meaning set forth in Section 8.1.
1.18 "CONFIDENTIAL INFORMATION" means all tangible embodiments of Technology and
all information (including but not limited to information about any element of
Technology) which is disclosed by one party to the other hereunder or under the
Joint Venture Agreements, except to the extent that such information (i) as of
the date of disclosure is demonstrably known to the party receiving such
disclosure or its Affiliates, as shown by written documentation, other than by
virtue of a prior confidential disclosure to such party or its Affiliates; (ii)
as of the date of disclosure is in, or subsequently enters, the public domain,
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through no fault or omission of the party receiving such disclosure; or (iii) as
of the date of disclosure or thereafter is obtained from a third party free from
any obligation of confidentiality to the disclosing party.
1.19 "COPYRIGHT RIGHTS" means the rights and interests in and to copyrights in
any country, including without limitation, copyrights pertaining to
Bioinformatics or other software. "ARIAD Copyright Rights" means Copyright
Rights of ARIAD. "HMRI Copyright Rights" means Copyright Rights of HMRI.
1.20 "CROSS LICENSE AGREEMENT" has the meaning set forth in Section 7.1.5.
1.21 "DERIVATIVE PROTEIN DRUG" means a Protein, the discovery of which was based
on the identification of a Validated Protein or the Candidate Gene of such
Validated Protein, including, without limitation, species variant forms thereof,
amino acid variant forms thereof having [*] amino acid sequence identity and
truncated forms or fragments thereof.
1.22 "DIAGNOSTIC PRODUCT" means any product in the form of a device, compound,
kit or service, the discovery of which was based upon, or which utilizes, any
Candidate Gene, Validated Target or Validated Protein, which is intended to
predict, detect or identify a disease, determine the presence of a pathologic
condition or monitor the course of disease or therapy in humans.
1.23 "DRUG" means any product which is intended to treat and/or prevent a
disease or disorder in humans.
1.24 "EFFECTIVE DATE" means the date first written above.
1.25 "FIELD" means Functional Genomics.
1.26 "FUNCTIONAL GENOMICS" means the identification of Genes, and the function
of such Genes or the products thereof, and the interacting elements of pathways
involving those Genes.
1.27 "GENE" means a cDNA or a human gene or a family of such human genes or any
portion of such cDNA, gene or genes.
1.28 "GENE THERAPY DRUG" means a nucleic acid or a functional analog, derivative
or homologue thereof, the discovery of which was
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based on the identification of a Validated Protein or the Candidate Gene of such
Validated Protein, and which, upon delivery by any means, causes a gene product
encoded thereby to be expressed, but does not include an Antisense Drug or a
Vaccine.
1.29 "HMRI BACKGROUND TECHNOLOGY" means Technology owned or licensed by: (i)
HMRI or (ii) [*] of an Affiliate of HMRI [*] that exists as of the date hereof
or is acquired by any such party during the Term that is useful in Functional
Genomics and that is [*] of the Research Program. HMRI Background Technology is
listed or described as such on Schedule I to the HMRI License Agreement, as such
Schedule is amended from time to time. In the event of any restructuring of [*]
which involves the [*] HMRI and ARIAD agree to review in good faith the
definitions set forth in this Section 1.29 and in Section 1.5 and the provisions
of Section 7.1.2, and, to the extent they have the ability to do so, to modify
such definitions and provisions to achieve the same scope and inclusion of
entities and Technology as contemplated at the time of execution of this
Agreement.
1.30 "HMRI LICENSE AGREEMENT" has the meaning set forth in Section 7.1.2.
1.31 "HSR ACT" has the meaning set forth in Section 13.14.
1.32 "JOINT VENTURE" means the limited liability company to be established
pursuant to Article 2 of this Agreement by the parties for the purposes set
forth therein.
1.33 "JOINT VENTURE AGREEMENTS" means this Agreement, the Administrative
Services Agreement, the ARIAD License Agreement, the Certificate, the Cross
License Agreement, the HMRI License Agreement, the Operating Agreement, the
Scientific Research Services Agreement, the Stock Purchase, Standstill and
Registration Rights Agreement and the Product Rights Agreement.
1.34 "JOINT VENTURE TECHNOLOGY" has the meaning set forth in Section 7.2.
1.35 "LICENSEE" means a third party licensee of rights from the Joint Venture.
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1.36 "MANAGEMENT COMMITTEE" means the committee of ARIAD and HMRI
representatives, established pursuant to Section 3.1 hereof.
1.37 "MARKET VALUE" means [*] of the average of the closing prices of ARIAD
Common Stock on the NASDAQ National Market System (or, if the ARIAD Common Stock
is not listed on the NASDAQ National Market System, the principal exchange or
interdealer quotation system on which the ARIAD Common Stock is listed) for the
[*] trading days preceding the date as of which Market Value is determined (the
"Average Closing Price"); provided, however, that Market Value shall be no
greater than [*] and no less than the minimum purchase price determined in
accordance with the following sentence. The minimum purchase price shall be [*]
at the Closing and shall increase by [*] on each January 1 after the Closing.
Notwithstanding the foregoing, if the Average Closing Price is greater than [*]
Market Value shall mean the Average Closing Price.
1.38 "MASTER RESEARCH PLAN" means the written plan describing the scientific
research and other activities to be carried out by the Joint Venture attached as
Schedule I to this Agreement, and as reflected in the Annual Research Plans.
1.39 "MEMBERS" has the meaning set forth in Section 2.1.
1.40 "OPERATING AGREEMENT" has the meaning set forth in Section 2.1.
1.41 "OTHER PRODUCTS" means any product (e.g., a cosmetic or veterinary product)
which does not comprise a Small-molecule Drug, Peptidomimetic Drug, Antisense
Drug, Protein Drug, Derivative Protein Drug, Analog Protein Drug, Protein
Mimetic Drug, Gene Therapy Drug, Vaccine, Antibody Drug or Diagnostic Product.
1.42 "PATENT RIGHTS" means the rights and interests in and to issued patents and
pending patent applications (which for purposes of this Agreement shall be
deemed to include certificates of invention and applications for certificates of
invention and priority rights) in any country, including all substitutions,
continuations, continuations-in-part, divisions, and renewals, all letters
patent granted thereon, and all reissues, reexaminations
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and extensions thereof, whether owned or licensed in by a party with the right
to sublicense. "ARIAD Patent Rights" means Patent Rights with respect to ARIAD
Background Technology. "HMRI Patent Rights" means Patent Rights with respect to
HMRI Background Technology. "Joint Venture Patent Rights" means Patent Rights
with respect to Joint Venture Technology.
1.43 "PEPTIDOMIMETIC DRUG" means a synthetic organic molecule which is a mimetic
of, or is designed or developed, using computational, medicinal or combinatorial
chemistry techniques, to interact with a Validated Target and which incorporates
key structural features of a peptide or Protein which interacts with such
Validated Target.
1.44 "PRINCIPAL OFFICE" means the portion of the facility located at 00
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx dedicated for the business
activities and operations of the Joint Venture, and the mechanical, laboratory,
office and common areas shared with ARIAD supporting those portions of the
facility.
1.45 "PRODUCT" means any product that comprises a Small-molecule Drug,
Peptidomimetic Drug, Antisense Drug, Protein Drug, Derivative Protein Drug,
Analog Protein Drug, Protein Mimetic Drug or Gene Therapy Drug; provided,
however, that Product shall not include any Diagnostic Product, Vaccine,
Antibody Drug or Other Product.
1.46 "PRODUCT RIGHTS AGREEMENT" has the meaning set forth in Section 7.4.
1.47 "PROTEIN" means any of a class of high molecular weight polymer compounds
composed of a variety of amino acids joined by peptide linkages, including
aggregates and hybrids thereof, as well as naturally post-translationally
modified variants thereof (e.g., glycosylated proteins) and chemically modified
versions thereof (e.g., pegylated or liposomally encapsulated proteins).
1.48 "PROTEIN DRUG" means a Validated Protein used as a Drug.
1.49 "PROTEIN MIMETIC DRUG" means a synthetic organic molecule which is a
mimetic of, or is designed or developed using computational, medicinal or
combinatorial chemistry techniques to incorporate the key properties of a
Validated Protein.
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1.50 "RESEARCH PROGRAM" means the research program, to be conducted by the Joint
Venture pursuant to the Joint Venture Agreements and reflected in the Master and
Annual Research Plans.
1.51 "RESEARCH PROJECT" means a detailed project approved by the Management
Committee, the objective of which is to discover and research Candidate Genes,
Validated Targets and Validated Proteins, generally in a particular disease area
or pathophysiologic condition.
1.52 "SCIENTIFIC ADVISORY BOARD" or "SAB" means the Scientific Advisory Board
created pursuant to Section 5.4.
1.53 "SCIENTIFIC DIRECTOR" has the meaning set forth in Section 3.3.
1.54 "SCIENTIFIC RESEARCH SERVICES AGREEMENT" has the meaning set forth in
Section 5.2.2.
1.55 "SCIENTIFIC RESEARCH SERVICES" has the meaning set forth in the Scientific
Research Services Agreement.
1.56 "SMALL-MOLECULE DRUG" means a small-molecule therapeutic product identified
in an assay using a Validated Target, other than a Peptidomimetic Drug,
Antisense Drug, Protein Drug, Derivative Protein Drug, Analog Protein Drug,
Protein Mimetic Drug, Gene Therapy Drug, Vaccine, or Antibody Drug.
1.57 "SPECIAL PROJECT" has the meaning set forth in Section 5.2.10.
1.58 "STOCK PURCHASE, STANDSTILL AND REGISTRATION RIGHTS AGREEMENT" has the
meaning set forth in Section 2.8.1.
1.59 "SUPPLEMENTAL CAPITAL CONTRIBUTIONS" has the meaning set forth in Section
2.9.2(c).
1.60 "SUPPLEMENTAL CAPITAL LOAN" has the meaning set forth in Section 2.9.2(d).
1.61 "TECHNOLOGY" means and includes all inventions, discoveries, improvements
and proprietary materials, whether or not patentable or copyrightable, including
but not limited to samples of, and structural and functional information
pertaining to, chemical compounds, DNA vectors, cells, antibodies, other
proteins or other biological substances, including DNA sequence information
and
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information pertaining to the three-dimensional structure of proteins and other
substances; Bioinformatics and other software (in both source and object form)
and documentation with respect thereto; other data; formulations; techniques;
and know-how; including any negative results. "Technology" of a party includes
Technology owned by a party or licensed to that party with a right to grant
sublicenses.
1.62 "TERM" means the term of this Agreement as set forth in Article 9.
1.63 "TERRITORY" means all the countries and territories of the world.
1.64 "VACCINE" means any product which achieves a prophylactic or therapeutic
effect by inducing an antigen-specific humoral and/or cellular immune system
response.
1.65 "VALIDATED PROTEIN" means a Protein encoded by a Candidate Gene and which
has been determined by the Management Committee to be potentially suitable for
development into a Drug or potentially useful in the discovery of a Drug.
1.66 "VALIDATED PROTEIN POOL" has the meaning set forth in Section 7.4.2.
1.67 "VALIDATED TARGET" means a biological molecule (e.g., receptor, enzyme, ion
channel or protein domain) or Gene, the function of which has been identified
and which has been determined by the Management Committee to be potentially
useful in the discovery of a Drug.
1.68 "VALIDATED TARGET POOL" has the meaning set forth in Section 7.4.2.
1.69 "VISITING SCIENTIST" has the meaning set forth in Section 5.2.8.
1.70 "YEAR" or "YEAR" means a calendar year ending December 31.
2. FORMATION OF THE JOINT VENTURE
2.1 FORMATION OF LIMITED LIABILITY COMPANY. On or prior to the Closing Date,
ARIAD and HMRI shall establish or cause to be established a Limited Liability
Company (the "LLC" or "Joint
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Venture") under the laws of the State of Delaware in accordance with the
Delaware Limited Liability Company Act (the "Act"). For purposes of this
Agreement, ARIAD and HMRI may be referred to individually as a "Member" and
collectively as the "Members". The "Percentage Interest" in the LLC of each of
the two Members shall be fifty percent (50%). The Members shall, on or prior to
the Closing Date, take all actions necessary to enter into an Operating
Agreement setting forth the rights, obligations and duties of the Members with
respect to the LLC in the form of Exhibit A hereto (the "Operating Agreement"),
to assure the prompt filing of a Certificate of Formation of the LLC in the form
of Exhibit B hereto (the "Certificate") with the Secretary of State of the State
of Delaware as required by the Act, and to execute the other Joint Venture
Agreements to be executed on or prior to the Closing Date, all in form and
substance satisfactory to each of ARIAD and HMRI. Except as expressly provided
herein and in the Operating Agreement and the other Joint Venture Agreements,
the rights and obligations of the Members with respect to the LLC shall be
governed by the Act.
2.2 NAME OF THE JOINT VENTURE. The name of the Joint Venture shall be the
"HOECHST-ARIAD Genomics Center, LLC" or such other name as the Members may from
time to time determine. The Members shall cause to be filed on behalf of the
Joint Venture such corporate, assumed or fictitious name or foreign
qualification certificate or certificates as may from time to time be required
by law.
2.3 PRINCIPAL OFFICE. The initial principal place of business of the Joint
Venture shall be located at the Principal Office.
2.4 PURPOSE OF JOINT VENTURE. The purpose of the Joint Venture shall be to
pursue Functional Genomics in order to [*] and to do and perform all acts
necessary or desirable to carry out the foregoing purpose in accordance with the
terms and conditions of this Agreement and the other Joint Venture Agreements,
and to take any other action not prohibited under the Act or other applicable
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law.
2.5 SCOPE OF MEMBERS' AUTHORITY. Except as provided in the Operating Agreement,
no Member shall have any authority to act for, hold itself out as the agent of,
or assume any obligation or responsibility on behalf of any other Member or the
Joint Venture. All property and rights acquired by the Joint Venture by
purchase, license, or otherwise will be the property of the Joint Venture and
not of either of the Members. Title to all such property shall be held in the
name of the Joint Venture.
2.6 ADMINISTRATION. The program, operations, and business of the Joint Venture
shall be administered by the Management Committee as provided herein and in the
Operating Agreement, and pursuant to an Administrative Services Agreement and
Scientific Research Services Agreement to be entered into by ARIAD, HMRI and the
Joint Venture, all as further described in Articles 3, 4 and 5.
2.7 TERM. The term of the Joint Venture shall commence upon the filing of the
Certificate with the Secretary of State of the State of Delaware and the Joint
Venture shall continue for ten (10) years unless sooner terminated pursuant to
the terms hereof and of the Operating Agreement or pursuant to applicable law or
extended pursuant to the terms hereof or of the Operating Agreement.
2.8 PURCHASE OF PREFERRED STOCK.
2.8.1 Initial Purchase of Preferred Stock. Simultaneously with the
execution of this Agreement, HMRI and ARIAD will enter into a Stock Purchase,
Standstill and Registration Rights Agreement in the form of Exhibit C hereto
(the "Stock Purchase, Standstill and Registration Rights Agreement"), pursuant
to which HMRI will purchase from ARIAD, and ARIAD will sell to HMRI, at the time
of the Closing hereunder, Two Million Five Hundred Twenty-Six Thousand Three
Hundred Sixteen (2,526,316) shares of Series B Convertible Preferred Stock, $.01
par value per share ("Series B Preferred Stock") of ARIAD having an aggregate
purchase price of Twenty-Four Million Dollars ($24,000,000) (the "Initial
Purchase").
2.8.2 Additional Purchases of Preferred Stock. In addition to
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the Initial Purchase, pursuant to the terms and conditions of the Stock
Purchase, Standstill and Registration Rights Agreement, ARIAD may require HMRI
to purchase an additional number of shares of Series B Preferred Stock equal to
the aggregate purchase price to be paid divided by the Market Value then in
effect at any time during such years and for an aggregate purchase price equal
to [*] or the amounts listed below [*]:
Year Aggregate Purchase Price
---- ------------------------
[*] [*]
In addition, except as otherwise provided in Section 9.6.2, at any time
that ARIAD elects or is required to repay a Supplemental Capital Loan pursuant
to Section 2.9.2(d) hereof or Section 3.2(b) of the Operating Agreement,
pursuant to the terms and conditions of the Stock Purchase, Standstill and
Registration Rights Agreement, ARIAD may require HMRI to purchase an additional
number of shares of Series B Preferred Stock equal to [*] divided by the Market
Value then in effect.
2.9 CAPITAL CONTRIBUTIONS.
2.9.1 Initial Capital Contributions. Each of the Members shall
contribute in cash to the Joint Venture immediately following its formation the
amount set forth in this Section 2.9.1, which shall also be set forth in the
Operating Agreement. Except as provided in this Section 2.9.1 or in the
Operating Agreement, no Member shall be required to make any capital
contributions or loans to the Joint Venture. The Initial Capital Contribution
for HMRI shall be [*] and the Initial Capital Contribution for ARIAD shall be
[*].
2.9.2 Additional Capital Contributions.
(a) Call for Additional Capital Contributions. Pursuant to the
terms of the Operating Agreement, each Member shall make additional Capital
Contributions in cash to the Joint Venture ("Additional Capital Contributions").
Pursuant to the Operating Agreement, if Additional Capital Contributions are
required to be
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made by the Members, the Joint Venture shall provide each Member with written
notice at least thirty (30) days prior to the date such payment is due (the
"Call Notice"). Such Call Notice shall specify the amount of the Additional
Capital Contribution to be paid, the purposes for the Additional Capital
Contribution and the date by which payment must be made (the "Due Date"), which
shall not be less than thirty (30) days from the date of the Call Notice.
(b) Circumstances Requiring Additional Capital Contributions.
Pursuant to the terms of the Operating Agreement, each of the Members shall make
quarterly Additional Capital Contributions to the Joint Venture, in addition to
the amount of its Initial Capital Contribution, as will be recommended by the
Management Committee from time to time and as agreed to by the Members, for
purposes of funding the operating expenses of the Joint Venture, on the terms
and conditions set forth in the Operating Agreement. Notwithstanding the
foregoing, pursuant to the terms of the Operating Agreement, each of HMRI and
ARIAD shall provide its "Expense Sharing Percentage" of the following aggregate
Joint Venture operating expenses (which have been calculated on the basis of [*]
to the Joint Venture as Additional Capital Contributions during the following
years:
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Joint Venture
Year Operating Expenses
---- ------------------
1997 [*] $[*]
1998 $[*]
1999 $[*]
2000 $[*]
2001 $[*]
2002 $[*]
; provided, however, that in the event that capital contributions in any year
are less than such amounts, [*] Contributions are intended to be used primarily
for Reimbursable Costs (as such term is defined in the Scientific Research
Services Agreement and the Administrative Services Agreement), and any remainder
may be used for other expenses of the Joint Venture.
HMRI's Expense Sharing Percentage shall be fifty percent (50%), and
ARIAD's Expense Sharing Percentage shall be fifty percent (50%), subject to
adjustment as set forth in the Operating Agreement.
(c) Pursuant to the terms of the Operating Agreement, in the
event that capital contributions in excess of the Additional Capital
Contributions [*] are required in any of such years to cover expenses such as
patent costs, operating costs for Visiting Scientists, transactions with or
acquisitions of Technology from third parties, capital purchases beyond the
initial plan, contingencies or other expenses of the Joint Venture, the Members
shall discuss and determine whether to make supplemental capital contributions
("Supplemental Capital Contributions") by the Members of amounts which exceed
the amount set forth as Additional Capital Contributions for any year.
(d) Pursuant to the terms of the Operating Agreement, in order
to provide funds to ARIAD for ARIAD's share of any Supplemental Capital
Contributions, HMRI shall, on the date the Supplemental Capital Contribution is
due, at ARIAD's request, lend the necessary funds to ARIAD (a "Supplemental
Capital Loan"), which
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shall be repayable, together with interest at [*] with interest to be reset
quarterly on the first business day of each calendar quarter, out of (a) [*] or
(b) in cash. Pursuant to the terms of the Operating Agreement, each Supplemental
Capital Loan shall provide that it shall be repayable (i) [*] years after the
Effective Date if additional funding arrangements are not agreed upon pursuant
to Section 9.3.2 or (ii) on terms and conditions to be agreed upon as part of
such arrangements if additional funding arrangements are agreed upon pursuant to
Section 9.3.2; provided, however, that ARIAD may elect to prepay all or part of
any Supplemental Capital Loan or Loans at any time, and provided, further, that
all Supplemental Capital Loans outstanding at the time of consummation of a
Change of Control or Acquisition of ARIAD shall become due [*] after the
occurrence of the Change of Control or Acquisition of ARIAD, pursuant to Section
9.6.2.
(e) Funding for Incyte Subscription. In order to provide funds
to ARIAD in connection with ARIAD's subscription to the [*] database of Incyte
Pharmaceuticals, Inc. ("Incyte") pursuant to the Collaborative Agreement
between ARIAD and Incyte dated March 4, 1997 (the "Incyte Agreement"), HMRI
shall reimburse to ARIAD [*] for each subscription year during the Access Term
(as defined in the Incyte Agreement) through the subscription year ending [*]
within thirty (30) days of the receipt of an invoice from ARIAD evidencing
ARIAD's payment to Incyte of the Access Fee (as defined in the Incyte
Agreement) for ARIAD's LifeSeq database subscription.
(f) Funding for Additional Incyte Subscription(s). In
addition, in the event that [*] (i) continue its subscription to the LifeSeq
database for the period from [*] or thereafter (an "Incyte Extension") or (ii)
upgrade its subscription to include additional Incyte databases or services [*]
(an "Incyte Enhancement"), [*] will take the same action or actions. The cost of
any Incyte Extension or Incyte Enhancement by ARIAD will be borne by ARIAD. HMRI
shall reimburse to ARIAD [*] of the cost to
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ARIAD of any Incyte Extension. HMRI shall make a Supplemental Capital Loan to
ARIAD for (a) [*] of the cost to ARIAD of the subscription pursuant to any
Incyte Extension and (b) [*] cost to ARIAD of any Incyte Enhancement, within
thirty (30) days of the receipt of an invoice from ARIAD for such reimbursement
or a request from ARIAD for such Supplemental Capital Loan, which invoice or
request shall not be sent by ARIAD more than forty-five (45) days prior to the
date payment is due to Incyte.
(g) Failure to Make Additional Capital Contributions. Pursuant
to the terms of the Operating Agreement, if a Member fails to make an Additional
Capital Contribution as required by the Operating Agreement by the Due Date, the
Joint Venture shall so notify such Member, and such Member shall be deemed to be
in default of its obligations to make an Additional Capital Contribution, unless
such Member cures the default within thirty (30) days of receipt of such notice
by the Joint Venture. In the event of such a default, the procedures set forth
in the Operating Agreement shall then apply.
(h) Use of Additional Capital Contributions. The Additional
Capital Contributions shall be paid or delivered to the Joint Venture by wire
transfer or by a certified or bank cashier's check when payment thereof is
called for pursuant to the terms of the Operating Agreement. Pursuant to the
terms of the Operating Agreement: (i) such Additional Capital Contributions
shall be used for the purposes set forth in the Call Notice and (ii) all Capital
Contributions will be temporarily invested by the Joint Venture in short-term
United States Treasury securities, or other such investment grade instruments
and securities as determined by the Management Committee.
(i) Benefit. The Members shall have no personal liability, one
to another, for the payment or repayment of Capital Contributions made pursuant
to the Operating Agreement, except for Supplemental Capital Loans and as
otherwise provided in the Operating Agreement. The provisions of this Section
2.9 are not
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intended to be for the benefit of any creditor of the Joint Venture or other
person, and no such creditor or other person shall by reason of any such
foregoing provisions make any claim in respect of any debt, liability or
obligation (or otherwise) against the Joint Venture or any of the Members.
2.10 LOANS. Pursuant to the terms of the Operating Agreement, in the event the
Joint Venture's funds are insufficient to meet its costs, expenses, obligations,
contingencies, liabilities and charges, or to make any expenditure authorized by
this Agreement, the Operating Agreement or the other Joint Venture Agreements,
and Additional Capital Contributions or Supplemental Capital Contributions are
not required to be made pursuant to the Operating Agreement or additional funds
are not available from third parties on terms acceptable to the Members in their
sole discretion, then a Member or its Affiliate may (but shall not be required
to) advance such funds to the Joint Venture upon the prior approval of the
Management Committee. Any such advance by a Member or an Affiliate of a Member
pursuant to the Operating Agreement shall be evidenced by a promissory note and
shall bear interest, accrued annually, at a rate of interest equal to [*] with
interest to be reset quarterly on the first business day of each calendar
quarter. Any such loan made pursuant to the Operating Agreement shall be on a
full recourse basis to the Joint Venture but without recourse to the Members.
2.11 CAPITAL ACCOUNTS; CONTRIBUTIONS AND WITHDRAWAL OF CAPITAL. The Operating
Agreement shall contain appropriate provisions for the establishment and
maintenance of separate capital accounts for each Member, all in accordance with
the rules of Treasury Regulations Section 1.704-1(b)(2)(iv).
2.12 WITHDRAWAL OF CAPITAL; VOLUNTARY CONTRIBUTION OF CAPITAL. The Operating
Agreement shall provide that: (i) without the approval of the Management
Committee, no Member shall have the right to withdraw from the Joint Venture all
or any part of its Capital Contribution or to receive any funds or property from
the Joint
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Venture, or to make any voluntary contribution of capital to the Joint Venture,
except as provided in the Operating Agreement, (ii) no Member shall have any
right to demand and receive property other than cash of the Joint Venture in
return of its Capital Contribution except as may be specifically provided in the
Operating Agreement or the other Joint Venture Agreements and (iii) no interest
shall be paid on any Capital Contribution.
2.13 ALLOCATION OF PROFITS AND LOSSES; DISTRIBUTIONS.
2.13.1 Allocation of Profits and Losses; Taxation. The Operating
Agreement shall provide that: (i) the net profits, net losses, net cash flow and
net proceeds of any disposition of property of the Joint Venture or upon
liquidation of the Joint Venture shall be allocated among the Members according
to the Percentage Interest of each Member or as otherwise set forth in the
Operating Agreement; (ii) tax losses shall be allocated on a preferential basis
[*]; (iii) the Percentage Interest of each Member shall be fifty percent (50%);
(iv) net profits and net losses shall, for both allocation and tax purposes, be
net profits and net losses as determined for reporting on the Joint Venture's
federal income tax return; and (v) except as otherwise set forth in the
Operating Agreement, for tax purposes, all items of depreciation, gain, loss,
deduction or credit shall be determined in accordance with the Internal Revenue
Code of 1986, as amended (the "Code"), and, except to the extent otherwise
required by the Code, allocated to and among the Members in the same percentages
in which the Members share in net profits and net losses.
2.13.2 Distributions; Taxation. The Operating Agreement shall provide
that: (i) the Management Committee shall have sole discretion, to the extent
consistent with the maintenance of an appropriate and prudent capital structure,
to determine whether all cash available in excess of operating and capital
expenditure requirements and provision for repayment of borrowings of the Joint
Venture shall be: (a) used to fund the further operations of the Joint Venture
or (b) paid out to the Members in proportion to their
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Percentage Interests on the date the distribution is authorized by the
Management Committee; (ii) the Joint Venture is authorized to withhold from
distributions, or with respect to allocations, to the Members and to pay over to
any federal, foreign, state or local government any amounts required to be so
withheld pursuant to the Code or any provisions of any other federal, foreign,
state or local law and; (iii) all amounts withheld pursuant to the preceding
sentence with respect to any distribution or allocation shall be treated as
amounts distributed to the Members with respect to which such amounts were
withheld pursuant to this Section 2.13.2 for all purposes of the Operating
Agreement.
2.14 TAX MATTERS MEMBER. The Operating Agreement shall provide that ARIAD shall
serve as the tax matters Member for the Joint Venture (the "Tax Matters
Member"), with such duties and responsibilities as shall be enumerated in the
Operating Agreement and that the Joint Venture shall indemnify and reimburse the
Tax Matters Member for all expenses, including legal and accounting fees,
claims, liabilities, losses and damages incurred in connection with any
administrative or judicial proceeding with respect to the tax liability of the
Joint Venture and its Members, all as provided in the Operating Agreement.
2.15 LIMITATION OF LIABILITY. Each Member's liability shall be limited as set
forth in the Operating Agreement, the Act, and other applicable law. Except as
required pursuant to the Act or as otherwise provided in the Operating
Agreement, a Member will not be personally liable for any debts or losses of the
Joint Venture beyond the Member's Capital Contributions.
2.16 LIABILITY FOR CERTAIN ACTS. The Members shall perform their duties in good
faith, in a manner they reasonably believe to be in the best interests of the
Joint Venture, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances. Except as otherwise provided in
the Operating Agreement, each Member (including its Affiliates and their
respective officers, directors, partners, employees,
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shareholders and agents) who so performs such duties shall not have any
liability by reason of being or having been a Member of the Joint Venture.
Except as otherwise provided herein or in the Operating Agreement, no Member
(including its Affiliates and their respective officers, directors, partners,
employees, shareholders and agents) shall be liable to the Joint Venture or to
any Member for any loss or damage sustained by the Joint Venture or any Member,
unless the loss or damage shall have been the result of fraud, deceit, gross
negligence, willful misconduct, or a wrongful taking by the Member (including
its Affiliates and their respective officers, directors, partners, employees,
shareholders and agents).
2.17 INDEMNIFICATION OF MEMBERS.
(a) Pursuant to the terms of the Operating Agreement, to the
maximum extent permitted from time-to-time under the Act, each Member (including
its Affiliates and their respective officers, directors, partners, employees,
shareholders and agents) shall be entitled to indemnity from the Joint Venture
for any liability incurred and/or for any act performed by them within the scope
of the authority conferred on them by the Joint Venture Agreements and/or for
any act omitted to be performed, except in any case where the alleged act or
failure to act giving rise to the claim for indemnification is a result of
fraud, deceit, gross negligence, willful misconduct, or a wrongful taking by
such Member, which indemnification shall include all reasonable expenses
incurred, including reasonable legal and other professional fees and expenses.
(b) Pursuant to the terms of the Operating Agreement, to the
extent that the activities of a Member (including its Affiliates and their
respective officers, directors, partners, employees, shareholders and agents),
other than in connection with performing its obligations under the Joint Venture
Agreements (a "Non-Joint Venture Activity"), gives rise to a claim or
litigation, such Member shall indemnify the Joint Venture and each other Member
(including its Affiliates and their respective officers, directors,
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partners, employees, shareholders and agents) of the Joint Venture who was or is
made a party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, which arises by reason
of the Non-Joint Venture Activities of the indemnifying Member or by reason of
fraud, deceit, gross negligence, willful misconduct, or a wrongful taking by the
Member (including its Affiliates and their respective officers, directors,
partners employees, shareholders and agents), against all expenses (including
attorneys' fees and expenses), judgments, fines, and amounts paid in settlement
actually and reasonably incurred by the Joint Venture or the indemnified Member
in connection with such action, suit or proceeding. No amount paid hereunder
shall be treated as a Capital Contribution or a loan to the Joint Venture by the
Member making such payment.
2.18 OTHER BUSINESS ACTIVITIES OF MEMBERS. The Members acknowledge that each
Member and its Affiliates are engaged in drug discovery, drug development and
other activities which may be competitive with the business of the Joint Venture
and the other Member. Each Member and its Affiliates may engage independently or
with others in other business ventures of every nature and description;
provided, however, that if [*]. Each party shall keep the Management Committee
promptly informed as to any Functional Genomics research undertaken by the party
in areas closely related to the objectives of the Research Projects. Neither the
Joint Venture nor any Member shall have any right by virtue of the Operating
Agreement or the other Joint Venture Agreements or the relationship created
thereunder in or to such other ventures or activities of an individual Member or
to the income or proceeds derived therefrom, except as set forth in this Section
2.18.
3. MANAGEMENT OF THE JOINT VENTURE
3.1 DECISION MAKING. Pursuant to the terms of the Operating Agreement, subject
to any express provisions, if any, of the other Joint Venture Agreements
reserving to either ARIAD or HMRI, as the case may be, the right to make
unilateral decisions concerning the
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Joint Venture, the general affairs and activities of the Joint Venture and the
research, development and licensing programs of the Joint Venture described
herein shall be administered, managed and coordinated by a committee (the
"Management Committee") consisting of three (3) representatives designated by
ARIAD (who shall be officers, directors or employees of ARIAD or an Affiliate of
ARIAD) and three (3) representatives designated by HMRI (who shall be officers,
directors or employees of HMRI or an Affiliate of HMRI), in each case reasonably
acceptable to the other party. The Management Committee may be given such name
as ARIAD and HMRI may agree upon from time to time.
3.2 MANAGEMENT COMMITTEE CO-CHAIRS. The Operating Agreement shall provide that:
(i) each Member shall designate one of its representatives on the Management
Committee as its "Co-Chair"; (ii) the initial Co-Chair designated by ARIAD shall
be Xxxxxx X. Xxxxxx, M.D., and the initial Co-Chair designated by HMRI shall be
Xxxxxxx X. Xxxxxx, Ph.D.; (iii) each of the Co-Chairs shall have authority to
act for the Joint Venture as specified by the Management Committee; and (iv)
each Member shall have the right at any time to substitute individuals, on a
permanent or temporary basis, for any of its previously designated
representatives to the Management Committee, including its Co-Chair, by giving
written notice thereof to the other Member.
3.3 APPOINTMENT OF SCIENTIFIC DIRECTOR AND OTHER OFFICERS. The Operating
Agreement shall provide that: (i) the Management Committee shall select a
Scientific Director of the Joint Venture (the "Scientific Director"), who shall
be responsible for setting the scientific direction of the Joint Venture in
conjunction with the Management Committee, directing the Joint Venture's
research programs, and managing the day-to-day operations of the Joint Venture,
and who shall be an officer, director or employee of ARIAD or HMRI (or their
respective Affiliates); (ii) the Management Committee shall also appoint a
Secretary-Treasurer and a Director of Finance and Administration of the Joint
Venture who shall keep
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the records of the Joint Venture and be authorized to act for the Joint Venture
within the level of authority designated by the Management Committee; and (iii)
the Scientific Director, Secretary-Treasurer and Director of Finance and
Administration shall report to the Co-Chairs of the Management Committee.
3.4 MANAGEMENT COMMITTEE MEETINGS.
3.4.1 Schedule of Meetings. The Operating Agreement shall provide that:
(i) the Management Committee shall meet at least semi-annually; (ii) meetings
shall also be convened upon the determination of the Co-Chairs, or either of
them, by written notice thereof to the members of the Management Committee, that
a meeting of the Management Committee is required to discuss and/or resolve any
matter or matters with respect to the Joint Venture; and (iii) meetings shall be
held in the Principal Office of the Joint Venture unless the Co-Chairs otherwise
agree; provided, however, that the parties may mutually agree to meet by
teleconference or video conference and may act by unanimous written action
without a meeting.
3.4.2 Quorum; Voting; Decisions. The Operating Agreement shall provide
that: (i) at each Management Committee meeting, attendance by at least [*]
members appointed by each party shall constitute a quorum; (ii) each Management
Committee member shall have [*] vote on all matters before the Management
Committee; provided, however, that the member or members of each party present
at a Management Committee meeting shall have the authority to cast the votes of
any of such party's members on the Management Committee who are absent from the
meeting; (iii) all decisions of the Management Committee shall be made by
majority vote of all of the members; (iv) whenever any action by the Management
Committee is called for hereunder during a time period in which the Management
Committee is not scheduled to meet, the Co-Chairs shall cause the Management
Committee to take the action in the requested time period by calling a special
meeting or by action without a meeting; (v) representatives of each party, in
addition to the
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members of the Management Committee, may attend Management Committee meetings at
the invitation of either party with the approval of the other party, which shall
not be unreasonably withheld; and (vi) in the event that the Management
Committee is unable to resolve any matter before it, such matter shall be
resolved as set forth in Section 3.8 hereof.
3.4.3 Minutes. The Operating Agreement shall provide that: (i) the
Management Committee shall keep accurate minutes of its deliberations which
record all proposed decisions and all actions recommended or taken; (ii) the
Co-Chairs shall designate a member of the Management Committee to prepare and
circulate a draft of the minutes of each meeting; and (iv) drafts of the minutes
shall be delivered to the Co-Chairs of the Management Committee within twenty
(20) days after the meeting. Draft minutes shall be edited by the Co-Chairs and
shall be issued in final form as soon as is practical, but not more than
forty-five (45) days after the meeting only with their approval and agreement as
evidenced by their signatures on the minutes.
3.4.4 Expenses. Pursuant to the terms of the Operating Agreement, ARIAD
and HMRI shall each bear all expenses of their respective Management Committee
members related to their participation on the Management Committee and
attendance at Management Committee meetings.
3.5 DECISION MAKING RESPONSIBILITIES. Pursuant to the terms of the Operating
Agreement, the Management Committee shall be solely responsible for making all
decisions regarding the operation and policies of the Joint Venture, not
expressly reserved to the Members or to one Member, including, but not limited
to, decisions with respect to the following matters:
(i) any amendments to or changes in the objectives and scope
of the Research Program described in Article 5 hereof;
(ii) approval of the Annual Research Plans;
(iii) the appointment of the Scientific Director of the Joint
Venture;
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(iv) the appointment of the members of the Scientific Advisory
Board of the Joint Venture;
(v) the appointment of consultants and scientific experts on
behalf of the Joint Venture;
(vi) calls for Additional Capital Contributions from the
Members;
(vii) business plans and annual budgets of the Joint Venture,
subject to the limitations on Additional Capital Contributions;
(viii) prioritization of Research Projects, Special Projects
and other activities of the Joint Venture;
(ix) annual financial statements, distributions to the
Members, investment and allocation of surplus funds, establishment of reserves
out of earnings (including disposition of such reserves) and establishment of
accounting policy, including depreciation rates and accruals and internal
accounting controls;
(x) [*]
(xi) [*]
(xii) [*]
(xiii) [*]
(xiv) [*]
(xv) appointment of a Secretary-Treasurer and Director of
Finance and Administration of the Joint Venture;
(xvi) determination of levels of authority for the Management
Committee Co-Chairs, Scientific Director, Secretary-Treasurer and Director of
Finance and Administration;
(xvii) authorization of individuals to act on behalf of the
Joint Venture for particular matters or classes of matters (subject to the
authority of the Management Committee);
(xviii) maintenance of a list of Technology in accordance with
Section 7.3;
(xix) establishment and amendment of the criteria for
determining whether a Candidate Gene, Validated Target or Validated Protein has
been discovered by the Joint Venture; and,
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(xx) recommendations to the Members for modifications of the
selection procedures set forth in Section 7.4 and the Product Rights Agreement.
The representatives of a Member on the Management Committee shall at
all times be entitled to consult with that Member prior to taking any action as
members of the Management Committee. In addition, the Management Committee, as a
whole, may from time to time consult with, and act as directed by, the Members
on any matter related to the conduct and operations of the Joint Venture.
3.6 DECISIONS RESERVED TO THE MEMBERS.
Pursuant to the terms of the Operating Agreement, the Members shall
reserve to themselves the following decisions:
(i) [*]
(ii) capital contributions in excess of the amounts set forth
in Sections 2.9.2(b);
(iii) Supplemental Capital Contributions;
(iv) conduct of litigation involving the Joint Venture;
(v) hiring of legal counsel and independent public
accountants; and
(vi) modifications of the procedures set forth in Section 7.4
and the Product Rights Agreement.
3.7 ANNUAL BUDGET. The Operating Agreement shall provide that: (i) the
Management Committee shall annually adopt a budget for the Joint Venture; (ii)
the Management Committee shall use commercially reasonable efforts to adopt such
budget thirty (30) days prior to the beginning of each year; and (iii) such
budget may be amended from time to time by the Management Committee.
3.8 MANAGEMENT COMMITTEE DISPUTE RESOLUTION.
3.8.1 Reference to Senior Officials. In the event that the Management
Committee shall not be able to reach a decision or take an action on any matter
for which the Management Committee is responsible, or in the event that the
parties are unable to resolve any dispute involving any of the Joint Venture
Agreements, the matter in question shall be referred for final resolution to [*]
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(or, if [*] is also a member of the Management Committee, [*] if such person is
not an employee of ARIAD), and if [*] is an employee of ARIAD, then to [*] who
is not an employee of ARIAD, and to the [*] of Hoechst Xxxxxx Xxxxxxx (or, if
the [*] is a Member of the Management Committee, then to a senior officer of
HMRI designated by the Chief Executive Officer of HMRI who is not a member of
the Management Committee), respectively, or a person or persons designated by
each or both said officials.
3.8.2 Scientific Issues. In the event that a matter for dispute
resolution pursuant to Section 3.8.1 involves a scientific issue, and said
persons or their respective designees (none of whom may be a member of the
Management Committee) shall be unable to resolve such matter after reasonable
efforts to do so and after the passage of a reasonable period of time under the
relevant circumstances, in any event not to exceed [*], each party shall, at its
own expense, appoint an unaffiliated scientific expert to advise such persons on
the matter. The scientific experts shall be chosen based on their experience and
expertise in the particular type of issue which is unresolved. The experts shall
render a written advisory opinion to such persons, [*].
3.8.3 Budget Disputes. In the event that the Management Committee is
unable to adopt an annual budget for the Joint Venture (or amend such budget as
required from time to time) within the annual limitations as set forth in
Section 3.2(a) of the Operating Agreement, the matter shall be resolved in
accordance with the procedures set forth in Section 3.8.1; provided, however,
without the approval of the Members, such budget shall be limited to the amount
of Additional Capital Contributions [*] set forth in Section 3.2(a) of the
Operating Agreement, and such dispute shall not be subject to the dispute
resolution procedures set forth in Section 12.1. In the event that a dispute
regarding an annual budget is not resolved in accordance with the procedures set
forth in Section 3.8.1, the amount of the annual budget shall be the amount set
forth for the year in question in Section 3.2(a) of the Operating
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Agreement, excluding any carry-forward amounts. Notwithstanding any provision
contained herein or in the other Joint Venture Agreements to the contrary, the
parties agree that any decision as to whether to make Supplemental Capital
Contributions shall be reserved solely to the Members and such decision shall
not be subject to the dispute resolution procedures set forth in Section 3.8.1
or Section 12.1, and under no circumstance shall either Member be required to
make Supplemental Capital Contributions without the agreement of the Members.
3.9 INTERESTS OF THE PARTIES. Notwithstanding any other provisions of this
Agreement, all decisions made and all actions taken by the Management Committee
with respect to any Joint Venture matter shall be made or taken in the best
interest of the Joint Venture.
4. OPERATIONS OF THE JOINT VENTURE
4.1 PROVISION OF ADMINISTRATIVE SERVICES; COMPENSATION.
4.1.1 Services. Immediately following formation of the LLC as set forth
in Section 2.1, ARIAD and HMRI agree to enter into and agree to cause the Joint
Venture to enter into an Administrative Services Agreement in the form of
Exhibit D hereto (the "Administrative Services Agreement") in form and substance
satisfactory to each of ARIAD, HMRI and the Joint Venture, pursuant to which
ARIAD will use commercially reasonable efforts to provide to the Joint Venture
the Administrative Services (as such term is defined in the Administrative
Services Agreement). Pursuant to the terms of the Administrative Services
Agreement, ARIAD shall provide the Administrative Services in a prompt manner
generally consistent with ARIAD's past practices in the conduct of its own
business and operations.
4.1.2 Compensation for Administrative Services; Determination of Cost.
The Administrative Services Agreement shall provide that:
(a) In consideration of the performance of the Administrative
Services by ARIAD, the Joint Venture shall pay to ARIAD the Reimbursable Costs
(as defined in the Administrative
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Services Agreement) incurred by ARIAD in providing such Administrative Services
on a quarterly basis as follows: the amount of the budget for the first calendar
quarter will be paid by the Joint Venture to ARIAD within thirty (30) days
following execution of the Administrative Services Agreement. The amount of the
budget for the second calendar quarter will be paid by the Joint Venture to
ARIAD on or before April 1, 1997. Thereafter, at least forty-five (45) days
prior to each calendar quarter, ARIAD will invoice the Joint Venture for an
amount equal to the budgeted amount for the following quarter as contained in
the annual budget (as amended), plus or minus the excess or deficiency of actual
expenditures during the calendar quarter preceding the invoice compared to the
budgeted amount for such quarter. The invoice will be paid by the Joint Venture
to ARIAD on or before the first day of the following quarter. For example, if
the annual budget for 1998 was $1,200,000 in equal quarterly amounts of
$300,000, and actual expenditures were $220,000 in the first quarter, $320,000
in the second quarter, and $300,000 in each of the third and fourth quarters,
then the Joint Venture would pay to ARIAD $300,000 on January 1, 1998, $300,000
on April 1, 1998, $220,000 on July 1, 1998 ($300,000 less $80,000 deficiency
from first quarter) and $320,000 on September 1, 1998 ($300,000 plus $20,000
excess from the second quarter).
(b) Each invoice shall set forth in reasonable detail the
determination of the cost upon which the amount to be reimbursed is based,
broken down by the nature of costs incurred in rendering Administrative Services
and the period to which such invoice relates. A copy of each invoice will be
sent to HMRI at the time it is sent to the Joint Venture. If HMRI or the Joint
Venture has objection to the amount of any invoice, the Joint Venture shall
nevertheless be obligated to pay the undisputed portion of the invoice in full,
and the parties shall promptly meet to resolve the matter. If the parties do not
resolve the matter within thirty (30) days, the Joint Venture or HMRI may
thereafter
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cause ARIAD's records with respect thereto to be audited in accordance with
Section 4.1.3. Following such audit, or at the request of either party after the
thirty (30) day period if no audit is requested, the Management Committee shall
endeavor in good faith to resolve any disagreement with respect to costs for
Administrative Services rendered by ARIAD to the Joint Venture under the
Administrative Services Agreement. If the Management Committee does not resolve
the matter, it shall be resolved in accordance with the procedures set forth in
Sections 3.8 and 12.1. Notwithstanding the foregoing, in the event that ARIAD
anticipates that the total amount to be paid to ARIAD for the Administrative
Services will exceed the annual budget approved by the Management Committee,
ARIAD shall promptly advise the Management Committee, which shall, in
consultation with ARIAD, determine whether to reduce the services to be provided
or amend the budget. If the Management Committee does not resolve the matter, it
shall be resolved in accordance with the procedures set forth in Section 3.8.
4.1.3 Maintenance of Books and Records; Audits. The Administrative
Services Agreement shall provide that: (i) ARIAD shall maintain true and
complete books of account containing an accurate record of the data necessary
for the proper determination and computation of all charges and costs to be
reimbursed by the Joint Venture to ARIAD under the terms of the Administrative
Services Agreement; provided, however, that ARIAD shall not be required hereby
to maintain any duplicate books of account or records; (ii) ARIAD shall retain
and maintain such records in accordance with ARIAD's records retention policy
for its other books and records; provided, however, that no such retained
records will be destroyed without the consent of HMRI (such consent not to be
unreasonably withheld); (iii) the Joint Venture and HMRI shall each have the
right, using the firm of independent certified public accountants employed by
ARIAD to conduct ARIAD's regular annual audit, or another national firm of
independent certified public
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accountants acceptable to ARIAD (whose approval of such accountants will not be
unreasonably withheld), to audit such books on any one occasion as to each
fiscal year within two (2) years after the delivery of year-end financial
statements for the fiscal year to which they relate for the purpose of verifying
such charges and costs; and (iv) such examination shall be made upon reasonable
advance notice to ARIAD during normal business hours at the Principal Office.
4.2 RENOVATION COSTS; START-UP EXPENSES. ARIAD, in consultation with HMRI, shall
prepare a plan and budget for the construction of the Joint Venture's
laboratories and offices at the Principal Office, and for equipping the
facility. ARIAD shall undertake to construct and renovate the Principal Office
and equip the laboratory in accordance with such plans and budget and shall use
commercially reasonable efforts to complete such construction within six (6)
months after approval of such plans and budget by ARIAD and HMRI. The parties
agree that all costs incurred by ARIAD under this Section 4.2 shall be borne by
ARIAD, but ARIAD shall not be obligated to spend in excess of [*]. If such costs
are less than [*], the remainder shall be used by ARIAD for additional equipment
and leasehold improvements, if any, for the Principal Office, during the Term of
the Joint Venture. In the event the parties determine that the costs of
constructing and renovating the Principal Office and equipping the laboratory is
greater than such amount, then the Members shall either revise the plans and
budget or shall agree upon a method for funding the excess costs.
4.3 INSURANCE. Pursuant to the Administrative Services Agreement, ARIAD, on
behalf of the Joint Venture, shall use commercially reasonable efforts to obtain
insurance for the Joint Venture, and in the name of the Joint Venture, against
such casualties and contingencies and of such types and in such amounts as is
customary for companies similarly situated. Each of ARIAD and HMRI shall be
responsible for directors and officers liability insurance insuring their
respective members serving on the Management Committee, but
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neither party shall be required to maintain such insurance.
4.4 LITIGATION. Each of ARIAD, HMRI and the Joint Venture shall promptly notify
the others of any actions which are threatened or commenced against or by such
party which relates to or may affect the business or operations of the Joint
Venture.
4.5 ACCESS. At any time and from time to time during the term of the Joint
Venture and until completion of wind-down of the Joint Venture after
termination, authorized representatives of ARIAD and HMRI shall have access to
the Principal Offices, upon reasonable notice and at reasonable times for
specified periods, without further consideration and subject to reasonable
confidentiality undertakings, for the purpose of allowing such ARIAD and HMRI
authorized representatives to review the operations, books and records of the
Joint Venture and to assist with the business and purposes of the Joint Venture.
4.6 INDEPENDENT CONTRACTOR; RELATIONSHIP OF THE PARTIES.
(a) Nothing herein or in the Administrative Services Agreement
shall be deemed to constitute ARIAD (or any of ARIAD's employees or agents) to
be the agent, representative or employee of the Joint Venture. ARIAD shall be an
independent contractor and shall have responsibility for and control over the
details and means of performing the Administrative Services.
(b) Nothing herein or in the Administrative Services Agreement
shall be construed as: (i) an assumption by ARIAD of responsibility for the
operations of the Joint Venture except as expressly set forth in the
Administrative Services Agreement; (ii) an assumption by ARIAD of any financial
obligation of the Joint Venture; or (iii) the assumption by ARIAD of any
responsibility for work performed by outside suppliers employed directly by the
Joint Venture at the suggestion or recommendation of ARIAD.
4.7 COOPERATION. Each of ARIAD, HMRI and the Joint Venture shall use
commercially reasonable efforts to perform and fulfill all conditions and
obligations to be fulfilled or performed by it under
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this Article 4 and as provided in the Administrative Services Agreement.
5. STRUCTURE OF RESEARCH PROGRAM
5.1 RESEARCH PROGRAM; RESEARCH PLANS. In accordance with the Master Research
Plan, as updated and amended from time to time by the Annual Research Plans and
otherwise, the Joint Venture shall conduct the scientific research efforts in
the Research Program. The Annual Research Plan for the first year of the
Research Program shall be prepared by HMRI and ARIAD and approved by the
Management Committee as promptly as practical after the Closing Date. For each
year of the Research Program commencing with the second year, the Annual
Research Plan shall be prepared by the Management Committee no later than sixty
(60) days before the end of the prior year. Each Annual Research Plan shall set
forth: (i) the Research Projects to be pursued, (ii) the specific objectives of
each Research Project, (iii) a detailed plan to achieve such objectives and the
tasks to be performed and (iv) the therapeutic and/or pathophysiologic rationale
for each Research Project. The Management Committee shall review and monitor the
progress of the Research Program. In planning and monitoring the Research
Program, the Management Committee may propose that certain tasks and
responsibilities be assigned to the parties outside the Scientific Research
Services Agreement, taking into account each party's respective specialized
facilities, know-how, expert personnel and research expertise in order to avoid
duplication and enhance synergies among the parties. The Management Committee
may make adjustments in the Annual Research Plan at its meetings or otherwise as
it may determine.
5.2 PERFORMANCE OF SCIENTIFIC RESEARCH.
5.2.1 Scientific Research. Pursuant to the terms of the
Scientific Research Services Agreement, ARIAD, with the cooperation of HMRI,
will use commercially reasonable efforts to employ at the Joint Venture at least
[*] in order to accomplish such objectives.
5.2.2 Scientific Research Services Agreement.
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Immediately following formation of the LLC as set forth in Section 2.1, ARIAD
and HMRI agree to enter into and agree to cause the Joint Venture to enter into
a Scientific Research Services Agreement in the form of Exhibit E hereto (the
"Scientific Research Services Agreement") in form and substance satisfactory to
each of ARIAD, HMRI and the Joint Venture, pursuant to which ARIAD will use
commercially reasonable efforts to provide to the Joint Venture the Scientific
Research Services (as such term is defined in the Scientific Research Services
Agreement). Pursuant to the terms of the Scientific Research Services Agreement,
ARIAD will furnish scientific employees and consultants (e.g., the Scientific
Advisory Board), supervision (including the Scientific Director), services,
supplies and materials to perform the Scientific Research Services for the Joint
Venture and provide compensation and benefits, including, without limitation,
stock options, for the employees and certain consultants rendering the
Scientific Research Services. Pursuant to the terms of the Scientific Research
Services Agreement, ARIAD shall provide the Scientific Research Services in a
prompt manner generally consistent with ARIAD's past practices in the conduct of
its own business and operations.
5.2.3 Compensation for Scientific Research Services;
Determination of Cost. The Scientific Research Services Agreement shall provide
that:
(a) In consideration of ARIAD's provision of
facilities and the performance of the Scientific Research Services, the Joint
Venture shall pay to ARIAD the Reimbursable Costs (as defined in the Scientific
Research Services Agreement) incurred by ARIAD in providing such facilities and
services on a quarterly basis as follows: the amount of the budget for the first
calendar quarter will be paid by the Joint Venture to ARIAD within thirty (30)
days following execution of the Scientific Research Services Agreement. The
amount of the budget for the second calendar quarter will be paid by the Joint
Venture to ARIAD on or before April 1, 1997. Thereafter, at least forty-five
(45) days prior to
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each calendar quarter, ARIAD will invoice the Joint Venture for an amount equal
to the budgeted amount for the following quarter as contained in the annual
budget (as amended), plus or minus the excess or deficiency of actual
expenditures during the calendar quarter preceding the invoice compared to the
budgeted amount for such quarter. The invoice will be paid by the Joint Venture
to ARIAD on or before the first day of the following quarter. For example, if
the annual budget for 1998 was $12,000,000 in equal quarterly amounts of
$3,000,000, and actual expenditures were $2,200,000 in the first quarter,
$3,200,000 in the second quarter and $3,000,000 in each of the third and fourth
quarters, then the Joint Venture would pay to ARIAD $3,000,000 on January 1,
1998, $3,000,000 on April 1, 1998, $2,200,000 on July 1, 1998 ($3,000,000 less
$800,000 deficiency from first quarter) and $3,200,000 on September 1, 1998
($3,000,000 plus $200,000 excess from the second quarter).
(b) Each invoice shall set forth in reasonable detail
the determination of the cost upon which the amount to be reimbursed is based,
broken down by the nature of costs incurred in rendering Scientific Research
Services and the period to which such invoice relates. A copy of each invoice
will be sent to HMRI at the time it is sent to the Joint Venture. If the Joint
Venture or HMRI has objection to the amount of any invoice, the Joint Venture
shall nevertheless be obligated to pay the undisputed portion of the invoice in
full, and the parties shall promptly meet to resolve the matter. If the parties
do not resolve the matter within thirty (30) days, the Joint Venture or HMRI may
thereafter cause ARIAD's records with respect thereto to be audited in
accordance with Section 5.2.4. Following such audit, or at the request of either
party after the thirty (30) day period if no audit is requested, the Management
Committee shall endeavor in good faith to resolve any disagreement with respect
to costs for Scientific Research Services rendered by ARIAD to the Joint Venture
under the Scientific Research Services Agreement. If the Management
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Committee does not resolve the matter, it shall be resolved in accordance with
the procedures set forth in Sections 3.8 and 12.1. Notwithstanding the
foregoing, in the event that ARIAD anticipates that the total amount to be paid
to ARIAD for the Scientific Research Services will exceed the annual budget
approved by the Management Committee, ARIAD shall promptly advise the Management
Committee, which shall, in consultation with ARIAD, determine whether to reduce
the services to be provided or amend the budget. If the Management Committee
does not resolve the matter, it shall be resolved in accordance with the
procedures set forth in Section 3.8.
5.2.4 Maintenance of Books and Records; Audits. The Scientific
Research Services Agreement shall provide that: (i) ARIAD shall maintain true
and complete books of account containing an accurate record of the data
necessary for the proper determination and computation of all charges and costs
to be reimbursed by the Joint Venture under the terms of the Scientific Research
Services Agreement; provided, however, that ARIAD shall not be required hereby
to maintain any duplicate books of account or records; (ii) ARIAD shall retain
and maintain such records in accordance with ARIAD's records retention policy
for its other books and records; provided, however that no such retained records
shall be destroyed without the consent of HMRI (such consent not to be
unreasonably withheld); (iii) the Joint Venture and HMRI shall each have the
right, using the firm of independent certified public accountants employed by
ARIAD to conduct ARIAD's regular annual audit, or another national firm of
independent certified public accountants acceptable to ARIAD (whose approval of
such accountants will not be unreasonably withheld), to audit such books on any
one occasion as to each fiscal year within two (2) years after the delivery of
year-end financial statements for the fiscal year to which they relate for the
purpose of verifying such charges and costs; and (iv) such examination shall be
made upon reasonable advance notice to ARIAD during normal business hours at the
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Principal Office.
5.2.5 Reports to Management Committee. Pursuant to the
Scientific Research Services Agreement, ARIAD shall furnish to the Management
Committee a semi-annual written report, describing the progress of the work done
by it under the Scientific Research Services Agreement pursuant to the Annual
Research Plan in reasonable detail, at least fifteen (15) days prior to each
semi-annual meeting of the Management Committee.
5.2.6 Research Collaborations. In the event that the
Management Committee or its designee determines that any research task exceeds
the scope or capacity available under the Scientific Research Services
Agreement, the Joint Venture may contract with HMRI, ARIAD or a third party
(including any academic laboratory) to perform such research. Such research
contracts shall be on terms approved by the Management Committee or its
designee; provided, however, that if the party performing the research is HMRI
or ARIAD or an Affiliate of either, such agreement shall provide that any
Technology developed in such research shall become the property of the Joint
Venture.
5.2.7 Scientific Cooperation. Pursuant to the Scientific
Research Services Agreement, scientists at ARIAD and HMRI shall cooperate with
the Joint Venture in the performance of the Research Program and, subject to any
confidentiality obligations to third parties, shall exchange information and
materials as necessary to carry out the Research Program and to assist the Joint
Venture in the performance of the Research Program, but subject to the
provisions of Article 6. Such activities shall be deemed to be part of the Joint
Venture, and any Technology developed in such activities will be Joint Venture
Technology.
5.2.8 Visiting Scientists. Pursuant to the Scientific Research
Services Agreement, the parties expect that scientists from ARIAD and HMRI
("Visiting Scientists") may work at the Principal Office of the Joint Venture on
the Research Program or Special Projects (as defined in Section 5.2.10). Under
no
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circumstances shall any such Visiting Scientist be deemed an agent,
representative or employee of the Joint Venture, and each shall remain an
employee of HMRI or ARIAD, as the case may be. Notwithstanding the foregoing or
any agreement between the Visiting Scientist and his or her employer, any
Technology developed by a Visiting Scientist relating to his or her activities
for the Joint Venture will be Joint Venture Technology, except as otherwise
provided in Section 5.2.10. Salary, benefits, housing and relocation expenses of
Visiting Scientists shall be borne by the party by whom they are employed.
5.2.9 Specialized Facilities of the Parties. Each of ARIAD and
HMRI shall make available to the Joint Venture their specialized facilities,
such as [*], for reasonable use by the Joint Venture without charge in
fulfilling the Master Research Plan and Annual Research Plans. In addition, the
parties shall furnish to the Joint Venture specialized materials and reagents
without charge, for reasonable use by the Joint Venture in fulfilling the Master
Research Plan and Annual Research Plans, with each such task being performed by
the party with appropriate expertise and resources.
5.2.10 Special Projects for ARIAD and HMRI. Either party may
request the Joint Venture to perform a special project or projects (each, a
"Special Project") [*] for such requesting party, where the Joint Venture has
specialized Technology, resources, skills or equipment which are otherwise not
available to such requesting party and where the objectives of the Special
Project are [*]. Subject to the availability of the needed personnel, resources
and equipment, as determined by the Management Committee, the Joint Venture will
perform such Special Projects through the Scientific Research Services Agreement
and the Administrative Services Agreement; provided, however, that the Joint
Venture shall in no event be obligated to devote more than [*] full-time
employees (including Visiting Scientists) in the aggregate to all Special
Project(s) for ARIAD and HMRI at any time. [*] shall
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reimburse the Joint Venture for [*] of the fully burdened cost of performing the
Special Projects, and such costs shall not be deemed to be a part of the Joint
Venture's annual budget. Any Technology developed by the Joint Venture in any
Special Project for a Project Sponsor that is useful only in conducting the
Special Project or exploiting the results thereof, as determined by the
Management Committee, shall be assigned to the [*]. Any other Technology
developed by the Joint Venture in any Special Project shall be owned by the
Joint Venture, which shall grant to such Project Sponsor an irrevocable,
world-wide, exclusive, royalty-free license to such Technology for use by [*] or
exploiting the results thereof.
5.2.11 Bioinformatics and Information Services. Pursuant to
the Scientific Research Services Agreement, scientists from ARIAD and HMRI shall
cooperate with the Joint Venture to establish a Bioinformatics center as
required to achieve the objectives of the Research Program and each party's
internal use outside the Joint Venture, subject to the limitations set forth in
Section 7.2(c). The Management Committee will establish standards for the
network system to be used by the Joint Venture, which shall comply with the
security requirements of ARIAD and HMRI. The Joint Venture will provide overall
system administration and support for the network components at the Principal
Office. System administration and support for the network components at ARIAD
and HMRI will be the responsibility of the respective party.
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5.2.12 Compliance with Laws. ARIAD shall conduct the
Scientific Research Services under the Scientific Research Services Agreement,
and the parties shall conduct any other research conducted by them for the Joint
Venture, in compliance with all applicable laws, rules, regulations and orders.
5.2.13 Independent Contractor; Relationship of the Parties.
(a) Nothing in the Scientific Research Services Agreement
shall be deemed to constitute ARIAD or HMRI or any of ARIAD's or HMRI's
employees or agents to be the agent, representative or employee of the Joint
Venture. ARIAD and HMRI shall each be an independent contractor and shall have
responsibility for and control over the details and means of performing the
Scientific Research Services.
(b) Nothing in the Scientific Research Services Agreement
shall be construed as an assumption by ARIAD or HMRI of any financial obligation
of the Joint Venture or the assumption by ARIAD or HMRI of any responsibility
for work performed by outside third parties engaged directly by the Joint
Venture.
5.2.14 Cooperation. Each of ARIAD, HMRI and the Joint Venture
shall use commercially reasonable efforts to perform and fulfill all conditions
and obligations to be fulfilled or performed by it under this Section 5.2 and as
provided in the Scientific Research Services Agreement.
5.3 RECORDS AND REPORTS.
5.3.1 Record Keeping. ARIAD, HMRI and the Joint Venture shall
each maintain records in sufficient detail and in good form appropriate for
patent purposes and as will properly reflect all work done and results achieved
in the performance of the Research Program (including all data in the form
required under any applicable governmental regulations). ARIAD, HMRI and the
Joint Venture shall each provide the other the right to inspect and copy such
records to the extent reasonably required for the exercise of its rights and the
performance of its obligations under the Joint
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Venture Agreements; provided, however, that each party shall maintain such
records and the information of the other contained therein in confidence in
accordance with Article 6 and shall not use such records or information except
to the extent otherwise permitted by this Agreement.
5.3.2 Technical Reports. Each party shall keep the Management
Committee fully informed about the status of any part of the Research Program
performed by it outside the Scientific Research Services Agreement. In
particular, without limitation, each party shall provide the other party with
access to Technology and Confidential Information employed in or arising out of
the Research Program and provide such other information concerning the Research
Program as the other party shall reasonably request.
5.4 SCIENTIFIC ADVISORY BOARD.
5.4.1 Establishment and Functions. The Operating Agreement
shall provide that: (i) the Management Committee shall establish a Scientific
Advisory Board ("SAB") for the Joint Venture, consisting of experts in the Field
or related fields who may be members of the Scientific Advisory Board of either
ARIAD or HMRI or may be previously unaffiliated with either party; and (ii) the
SAB shall perform such functions and advise the Joint Venture on matters as the
Management Committee may from time to time determine, including, without
limitation, evaluation of the Research Program and the provision of advice on
scientific, technical and intellectual property matters.
5.4.2 Meetings. The Operating Agreement shall provide that:
(i) the SAB shall meet as needed in Cambridge, Massachusetts at the Principal
Office of the Joint Venture; and (ii) representatives of each party, in addition
to the members of the SAB, may attend such meetings at the invitation of either
party, with the approval of the other party.
5.4.3 Expenses. The Joint Venture shall bear all expenses of
the SAB members related to the participation of the SAB members on the SAB and
attendance at SAB meetings pursuant to the
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Scientific Research Services Agreement; provided, however, that when
appropriate, upon consultation with the Management Committee, ARIAD shall make
appropriate provision for the grant of ARIAD stock options to the SAB members
pursuant to the Scientific Research Services Agreement.
5.5 INCYTE AGREEMENTS. Simultaneously with the execution of this Agreement,
ARIAD, HMRI and Hoechst Aktiengesellschaft will collectively enter into a letter
agreement with Incyte in the form of Exhibit F hereto.
6. TREATMENT OF CONFIDENTIAL INFORMATION
6.1 CONFIDENTIALITY.
6.1.1 ARIAD and HMRI each recognize that the Confidential
Information of the Joint Venture and the other party (including minutes of
meetings of the Management Committee) constitute highly valuable and proprietary
confidential information. ARIAD and HMRI each agree that during the Term of the
Joint Venture and for five (5) years thereafter, but in no event less than ten
(10) years, it will keep confidential, and will cause its employees,
consultants, Affiliates and licensees and sublicensees to keep confidential, all
Confidential Information of the other party and the Joint Venture that is
disclosed to it, or to any of its employees, consultants, Affiliates and
licensees and sublicensees, pursuant to or in connection with this Agreement,
except to the extent that disclosure is required in accordance with the
performance of this Agreement. Neither ARIAD nor HMRI nor any of their
respective employees, consultants, Affiliates and licensees and sublicensees
shall use Confidential Information of the other party or the Joint Venture for
any purpose whatsoever except as expressly permitted in this Agreement.
6.1.2 ARIAD and HMRI each agree that any disclosure of the
Confidential Information of the Joint Venture and the other party (including
minutes of meetings of the Management Committee) to any of its officers,
employees, consultants or agents or those of any of its Affiliates and licensees
and sublicensees shall be
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made only if and to the extent necessary to carry out its rights and
responsibilities under this Agreement, shall be limited to the maximum extent
possible consistent with such rights and responsibilities and shall only be made
to persons who are bound by written confidentiality obligations to maintain the
confidentiality thereof and not to use such Confidential Information except as
expressly permitted by this Agreement. ARIAD and HMRI each agree not to disclose
the Confidential Information of the Joint Venture or the other party to any
third parties under any circumstance without the prior written approval from the
other party or the Joint Venture (such approval not to be unreasonably
withheld), except as required by law, and except as otherwise expressly
permitted by this Agreement. Each party shall take such action, and shall cause
its Affiliates and licensees and sublicensees to take such action, to preserve
the confidentiality of the Joint Venture's and each other's Confidential
Information as it would customarily take to preserve the confidentiality of its
own Confidential Information, and in no event, less than reasonable care. Each
party, upon the other's request, will return all the Confidential Information
disclosed to it by the other party pursuant to this Agreement, including all
copies and extracts of documents, within sixty (60) days of the request
following the termination of this Agreement; provided, however, that a party may
retain Confidential Information of the other party relating to any license or
right to use Technology or any Candidate Gene, Validated Target or Validated
Protein which survives such termination and one copy of all other Confidential
Information may be retained in inactive archives solely for the purpose of
establishing the contents thereof.
6.1.3 ARIAD and HMRI each represent that all of its employees
and the employees of its Affiliates, and any consultants to such party or its
Affiliates, participating in the Joint Venture's activities who shall have
access to Confidential Information of the Joint Venture or the other party are
bound by
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written obligations to maintain such information in confidence and not to use
such information except as expressly permitted herein. Each party agrees to
enforce confidentiality obligations to which its employees and consultants (and
those of its Affiliates) are obligated.
6.1.4 The Operating Agreement shall contain appropriate
provisions setting forth the confidentiality obligations between the Joint
Venture and each of the Members.
6.2 PUBLICITY. Neither party may disclose the terms of this Agreement or the
Joint Venture without the prior consent of the other party; provided, however,
that either party may make such a disclosure to the extent required by law;
provided, further, that prior to any such required disclosure the non-disclosing
party shall be allowed to review the proposed disclosure, and the party making
the disclosure shall seek confidential treatment for such disclosure as
permitted by applicable laws. The parties, upon the execution of this Agreement,
will agree to a news release for publication. Once any written statement is
approved for disclosure by the parties, either party may make subsequent public
disclosure of the contents of such statement without the further approval of the
other party.
6.3 PUBLICATION. It is expected that ARIAD, HMRI and the Joint Venture may wish
to publish the results of the research under the Research Program. In order to
safeguard patent rights, the party wishing to publish or otherwise publicly
disclose the results of any such research shall first submit a draft of the
proposed manuscript or disclosure to the Scientific Director for review, comment
and consideration of appropriate action at least four (4) weeks prior to any
submission for publication or other public disclosure. Within thirty (30) days
of receipt of the prepublication materials, the Scientific Director, with the
advice of the Co-Chairs of the Management Committee and patent counsel, will
advise the party seeking publication as to whether a patent application shall be
prepared and filed and the party seeking
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publication shall delay submission for thirty (30) days from such request or
until a patent application can be filed, whichever is sooner. Notwithstanding
the foregoing, the Members agree that the Co-Chairs of the Management Committee
may jointly [*].
6.4 SOLICITATION. During the Term of the Joint Venture, in the event either
party or its Affiliates wishes to hire or solicit for employment any person who
is employed by the other party or its Affiliates, the party wishing to hire or
solicit such person shall notify and consult with the Management Committee prior
to engaging in any such solicitation or hiring.
7. JOINT VENTURE TECHNOLOGIES AND RIGHTS TO RESEARCH
7.1 Patent and Technology Rights of Joint Venture. In order to
fulfill its obligations under the Research Program, the Joint Venture shall be
granted rights by the parties as follows:
7.1.1 ARIAD License to Joint Venture. Immediately following
the formation of the LLC as set forth in Section 2.1, ARIAD agrees to enter into
and the Members shall cause the Joint Venture to enter into a License Agreement
in the form of Exhibit G hereto (the "ARIAD License Agreement") in form and
substance satisfactory to each of ARIAD and the Joint Venture pursuant to which
ARIAD shall grant to the Joint Venture [*] license or sublicense, as the case
may be, in the Field to all ARIAD Background Technology and ARIAD Patent Rights
to research, discover, develop, have developed, make and have made Candidate
Genes, Validated Targets and Validated Proteins in accordance with the Research
Program and the terms of the ARIAD License Agreement. Except as set forth in
Section 7.1.3, any fees payable to any licensor as a result of the grant of any
such sublicense to the Joint Venture shall be paid by ARIAD. Set forth on
Schedule I to the ARIAD License Agreement is a list (with a reasonable
description thereof) designating all ARIAD Background Technology. The initial
Schedule I to the ARIAD License Agreement includes Technology which is the
subject of licensing or acquisition negotiations with third parties (which is so
designated under
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Section C of such Schedule I). To the extent ARIAD [*] acquire Technology after
the date hereof that [*] ARIAD shall so advise the Management Committee, and,
upon agreement by HMRI, [*].
7.1.2 HMRI License to Joint Venture. Immediately following
formation of the LLC as set forth in Section 2.1, HMRI agrees to enter into and
the Members shall cause the Joint Venture to enter into a License Agreement in
the form of Exhibit H hereto (the "HMRI License Agreement") in form and
substance satisfactory to each of HMRI and the Joint Venture pursuant to which
HMRI shall grant to the Joint Venture a [*], as the case may be, in the Field to
all HMRI Background Technology and HMRI Patent Rights to research, discover,
develop, have developed, make and have made Candidate Genes, Validated Targets
and Validated Proteins in accordance with the Research Program and the terms of
the HMRI License Agreement. Except as set forth in Section 7.1.3, any fees
payable to any licensor as a result of the grant of any such sublicense to the
Joint Venture shall be paid by HMRI. Set forth on Schedule I to the HMRI License
Agreement is a list (with a reasonable description thereof) designating all HMRI
Background Technology. The initial Schedule I to the HMRI License Agreement
includes Technology which is the subject of licensing or acquisition
negotiations with third parties (which is so designated under Section C of such
Schedule I). Subject to Section 1.29, to the extent HMRI or [*] acquires
Technology after the date hereof that [*], HMRI shall so advise the Management
Committee, and, upon agreement by ARIAD, [*].
7.1.3 Royalty to Third Parties. If either ARIAD or HMRI would
be obligated [*] as a result of granting any sublicense pursuant to Section
7.1.1 or 7.1.2, [*] shall reimburse the party granting the sublicense [*] within
[*] after receipt of an invoice for such payment from the party granting the
sublicense. The party receiving the license shall not be obligated [*], except
for those: (i) based on or resulting from [*] or (ii) as otherwise expressly
provided in the Joint Venture Agreements.
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7.1.4 Limitation on In-Licenses to Joint Venture.
Notwithstanding anything to the contrary in this Section 7.1, neither ARIAD nor
HMRI nor their respective Affiliates shall be obligated to make any disclosure
of or grant any license for any Technology if ARIAD, HMRI or their Affiliates
are prohibited by law or third party agreements from making such disclosure or
granting such license. Each party agrees to [*].
7.1.5 Licenses Between ARIAD and HMRI. Immediately following
formation of the LLC as set forth in Section 2.1, ARIAD and HMRI agree to enter
into a Cross License Agreement in the form of Exhibit I hereto (the "Cross
License Agreement") in form and substance satisfactory to each of ARIAD and HMRI
pursuant to which: (i) ARIAD shall grant to HMRI a [*] license or sublicense in
the Field under the ARIAD Background Technology and ARIAD Patent Rights for the
purposes of (a) developing, making, using and selling Products to which HMRI
shall have been granted rights pursuant to Section 7.4 hereof and the Joint
Venture Agreements, and (b) utilizing in the Field any Joint Venture Technology
licensed to HMRI pursuant to Section 7.2, but not for any other purpose; and
(ii) HMRI shall grant to ARIAD a [*] license or sublicense in the Field [*] for
the purposes of (a) developing, making, using and selling Products to which
ARIAD shall have been granted rights pursuant to Section 7.4 hereof and the
Joint Venture Agreements, and (b) utilizing in the Field any Joint Venture
Technology licensed to ARIAD pursuant to Section 7.2, but not for any other
purpose. If a Member cannot grant [*], then, subject to the approval of the
other Member, [*]. Notwithstanding the foregoing, neither Member shall have any
rights to the other Member's combinatorial, natural product or other compound
libraries or sources. If the party granting the sublicense or taking such other
steps (the "Grantor") would be obligated [*] based on or resulting from the
development, manufacture or sale of a Product by the other party (the "Grantee")
as a result of [*], the Grantee shall [*]. The Grantee shall not be obligated to
[*], except for those: (i)
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based on or resulting from [*] or (ii) as otherwise expressly provided in the
Joint Venture Agreements.
7.1.6 In-Licensing of Technology. Pursuant to the ARIAD
License Agreement and the HMRI License Agreement, respectively, and the Cross
License Agreement, ARIAD and HMRI will [*] in accordance with the terms hereof.
7.2 RIGHTS TO JOINT VENTURE TECHNOLOGY. Rights to Joint Venture Technology shall
be allocated as follows:
(a) The Joint Venture shall have sole and exclusive ownership
of all right, title and interest on a world-wide basis in and to any technology
(the "Joint Venture Technology") or patents (the "Joint Venture Patent Rights")
arising out of the Research Program or any Special Project, except as otherwise
provided in Section 5.2.10.
(b) Except with respect to Candidate Genes, Validated Targets,
Validated Proteins and Technology related to specific Research Projects, the
Joint Venture shall grant to each of ARIAD and HMRI a [*] (except as set forth
in the next to last sentence of this Section 7.2(b)) license, with the right to
grant sublicenses, to any Joint Venture Technology and Joint Venture Patents
which are designated by the Management Committee, using criteria to be
established by the Management Committee, as having been sufficiently developed
so as to be suitable for use outside the Joint Venture (i) for any use outside
the Field, and (ii) for use in the Field for projects and products other than
Research Projects and Products, Antibody Drugs, Vaccines and Other Products
derived from Validated Targets and Validated Proteins. In the event either ARIAD
or HMRI wish to license from the Joint Venture any rights to the Joint Venture
Technology and Joint Venture Patents outside the Field [*], any such license
shall be [*], and the parties agree to [*] and other terms of such a license;
provided, however, that neither party shall be obligated to agree that the other
shall[*]. If the Joint Venture [*] or resulting from the development,
manufacture or sale of a Product by the party receiving the license
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as a result of granting such licenses [*]. The party receiving the license shall
not be obligated to [*] except for those: (i) based on or resulting from [*] or
(ii) as otherwise expressly provided in the Joint Venture Agreements.
(c) Without limiting the generality of Section 7.2(b), the
Joint Venture shall grant to each of ARIAD and HMRI [*] license, with the right
to grant sublicenses, to any Bioinformatics developed or utilized by the Joint
Venture, for each party's internal use (including for uses in collaborations
with third parties); provided, however, that neither ARIAD nor HMRI shall have
access to the other party's proprietary data bases developed outside the Joint
Venture by virtue of such licenses.
(d) The Management Committee shall determine the extent to
which, and the terms of, arrangements for the possible licensing by the Joint
Venture of the Joint Venture Technology and Joint Venture Patents to potential
Licensees.
(e) ARIAD shall be responsible for filing, prosecuting,
maintaining and enforcing patent rights with respect to Joint Venture
Technology, in consultation with HMRI, in accordance with the terms of the
Scientific Research Services Agreement. HMRI shall, at ARIAD's request and in
consultation with ARIAD, file outside the United States any patent application
of the Joint Venture. The Joint Venture shall reimburse HMRI for out-of-pocket
costs incurred in such filings. ARIAD and HMRI will provide quarterly reports of
all patent filings undertaken on behalf of the Joint Venture to the Management
Committee and each other in a format approved by the Management Committee. With
respect to any Products as to which a party has rights pursuant to the Product
Rights Agreement, such party shall be responsible for filing, prosecuting,
maintaining and enforcing patent rights claiming inventions made by such party
with respect to such Products. Pursuant to the Product Rights Agreement, the
party with responsibility for prosecution shall furnish copies of relevant
filings and correspondence to the Joint Venture as reasonably
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requested by the Joint Venture and cooperate with the Joint Venture and the
other party to achieve consistency in prosecution of all patent applications
relating to the Research Program. In the event a Product is a Validated Protein,
responsibility for prosecuting, maintaining and enforcing patent rights shall be
effective from and after the time the relevant Validated Protein has been
selected as described in Section 7.4, in accordance with the terms of the
Product Rights Agreement. In the event Technology developed in a Special Project
is assigned to a Project Sponsor, the Project Sponsor shall assume
responsibility for filing, prosecuting, maintaining and enforcing patent rights
with respect to Technology assigned to it.
(f) ARIAD and HMRI shall each appoint a Patent Coordinator who
shall serve as such party's primary liaison with the other party on matters
relating to patent filing, prosecution, maintenance and enforcement. Each party
may replace its Patent Coordinator at any time by notice in writing to the other
party. The initial Patent Coordinators shall be:
For ARIAD: Xxxxx X. Xxxxxxxx
For HMRI: Xxxxxxx X. Xxxxxxx
7.3 REVIEW OF TECHNOLOGY.
(a) In the event either party becomes aware of Technology
believed to be useful in the Field or of any opportunity to license or otherwise
acquire such Technology, it shall notify the Management Committee or its
designees, providing reasonable details of the Technology and the terms on which
it may be available, as promptly as is reasonably practical, and subject to
confidentiality obligations to third parties and other legal obligations. The
Management Committee shall maintain and update a list of all such Technology.
The Management Committee or its designees will review such Technology and advise
the Members on the utility of such Technology in the Field. ARIAD and HMRI each
agrees that it will not in any way compete with the other to obtain rights to
any Technology brought by the other party to the
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Management Committee or its designees pursuant to this Section 7.3 or in any way
interfere with the other party's efforts to obtain rights to such Technology.
(b) In the event either party proposes to subscribe to a
database or Bioinformatics service other than the LifeSeq database or other
database or Bioinformatics service offered by Incyte or its affiliates, it shall
so advise the Management Committee, which shall determine whether or not the
Joint Venture should subscribe to such database or other Bioinformatics service.
The cost of any such database or other Bioinformatics service shall be funded
pursuant to Section 3.2 of the Operating Agreement, provided, however, that any
Supplemental Capital Contribution shall require the approval of the Members.
7.4 PRODUCT RIGHTS AGREEMENT. Immediately following the formation of the LLC as
set forth in Section 2.1, ARIAD and HMRI agree to enter into and agree to cause
the Joint Venture to enter into a Product Rights Agreement in the form of
Exhibit J hereto (the "Product Rights Agreement") in form and substance
satisfactory to the parties, which will provide for the following mechanism to
grant rights to ARIAD and HMRI to Candidate Genes, Validated Targets and
Validated Proteins developed by the Joint Venture:
7.4.1 Determination of Discovery of Candidate Genes, Validated
Targets and Validated Proteins. Whenever ARIAD, HMRI or the Joint Venture
believes it has discovered a Candidate Gene, Validated Target or Validated
Protein in the course of the Research Program, it shall promptly notify and
provide all relevant data to the Management Committee. Upon such notice (and on
its own initiative even without notice), the Management Committee shall
determine whether a Candidate Gene, Validated Target or Validated Protein has
been discovered by the Joint Venture utilizing criteria to be established by the
Management Committee and furnished to the parties in writing. The Management
Committee shall use its best efforts to establish the initial criteria by [*]
and shall have the right to amend the criteria from time to time. Regardless of
the
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date of determination of discovery by the Management Committee, any Candidate
Gene, Validated Target or Validated Protein will be deemed to have been
discovered at the earlier of disclosure of such Candidate Gene, Validated Target
or Validated Protein in: [*]. The required scope and contents of such disclosure
shall be determined by the Management Committee as part of the criteria for
determination of discovery of a Candidate Gene, Validated Target or Validated
Protein. Upon a determination by the Management Committee that a Validated
Target or Validated Protein has been discovered by the Joint Venture, the
Management Committee shall provide prompt written notice to each of ARIAD and
HMRI, and such Validated Targets and Validated Proteins shall be added to the
respective Pools, as described below.
7.4.2 Establishment of Validated Target Pool and Validated
Protein Pool. The Management Committee shall establish a Validated Target Pool
(the "Validated Target Pool") and a Validated Protein Pool (the "Validated
Protein Pool"). The [*] discovered by the Joint Venture shall constitute the
initial Validated Target Pool, and the [*] discovered by the Joint Venture shall
constitute the initial Validated Protein Pool, and additional Validated Targets
and Validated Proteins shall be added to the Pools as the Management Committee
determines that they have been discovered in accordance with Section 7.4.1. The
Management Committee shall provide prompt written notice to each of ARIAD and
HMRI of the establishment of each initial Pool. Validated Targets and Validated
Proteins will be deemed added to the Pools in the order in which they are
discovered; provided, however, that if the Management Committee later determines
that the contents of a Pool should have been different at the time of selection
by a party, the party which has made such selection will neither be required nor
entitled to return that selection to the Pool or otherwise change its selection.
In the event more than one Validated Target or Validated Protein is discovered
[*].
7.4.3 Procedure for Selecting Candidates from Pools.
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(a) As to each of the Validated Target Pool and Validated
Protein Pool, the selection procedures set forth below for ARIAD and HMRI shall
apply separately to each such Pool. As used below, the word "Pool" means the
Validated Target Pool or the Validated Protein Pool, and the word "Candidate"
means a Validated Target or a Validated Protein, as the case may be.
(b) Upon receipt from the Management Committee of notice of
creation of each initial Pool, [*]; provided, however, that within thirty (30)
days of receipt from the Management Committee of notice that the Validated
Target Pool is comprised of [*] and the Validated Protein Pool is comprised of
[*], with respect to each Pool, HMRI shall give written notice to the Management
Committee of [*].
(c) If [*] shall have the right to [*]. [*] to provide written
notice to the Management Committee of [*].
(d) If [*] within [*] shall then have the [*] by the
Management Committee. [*] to provide written notice to the Management Committee
of [*].
(e) If [*] shall then have the [*] by the Management
Committee. [*] to provide written notice to the Management Committee of [*]. If
[*] under the circumstances described in subparagraph (d) above, then [*]. [*]
shall have [*] described in subparagraph (d) to provide written notice to the
Management Committee of [*]. Whether or not [*] shall have [*] to provide
written notice to the Management Committee of [*]. If [*] under the
circumstances described in subparagraph (c) above, then [*] by the Management
Committee. [*] to provide written notice to the Management Committee of [*].
(f) It is the intention of ARIAD and HMRI that the selection
process for Candidates shall continue thereafter in a manner consistent with:
(i) [*].
(g) Notwithstanding the foregoing, at any time that ARIAD or
HMRI has the [*] right to select a Candidate from a Pool, such party may
exercise such right upon written notice to the
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Management Committee [*]. ARIAD and HMRI may [*] upon mutual agreement.
(h) Any selection of a Candidate by ARIAD or HMRI pursuant to
this Section 7.4 shall be deemed to have been made upon receipt by the
Management Committee of written notice thereof. In the event ARIAD or HMRI fails
to provide written notice to the Management Committee of a selection of a
Candidate from a Pool within such [*] day period for selection, [*] in
accordance with the procedures set forth in this Section 7.4. The Management
Committee shall promptly inform ARIAD or HMRI whenever the other has selected a
Candidate from a Pool, or failed or affirmatively decided not to select a
Candidate within any such [*] during which such party has a right to select a
Candidate.
7.4.4 Rights to Diagnostic Products, Vaccines, Antibody Drugs
and Other Products. The Joint Venture shall have sole and exclusive ownership of
all right, title and interest in any Diagnostic Product, Vaccine, Antibody Drug
or Other Product derived from any Candidate Gene, Validated Target, Validated
Protein or otherwise derived from the Research Program. The Management Committee
shall have sole discretion in determining whether to grant any licenses to
ARIAD, HMRI or third parties for the development, manufacture, use or sale of
any Diagnostic Product, Vaccine, Antibody Drug or Other Product, and the terms
and conditions of any such licenses, in order to maximize the value of the Joint
Venture.
7.4.5 Licenses to Drugs Derived from Validated Targets.
Pursuant to the terms of the Product Rights Agreement, effective upon selection
of a Validated Target by ARIAD or HMRI, the Joint Venture shall be deemed,
without further action, to have granted to the party selecting such Validated
Target [*] license under all Joint Venture Technology and Joint Venture Patent
Rights, and [*] to use such Validated Target for purposes of developing, making,
having made, using, having used, selling, having sold, offering for sale and
importing any Small-molecule
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Drug, Peptidomimetic Drug, or Antisense Drug. If the Joint Venture [*], the
party receiving the license[*] The party receiving the license [*], except for
those: (i) based on or resulting from [*] or (ii) as otherwise expressly
provided in the Joint Venture Agreements.
7.4.6 Licenses to Drugs Derived from Validated Proteins.
Pursuant to the terms of the Product Rights Agreement, effective upon selection
of a Validated Protein by ARIAD or HMRI, the Joint Venture shall be deemed,
without further action, to have granted to the party selecting such Validated
Protein [*] license under all Joint Venture Technology and Joint Venture Patent
Rights, and [*] sublicense (limited to the field and scope of the license to the
Joint Venture) under all licenses of Technology to the Joint Venture to use such
Validated Protein for purposes of developing, making, having made, using, having
used, selling, having sold, offering for sale and importing any Protein Drug,
Derivative Protein Drug, Protein Mimetic Drug, Analog Protein Drug or Gene
Therapy Drug. If the Joint Venture [*], the party receiving the license [*]. The
party receiving the license shall not be obligated [*], except for those: (i)
based on or resulting from [*] or (ii) as otherwise expressly provided in the
Joint Venture Agreements.
7.5 DILIGENCE AND PRODUCT REVERSION. Pursuant to the terms of the Product Rights
Agreement, with respect to each Validated Target or Validated Protein selected
by ARIAD or HMRI, the party selecting such Validated Target or Validated Protein
shall, by virtue of selecting the Validated Protein and without further action,
be deemed to have committed itself in good faith to apply [*], to diligently
pursue the discovery, development and/or commercialization of at least [*]
derived from such Validated Target or Validated Protein. Notwithstanding the
fact that, as set forth in Section 7.1.5, neither party has any rights to the
other party's combinatorial, natural product or other compound libraries or
services, if the party selecting the Validated Target or
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Validated Protein fails to utilize such diligent efforts or ceases to pursue for
any reason such Validated Target or Validated Protein, the relevant Validated
Target or Validated Protein [*], and the party which failed to utilize such
diligent efforts or ceased pursuit [*]. If [*] accepts the transfer of the
Validated Target or Validated Protein, by virtue of such transfer and without
further action it will be deemed to have received a license under Section 7.4.5
or Section 7.4.6, as the case may be, and to have [*], to diligently pursue the
discovery, development and/or commercialization of such Validated Target,
Validated Protein or Product. If the party which originally selected the
Validated Target or Validated Protein [*] as a result of the transfer of the
Validated Target or Validated Protein [*]. If the [*] does not wish to acquire
rights to such Validated Target or Validated Protein, or if, after acquiring
rights to such Validated Target or Validated Protein fails to utilize diligent
efforts or ceases to pursue for any reason such Validated Target or Validated
Protein, the relevant Validated Target or Validated Protein shall be [*].
7.6 RIGHTS TO VALIDATED TARGETS AND VALIDATED PROTEINS REMAINING IN POOL.
Pursuant to the Product Rights Agreement, the Management Committee shall have
the authority, at such times as the Management Committee deems appropriate, to
assess the Pools containing Candidates that each of ARIAD and HMRI has not
selected or has returned, for purposes of determining whether to grant any
licenses to third parties for rights to such Candidates previously unselected or
returned by ARIAD and HMRI. The Management Committee shall have sole discretion
in determining the terms and conditions of any such licenses.
7.7 ROYALTIES. Pursuant to the terms of the Product Rights Agreement:
(a) In the event ARIAD or HMRI develops a Product, that is [*]
Validated Target or Validated Protein or the associated Candidate Gene, it shall
pay a [*] royalty on its Net Sales (as such term is defined in the Product
Rights Agreement) and those of
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its Affiliates to the other party.
(b) In the event ARIAD or HMRI shall grant a sublicense to a
third party to make, use or sell a Product, that is [*] a Validated Target or
Validated Protein, the royalty shall be the lesser of the amount set forth in
subparagraph (a) above calculated on the sublicensee's Net Sales (as such term
is defined in the Product Rights Agreement) or [*] of the royalties actually
received from the sublicensee.
(c) In the event that ARIAD or HMRI shall be obligated to pay
royalties in excess of [*] its Net Sales and those of its Affiliates or
sublicensees to a third party with respect to a particular Product being
developed or sold by it under a license from the third party for a Gene or
Protein necessary to develop or sell such Product, then the paying party shall
be entitled to reduce the royalty payable hereunder to the other party by [*];
provided, however, that the royalty payable to the other party under
subparagraph (a) above shall not be reduced below [*] of Net Sales and the
royalty payable to the other party under subparagraph (b) above shall not be
reduced below [*] of the royalties actually received by the paying party from
the sublicensee.
(d) In the event that ARIAD or HMRI shall be obligated to pay
royalties or other payments to a third party with respect to a particular
Product being developed or sold by the other party or its Affiliates or
sublicensees as a result of the grant of a sublicense to the Joint Venture or
the other party, [*] after receipt of an invoice for such payment from the party
granting the sublicense. The party receiving the license shall not be obligated
[*], except for those: (i) based on or resulting from [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
7.8 RIGHT OF FIRST NEGOTIATION. Pursuant to the terms of the Product Rights
Agreement, for a period of [*] years [*] by ARIAD or HMRI under Section 7.4 or
7.5, in the event that the party making the selection determines to license or
sublicense to any non-Affiliate rights to any such Validated Target or Validated
Protein,
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or any Products derived therefrom, it shall give written notice to the other
party, specifying in reasonable detail the rights it intends to license (the
"Negotiation Notice"). The party receiving the Negotiation Notice (the
"Recipient") shall have [*] after the date of the Negotiation Notice to provide
a written response (the "Response") to the party sending the Negotiation Notice
(the "Sender") as to whether or not the Recipient wishes to enter into
negotiations with the Sender concerning the licensing of such rights. If the
Sender does not receive a Response within such [*] period or if the Recipient
declines to enter into negotiations, the Sender shall thereafter have the right
to license the rights which were the subject of the Negotiation Notice free of
any restriction, limitation or duty to the Recipient whatsoever. If the Response
states that the Recipient wishes to enter into negotiations with the Sender, the
parties shall negotiate in good faith the licensing of such rights to the
Recipient for a period of [*] from the date of the Response.
If the parties do not agree upon and execute a written
agreement for such rights within such [*] period, as such period may be extended
by written agreement of both parties, the Recipient [*].
8. CONDITIONS TO CLOSING
8.1 CLOSING. The closing of the transactions which are the subject matter of
this Agreement (the "Closing") will take place at 9:00 a.m. Eastern Standard
Time on a date to be specified by the parties (the "Closing Date"), which shall
be not later than the second business day after satisfaction or waiver of the
conditions set forth in Section 8.2 (and in no event later than May 30, 1997),
at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. in Boston,
Massachusetts unless another date or place is agreed to in writing by the
parties hereto.
8.2 CONDITIONS TO CLOSING. The respective obligations of each party to effect
the transactions contemplated under this Agreement shall be subject to the
satisfaction, at or prior to the Closing
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Date, of the following conditions (the performance of any of which by the other
party may be waived in writing by ARIAD or HMRI):
(a) Neither ARIAD nor HMRI shall be subject to any order, decree or
injunction by a court of competent jurisdiction which prevents or materially
delays the consummation of the transactions contemplated hereby;
(b) No statute, rule or regulation shall have been enacted by the
government (or any governmental agency) of the United States or any state,
municipality or other political subdivision thereof that makes the consummation
of the transactions contemplated hereby illegal;
(c) Any waiting period (and any extension thereof) applicable to the
consummation of the transactions contemplated hereby under the HSR Act shall
have expired or been terminated;
(d) The Operating Agreement and the Stock Purchase, Standstill and
Registration Rights Agreement shall have been entered into by the parties
thereto and the Certificate shall have been filed with the Secretary of State of
the State of Delaware;
(e) ARIAD shall have furnished to HMRI evidence satisfactory to HMRI
that ARIAD has entered into an agreement with Incyte for a subscription to
Incyte's [*] to become effective at the time of Closing of this Agreement and
extending through [*], and HMRI shall have furnished to ARIAD evidence
satisfactory to ARIAD that HMRI has amended its agreement with Incyte extending
through [*] and otherwise modifying HMRI's subscription to Incyte's [*] to
become effective at the time of Closing of this Agreement;
(f) Each party shall have furnished to the other party evidence
satisfactory to the other party of its authority to enter into the Joint
Venture, the consent or approval of those persons or entities whose consent or
approval shall be required in order for such party to consummate the
transactions contemplated hereby (including, without limitation, any necessary
consents of third parties for the grant of licenses or sublicenses to the Joint
Venture), and such other documents as the other party may
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reasonably request; and
(g) The representations and warranties of the other party shall be
accurate in all material respects as of the time of the Closing and such other
party shall have delivered a certificate of an officer certifying the same.
9. TERMINATION AND DISENGAGEMENT
9.1 TERM. This Agreement shall take effect as of the Effective Date and shall
continue for ten (10) years unless terminated in accordance with the provisions
of this Article 9 or extended pursuant to the terms hereof or of the Operating
Agreement (the "Term").
9.2 EXTENSION OF THE JOINT VENTURE. The parties may agree to extend the term of
the Joint Venture beyond ten years by mutual written agreement.
9.3 TERMINATION.
9.3.1 General Termination Conditions. The Joint Venture (and the rights
and obligations of the parties pursuant to the Joint Venture Agreements) may be
terminated in the following ways:
(a) if either party files for protection under bankruptcy laws, makes
an assignment for the benefit of creditors, appoints or suffers appointment of a
receiver or trustee over substantially all of its property, files a petition
under any bankruptcy or insolvency act or has any such petition filed against it
which is not discharged within sixty (60) days of the filing thereof, then the
other party may terminate this Agreement upon written notice to such party;
(b) upon a material breach of either party (subject first to the
dispute resolution procedures set forth in Sections 3.8 and 12.1) in the full
and timely observance or performance of its covenants or obligations under this
Agreement which has been determined in arbitration pursuant to Section 12.1 to
affect the ability of the Joint Venture to carry out its objectives and purposes
and the arbitration panel has determined that termination
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is the appropriate remedy for such material breach, upon thirty (30) days' prior
written notice by the other party, which notice shall specify the nature of the
breach and the steps to be taken to cure such breach; provided, however, that if
such breach is cured by the breaching party within such thirty (30) day period,
such notice of termination shall be deemed null and void as if the same had
never been given and this Agreement shall not be terminated pursuant thereto; or
(c) if without fault of the terminating party, the Closing shall not
have occurred on or before May 30, 1997.
9.3.2 Further Funding for Joint Venture. HMRI and ARIAD currently
expect that the Joint Venture will continue in operation and be funded beyond
[*]; provided, however, that the parties acknowledge that neither this
Agreement nor the other Joint Venture Agreements creates a binding commitment
to fund the Joint Venture beyond [*]. [*]
9.3.3 Potential Termination After [*]. The Joint Venture may be
terminated by either of the parties hereto at any time on or after [*], unless
additional funding arrangements have been agreed upon pursuant to Section 9.3.2,
by six (6) months written notice to the other party.
9.4 CONSEQUENCES OF TERMINATION.
9.4.1 Technology Rights. In the event of termination of the Joint
Venture:
(a) each party will retain exclusive rights under such party's
Technology and Patent Rights, and each party shall be free to pursue the
development and commercialization of such rights in any manner that it may
choose in all fields except to the extent that exclusive rights have been
granted to the other party pursuant to the Product Rights Agreement;
(b) each party will retain the licenses to the Joint Venture Technology
granted to it in Section 7.2 and in the Product Rights Agreement, subject to
continued royalty obligations to the other party in connection therewith
pursuant to Section 10 of the
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Product Rights Agreement;
(c) each party will retain the licenses and sublicenses granted to it
by the other party pursuant to Section 7.1.5;
(d) each party will be free to pursue activities in the Field alone or
with a third party;
(e) the procedures set forth in Section 7.4 and as set forth in the
Product Rights Agreement shall be applied until there are no more Candidates in
either Pool;
(f) each party will retain the licenses and sublicenses granted to it
by the Joint Venture in Section 7.4.5 and 7.4.6 and as set forth in Section 6
and 7 of the Product Rights Agreement prior to termination; and
[*]
9.4.2 Wind-down Payments. HMRI shall pay to ARIAD an amount equal to
[*] to be paid to ARIAD under the Scientific Research Services Agreement and the
Administrative Services Agreement for the last calendar year of the Joint
Venture (provided, however, that no such payment shall exceed [*] in the event
the Joint Venture is terminated under any of the following conditions:
(a) ARIAD and HMRI are unable to agree upon further funding for the
Joint Venture and either party terminates the Joint Venture pursuant to Section
9.3.3;
(b) ARIAD terminates the Joint Venture upon a material breach by HMRI
pursuant to Section 9.3.1(c); or
(c) HMRI terminates the Joint Venture for any reason other than: (i)
upon a material breach by ARIAD pursuant to Section 9.3.1(c) or (ii) pursuant to
Section 9.6.2.
Any such payment required hereunder shall be made on or before the effective
date of termination of the Joint Venture.
9.5 SURVIVING PROVISIONS.
Termination of this Agreement for any reason shall be without prejudice to:
(a) the rights and obligations of the parties provided
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in Section 7.5 of the Operating Agreement, Section 8 of the ARIAD License
Agreement (with respect to Validated Targets and Validated Proteins discovered
at the time of termination), Section 8 of the HMRI License Agreement (with
respect to Validated Targets and Validated Proteins discovered at the time of
termination), Sections 7.1.5, 7.2(b), 7.2(c), and Articles 6, 11, 12 and 13
hereof and Section 17 of the Product Rights Agreement, all of which shall
survive such termination;
(b) ARIAD's and HMRI's right to receive all payments earned and/or
accrued prior to termination hereunder; and
(c) any other rights or remedies which either party may otherwise have
against the other.
9.6 CONSEQUENCES OF CHANGE OF CONTROL OR ACQUISITION.
9.6.1. Notice. If ARIAD enters into any written agreement for a
transaction which, upon consummation, will result in an Acquisition or Change of
Control, it shall give written notice thereof to HMRI at least thirty (30) days
prior to the scheduled consummation thereof.
9.6.2. Consequences. In the event a Change of Control or Acquisition of
ARIAD shall occur, then [*] upon termination of the Joint Venture for any
reason. [*]
[*]
[*]
[*]
[*]
[*]
9.6.3. Definition. For purposes hereof, an "Acquisition" shall be
deemed to have occurred if ARIAD shall consolidate or merge with another entity,
or convey, sell or lease to another entity all or substantially all of the
stock, assets or business of ARIAD and its subsidiaries taken as a whole, unless
the stockholders of ARIAD immediately prior to the transaction own a majority of
the voting equity securities of the merged, consolidated or acquiring entity
after the transaction. For
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purposes hereof, a "Change of Control" shall be deemed to have occurred upon
consummation of any transaction or event as a result of which any other entity
acquires or controls [*].
10. REPRESENTATIONS AND WARRANTIES
10.1 MUTUAL REPRESENTATIONS. ARIAD and HMRI each represents and warrants as
follows:
10.1.1 Organization. It is a corporation duly organized, validly
existing and is in good standing under the laws of the State of Delaware, is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the performance of its obligations hereunder requires
such qualification and has all requisite power and authority, corporate or
otherwise, to conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform this Agreement.
10.1.2 Authorization. The execution, delivery and performance by it of
this Agreement have been duly authorized by all necessary corporate action and
do not and will not (a) require any consent or approval of its stockholders or
(b) violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award presently in effect having
applicability to it or any provision of its charter documents.
10.1.3 Binding Agreement. This Agreement is a legal, valid and binding
obligation of it enforceable against it in accordance with its terms and
conditions.
10.1.4 No Inconsistent Obligation. It is not under any obligation to
any person, or entity, contractual or otherwise, that is materially conflicting
or materially inconsistent in any respect with the terms of this Agreement or
that would materially impede the diligent and complete fulfillment of its
obligations.
11. INDEMNIFICATION
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11.1 INDEMNIFICATION OF ARIAD BY HMRI. HMRI shall indemnify, defend and hold
harmless ARIAD, its Affiliates and their respective directors, officers,
employees, and agents and their respective successors, heirs and assigns (the
"ARIAD Indemnitees"), against any liability, damage, loss or expense (including
reasonable attorneys' fees and expenses of litigation) incurred by or imposed
upon the ARIAD Indemnitees, or any one of them, in connection with any claims,
suits, actions, demands or judgments of third parties, including without
limitation personal injury and product liability matters (except in cases where
such claims, suits, actions, demands or judgments result from a material breach
of this Agreement, gross negligence or willful misconduct on the part of ARIAD)
arising out of any actions of HMRI in the performance of the Research Program,
the use by the Joint Venture or any Licensee of the HMRI Background Technology
or the development, testing, production, manufacture, promotion, import, sale or
use by any person of any Product which is manufactured or sold by HMRI or by an
Affiliate, licensee, sublicensee, distributor or agent of HMRI other than a
Licensee.
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11.2 INDEMNIFICATION OF HMRI BY ARIAD. ARIAD shall indemnify, defend and hold
harmless HMRI and its Affiliates and their respective directors, officers,
employees, and agents and their respective successors, heirs and assigns (the
"HMRI Indemnitees"), against any liability, damage, loss or expense (including
reasonable attorneys' fees and expenses of litigation) incurred by or imposed
upon the HMRI Indemnitees, or any one of them, in connection with any claims,
suits, actions, demands or judgments of third parties, including without
limitation claims of suppliers and ARIAD employees (except in cases where such
claims, suits, actions, demands or judgments result from a material breach of
this Agreement, gross negligence or willful misconduct on the part of HMRI),
arising out of any actions of ARIAD in the performance of the Research Program,
the use by the Joint Venture of the ARIAD Background Technology or the
development, testing, production, manufacture, promotion, import, sale or use by
any person of any Product which is manufactured or sold by ARIAD or by an
Affiliate, licensee, sublicensee, distributor or agent of ARIAD other than a
Licensee.
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11.3 WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY,
GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY
DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
11.4 LIMITED LIABILITY. NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR
OTHERWISE, NEITHER ARIAD NOR HMRI WILL BE LIABLE WITH RESPECT TO ANY SUBJECT
MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
12. ARBITRATION
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12.1 ARBITRATION. In the event of any dispute, difference or question arising
between the parties in connection with this Agreement or the other Joint Venture
Agreements, the construction hereof or thereof, or the rights, duties or
liabilities of either party hereunder or under the other Joint Venture
Agreements (other than disputes concerning Management Committee decisions
subject to resolution by the good faith efforts of specified persons under
Section 3.8), then such dispute shall be resolved by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association. The arbitration panel shall be composed of three arbitrators, one
of whom shall be chosen by ARIAD, one by HMRI and the third by the two so
chosen. If both or either of ARIAD or HMRI fails to choose an arbitrator or
arbitrators within fourteen (14) days after receiving notice of commencement of
arbitration or if the two arbitrators fail to choose a third arbitrator within
fourteen (14) days after their appointment, the then President of the American
Arbitration Association shall, upon the request of both or either of the parties
to the arbitration, appoint the arbitrator or arbitrators required to complete
the board or, if he or she shall decline or fail to do so, such arbitrator or
arbitrators shall be appointed by the New York office of the American
Arbitration Association. The decision of the arbitrators shall be by majority
vote and, at the request of either party, the arbitrators shall issue a written
opinion of findings of fact and conclusions of law. Costs shall be borne as
determined by the arbitrators. Unless the parties to the arbitration shall
otherwise agree to a place of arbitration, the place of arbitration shall be at
New York, New York, U.S.A. The arbitration award shall be final and binding upon
the parties to such arbitration and may be entered in any court having
jurisdiction.
13. MISCELLANEOUS
13.1 NOTICES. All notices, requests and other communications to ARIAD, HMRI and
the Joint Venture hereunder or under the other
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Joint Venture Agreements shall be in writing (including telecopy or similar
electronic transmissions), shall refer specifically to the Joint Venture
Agreement(s) to which they pertain and shall be personally delivered by a
courier service providing evidence of receipt or sent by telecopy or other
electronic facsimile transmission or by registered air mail or certified air
mail, return receipt requested, postage prepaid, in each case to the respective
address specified below (or such other address as may be specified in writing to
the other party hereto):
If to HMRI: Hoechst Xxxxxx Xxxxxxx, Inc.
Xxxxx 000-000 X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attn: Senior Vice President,
Business Development
and Strategic Planning
With a copy to: Hoechst Xxxxxx Xxxxxxx, Inc.
Xxxxx 000-000 X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attn: General Counsel, Global
Development Center
If to ARIAD: ARIAD Pharmaceuticals, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Executive Officer
With a copy to: Xxxxxxx X. Xxxxxx, Esq.
Mintz, Levin, Cohn, Ferris,
Glovsky and Popeo, P.C.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
If to the To the Co-Chairs at their respective
Management addresses at HMRI and ARIAD.
Committee:
In addition, any Call Notice for Additional Capital Contributions or
Supplemental Capital Contributions addressed to HMRI shall also be sent to:
Hoechst Xxxxxx Xxxxxxx, Inc.
Xxxxx 000-000 X.X. Xxx 0000
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00
Xxxxxxxxxxx, XX 00000-0000
Attn: R&D Controller
Any notice or communication given in conformity with this section shall be
deemed to be effective on the same day as delivered if personally delivered or
if sent by telecopy or other electronic facsimile transmission and seven (7)
days after mailing, if mailed.
13.2 GOVERNING LAW AND JURISDICTION. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, U.S.A., without
regard to the application of principles of conflicts of law.
13.3 CURRENCY TRANSLATIONS. All costs charged by either party hereunder will be
charged in the currency or currencies in which the same are incurred. Any costs
incurred by either party in currencies other than United States Dollars will be
converted to United States Dollars as of the end of each calendar quarter using
the average exchange rate for such calendar quarter based on rates reported in
The Wall Street Journal. The parties hereto shall each bear all risks of
exchange losses and/or currency restrictions, regardless of when expenditures
relating to the charging of such costs are actually made by either party.
13.4 BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective legal representatives, successors
and permitted assigns.
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13.5 HEADINGS. Section and subsection headings are inserted for convenience of
reference only and do not form a part of this Agreement.
13.6 COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original.
13.7 AMENDMENT; WAIVER. This Agreement may be amended, modified, superseded or
canceled, and any of the terms may be waived, only by a written instrument
executed by each party or, in the case of waiver, by the party or parties
waiving compliance. The delay or failure of any party at any time or times to
require performance of any provisions shall in no manner affect the rights at a
later time to enforce the same. No waiver by any party of any condition or of
the breach of any term contained in this Agreement, whether by conduct, or
otherwise, in any one or more instances, shall be deemed to be, or considered
as, a further or continuing waiver of any such condition or of the breach of
such term or any other term of this Agreement.
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13.8 NO THIRD PARTY BENEFICIARIES. Except as set forth in Article 11 hereof, no
third party, including any employee of any party to this Agreement, shall have
or acquire any rights by reason of this Agreement.
13.9 ASSIGNMENT AND SUCCESSORS. Neither this Agreement nor any obligation of a
party hereunder may be assigned by either party without the consent of the other
which shall not be unreasonably withheld, except that each party may assign this
Agreement, its interest in the Joint Venture, and the rights, obligations and
interests of such party, in whole or in part, to any of its Affiliates, to any
entity created for the purpose of providing financing for either party's
contributions to the Joint Venture (provided, however, that any such assignment
by a party to such entity shall not be permitted without the prior consent of
the other party, which shall not be unreasonably withheld), to any purchaser of
all or substantially all of its assets or to any successor corporation resulting
from any merger or consolidation of such party with or into such corporations.
Subject to the foregoing, any reference to ARIAD or HMRI hereunder shall be
deemed to include the successor thereto and assigns thereof.
13.10 FORCE MAJEURE. Neither ARIAD nor HMRI shall be liable for failure of or
delay in performing obligations set forth in this Agreement, and neither shall
be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes beyond the reasonable control of ARIAD or HMRI.
In event of such force majeure, the party affected thereby shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.
13.11 INTERPRETATION. The parties hereto acknowledge and agree that: (i) each
party and its counsel reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement; and (iii) the
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terms and provisions of this Agreement shall be construed fairly as to all
parties hereto and not in a favor of or against any party, regardless of which
party was generally responsible for the preparation of this Agreement.
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13.12 INTEGRATION; SEVERABILITY. This Agreement together with the other Joint
Venture Agreements constitutes on and as of the date hereof the entire
understanding of the parties with respect to the subject matter hereof and all
prior or contemporaneous agreements and understandings, whether written or oral,
between the parties with respect to such subject matter are hereby superseded in
their entirety, including but not limited to the Confidentiality Agreement
between ARIAD and HMRI dated October 28, 1996; provided, however, that all or
part of this Agreement may be superseded by the remainder of the Joint Venture
Agreements. This Agreement and the other Joint Venture Agreements do not
supersede the Collaborative Research and License Agreement between ARIAD and
Xxxxxxx Uclaf dated as of November 5, 1995. If any provision hereof should be
held invalid, illegal or unenforceable in any respect in any jurisdictions then,
to the fullest extent permitted by law, (a) all other provisions hereof shall
remain in full force and effect in such jurisdiction and shall be liberally
construed in order to carry out the intentions of the parties hereto as nearly
as may be possible and (b) such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of such provision in any
other jurisdiction. To the extent permitted by applicable law, each party hereby
waives any provision of law that would render any provision hereof prohibited or
unenforceable in any respect.
13.13 FURTHER ASSURANCES. Each of ARIAD and HMRI agrees to duly execute and
deliver, or cause to be duly executed and delivered, such further instruments
and do and cause to be done such further acts and things, including, without
limitation, the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement or to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
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13.14 XXXX-XXXXX-XXXXXX FILING. The parties shall cooperate fully and use their
best efforts to comply with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations issued thereunder (the "HSR
Act"), to determine if a Notification Report is required thereunder, and to file
any required Notification Report form with the Federal Trade Commission and the
Department of Justice in accordance with such rules and regulations with respect
to the transactions contemplated in this Agreement.
13.15 ACTIONS BY JOINT VENTURE. Whenever this Agreement provides that the Joint
Venture (or its Management Committee) shall take or refrain from taking any
action or shall do or refrain from doing anything, the Members agree that they
shall cause the Joint Venture (or its Management Committee) to do so.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized representatives.
HOECHST XXXXXX XXXXXXX, INC.
By: /s/ Xxxxx X. Xxxxxxx, M.D.
-------------------------------
Title: Executive Vice President
----------------------------
Date: March 3, 1997
----------------------------
ARIAD PHARMACEUTICALS, INC.
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Title: Chief Executive Officer
----------------------------
Date: March 3, 1997
----------------------------
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SCHEDULE I
MASTER RESEARCH PLAN
[*]
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EXHIBIT A
FORM OF OPERATING AGREEMENT
OPERATING AGREEMENT
OF
HOECHST-ARIAD GENOMICS CENTER, LLC
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OPERATING AGREEMENT
This Operating Agreement is dated as of March 18, 1997 (the "Agreement"),
by and between HOECHST XXXXXX XXXXXXX, INC., a Delaware corporation ("HMRI"),
having its offices at Xxxxx 000-000, X.X. Xxx 0000, Xxxxxxxxxxx, Xxx Xxxxxx
00000-0000, and ARIAD PHARMACEUTICALS, INC., a Delaware corporation ("ARIAD"),
having its principal office at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx
00000. HMRI and ARIAD are sometimes referred to herein individually as a
"Member" and collectively as the "Members." Capitalized terms used but not
defined herein shall have the same meaning as provided in the Joint Venture
Master Agreement dated March 4, 1997 between HMRI and ARIAD (the "JV Master
Agreement").
PRELIMINARY STATEMENT
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics in order to identify
Candidate Genes, Validated Targets and Validated Proteins for use in drug
discovery, the Members desire to form the HOECHST-ARIAD GENOMICS CENTER, LLC
(the "Company"); and
WHEREAS the purpose of this Agreement is to form the Company in accordance
with the Delaware Limited Liability Company Act (the "Act") and to set out fully
the rights, obligations and duties of the Members.
NOW, THEREFORE, in consideration of the mutual covenants contained in this
Agreement, and for other good and valuable consideration, the parties hereto
agree to form the Company, and to set out fully the rights, obligations and
duties of the Members, as follows:
ARTICLE I
GENERAL PROVISIONS
1.1 Formation of Limited Liability Company. The Company is hereby formed
under the Act. Except as expressly provided herein and in the other Joint
Venture Agreements, the rights and obligations of the Members and the
administration and termination of the Company shall be governed by the Act. The
Members shall take all actions necessary to assure the filing of a Certificate
of Formation of the Company (the "Certificate") with the Secretary of State of
the State of Delaware (the "Delaware Secretary") as required by Delaware law
upon satisfaction of the conditions to closing set forth in Section 8.2 of the
JV Master Agreement. The names and addresses of the Members are as set forth on
Schedule A hereto.
1.2 Name of the Company. The name of the Company shall be the
"HOECHST-ARIAD GENOMICS CENTER, LLC" or such other name as the Members may from
time to time determine. The Members shall cause to be filed on behalf of the
Company such corporate,
81
assumed or fictitious name or foreign qualification certificate or certificates
as may from time to time be required by law.
1.3 Principal Place of Business of the Company; Registered Agent. The
initial principal place of business of the Company shall be located at the
Principal Office. The Members may, at any time and from time to time, change the
location of the Company's principal place of business. The Company shall
maintain its records at such address. The registered agent for service of
process for the Company in the State of Delaware shall be The Xxxxxxxx-Xxxx
Corporation System, Inc., with a principal place of business at 0000 Xxxxxx
Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
1.4 Title to Company Property. All property and rights owned or acquired
by the Company by purchase, license or otherwise, whether real or personal,
tangible or intangible, shall be deemed to be owned by the Company as an entity,
and no Member, individually, shall have any ownership rights with respect to
such property. Title to all such property shall be held in the name of the
Company.
1.5 Representations and Warranties of Members. Each Member represents and
warrants to the Company and to the other Member as follows:
(a) It is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the performance of
its obligations hereunder requires such qualification and has
all requisite power and authority, corporate or otherwise, to
conduct its business as now being conducted, to own, lease and
operate its properties and to execute, deliver and perform
this Agreement.
(b) The execution, delivery and performance by it of this
Agreement have been duly authorized by all corporate action
and do not and will not: (i) require any consent of its
stockholders or (ii) violate any provision of any law, rule,
regulation, order, writ, judgment, injunction, decree,
determination or award presently in effect having
applicability to it or any provision of its charter documents.
(c) This Agreement is a legal, valid and binding obligation of it
enforceable against it in accordance with its terms and
conditions.
(d) It is not under any obligation to any person, or entity,
contractual or otherwise, that is materially conflicting or
materially inconsistent in any respect with the terms of this
Agreement or that would materially impede the diligent and
complete fulfillment of its obligations.
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ARTICLE II
PURPOSE OF BUSINESS; TERM
2.1 Company Purpose. The purpose of the Company shall be to pursue
Functional Genomics in order to identify Candidate Genes, Validated Targets and
Validated Proteins and to do and perform all acts necessary or desirable to
carry out the foregoing purpose in accordance with the terms and conditions of
this Agreement and the other Joint Venture Agreements, and to take any other
action not prohibited under the Act or other applicable law.
2.2 Term. The term (the "Term") of the Company shall commence upon the
filing of the Certificate with the Secretary of State of the State of Delaware
and the Company shall continue for ten (10) years unless sooner terminated and
dissolved pursuant to Article IX of this Agreement or pursuant to applicable law
or extended pursuant to the terms hereof or of the JV Master Agreement.
2.3 Scope of Members' Authority. Except as expressly provided for herein
or in the other Joint Venture Agreements, no Member shall have any authority to
act for, hold itself out as the agent of, or assume any obligation or
responsibility on behalf of the Company or any other Member.
2.4 Fiscal Year. The fiscal year of the Company shall be the calendar
year.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 Initial Capital Contributions. Each of the Members will, immediately
following the Closing under the JV Master Agreement and upon execution of this
Agreement, contribute in cash to the Company the amount set forth opposite its
name in the column entitled "Initial Capital Contribution" on Schedule A hereto.
Except as provided in this Section or Section 3.2 herein or by law, no Member
shall be required to make any capital contributions or loans to the Company.
3.2 Additional and Supplemental Capital Contributions.
(a) Additional Capital Contributions. Each of the Members shall make
quarterly Additional Capital Contributions to the Company, in addition to the
amount of its Initial Capital Contribution, as will be recommended by the
Management Committee from time to time and as agreed to by the Members, for
purposes of funding the operating expenses of the Company, on the terms and
conditions set forth herein. Notwithstanding the foregoing, each of the Members
shall provide its Expense Sharing Percentage of the following aggregate Company
operating expenses [*] to the Company as Additional Capital Contributions during
the following years:
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Company
Year Operating Expenses
---- ------------------
1997 [*] $ [*]
1998 $ [*]
1999 $ [*]
2000 $ [*]
2001 $ [*]
2002 $ [*]
; provided, however, that in the event that capital contributions in any year
are less than such amounts, the remainder of the financial commitment will be
carried forward to subsequent years, but no later than March 31, 2002. Such
Additional Capital Contributions are intended to be used primarily for
Reimbursable Costs (as such term is defined in the Scientific Research Services
Agreement and the Administrative Services Agreement), and any remainder may be
used for other expenses of the Company. HMRI's Expense Sharing Percentage shall
be fifty percent (50%), and ARIAD's Expense Sharing Percentage shall be fifty
percent (50%), subject to adjustment as set forth in Section 3.2(e).
(b) Supplemental Capital Contributions. In the event that capital
contributions in excess of the Additional Capital Contributions [*] are
required in any of such years to cover expenses of the Company such as patent
costs, operating costs for Visiting Scientists, transactions with or
acquisitions of Technology from third parties, capital purchases beyond the
initial plan, contingencies or other expenses of the Company, the Members shall
discuss and determine whether to make supplemental capital contributions (the
"Supplemental Capital Contributions") by the Members of amounts which exceed
the amount set forth in Section 3.2(a) for any year. In order to provide funds
to ARIAD for ARIAD's share of any Supplemental Capital Contributions, HMRI
shall, on the date the Supplemental Capital Contribution is due, at ARIAD's
request, lend the necessary funds to ARIAD (a "Supplemental Capital Loan")
which shall be repayable, together with interest at [*] with interest to be
reset quarterly on the first business day of each calendar quarter, out of (a)
[*] or (b) in cash. Each Supplemental Capital Loan shall provide that it shall
be repayable (i) [*] years after the date of this Agreement if additional
funding arrangements are not agreed upon pursuant to Section 9.3.2 of the JV
Master Agreement or (ii) on terms to be agreed upon as part of such
arrangements if additional funding arrangements are agreed upon pursuant to
Section 9.3.2 of the JV Master Agreement; provided, however, that ARIAD may
elect to prepay all or part of any Supplemental Capital Loan or Loans at any
time and, provided, further, that all Supplemental Capital Loans outstanding at
the time of consummation of a Change of Control or Acquisition of ARIAD shall
become due [*] after the occurrence of the Change of Control or Acquisition of
ARIAD, pursuant to Section 9.6.2 of the JV Master Agreement.
(c) Procedure for Additional and Supplemental Capital Contributions.
If Additional Capital Contributions are required to be made by the Members
pursuant to Section 3.2(a) or the Members agree to make Supplemental Capital
Contributions pursuant to Section
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3.2(b), the Company shall provide each Member with written notice at least
thirty (30) days prior to the date such payment is due (the "Call Notice"). The
Call Notice shall specify the amount of the Additional Capital Contributions or
Supplemental Capital Contributions to be paid, the purposes for the Additional
Capital Contributions or Supplemental Capital Contributions and the date by
which payment must be made (the "Due Date"), which shall not be less than thirty
(30) days from the date of the Call Notice. The Company shall call for payment
of Additional Capital Contributions or Supplemental Capital Contributions from
all Members on a pro rata basis based on their respective Percentage Interests
as of the date of the Call Notice.
(d) Failure to Make Additional Capital Contribution or Supplemental
Capital Contribution. If a Member fails to make an Additional Capital
Contribution or Supplemental Capital Contribution by the Due Date, it (the
"Named Member") shall be deemed to be in default of its obligations hereunder as
of the Due Date. The following procedures shall then apply:
(i) The Company shall immediately send a default notice (the
"Default Notice") to the Named Member. If the Named
Member has not cured its default within thirty (30) days
following receipt of the Default Notice, it shall be
deemed to be an Event of Default herein.
(ii) Upon such Event of Default, the nondefaulting Member
shall have the option, but not the obligation, to pay to
the Company the amount of the Named Member's Additional
Capital Contribution or Supplemental Capital
Contribution that it failed to pay. Such payment must be
made within thirty (30) days from the date of the Event
of Default.
(iii) Upon such Event of Default, and following any payment to
the Company by a nondefaulting Member of the Named
Member's Additional Capital Contribution or Supplemental
Capital Contribution that it failed to pay, the
Percentage Interests of the Members shall be adjusted in
accordance with Section 3.2(e).
(iv) Notwithstanding the foregoing, in the event that the
Named Member fails to make a required Additional Capital
Contribution or Supplemental Capital Contribution
pursuant to this Section 3.2(d), then the Company may
proceed to pursue any and all available legal remedies
against the Named Member in order to collect the amount
owed by the Named Member to the Company. In furtherance
thereof, the Company may proceed to collect any amount
due from the Named Member as and when due, together with
interest thereon from the date for payment stated herein
at the lesser of: (a) the prime rate as reported by the
Xxxxxx Guaranty Bank and Trust, New York, New York, on
the date such payment is due, plus an additional three
percent (3%) or (b) the maximum rate permitted by
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applicable law, and all costs and expenses of collection
incurred by the Company (including reasonable fees and
disbursements of counsel). So long as a Named Member
remains in default, it shall have no right to receive
any distributions or allocations of credits, profits or
losses under this Agreement. Any actions by the Company
under this clause (iv) shall be controlled by, and at
the direction of, the Member other than the Named
Member.
(e) When any adjustment of the Percentage Interests is required
hereunder, the Percentage Interests shall be adjusted such that each Member's
new Percentage Interest shall be equal to the sum of (i) such Member's aggregate
paid-in Capital Contributions (including its Initial, Additional and
Supplemental Capital Contributions), divided by (ii) aggregate paid-in Capital
Contributions (including Initial, Additional and Supplemental Capital
Contributions) made by all of the Members.
(f) Use of Additional and Supplemental Capital Contributions. The
Additional and Supplemental Capital Contributions shall be paid or delivered to
the Company by wire transfer or by a certified or bank cashier's check when
payment thereof is called for pursuant to this Section 3.2. Such Additional and
Supplemental Capital Contributions shall be used for the purposes set forth in
the Call Notice. All Capital Contributions will be temporarily invested by the
Company in short-term United States Treasury securities or other such investment
grade instruments and securities as determined by the Management Committee.
(g) Benefit. The Members shall have no personal liability, one to
another, for the payment or repayment of Capital Contributions made pursuant to
this Section 3.2, except for Supplemental Capital Loans and as otherwise
provided herein. The provisions of this Section 3.2 are not intended to be for
the benefit of any creditor of the Company or any Member or other person and no
such creditor or other person shall by reason of any such foregoing provisions
make any claim in respect of any debt, liability or obligation (or otherwise)
against the Company or any of the Members.
3.3 Loans. In the event the Company's funds are insufficient to meet its
costs, expenses, obligations, contingencies, liabilities and charges, or to make
any expenditure authorized by this Agreement or the other Joint Venture
Agreements, and Additional Capital Contributions or Supplemental Capital
Contributions are not required to be made pursuant to Section 3.2 herein or
additional funds are not available from third parties on terms acceptable to the
Members in their sole discretion, a Member or its Affiliate may (but shall not
be required to) advance such funds to the Company upon the prior approval of the
Management Committee. Any advance by a Member or an Affiliate of a Member
pursuant to this Section 3.3 shall be evidenced by a promissory note and shall
bear interest, accrued annually, at a rate of interest equal to [*] with
interest to be reset quarterly on the first business day of each calendar
quarter. Any such loan made pursuant to this Section 3.3 shall be on a full
recourse basis to the Company but without recourse to the Members.
3.4 Capital Accounts. A separate capital account (each, a "Capital
Account") shall be
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established and maintained for each Member in accordance with the rules of
Treasury Regulations Section 1.704-1(b)(2)(iv), and this Section 3.4 shall be
interpreted and applied in a manner consistent therewith. Whenever the Company
would be permitted to adjust the Capital Accounts of the Members pursuant to
Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect revaluations of
Company property, the Company shall so adjust the Capital Accounts of the
Members. In the event that the Capital Accounts of the Members are adjusted
pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)(f) to reflect
revaluations of Company property, (i) the Capital Accounts of the Members shall
be adjusted in accordance with Treasury Regulations Section 1.704-1(b)(2)(iv)(g)
for allocations of depreciation, depletion, amortization and gain or loss, as
computed for book purposes, with respect to such property and (ii) the Member's
distributive shares of depreciation, depletion, amortization and gain or loss,
as computed for tax purposes, with respect to such property shall be determined
so as to take account of the variation between the adjusted tax basis and book
value of such property in the same manner as under Section 704(c) of the
Internal Revenue Code of 1986, as amended (the "Code"). In the event that Code
Section 704(c) applies to the Company property, the Capital Accounts of the
Members shall be adjusted in accordance with Treasury Regulations Section
1.704-1(b)(2)(iv)(g) for allocations of depreciation, depletion, amortization
and gain and loss, as computed for book purposes, with respect to such property.
3.5 Withdrawal of Capital; Voluntary Contribution of Capital. Without the
approval of the Management Committee, no Member shall have the right to withdraw
from the Company all or any part of its Capital Contribution or to receive any
funds or property from the Company, or to make any voluntary contribution of
capital to the Company, except as provided herein or in the other Joint Venture
Agreements. No Member shall have any right to demand and receive property other
than cash of the Company in return of its Capital Contribution except as may be
specifically provided in this Agreement or the other Joint Venture Agreements.
No interest shall be paid on any Capital Contribution.
ARTICLE IV
DISTRIBUTIONS
4.1 Distributions. Unless otherwise determined by the Members, to the
extent consistent with the maintenance of an appropriate and prudent capital
structure, the Management Committee shall have sole discretion to determine
whether all cash available in excess of operating and capital expenditure
requirements, provision for repayment of borrowings of the Company and
maintenance of appropriate reserves shall be: (i) used to fund the further
operations of the Company or (ii) paid out to the Members in proportion to their
Percentage Interests on the date the distribution is authorized by the
Management Committee.
4.2 Withholding From Certain Distributions. The Company is authorized to
withhold from distributions, or with respect to allocations, to the Members and
to pay over to any federal, foreign, state or local government any amounts
required to be so withheld pursuant to the Code or any provisions of any other
federal, foreign, state or local law. All amounts withheld pursuant to the
preceding sentence of this Section 4.2 with respect to any distribution or
allocation
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shall be treated as amounts distributed to the Members with respect to which
such amounts were withheld pursuant to this Article IV for all purposes of this
Agreement.
ARTICLE V
ALLOCATION OF PROFITS AND LOSSES
5.1 Profits. Net profits shall be allocated:
(a) First, to reverse any allocations of net losses, determined on a
cumulative basis from the inception of the Company, with the most recent
allocations of losses being reversed first; and
(b) Thereafter, among the Members according to their respective
Percentage Interests.
5.2 Losses. Net losses shall be allocated:
(a) First, to reverse any allocations of net profits, determined on
a cumulative basis from the inception of the Company, with the most recent
profits being reversed first;
(b) [*]
(c) [*]
(d) Fourth, among the Members in proportion to, and to the extent
of, their Capital Contributions made after the Company's first five fiscal
years;
(e) Thereafter, among the Members according to their respective
Percentage Interests.
5.3 Curative Allocations. In the event any losses allocated to a Member
under Section 5.2 are not so allocable according to Treasury regulations, such
losses shall instead be allocated to the other Member. In such case items of
gross income shall be allocated to such other Member to reverse the effect of
the preceding sentence as quickly as possible.
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ARTICLE VI
MANAGEMENT
6.1 Decision Making. Subject to any express provisions, if any, of the
other Joint Venture Agreements reserving to either of ARIAD or HMRI, as the case
may be, the right to make unilateral decisions concerning the Company, the
general affairs and activities of the Company and the research, development and
licensing programs of the Company described in the Master JV Agreement shall be
administered, managed and coordinated by a committee (the "Management
Committee") consisting of three (3) representatives designated by ARIAD (who
shall be officers, directors or employees of ARIAD or an Affiliate of ARIAD) and
three (3) representatives designated by HMRI (who shall be officers, directors
or employees of HMRI or an Affiliate of HMRI), in each case reasonably
acceptable to the other party. The Management Committee may be given such name
as the Members may agree upon from time to time.
6.2 Management Committee Co-Chairs. Each Member shall designate one of its
representatives on the Management Committee as its "Co-Chair". The initial
Co-Chair designated by ARIAD shall be Xxxxxx X. Xxxxxx, M.D., and the initial
Co-Chair designated by HMRI shall be Xxxxxxx X. Xxxxxx, Ph.D. Each of the
Co-Chairs shall have authority to act for the Company, as specified by the
Management Committee. Each Member shall have the right at any time to substitute
individuals, on a permanent or temporary basis, for any of its previously
designated representatives to the Management Committee, including its Co-Chair,
by giving written notice thereof to the other Member.
6.3 Appointment of Scientific Director and Other Officers. The Management
Committee shall select a Scientific Director of the Company (the "Scientific
Director"), who shall be responsible for setting the scientific direction of the
Company in conjunction with the Management Committee, directing the Company's
research programs, and managing the day-to-day operations of the Company, and
who shall be an officer, director or employee of ARIAD or HMRI (or their
respective Affiliates). The Management Committee shall also appoint a Secretary
- Treasurer of the Company and a Director of Finance and Administration who
shall keep the records of the Company and be authorized to act for the Company
within the level of authority designated by the Management Committee. The
Scientific Director, Secretary - Treasurer and Director of Finance and
Administration shall report to the Co-Chairs of the Management Committee.
6.4 Management Committee Meetings.
(a) Schedule of Meetings. The Management Committee shall meet at
least semi-annually. Meetings shall also be convened upon the determination of
the Co-Chairs, or either of them, by written notice thereof to the members of
the Management Committee, that a meeting of the Management Committee is required
to discuss and/or resolve any matter or matters with respect to the Company.
Meetings shall be held in the Principal Office of the Company unless the
Co-Chairs otherwise agree; provided, however, that the parties may mutually
agree to meet by
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teleconference or video conference and may act by unanimous written action
without a meeting.
(b) Quorum; Voting; Decisions. At each Management Committee meeting,
attendance by at least [*] members appointed by each Member shall constitute a
quorum. Each Management Committee member shall have [*] vote on all matters
before the Management Committee; provided, however, that the member or members
of each Member present at a Management Committee meeting shall have the
authority to cast the votes of any of such Member's members on the Management
Committee who are absent from the meeting. All decisions of the Management
Committee shall be made by majority vote of all of the members. Whenever any
action by the Management Committee is called for hereunder during a time period
in which the Management Committee is not scheduled to meet, the Co-Chairs shall
cause the Management Committee to take the action in the requested time period
by calling a special meeting or by action without a meeting. Representatives of
each party, in addition to the members of the Management Committee, may attend
Management Committee meetings at the invitation of either Member with the
approval of the other Member, which shall not be unreasonably withheld. In the
event that the Management Committee is unable to resolve any matter before it,
such matter shall be resolved as set forth in Section 6.8 herein.
(c) Minutes. The Management Committee shall keep accurate minutes of
its deliberations which record all proposed decisions and all actions
recommended or taken. The Co-Chairs shall designate a member of the Management
Committee to prepare and circulate a draft of the minutes of each meeting.
Drafts of the minutes shall be delivered to the Co-Chairs of the Management
Committee within twenty (20) days after the meeting. Draft minutes shall be
edited by the Co-Chairs and shall be issued in final form within forty-five (45)
days after the meeting only with their approval and agreement as evidenced by
their signatures on the minutes.
(d) Expenses. The Members shall each bear all expenses of their
respective Management Committee members related to their participation on the
Management Committee and attendance at Management Committee meetings.
6.5 Decision Making Responsibilities. The Management Committee shall be
solely responsible for making all decisions regarding the operation and policies
of the Company not expressly reserved to the Members or to one Member,
including, but not limited to, decisions with respect to the following matters:
(i) any amendments to or changes in the objectives and scope
of the Research Program described in Article 5 of the JV Master Agreement;
(ii) approval of the Annual Research Plans;
(iii) the appointment of the Scientific Director of the
Company;
(iv) the appointment of the members of the Scientific Advisory
Board of the Company;
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(v) the appointment of consultants and scientific experts on
behalf of the Company;
(vi) calls for Additional Capital Contributions from the
Members;
(vii) business plans and annual budgets of the Company,
subject to the limitations on Additional Capital Contributions;
(viii) prioritization of Research Projects, Special Projects
and other activities of the Company;
(ix) annual financial statements, distributions to the
Members, investment and allocation of surplus funds, establishment of reserves
out of earnings (including disposition of such reserves) and establishment of
accounting policy, including depreciation rates and accruals and internal
accounting controls;
[*]
(xv) appointment of a Secretary - Treasurer and Director of
Finance and Administration of the Company;
(xvi) determination of levels of authority for the Management
Committee Co-Chairs, Scientific Director, Secretary - Treasurer and Director of
Finance and Administration;
(xvii) authorization of individuals to act on behalf of the
Company for particular matters or classes of matters (subject to the authority
of the Management Committee);
(xviii) maintenance of a list of Technology in accordance with
Section 7.3 of the JV Master Agreement;
(xix) establishment and amendment of the criteria for
determining whether a Candidate Gene, Validated Target or Validated Protein has
been discovered by the or the Company; and
(xx) recommendations to the Members for modifications of the
procedures set forth in Section 7.4 of the JV Master Agreement and the Product
Rights Agreement.
The representatives of a Member on the Management Committee shall at all
times be entitled to consult with that Member prior to taking any action as
members of the Management Committee. In addition, the Management Committee, as a
whole, may from time to time consult with, and act as directed by, the Members
on any matter related to the conduct and operations of the Company.
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6.6 Decisions Reserved to the Members. The Members shall reserve to
themselves the following decisions:
[*]
(ii) capital contributions in excess of the amounts set forth
in Section 3.3(b);
(iii) Supplemental Capital Contributions;
(iv) conduct of litigation involving the Company;
(v) control of actions by the Company pursuant to Section
3.2(d)(iv);
(vi) hiring of legal counsel and independent public
accountants; and
(vii) modifications of the procedures set forth in Section 7.4
of the JV Master Agreement and the Product Rights Agreement.
6.7 Annual Budget. The Management Committee shall annually adopt a budget
for the Company. The Management Committee shall use commercially reasonable
efforts to adopt such budget thirty (30) days prior to the beginning of each
year. Such budget may be amended from time to time by the Management Committee.
6.8 Dispute Resolution.
(a) Reference to Senior Officials. In the event that the Management
Committee shall not be able to reach a decision or take an action on any matter
for which the Management Committee is responsible, or in the event that the
parties are unable to resolve any dispute involving any of the Joint Venture
Agreements, the matter in question shall be referred for resolution to [*] (or,
if [*] is also a member of the Management Committee, [*] if such person is not
an employee of ARIAD), and if [*] is an employee of ARIAD, then to [*] who is
not an employee of ARIAD, and to [*] (or, if the [*] is also a member of the
Management Committee, then to a senior officer of HMRI designated by the Chief
Executive Officer of HMRI who is not a member of the Management Committee),
respectively, or a person or persons designated by each or both said officials.
(b) Scientific Issues. In the event that a matter for dispute
resolution pursuant to Section 6.8(a) involves a scientific issue, and said
persons or their respective designees (none of whom may be a member of the
Management Committee) shall be unable to resolve such matter after reasonable
efforts to do so and after the passage of a reasonable period of time under the
relevant circumstances, in any event not to exceed [*], each party shall, at
its own expense, appoint an unaffiliated scientific expert to advise such
persons on the matter. The scientific experts shall be chosen based on their
experience and expertise in the particular type of
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issue which is unresolved. The experts shall render a written advisory opinion
to such persons, [*].
(c) Budget Disputes. In the event that the Management Committee is
unable to adopt an annual budget for the Joint Venture (or amend such budget as
required from time to time) within the annual limitations as set forth in
Section 3.2(a), the matter shall be resolved in accordance with the procedures
set forth in Section 6.8(a); provided, however, without the approval of the
Members, such budget shall be limited to the amount of Additional Capital
Contributions [*] set forth in Section 3.2(a), and such dispute shall not be
subject to the dispute resolution procedures set forth in Section 12.1 of the
JV Master Agreement. In the event that a dispute regarding an annual budget is
not resolved in accordance with the procedures set forth in Section 6.8(a), the
amount of the annual budget shall be the amount set forth for the year in
question in Section 3.2(a), excluding any carry-forward amounts.
Notwithstanding any provision contained herein or in the other Joint Venture
Agreements to the contrary, the parties agree that any decision as to whether
to make Supplemental Capital Contributions shall be reserved solely to the
Members and such decision shall not be subject to the dispute resolution
procedures set forth in Section 3.8 or Section 12.1 of the JV Master Agreement
or Section 6.8 or Section 10.1 hereof, and under no circumstance shall either
Member be required to make Supplemental Capital Contributions without the
agreement of the Members.
6.9 Restrictions on the Authority of the Members and the Management
Committee. Notwithstanding any other provisions of this Agreement, neither the
Members nor the Management Committee shall have the authority (i) to perform any
act in violation of any applicable law; (ii) to perform any act in violation of
this Agreement or the other Joint Venture Agreements; (iii) to possess Company
property, or assign the Company's rights in specific Company property, for other
than a Company purpose; or (iv) to knowingly perform any act, or knowingly cause
the Company to perform any act, which would result in the Company being
classified as an Investment Company under the Investment Company Act of 1940, as
amended.
6.10 Obligations of the Members.
(a) The Members shall take such action as may be necessary or
appropriate for the continuation of the Company's valid existence under the laws
of the State of Delaware and in order to form or qualify the Company under the
laws of any jurisdiction in which the Company is doing business or in which such
formation or qualification is necessary to protect the limited liability of the
Members or in order to continue in effect such formation or qualification. The
Members shall file or cause to be filed for recordation in the office of the
appropriate authorities of the State of Delaware and in the proper office or
offices in each other jurisdiction in which the Company is formed or qualified,
such certificates, including limited liability company and fictitious name
certificates, and other documents as are required by the applicable statutes,
rules or regulations of any such jurisdiction.
(b) Each of the Members hereby recognizes that, for United States
federal income tax purposes, the Company will be subject to all provisions of
Subchapter K of Chapter 1
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of Subtitle A of the Code. The Members shall cause to be prepared and filed on
or before the due date (or any extension thereof) any federal, state or local
tax returns required to be filed by the Company.
6.11 Tax Matters Member. ARIAD shall serve as the tax matters Member for
the Company (the "Tax Matters Member"). Each Member by the execution of this
Agreement consents to ARIAD serving as the Tax Matters Member and agrees to
execute, certify, acknowledge, deliver, swear to, file and record at the
appropriate public offices such documents as may be necessary or appropriate to
evidence such consent. To the extent and in the manner provided by applicable
law and regulations, the Tax Matters Member shall furnish the name, address,
profits interest and taxpayer identification number of each Member to the
Secretary of the Treasury or his delegate (the "Secretary"). The Tax Matters
Member shall keep the Members informed of the administrative and judicial
proceedings for the adjustment at the Company level of any item required to be
taken into account by a Member for income tax purposes (such administrative
proceedings referred to hereinafter as a "tax audit" and such judicial
proceeding referred to hereinafter as "judicial review").
The Tax Matters Member is hereby authorized, subject to the consent of all
Members, but not required:
(a) to make all elections and to take any actions to perfect the
election by the Company to be treated for tax purposes only as a partnership
under Subchapter K of the Code;
(b) to enter into any settlement with the Internal Revenue Service
or the Secretary with respect to any tax audit or judicial review, in which
agreement the Tax Matters Member may expressly state that such agreement shall
bind the other Member, except that such settlement agreement shall not bind any
Member who (within the time prescribed pursuant to the Code and regulations
thereunder) files a statement with the Secretary providing that the Tax Matters
Member shall not have the authority to enter into a settlement agreement on the
behalf of such Member;
(c) in the event that a notice of a final partnership administrative
adjustment at the Company level of any item required to be taken into account by
a Member for tax purposes (a "final adjustment") is mailed to the Tax Matters
Member, to seek judicial review of such final adjustment, including the filing
of a petition for readjustment with the Tax Court, the District Court of the
United States for the district in which the Company's principal place of
business is located, or the U.S. Court of Federal Claims;
(d) to intervene in any action brought by any other Member for
judicial review of a final adjustment;
(e) to file a request for an administrative adjustment with the
Secretary at any time and, if any part of such request is not allowed by the
Secretary, to file a petition for judicial review with respect to such request;
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(f) to enter into an agreement with the Internal Revenue Service to
extend the period for assessing any tax which is attributable to any item
required to be taken into account by a Member for tax purposes, or an item
affected by such item; and
(g) to take any other action on behalf of the Members or the Company
in connection with any administrative or judicial tax proceeding to the extent
permitted by applicable law or regulations.
The Company shall indemnify and reimburse the Tax Matters Member for
all expenses, including legal and accounting fees, claims, liabilities, losses
and damages incurred in connection with any administrative or judicial
proceeding with respect to the tax liability of the Members. The payment of all
such expenses shall be made before any distributions are made pursuant to
Article IV herein or any discretionary reserves are set aside by the Members.
Subject to the provisions of this Section 6.11, the taking of any action and the
incurring of any expense by the Tax Matters Member in connection with any such
proceeding, except to the extent required by law, is a matter in the sole
discretion of the Tax Matters Member and the provisions on limitations of
liability and indemnification set forth in Section 6.14 shall be fully
applicable to the Tax Matters Member in its capacity as such.
6.12 Limitation of Liability. Each Member's liability shall be limited as
set forth in this Agreement, the other Joint Venture Agreements, the Act, and
other applicable law. Except as required pursuant to the Act or as otherwise
provided herein or in the other Joint Venture Agreements, a Member will not be
personally liable for any debts or losses of the Company beyond the Member's
Capital Contributions.
6.13 Liability for Certain Acts. The Members shall perform their duties in
good faith, in a manner they reasonably believe to be in the best interests of
the Company, and with such care as an ordinarily prudent person in a like
position would use under similar circumstances. Except as otherwise provided
herein or in the other Joint Venture Agreements, each Member (including its
Affiliates and their respective officers, directors, partners, employees,
shareholders and agents) who so performs such duties shall not have any
liability by reason of being or having been a Member of the Company. Except as
otherwise provided herein or in the other Joint Venture Agreements, no Member
(including its affiliates and their respective officers, directors, partners,
employees, shareholders and agents) shall be liable to the Company or to any
Member for any loss or damage sustained by the Company or any Member, unless the
loss or damage shall have been the result of fraud, deceit, gross negligence,
willful misconduct, or a wrongful taking by the Member (including its affiliates
and their respective officers, directors, partners, employees, shareholders and
agents).
6.14 Indemnification of Members.
(a) To the maximum extent permitted from time-to-time under the Act,
each Member (including its Affiliates and their respective officers, directors,
partners, employees,
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shareholders and agents) shall be entitled to indemnity from the Company for any
liability incurred and/or for any act performed by them within the scope of the
authority conferred on them by the Joint Venture Agreements and/or for any act
omitted to be performed, except in any case where the alleged act or failure to
act giving rise to the claim for indemnification is a result of fraud, deceit,
gross negligence, willful misconduct, or a wrongful taking by such Member, which
indemnification shall include all reasonable expenses incurred, including
reasonable legal and other professional fees and expenses.
(b) To the extent that the activities of a Member (including its
Affiliates and their respective officers, directors, partners, employees,
shareholders and agents) other than in connection with performing its
obligations under the Joint Venture Agreements (a "Non-Company Activity"), gives
rise to a claim or litigation, such Member shall indemnify the Company and each
other Member (including its Affiliates and their respective officers, directors,
partners, employees, shareholders and agents) of the Company who was or is made
a party to or a witness in any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, which
arises by reason of the Non-Company Activities of the indemnifying Member or by
reason of fraud, deceit, gross negligence, willful misconduct, or a wrongful
taking by the Member (including its Affiliates and their respective officers,
directors, partners, employees, shareholders and agents), against all expenses
(including attorneys' fees and expenses), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by the Company or the indemnified
Member in connection with such action, suit or proceeding. No amount paid
hereunder shall be treated as a Capital Contribution or a loan to the Company by
the Member making such payment.
6.15 Interests of the Parties. Notwithstanding any other provisions of
this Agreement, all decisions made and all actions taken by the Management
Committee with respect to any Company matter shall be made or taken in the best
interest of the Company.
6.16 Scientific Advisory Board.
(a) Establishment and Functions. The Management Committee shall
establish a Scientific Advisory Board ("SAB") for the Company, consisting of
experts in the Field or related fields who may be members of the Scientific
Advisory Board of either Member or may be previously unaffiliated with either
party. The SAB shall perform such functions and advise the Company on matters as
the Management Committee may from time to time determine, including, without
limitation, evaluation of the Research Program and the provisions of advice on
scientific, technical and intellectual property matters.
(b) Meetings. The SAB shall meet as needed in Cambridge,
Massachusetts at the Principal Office of the Company. Representatives of each
Member, in addition to the members of the SAB, may attend such meetings at the
invitation of either Member, with the approval of the other Member.
(c) Expenses. The Company shall bear all expenses of the SAB members
related
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to the participation of the SAB members on the SAB and attendance at SAB
meetings, pursuant to the Scientific Research Services Agreement; provided,
however, that when appropriate, upon consultation with the Management Committee,
ARIAD shall make appropriate provision for the grant of ARIAD stock options to
the SAB members pursuant to the Scientific Research Services Agreement.
ARTICLE VII
BOOKS AND RECORDS; CONFIDENTIALITY
7.1 Books and Records; Inspection. ARIAD, on behalf of the Company and
pursuant to the Administrative Services Agreement, shall keep just and true
books of account with respect to the Company's operations. Such books shall be
maintained at the Principal Office, or at such other location as approved by the
Members, and each Member, and their duly authorized representatives, shall have
access to such books as provided in the Administrative Services Agreement.
7.2 Accounting Basis and Fiscal Year. The books of the Company shall be
kept on the accrual method of accounting, or on such other method of accounting
as the Members may from time to time determine, and shall be closed and balanced
at the end of each fiscal year. The same method of accounting shall be used for
both Company accounting and tax purposes. All decisions as to accounting matters
shall be made in accordance with the accounting methods utilized for federal
income tax purposes and otherwise in accordance with generally accepted
accounting principles applied in a consistent manner. The Company and the
Members may rely upon the advice of the firm of independent certified public
accountants employed by ARIAD to conduct ARIAD's regular annual audit as to
whether such decisions are in accordance with generally accepted accounting
principles.
7.3 Reports. ARIAD, on behalf of the Company and pursuant to the
Administrative Services Agreement, shall prepare or cause to be prepared the
following unless otherwise determined by the Members:
(a) Within ninety (90) days after the end of each fiscal year, ARIAD
shall cause to be prepared and delivered to each person who was a Member at any
time during the fiscal year then ended an audited financial report of the
Company, including a balance sheet, a profit and loss statement and a cash flow
or source and application of funds statement, all of which shall be prepared on
the accrual basis of accounting and audited by the independent certified public
accountants hired by the Members pursuant to Section 6.6. In addition, within
ninety (90) days after the end of each fiscal year, ARIAD shall cause to be
prepared and delivered to each Member such information as may be needed to
enable such Member to file its federal income tax return, any required state
income tax return and any other reporting or filing requirements imposed by any
governmental agency or authority.
(b) Within forty-five (45) days after the end of each fiscal
quarter, ARIAD shall cause to be prepared and distributed to each Member a
financial report of the Company, including a
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balance sheet and a profit and loss statement, and a cash flow or source and
application of funds statement, all of which shall be prepared on the accrual
basis of accounting. Such report shall contain a status report on all material
Company activities for such quarter.
(c) Promptly after the commencement thereof, ARIAD shall cause to be
delivered to the Members notice of all actions, suits and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Company or any assets of the
Company.
(d) The cost of all reporting described in this Section 7.3 shall be
paid by the Company to ARIAD in accordance with the terms of the Administrative
Services Agreement. HMRI and ARIAD shall each have the right, using the firm of
independent certified public accountants employed by the Company to conduct the
Company's regular annual audit, or another national firm of independent
certified public accountants acceptable to the Company (whose approval of such
accountants will not be unreasonably withheld), to audit such books on any one
occasion as to each fiscal year within two (2) years after the delivery of
year-end financial statements for the fiscal year to which they relate for the
purpose of verifying such charges and costs. Such examination shall be made upon
reasonable advance notice to the Company during normal business hours at the
Principal Office of the Company.
7.4 Bank Accounts. ARIAD, on behalf of the Company, shall cause one or
more separate accounts to be maintained in a bank (or banks) or other reputable
financial depository or institution (including, without limitation, money market
funds), which accounts shall be used for the payment of the expenditures
incurred in connection with the business of the Company, and in which shall be
deposited any and all cash receipts of the Company. All such amounts shall be
and remain the property of the Company, and shall be received, held and
disbursed by the Company and its designees for the purposes specified in this
Agreement. There shall not be deposited in any of said accounts any funds other
than funds belonging to the Company, and no other funds shall in any way be
commingled with such funds.
7.5 Confidentiality.
(a) The Company and each Member each recognize that the Confidential
Information of the Company and the other Member (including minutes of meetings
of the Management Committee) constitute highly valuable and proprietary
confidential information. The Company and each Member each agree that during the
Term and for five (5) years thereafter, but in no event less than ten (10)
years, it will keep confidential, and will cause its employees, consultants,
Affiliates and licensees and sublicensees to keep confidential, all Confidential
Information of the other party and the Company that is disclosed to it, or to
any of its employees, consultants, Affiliates and licensees and sublicensees,
pursuant to or in connection with this Agreement, except to the extent that
disclosure is required in accordance with the performance of this Agreement.
Neither the Company nor each Member nor any of their respective employees,
consultants, Affiliates and licensees and sublicensees shall use Confidential
Information of the other party or the Company for any purpose whatsoever except
as expressly permitted in this Agreement.
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(b) The Company and each Member each agree that any disclosure of
the Confidential Information of the Company and the other Member (including
minutes of meetings of the Management Committee) to any of its officers,
employees, consultants or agents or those of any of its Affiliates and licensees
and sublicensees shall be made only if and to the extent necessary to carry out
its rights and responsibilities under this Agreement, shall be limited to the
maximum extent possible consistent with such rights and responsibilities and
shall only be made to persons who are bound by written confidentiality
obligations to maintain the confidentiality thereof and not to use such
Confidential Information except as expressly permitted by this Agreement. The
Company and each Member each agree not to disclose the Confidential Information
of the Company or the other party to any third parties under any circumstance
without the prior written approval from the other party or the Company (such
approval not to be unreasonably withheld), except as required by law, and except
as otherwise expressly permitted by this Agreement. The Company and each Member
each shall take such action, and shall cause its Affiliates and licensees and
sublicensees to take such action, to preserve the confidentiality of the
Company's and each other's Confidential Information as it would customarily take
to preserve the confidentiality of its own Confidential Information, and in no
event, less than reasonable care. The Company and each Member upon the other's
request, will return all the Confidential Information disclosed to it by the
other party pursuant to this Agreement, including all copies and extracts of
documents, within sixty (60) days of the request following the termination of
this Agreement; provided, however, that a party may retain Confidential
Information of the other party relating to any license or right to use
Technology or any Candidate Gene, Validated Target or Validated Protein which
survives such termination and one copy of all other Confidential Information may
be retained in inactive archives solely for the purpose of establishing the
contents thereof.
(c) The Company and each Member each represent that all of its
employees and the employees of its Affiliates, and any consultants to such party
or its Affiliates, participating in the Company's activities who shall have
access to Confidential Information of the Company or the other party are bound
by written obligations to maintain such information in confidence and not to use
such information except as expressly permitted herein. The Company and each
Member each agrees to enforce confidentiality obligations to which its employees
and consultants (and those of its Affiliates) are obligated.
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ARTICLE VIII
ASSIGNABILITY OF MEMBERSHIP INTERESTS
8.1 Assignment.
(a) Neither this Agreement nor any interest or obligation of a
Member hereunder may be assigned by either Member without the consent of the
other which shall not be unreasonably withheld, except that either Member may
assign this Agreement, its interest in the Company, and the rights, obligations
and interests of such Member, in whole or in part, to any of its Affiliates, to
any entity created for the purpose of providing financing for either Member's
Capital Contributions to the Company, to any purchaser of all or substantially
all of its assets or to any successor corporation resulting from any merger or
consolidation of such Member with or into such corporations.
(b) An assignment of a Member's interest does not of itself dissolve
the Company.
8.2 Substitute Members. No assignee of a Member's interest shall have the
right to be admitted as a substitute member (a "Substitute Member") in place of
the assignor unless:
(a) the assignor shall designate in writing to the other Member the
intention that the assignee is to become a Substitute Member;
(b) the assignee shall agree in writing to be bound by all of the
terms of this Agreement;
(c) the assignee shall execute and/or deliver such instruments,
including without limitation, an opinion of counsel satisfactory to the Members,
to the effect that such proposed assignment and substitution does not violate
state or federal securities laws, and such instrument as the Members deem
necessary or desirable to effect such assignee's admission as a Substitute
Member and to evidence the assignee's acceptance of the terms of this Agreement;
and
(d) the assignee shall pay all reasonable expenses in connection
with the assignee's admission as a Substitute Member.
ARTICLE IX
TERMINATION AND DISENGAGEMENT
9.1 Termination. The Term of the Company shall commence on the date first
above written and shall be in full force and effect for ten (10) years until the
earliest of the following:
(a) the termination of the JV Master Agreement pursuant to Section
9.3 thereof;
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(b) the entry of a decree of judicial dissolution under Section 802
of the Act; or
(c) the occurrence of any event, other than those referred to in
paragraph (b), which causes dissolution of a limited liability company under the
Act.
9.2 Extension of Term. The Members may agree to extend the Term of the
Company beyond ten (10) years by mutual written agreement.
9.3 Distribution Upon Dissolution.
(a) After payment of liabilities owing to creditors (other than
liabilities to ARIAD under the Administrative Services Agreement and Scientific
Research Services Agreement), the Members or liquidator shall set up such
reserves as they deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company, including the expenses of
liquidation. Such reserves may be paid over by the Members or liquidator to a
bank, to be held in escrow for the purpose of paying any such contingent or
unforeseen liabilities or obligations and, at the expiration of such period as
the Members or liquidator may deem advisable, such reserves shall be distributed
to all of the Members or their assigns in the manner set forth below in Section
9.3(b). In the event that any part of such net assets consists of securities or
other non-cash assets, the Members or liquidator may (but shall not be required
to) take whatever steps they deem appropriate to convert such assets into cash
or into any other form that would facilitate the distribution thereof.
(b) After payment has been made pursuant to Section 9.3(a) hereof,
Section 9.4 of the JV Master Agreement shall be applied with respect to
determining the relative rights and obligations of the Members in the event of
termination of the Company. Any remaining assets shall be distributed to the
Members in accordance with their positive Capital Account balances.
(c) The Company shall terminate when all property has been
distributed among the Members. Upon such termination, the Members shall execute
and cause to be filed a certificate of cancellation of the Company, as provided
for in Section 203 of the Act, and any and all other documents necessary in
connection with the termination of the Company.
9.4 Survival. Termination of the Company as provided herein shall be
without prejudice to those rights and obligations of the parties as described in
Section 9.5 of the JV Master Agreement, and Sections 6.14, 7.5, 10.1 and Article
XI hereunder shall survive such termination.
ARTICLE X
DISPUTE RESOLUTION
10.1 Dispute Resolution. In the event of any dispute, difference or
question arising between the parties in connection with this Agreement, the
construction thereof, or the rights,
21
101
duties or liabilities of either party, then such disputes shall be resolved in
accordance with the procedures set forth in Section 6.8 hereof and Section 12.1
of the JV Master Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
11.2 Governing Law and Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Delaware, U.S.A.,
without regard to the application of principles of conflicts of law.
11.3 Binding Effect. This Agreement shall take effect as of the date first
above written immediately following the Closing under the JV Master Agreement
and upon execution of this Agreement and shall be binding upon and inure to the
benefit of the parties and their respective legal representatives, successors
and permitted assigns.
11.4 Headings. Section and subsection headings are inserted for
convenience of reference only and do not form a part of this Agreement.
11.5 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original.
11.6 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and any of the terms may be waived, only by a written
instrument executed by each party or, in the case of waiver, by the party or
parties waiving compliance. The delay or failure of any party at any time or
times to require performance of any provisions shall in no manner affect the
rights at a later time to enforce the same. No waiver by any party of any
condition or of the breach of any term contained in this Agreement, whether by
conduct, or otherwise, in any one or more instances, shall be deemed to be, or
considered as, a further or continuing waiver of any such condition or of the
breach of such term or any other term of this Agreement.
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11.7 No Third Party Beneficiaries. Except as set forth in Sections 6.13
and 6.14 hereof, no third party including any employee of any party to this
Agreement, shall have or acquire any rights by reason of this Agreement.
11.8 Assignment and Successors. Neither this Agreement nor any obligation
of a party hereunder may be assigned by either party without the consent of the
other which shall not be unreasonably withheld, except that each party may
assign this Agreement, its interest in the Company, and the rights, obligations
and interests of such party, in whole or in part, to any of its Affiliates, to
any entity created for the purpose of providing financing for either party's
contributions to the Company (provided, however, that no party may make any such
assignment to any such entity without the consent of the other party which shall
not be unreasonably withheld), to any purchaser of all or substantially all of
its assets or to any successor corporation resulting from any merger or
consolidation of such party with or into such corporations. Subject to the
foregoing, any reference to ARIAD or HMRI hereunder shall be deemed to include
the successor thereto and assigns thereof.
11.9 Force Majeure. Neither ARIAD nor HMRI shall be liable for failure of
or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes beyond the reasonable control of ARIAD or HMRI.
In event of such force majeure, the party affected thereby shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.
11.10 Interpretation. The parties hereto acknowledge and agree that: (i)
each party and its counsel reviewed and negotiated the terms and provisions of
this Agreement and have contributed to its revision; (ii) the rule of
construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all parties hereto and not in a favor of or against any party, regardless
of which party was generally responsible for the preparation of this Agreement.
11.11 Integration; Severability. This Agreement, together with the other
Joint Venture Agreements, constitutes on and as of the date hereof the entire
understanding between the parties with respect to the subject matter hereof, and
all prior or contemporaneous understandings or agreements, whether written or
oral, between the parties with respect to such subject matter are hereby
superseded in their entirety, and this Agreement supersedes any duplicative or
inconsistent provision in the JV Master Agreement. If any provision hereof
should be held invalid, illegal or unenforceable in any respect in any
jurisdictions then, to the fullest extent permitted by law, (a) all other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (b) such invalidity, illegality, or
unenforceability shall not affect the validity, legality or enforceability of
such provision in any other jurisdiction. To the extent permitted by applicable
law, each party hereby waives any provision of law that would render any
provision hereof prohibited or unenforceable in any respect.
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103
11.12 Further Assurances. Each of ARIAD and HMRI agrees to duly execute
and deliver, or cause to be duly executed and delivered, such further
instruments and do and cause to be done such further acts and things, including,
without limitation, the filing of such additional assignments, agreements,
documents and instruments, that may be necessary or as the other party hereto
may at any time and from time to time reasonably request in connection with this
Agreement or to carry out more effectively the provisions and purposes of, or to
better assure and confirm unto such other party its rights and remedies under,
this Agreement.
11.13 Partition. The Members hereby agree that no Member, nor any
successor-in-interest to any Member, shall have the right while this Agreement
remains in effect to have the property of the Company partitioned, or to file a
complaint or institute any proceeding at law or in equity to have the property
of the Company partitioned, and each Member, on behalf of itself and its
successors, representatives, heirs, and assigns, hereby waives any such right.
It is the intention of the Members that during the term of this Agreement, the
rights of the Members and their successors-in-interest, as among themselves,
shall be governed by the terms of this Agreement and the other Joint Venture
Agreements, and that the right of any Member or successor-in-interest to assign,
transfer, sell or otherwise dispose of its interest in the property shall be
subject to the limitations and restrictions of this Agreement and the other
Joint Venture Agreements.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement under seal as of the day and year first above written.
HOECHST XXXXXX XXXXXXX, INC.
By:
-------------------------------------
Title:
ARIAD PHARMACEUTICALS, INC.
By:
-------------------------------------
Title: Chief Executive Officer
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105
SCHEDULE A
TO
HOECHST-ARIAD GENOMICS CENTER, LLC
OPERATING AGREEMENT
Initial
Capital
Contribution Percentage Interest
------------ -------------------
HOECHST XXXXXX XXXXXXX, INC. $ [*] 50%
Xxxxx 000-000
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
ARIAD PHARMACEUTICALS, INC. $ [*] 50%
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
--------- ---
Total $ [*] 100%
========= ===
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EXHIBIT D
FORM OF ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT
This ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is entered
into as of [__________] [___], 1997, by and among ARIAD PHARMACEUTICALS, INC., a
Delaware corporation with principal offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx,
XX 00000-0000 ("ARIAD"), the HOECHST-ARIAD GENOMICS CENTER, LLC, a Delaware
limited liability company with principal offices at 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000-0000 (the "Company"), and HOECHST XXXXXX XXXXXXX, INC., a
Delaware corporation having its offices at Xxxxx 000-000, X.X. Xxx 0000,
Xxxxxxxxxxx, XX 00000-0000 ("HMRI").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HMRI have
entered into a Joint Venture Master Agreement, dated March 4, 1997 (the "JV
Master Agreement") and related Joint Venture Agreements, providing for the
formation of the Company and the establishment of a joint venture to pursue
Functional Genomics collaboratively;
WHEREAS, in order to carry out its purpose to pursue Functional
Genomics and conduct its business activities and operations pursuant thereto,
the Company requires, among other things, certain personnel, facilities and
services;
WHEREAS, the Company desires to engage ARIAD to provide to the Company
pursuant to this Agreement, among other things, administrative, managerial,
financial, accounting, insurance, human resource, and other corporate services
required by the Company to conduct its business and operations as directed by
the Management Committee, all on the terms and conditions as set forth herein
(the "Administrative Services");
WHEREAS, ARIAD desires to provide such Administrative Services on the
terms and conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions.
Unless otherwise provided, all capitalized terms used herein
shall have the meanings set forth in the JV Master Agreement.
2. Administrative Services.
Pursuant to the terms herein, ARIAD will use commercially
reasonable efforts to provide to the Company such of the Administrative Services
as are required by the Company to
107
conduct the business activities and operations of the Company as are proposed to
be conducted as determined by the Management Committee, all in accordance with
an annual budget approved by the Management Committee as provided in the JV
Master Agreement. ARIAD shall provide the Administrative Services in a prompt
manner generally consistent with ARIAD's past practices in the conduct of its
own business and operations. Without limiting the generality of the foregoing,
the Administrative Services to be provided to the Company by ARIAD shall
include, but are not limited to:
(i) Services concerning accounting and financial matters,
government and public relations, personnel
administration, recruiting, relocation, procurement,
purchasing, planning, auditing, administrative
matters and insurance, including, without limitation,
maintenance of Company books and records, maintenance
of separate Company bank accounts and preparation of
forecasts and financial statements.
(ii) Treasury services, including without limitation,
cashier, payroll and payment services and sales
records.
(iii) Employee benefits administration, including, without
limitation, workers compensation, health, dental,
disability and life insurance programs and 401(k)
programs.
(iv) Services concerning selection, recruitment,
supervision and evaluation of personnel assigned to
the Company, including, without limitation,
immigration matters.
(v) Handling of regulatory, legal and tax matters before
local, state, United States and international
authorities.
(vi) Fixed asset management, records retention and
communications services.
(vii) Meeting planning and organization.
3. Compensation for Administrative Services; Determination of
Cost.
(a) In consideration of the performance of the Administrative
Services by ARIAD, the Company shall pay to ARIAD the Reimbursable Costs (as
defined herein) incurred by ARIAD in providing such Administrative Services on a
quarterly basis as follows: the amount of the budget for the first calendar
quarter will be paid by the Company to ARIAD within thirty (30) days following
execution of this Agreement. The amount of the budget for the second calendar
quarter will be paid by the Company to ARIAD on or before April 1, 1997.
Thereafter, at least forty-five (45) days prior to each calendar quarter, ARIAD
will invoice the Company for an amount equal to the budgeted amount for the
following quarter as contained in the annual budget (as amended), plus or minus
the excess or deficiency of actual expenditures during the calendar quarter
preceding the invoice compared to the budgeted amount for such quarter. The
invoice will be paid by the Company to ARIAD on or before the first day of the
following quarter. For example, if the annual budget for 1998 was $1,200,000 in
equal quarterly amounts of $300,000,
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108
and actual expenditures were $220,000 in the first quarter, $320,000 in the
second quarter, and $300,000 in each of the third and fourth quarters, then the
Company would pay to ARIAD $300,000 on January 1, 1998, $300,000 on April 1,
1998, $220,000 on July 1, 1998 ($300,000 less $80,000 deficiency from first
quarter) and $320,000 on September 1, 1998 ($300,000 plus $20,000 excess from
the second quarter).
(b) Each invoice shall set forth in reasonable detail the
determination of the cost upon which the amount to be reimbursed is based,
broken down by the nature of costs incurred in rendering the Administrative
Services and the period to which such invoice relates. A copy of each invoice
will be sent to HMRI at the time it is sent to the Company. If HMRI or the
Company has objection to the amount of any invoice, the Company shall
nevertheless be obligated to pay the undisputed portion of the invoice in full,
and the parties shall promptly meet to resolve the matter. If the parties do not
resolve the matter within thirty (30) days, the Company or HMRI may thereafter
cause ARIAD's records with respect thereto to be audited in accordance with
Section 4 hereof. Following such audit, or at the request of either party after
the thirty (30) day period if no audit is requested, the Management Committee
shall endeavor in good faith to resolve any disagreement with respect to costs
for Administrative Services rendered by ARIAD to the Company under this
Agreement. If the Management Committee does not resolve the matter, it shall be
resolved in accordance with the procedures set forth in Sections 3.8 and 12.1 of
the JV Master Agreement. Notwithstanding the foregoing, in the event that ARIAD
anticipates that the total amount to be paid to ARIAD for the Administrative
Services will exceed the annual budget approved by the Management Committee,
ARIAD shall promptly advise the Management Committee, which shall, in
consultation with ARIAD, determine whether to reduce the services to be provided
or amend the budget. If the Management Committee does not resolve the matter, it
shall be resolved in accordance with the procedures set forth in Section 3.8 of
the JV Master Agreement.
(c) "Reimbursable Costs" shall mean all direct and indirect
costs incurred by ARIAD in performing work under this Agreement. Such
Reimbursable Costs shall include, but are not limited to:
(i) Personnel costs, including, without
limitation: salaries, wages and bonuses (but
not including stock options); employee
benefits, including, without limitation,
workers compensation, health, dental,
disability and life insurance and 401(k)
matching contributions; payroll taxes; and
recruiting and relocation, including,
without limitation, immigration matters.
(ii) Outside service costs contracted to
institutions, consultants, accountants,
counsel and others, including, without
limitation, out-of-pocket expenses.
(iii) General office administration costs,
including, without limitation:
communication, networking and data
processing; hardware and software
maintenance; office services, including,
without limitation, equipment rental,
postage, printing and graphic arts; library
and database services; and seminars and
other training.
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109
(iv) Facilities costs, including, without
limitation: rent, depreciation and
amortization; maintenance, real estate
taxes, utilities and repairs; interest
expense; insurance; and parking.
(v) Equipment costs, including, without
limitation: operating lease payments;
finance charges under capital leases;
depreciation and amortization; interest
expense; sales and use taxes; and
maintenance and repairs.
Notwithstanding the foregoing, Reimbursable Costs shall exclude expenses,
including compensation, of members of the Management Committee in performance of
their duty as members of the Management Committee. Costs and expenses not
included in the annual budget shall be authorized in a manner consistent with
ARIAD's internal accounting controls, and the application of such accounting
controls to the Company shall be subject to approval by the Management
Committee.
(d) In determining Reimbursable Costs under this Agreement,
ARIAD and its Affiliates will employ the following cost accounting policies:
(i) Direct and indirect costs shall be
determined as incurred based on specifically
identified personnel, activities, services
and materials that are provided by ARIAD to
the Company.
(ii) General and administrative expenses of ARIAD
charged to ARIAD's administrative
departments, presently consisting of the
finance, corporate administration and
operations departments, shall be allocated
to the Company based on a ratio of: (A) the
total number of ARIAD full time employees
assigned to the Company on the last day of a
calendar quarter (but not less than [*] to
(B) the total number of ARIAD full time
employees assigned to all of ARIAD's
research and development departments (other
than research support departments),
including those assigned to the Company on
the last day of a calendar quarter (the
"Employee Ratio"). For purposes of
calculating the Employee Ratio, Visiting
Scientists from ARIAD and HMRI will be [*]
the total number of full time employees
assigned to the Company (as in (A) above)
and the total number of full time employees
assigned to all of ARIAD's research and
development departments (other than research
support departments) (as in (B) above). For
example, based on ARIAD's expectation that
it will have [*] full time employees
assigned to its research and development
departments (exclusive of those assigned to
the Company) on March 31, 1997, the Employee
Ratio would be approximately [*] as of [*].
(e) All other direct and indirect costs and expenses which are
not otherwise covered in this Section 3 and which are in support of
Administrative Services pursuant to this
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Agreement will be allocated on the basis specified in subparagraph (d), except
that if it is not reasonable or appropriate to use the basis specified in
subparagraph (d), such costs and expenses shall be allocated on the basis
generally employed by ARIAD in allocating costs and expenses among departments.
(f) No amount charged under the Scientific Research Services
Agreement shall be charged under this Agreement.
4. Maintenance of Books and Records; Audits.
ARIAD shall maintain true and complete books of account
containing an accurate record of the data necessary for the proper determination
and computation of all charges and Reimbursable Costs to be reimbursed by the
Company to ARIAD under the terms of this Agreement; provided, however, that
ARIAD shall not be required hereby to maintain any duplicate books of account or
records. ARIAD shall retain and maintain such records in accordance with ARIAD's
records retention policy for its other books and records; provided, however,
such retained records shall not be destroyed without the consent of HMRI (such
consent not to be unreasonably withheld). The Company and HMRI shall each have
the right, using the firm of independent certified public accountants employed
by ARIAD to conduct ARIAD's regular annual audit, or another national firm of
independent certified public accountants acceptable to ARIAD (whose approval of
such accountants will not be unreasonably withheld), to audit such books on any
one occasion as to each fiscal year within two (2) years after the delivery of
year-end financial statements for the fiscal year to which they relate for the
purpose of verifying such charges and costs. Such examination shall be made upon
reasonable advance notice to ARIAD during normal business hours at the Principal
Office of the Company.
5. Insurance.
ARIAD, on behalf of the Company, shall use commercially
reasonable efforts to obtain insurance for the Company, and in the name of the
Company, against such casualties and contingencies and of such types and in such
amounts as is customary for companies similarly situated. Each of ARIAD and HMRI
shall be responsible for directors and officers liability insurance insuring
their respective members serving on the Management Committee, but neither party
shall be required to maintain such insurance.
6. Quarterly Financial Reports.
As part of the Administrative Services, ARIAD shall provide to
the Management Committee, within forty-five (45) days after each calendar
quarter, a financial report, broken down into reasonable line items and
categories, showing costs and expenses of the Company as compared to the budget
for such quarter.
7. Access.
At any time and from time to time during the term of this
Agreement and until completion of wind-down of the Company after termination,
authorized representatives of ARIAD
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111
and HMRI shall have access to the Principal Offices, upon reasonable notice and
at reasonable times for specified periods, without further consideration and
subject to reasonable confidentiality undertakings, for the purpose of allowing
such ARIAD and HMRI authorized representatives to review the operations, books
and records of the Company and to assist with the business and purposes of the
Company, including, but not limited to, internal auditors of ARIAD or HMRI
examining books and records of the Company for the purpose of resolving any
disputed invoice amount under this Agreement or the Scientific Research Services
Agreement.
8. Independent Contractor; Relationship of the Parties.
(a) Nothing herein shall be deemed to constitute ARIAD (or any
of ARIAD's employees or agents) to be the agent, representative or employee of
the Company. ARIAD shall be an independent contractor and shall have
responsibility for and control over the details and means of performing the
Administrative Services.
(b) Nothing herein shall be construed as: (i) an assumption by
ARIAD of responsibility for the operations of the Company except as expressly
set forth in this Agreement; (ii) an assumption by ARIAD of any financial
obligation of the Company; or (iii) the assumption by ARIAD of any
responsibility for work performed by outside suppliers employed directly by the
Company at the suggestion or recommendation of ARIAD.
9. Cooperation.
Each of ARIAD, HMRI and the Company shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
fulfilled or performed by it under this Agreement.
10. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement.
11. Subcontractors.
With the prior consent of the Company, ARIAD may subcontract
all or any portion of its services to be provided hereunder to third parties;
provided, however, that any such subcontractor shall be bound by the terms of
this Agreement; provided, further, however, that for services usually performed
for ARIAD by third parties and services performed for ARIAD by its Affiliates,
no such consent shall be required. Notwithstanding the foregoing, with the prior
consent of the Company, ARIAD may request that HMRI perform certain services,
and if HMRI agrees to perform such services, the costs to the Company of such
services shall be reasonably determined by the parties, which costs shall
include a reasonable allocation of overhead.
12. Indemnification of ARIAD.
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112
The Company shall, and hereby agrees to, indemnify, protect
and hold each ARIAD Indemnitee harmless from and against any and all
liabilities, costs or expenses incurred by any ARIAD Indemnitee as a result of
services rendered by ARIAD under this Agreement, including lawsuits of and
claims by third parties, except for liabilities, costs or expenses resulting
from ARIAD's or any of its employees or agents' gross negligence or willful
misconduct.
13. Force Majeure.
None of the parties shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and no party shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such party. In event of
such force majeure, the party seeking to be excused on the basis of force
majeure shall advise the other party of the beginning and end of the
circumstances constituting the force majeure, and shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
14. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement. Notwithstanding the foregoing, invoices for Reimbursable Costs
pursuant to Section 3 hereof shall be sent to HMRI at the following address:
Hoechst Xxxxxx Xxxxxxx, Inc.
Xxxxx 000-000, X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attn: R&D Controller
15. Further Assurances.
Each of the parties hereto agrees to duly execute and deliver,
or cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
16. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by a party without the
consent of the others which shall not be unreasonably withheld, except that a
party may assign this Agreement and the rights, obligations and interests of
such party, in whole or in part, to any of its Affiliates, to any entity created
for the purpose of providing financing for either party's contributions to the
Company (provided, however,
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113
that any such assignment by a party to such entity shall not be permitted
without the prior consent of the other party, which shall not be unreasonably
withheld), to any purchaser of all or substantially all of its assets or to any
successor corporation resulting from any merger or consolidation of such party
with or into such corporations. Subject to the foregoing, any reference to
ARIAD, HMRI or the Company hereunder shall be deemed to include the successor
thereto and assigns thereof.
17. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by a party
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by the parties,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by the parties.
18. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
19. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, each party hereby waives any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
20. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
21. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which
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114
counterparts together, shall constitute one and the same instrument.
22. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
23. Dispute Resolution.
In the event of any dispute, difference or question arising
between the parties in connection with this Agreement, the construction thereof,
or the rights, duties or liabilities of either party, then such disputes shall
be resolved in accordance with the procedures set forth in Sections 3.8 and 12.1
of the JV Master Agreement.
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115
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives:
ARIAD PHARMACEUTICALS, INC.
By: ________________
Title: Chief Executive Officer
HOECHST XXXXXX XXXXXXX, INC.
By: ________________
Title:
HOECHST-ARIAD GENOMICS CENTER, LLC
By: ________________
Title: Co-Chair of Management Committee
By: ________________
Title: Co-Chair of Management Committee
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EXHIBIT E
FORM OF SCIENTIFIC RESEARCH SERVICES AGREEMENT
SCIENTIFIC RESEARCH SERVICES AGREEMENT
This SCIENTIFIC RESEARCH SERVICES AGREEMENT (the "Agreement") is
entered into as of [__________] [___], 1997, by and among ARIAD PHARMACEUTICALS,
INC., a Delaware corporation with principal offices at 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000-0000 ("ARIAD"), the HOECHST-ARIAD GENOMICS CENTER, LLC, a
Delaware limited liability company with principal offices at 00 Xxxxxxxxxx
Xxxxxx, Xxxxxxxxx, XX 00000-0000 (the "Company"), and HOECHST XXXXXX XXXXXXX,
INC., a Delaware corporation having its offices at Xxxxx 000-000, X.X. Xxx 0000,
Xxxxxxxxxxx, XX 00000-0000 ("HMRI").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HMRI have
entered into a Joint Venture Master Agreement, dated March 4, 1997 (the "JV
Master Agreement") and related Joint Venture Agreements, providing for the
formation of the Company and the establishment of a joint venture to pursue
Functional Genomics collaboratively;
WHEREAS, in order to carry out its purpose to pursue Functional
Genomics and conduct its business activities and operations pursuant thereto,
the Company requires, among other things, certain personnel, facilities and
services;
WHEREAS, the Company desires to engage ARIAD to provide to the Company
pursuant to this Agreement, among other things, (i) scientists (the "Company
Scientists") to conduct research in furtherance of the Master Research Plan and
the then current Annual Research Plan as directed by the Scientific Director and
the Management Committee; (ii) facilities for the Company to conduct its
business activities, including laboratories for Company Scientists and Visiting
Scientists to conduct research; (iii) access for Company Scientists and Visiting
Scientists to certain common areas of ARIAD's facilities along with other ARIAD
employees; (iv) the Scientific Director to manage the day-to-day operations of
the Company (subject to the selection of the Scientific Director by the
Management Committee); (v) the Scientific Advisory Board (subject to selection
of the members of the Scientific Advisory Board by the Management Committee);
and (vi) other personnel to support the start-up and ongoing Research Program of
the Company, on the terms and conditions as set forth herein (collectively, the
"Scientific Research Services");
WHEREAS, ARIAD desires to provide such Scientific Research Services on
the terms and conditions as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
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1. Definitions.
Unless otherwise provided, all capitalized terms used herein shall
have the meanings set forth in the JV Master Agreement.
2. Scientific Research Services.
(a) Pursuant to the terms herein, ARIAD will use commercially
reasonable efforts to provide to the Company such of the Scientific Research
Services as are required by the Company to conduct the Research Program as
proposed to be conducted as determined by the Management Committee, all in
accordance with the Master Research Plan and the then current Annual Research
Plan and annual budget approved by the Management Committee as provided in the
JV Master Agreement, in a facility or facilities to be owned (or leased) and
operated by ARIAD. ARIAD will furnish scientific employees and consultants
(e.g., the Scientific Advisory Board), supervision (including the Scientific
Director), services, supplies and materials to perform the Scientific Research
Services for the Company and provide compensation and benefits, including,
without limitation, stock options, for the employees and certain consultants
rendering the Scientific Research Services. ARIAD shall provide the Scientific
Research Services in a prompt manner generally consistent with ARIAD's past
practices in the conduct of its own business and operations.
(b) ARIAD, with the cooperation of HMRI, will use commercially
reasonable efforts to employ at the Company [*] in order to accomplish the
Company's scientific objectives as reflected in the Annual Research Plans.
3. Compensation for Scientific Research Services; Determination of
Cost.
(a) In consideration of ARIAD's provision of facilities and the
performance of the Scientific Research Services, the Company shall pay to ARIAD
the Reimbursable Costs (as defined herein) incurred by ARIAD in providing such
facilities and services on a quarterly basis as follows: the amount of the
budget for the first calendar quarter will be paid by the Company to ARIAD
within thirty (30) days following execution of this Agreement. The amount of the
budget for the second calendar quarter will be paid by the Company to ARIAD on
or before April 1, 1997. Thereafter, at least forty-five (45) days prior to each
calendar quarter, ARIAD will invoice the Company for an amount equal to the
budgeted amount for the following quarter as contained in the annual budget (as
amended), plus or minus the excess or deficiency of actual expenditures during
the calendar quarter preceding the invoice compared to the budgeted amount for
such quarter. The invoice will be paid by the Company to ARIAD on or before the
first day of the following quarter. For example, if the annual budget for 1998
was $12,000,000 in equal quarterly amounts of $3,000,000, and actual
expenditures were $2,200,000 in the first quarter, $3,200,000 in the second
quarter, and $3,000,000 in each of the third and fourth quarters, then the
Company would pay to ARIAD $3,000,000 on January 1, 1998, $3,000,000 on April 1,
1998, $2,200,000 on July 1, 1998 ($3,000,000 less $800,000 deficiency from first
quarter) and $3,200,000 on September 1, 1998 ($3,000,000 plus $200,000 excess
from the second quarter).
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(b) Each invoice shall set forth in reasonable detail the
determination of the cost upon which the amount to be reimbursed is based,
broken down by the nature of costs incurred in rendering the Scientific Research
Services and the period to which such invoice relates. A copy of each invoice
will be sent to HMRI at the time it is sent to the Company. If the Company or
HMRI has objection to the amount of any invoice, the Company shall nevertheless
be obligated to pay the undisputed portion of the invoice in full, and the
parties shall promptly meet to resolve the matter. If the parties do not resolve
the matter within thirty (30) days, the Company or HMRI may thereafter cause
ARIAD's records with respect thereto to be audited in accordance with Section 4
hereof. Following such audit, or at the request of either party after the thirty
(30) day period if no audit is requested, the Management Committee shall
endeavor in good faith to resolve any disagreement with respect to costs for
Scientific Research Services rendered by ARIAD to the Company under this
Agreement. If the Management Committee does not resolve the matter, it shall be
resolved in accordance with the procedures set forth in Sections 3.8 and 12.1 of
the JV Master Agreement. Notwithstanding the foregoing, in the event that ARIAD
anticipates that the total amount to be paid to ARIAD for the Scientific
Research Services will exceed the annual budget approved by the Management
Committee, ARIAD shall promptly advise the Management Committee, which shall, in
consultation with ARIAD, determine whether to reduce the services to be provided
or amend the budget. If the Management Committee does not resolve the matter, it
shall be resolved in accordance with the procedures set forth in Section 3.8 of
the JV Master Agreement.
(c) "Reimbursable Costs" shall mean all direct, indirect and
allocable costs incurred by ARIAD in performing work under this Agreement. Such
Reimbursable Costs shall include, but are not limited to:
(i) Personnel costs, including, without
limitation: salaries, wages and bonuses (but
not including stock options); employee
benefits, including, without limitation,
workers compensation, health, dental,
disability and life insurance and 401(k)
matching contributions; payroll taxes; and
recruiting and relocation, including,
without limitation, immigration matters.
(ii) Laboratory costs, including, without
limitation: laboratory supplies; small tools
and instruments; laboratory services,
including, without limitation, protein
sequencing, waste disposal, radiation
safety, biohazard control, laboratory
uniforms and laboratory cleaning; and media
and glassware preparation.
(iii) Outside service costs contracted to
laboratories, institutions, consultants,
accountants, counsel and others, including,
without limitation: patent and other
intellectual property services, consultant
fees and travel/meeting expenses.
(iv) General office administration costs,
including, without limitation:
communication, networking and data
processing; hardware and software
maintenance; office services, including,
without limitation,
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equipment rental, postage, printing and
graphic arts; library and database services;
travel; and seminars and other training.
(v) Facilities costs, including, without
limitation: rent; depreciation and
amortization; maintenance, real estate
taxes, utilities and repairs; interest
expense; insurance; and parking.
(vi) Equipment costs, including, without
limitation: operating lease payments;
finance charges under capital leases;
depreciation and amortization; interest
expense; sales and use taxes; and
maintenance and repairs.
Notwithstanding the foregoing, Reimbursable Costs shall exclude expenses,
including compensation, of members of the Management Committee in performance of
their duty as members of the Management Committee. Costs and expenses not
included in the annual budget shall be authorized in a manner consistent with
ARIAD's internal accounting controls, and the application of such accounting
controls to the Company shall be subject to approval by the Management
Committee.
(d) In determining Reimbursable Costs under this Agreement,
ARIAD and its Affiliates will employ the following cost accounting policies:
(i) Direct and indirect costs shall be
determined as incurred based on specifically
identified personnel, activities, services
and materials that are provided by ARIAD to
the Company.
(ii) Costs and expenses incurred by ARIAD's
research support departments, presently
consisting of the research and development
operations department and intellectual
property department, shall be allocated to
the Company based on a ratio of: (A) the
total number of ARIAD full time employees
assigned to the Company on the last day of a
calendar quarter (but not less than [*]) to
(B) the total number of ARIAD full time
employees assigned to all of ARIAD's
research and development departments (other
than research support departments),
including those assigned to the Company, on
the last day of a calendar quarter (the
"Employee Ratio"). For purposes of
calculating the Employee Ratio, Visiting
Scientists from ARIAD and HMRI will [*]
total number of full time employees assigned
to the Company (as in (A) above) and the
total number of full time employees assigned
to all of ARIAD's research and development
departments (other than research support
departments) (as in (B) above). For example,
based on ARIAD's expectation that it will
have [*] full time employees assigned to its
research and development departments
(exclusive of those assigned to the Company)
on March 31, 1997, the Employee Ratio would
be approximately [*] as of [*].
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(iii) Facilities expenses shall include all
direct, indirect and allocated costs of
maintaining and operating the facility
occupied or to be occupied by employees
assigned to the Company (and associated
mechanical areas containing equipment
supporting the facility) effective upon
execution of this Agreement. Costs and
expenses of operating and maintaining common
areas within the facility and certain
mechanical rooms containing equipment
supporting the facility occupied by both the
Company and ARIAD shall be allocated to the
Company based on the Employee Ratio.
(iv) The Company shall pay depreciation or
amortization of, and financing and interest
charges for, capital acquisitions made by
ARIAD utilized in the performance of
Scientific Research Services under this
Agreement.
(A) The term "capital acquisition" as
used herein shall mean the portion
of capital equipment or leasehold
improvements which are capitalized
on the accounting records of
ARIAD. Assets acquired under
financing leases will be
considered capital acquisitions
for purposes of this section.
Capital acquisitions will be
assigned an estimated economic (as
opposed to tax) useful life and
salvage value, if any, and
depreciation and amortization will
be computed using the
straight-line method.
(B) The financing and/or interest
charges will be determined based
on the actual terms of the finance
agreements. Financing charges
under capital lease agreements
shall be determined in accordance
with generally accepted accounting
principles and as reported in
ARIAD's audited financial
statements.
(e) In the event that ARIAD employees not assigned to the
Company on a full time basis provide supervision for the Scientific Research
Services on a part time basis (other than in performance of their duty as
members of the Management Committee), they shall be allocated to this Agreement
based on the ratio of: (A) the time which is devoted to the performance of
Scientific Research Services under this Agreement by such personnel to (B) the
total time spent by such personnel on work for ARIAD and the Company. Such costs
and expenses shall include all direct and indirect personnel costs supplemented
by an overhead allowance of [*].
(f) All other direct, indirect and allocable costs and
expenses which are not otherwise covered in this Section 3 and which are in
support of Scientific Research Services pursuant to this Agreement will be
allocated on the basis of the Employee Ratio, except that if it is not
reasonable or appropriate to use such basis, such costs and expenses shall be
allocated on the basis generally employed by ARIAD in allocating costs and
expenses among departments.
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(g) No amount charged under the Administrative Services Agreement
shall be charged under this Agreement.
4. Maintenance of Books and Records; Audits.
ARIAD shall maintain true and complete books of account containing
an accurate record of the data necessary for the proper determination and
computation of all charges and Reimbursable Costs to be reimbursed by the
Company to ARIAD under the terms of this Agreement; provided, however, that
ARIAD shall not be required hereby to maintain any duplicate books of account or
records. ARIAD shall retain and maintain such records in accordance with ARIAD's
records retention policy for its other books and records; provided, however,
such retained records shall not be destroyed without the consent of HMRI (such
consent not to be unreasonably withheld). The Company and HMRI shall each have
the right, using the firm of independent certified public accountants employed
by ARIAD to conduct ARIAD's regular annual audit, or another national firm of
independent certified public accountants acceptable to ARIAD (whose approval of
such accountants will not be unreasonably withheld), to audit such books on any
one occasion as to each fiscal year within two (2) years after the delivery of
year-end financial statements for the fiscal year to which they relate for the
purpose of verifying such charges and costs. Such examination shall be made upon
reasonable advance notice to ARIAD during normal business hours at the Principal
Office of the Company.
5. Reports to Management Committee.
ARIAD shall furnish to the Management Committee a semi-annual
written report setting forth in reasonable detail (i) a summary of the progress
of the work done by it under this Agreement pursuant to each Annual Research
Plan and (ii) a description of any material developments with respect to the
Research Program, at least fifteen (15) days prior to each semi-annual meeting
of the Management Committee.
6. Scientific Cooperation.
Scientists at ARIAD and HMRI shall cooperate with the Company in the
performance of the Research Program and, subject to any confidentiality
obligations to third parties, shall exchange information and materials as
necessary to carry out the Research Program and to assist the Company in the
performance of the Research Program, but subject to the provisions of Article 6
of the JV Master Agreement. Such activities shall be deemed to be a part of the
Company, and any Technology developed in such activities will be Joint Venture
Technology.
7. Technology Ownership.
All Technology developed under this Agreement shall be owned as set
forth in the JV Master Agreement.
8. Visiting Scientists.
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ARIAD, HMRI and the Company expect that scientists from ARIAD and
HMRI ("Visiting Scientists") may work on the Research Program at the facility
which the Research Services are provided hereunder. Under no circumstances shall
any such Visiting Scientist be deemed an agent, representative or employee of
the Company, and each shall remain an employee of HMRI or ARIAD, as the case may
be. Salary, benefits, housing and relocation expenses of Visiting Scientists
will be borne by the party by whom they are employed.
9. Special Projects for ARIAD and HMRI.
[*]
10. Bioinformatics and Information Services.
Scientists from ARIAD and HMRI shall cooperate with the Company to
establish a Bioinformatics center as required to achieve the objectives of the
Research Program and for each of ARIAD's and HMRI's internal use outside the
Company, subject to the limitations set forth in Section 7.2(c) of the JV Master
Agreement. The Management Committee will establish standards for the network
system to be used by the Company, which shall comply with the security
requirements of ARIAD and HMRI. The Company will provide overall system
administration and support for the network components at the Principal Office.
System administration and support for the network components at ARIAD and HMRI
will be the responsibility of the respective party.
11. Compliance with Laws.
ARIAD shall conduct the Scientific Research Services for the
Company under this Agreement in compliance with all applicable laws, rules,
regulations and orders.
12. Independent Contractor; Relationship of the Parties.
(a) Nothing herein shall be deemed to constitute ARIAD (or any of
ARIAD's employees or agents) to be the agent, representative or employee of the
Company. ARIAD shall be an independent contractor and shall have responsibility
for and control over the details and means of performing the Scientific Research
Services.
(b) Nothing herein shall be construed as: (i) an assumption by ARIAD
of responsibility for the operations of the Company except as expressly set
forth in this Agreement; (ii) an assumption by ARIAD of any financial obligation
of the Company; or (iii) the assumption by ARIAD of any responsibility for work
performed by outside suppliers employed directly by the Company at the
suggestion or recommendation of ARIAD.
13. Cooperation.
Each of ARIAD, HMRI and the Company shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
fulfilled or performed by it under this Agreement.
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14. Term and Termination.
This Agreement shall take effect as of the date first written above
and shall continue until termination of the JV Master Agreement in accordance
with Section 9.3 of the JV Master Agreement.
15. Subcontractors.
With the prior consent of the Company, ARIAD may subcontract all or
any portion of its services to be performed hereunder to third parties;
provided, however, that any such subcontractor shall be bound by the terms of
this Agreement; provided, further, however, that for services usually performed
for ARIAD by third parties and services performed for ARIAD by its Affiliates,
no such consent shall be required. Notwithstanding the foregoing, with the prior
consent of the Company, ARIAD may request that HMRI perform certain services,
and if HMRI agrees to perform such services, the costs to the Company of such
services shall be reasonably determined by the parties, which costs shall
include a reasonable allocation of overhead.
16. Indemnification of ARIAD.
The Company shall, and hereby agrees to, indemnify, protect and
hold each ARIAD Indemnitee harmless from and against any and all liabilities,
costs or expenses incurred by any ARIAD Indemnitee as a result of services
rendered by ARIAD under this Agreement, including lawsuits of and claims by
third parties, except for liabilities, costs or expenses resulting from ARIAD's
or any of its employees or agents' gross negligence or willful misconduct.
17. Force Majeure.
None of the parties shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and no party shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such party. In event of
such force majeure, the party seeking to be excused on the basis of force
majeure shall advise the other party of the beginning and end of the
circumstances constituting the force majeure, and shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
18. Notices.
All notices, requests, consents and other communications hereunder
shall be made in accordance with Section 13.1 of the JV Master Agreement.
Notwithstanding the foregoing, invoices for Reimbursable Costs pursuant to
Section 3 hereof shall be sent to HMRI at the following address:
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000
Xxxxxxx Xxxxxx Xxxxxxx, Inc.
Xxxxx 000-000, X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
Attn: R&D Controller
19. Further Assurances.
Each of the parties hereto agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
20. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement nor any
obligation of a party hereunder may be assigned by a party without the consent
of the other parties which shall not be unreasonably withheld, except that a
party may assign this Agreement and the rights, obligations and interests of
such party, in whole or in part, to any of its Affiliates, to any entity created
for the purpose of providing financing for either party's contributions to the
Company (provided, however, that any such assignment by a party to such entity
shall not be permitted without the prior consent of the other party, which shall
not be unreasonably withheld), to any purchaser of all or substantially all of
its assets or to any successor corporation resulting from any merger or
consolidation of such party with or into such corporations. Subject to the
foregoing, any reference to ARIAD, HMRI or the Company hereunder shall be deemed
to include the successor thereto and assigns thereof.
21. Amendments.
No amendment, modification, waiver, termination or discharge of any
provision of this Agreement nor consent to any departure by a party therefrom,
shall in any event be effective unless the same shall he in writing specifically
identifying this Agreement and the provision intended to be amended, modified,
waived, terminated or discharged and signed by the parties, and each amendment,
modification, waiver, termination or discharge shall be effective only in the
specific instance and for the specific purpose for which given. No provision of
this Agreement shall be varied, contradicted or explained by any oral agreement
course of dealing or performance or any other matter not set forth in an
agreement in writing and signed by the parties.
22. Governing Law.
This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without giving effect to principles of
conflicts of law.
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23. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, each party hereby waives any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
24. Headings.
Headings used herein are for convenience only and shall not in any
way affect the construction of, or be taken into consideration in interpreting,
this Agreement.
25. Execution in Counterparts.
This Agreement may be executed in any number of counterparts each
of which counterpart when so executed and delivered, shall be deemed to be an
original, and all of which counterparts together, shall constitute one and the
same instrument.
26. Entire Agreement.
This Agreement, together with the other Joint Venture Agreements,
constitutes, on and as of the date hereof, the entire agreement of the parties
with respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, between the parties with
respect to such subject matter are hereby superseded in their entirety, and this
Agreement supersedes any duplicative or inconsistent provision in the JV Master
Agreement.
27. Dispute Resolution.
In the event of any dispute, difference or question arising between
the parties in connection with this Agreement, the construction thereof, or the
rights, duties or liabilities of either party, then such disputes shall be
resolved in accordance with the procedures set forth in Sections 3.8 and 12.1 of
the JV Master Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
ARIAD PHARMACEUTICALS, INC.
By:___________________________________________
Title: Chief Executive Officer
HOECHST XXXXXX XXXXXXX, INC.
By:___________________________________________
Title:
HOECHST-ARIAD GENOMICS CENTER, LLC
By:___________________________________________
Title: Co-Chair of Management Committee
By:___________________________________________
Title: Co-Chair of Management Committee
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EXHIBIT F
Form of Incyte Letter Agreement
Incyte Pharmaceuticals, Inc.
0000 Xxxxxx Xxxxx
Xxxx Xxxx, XX 00000
March 4, 1997
ARIAD Pharmaceuticals, Inc.
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000-0000
Hoechst Xxxxxx Xxxxxxx, Inc.
Global Development Center
Xxxxx 000-000
X.X. Xxx 0000
Xxxxxxxxxxx, XX 00000-0000
Gentlemen:
Reference is made to the Collaborative Agreement dated March 4, 1997
between Incyte Pharmaceuticals, Inc. ("Incyte") and ARIAD Pharmaceuticals, Inc.
("ARIAD") (the "ARIAD Agreement") and to the Amended and Restated Collaborative
Agreement dated March 4, 1997 between Incyte and Hoechst Aktiengesellschaft and
Hoechst Xxxxxx Xxxxxxx, Inc. (collectively, "Hoechst") (the "Hoechst
Agreement"). The ARIAD Agreement and the Hoechst Agreement are referred to
herein collectively as the "Agreements." ARIAD and Hoechst Xxxxxx Xxxxxxx, Inc.
have entered into agreements to form a limited liability company known as
Hoechst-ARIAD Genomics Center, LLC (the "HMRI-ARIAD JV"). This letter will set
forth our mutual understanding regarding the integration of the ARIAD Agreement,
the Hoechst Agreement, and certain rights and obligations of Hoechst, ARIAD and
the HMRI-ARIAD JV under the
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Agreements. For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, we have agreed as follows:
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1. Notwithstanding the definition of "Affiliate" in the Agreements, the
HMRI-ARIAD JV shall be treated as an Affiliate of ARIAD under the ARIAD
Agreement and as an Affiliate of Hoechst under the Hoechst Agreement. Without
limiting the generality of the foregoing, the HMRI-ARIAD JV shall have any and
all of the applicable rights (with the corresponding obligations) as fully if it
were a party in ARIAD's place under the ARIAD Agreement and as fully if it were
a party in Hoechst's place under the Hoechst Agreement, except as set forth in
this letter.
2. Section 3.4.3 of the ARIAD Agreement and Section 3.9 of the Hoechst Agreement
require ARIAD and Hoechst, respectively, to "use due diligence to pursue the
development, governmental approval and commercial exploitation" of products
covered by any exclusive license from Incyte, and further provide for
termination of licenses from Incyte and grant of licenses by ARIAD or Hoechst
respectively, in the event of discontinuation of development or
commercialization of such products, all as set forth in such sections. It is
hereby agreed that [*]
3. [*] The determination of whether a Product is a Hoechst Product, an
HMRI-ARIAD JV Product or an ARIAD Product shall be based on the party named in
the IND Filing.
4. Disclosure by the HMRI-ARIAD JV to consultants and third party collaborators
of the HMRI-ARIAD JV will be governed by Section 5.2(b) of the ARIAD Agreement
and not Section 5.2(b) of the Hoechst Agreement.
This letter Agreement shall become effective upon the consummation of
the Closing under the agreements under which the HMRI-ARIAD JV is formed. All
rights granted to the HMRI-ARIAD JV shall terminate upon termination of the
HMRI-ARIAD JV, provided, however, that the accrued rights of the HMRI-ARIAD JV
shall be governed by Section 7.5 of the Hoechst Agreement and Section 7.6 of the
ARIAD Agreement, as appropriate. In the event of any
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inconsistency between this Letter Agreement and the ARIAD Agreement or the
Hoechst Agreement, the provisions of this Letter Agreement shall govern. Except
as set forth herein, the ARIAD Agreement and the Hoechst Agreement shall not be
modified hereby, and shall remain in full force and effect in accordance with
their respective terms.
If the foregoing accurately sets forth our understanding, please so
signify by signing below and returning a copy of this letter, whereupon it will
take effect as an amendment to both the ARIAD Agreement and the Hoechst
Agreement.
Very truly yours,
Incyte Pharmaceuticals, Inc.
By: _________________________
Title:
ACCEPTED AND AGREED:
ARIAD Pharmaceuticals, Inc.
By: ________________________________
Title:
Hoechst Aktiengesellschaft
By: _________________________________
Title:
Hoechst Xxxxxx Xxxxxxx, Inc.
By: ___________________________________
Title:
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EXHIBIT G
FORM OF ARIAD LICENSE AGREEMENT
ARIAD LICENSE AGREEMENT
This ARIAD LICENSE AGREEMENT (the "Agreement") is entered into as of
[__________] [___], 1997, by and between ARIAD PHARMACEUTICALS, INC., a Delaware
corporation with principal offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000-0000 ("ARIAD") and the HOECHST-ARIAD GENOMICS CENTER, LLC, a Delaware
limited liability company with principal offices at 00 Xxxxxxxxxx Xxxxxx,
Xxxxxxxxx, XX 00000-0000 (the "Company").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HOECHST
XXXXXX XXXXXXX, INC., a Delaware corporation ("HMRI") have entered into a Joint
Venture Master Agreement, dated March 4, 1997 (the "JV Master Agreement") and
related Joint Venture Agreements, providing for the formation of the Company and
the establishment of a joint venture to pursue Functional Genomics
collaboratively;
WHEREAS, in connection with the Company's performance of research in
the area of Functional Genomics in order to identify Candidate Genes, Validated
Targets and Validated Proteins, ARIAD and the Company desire to enter into this
Agreement pursuant to which, among other things, ARIAD will grant to the Company
a license or sublicense, as the case may be, for certain uses of ARIAD
Background Technology, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions.
Unless otherwise provided, all capitalized terms used herein
shall have the meanings set forth in the JV Master Agreement.
2. ARIAD License to Company.
(a) ARIAD hereby grants to the Company [*] license under all
ARIAD Background Technology and ARIAD Patent Rights, and [*] (except as set
forth in Section 2(b)) sublicense (limited to the field, scope and term of the
license to ARIAD) under all licenses of Technology to ARIAD, in the Field to
research, discover, develop, have developed, make and have made Candidate Genes,
Validated Targets and Validated Proteins in accordance with the Research Program
and the terms and conditions of this Agreement. Except as set forth in Section
2(b), any fees payable to any licensor as a result of the grant of any such
sublicense to the Company shall be paid by ARIAD. Set forth on Schedule I hereto
is a list (with a reasonable description thereof) designating all ARIAD
Background Technology. The initial Schedule I includes Technology which is the
subject of licensing or acquisition negotiations with third parties (which is so
designated under Section C of such Schedule I). Pursuant to the terms of the JV
Master Agreement, to the extent ARIAD [*] acquires
132
Technology after the date of this Agreement that [*] ARIAD shall so advise the
Management Committee, and, upon agreement by HMRI, [*] .
(b) If ARIAD would be obligated [*] as a result of granting
any sublicense pursuant to Section 2(a), [*] within [*] of the receipt of an
invoice therefor, which invoice shall contain a calculation of the amount due in
reasonable detail. The party receiving the license shall not be obligated [*],
except for those: (i) based on or resulting from [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
(c) Notwithstanding anything to the contrary in this Section
2, neither ARIAD [*] shall be obligated to [*] for any Technology if ARIAD or
its Affiliates are prohibited by law [*]. ARIAD agrees to [*].
(d) In the event any license or rights granted to ARIAD under
which a sublicense or rights to the Company is granted hereby is due to expire,
ARIAD shall give written notice of such potential expiration to the Company at
least sixty (60) days prior to the date of expiration, which notice shall
specify whether or not ARIAD intends to extend the license or rights and the
terms of any proposed extensions. If ARIAD advises the Company that it does not
intend to extend the license or rights, the Company may request that ARIAD
extend the license or rights and ARIAD will consider such extension in good
faith, or the Company may seek to obtain a license or rights to the Technology
covered by such license or rights directly from the licensor thereof.
(e) Except as expressly set forth in Section 2(a), no license
is granted hereby to the Company or HMRI.
3. Technology Transfer; Confidentiality; Company Efforts.
After the date hereof, upon request by the Company, ARIAD shall, within
a reasonable time thereafter, make available to the Company the ARIAD Background
Technology through such reasonable written and oral disclosures and such
reasonable on site training as the Company may request. Without limiting the
generality of the foregoing, ARIAD will provide the Company with such manuals,
standard operating procedures, process descriptions and the like, as ARIAD
employs in its own utilization of such Technology. All disclosures pursuant to
this Agreement are subject to the confidentiality provisions of Section 7.5 of
the Operating Agreement and Article 6 of the JV Master Agreement. The Company
shall use the ARIAD Background Technology and ARIAD Patent Rights licensed to it
hereunder in the Field to research, discover, develop, have developed, make and
have made Candidate Genes, Validated Targets and Validated Proteins in
accordance with the Research Program and the terms and conditions of this
Agreement but for no other purpose.
4. Indemnification.
The Company (the "Indemnitor"), shall indemnify, defend and
hold harmless ARIAD, its Affiliates and its directors, officers, employees, and
agents and their respective successors, heirs and assigns (the "Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Indemnitees, or
any one of them, in connection with any claims, suits, actions, demands or
judgments of third parties, including, without limitation, personal injury,
product liability and patent infringement matters (except in cases where such
claims, suits, actions, demands or judgments result from a material breach of
this Agreement, gross negligence or willful misconduct on the part of an
Indemnitee) arising out of any
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133
actions of the Indemnitor in the use of the ARIAD Background Technology by the
Indemnitor or by an Affiliate, licensee, sublicensee, distributor or agent of
the Indemnitor.
5. Warranty Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
ARIAD MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, PRODUCTS,
SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
6. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER ARIAD NOR THE COMPANY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER
OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
7. Cooperation.
Each of ARIAD and the Company shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
fulfilled or performed by it under this Agreement.
8. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement; provided, however, that
in the event of termination the rights and obligations of the parties provided
in Sections 2 (with respect to Validated Targets and Validated Proteins
discovered at the time of termination), 4, 5, 6, 9, 10, 11, 12, 13, 14, 15, 18
and 19 shall survive such termination.
9. Force Majeure.
Neither ARIAD nor the Company shall be liable for failure of
or delay in performing obligations set forth in this Agreement, and neither
shall be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes beyond the reasonable control of ARIAD or the
Company. In event of such force majeure, the party seeking to be excused on the
basis of force majeure shall advise the other party of the beginning and end of
the circumstances constituting the force majeure, and shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.
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134
10. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
11. Further Assurances.
Each of the parties agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
12. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by either party without
the consent of the other which shall not be unreasonably withheld, except that
each party may assign this Agreement and the rights, obligations and interests
of such party, in whole or in part, to any of its Affiliates, to any entity
created for the purpose of providing financing for either party's contributions
to the Company (provided, however, that any such assignment by a party to such
entity shall not be permitted without the prior consent of the other party,
which shall not be unreasonably withheld), to any purchaser of all or
substantially all of its assets or to any successor corporation resulting from
any merger or consolidation of such party with or into such corporations.
Subject to the foregoing, any reference to ARIAD or the Company hereunder shall
be deemed to include the successor thereto and assigns thereof.
13. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by the parties
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by each party,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each party.
14. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
15. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or
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135
unenforceability shall not affect the validity, legality or enforceability of
such provision in any other jurisdiction. To the extent permitted by applicable
law, the parties hereby waive any provision of law that would render any
provision hereof prohibited or unenforceable in any respect.
16. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
17. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which counterparts together, shall constitute one and
the same instrument.
18. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
19. Dispute Resolution.
Except as otherwise provided herein, in the event of any
dispute, difference or question arising between the parties in connection with
this Agreement, the construction thereof, or the rights, duties or liabilities
of either party, then such disputes shall be resolved in accordance with the
procedures set forth in Sections 3.8 and 12.1 of the JV Master Agreement.
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136
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
ARIAD PHARMACEUTICALS, INC.
By:_____________________________________
Title: Chief Executive Officer
HOECHST-ARIAD GENOMICS CENTER, LLC
By:_____________________________________
Title: Co-Chair of Management Committee
By:_____________________________________
Title: Co-Chair of Management Committee
6
137
Schedule I
ARIAD Background Technology
[*]
7
138
EXHIBIT H
FORM OF HMRI LICENSE AGREEMENT
HMRI LICENSE AGREEMENT
This HMRI LICENSE AGREEMENT (the "Agreement") is entered into as of
[__________] [___], 1997, by and between HOECHST XXXXXX XXXXXXX, INC., a
Delaware Corporation having its offices at Xxxxx 000-000, X.X. Xxx 0000,
Xxxxxxxxxxx, XX 00000-0000 (collectively, "HMRI") and the HOECHST-ARIAD GENOMICS
CENTER, LLC, a Delaware limited liability company with principal offices at 00
Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000-0000 (the "Company").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, HMRI and ARIAD
Pharmaceuticals, Inc., a Delaware Corporation ("ARIAD") have entered into a
Joint Venture Master Agreement, dated March 4, 1997 (the "JV Master Agreement")
and related Joint Venture Agreements, providing for the formation of the Company
and the establishment of a joint venture to pursue Functional Genomics
collaboratively;
WHEREAS, in connection with the Company's performance of research in
the area of Functional Genomics in order to identify Candidate Genes, Validated
Targets and Validated Proteins, HMRI and the Company desire to enter into this
Agreement pursuant to which, among other things, HMRI will grant to the Company
a license or sublicense, as the case may be, for certain uses of HMRI Background
Technology, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions.
Unless otherwise provided, all capitalized terms used herein
shall have the meanings set forth in the JV Master Agreement.
139
2. HMRI License to Company.
(a) HMRI hereby grants to the Company [*] license under all
HMRI Background Technology and HMRI Patent Rights, and [*] (except as set forth
in Section 2(b)) sublicense (limited to the field, scope and term of the license
to HMRI) under all licenses of Technology to HMRI, in the Field to research,
discover, develop, have developed, make and have made Candidate Genes, Validated
Targets and Validated Proteins in accordance with the Research Program and the
terms and conditions of this Agreement. Except as set forth in Section 2(b), any
fees payable to any licensor as a result of the grant of any such sublicense or
right to the Company shall be paid by HMRI. Set forth on Schedule I hereto is a
list (with a reasonable description thereof) designating all HMRI Background
Technology. The initial Schedule I includes Technology which is the subject of
licensing or acquisition negotiations with third parties (which is so designated
under Section C of such Schedule I). Pursuant to the terms of the JV Master
Agreement (and subject to Section 1.29 thereof), to the extent HMRI [*] acquires
Technology after the date of this Agreement that [*], HMRI shall so advise the
Management Committee, and, upon agreement by ARIAD, [*].
(b) If HMRI would be obligated [*] as a result of granting any
sublicense or rights pursuant to Section 2(a), [*] within [*] of the receipt of
an invoice therefor, which invoice shall contain a calculation of the amount due
in reasonable detail. The party receiving the license shall not be obligated
[*], except for those: (i) based on or resulting [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
(c) Notwithstanding anything to the contrary in this Section
2, neither HMRI [*] shall be obligated [*] for any Technology if HMRI or its
Affiliates are prohibited by law [*]. HMRI agrees to [*].
(d) In the event any license or rights granted to HMRI under
which a sublicense or rights to the Company is granted hereby is due to expire,
HMRI shall give written notice of such potential expiration to the Company at
least sixty (60) days prior to the date of expiration, which notice shall
specify whether or not HMRI intends to extend the license or rights and the
terms of any proposed extensions. If HMRI advises the Company that it does not
intend to extend the license or rights, the Company may request that HMRI extend
the license or rights and HMRI will consider such extension in good faith, or
the Company may seek to obtain a license or rights to the Technology covered by
such license or rights directly from the licensor thereof.
(e) Except as expressly set forth in Section 2(a), no license
is granted hereby to the Company or HMRI.
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140
3. Technology Transfer; Confidentiality; Company Efforts.
After the date hereof, upon request by the Company, HMRI shall, within
a reasonable time thereafter, make available to the Company the HMRI Background
Technology through such reasonable written and oral disclosures and such
reasonable on site training as the Company may request. Without limiting the
generality of the foregoing, HMRI will provide the Company with such manuals,
standard operating procedures, process descriptions and the like, as HMRI
employs in its own utilization of such Technology. All disclosures pursuant to
this Agreement are subject to the confidentiality provisions of Section 7.5 of
the Operating Agreement and Article 6 of the JV Master Agreement. The Company
shall use the HMRI Background Technology and HMRI Patent Rights licensed to it
hereunder in the Field to research, discover, develop, have developed, make and
have made Candidate Genes, Validated Targets and Validated Proteins in
accordance with the Research Program and the terms and conditions of this
Agreement but for no other purpose.
4. Indemnification.
The Company (the "Indemnitor"), shall indemnify, defend and
hold harmless HMRI, its Affiliates and its directors, officers, employees, and
agents and their respective successors, heirs and assigns (the "Indemnitees"),
against any liability, damage, loss or expense (including reasonable attorneys'
fees and expenses of litigation) incurred by or imposed upon the Indemnitees, or
any one of them, in connection with any claims, suits, actions, demands or
judgments of third parties, including, without limitation, personal injury,
product liability and patent infringement matters (except in cases where such
claims, suits, actions, demands or judgments result from a material breach of
this Agreement, gross negligence or willful misconduct on the part of an
Indemnitee) arising out of any actions of the Indemnitor in the use of the HMRI
Background Technology by the Indemnitor or by an Affiliate, licensee,
sublicensee, distributor or agent of the Indemnitor.
5. Warranty Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, HMRI
MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, PRODUCTS, SERVICES,
RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS WARRANTIES
OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH
RESPECT TO ANY AND ALL OF THE FOREGOING.
6. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER HMRI NOR THE COMPANY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER
OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR
PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
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141
7. Cooperation.
Each of HMRI and the Company shall use commercially reasonable
efforts to perform and fulfill all conditions and obligations to be fulfilled or
performed by it under this Agreement.
8. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement; provided, however, that
in the event of termination the rights and obligations of the parties provided
in Sections 2 (with respect to Validated Targets and Validated Proteins
discovered at the time of termination), 4, 5, 6, 9, 10, 11, 12, 13, 14, 15, 18
and 19 shall survive such termination.
9. Force Majeure.
Neither HMRI nor the Company shall be liable for failure of or
delay in performing obligations set forth in this Agreement, and neither shall
be deemed in breach of its obligations, if such failure or delay is due to
natural disasters or any causes beyond the reasonable control of HMRI or the
Company. In event of such force majeure, the party seeking to be excused on the
basis of force majeure shall advise the other party of the beginning and end of
the circumstances constituting the force majeure, and shall use reasonable
efforts to cure or overcome the same and resume performance of its obligations
hereunder.
10. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
11. Further Assurances.
Each of the parties agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
12. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by either party without
the consent of the other which shall not be unreasonably withheld, except that
each party may assign this Agreement and the rights, obligations
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142
and interests of such party, in whole or in part, to any of its Affiliates, to
any entity created for the purpose of providing financing for either party's
contributions to the Company (provided, however, that any such assignment by a
party to such entity shall not be permitted without the prior consent of the
other party, which shall not be unreasonably withheld), to any purchaser of all
or substantially all of its assets or to any successor corporation resulting
from any merger or consolidation of such party with or into such corporations.
Subject to the foregoing, any reference to HMRI or the Company hereunder shall
be deemed to include the successor thereto and assigns thereof.
13. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by the parties
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by each party,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each party.
14. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
15. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
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143
16. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
17. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which counterparts together, shall constitute one and
the same instrument.
18. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
19. Dispute Resolution.
Except as otherwise provided herein, in the event of any
dispute, difference or question arising between the parties in connection with
this Agreement, the construction thereof, or the rights, duties or liabilities
of either party, then such disputes shall be resolved in accordance with the
procedures set forth in Sections 3.8 and 12.1 of the JV Master Agreement.
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144
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
HOECHST XXXXXX XXXXXXX, INC.
By: _________________________________________
Title:
HOECHST-ARIAD GENOMICS CENTER, LLC
By: _________________________________________
Title: Co-Chair of Management Committee
By: _________________________________________
Title: Co-Chair of Management Committee
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145
SCHEDULE I
HMRI BACKGROUND TECHNOLOGY
[*]
-8-
146
EXHIBIT I
FORM OF CROSS LICENSE AGREEMENT
CROSS LICENSE AGREEMENT
This CROSS LICENSE AGREEMENT (the "Agreement") is entered into as of
[__________] [___], 1997 by and between ARIAD PHARMACEUTICALS, INC., a Delaware
corporation with principal offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000-0000 ("ARIAD") and HOECHST XXXXXX XXXXXXX, INC., a Delaware corporation
having its offices at Xxxxx 000-000, X.X. Xxx 0000, Xxxxxxxxxxx, XX 00000-0000
("HMRI").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HMRI have
entered into a Joint Venture Master Agreement, dated March 4, 1997 (the "JV
Master Agreement") and related Joint Venture Agreements, providing for the
formation of the HOECHST-ARIAD GENOMICS CENTER, LLC, a Delaware limited
liability company with principal offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000-0000 (the "Company") and the establishment of a joint venture to pursue
Functional Genomics collaboratively;
WHEREAS, in connection with each party's rights to develop, make, use
and sell Products as to which it has been granted rights pursuant to the Product
Rights Agreement and other Joint Venture Agreements, ARIAD and HMRI desire to
enter into this Agreement pursuant to which, among other things, the parties
will grant to each other a license or sublicense in the Field, as the case may
be, for certain uses of the other party's Background Technology and Patent
Rights, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions.
Unless otherwise provided, all capitalized terms used herein
shall have the meanings set forth in the JV Master Agreement.
2. ARIAD License to HMRI.
(a) ARIAD hereby grants to HMRI [*] license and sublicense
(limited to the field, scope and term of the license to ARIAD) in the Field
under all ARIAD Background Technology and ARIAD Patent Rights for the purposes
of: (i) developing, making, using and selling Products to which HMRI shall have
been granted rights pursuant to the Product Rights Agreement and the other Joint
Venture Agreements, and (ii) utilizing in the Field any Joint Venture Technology
licensed to HMRI pursuant to Section 7.2 of the JV Master Agreement, but not for
any other purpose.
(b) In the event any license to ARIAD under which a sublicense
to HMRI is granted hereby is due to expire, ARIAD shall give written notice of
such potential expiration to HMRI
147
least sixty (60) days prior to the date of expiration, which notice shall
specify whether or not ARIAD intends to extend the license and the terms of any
proposed extensions. If ARIAD advises HMRI that it does not intend to extend the
license, HMRI may request that ARIAD extend the license and ARIAD will consider
such extension in good faith, or HMRI may seek to obtain a license to the
Technology covered by such license directly from the licensor thereof.
(c) Except as expressly set forth in Section 2(a), no license
is granted hereby to HMRI by ARIAD.
3. HMRI License to ARIAD.
(a) HMRI hereby grants to ARIAD [*] license and sublicense
(limited to the field, scope and term of the license to HMRI) in the Field under
all HMRI Background Technology and HMRI Patent Rights for the purposes of: (i)
developing, making, using and selling Products to which ARIAD shall have been
granted rights pursuant to the Product Rights Agreement and the other Joint
Venture Agreements, and (ii) utilizing in the Field any Joint Venture Technology
licensed to ARIAD pursuant to Section 7.2 of the JV Master Agreement, but not
for any other purpose.
(b) In the event any license to HMRI under which a sublicense
to ARIAD is granted hereby is due to expire, HMRI shall give written notice of
such potential expiration to ARIAD least sixty (60) days prior to the date of
expiration, which notice shall specify whether or not HMRI intends to extend the
license and the terms of any proposed extensions. If HMRI advises ARIAD that it
does not intend to extend the license, ARIAD may request that HMRI extend the
license and HMRI will consider such extension in good faith, or ARIAD may seek
to obtain a license to the Technology covered by such license directly from the
licensor thereof.
(c) Except as expressly set forth in Section 3(a), no license
is granted hereby to ARIAD by HMRI.
4. Limitation on In-Licenses of Technology; Payments to Third
Parties.
(a) ARIAD and HMRI shall each [*] with the terms hereof and of
the JV Master Agreement in any in-license of Technology which it enters into for
use in the Field. [*] Notwithstanding the foregoing, neither party shall have
rights to the other party's combinatorial, natural product or other compound
libraries or sources.
(b) If the party granting the sublicense or taking such other
steps (the "Grantor") would be obligated [*] as a result of granting such
sublicense or taking such other steps, [*]. The Grantee shall not be obligated
[*], except for those: (i) based on or resulting from [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
5. Technology Transfer; Confidentiality; Efforts.
After the date hereof, each party shall (upon request by the other
party), within a reasonable time thereafter, make available to the other party
its Background Technology licensed or sublicensed hereunder pursuant to Section
2(a) and Section 3(a), respectively, through such reasonable written and oral
disclosures and such reasonable on site training as the other party may request.
Without limiting the generality of the foregoing, each party will provide the
other party with such manuals, standard operating procedures, process
descriptions and the like, as it in its own utilization of such Technology. All
disclosures pursuant to this Agreement are subject to the confidentiality
provisions of Section 7.5
2
148
of the Operating Agreement and Article 6 of the JV Master Agreement. The other
party shall use the Background Technology and Patent Rights licensed to it
hereunder in the Field for the purposes of: (i) developing, making, using and
selling Products to which it shall have been granted rights pursuant to the
Product Rights Agreement and the other Joint Venture Agreements, and (ii)
utilizing in the Field any Joint Venture Technology licensed to it pursuant to
Section 7.2 of the JV Master Agreement, but not for any other purpose.
6. Indemnification.
Each party (the "Indemnitor"), shall indemnify, defend and
hold harmless the other party, its Affiliates and its directors, officers,
employees, and agents and their respective successors, heirs and assigns (the
"Indemnitees"), against any liability, damage, loss or expense (including
reasonable attorneys' fees and expenses of litigation) incurred by or imposed
upon the Indemnitees, or any one of them, in connection with any claims, suits,
actions, demands or judgments of third parties, including, without limitation,
personal injury, product liability and patent infringement matters (except in
cases where such claims, suits, actions, demands or judgments result from a
material breach of this Agreement, gross negligence or willful misconduct on the
part of an Indemnitee) arising out of any actions of the Indemnitor in the use
of the Indemnitee's Background Technology by the Indemnitor or by an Affiliate,
licensee, sublicensee, distributor or agent of the Indemnitor.
7. Warranty Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
NEITHER ARIAD NOR HMRI MAKES ANY WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS,
PRODUCTS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY
DISCLAIMS WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
8. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER ARIAD NOR HMRI WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER LEGAL OR
EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE
DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE GOODS,
TECHNOLOGY OR SERVICES.
9. Cooperation.
Each of ARIAD and HMRI shall use commercially reasonable
efforts to perform and fulfill all conditions and obligations to be fulfilled or
performed by it under this Agreement.
10. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement; provided, however, that
in the event of termination each party will retain the licenses and sublicenses
granted to it by the other party pursuant to Sections 2 and 3 and Sections 4, 6,
7, 8, 11, 12, 13, 14, 15, 16, 17, 20 and 21 shall survive such termination.
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11. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
12. Force Majeure.
Neither ARIAD nor HMRI shall be liable for failure of or delay
in performing obligations set forth in this Agreement, and neither shall be
deemed in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of ARIAD or HMRI. In event
of such force majeure, the party seeking to be excused on the basis of force
majeure shall advise the other party of the beginning and end of the
circumstances constituting the force majeure, and shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
13. Further Assurances.
Each of the parties agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
14. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by either party without
the consent of the other which shall not be unreasonably withheld, except that
each party may assign this Agreement and the rights, obligations and interests
of such party, in whole or in part, to any of its Affiliates, to any entity
created for the purpose of providing financing for either party's contributions
to the Company (provided, however, that any such assignment by a party to such
entity shall not be permitted without the consent of the other party, which
shall not be unreasonably withheld), to any purchaser of all or substantially
all of its assets or to any successor corporation resulting from any merger or
consolidation of such party with or into such corporations. Subject to the
foregoing, any reference to ARIAD or HMRI hereunder shall be deemed to include
the successor thereto and assigns thereof.
15. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by the parties
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by each party,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each party.
16. Governing Law.
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This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
17. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
18. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
19. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which counterparts together, shall constitute one and
the same instrument.
20. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
21. Dispute Resolution.
Except as otherwise provided herein, in the event of any
dispute, difference or question arising between the parties in connection with
this Agreement, the construction thereof, or the rights, duties or liabilities
of either party, then such disputes shall be resolved in accordance with the
procedures set forth in Sections 3.8 and 12.1 of the JV Master Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
ARIAD PHARMACEUTICALS, INC.
By:__________________________________
Title: Chief Executive Officer
HOECHST XXXXXX XXXXXXX, INC.
By:__________________________________
Title:
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EXHIBIT J
FORM OF PRODUCT RIGHTS AGREEMENT
PRODUCT RIGHTS AGREEMENT
This PRODUCT RIGHTS AGREEMENT (the "Agreement") is entered into as of
[__________] [___], 1997, by and among ARIAD PHARMACEUTICALS, INC., a Delaware
corporation with principal offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000-0000 ("ARIAD"), HOECHST-ARIAD GENOMICS CENTER, LLC, a Delaware limited
liability company with principal offices at 00 Xxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX
00000-0000 (the "Company"), and HOECHST XXXXXX XXXXXXX, INC., a Delaware
corporation having its offices at Xxxxx 000-000, X.X. Xxx 0000, Xxxxxxxxxxx, XX
00000-0000 ("HMRI").
RECITALS:
WHEREAS, for the purposes of combining and further developing their
respective technologies in the area of Functional Genomics, ARIAD and HMRI have
entered into a Joint Venture Master Agreement, dated March 4, 1997 (the "JV
Master Agreement") and related Joint Venture Agreements, providing for the
formation of the Company and the establishment of a joint venture to pursue
Functional Genomics collaboratively;
WHEREAS, in connection with the Company's performance of research in
the area of Functional Genomics in order to identify Validated Targets and
Validated Proteins, the parties desire to enter into this Agreement which, among
other things, will provide for a mechanism for the granting of rights to ARIAD
and HMRI with respect to Validated Targets and Validated Proteins discovered by
the Company and the payment of royalties on Products developed by ARIAD or HMRI
which are Validated Proteins or based on the use of a Validated Target or
Validated Protein, all on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants expressed
herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound,
the parties agree as follows:
1. Definitions. Unless otherwise provided, all capitalized terms
used herein shall have the meanings set forth in the JV Master Agreement.
2. Determination of Discovery of Candidate Genes, Validated
Targets and Validated Proteins.
Whenever ARIAD, HMRI or the Company believes it has discovered
a Candidate Gene, Validated Target or Validated Protein in the course of the
Research Program, it shall promptly notify and provide all relevant data to the
Management Committee. Upon such notice (and on its own initiative even without
notice), the Management Committee shall determine whether a Candidate Gene,
Validated Target or Validated Protein has been discovered by the Company
utilizing criteria to be established by the Management Committee and furnished
to the parties in writing. The Management Committee shall use its best efforts
to establish the initial
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criteria by [*] and shall have the right to amend the criteria
from time to time. Regardless of the date of determination of discovery by the
Management Committee, any Candidate Gene, Validated Target or Validated Protein
will be deemed to have been discovered at the earlier of disclosure of such
Candidate Gene, Validated Target or Validated Protein in: [*]. The
required scope and contents of such disclosure shall be determined by the
Management Committee as part of the criteria for determination of discovery of
a Candidate Gene, Validated Target or Validated Protein. Upon a determination
by the Management Committee that a Validated Target or Validated Protein has
been discovered by the Company, the Management Committee shall provide prompt
written notice to each of ARIAD and HMRI, and such Validated Targets and
Validated Proteins shall be added to the respective Pools, as described below.
3. Establishment of Validated Target Pool and Validated Protein
Pool.
The Management Committee shall establish a Validated Target
Pool (the "Validated Target Pool") and a Validated Protein Pool (the "Validated
Protein Pool"). The [*] discovered by the Company shall constitute the initial
Validated Target Pool, and the [*] discovered by the Company shall constitute
the initial Validated Protein Pool, and additional Validated Targets and
Validated Proteins shall be added to the Pools as the Management Committee
determines that they have been discovered in accordance with Section 2. The
Management Committee shall provide prompt written notice to each of ARIAD and
HMRI of the establishment of each initial Pool. Validated Targets and Validated
Proteins will be deemed added to the Pools in the order in which they are
discovered; provided, however, that if the Management Committee later
determines that the contents of a Pool should have been different at the time
of a selection by a party, the party which has made such selection will neither
be required nor entitled to return that selection to the Pool or otherwise
change its selection. In the event more than one Validated Target or Validated
Protein is discovered [*].
4. Procedure for Selecting Candidates from Pools.
As to each of the Validated Target Pool and Validated Protein
Pool, the selection procedures set forth below for ARIAD and HMRI shall apply
separately to each such Pool. As used below, the word "Pool" means the Validated
Target Pool or the Validated Protein Pool, and the word "Candidate" means a
Validated Target or a Validated Protein, as the case may be.
(a) Upon receipt from the Management Committee of notice of
creation of each initial Pool, [*]; provided, however, that within thirty (30)
days of receipt from the Management Committee of notice that the Validated
Target Pool is comprised of [*] and the Validated Protein Pool is comprised of
[*], with respect to each Pool [*] shall give written notice to the Management
Committee of [*].
(b) [*] shall have the right to [*] to provide written notice
to the Management Committee of [*].
(c) If [*] within the [*] shall then have the [*] by the
Management Committee.
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[*] to provide written notice to the Management Committee of [*].
(d) If [*] shall then have the [*] by the Management
Committee. [*] to provide written notice to the Management Committee of [*]. If
[*] under the circumstances described in subparagraph (c) above, then [*] shall
have [*] described in subparagraph (c) to provide written notice to the
Management Committee of [*] . Whether or not [*] shall have [*] to provide
written notice to the Management Committee of [*] . If [*] under the
circumstances described in subparagraph (b) above, then [*] by the Management
Committee [*] to provide written notice to the Management Committee of [*] .
(e) It is the intention of ARIAD and HMRI that the selection
process for Candidates shall continue thereafter in a manner consistent with:
(i) [*].
(f) Notwithstanding the foregoing, at any time that ARIAD or
HMRI has the [*] right to select a Candidate from a Pool, such party may
exercise such right upon written notice to the Management Committee [*] . ARIAD
and HMRI may [*] upon mutual agreement.
(g) Any selection of a Candidate by ARIAD or HMRI pursuant to
this Section 4 shall be deemed to have been made upon receipt by the Management
Committee of written notice thereof. In the event ARIAD or HMRI fails to provide
written notice to the Management Committee of a selection of a Candidate from a
Pool within any such [*] period for selection, [*] in accordance with the
procedures described in this Section 4. The Management Committee shall promptly
inform ARIAD or HMRI whenever the other has either selected a Candidate from a
Pool, or failed to select or affirmatively decided not to select a Candidate
within any such [*] period during which such party has a right to select a
Candidate.
5. Rights to Diagnostic Products, Vaccines, Antibody Drugs and
Other Products.
The Company shall have sole and exclusive ownership of all right, title
and interest in any Diagnostic Product, Vaccine, Antibody Drug or Other Product
derived from any Candidate Gene, Validated Target, Validated Protein or
otherwise derived from the Research Program. The Management Committee shall have
sole discretion in determining whether to grant any licenses to ARIAD, HMRI or
third parties for the development, manufacture, use or sale of any Diagnostic
Product, Vaccine, Antibody Drug or Other Product, and the terms and conditions
of any such licenses, in order to maximize the value of the Company.
6. Licenses to Drugs Derived from Validated Targets.
Effective upon selection of a Validated Target by ARIAD or HMRI, the
Company shall be deemed, without further action, to have granted to the party
selecting such Validated Target [*] license under all Joint Venture Technology
and Joint Venture Patent Rights, and [*] to use such Validated Target for
purposes of developing, making, having made, using, having used, selling, having
sold, offering for sale and importing any Small-molecule Drug, Peptidomimetic
Drug, or Antisense Drug. If the Company [*] , the party receiving the license
[*] . The party receiving the license shall not be obligated [*] , except for
those: (i) based on or resulting from [*] or (ii) as otherwise expressly
provided in the Joint Venture Agreements.
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7. Licenses to Drugs Derived from Validated Proteins.
Effective upon selection of a Validated Protein by ARIAD or HMRI, the
Company shall be deemed, without further action, to have granted to the party
selecting such Validated Protein [*] license under all Joint Venture
Technology and Joint Venture Patent Rights, and [*] sublicense (limited to
the field and scope of the license to the Company) under all licenses of
Technology to the Company to use such Validated Protein for purposes of
developing, making, having made, using, having used, selling, having sold,
offering for sale and importing any Protein Drug, Derivative Protein Drug,
Protein Mimetic Drug, Analog Protein Drug or Gene Therapy Drug. If the Company
[*] as a result of granting such licenses, [*] . The party receiving the
license shall not be obligated [*] , except for those: (i) based on or
resulting [*] or (ii) as otherwise expressly provided in the Joint Venture
Agreements.
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8. Diligence and Product Reversion.
With respect to each Validated Target or Validated Protein selected by
ARIAD or HMRI, the party selecting such Validated Target or Validated Protein
shall, by virtue of selecting the Validated Target or Validated Protein and
without further action, be deemed to have committed in good faith to apply [*],
consistent with the efforts it devotes to its other projects, to diligently
pursue the discovery, development and/or commercialization of at least [*]
derived from such Validated Target or Validated Protein. Notwithstanding the
fact that, as set forth in Section 7.1.5 of the JV Master Agreement and in the
Cross License Agreement, neither party has any rights to the other party's
combinatorial, natural product or other compound libraries or sources, if the
party selecting the Validated Target or Validated Protein fails to utilize such
diligent efforts or ceases to pursue such Validated Target or Validated Protein,
the relevant Validated Target or Validated Protein [*] , and the party which
failed to utilize such diligent efforts or ceased pursuit [*] : If [*] accepts
the transfer of the Validated Target or Validated Protein, by virtue of such
transfer and without further action it will be deemed to have received a license
under Section 6 or Section 7, as the case may be, and to have [*], to diligently
pursue the discovery, development and/or commercialization of such Validated
Target, Validated Protein or Product. If the party which originally selected the
Validated Target or Validated Protein [*] as a result of the transfer of the
Validated Target or Validated Protein [*] . If [*] does not wish to acquire
rights to such Validated Target or Validated Protein, or if, after acquiring
rights to such Validated Target or Validated Protein fails to utilize diligent
efforts or ceases to pursue for any reason such Validated Target or Validated
Protein, the relevant Validated Target or Validated Protein shall be [*].
9. Rights to Validated Targets and Validated Proteins Remaining
in Pool.
The Management Committee shall have the authority, at such times as the
Management Committee deems appropriate, to assess the Pools containing
Candidates that each of ARIAD and HMRI has not selected or has returned, for
purposes of determining whether to grant any licenses to third parties for
rights to such Candidates previously unselected or returned by ARIAD and HMRI.
The Management Committee shall have sole discretion in determining the terms and
conditions of any such licenses.
10. Royalties.
(a) In the event ARIAD or HMRI develops a Product that is
[*] Validated Target or Validated Protein or the associated Candidate Gene, it
shall pay a [*] royalty on its Net Sales and those of its Affiliates
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to the other party.
(b) In the event ARIAD or HMRI shall grant a sublicense to a
third party to make, use or sell a Product that is [*] a Validated Target or
Validated Protein, the royalty shall be the lesser of the amount set forth in
Section 10(a) calculated on the sublicensee's Net Sales or [*] of the royalties
actually received by a party from the sublicensee.
(c) In the event that ARIAD and HMRI shall be obligated to pay
royalties in excess of [*] of its Net Sales and those of its Affiliates or
sublicensees to a third party with respect to a particular Product being
developed or sold by it under a license from the third party for a Gene or
Protein necessary to develop or sell such Product, then the paying party shall
be entitled to reduce the royalty payable hereunder to the other party [*] ;
provided that the royalty payable to the other party under Section 10(a) shall
not be reduced below [*] of Net Sales and the royalty payable to the other party
under Section 10(b) shall not be reduced below [*] of the royalties actually
received by the paying party from the sublicensee.
(d) In the event that ARIAD or HMRI shall be obligated to pay
royalties or other payments to a third party with respect to a particular
Product being developed or sold by the other party or its Affiliates or
sublicensees as a result of the grant of a sublicense to the Company or the
other party, [*] after receipt of an invoice for such payment from the party
granting the sublicense. The party receiving the license shall not be obligated
[*] , except for those: (i) based on or resulting from [*] or (ii) as otherwise
expressly provided in the Joint Venture Agreements.
(e) "Net Sales" shall mean the gross amount billed by ARIAD or
HMRI or their Affiliates or licensees or sublicensees to third parties worldwide
for the sales of Products, less (a) allowances for normal and customary trade,
quantity and cash discounts actually allowed and taken, (b) transportation,
insurance and postage charges, if prepaid by a party or any Affiliate, licensee
or sublicensee of a party and billed on a party's or any Affiliate's, licensee's
or sublicensee's invoices as a separate item, (c) credits, rebates, returns
(including, but not limited to, wholesaler and retailer returns), to the extent
actually allowed, and royalties payable to third parties, and (d) sales, use and
other taxes similarly incurred to the extent stated on the invoice as a separate
item, all subject to the following:
(i) In the case of pharmacy incentive programs, hospital
performance incentive program chargebacks, disease
management programs, similar programs or discounts on
"bundles" of products, all discounts and the like shall
be allocated among products on the basis on which such
discounts and the like were actually granted, or if such
basis cannot be determined, proportionately to the list
prices of such products.
(ii) In the case of any sale or other disposal by ARIAD or
HMRI to an Affiliate, for resale, the Net Sales shall be
calculated as above on the value charged or invoiced on
the first arm's length sale to a party who is not an
Affiliate.
(iii) In the case of any other sale or other disposal, such as
barter or counter-trade, of any Product, or part thereof,
otherwise than in an arm's length transaction
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exclusively for money, the Net Sales shall be calculated
as above on the fair market price (if higher) in the
relevant country of sale or disposal.
(f) Royalties shall be paid by ARIAD or HMRI to the other
party on Net Sales within sixty (60) days after the end of each fiscal quarter
in which such Net Sales are made. Such payments shall be accompanied by a report
showing the quantity and Net Sales of each Product sold by ARIAD or HMRI or any
Affiliate, licensee or sublicensee of ARIAD or HMRI in each country, the
applicable royalty rate for such Product, and a calculation of the amount of
royalty due.
(g) The Net Sales used for computing the royalties payable to
ARIAD or HMRI from the other party shall be computed, and royalties shall be
paid, in U.S. dollars. For purposes of determining the amount of royalties due,
the amount of Net Sales in any foreign currency shall be computed by converting
such amount into dollars at the prevailing commercial rate of exchange for
purchasing dollars with such foreign currency as reported in The Wall Street
Journal on the last business day of the fiscal quarter to which a royalty
payment relates.
(h) ARIAD and HMRI and their respective Affiliates, licensees
and sublicensees shall keep for five (5) years from the date of each payment of
royalties complete and accurate records of sales by each of them and their
Affiliates, licensees and sublicensees of each Product in sufficient detail to
allow the accruing royalties to be determined accurately. Each of ARIAD and HMRI
shall have the right for a period of three (3) years after receiving any report
or statement with respect to royalties due and payable to appoint at its expense
an independent certified public accountant reasonably acceptable to the other
party to inspect the relevant records of the other party and its Affiliates,
licensees and sublicensees to verify such report or statement. ARIAD and HMRI
and their respective Affiliates, licensees and sublicensees shall each make
their records available for inspection by such independent certified public
accountant during regular business hours at such place or places where such
records are customarily kept, upon reasonable notice from the other party,
solely to verify the accuracy of the reports and payments. Such inspection right
shall not be exercised more than once in any calendar year nor more than once
with respect to sales of any Product in any given period. ARIAD and HMRI agree
to hold in strict confidence all information concerning royalty payments and
reports, and all information learned in the course of any audit or inspection,
except to the extent necessary for a party to reveal such information in order
to enforce its rights under this Agreement or if disclosure is required by law.
The results of each inspection, if any, shall be binding on both ARIAD and HMRI.
The party requesting inspection shall pay for such inspection, except that in
the event there is any upward adjustment in aggregate royalties payable for any
fiscal year shown by such inspection of more than two percent (2%) of the amount
paid, the party whose records were inspected shall pay for such inspection.
(i) Royalties not paid within the time period set forth in
subparagraph (e) shall bear interest at the lesser of: (i) the prime rate as
reported by the Xxxxxx Guaranty Bank and Trust, New York, New York, on the date
such payment is due, plus an additional three percent (3%) or (ii) the maximum
rate permitted by applicable law, from the due date until paid in full.
11. Patents.
(a) If either party selects a Validated Protein pursuant to
Section 4 or Section 8,
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such party shall assume prosecution and maintenance of pending and issued patent
applications and patents with claims directed only to such Validated Protein and
its Candidate Gene, effective as of the time of selection. Each of ARIAD and
HMRI, with respect to any Product as to which it has rights pursuant to this
Agreement, shall, on its own behalf and expense (directly or through another
entity), be responsible for filing patent applications, continuing prosecution
of such applications, and obtaining patents claiming inventions made by such
party with respect to any such Product. The party filing or continuing to
prosecute a patent application shall be entitled to control the prosecution of
such application and make all decisions necessary or appropriate to the conduct
of such prosecution, including decisions to resolve any interference or
opposition. In the event that any patent is issued, the party with
responsibility for prosecution shall control the maintenance and enforcement of
such patent and shall be entitled to make all decisions concerning payment of
all taxes and fees necessary for the maintenance and enforcement of such patent.
The party with responsibility for prosecution shall furnish copies of relevant
filings and correspondence to the Company as reasonably requested by the Company
and cooperate with the Company and the other party to achieve consistency in
prosecution of all patent applications relating to the Research Program. The
parties undertake that they shall take such actions which are reasonably
necessary or desirable to establish, maintain and assert any rights or interest
of the parties in respective patent rights, including the execution of all
documents necessary or desirable so that title or other rights can be
established and maintained and so that any patent filings permitted hereunder
can be made, prosecuted and maintained. Such actions shall include cooperative
efforts as reasonable to obtain the broadest possible protection for Product(s)
in all jurisdictions, to the mutual benefit of the parties, taking into account
the nature of the invention(s) and the state of the law in the respective
jurisdictions.
(b) ARIAD and HMRI shall notify each other and the Company in
a timely manner of any decision to abandon a pending patent application or an
issued patent directed to a Product. Thereafter, the Company shall have the
option, at its expense, of continuing to prosecute any such pending patent
application or of keeping the issued patent in force.
(c) In the event that either of ARIAD or HMRI becomes aware of
any infringement or alleged infringement by a third party of any patent rights
with respect to a Product as to which ARIAD or HMRI has rights pursuant to this
Agreement, it shall promptly notify the Company in writing and provide available
evidence, if any, of such infringement. The party with rights to the Product
shall have the right at its own expense to initiate and prosecute litigation
against the alleged infringer, and shall be entitled to any amounts recovered.
In the event any such proceeding is instituted, the Company and the other party
shall cooperate with the party pursuing the proceeding at the expense of such
party, and shall execute all documents and perform such other acts as may be
reasonably requested in the circumstances.
(d) In the event that any action, suit or proceeding is
brought against ARIAD, HMRI, or any Affiliate, licensee or sublicensee of ARIAD
or HMRI, alleging the infringement of the intellectual property rights of a
third party by reason of the development, manufacture, use, sale, importation or
offer for sale of a Product, the party whose Product is the subject matter of
the action, suit or proceeding shall have the obligation to defend itself, the
other party and the Company in such action, suit or proceeding at its own
expense; provided, however, that any other party named in such action, suit or
proceeding shall be allowed to participate in the defense of such action, suit
or proceeding with its own counsel at its own expense. The defending party shall
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provide the Company and the other party with prompt written notice of the
commencement of any such action, suit, proceeding or claim of infringement and
will furnish to the Company and the other party a copy of each substantive
communication relating to the alleged infringement. The Company and the other
party will cooperate with the defending party in the defense of any such action,
suit or proceeding at the expense of the defending party, and shall execute all
documents and take all other actions which may reasonably be requested in
connection with the prosecution of such action, suit or proceeding.
(e) ARIAD and HMRI, as the owners of the Company, agree that
they will not challenge the validity of any patent owned by or licensed to the
Company or either party which claims any Candidate Gene, Validated Target,
Validated Protein or Product.
12. Right of First Negotiation.
(a) For a period of [*] by ARIAD or HMRI under Section 4 or
Section 8, in the event that ARIAD or HMRI determines to license or sublicense
to any non-Affiliate rights to any such Validated Target or Validated Protein,
or any Products derived therefrom, it shall give written notice to the other
party, specifying in reasonable detail the rights it intends to license (the
"Negotiation Notice"). The party receiving the Negotiation Notice (the
"Recipient") shall have [*] after the date of the Negotiation Notice to provide
a written response (the "Response") to the party sending the Negotiation Notice
(the "Sender") as to whether or not the Recipient wishes to enter into
negotiations with the Sender concerning the licensing of such rights. If the
Sender does not receive a Response within such [*] period or if the Recipient
declines to enter into negotiations, the Sender shall thereafter have the right
to license the rights which were the subject of the Negotiation Notice free of
any restriction, limitation or duty to the Recipient whatsoever. If the Response
states that the Recipient wishes to enter into negotiations with the Sender, the
parties shall negotiate in good faith the licensing of such rights to the
Recipient for a period of [*] from the date of the Response.
(b) If the parties do not agree upon and execute a written
agreement for such rights within such [*] period, as such period may be extended
by written agreement of both parties, the Recipient [*]
13. Indemnification.
Each party, with respect to any Product as to which it has
rights pursuant to this Agreement (the "Indemnitor"), shall indemnify, defend
and hold harmless the other party, its Affiliates and their respective
directors, officers, employees, and agents and their respective successors,
heirs and assigns (the "Indemnitees"), against any liability, damage, loss or
expense (including reasonable attorneys' fees and expenses of litigation)
incurred by or imposed upon the Indemnitees, or any one of them, in connection
with any claims, suits, actions, demands or judgments of third parties,
including, without limitation, personal injury and product liability matters
(except in cases where such claims, suits, actions, demands or judgments result
from a material breach of this Agreement, gross negligence or willful misconduct
on the part of an Indemnitee) arising out of any actions of the Indemnitor in
the development, testing, production, manufacture, promotion, import, sale or
use by any person of any Product which is manufactured
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or sold by the Indemnitor or by an Affiliate, licensee, sublicensee, distributor
or agent of the Indemnitor other than a Licensee.
14. Warranty Disclaimer.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE
COMPANY MAKES NO WARRANTY WITH RESPECT TO ANY TECHNOLOGY, GOODS, PRODUCTS,
SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS AGREEMENT AND HEREBY DISCLAIMS
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND
NONINFRINGEMENT WITH RESPECT TO ANY AND ALL OF THE FOREGOING.
15. Limited Liability.
NOTWITHSTANDING ANYTHING ELSE IN THIS AGREEMENT OR OTHERWISE,
NEITHER ARIAD, HMRI NOR THE COMPANY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT
MATTER OF THIS AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR
OTHER LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL
OR PUNITIVE DAMAGES OR LOST PROFITS OR (II) COST OF PROCUREMENT OF SUBSTITUTE
GOODS, TECHNOLOGY OR SERVICES.
16. Cooperation.
Each of ARIAD, HMRI and the Company shall use commercially
reasonable efforts to perform and fulfill all conditions and obligations to be
fulfilled or performed by it under this Agreement.
17. Term and Termination.
This Agreement shall take effect as of the date first written
above and shall continue until termination of the JV Master Agreement in
accordance with Section 9.3 of the JV Master Agreement; provided, however, that
in the event of termination:
(a) the procedures set forth in Section 4 shall be applied
until there are no more Candidates in either Pool;
(b) the procedures set forth in Section 9.4.1(f) of the JV
Master Agreement shall be applied with respect to rights to Diagnostic Products,
Vaccines, Antibody Drugs and Other Products described in Section 5 herein;
(c) ARIAD and HMRI will retain the licenses granted to each in
Sections 6 and 7 prior to termination;
(d) each of ARIAD's and HMRI's rights to receive royalty
payments pursuant to Section 10 shall survive such termination; and,
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(e) Sections 11, 12, 13, 14, 15, 19, 20, 22, 23, 24, 25, 26,
28 and 29 shall survive such termination.
18. Force Majeure.
None of the parties shall be liable for failure of or delay in
performing obligations set forth in this Agreement, and no party shall be deemed
in breach of its obligations, if such failure or delay is due to natural
disasters or any causes beyond the reasonable control of such party. In event of
such force majeure, the party seeking to be excused on the basis of force
majeure shall advise the other party of the beginning and end of the
circumstances constituting the force majeure, and shall use reasonable efforts
to cure or overcome the same and resume performance of its obligations
hereunder.
19. Notices.
All notices, requests, consents and other communications
hereunder shall be made in accordance with Section 13.1 of the JV Master
Agreement.
20. Further Assurances.
Each of the parties agrees to duly execute and deliver, or
cause to be duly executed and delivered, such further instruments and do and
cause to be done such further acts and things, including, without limitation,
the filing of such additional assignments, agreements, documents and
instruments, that may be necessary or as the other party hereto may at any time
and from time to time reasonably request in connection with this Agreement to
carry out more effectively the provisions and purposes of, or to better assure
and confirm unto such other party its rights and remedies under, this Agreement.
21. Xxxx-Xxxxx-Xxxxxx Filing.
The parties shall cooperate fully and use their best efforts
to comply with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the rules and regulations issued thereunder (the "HSR Act"), to
determine if a Notification Report form is required thereunder, and to file any
required Notification Report form with the Federal Trade Commission and the
Department of Justice in accordance with such rules and regulations with respect
to transactions contemplated in this Agreement.
22. Successors and Assigns.
Except as otherwise provided herein, neither this Agreement
nor any obligation of a party hereunder may be assigned by either party without
the consent of the other which shall not be unreasonably withheld, except that
each party may assign this Agreement and the rights, obligations and interests
of such party, in whole or in part, to any of its Affiliates, to any entity
created for the purpose of providing financing for a party's contributions to
the Company (provided, however, that
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any such assignment by a party to such entity shall not be permitted without the
prior consent of the other party, which shall not be unreasonably withheld), to
any purchaser of all or substantially all of its assets or to any successor
corporation resulting from any merger or consolidation of such party with or
into such corporations. Subject to the foregoing, any reference to ARIAD, HMRI
or the Company hereunder shall be deemed to include the successor thereto and
assigns thereof.
23. Amendments.
No amendment, modification, waiver, termination or discharge
of any provision of this Agreement nor consent to any departure by the parties
therefrom, shall in any event be effective unless the same shall he in writing
specifically identifying this Agreement and the provision intended to be
amended, modified, waived, terminated or discharged and signed by each party,
and each amendment, modification, waiver, termination or discharge shall be
effective only in the specific instance and for the specific purpose for which
given. No provision of this Agreement shall be varied, contradicted or explained
by any oral agreement course of dealing or performance or any other matter not
set forth in an agreement in writing and signed by each party.
24. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without giving effect to
principles of conflicts of law.
25. Severability.
If any provision hereof should be held invalid, illegal or
unenforceable in any respect in any jurisdictions then, to the fullest extent
permitted by law, (a) all other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in order to carry
out the intentions of the parties hereto as nearly as may he possible and (b)
such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of such provision in any other jurisdiction. To the
extent permitted by applicable law, the parties hereby waive any provision of
law that would render any provision hereof prohibited or unenforceable in any
respect.
26. Headings.
Headings used herein are for convenience only and shall not in
any way affect the construction of, or be taken into consideration in
interpreting, this Agreement.
27. Execution in Counterparts.
This Agreement may be executed in any number of counterparts
each of which counterpart when so executed and delivered, shall be deemed to be
an original, and all of which counterparts together, shall constitute one and
the same instrument.
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28. Entire Agreement.
This Agreement, together with the other Joint Venture
Agreements, constitutes, on and as of the date hereof, the entire agreement of
the parties with respect to the subject matter hereof, and all prior or
contemporaneous understandings or agreements, whether written or oral, between
the parties with respect to such subject matter are hereby superseded in their
entirety, and this Agreement supersedes any duplicative or inconsistent
provision in the JV Master Agreement.
29. Dispute Resolution.
In the event of any dispute, difference or question arising
between the parties in connection with this Agreement, the construction thereof,
or the rights, duties or liabilities of any party, then such disputes shall be
resolved in accordance with the procedures set forth in Sections 3.8 and 12.1 of
the JV Master Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives.
ARIAD PHARMACEUTICALS, INC.
By:______________________________________
Title: Chief Executive Officer
HOECHST XXXXXX XXXXXXX, INC.
By:______________________________________
Title:
HOECHST-ARIAD GENOMICS CENTER, LLC
By:______________________________________
Title: Co-Chair of Management Committee
By:______________________________________
Title: Co-Chair of Management Committee
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