Therapeutic Collaboration and License Agreement - Human Genome Sciences Inc., Schering Corp., Schering Plough Ltd., SmithKline Beecham Corp. and SmithKline Beecham plc
THERAPEUTIC COLLABORATION AND LICENSE AGREEMENT
This Agreement ("Agreement"), effective as of the 28th of June, 1996 (the
"EFFECTIVE DATE"), by and among Human Genome Sciences, Inc., a corporation
organized under the laws of the State of Delaware, United States of America,
having a place of business at 9410 Key West Avenue, Rockville, Maryland 20850,
for itself and its AFFILIATES, as defined below (collectively including such
AFFILIATES "HGS"), Schering Corporation, a corporation organized under the laws
of the State of New Jersey, United States of America, having a place of business
at 2000 Galloping Hill Road, Kenilworth, New Jersey 07033, and Schering Plough
Ltd., a Swiss corporation having its principal place of business at
Toepferstrasse 5, CH-6004 Lucerne, Switzerland, each for itself and its
AFFILIATES, as defined below (collectively including such AFFILIATES "SP"), and
SmithKline Beecham Corporation, a corporation organized under the laws of the
Commonwealth of Pennsylvania, United States of America, having a place of
business at 709 Swedeland Road, King of Prussia, Pennsylvania, 19406 and
SmithKline Beecham, plc, having a place of business at Great West Road,
Brentford, Middlesex, U.K.
WITNESSETH THAT:
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WHEREAS HGS is in possession of certain human gene sequence information and
has the capacity and ability to rapidly obtain full or meaningful partial
sequence data for expressed human genes,
WHEREAS, HGS and SB (as defined below) have entered into a
COLLABORATION AGREEMENT relating to sequencing of human genes and development of
practical applications
therefor and have amended such COLLABORATION AGREEMENT to permit them to
collaborate with and grant certain rights to SP.
WHEREAS SP is a multinational human healthcare company which has the
capacity and ability to develop practical applications in the human healthcare
field of the gene sequence data in the possession of or within the capacity and
ability of HGS to obtain,
WHEREAS HGS, SB and SP wish to grant rights to each other with respect to
developing human therapeutic products.
NOW, THEREFORE, in consideration of the covenants and obligations expressed
herein, and intending to be legally bound, and otherwise to be bound by proper
and reasonable conduct, the parties agree as follows:
1. DEFINITIONS
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1.1 "AFFILIATES" shall mean any individual or entity directly or
indirectly controlling, controlled by or under common control with, the
specified individual or entity. For purposes of this Agreement, the direct or
indirect ownership of over fifty percent (50%) of the outstanding voting
securities of an entity, or the right to receive over fifty (50%) of the profits
or earnings of an entity shall be deemed to constitute control. Such other
relationship as in fact gives such individual or entity the power or ability to
control the management, business and affairs of an entity shall also be deemed
to constitute control.
1.2 "ANTIBODY PRODUCT" shall mean an antibody (monoclonal or
polyclonal) or fragments or constructs thereof in the SP FIELD which is
potentially useful for the treatment or prevention of a disease or disorder in
humans.
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1.3 "ANTIBODY RESEARCH PLAN" shall mean a plan for developing an SP
ANTIBODY PRODUCT. A representative sample of such a plan is shown in Appendix A.
1.4 "ANTISENSE" shall mean inhibiting or preventing in vivo expression
in a human or animal of a gene product by use of an oligonucleotide or modified
oligonucleotide which binds to RNA or DNA to prevent and/or impair expression of
the gene product.
1.5 "BLOCKING CLAIM" shall mean a claim under any patent application or
granted patent anywhere in the world which generically but not specifically
claims (i) any and all compounds (and/or the use thereof) which interact with or
prevent interaction with a specified TARGET which is a PRODUCT (i.e., an omnibus
claim) and/or (ii) any and all antibodies (and/or the use thereof) against a
specified THERAPEUTIC PROTEIN (i.e., an omnibus claim). The following are
representative but not exclusive examples of claim language for "BLOCKING
CLAIMS": (1) a compound which interacts with receptor X; (2) a compound which
prevents binding between receptor X and its ligand, (3) a process for activating
receptor X, comprising: contacting receptor X with a compound which binds
thereto and activates the receptor; (4) a process for preventing activation of
receptor X comprising contacting receptor X with a compound which prevents
binding between receptor X and its ligand , and (5) a compound which is capable
of interacting with a receptor X.
1.6 "cDNA" shall mean complementary DNA prepared from human messenger
RNA.
1.7 "COLLABORATION AGREEMENT" shall mean the Collaboration Agreement
entered into between SB and HGS effective as of May 19, 1993, as amended or
superseded from time to time, a copy of the version to be in effect on the
EFFECTIVE DATE having been provided to SP prior to the EFFECTIVE DATE.
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1.8 "COLLABORATION PARTNER" shall mean those entities which are set
forth in Appendix B and any entity added to Appendix B or substituted for an
entity in Appendix B, pursuant to the terms of the COLLABORATION AGREEMENT,
provided that the aggregate of COLLABORATION PARTNERS shall be no more than four
entities at any one time.
1.9 "COLLABORATION BLOCKING PATENT" means a patent or patent
application filed prior to the end of the INITIAL RESEARCH TERM owned by a
COLLABORATION PARTNER, SB, or HGS only to the extent that it includes a
"BLOCKING CLAIM" and as to which HGS and/or SB has the right to grant a license
to SP. Included within the definition are all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals,
extensions, registrations, confirmations, reexaminations, provisional
applications, SPCs.
1.10 "COLLABORATION PATENT" means a COLLABORATION BLOCKING PATENT
and/or COLLABORATION TARGET PATENT and/or COLLABORATION PROTEIN PATENT.
1.11 "COLLABORATION PROTEIN PATENT" means a patent or patent
application filed prior to the end of the INITIAL RESEARCH TERM owned by a
COLLABORATION PARTNER, SB, or HGS only to the extent that it claims a
THERAPEUTIC PROTEIN which is a PRODUCT and/or the manufacture or use of such
THERAPEUTIC PROTEIN and as to which HGS and/or SB has the right to grant a
license to SP. Included within the definition are all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals,
extensions, registrations, confirmations, reexaminations, provisional
applications, SPCs.
1.12 "COLLABORATION TARGET PATENT(S)" means a patent or patent
application filed prior to the end of the INITIAL RESEARCH TERM owned by a
COLLABORATION
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PARTNER, SB, or HGS only to the extent that it claims a TARGET which is a
PRODUCT and/or the manufacture or use thereof and as to which HGS and/or SB has
the right to grant a license to SP. Included within the definition are all
continuations, continuations-in-part, divisions, patents of addition, reissues,
renewals, extensions, registrations, confirmations, reexaminations, provisional
applications, SPCs.
1.13 "DIAGNOSTIC(S)" shall mean any product, process, substance,
composition or service intended to predict, detect or identify a disease or
determine the presence of a pathologic condition in a human.
1.14 "DISCOVERED" shall mean with respect to any product, process,
substance, composition or service, the earlier of the following events (i) the
specific disclosure of such product, process, substance, composition or service
in a patent application filed by the discovering party or (ii) the specific
disclosure of such product, process, substance, composition or service by the
discovering party in a written document (including, but not limited to,
laboratory notebooks) other than a filed patent application.
1.15 "DRUG PRODUCT" shall mean a PRODUCT (other than a THERAPEUTIC
PROTEIN or ANTIBODY PRODUCT) in the SP FIELD which is potentially useful for the
treatment or prevention of a disease or disorder in humans.
1.16 "DRUG RESEARCH PLAN" shall mean a plan for developing screens for
and screening of TARGETS to discover an SP DRUG PRODUCT. A representative
example of such a plan is shown in Appendix A.
1.17 "EFFECTIVE DATE" shall mean the date first above written.
1.18 "EXTENDED TERM" shall mean the additional period defined in
Paragraph 4.2.
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1.19 "GENE" shall mean a human gene or a portion thereof or cDNA
corresponding thereto.
1.20 "GENE THERAPY" shall mean treatment or prevention of a disease, or
remedying a gene deficiency of humans or animals by genetic modification of
human somatic cells or animal somatic or germ cells (in vivo, in vitro or ex
vivo) with DNA (RNA) for the purpose of expressing a protein or
oligo(poly)nucleotide encoded by said DNA (RNA) in a human or animal.
1.21 "GENE THERAPY VACCINE" shall mean a VACCINE which achieves a
therapeutic effect by inducing an antigen-specific humoral and/or cellular
immune system response by GENE THERAPY.
1.22 "HGS FIELD" shall mean: (i) GENE THERAPY, (ii) ANTISENSE, (iii)
biotransformation of a chemical to prepare pharmaceutically active agents for
human or animal use, or intermediates therefor, which active agent was
DISCOVERED before the EFFECTIVE DATE; and (iv) DIAGNOSTICS.
1.23 "HGS PATENT(S)" shall mean all patents and patent applications to
the extent that they claim HGS TECHNOLOGY and which are or become owned by HGS
or to which HGS otherwise has, now or in the future, the right to grant
licenses. Included within the definition of HGS PATENTS are all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals ,
extensions registrations, confirmations, re-examinations thereof and any
provisional applications and all SPCs.
1.24 "HGS TECHNOLOGY" shall mean, the following which is provided to SP
by or on behalf of HGS: (a) sequence data with respect to human DNA (and the
corresponding
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clones) and expression products thereof, in each case developed by or on behalf
of HGS prior to or during the INITIAL RESEARCH TERM, (b) information on
biological function of TARGETS and THERAPEUTIC PROTEINS developed by or on
behalf of HGS prior to the INITIAL RESEARCH TERM, and (c) HGS clones, cell lines
and vectors, and all information and data provided to SP by HGS pursuant to
Section 6 hereof, and (d) SOFTWARE.
1.25 "INITIAL RESEARCH TERM" shall mean the term beginning on the
EFFECTIVE DATE and ending five years (5) from the EFFECTIVE DATE.
1.26 "LICENSED PATENT(S)" means HGS PATENT(S) and/or SPECIAL SB
PATENT(S).
1.27 "LICENSED TECHNOLOGY" means HGS TECHNOLOGY and/or SPECIAL SB
TECHNOLOGY.
1.28 "MAJOR MARKET" means the United States, Canada, Germany, United
Kingdom, France, Italy or Japan.
1.29 "MERCK" shall mean Merck KGaA and its AFFILIATES.
1.30 "NET SALES" shall mean proceeds actually received from sales of SP
PRODUCT (calculated on a SP PRODUCT by SP PRODUCT basis) by SP or, except as
provided below, its respective licensees, distributors trading on SP's account
or joint ventures or other associated companies, less deductions for (i)
transportation, shipping and postage charges, including transportation insurance
and customs duties to the extent separately invoiced; (ii) sales and excise
taxes and duties paid or allowed by a selling party and any other governmental
charges imposed upon the production, importation, use or sale of such SP PRODUCT
(including value added taxes or other governmental charges otherwise measured by
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the billing amount when included in billing); (iii) normal and customary trade,
quantity and cash discounts allowed and charge back payments and rebates granted
to managed health care organizations or to federal, state and local governments,
their agencies and purchasers and reimbursees, including but not limited to
Medicaid rebates or to trade customers, including but not limited to
wholesalers, chain and pharmacy buying groups; (iv) rebates (or equivalents
thereof) granted to or charged by national, state or local government
authorities in countries other than the United States; and (v) allowances or
credits to customers on account of rejection or return of such product or on
account of retroactive price reductions affecting such SP PRODUCT. Sales between
or among SP and their respective licensees, distributors trading on SP's
account, or joint ventures or other associated companies shall be included
within NET SALES only if such purchaser is an end-user of the SP PRODUCT.
Otherwise, NET SALES shall only include the subsequent, final sales to THIRD
PARTIES.
1.31 "PRELIMINARY ANTIBODY PLAN" shall mean a plan for developing an SP
ANTIBODY PRODUCT in the form of Appendix C.
1.32 "PRELIMINARY DRUG PLAN" shall mean a plan for developing screens
for and screening of TARGETS to discover an SP DRUG PRODUCT in the form of
Appendix C.
1.33 "PROTEIN RESEARCH PLAN" shall mean a plan for research and
development of a THERAPEUTIC PROTEIN which includes, at a minimum, scientific
data, research and development efforts, research and development milestones,
sufficient to reasonably monitor diligence of research/development of such
THERAPEUTIC PROTEIN . An example of such a plan is shown in Appendix D.
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1.34 "PRODUCT(S)" shall mean any product, process, substance,
composition or service which (i) is based on the use of or derived by use of
LICENSED TECHNOLOGY and/or SP TECHNOLOGY and/or (ii) is covered by a LICENSED
PATENT and/or claim of an SP PATENT which claims SP TECHNOLOGY and/or is covered
by a COLLABORATION PATENT as to which SP obtains rights under this Agreement;
and/or (iii) is based on or is derived by use of a TARGET and/or use of a
THERAPEUTIC PROTEIN as to which SP obtains rights under this Agreement.
Notwithstanding the previous sentence, an incidental or immaterial use of
LICENSED TECHNOLOGY , SP TECHNOLOGY, or a TARGET or a THERAPEUTIC PROTEIN from a
COLLABORATION PARTNER and/or HGS and/or SB, shall not cause a product, process,
substance, composition or service to become a PRODUCT. Appendix E contains
representative, examples of incidental or immaterial use and material use but is
not intended by the parties to be an exhaustive list of incidental, immaterial
and/or material uses.
1.35 "PROOF OF EFFICACY" shall mean proof of therapeutic effectiveness
in a Phase II(a) Clinical Test based on biostatistical methods, that supports a
determination to proceed with expanded controlled clinical trials. "Phase II(a)
Clinical Test" shall mean a well-controlled clinical study conducted to evaluate
the effectiveness of the drug for a particular indication or indications in
patients with the disease or condition under study and to determine the common
short-term side effects and risks associated with the drug.
1.36 "RESEARCH PLAN" shall mean individually and collectively a DRUG
RESEARCH PLAN, PROTEIN RESEARCH PLAN and ANTIBODY RESEARCH PLAN.
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1.37 "SB" shall mean SmithKline Beecham Corporation and SmithKline
Beecham, plc, and any past (from May 19, 1993 to the EFFECTIVE DATE), present or
future AFFILIATE thereof, which AFFILIATE holds the relevant right and/or is or
was or will be necessary or required to perform any obligations of SB
(including, without limitation, those which have performed research and
development of SPECIAL SB TECHNOLOGY) under this Agreement and/or to which any
of the rights and/or obligations of either of them are subsequently assigned
and/or delegated pursuant to Section 22 of this Agreement.
1.38 "SOFTWARE" shall mean software (together with the source code
therefor and maintenance files and "Documentation" as defined below) designed
and developed by HGS prior to or during the INITIAL RESEARCH TERM for analysis
of sequence data with respect to human DNA and expression products thereof,
including, without limitation, the specific software modules set forth in the
attached Appendix F. "Documentation" shall include all operating and user
manuals, training materials guides, listings, specifications and other material
used with the SOFTWARE.
1.39 "SP ANTIBODY PRODUCT" shall mean a PRODUCT in the SP FIELD
discovered and/or developed by or on behalf of SP or its licensee which is an
ANTIBODY PRODUCT.
1.40 "SP DRUG PRODUCT" shall mean a PRODUCT in the SP FIELD discovered
and/or developed by or on behalf of SP or its licensee other than an SP ANTIBODY
PRODUCT and/or SP PROTEIN PRODUCT and/or a TARGET.
1.41 "SP FIELD" shall mean the treatment and/or prevention of disease
in humans, excluding the HGS FIELD. For avoidance of doubt, in the event a
PRODUCT has both
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therapeutic and DIAGNOSTIC use, the therapeutic use of such PRODUCT shall be
included in the SP FIELD.
1.42 "SP PATENT(s)" shall mean all patents and patent applications to
the extent that they claim SP TECHNOLOGY, which are or become owned by SP or to
which SP otherwise has, now or in the future, the right to grant licenses.
Included within the definition of SP PATENT are all continuations,
continuations-in-part, divisions, patents of addition, reissues, renewals,
extensions, registrations, confirmations, re-examinations thereof, and any
provisional applications and all SPCs.
1.43"SP PRODUCT" means SP DRUG PRODUCT, SP ANTIBODY PRODUCT and SP
PROTEIN PRODUCT.
1.44 "SP PROTEIN PRODUCT" shall mean a PRODUCT in the SP FIELD which is
a THERAPEUTIC PROTEIN as to which SP gets rights under Section 7 or under
Paragraph 9.3.
1.45 "SP/SB AGREEMENT" shall mean that certain agreement between SP and
SB referred to in Paragraph 9.2 of this Agreement.
1.46 "SP TECHNOLOGY" shall mean:
(i) peptides and/or polypeptides, and/or polynucleotides and/or the
sequences thereof and/or antibodies and/or clones or plasmids containing
polynucleotides which (a) are based on use of LICENSED TECHNOLOGY by or on
behalf of SP, and/or (b) are derived by use of LICENSED TECHNOLOGY by or on
behalf of SP and/or; (c) are based on and/or derived by use by or on behalf of
SP of a TARGET and/or THERAPEUTIC PROTEIN as to which SP obtains rights under
this Agreement from a COLLABORATION PARTNER or SB.
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(ii) therapeutic compounds and potential therapeutic compounds
(including antibodies) developed by or on behalf of SP which are based on use of
or derived from use of item (i) and/or item (iii) and/or item (iv) and/or
LICENSED TECHNOLOGY;
(iii) biological information developed by or on behalf of SP
specifically related to item (i) and/or item (ii) and/or LICENSED TECHNOLOGY ;
(iv) screens and/or assays for identifying potential therapeutics
(including antibodies), developed by or on behalf of SP and which screens or
assays are directed to and/or based on and/or derived by use of item (i) and/or
item (iii) and/or LICENSED TECHNOLOGY;
Items (i) through (iv) are included as SP TECHNOLOGY only to the extent
they are obtained by or on behalf of or derived by or on behalf of SP after the
EFFECTIVE DATE and prior to the later of four (4) years after the end of the
INITIAL RESEARCH TERM or four (4) years after the end of any EXTENDED TERM;
provided, however, that any of items (i)-(iii) which are obtained by or on
behalf of SP or derived by or on behalf of SP after such time shall also be SP
TECHNOLOGY if it results from item (iv) within three (3) years after the screen
or assay becomes operational for use by or on behalf of SP as a screen or assay.
Notwithstanding the above, an incidental or immaterial use of LICENSED
TECHNOLOGY and/or a TARGET and/or a THERAPEUTIC PROTEIN shall not cause any
items (i) to (iv ) to become SP TECHNOLOGY. Appendix E. contains representative
examples of incidental or immaterial use and material use, but is not intended
by the parties to be an exhaustive list of incidental, immaterial and/or
material uses.
1.47 "SPC" shall mean a right based upon an underlying patent such as a
Supplementary Protection Certificate .
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"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
1.48 "SPECIAL SB PATENT(S)" means all patents and patent applications
to the extent that they claim SPECIAL SB TECHNOLOGY which are or become owned by
SB or to which SB otherwise has, now or in the future, the right to grant
licenses. SPECIAL SB PATENTS include all continuations, continuations-in-part,
divisions, patents of addition, reissues, renewals, extensions registrations,
confirmations, re-examinations thereof and any provisional applications and all
SPCs.
1.49 "SPECIAL SB TECHNOLOGY" means [***].
1.50 "TARGET" shall mean a GENE or expression product thereof (e.g.,
receptors, enzymes or ion channels) which could be used for screening or other
drug discovery purposes to identify compounds or ANTIBODY PRODUCTS with a
biochemical or pharmaceutical effect.
1.51 "TERRITORY" shall mean all the countries and territories in the
world.
1.52 "THIRD PARTY(IES)" shall mean any party other than a party to this
Agreement or an AFFILIATE of SP or HGS or SB.
1.53 "THERAPEUTIC PROTEIN" shall mean a polypeptide derived from a GENE
(excluding ANTIBODY PRODUCTS) which is potentially useful for the treatment or
prevention of a disease or disorder in humans.
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1.54 VACCINE" shall mean any substance which achieves a prophylactic or
therapeutic effect by inducing an antigen-specific humoral and/or cellular
immune system response excluding a GENE THERAPY VACCINE.
2. SB AND HGS AND SP GRANTS AND COVENANTS
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2.1 (a) Subject to the terms and conditions of this Agreement, HGS and
SB, as the case may be, grant to SP a non-exclusive, non-transferable worldwide
license under LICENSED TECHNOLOGY, LICENSED PATENTS and COLLABORATION PATENTS to
perform research and development in the SP FIELD during the INITIAL RESEARCH
TERM.
(b) Subject to the terms and conditions of this Agreement, HGS
and SB, as the case may be, grant to SP a non-exclusive, non-transferable
worldwide license under LICENSED TECHNOLOGY, LICENSED PATENTS and COLLABORATION
PATENTS to perform research and development during the EXTENDED TERM of (i) SP
DRUG PRODUCTS, (ii) SP PROTEIN PRODUCTS , and (iii) SP ANTIBODY PRODUCTS
encompassed by an ANTIBODY RESEARCH PLAN submitted by SP prior to the end of the
INITIAL RESEARCH TERM.
(c) Subject to the terms and conditions of this Agreement, HGS
and SB, as the case may be, grant to SP a non-exclusive, non-transferable,
worldwide license under LICENSED TECHNOLOGY, LICENSED PATENTS, and COLLABORATION
PATENTS to perform research and development after the INITIAL RESEARCH TERM of
(i) SP DRUG PRODUCTS encompassed by a DRUG RESEARCH PLAN submitted by SP prior
to the end of the INITIAL RESEARCH TERM or the EXTENDED TERM, (ii) SP PROTEIN
PRODUCTS, (iii) SP ANTIBODY PRODUCTS encompassed by an ANTIBODY RESEARCH
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PLAN submitted by SP prior to the end of the INITIAL RESEARCH TERM, and (iv)
TARGETS which are PRODUCTS encompassed by a DRUG RESEARCH PLAN submitted by SP
prior to the end of the INITIAL RESEARCH TERM or the EXTENDED TERM.
2.2 Subject to the terms and conditions of this Agreement, HGS and SB,
as the case may be, grant to SP a non-exclusive worldwide license under (i)
LICENSED TECHNOLOGY, (ii) LICENSED PATENTS with respect to claims directed to
TARGETS which are PRODUCTS and the manufacture and use thereof, (iii)
COLLABORATION BLOCKING PATENTS, and (iv) COLLABORATION TARGET PATENTS, in each
case to make, have made, use, import, export, offer to sell and sell SP DRUG
PRODUCT and SP ANTIBODY PRODUCT in the SP FIELD. In the case of an SP DRUG
PRODUCT, such license is limited to SP DRUG PRODUCTS encompassed by a DRUG
RESEARCH PLAN submitted by SP prior to the end of the INITIAL RESEARCH TERM or
EXTENDED TERM, and in the case of an SP ANTIBODY PRODUCT is limited to an SP
ANTIBODY PRODUCT encompassed by an ANTIBODY RESEARCH PLAN submitted by SP prior
to the end of the INITIAL RESEARCH TERM.
2.3 HGS grants to SP an irrevocable, royalty-free, non-exclusive,
non-transferable, worldwide license to use SOFTWARE to perform research and
development after the INITIAL RESEARCH TERM. The license granted under this
Paragraph 2.3 is limited to SOFTWARE which is (i) owned by HGS and/or (ii) is
owned or licensed by a THIRD PARTY and licensed to HGS which license to HGS
includes the right to grant sublicenses. To the extent that acceptance of the
license granted under this Paragraph 2.3 would obligate SP or HGS to pay
royalties and/or license fees to a THIRD PARTY based solely upon SP's use of
SOFTWARE
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owned or licensed by said THIRD PARTY and sublicensed to SP by HGS, SP shall, in
its sole discretion elect to (i) accept the SOFTWARE in its entirety and pay all
such royalties and/or licensee fees, (ii) obtain a direct license from the THIRD
PARTY owner of the SOFTWARE, or (iii) accept the SOFTWARE with the exception of
the THIRD PARTY SOFTWARE for which royalties and/or license fees would have been
due. To the extent that SOFTWARE includes software owned or licensed by THIRD
PARTIES which is not sublicensable by HGS, HGS will promptly provide written
notice to SP identifying all such software and its owner, and SP acknowledges
and agrees that it must obtain the necessary license(s) prior to using any such
software.
2.4 Subject to the terms and conditions of this Agreement, HGS and SB,
as the case may be, grant to SP an exclusive worldwide license in the SP FIELD
under LICENSED TECHNOLOGY, LICENSED PATENTS and COLLABORATION PROTEIN PATENTS to
research, develop, make, have made, use, import, export, offer to sell and sell
SP PROTEIN PRODUCTS, provided, however, that such license shall not extend to
VACCINES to the extent that prior to SP obtaining exclusive rights to a
THERAPEUTIC PROTEIN under Section 7 of this Agreement, MERCK obtains exclusive
rights to such THERAPEUTIC PROTEIN as a VACCINE in the SP FIELD under an
agreement among SB, HGS and MERCK by which MERCK obtains exclusive rights to a
THERAPEUTIC PROTEIN as a VACCINE by the submission of data essentially identical
to the data required to obtain rights to a THERAPEUTIC PROTEIN under Section 7
of this Agreement prior to SP's submission of an information package pursuant to
Section 7 of this Agreement for such THERAPEUTIC PROTEIN.
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2.5 The licenses granted to SP under Paragraphs 2.1, 2.2, 2.4 and 2.6
shall be sublicensable by SP but only in accordance with Paragraphs 2.8, 2.9,
2.10, 10.3 and 10.4.
2.6 In the event that a SP PRODUCT is DISCOVERED by or on behalf of SP
which is not encompassed by a RESEARCH PLAN and for which royalties are due to
HGS under this Agreement, SP may request in writing that HGS grant a
non-exclusive license in the SP FIELD under HGS PATENTS covering such SP
PRODUCT. HGS shall grant such a license, to the extent that it has the ability
to do so, provided, however, that HGS can refuse to grant the license if, at the
time of receipt of the request from SP, HGS has an ongoing program of research
and development for a PRODUCT which is "essentially the same" as such SP
PRODUCT. For purposes of this Paragraph, the term "essentially the same" shall
mean that an SP PRODUCT and a PRODUCT being developed by HGS are substantially
the same chemical entity, for example, a THERAPEUTIC PROTEIN and a mutein
thereof.
2.7 Notwithstanding any exclusive rights granted to SP with respect to
a THERAPEUTIC PROTEIN, SP acknowledges and agrees that HGS, SB and COLLABORATION
PARTNERS, as the case may be, retain the right under LICENSED TECHNOLOGY,
LICENSED PATENTS and COLLABORATION PROTEIN PATENTS to use a THERAPEUTIC PROTEIN
as to which SP obtains rights under Section 7 as a TARGET and to research,
develop, make, have made, use, import, export, offer to sell and sell a DRUG
PRODUCT or ANTIBODY PRODUCT.
2.8 (a) During and after the INITIAL RESEARCH TERM, SP agrees to use SP
TECHNOLOGY and SP PATENTS only in the SP FIELD. After the INITIAL RESEARCH
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TERM, the use of SP TECHNOLOGY to the extent available to the general public
through publications made by third parties independent of SP shall not be a
breach of this paragraph 2.8.
(b) During and after the INITIAL RESEARCH TERM, SP agrees to
use LICENSED TECHNOLOGY, COLLABORATION PATENTS and LICENSED PATENTS only as
licensed and permitted hereunder. After the INITIAL RESEARCH TERM, (i) an
incidental or immaterial use of LICENSED TECHNOLOGY and/or (ii) the use of
LICENSED TECHNOLOGY to the extent available to the general public and to the
extent not covered by a granted LICENSED PATENT, shall not be a breach of this
paragraph 2.8.
2.9 Except as permitted under Section 10, SP agrees not to grant to any
THIRD PARTY (IES) any rights or licenses in or to an SP PRODUCT until SP has
established PROOF OF EFFICACY for such SP PRODUCT.
2.10 The rights and licenses granted to SP by HGS and SB under this
Agreement and rights to SP TECHNOLOGY and SP PATENTS are licensable and/or
transferable by SP to a THIRD PARTY only with respect to an SP PRODUCT, and only
pursuant to an Agreement by which SP grants a license to a THIRD PARTY to an SP
PRODUCT as permitted under Paragraph 2.9, or as permitted under Section 10, and
in which the THIRD PARTY (IES) agree(s) to covenants and obligations which limit
the use of SP PRODUCTS, LICENSED TECHNOLOGY, LICENSED PATENTS, SP TECHNOLOGY and
SP PATENTS which are essentially identical to the covenants and obligations of
SP to HGS and SB under this Agreement.
2.11(a) Subject to the terms and conditions of this Agreement, SP
grants to HGS an exclusive worldwide license (with the right to sublicense)
under SP PATENTS to make, have
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<PAGE>
made, use, export, import, offer to sell and sell THERAPEUTIC PROTEINS as to
which HGS or SB has obtained exclusive rights under Section 7.
(b) Subject to the terms and conditions of this Agreement,
including the retained right of SP under Paragraph 2.13, SP grants to HGS an
exclusive worldwide license under SP PATENTS to make, have made, use, export,
import, offer to sell and sell THERAPEUTIC PROTEINS as to which a COLLABORATION
PARTNER has obtained exclusive rights under terms and conditions essentially
identical to Paragraph 7.1 for the sole purpose of granting a sublicense to such
COLLABORATION PARTNER. The license granted under this Paragraph 2.11(b) may only
be sublicensed to a COLLABORATION PARTNER who has entered into an agreement
granting essentially identical rights to HGS and/or SB under all COLLABORATION
PROTEIN PATENTS owned by the COLLABORATION PARTNER and which rights are
licensable to SP for THERAPEUTIC PROTEINS as to which SP obtains exclusive
rights under Section 7.
2.12 Subject to the terms and conditions of this Agreement, SP grants
to HGS a non-exclusive worldwide, royalty-free license (with the right to
sublicense) under SP PATENTS to make, have made, use, import, offer to sell and
sell any and all products and processes in the HGS FIELD. The license granted in
this paragraph with respect to GENE THERAPY shall be subject to the terms and
conditions of any agreement between HGS and SP with respect to GENE THERAPY.
2.13 Notwithstanding any exclusive rights granted by SP with respect to
a THERAPEUTIC PROTEIN, HGS and SB acknowledge and agree that SP retains the
right under SP PATENTS and SP TECHNOLOGY to use a THERAPEUTIC PROTEIN as to
which
19
<PAGE>
HGS, SB or a COLLABORATION PARTNER obtains rights under Section 7 as a TARGET
and to research, develop, make, have made, use, import, export, offer to sell
and sell a SP DRUG PRODUCT or SP ANTIBODY PRODUCT.
2.14 Subject to the terms and conditions of this Agreement, SP grants a
non-exclusive, royalty-free license to HGS and SB under (i) SP PATENTS to use
TARGETS which are PRODUCTS developed by SP during the INITIAL RESEARCH TERM or
EXTENDED TERM, and (ii) BLOCKING CLAIMS of SP PATENTS, in each case to research,
develop, make, have made, use, import, export, offer to sell and sell DRUG
PRODUCTS and ANTIBODY PRODUCTS other than SP PRODUCTS. Such TARGETS need not be
disclosed by SP to HGS or SB until such TARGETS are disclosed to the public;
e.g., by publication of a patent application. HGS shall have the right to
sublicense such rights to TARGETS which are PRODUCTS and BLOCKING CLAIMS under
SP PATENTS to each COLLABORATION PARTNER and will grant such sublicenses only to
the extent that the COLLABORATION PARTNER(S) grants essentially identical rights
to HGS and/or SB under COLLABORATION PATENTS to TARGETS which are PRODUCTS and
BLOCKING CLAIMS which rights are or will be licensed to SP hereunder .
2.15 HGS agrees not to grant any rights or licenses to any THIRD PARTY,
other than a COLLABORATION PARTNER, under HGS TECHNOLOGY and/or HGS PATENTS in
the SP FIELD with respect to (i) use of TARGETS which are PRODUCTS for screening
for DRUG PRODUCTS during the INITIAL RESEARCH TERM and/or (ii) THERAPEUTIC
PROTEINS during the INITIAL RESEARCH TERM other than those as to which HGS
obtains exclusive rights under Section 7, and/or (iii) THERAPEUTIC PROTEINS as
to which SP obtains and
20
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"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
maintains exclusive rights under Section 7 or as to which SP has exercised its
option under Section 9.
3. PAYMENTS AND ROYALTIES
----------------------
3.1 (a) SP agrees to pay to HGS as an upfront fee an amount equal to
[***] which shall be due and payable in five equal payments with the first
payment being due and payable ten (10) days after the EFFECTIVE DATE and each of
the second through fifth payments being due and payable on the first through
fourth anniversaries of the EFFECTIVE DATE, respectively. All payments to be
made hereunder shall be by wire transfer of immediately available funds to an
account designated by HGS.
(b) In the event that any payment due and payable under this
Paragraph 3.1 is not paid when due and payable and remains unpaid for a period
of thirty (30) days after written notice by HGS to SP of such failure, or if
this Agreement is terminated by HGS pursuant to Section 13 hereof, then all
amounts which are to be paid under Paragraph 3.1(a) which have not been paid
shall become immediately due and payable at the end of such thirty (30) day
period.
3.2 Subject to Paragraphs 3.3, 3.5 and 3.6, SP shall pay to HGS the
following royalties on NET SALES of each SP PRODUCT sold by SP or its respective
licensees , distributors trading on SP's account or joint ventures or other
associated companies, which royalty shall be calculated on a SP PRODUCT by SP
PRODUCT basis, with the applicable royalty rate(s) for each SP PRODUCT in a
calendar year being based on worldwide NET SALES for such SP PRODUCT in the
calendar year and these determined royalty rate(s) being applied to all
worldwide NET SALES of such SP PRODUCT in such calendar year.
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"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
SP PROTEIN PRODUCT
Net Sales OR SP ANTIBODY
(U.S. Dollars in Millions) PRODUCT SP DRUG PRODUCT
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
[***] [***] [***]
By way of example and for avoidance of doubt, if an SP PROTEIN PRODUCT
or an SP ANTIBODY PRODUCT shall have applicable worldwide NET SALES in a
calendar year of [***], then the royalty rates and royalties owed shall be [***]
on all sales of such SP PROTEIN PRODUCT or SP ANTIBODY PRODUCT.
3.3 (a) With respect to any SP PRODUCT in any country in any calendar
year, in the event that SP also owes royalties to a THIRD PARTY for such SP
PRODUCT in such country for such calendar year and the royalties actually owed
to such THIRD PARTY when aggregated with the royalties owed to HGS for such SP
PRODUCT in such country in such calendar year (hereafter for the purposes of
this Paragraph 3.3 shall be "Aggregated Royalties") causes the royalty rate on
NET SALES for such SP PRODUCT in such country in such calendar year to exceed
[***] , then one-half of the royalties which are to be actually paid to such
THIRD PARTY may be credited against the royalties due to HGS for such SP PRODUCT
in such country in such calendar year, but in no event shall the royalty rate
payable to HGS be reduced to less than [***], nor shall the Aggregated Royalties
for such SP PRODUCT be reduced to less than [***].
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"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
(b) With respect to an SP PROTEIN PRODUCT as to which the
making, having made, using, selling, importing, exporting or offering for sale
is not covered by a granted claim of a LICENSED PATENT and as to which at least
[***]and less than [***] of the full length cDNA coding sequence for, or the
cDNA corresponding to the amino acid sequence of the final form of, such SP
PROTEIN PRODUCT is independently identified by SP without use of LICENSED
TECHNOLOGY or SP TECHNOLOGY, the royalties due for such SP PROTEIN PRODUCT under
Paragraph 3.2 shall be reduced by [***].
3.4 SP shall make the following milestone payments to HGS for each SP
PRODUCT, which milestone payment shall be due and payable within thirty (30)
days after the milestone event is achieved by or on behalf of SP or a licensee
of SP. All payments to be made hereunder shall be by wire transfer of
immediately available funds to an account designated by HGS.
(i) [***] upon successful completion of Phase I for
an SP PRODUCT, except that for an SP PROTEIN PRODUCT this milestone shall be
split with [***] upon successful completion of Phase I and another [***] upon
successful completion of Phase II(a);
(ii) [***] upon first submission of an application
for regulatory approval of an SP PRODUCT in a MAJOR MARKET;
(iii) [***] upon the first approval of an SP PRODUCT
for commercial sale in a MAJOR MARKET (provided, however, that any pricing and
third party reimbursement approvals (including governmental pricing and
reimbursement approvals as necessary for sale of the SP PRODUCT are also
received).
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The milestone payments provided in this paragraph shall only be made
once for each SP PRODUCT and shall not be made in the case of improvements or
modifications such as but not limited to changed forms, formats, salts,
formulations, indications, processes or protocols of an SP PRODUCT for which the
payments were previously made.
3.5 Royalty obligations under this Agreement and any agreements that SP
shall enter into with a licensee, with respect to SP PRODUCT, shall terminate on
a country-by-country and product-by-product basis on the later of (i) ten (10)
years after first country-wide launch of each product in each country or (ii)
expiration of the last to expire SP PATENT or LICENSED PATENT or COLLABORATION
PATENT licensed to SP under this Agreement which covers the making, having made,
importing, exporting, offering to sell or using or selling of each product in
each country.
3.6 SP shall not be obligated to pay royalties under Paragraph 3.2 or
milestones under Paragraph 3.4 with respect to any of the following:
(a) SP PROTEIN PRODUCT as to which the making, having made,
using, importing, exporting, offering to sell and selling is not covered by a
granted claim of a LICENSED PATENT or COLLABORATION PATENT licensed to SP under
this Agreement and of which at least 95% of the full length cDNA coding sequence
for, or the cDNA corresponding to the amino acid sequence of the final form of,
such SP PROTEIN PRODUCT is independently identified by SP without use of
LICENSED TECHNOLOGY or SP TECHNOLOGY.
(b) SP DRUG PRODUCT or SP ANTIBODY PRODUCT which is
encompassed by a DRUG RESEARCH PLAN or ANTIBODY RESEARCH PLAN submitted
24
<PAGE>
by SP in accordance with this Agreement which SP DRUG PRODUCT or SP ANTIBODY
PRODUCT is not covered by a claim of a granted LICENSED PATENT or COLLABORATION
PATENT licensed to SP under this Agreement and in the case of SP DRUG PRODUCT is
DISCOVERED after the later of (i) four years after the end of the INITIAL
RESEARCH TERM or (ii) four years after the end of the EXTENDED TERM and in the
case of SP ANTIBODY PRODUCT is DISCOVERED after four years after the end of the
INITIAL RESEARCH TERM;
(c) SP PRODUCT which is DISCOVERED after the INITIAL RESEARCH
TERM, or in the case of a SP DRUG PRODUCT after the later of the INITIAL
RESEARCH TERM or the EXTENDED TERM, and which SP PRODUCT is not encompassed by a
RESEARCH PLAN submitted by SP under this Agreement, and the only reason why such
SP PRODUCT is SP PRODUCT is because of use of one or more of the following: (i)
use of unpatented LICENSED TECHNOLOGY after the later of the end of the INITIAL
RESEARCH TERM or EXTENDED TERM which LICENSED TECHNOLOGY at the time of such use
is generally available to the public, and/or (ii) use of SP TECHNOLOGY developed
after the later of the end of the INITIAL RESEARCH TERM or EXTENDED TERM which
is SP TECHNOLOGY only as the result of use of unpatented LICENSED TECHNOLOGY
which is generally available to the public at the time of such use, and/or (iii)
use of SOFTWARE after the later of the end of the INITIAL RESEARCH TERM or
EXTENDED TERM.
(d) SP PRODUCT which is DISCOVERED after the later of four
years after the end of the INITIAL RESEARCH TERM or EXTENDED TERM, which SP
PRODUCT is not encompassed by a RESEARCH PLAN submitted by SP in accordance with
this Agreement
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<PAGE>
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
and which SP PRODUCT is an SP PRODUCT only because the SP PRODUCT is based on
the use of or derived by the use of SP TECHNOLOGY.
(e) SP PRODUCT for which SB is granted co-promotion rights
under the SP/SB AGREEMENT.
(f) SP DRUG PRODUCT or SP ANTIBODY PRODUCT which is DISCOVERED
by or on behalf of SP which is a SP DRUG PRODUCT or SP ANTIBODY PRODUCT,
respectively, only as a result of the use of a TARGET as to which at least 95%
of the full length cDNA coding sequence for, or the cDNA corresponding to the
amino acid sequence of the final form of, such TARGET is independently
identified by SP without use of LICENSED TECHNOLOGY or SP TECHNOLOGY, and where
neither the SP DRUG PRODUCT nor SP ANTIBODY PRODUCT nor the TARGET is covered by
a granted claim of a LICENSED PATENT or COLLABORATION PATENT.
3.7 [***] of all payments to be made by SP pursuant to Sections 3.1 and
3.4 shall be paid by [***] and [***] shall be paid by [***]. All payments to be
made by SP pursuant to Section 3.2 shall be apportioned between Schering
Corporation and Schering-Plough Ltd. according to the provisions of Section
12.5. The foregoing notwithstanding, Schering Corporation and Schering-Plough
Ltd. are jointly and severally liable for any and all payments by SP to HGS
pursuant to this Section 3, provided that payments made by Schering-Plough Ltd.
does not cause HGS to be subject to additional taxes and/or a withholding tax
solely as a result of such payments being made by Schering- Plough Ltd. In the
event that (i) payments made by Schering-Plough, Ltd. cause HGS to be subject to
additional taxes and/or withholding tax, and (ii) such additional taxes and/or
26
<PAGE>
withholding tax are due solely as a result of such payments being made by
Schering-Plough, Ltd., then SP and HGS shall agree upon an alternative manner of
payment.
3.8 The manner in which statements and remittances of royalty payments
are handled are as set forth in Section 12 hereof.
4. RESEARCH TERM AND RESEARCH PLANS
--------------------------------
4.1 The INITIAL RESEARCH TERM shall terminate five years after the
EFFECTIVE DATE.
4.2 The INITIAL RESEARCH TERM may be extended for up to five additional
years by written notice provided to HGS by SP at least sixty (60) days prior to
the end of the INITIAL RESEARCH TERM or at least sixty (60) days prior to the
end of any one year extension thereof. A payment of [xxx] for each additional
year shall be due within ten (10) days of the end of the INITIAL RESEARCH TERM
or the end of any one year extension thereof, as the case may be.
4.3 A DRUG RESEARCH PLAN and/or a PRELIMINARY DRUG PLAN may only be
submitted to HGS by SP during the INITIAL RESEARCH TERM and/or the EXTENDED
TERM. An ANTIBODY RESEARCH PLAN and/or a PRELIMINARY ANTIBODY PLAN may only be
submitted by SP to HGS during the INITIAL RESEARCH TERM.
4.4 A PROTEIN RESEARCH PLAN may only be submitted by SP to HGS during
the INITIAL RESEARCH TERM and only in accordance with Section 7. Such a PROTEIN
RESEARCH PLAN shall be deemed to also be an ANTIBODY RESEARCH PLAN for all
antibodies against the THERAPEUTIC PROTEIN.
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<PAGE>
4.5 (a) SP agrees that SP will not initiate screening to evaluate
multiple chemical entities for activity or a formal program of rational drug
design (i) with respect to a TARGET which is a PRODUCT, or with respect to a SP
DRUG PRODUCT, during the INITIAL RESEARCH TERM or EXTENDED TERM without first
submitting a PRELIMINARY DRUG PLAN, or (ii) with respect to an SP ANTIBODY
PRODUCT without first submitting to HGS a PRELIMINARY ANTIBODY PLAN during the
INITIAL RESEARCH TERM.
(b) In the event that a DRUG RESEARCH PLAN submitted by SP to HGS
is directed to the use of a TARGET which was DISCOVERED by or on behalf of SP
without the assistance of HGS and/or SB and/or a COLLABORATION PARTNER, HGS
agrees not to use such TARGET and/or any biological information with respect to
such TARGET contained in the DRUG RESEARCH PLAN until such TARGET is generally
identified to the public, unless HGS has initiated use thereof prior to
submission of such DRUG RESEARCH PLAN or HGS and/or SB and/or a COLLABORATION
PARTNER DISCOVERS such TARGET prior to receipt of the DRUG RESEARCH PLAN from
SP.
(c) HGS agrees not to disclose to SB and/or a THIRD PARTY any
RESEARCH PLANS submitted by SP, or TARGETS encompassed by such RESEARCH PLANS,
provided, however, that HGS may disclose TARGETS to the extent disclosed to the
public.
4.6 With respect to each TARGET encompassed by an ANTIBODY RESEARCH
PLAN, SP shall identify to HGS in writing the full length DNA coding sequence
therefor promptly after such DNA coding sequence is available to the public.
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<PAGE>
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
4.7 With respect to each TARGET encompassed by a DRUG RESEARCH PLAN, SP
shall identify to HGS in writing the full length DNA coding sequence therefor
promptly after such DNA coding sequence is available to the public.
5. ADDITIONAL PAYMENTS
-------------------
5.1 (a) In support of HGS' research, SP shall pay to HGS a total of
[***] which shall be due and payable as follows:
(i) [***] within ten (10) days after the EFFECTIVE
DATE:
(ii) [***] on each of the first through fourth
anniversaries of the EFFECTIVE DATE.
(b) In the event that any payment due and payable under Paragraph
5.1(a) is not paid when due and payable and remains unpaid for a period of
thirty (30) days after written notice by HGS to SP of such failure, or if this
Agreement is terminated by HGS under Section 13, then all amounts which are to
be paid under Paragraph 5.1(a) which have not been paid shall become immediately
due and payable at the end of such thirty (30) day period.
6. TECHNOLOGY TRANSFER AND ADDITIONAL LICENSED TECHNOLOGY
------------------------------------------------------
6.1 (a) Promptly after the EFFECTIVE DATE, HGS shall disclose to SP all
information which is HGS TECHNOLOGY.
(b) Throughout the INITIAL RESEARCH TERM, except as provided
in Paragraph 6.2, HGS shall promptly provide to SP all information which is HGS
TECHNOLOGY and materials (as available to HGS and as reasonably requested by SP)
which are HGS TECHNOLOGY including, without limitation, (i) preliminary
annotation data of DNA
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<PAGE>
sequences which are HGS TECHNOLOGY such as tissue source; library specifications
for libraries from which DNA sequences which are HGS TECHNOLOGY are obtained;
(ii) sequence homologies and motif searches with respect to DNA sequences (and
encoded polypeptides) which are HGS TECHNOLOGY; (iii) biological information
obtained by HGS with respect to DNA sequences and encoded polypeptides which are
HGS TECHNOLOGY; and (iv) clones containing sequences which are HGS TECHNOLOGY as
available to HGS and as reasonably requested by SP; and (v) expression cell
lines and vectors, as reasonably requested by SP and as available to HGS and to
the extent that HGS is not contractually precluded from providing them, is for
the sole purpose of research and development in the SP FIELD. SP understands and
agrees that experimental data relating to characterization of DNA and encoded
polypeptides are not included in this Paragraph 6.1(b).
(c) Except as otherwise set forth herein, HGS TECHNOLOGY to be
provided to SP pursuant to Paragraphs 6.1(a) and 6.1(b)(i), (ii) and (iii) shall
be in the form of electronic transfers of the HGS TECHNOLOGY and HGS shall
deliver the HGS TECHNOLOGY to SP in a manner and format which is compatible for
use with the SOFTWARE.
(d) Promptly after the EFFECTIVE DATE, HGS will provide SP
with printouts of HGS full length gene reports which are HGS TECHNOLOGY and/or
SPECIAL SB TECHNOLOGY, which reports shall be sorted by THERAPEUTIC PROTEINS and
TARGETS.
(e) SB shall promptly disclose to SP all information which is
SPECIAL SB TECHNOLOGY, which shall be disclosed to SP directly by SB and/or
through HGS. SB agrees that it will provide SP promptly after the EFFECTIVE DATE
with an inventory (including
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<PAGE>
TARGET descriptions and code numbers) of all SPECIAL SB TECHNOLOGY. A template
of the form in which the SPECIAL SB TECHNOLOGY is generally available is
attached as Appendix H of this Agreement. SB further agrees that promptly after
the EFFECTIVE DATE it shall make reasonably available to SP, as mutually agreed,
the appropriate SB personnel necessary to meet with representatives of SP to
provide details of biological information which is SPECIAL SB TECHNOLOGY to
enable such representatives of SP to prioritize the delivery of SPECIAL SB
TECHNOLOGY from SB and/or HGS to SP. Both SB and SP agree to act in good faith
to effect the prompt and orderly delivery of all SPECIAL SB TECHNOLOGY to SP in
accordance with SP priorities. SB agrees that such delivery shall be completed
no later than ninety (90) days after the EFFECTIVE DATE.
6.2 HGS shall not be required to transfer to SP sequence data
consisting of second walks and full length sequences or biological information
or clones, in each case which are HGS TECHNOLOGY with respect to potential
THERAPEUTIC PROTEINS, until HGS, SP, SB or a COLLABORATION PARTNER obtains
exclusive rights thereto pursuant to Section 7. The preceding sentence shall not
apply to second walks performed by HGS at the specific request of SP.
6.3 The transfer of LICENSED TECHNOLOGY to SP shall be documented by
HGS and SB, as the case may be. Such documentation shall include, but not be
limited to, transfer of LICENSED TECHNOLOGY to SP electronically and/or in
writing and/or, in the case of oral transfer, by written notice to SP of the
substance of such oral transfer.
6.4 At the later of the end of the INITIAL RESEARCH TERM or the
EXTENDED TERM, as the case may be, SP shall promptly return to HGS and SB, as
the case may be, any
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<PAGE>
and all LICENSED TECHNOLOGY other than LICENSED TECHNOLOGY as to which SP
retains a license hereunder, including, without limitation, LICENSED TECHNOLOGY
which is not deemed confidential in accordance with Paragraph 10.2.
6.5 SP agrees to maintain security measures (including but not limited
to computer and computer network security measures) for LICENSED TECHNOLOGY
which are similar to the measures currently employed by SP to safeguard its own
confidential information. These security measures have been discussed with HGS
and SB which both agree that such security measures are acceptable to HGS and SB
respectively.
6.6 (a) To the extent it has not already been provided to SP, HGS
shall provide to SP, promptly following the EFFECTIVE DATE, without additional
charge, initial copies of the SOFTWARE and thereafter, during the INITIAL
RESEARCH TERM, as they become available, copies of any enhancements to the
SOFTWARE made by HGS during the INITIAL RESEARCH TERM, including all
modifications to the SOFTWARE which increase the speed, efficiency or ease of
operation of the SOFTWARE, or add additional capabilities to or otherwise
improve the functions of the SOFTWARE.
(b) For a period of two years after the EFFECTIVE DATE, HGS shall
provide to SP, without additional charge, all necessary telephone or on-site
consultation requested by SP in connection with its use and operation of the
SOFTWARE or any problems therewith. Telephone consultation shall be provided by
HGS during normal business hours.
(c) SP shall have the right, in its own discretion, to
independently modify the SOFTWARE for its own purposes and use SOFTWARE, through
the services of its own employees or of independent contractors, provided that
same agree not to disclose or distribute
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<PAGE>
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
any part of the SOFTWARE to any other person or entity or otherwise violate
HGS's proprietary rights therein. SP shall be the owner of any such
modification. SP may, at its sole discretion, provide such SOFTWARE
modifications to HGS, which will be retained by HGS in confidence and will not
be disclosed to SB, a COLLABORATION PARTNER or any THIRD PARTY without the prior
written consent of SP. HGS shall not incorporate any such modification into its
software for distribution to SB, COLLABORATION PARTNERS or THIRD PARTY(IES)
unless SP (in its sole discretion) first consents in writing and HGS first
agrees to pay SP a reasonable royalty, pursuant to mutually agreed upon terms.
SP acknowledges and agrees that SOFTWARE and any modified SOFTWARE developed by
or on behalf of SP may only be used by or for SP and may not be transferred to
SB or a THIRD PARTY.
6.7 During the INITIAL RESEARCH TERM SP shall have the right to
prioritize the sequencing by HGS of [***] expressed sequence tags per year. HGS
shall use diligent efforts to complete such prioritized sequencing (including
sequencing from cDNA libraries supplied by SP) as mutually agreed by HGS and SP,
subject to timely receipt by HGS of directions regarding prioritization and/or
cDNA libraries suitable for such sequencing from SP. All such expressed sequence
tags and the clones containing such expressed sequence tags shall be owned by
HGS and shall be HGS TECHNOLOGY under this Agreement.
6.8 During the INITIAL RESEARCH TERM, HGS shall maintain its annual
human cDNA sequencing activities at a level at least commensurate with the level
of human cDNA sequencing during the one year period immediately prior to the
EFFECTIVE DATE.
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6.9 SP may request additional research services from HGS at HGS's fully
allocated cost where HGS and SP mutually agree thereto. For sequencing of SP
libraries under this Paragraph, HGS will not use or disclose sequences sequenced
from such libraries to COLLABORATION PARTNERS or SB until twelve (12) months
after delivery of such sequences to SP.
6.10 HGS shall have the right to delay for a period of (12) months
disclosure to SP of such HGS TECHNOLOGY resulting from work performed by HGS for
a COLLABORATION PARTNER or SB pursuant to a provision of an agreement with a
COLLABORATION PARTNER or the COLLABORATION AGREEMENT similar to Paragraph 6.9 of
this Agreement.
6.11 Any sequences and clones containing such sequences arising under
Pargraph 6.9 shall be owned by HGS and are HGS TECHNOLOGY.
7. THERAPEUTIC PROTEINS
--------------------
7.1 SP, a COLLABORATION PARTNER, HGS or SB shall obtain exclusive
rights to any specific THERAPEUTIC PROTEIN which is a PRODUCT in the SP FIELD
provided:
(a) as among SP, HGS, SB and such COLLABORATION PARTNER, such
entity is the first to submit to HGS, or in the case of HGS to submit to SB, an
information package as permitted under this Agreement (or an agreement between
SB and/or HGS and each of the COLLABORATION PARTNERS) prior to the end of the
INITIAL RESEARCH TERM which:
(i) demonstrates evidence of in vivo biological activity for
any such THERAPEUTIC PROTEIN. Such evidence of in vivo biological activity must
be statistically
34
<PAGE>
different (p less than 0.05) from control for at least one data point, and must
be demonstrated in an experiment using at least three (3) dosages of the test
substance in which at least a trend of dose related activity is demonstrated,
OR
(ii) in the case of a THERAPEUTIC PROTEIN (a) for which in
vivo activity cannot be demonstrated after bone fide attempts to do so in at
least two (2) sub-primate species, or (b) it is demonstrated by documented
evidence (from scientific literature or in-house studies) that the relevant
effector system does not exist in sub-primates, or (c) it is demonstrated by
documented evidence (from scientific literature or in-house studies) that there
is an absence of reactivity with relevant targets in sub-primates, demonstrates
evidence of in vitro biological activity in at least one (1) relevant cellular
based assay for any such THERAPEUTIC PROTEIN. Such evidence of in vitro
biological activity must be statistically different (p less than 0.05) from
control for at least one data point, and must be demonstrated in an experiment
using at least three (3) concentrations of the test substance in which at least
a trend of dose related activity is demonstrated.
The preparation used to demonstrate biological activity shall be:
(i) a purified preparation in which at least 75% (w/w) of the
protein component of the preparation is the THERAPEUTIC
PROTEIN; or
(ii) a purified preparation in which the relative
concentration and/or specific activity of the THERAPEUTIC
PROTEIN has been increased at least 1000 fold as compared to
an unpurified preparation.
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"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
In no case shall the concentration of the THERAPEUTIC PROTEIN be less
than 1 microgram/ml. in the purified preparation of (i) or (ii). Such purified
preparation shall be shown to have a biological activity which is not
attributable to endotoxin contamination; and
(b) exclusive rights to such THERAPEUTIC PROTEIN have not been
previously given to SB or HGS or SP or a COLLABORATION PARTNER as the case may
be in accordance with the requirements of this Paragraph 7.1 or under Paragraph
7.2; and
(c) SP, HGS, the COLLABORATION PARTNERS or SB as the case may
be, submits with the information package a PROTEIN RESEARCH PLAN therefor.
7.2 SP acknowledges and agrees that rights are not available to SP
under this Section with respect to the following THERAPEUTIC PROTEINS:
Therapeutic Protein HGS Sequence ID
---------------
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
[***] [***]
It is understood that the HGS Sequence ID is for identification
purposes only and that, for purposes of paragraph 7.1 and this paragraph 7.2,
all clones and sequences and polypeptides associated with the THERAPEUTIC
PROTEIN as well as muteins and fragments thereof are included in the rights
granted herein.
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<PAGE>
7.3 (a) Within ninety (90) days from the receipt by SP of HGS
TECHNOLOGY in existence as of the EFFECTIVE DATE in the form of full length gene
reports, relevant to THERAPEUTIC PROTEINS which are PRODUCTS, SP shall have the
right to obtain exclusive rights to two (2) THERAPEUTIC PROTEINS under Paragraph
7.1 without meeting the evidence requirements of Paragraph 7.1 (a).
(b) To the extent available to HGS as of the EFFECTIVE DATE,
HGS shall provide SP with reasonable quantities of THERAPEUTIC PROTEINS which
are HGS TECHNOLOGY.
(c) HGS will also promptly provide to SP all material
information relating to the granted patents and pending patent applications in
existence as of the EFFECTIVE DATE for each THERAPEUTIC PROTEIN.
7.4 The rights granted to a THERAPEUTIC PROTEIN under this Section 7
and Paragraph 2.4 includes muteins and fragments thereof.
7.5 HGS shall notify SP in writing as to whether or not SP has obtained
exclusive rights to a THERAPEUTIC PROTEIN under this Section 7 within ten (10)
business days after submission of an information package to HGS by SP. The
failure of HGS to respond within such period shall be deemed to be notification
that the information package meets the requirements of this Section 7.
7.6 In the event that SP is notified that an information package
submitted by SP does not meet the requirements of Paragraph 7.1, such
notification shall include the reasons as to why such information package does
not meet such requirements. If the reason for such notification is that the
information package did not include the data and/or RESEARCH PLAN required
37
<PAGE>
by Paragraph 7.1 and SP disagrees with such notification, then HGS and SP shall
attempt to resolve such differences including by discussions between senior
management of HGS and SP, if necessary. If such dispute is not resolved within
twenty (20) days, then SP shall have the right to submit such dispute to binding
arbitration under Section 29 and if SP fails to do so, then the decision that
such information package did not meet such requirements shall be binding on SP.
If there is a dispute under this Agreement and/or the COLLABORATION AGREEMENT
and/or an agreement with a COLLABORATION PARTNER with respect to a THERAPEUTIC
PROTEIN as to whether or not a party thereto was the first to submit an
information package meeting the requirements of paragraph 7.1 (or requirements
essentially identical thereto), then no rights will be granted with respect to
such THERAPEUTIC PROTEIN until such dispute is resolved. In the event that SP is
notified that HGS, SB or a COLLABORATION PARTNER has, prior to SP, submitted an
information package and PROTEIN RESEARCH PLAN for the same THERAPEUTIC PROTEIN
for which SP has also filed an information package and PROTEIN RESEARCH PLAN,
such notification shall also include:
(i) the date on which the non-SP information package and
PROTEIN RESEARCH PLAN was received by HGS or SB, as
appropriate; and
(ii) a certification on behalf of HGS, signed by a senior
officer of HGS, that such non-SP information package (i.e., by
HGS and/or SB and/or a COLLABORATION PARTNER) met all of the
requirements of Paragraph 7.1 prior to HGS's receipt of SP's
information package and PROTEIN RESEARCH PLAN for the same
THERAPEUTIC PROTEIN.
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<PAGE>
7.7 (a) Subject to the dispute requirements of Paragraph 7.6, the
parties acknowledge and agree that a decision by HGS (or in the case of a
submission by HGS a decision by SB) that a party hereto or a COLLABORATION
PARTNER has submitted an information package which meets the requirements of
this Section 7 and as a result has exclusive rights to a THERAPEUTIC PROTEIN
shall be final and binding between the parties hereto and shall also be final
and binding between SP and a COLLABORATION PARTNER provided that such
COLLABORATION PARTNER also agrees that the rights granted to SP under this
Section 7 are final and binding as to such COLLABORATION PARTNER. (b) Neither SB
nor HGS shall have any liability to SP with respect to their respective
decisions that SB, HGS or a COLLABORATION PARTNER has exclusive rights to a
THERAPEUTIC PROTEIN under this Agreement, the COLLABORATION AGREEMENT or an
agreement with a COLLABORATION PARTNER or that SP does or does not have rights
to a THERAPEUTIC PROTEIN unless there has been willful misconduct by HGS and/or
SB.
7.8 HGS shall identify to SP, by HGS sequence ID, each THERAPEUTIC
PROTEIN which is a PRODUCT as to which exclusive rights have been granted to HGS
and/or SB and/or a COLLABORATION PARTNER within ten (10) business days after the
granting of such rights.
7.9 HGS agrees that information packages and PROTEIN RESEARCH PLANS
submitted by SP with respect to THERAPEUTIC PROTEINS shall be strictly
confidential and shall be provided to only those employees at HGS who are to
decide whether or not the information package meets the requirements of
Paragraph 7.1, not to exceed five (5) employees.
39
<PAGE>
HGS further agrees that all such information packages and PROTEIN RESEARCH PLANS
will not be utilized by or on behalf of HGS for any purpose.
7.10 HGS agrees that it will promptly inform SB and each COLLABORATION
PARTNER of each THERAPEUTIC PROTEIN by HGS Sequence ID number for which
exclusive rights have been granted to SP under this Agreement, but in doing so
will not identify SP as the party to whom such exclusive rights have been
granted.
7.11 HGS agrees that for each THERAPEUTIC PROTEIN for which it is
seeking exclusive rights (other than those specified in Paragraph 7.2), HGS will
submit to SB an information package and a PROTEIN RESEARCH PLAN therefor in
conformity with the terms and conditions of Paragraph 7.1 for evaluation. SB
will, in good faith, determine whether or not such information package and
PROTEIN RESEARCH PLAN meet the criteria set forth in Paragraph 7.1 of this
Agreement.
Subject to the dispute requirements of Paragraph 7.6, the parties
acknowledge and agree that a decision by SB that HGS has submitted an
information package and PROTEIN RESEARCH PLAN which meets the requirements of
this Section 7 and as a result that HGS has exclusive rights to a THERAPEUTIC
PROTEIN shall be final and binding as among the parties hereto.
7.12 For purposes of this Section 7, an information package and/or a
PROTEIN RESEARCH PLAN shall be deemed submitted when it is actually received by
HGS or SB, as the case may be.
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<PAGE>
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
7.13 For purposes of this Section 7, the term "business day" shall mean
each weekday which is not a legal holiday in the City of New York and which is a
day on which each of the parties would normally conduct business operations.
8. PRODUCT DEVELOPMENT
-------------------
8.1 SP shall use diligent efforts to develop, market, promote and sell
royalty bearing SP PROTEIN PRODUCT equivalent to those efforts it uses with
respect to the proteins of similar value and status, subject to SP's right to
terminate such efforts and surrender all rights in and to such THERAPEUTIC
PROTEIN.
8.2 After the INITIAL RESEARCH TERM, SP shall use diligent efforts to
develop screens and to screen for SP DRUG PRODUCTS which are the subject of a
DRUG RESEARCH PLAN submitted by SP equivalent to those efforts it uses to
develop and screen for drug products using its other proprietary targets of
similar value and status.
8.3 Within sixty (60) days after the end of each calendar year, SP
shall provide to HGS in writing annual reports with respect to work performed by
or for SP under RESEARCH PLANS.
9. SP CO-RIGHTS
------------
9.1 In addition to the rights obtained by SP with respect to
THERAPEUTIC PROTEINS under Section 7, HGS acknowledges and agrees that SP shall
have the right and option to obtain rights in and to [***] THERAPEUTIC
PROTEINS as to which HGS has obtained exclusive rights under Section 7 which
have not been licensed to another entity prior to initiating Phase II(a)
Clinical Studies and as to which Phase II(a) Clinical Studies have been
completed by or on behalf of HGS. The option shall be exercised by SP in writing
within sixty
41
<PAGE>
"The information below marked [***] has been omitted pursuant to a request for
confidential treatment. The omitted portions have been separately filed with the
Commission."
(60) days after HGS notifies SP in writing that such studies have been
completed. HGS and SP may mutually agree that such rights may be exercised at an
earlier time. Upon exercise of the option, HGS and SP shall negotiate a separate
agreement which shall embody the following principles:
(a) HGS and SP shall equally share all prospective costs, expenses and
profits incurred with respect to such two products after completion of Phase IIa
clinical studies, provided, however, that such costs and expenses shall not
include the cost of capital expenditures, except to the extent that the
depreciation of capital expenditures is included in costs and expenses.
(b) SP's rights will be determined by mutual agreement and may
include (i) copromotion and/or (ii) co-marketing and/or (iii)
exclusive rights in agreed-to territories.
(c) Neither HGS nor SP shall have a right to sublicense its
co-promotion or co- marketing rights.
(d) A Japanese company may have certain rights to the products in
Japan and to the extent that such rights exist, SP and HGS
shall adjust the rights in the remainder of the world to
compensate SP for loss of rights in Japan.
9.2 [***]
9.3(a) In the event that, prior to initiating Phase II(a) Clinical
Studies, HGS decides to license a THERAPEUTIC PROTEIN as to which HGS has
obtained exclusive rights under
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<PAGE>
Section 7, then HGS shall offer such THERAPEUTIC PROTEIN to SP in writing, along
with the PROTEIN RESEARCH PLAN submitted by HGS with respect thereto, and within
ninety (90) days thereafter SP shall have the right, in its sole discretion, to
designate such THERAPEUTIC PROTEIN as an SP PROTEIN PRODUCT subject to the terms
and conditions of this Agreement. With such written notice by SP, SP shall also
submit a PROTEIN RESEARCH PLAN.
(b) The option granted to SP under paragraphs 9.1 and 9.3(a) shall not
be applicable to any THERAPEUTIC PROTEIN after SP has exercised its option under
Paragraph 9.1 and under Paragraph 9.3(a) such that in the aggregate SP has
obtained rights under Paragraphs 9.1 and 9.3(a) to two (2) THERAPEUTIC PROTEINS.
(c) By written notice to HGS, SP within its sole discretion may
surrender all rights to a THERAPEUTIC PROTEIN as to which SP has exercised its
option under Paragraph 9.3(a), and at such time, such THERAPEUTIC PROTEIN shall
become a THERAPEUTIC PROTEIN as to which HGS has exclusive rights. SP shall
grant to HGS a license to any and all technology, data and information which SP
has developed with respect to such surrendered THERAPEUTIC PROTEIN. Effective
upon such surrender of such THERAPEUTIC PROTEIN, for the purposes of Paragraph
9.3(b), such THERAPEUTIC PROTEIN shall not be counted as a THERAPEUTIC PROTEIN
as to which SP has exercised its option under Paragraph 9.3(a).
(d) SB shall have no rights under the SP/SB AGREEMENT with respect to
any THERAPEUTIC PROTEIN as to which SP obtains rights under Paragraph 9.3(a).
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<PAGE>
10. CONFIDENTIALITY
---------------
10.1 Subject to Paragraphs 10.2 and 10.3 and 10.4, the parties agree
not to disclose and/or provide to a THIRD PARTY information and/or materials
received from another party and to use the information and materials received
from the other party only as licensed hereunder.
10.2 Unless otherwise restricted by this Agreement, the confidentiality
obligations of paragraph 10.1 shall not apply to information and/or materials
which:
(i) was known to the receiving party or generally known to
the public prior to its disclosure hereunder; or
(ii) subsequently becomes known to the public by some means
other than a breach of this Agreement;
(iii) is subsequently disclosed to the receiving party by a
THIRD PARTY having a lawful right to make such
disclosure and who is not under an obligation of
confidentiality to the disclosing party;
(iv) is required by law or bona fide legal process
regulation, rule, act or order of any governmental
agency or authority to be disclosed, provided that the
party required to make the disclosure takes all
reasonable steps to restrict and maintain
confidentiality of such disclosure and provides
reasonable notice to the party providing the
information and/or materials;
(v) is approved for release by the parties, or
(vi) is independently developed by the employees or agents
of a party or their respective AFFILIATES without any
knowledge of the information and/or
44
<PAGE>
materials provided by another party, provided that
such independent development can be properly
demonstrated by the party disclosing the information
and/or materials.
10.3 (a) Notwithstanding Paragraph 10.1, SP may disclose and/or provide
LICENSED TECHNOLOGY to a THIRD PARTY who (i) receives a license from SP to
LICENSED TECHNOLOGY in conjunction with a license to an SP PRODUCT as permitted
by Paragraph 2.9 hereof, or (ii) is a THIRD PARTY contractor assisting SP with
respect to an SP PRODUCT, provided that such THIRD PARTY enters into an
agreement as provided in Paragraph 10.4, and such THIRD PARTY agrees to
confidentiality and non-use obligations essentially identical to Paragraph 10.1.
(b) Unless restricted by other provisions of this Agreement, the
obligations of Paragraph 10.1 shall not restrict the ability of HGS or SB to
disclose information and/or provide materials to a THIRD PARTY, provided that
such THIRD PARTY enters into an agreement by which the THIRD PARTY agrees to
confidentiality and non-use obligations essentially identical to Paragraph 10.1.
10.4 In the event that SP intends to transfer or disclose LICENSED
TECHNOLOGY to a THIRD PARTY contractor as permitted by Paragraph 10.3 no such
transfer or disclosure shall take place until such THIRD PARTY enters into an
agreement with SP by which SP is granted ownership of or a license (including
the right to grant sublicenses) to all inventions (and patent rights based
thereon) which result from the use of LICENSED TECHNOLOGY. Any such inventions
and patents shall be SP TECHNOLOGY and SP PATENTS subject to the terms and
conditions of this Agreement, provided, however, that any such inventions and
patents which
45
<PAGE>
result from any incidental or immaterial use of LICENSED TECHNOLOGY shall not be
SP TECHNOLOGY or SP PATENTS.
10.5 All confidential information disclosed by one party to another
party shall remain the intellectual property of the disclosing party. In the
event that a court or other legal or administrative tribunal, directly or
through an appointed master, trustee or receiver, assumes partial or complete
control over the assets of a party to this Agreement based on the insolvency or
bankruptcy of such party, the bankrupt or insolvent party shall promptly notify
the court or other tribunal (i) that confidential information received from the
other party under this Agreement remains the property of another party and (ii)
of the confidentiality obligations under this Agreement. In addition, the
bankrupt or insolvent party shall, to the extent permitted by law, take all
steps necessary or desirable to maintain the confidentiality of the other
party's(ies') confidential information and to insure that the court, other
tribunal or appointee maintains such information in confidence in accordance
with the terms of this Agreement.
10.6 (a) No public announcement concerning (i) the existence of or
terms of this Agreement, (ii) research and/or discoveries made by SP, (iii)
milestones achieved by SP, and (iv) exercise by SP of rights and options granted
under this Agreement, shall be made, either directly or indirectly, by any party
to this Agreement without prior written notice to the other parties and, except
as may be legally required, or as may be legally required for a public offering
of securities, or as may be required for recording purposes, without first
obtaining the approval of the other parties and agreement upon the nature and
text of such announcement. The party desiring to make any such public
announcement shall inform the other parties of the proposed announcement or
disclosure in reasonably sufficient time prior to public release, and
46
<PAGE>
shall provide the other parties with a written copy thereof, in order to allow
such other parties to comment upon such announcement or disclosure. This
Paragraph 10.6 shall not apply to any information in an public announcement
which is information essentially identical to that contained in a previous
public announcement agreed to pursuant to this paragraph.
(b) HGS and/or SB may provide a COLLABORATION PARTNER with a
copy of this Agreement.
10.7 Without the written consent of HGS and SB, SP shall not submit for
written or oral publication any manuscript, abstract or the like which includes
SP TECHNOLOGY which is or is directed to a TARGET and/or is a THERAPEUTIC
PROTEIN prior to the earlier of (i) eighteen months after SP files an SP PATENT
which claims such TARGET or THERAPEUTIC PROTEIN or (ii) with respect to a
THERAPEUTIC PROTEIN, the date on which SP obtains rights to such THERAPEUTIC
PROTEIN pursuant to Section 7 or (iii) such TARGET or THERAPEUTIC PROTEIN has
been published in a printed publication other than through a breach of this
paragraph 10.7.
11. PATENT PROSECUTION AND LITIGATION
---------------------------------
11.1 A party shall have and retain sole and exclusive title to all
inventions, discoveries, designs, works of authorship and other know-how which
are made, conceived, reduced to practice or generated by its employees, agents,
or other persons acting under its authority. As to all inventions, discoveries,
designs, works of authorship and other know-how made, conceived, reduced to
practice or generated jointly by employees, agents, or other persons acting
under the authority of two or more parties, such parties shall own an equal
undivided interest
47
<PAGE>
therein. In the event of jointly owned inventions, in the case where HGS is one
of the joint owners, HGS shall be responsible for the filing, prosecution and
maintenance of patents and patent applications directed thereto under the terms
and conditions of Paragraph 11.2 and if HGS is not one of the joint owners,
then, to the extent that SP is a joint owner, SP shall be responsible for the
filing, prosecution and maintenance thereof under the terms and conditions of
Paragraph 11.3, in each case, however, each of the joint owners shall be
responsible for an equal share of the cost and expense thereof. HGS or SP, as
appropriate, shall consult with all joint owners with respect to strategies for
filing, prosecution and maintenance of patents and patent applications for which
it bears responsibility under this Section 11.1, and shall keep such joint
owners reasonably informed with regard to filing, prosecution and maintenance
activity for such patents and patent applications, provided, however, that HGS
or SP, as appropriate, shall have final decision-making authority with respect
to filing, prosecution and maintenance of any patents and patent applications
for which it is responsible. If a joint owner does not desire to file, prosecute
or maintain a patent or patent application to a joint invention, such owner
shall assign its ownership interest therein to the other joint owner(s) and
shall no longer be responsible for the cost and expense thereof, and shall have
no further right to consult, review or comment with respect to the filing,
prosecution and maintenance of said patent or patent application. All patents
and patent applications to joint inventions which are LICENSED TECHNOLOGY and/or
SP TECHNOLOGY shall be LICENSED PATENTS and SP PATENTS, respectively, subject to
the terms and conditions of this Agreement; otherwise, any joint owner shall be
free to dispose of its interest therein without accounting to any other owner.
48
<PAGE>
11.2 (a) HGS and SB, as the case may be, shall have the right within
its sole discretion to prepare, file, prosecute and maintain LICENSED PATENTS
owned by HGS and SB, respectively. With respect to LICENSED PATENTS as to which
SP retains a license hereunder, subject to Paragraph 11.10, HGS and SB, as the
case may be, shall keep SP reasonably informed with respect to the filing and
prosecution thereof (including interference proceedings). In the event that HGS
or SB, as the case may be, and do not intend to prepare, file, prosecute and/or
maintain patent protection in any country with respect to LICENSED TECHNOLOGY
(other than expressed sequence tags (ESTs)) which is or would be a LICENSED
PATENT as to which SP retains a license hereunder, HGS or SB, as the case may
be, shall, at SP's option, do so at the cost and expense of SP. In the event
that SB or a COLLABORATION PARTNER also makes such a request in a country, such
costs shall be apportioned between SP and the requesting entity(ies).
(b) SP shall have the right within its sole discretion to
prepare, file, prosecute and maintain SP PATENTS. With respect to SP PATENTS as
to which HGS retains a license hereunder, subject to Paragraph 11.11, SP shall
keep HGS reasonably informed with respect to the filing and prosecution thereof
(including interference proceedings). In the event that SP does not intend to
prepare, file, prosecute and/or maintain patent protection in any country with
respect to SP TECHNOLOGY which is or would be an SP PATENT as to which HGS
retains a license hereunder, SP shall, at HGS' option, do so at the cost and
expense of HGS.
(c) SP will provide HGS or SB, as appropriate, reasonable
assistance to enable HGS or SB, as appropriate, to prepare, file, prosecute and
maintain LICENSED PATENTS
49
<PAGE>
pursuant to section 11.2(a). HGS will provide SP reasonable assistance to enable
SP to prepare, file, prosecute and maintain SP PATENTS pursuant to section
11.2(b).
11.3 Each party, on behalf of itself, its AFFILIATES and its and their
respective directors, employees, officers, shareholders, agents, successors and
assigns hereby waives any and all actions and causes of action, claims and
demands whatsoever, in law or equity of any kind it or they may have against
another party, its AFFILIATES and its or their respective officers, directors,
employees, shareholders, agents, successors and assigns, which may arise
from performance of patent activities under this Section, except those which
result from gross negligence, recklessness, or willful misconduct.
11.4 (a) In the event of the institution of any suit by a THIRD PARTY
against SP or its licensees for patent infringement involving the manufacture,
use, import, export, offer for sale, sale, distribution or marketing of SP
PRODUCT, SP shall promptly notify HGS in writing. As between HGS, SB and SP, SP
shall be solely responsible for the cost and expense of such action and any
liability which results therefrom.
(b) In the event of the institution of any suit by a THIRD
PARTY against HGS and/or SB, or their respective licensees, for patent
infringement involving the manufacture, use, import, export, offer for sale,
sale, distribution or marketing of any PRODUCT sold by HGS and/or SB or their
respective licensees involving or developed using LICENSED TECHNOLOGY and/or SP
TECHNOLOGY, HGS and/or SB shall promptly notify SP in writing. As between HGS,
SB and SP, HGS and/or SB, as appropriate, shall be solely responsible for the
cost and expense of such action and any liability which results therefrom.
50
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11.5 In the event that HGS, SB or SP becomes aware of actual or
threatened infringement of a SP PATENT or LICENSED PATENT anywhere in the
TERRITORY, that party shall promptly notify the other parties in writing. The
owner of the SP PATENT or LICENSED PATENT shall have the first right but not the
obligation to bring, at its own expense, an infringement action against any
THIRD PARTY and to use another party's name in connection therewith. If the
owner of the patent does not commence a particular infringement action within
ninety (90) days, the other party, after notifying the owner in writing, shall
be entitled to bring such infringement action, in its own name and/or in the
name of the patent owner, at its own expense to the extent that such party is
licensed thereunder. The foregoing notwithstanding, in the event that an alleged
infringer certifies pursuant to 21 U.S.C. ss.355(b)(2)(A)(iv) against an issued
SP PATENT or LICENSED PATENT covering a PRODUCT, as between the patent owner and
the owner of the PRODUCT, the party receiving notice of such certification shall
immediately notify the other party of such certification, and if fourteen (14)
days prior to expiration of the forty five (45) day period set forth in 21
U.S.C. ss.355(c)(3)(C), the owner of the SP PATENT or LICENSED PATENT fails to
commence an infringement action, the party receiving notice, in its sole
discretion, at its own expense and to the extent that it is licensed under the
SP PATENT or LICENSED PATENT, shall be entitled to bring such infringement
action in its own name and/or in the name of the patent owner. The party
conducting an action under this Paragraph 11.5 shall have full control over its
conduct, including settlement thereof provided such settlement shall not be made
without the prior written consent of the other licensing party or licensed party
if it would adversely affect the patent rights of such party. The licensing
party (i.e., the patent owner) and the licensed party (e.g., the
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owner of the PRODUCT) shall reasonably assist one another and cooperate in any
such litigation at the other's request , each such party paying its own costs
and expenses. The party conducting the litigation shall periodically reimburse
the other party(ies) for its reasonable and actual out-of-pocket expenses for
assisting in the litigation , which reimbursement shall be made within thirty
(30) days of receipt by the party conducting the litigation of itemized invoices
from the assisting party documenting such expenses.
11.6 Any recovery made by a party as the result of an action for patent
infringement it has conducted under Paragraph 11.5 shall be distributed as
follows:
(i) The party conducting the action shall recover its actual
out -of-pocket expenses.
(ii) To the extent that the recovery exceeds the total of item
(i), the excess shall be kept by the party conducting the
action, provided, however, that to the extent that (a) the
recovery is based on an award of lost sales/profits, and (b)
the party conducting the action would have incurred a royalty
obligation to another party based upon such sales, the party
to whom such royalties would have been due shall receive a
proportion of the excess recovery corresponding to the royalty
percentage it would have otherwise been due.
11.7 The parties shall periodically keep one another reasonably
informed of the status of and of their respective activities regarding any such
litigation or settlement thereof.
11.8 To the extent that the owner of a SP PATENT or a LICENSED PATENT
also owns a PRODUCT (covered by an NDA or HRD) which PRODUCT is covered by a
granted claim of said SP PATENT or LICENSED PATENT, the owner of said SP PATENT
or
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LICENSED PATENT shall have the first right to seek extensions of the terms of
the patent and to seek to obtain SPCs. If the owner of a SP PATENT or a LICENSED
PATENT does not own a PRODUCT covered by a granted claim of said SP PATENT or
LICENSED PATENT, then the owner of a PRODUCT (covered by an NDA or HRD) which
PRODUCT is licensed under and is covered by a granted claim of said SP PATENT or
LICENSED PATENT shall have the right to seek extensions of the terms of the
patent and to seek to obtain SPCs. Where more than one (1) PRODUCT is covered by
a granted claim of the same SP PATENT or the same LICENSED PATENT, as between
SP, HGS, SB and COLLABORATION PARTNERS, the right to seek extensions of the
terms of the patent and to obtain SPCs shall be granted by the patent owner to
the first of SP, HGS, SB and the COLLABORATION PARTNERS, who is licensed
thereunder to submit to the patent owner, in writing, a request to obtain such
rights with respect to a PRODUCT (covered by an NDA or HRD) which is approved
for marketing and/or sale in at least one country in which said SP PATENT or
LICENSED PATENT is in force. Each party shall assist the other in the obtaining
of such extensions or SPCs including by authorizing the other party to act as
its agent.
11.9 (a) All rights and licenses granted under or pursuant to this
Agreement by one party to another party are, for all purposes of Section 365(n)
of Title 11 of the U.S. Code ("Title 11"), licenses of rights to intellectual
property as defined in Title 11. The licensing party agrees during the term of
this Agreement to maintain and preserve any current copies of all such
intellectual property which are in existence and in its possession as of the
commencement of a case under Title 11 by or against the licensing party. If a
case is commenced by or against the licensing party under Title 11, then, unless
and until this Agreement is rejected as provided in
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Title 11, the licensing party (in any capacity, including debtor-in-possession)
and its successors and assigns (including, without limitation, a Title 11
Trustee) shall, as the party who is a licensee may elect in a written request,
immediately upon such request (A) (i) perform all of the obligations provided in
this Agreement to be performed by the licensing party, or (ii) provide to the
party who is a licensee all such intellectual property (including all
embodiments thereof) held by the licensing party and such successors and assigns
as of the commencement of a case under Title 11 by or against the licensing
party and from time to time thereafter, and (B) not interfere with the rights of
the licensing party as provided in this Agreement, or any agreement
supplementary hereto, to such intellectual property (including all such
embodiments thereof, including any right of the licensing party to obtain such
intellectual property or such embodiment) from any other entity.
(b) If a Title 11 case is commenced by or against the
licensing party, this Agreement is rejected as provided in Title 11 and the
party who is a licensee elects to retain its rights hereunder as provided in
Title 11, then the licensing party (in any capacity, including
debtor-in-possession) and its successors and assigns (including, without,
limitation, a Title 11 Trustee) shall provide to the party who is a licensee all
such intellectual property (including all embodiments thereof) held by the
licensing party and such successors and assigns immediately upon the party who
is a licensee's written request thereof. Whenever, the licensing party or any of
its successors or assigns provides to the party who is a licensee any of the
intellectual property licensed hereunder (or any embodiment thereof) pursuant to
this Paragraph 11.9, the party who is a licensee shall have the right to perform
the obligations of the licensing party hereunder with respect to such
intellectual property, but neither such provision nor such
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performance by the party who is a licensee shall release the licensing party
from any such obligation or liability for failing to perform it; provided,
however, that in such event the party who is a licensee shall not be entitled to
compel specific performance by the licensing party under this Agreement except
to the extent of enforcing the exclusivity of the license granted hereunder.
(c) All rights, powers, remedies, obligations and conditions
of the party who is a licensee provided herein are in addition to and not in
substitution for any and all other rights, powers, remedies, obligations and
conditions of the licensing party or the party who is a licensee now or
hereafter existing at law or in equity (including, without limitation, Title 11)
in the event of the commencement of a Title 11 case by or against the licensing
party. The party who is a licensee, in addition to the rights, powers and
remedies expressly provided herein, shall be subject to all obligations and
conditions, and shall be entitled to exercise all other such rights and powers
and resort to all other such remedies as may now or hereafter exist at law or in
equity (including, without limitation, Title 11) in such event. The parties
agree that they intend the foregoing rights and obligations of the party who is
a licensee to apply to the maximum extent permitted by law, including without
limitation for purposes of Title 11, (i) the right of access to any intellectual
property (including all embodiments thereof) of the licensing party, or any
third party with whom the licensing party contracts to perform an obligation of
the licensing party under this Agreement, and, in the case of the third party,
which is necessary for the development, registration and manufacture of a
product licensed hereunder, and (ii) the right to contract directly with any
third party described in clause (i) in this sentence to complete the contracted
work.
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11.10 The obligations of HGS and/or SB to keep SP informed under
Paragraph 11.2(a) shall only apply to LICENSED PATENTS which claim LICENSED
TECHNOLOGY which HGS and/or SB is required to disclose to SP pursuant to Section
6.
11.11 The obligation of SP to keep HGS informed under Paragraph 11.2(b)
shall not extend to any SP PATENT directed to a THERAPEUTIC PROTEIN until the
earlier of publication of the SP PATENT and/or SP obtaining exclusive rights to
the THERAPEUTIC PROTEIN under Section 7.
12. STATEMENTS AND REMITTANCES
--------------------------
12.1 SP shall keep and require its licensees to keep complete and
accurate records of all NET SALES of SP PRODUCT for which royalties are due
hereunder. HGS shall have the right, at its expense, through a certified public
accountant or like person reasonably acceptable to SP, to examine pertinent
financial records during regular business hours upon proper advance written
notice during the life of this Agreement and for six (6) months after its
termination for the purpose of verifying and reporting to HGS as to the
computation of the royalty payments made hereunder; provided, however, that such
examination shall not take place more often than once a year and not later than
forty-five (45) days after written request is made; provided further that such
accountant shall report only as to the accuracy of the royalty statements and
payments, including the magnitude and source of any discrepancy. Neither SP nor
its licensees shall be required to maintain such records for more than three (3)
years. The accountant shall execute customary confidentiality agreements prior
to any examination, reasonably satisfactory in form
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and substance to SP, to maintain in confidence all information obtained during
the course of any such examination, except for disclosure to HGS, as necessary
for the above purpose.
12.2 Within sixty (60) days after the close of each calendar quarter,
SP shall deliver to HGS a true accounting of all SP PRODUCT subject to royalty
hereunder sold by it and its licensees and distributors during such calendar
quarter and shall at the same time pay all royalties due. In the event that the
royalty rate changes in a calendar quarter with respect to an SP PRODUCT as a
result of the NET SALES of such SP PRODUCT for such calendar year reaching a
level at which there is a change in royalty rate as provided in Paragraph 3.2
("New Royalty Rate") then the royalties which are paid by SP for such calendar
quarter and the subsequent calendar quarters for such calendar year (until the
royalty rate is again changed) shall be determined and paid based on the New
Royalty Rate, and in addition, the royalties for the previous calendar quarters
for such calendar year for such SP PRODUCT shall be recomputed at the New
Royalty Rate, and the payment for the calendar quarter in which there is a New
Royalty Rate shall be adjusted for the difference between the royalties paid for
such SP PRODUCT for the previous calendar quarters for such calendar year and
the royalties for such previous calendar quarters for such calendar year
calculated by use of the New Royalty Rate. Such accounting shall show sales,
each calculation of NET SALES and the calculation of currency conversion on a
country-by-country basis and SP-PRODUCT-by-SP-PRODUCT basis, and recalculation
of royalties based on a New Royalty Rate, if applicable.
12.4 All royalties and other payments due under this Agreement shall be
payable in U.S. dollars.
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12.5 All royalties, with the exception of those payable on sales to
customers in the United States, shall be paid by Schering-Plough Ltd. from its
office in Lucerne, Switzerland. Royalties payable on U.S. sales shall be paid
directly to HGS by Schering Corporation from its offices in Kenilworth, New
Jersey. Royalties payable on sales in countries other than the United States
shall be calculated by multiplying the appropriate royalty rate times the sales
in each currency in which they are made and converting the resulting amount into
United States dollars, at the rates of exchange used by Schering Corporation,
for reporting such sales for United States financial statement purposes. A copy
of SP's current policy for bookkeeping exchange rates is set forth in Appendix
G. If, due to restrictions or prohibitions imposed by a national or
international authority, payments cannot be made as aforesaid, the parties shall
consult with a view to finding a prompt and acceptable solution, and SP will
deal with such monies as HGS may lawfully direct at no additional out-of-pocket
expense to SP. Notwithstanding the foregoing, if royalties cannot be remitted to
HGS for any reason within six (6) months after the end of the calendar quarter
during which they are earned, then SP shall be obligated to deposit the
royalties in a bank account in Switzerland in the name of HGS. SP shall deduct
any withholding taxes which SP is obligated to withhold in a country based on
royalties or milestones due to HGS based on sales in such country from royalty
or milestone payments due HGS for such country under this Agreement and pay them
to the proper authorities as required by applicable laws. SP shall maintain
official receipts of payment of any withholding taxes and forward these receipts
to HGS within sixty (60) days.
13. TERM AND TERMINATION
--------------------
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13.1 This Agreement shall come into effect as of the EFFECTIVE DATE and
shall remain in full force and effect unless earlier terminated as provided in
this Section 13.
13.2 In the event SP fails to make a royalty or milestone payment to
HGS under this Agreement with respect to a SP PRODUCT, when due, or fails to
meet its obligations under Section 8 of this Agreement with respect to a SP
PRODUCT, in addition to any other remedy which it may have, HGS may notify SP in
writing that all of SP's rights with respect to such SP PRODUCT shall terminate
as of thirty (30) days after such written notice and SP's rights with respect
thereto shall terminate unless such payment is made or such failure is cured,
prior to the expiration of such thirty (30) day period.
13.3 In the event that SP fails to make a payment to HGS under
Paragraph 3.1 or under Paragraph 5.1, when due, in addition to any other remedy
which HGS may have, HGS may notify SP in writing of such failure and that this
Agreement shall terminate in its entirety and if SP fails to make such payment
within thirty (30) days thereafter, this Agreement shall terminate.
13.4 In the event that HGS and/or SB fails to meet its obligations
under Section 6, in addition to any other remedy which SP may have, SP may
notify HGS or SB, in writing, as the case may be, of such failure and that this
Agreement shall terminate in its entirety as to HGS and/or SB, as the case may
be, and if HGS or SB, as the case may be, fails to cure such failure within
thirty (30) days thereafter, this Agreement shall terminate with respect to HGS
or SB, as the case may be, in its entirety.
13.5 Any party, may terminate this Agreement as to another party if, at
any time, such other party shall file in any court or agency pursuant to any
statute or regulation of any state or
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country, a petition in bankruptcy or insolvency or for reorganization or for an
arrangement or for the appointment of a receiver or trustee of the party or of
its assets, or if such other party proposes a written agreement of composition
or extension of its debts, or if such other party shall be served with an
involuntary petition against it, filed in any insolvency proceeding, and such
petition shall not be dismissed within sixty (60) days after the filing thereof,
or if such other party shall propose or be a party to any dissolution or
liquidation, or if such other party shall make an assignment for the benefit of
creditors.
13.6 Neither HGS nor SP nor SB shall have the right to terminate this
Agreement except with respect to HGS and SP under paragraphs 13.3, 13.4 and with
respect to HGS, SP and SB under paragraph 13.5, provided, however, that nothing
in this Agreement shall limit any remedies for breach which may be available
pursuant to a judgment of a court, in law or equity, including termination of
this Agreement or of any or all rights hereunder, except that any action seeking
remedies for breach of this Agreement shall be conducted in accordance with
Section 18.
13.7 In the event that prior to one (1) year after the end of the
INITIAL RESEARCH TERM, SP has not obtained the full length DNA coding sequence
for each TARGET encompassed by an ANTIBODY RESEARCH PLAN and has not certified
in writing to HGS that such sequence(s) has been obtained, HGS by written notice
to SP may terminate all rights and licenses to such TARGET(S) and the ANTIBODY
PRODUCT(S) encompassed by such ANTIBODY RESEARCH PLAN(S) and such rights and
licenses shall terminate thirty (30) days thereafter unless SP prior to the
expiration of such thirty (30) days has obtained such sequence(s)
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and has provided to HGS such certification. Upon such termination, SP shall
discontinue all work encompassed by such ANTIBODY RESEARCH PLAN.
13.8 In the event that prior to one (1) year after the later of the end
of the INITIAL RESEARCH TERM or the EXTENDED TERM, SP has not obtained the full
length DNA coding sequence for each TARGET encompassed by a DRUG RESEARCH PLAN
and has not certified in writing to HGS that such sequence(s) has been obtained,
HGS by written notice to SP may terminate all rights and licenses to such
TARGET(s) and the DRUG PRODUCT(s) encompassed by such DRUG RESEARCH PLAN(s) and
such rights and licenses shall terminate thirty (30) days thereafter unless SP
prior to the expiration of such thirty (30) days has obtained such sequence(s)
and has provided to HGS such certification. Upon such termination, SP shall
discontinue all work encompassed by such DRUG RESEARCH PLAN(s).
14. RIGHTS AND DUTIES UPON TERMINATION
----------------------------------
14.1 Notwithstanding termination of this agreement, the rights and
obligations of the parties under Sections 10, 12, 14, 16, 18 and 30 and
paragraphs 2.8, 2.9, 2.10, 3.1(b), and 5.1(b), shall survive such termination.
14.2 Termination of the Agreement in accordance with the provisions
hereof shall not limit remedies which may be otherwise available in law or
equity.
14.3 Other than termination of this Agreement pursuant to Paragraph
13.4 or with respect to an SP PRODUCT as to which rights have been terminated
under Paragraph 13.2, SP's obligation to pay royalties and milestone payments
for SP PRODUCT shall survive such termination.
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15. WARRANTIES AND REPRESENTATIONS
------------------------------
15.1 Each of HGS, SB and SP hereby represents, warrants and covenants
to the other, as of the EFFECTIVE DATE, as follows:
(a) it is a corporation duly organized and validity existing
under the laws of the state or other jurisdiction of incorporation or formation;
(b) the execution, delivery and performance of this Agreement
by such party has been duly authorized by all requisite corporate action;
(c) it has the power and authority to execute and deliver this
Agreement and to perform its obligations hereunder, including, without
limitation, the right, power and authority to grant the licenses under Section
2;
(d) the execution, delivery and performance by such party of
this Agreement and its compliance with the terms and provisions hereof to such
party's best knowledge does not conflict with or result in a breach of any of
the terms and provisions of or constitute a default under (i) a loan agreement,
guaranty, financing agreement, agreement affecting a product or other agreement
or instrument binding or affecting it or its property; (ii) the provisions of
its charter documents or bylaws; or (iii) any order, writ, injunction or decree
of any court or governmental authority entered against it or by which any of its
property is bound;
(e) this Agreement constitutes such party's legal, valid and
binding obligation enforceable against it in accordance with its terms subject,
as to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to the
availability of particular remedies under general equity principles.
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15.2 HGS, SB and SP, as the case may be, hereby represent, warrant, and
covenant to a party receiving a license hereunder as follows:
(a) as of the EFFECTIVE DATE, there are no claims, judgments
or settlements against or owed by HGS or SB, as the case may be, or pending or
threatened claims or litigation, in each case relating to HGS' or SB's interest,
as the case may be, in or to LICENSED PATENTS or LICENSED TECHNOLOGY; and
(b) HGS, SB and SP, as the case may be, has not and will not
grant any rights or licenses to any person or entity which is inconsistent with
the rights and licenses granted by HGS, SB, or SP, as the case may be, to a
party under this Agreement.
15.3 HGS hereby represents and warrants to SP that as of the EFFECTIVE
DATE:
(a) without having made any inquiry or investigation, no
information has come to HGS' attention which causes HGS to reasonably believe
that SP will not be able to negotiate license rights from each THIRD PARTY, who
is a licensor to HGS of the SOFTWARE identified in Appendix F as owned by said
THIRD PARTY, on terms that are at least as favorable to SP as those given by
such THIRD PARTY to HGS;
(b) without having made an inquiry or investigation, no
information has come to HGS' attention which causes HGS to reasonably believe
that the SOFTWARE to be provided to SP by HGS as of the EFFECTIVE DATE infringes
any patent, copyright, trademark or trade secret right of any THIRD PARTY which
has not been licensed by HGS;
(c) to HGS' best knowledge, the list of SOFTWARE contained in
Appendix F is true, complete and correct in all material respects;
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(d) to HGS' best knowledge, the list of hardware components
set forth in Appendix F includes all of the material components SP will require
to utilize the SOFTWARE at its facilities in the manner contemplated by this
Agreement and to receive in an electronic format compatible with the SOFTWARE
all HGS TECHNOLOGY that is available in electronic format; and
(e) for a period of one (1) year from the date that the
SOFTWARE is installed and is fully operational at SP's facilities, the SOFTWARE
located at HGS and which is and will be used by HGS to input, format, and
transmit HGS TECHNOLOGY to SP in an electronic format will function in the
manner intended by the parties.
15.4 No party to this Agreement has in effect, and after the EFFECTIVE
DATE no party shall enter into any written agreement (including, but not limited
to, further amendments to the COLLABORATION AGREEMENT) that would be
inconsistent with its obligations under this Agreement.
15.5 NOTHING IN THIS AGREEMENT SHALL BE CONSTRUED AS A WARRANTY THAT SP
PATENTS, COLLABORATION PATENTS OR LICENSED PATENTS ARE VALID OR ENFORCEABLE OR
THAT THEIR EXERCISE OR THE EXERCISE OF LICENSED TECHNOLOGY OR SP TECHNOLOGY DOES
NOT INFRINGE ANY PATENT RIGHTS OF THIRD PARTIES. A HOLDING OF INVALIDITY OR
UNENFORCEABILITY OF ANY SUCH PATENT, FROM WHICH NO FURTHER APPEAL IS OR CAN BE
TAKEN, SHALL NOT AFFECT ANY OBLIGATION HEREUNDER, BUT SHALL ONLY ELIMINATE
ROYALTIES OTHERWISE DUE UNDER SUCH PATENT FROM THE DATE SUCH HOLDING BECOMES
FINAL.
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15.6 EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN HGS, SB and SP MAKE
NO REPRESENTATIONS OR EXTEND ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR
IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE.
15.7 Each party represents and warrants to the other parties hereto
that any materials provided by one party to another under this Agreement shall
be used in compliance with all applicable laws and regulations.
15.8 For the sole purpose of permitting SP to exercise its rights under
Paragraph 31.1, HGS and SB each hereby warrant and represent that after the
EFFECTIVE DATE they shall each, as applicable, promptly provide to SP (i) any
agreement entered into prior to the end of the INITIAL RESEARCH TERM with a
COLLABORATION PARTNER relating to LICENSED TECHNOLOGY, and any supplement or
amendment thereto entered into prior to the end of the INITIAL RESEARCH TERM
(ii) any agreement with a THIRD PARTY prior to the end of the INITIAL RESEARCH
TERM who is substituted for an existing COLLABORATION PARTNER in any agreement
and as a result becomes a COLLABORATION PARTNER, and (iii) any agreement prior
to the end of the INITIAL RESEARCH TERM that adds a COLLABORATION PARTNER,
provided that the aggregate of COLLABORATION PARTNERS shall be no more than four
(4) entities at any one time.
15.9 HGS hereby warrants and represents that to the extent any data
and/or information included within LICENSED TECHNOLOGY was obtained from The
Institute for Genomic Research (TIGR), TIGR has granted rights to HGS to all
such data and/or information.
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15.10 No claim can be made or shall exist with respect to a breach of
warranty, representation or covenant under Paragraph 15.1(a), (b), (d) and (e),
Paragraph 15.2(a), Paragraph 15.3 or 15.8 unless such claim is made prior to the
later of the end of the INITIAL RESEARCH TERM or EXTENDED TERM.
15.11 In the event that an agreement with a COLLABORATION PARTNER has a
publication provision which is more favorable to SP then Paragraph 10.7 of this
Agreement, then SP may substitute such more favorable publication provision for
Paragraph 10.7 by written notice to HGS and SB within sixty days of receipt
thereof.
16. INDEMNIFICATION
---------------
16.1 SP shall defend, indemnify and hold harmless HGS, SB, licensors of
HGS and SB, and each of their respective directors, officers, shareholders,
agents and employees, from and against any and all liability, loss, damages and
expenses (including reasonable attorneys' fees) as the result of claims,
demands, costs or judgments which may be made or instituted against any of them
arising out of the manufacture, possession, distribution, use, testing, sale or
other disposition of any SP PRODUCT by or through SP or any THIRD PARTY granted
rights by SP under this Agreement. Notwithstanding the foregoing, SP shall have
no obligation under this Agreement to defend, indemnify or hold harmless SB with
respect to claims, demands, costs or judgments arising out of the manufacture,
possession, distribution, use, testing, sale or other disposition of any SP
PRODUCT which is a CO-PROMOTION PRODUCT (as defined in the SP/SB AGREEMENT).
SP's obligation to defend, indemnify and hold harmless shall include claims,
demands, costs or judgments, whether for money damages or
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equitable relief by reason of alleged personal injury (including death) to any
person or alleged property damage, provided, however, the indemnity shall not
extend to any claims against an indemnified party which result from the gross
negligence or willful misconduct of such indemnified party. SP shall have the
exclusive right. to control the defense of any action which is to be indemnified
in whole by SP hereunder, including the right to select counsel reasonably
acceptable to HGS or SB, as the case may be, to defend HGS or SB, as the case
may be, and to settle any claim, provided that, without the written consent of
HGS or SB, as the case may be (which shall not be unreasonably withheld or
delayed), SP shall not agree to settle any claim against HGS or SB, as the case
may be, to the extent such claim has a material adverse effect on HGS or SB, as
the case may be. The provisions of this paragraph shall survive and remain in
full force and effect after any termination, expiration or cancellation of this
Agreement and the obligation hereunder shall apply whether or not such claims
are rightfully brought. SP shall require each licensee to agree to indemnify HGS
or SB, as the case may be, in a manner consistent with this paragraph.
16.2 HGS shall defend, indemnify and hold harmless SP, licensors of SP
and each of their respective directors, officers, shareholders, agents and
employees, from and against any and all liability, loss, damages and expenses
(including reasonable attorneys' fees) as the result of claims, demands, costs
or judgments which may be made or instituted against any of them arising out of
the manufacture, possession, distribution, use, testing, sale or other
disposition by or through HGS or any THIRD PARTY granted rights by HGS under
this Agreement of any PRODUCT in the HGS FIELD or the SP FIELD as to which HGS
is granted a license under an SP PATENT. HGS's obligation to defend, indemnify
and hold harmless shall include claims,
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demands, costs or judgments, whether for money damages or equitable relief by
reason of alleged personal injury (including death) to any person or alleged
property damage, provided, however, the indemnity shall not extend to any claims
against an indemnified party which result from the gross negligence or willful
misconduct of such indemnified party. HGS shall have the exclusive right to
control the defense of any action which is to be indemnified in whole by HGS
hereunder, including the right to select counsel reasonably acceptable to SP to
defend SP and to settle any claim, provided that, without the written consent of
SP (which shall not be unreasonably withheld or delayed), HGS shall not agree to
settle any claim against SP to the extent such claim has a material adverse
effect on SP. The provisions of this paragraph shall survive and remain in full
force and effect after any termination, expiration or cancellation of this
Agreement and HGS' obligation hereunder shall apply whether or not such claims
are rightfully brought. HGS shall require each licensee to agree to indemnify SP
in a manner consistent with this Paragraph 16.2.
16.3 A person or entity that intends to claim indemnification under
this Section 16 (the "Indemnitee") shall promptly notify the other party (the
"Indemnitor") of any loss, claim, damage, liability, or action in respect of
which the Indemnitee intends to claim such indemnification, and the Indemnitor,
after it determines that indemnification is required of it, shall assume the
defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an Indemnitee shall have the right to retain its own counsel, with
the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume
the defense; or, if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other
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party represented by such counsel in such proceedings. The indemnity agreement
in this Section 16 shall not apply to amounts paid in settlement of any loss,
claim, damage, liability or action if such settlement is effected without the
consent of the Indemnitor, which consent shall not be withheld unreasonably. The
failure to deliver notice to the Indemnitor within a reasonable time after the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such Indemnitor of any liability to the Indemnitee under
this Section 16, but the omission so to deliver notice to the Indemnitor will
not relieve it of any liability that it may have to any Indemnitee otherwise
than under this Section 16. The Indemnitee under this Section 16, its employees
and agents, shall cooperate fully with the Indemnitor and its legal
representatives in the investigations of any action, claim or liability covered
by this indemnification. In the event that each party claims indemnity from the
other and one party is finally held liable to indemnify the other, the
Indemnitor shall additionally be liable to pay the reasonable legal costs and
attorneys' fees incurred by the Indemnitee in establishing its claim for
indemnity.
17. FORCE MAJEURE
-------------
17.1 If the performance of any party of this Agreement, or of any
obligation under this Agreement, is prevented, restricted, interfered with or
delayed by reason of any cause beyond the reasonable control of the party liable
to perform, unless conclusive evidence to the contrary is provided, the party so
affected shall, upon giving written notice to the other parties, be excused from
such performance to the extent of such prevention, restriction, interference or
delay, provided that the affected party shall use its reasonable best efforts to
avoid or remove such causes of non-performance and shall continue performance
with the utmost dispatch
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whenever such causes are removed. When such circumstances arise, the parties
shall discuss what, if any, modification of the terms of this Agreement may be
required in order to arrive at an equitable solution.
18. GOVERNING LAW
-------------
18.1 Except for disputes under Section 11 which will be governed by
Federal law and brought in the Federal District Court of Delaware, this
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware without regard to the conflict of laws provisions thereof and
the exclusive jurisdiction and venue of any action with respect to this
Agreement shall be in a state court of the State of Delaware. Each of the
parties hereto agrees to submit to the exclusive jurisdiction and venue of such
court for the purpose of any such action. Service of process in any such action
may be effected in the manner provided in Section 21 for delivery of notice or
in any other manner consistent with Delaware law. In the event that a state
court or Federal District Court of the State of Delaware holds that an action
cannot be brought and maintained in a state court or Federal District Court of
the State of Delaware, then such action may be brought in any court having
proper jurisdiction.
19. SEPARABILITY
------------
19.1 In the event any portion of this Agreement shall be held illegal,
void or ineffective, the remaining portions hereof shall remain in full force
and effect.
19.2 If any of the terms or provisions of this Agreement are in
conflict with any applicable statute or rule of law, then such terms or
provisions shall be deemed inoperative to
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the extent that they may conflict therewith and shall be deemed to be modified
to conform with such statute or rule of law.
19.3 In the event that the terms and conditions of this Agreement are
materially altered as a result of paragraphs 19.1 or 19.2, the parties will, in
good faith, renegotiate the terms and conditions of this Agreement to resolve
any inequities.
20. ENTIRE AGREEMENT
----------------
20.1 This Agreement, together with the Schedules, exhibits, Appendices
or other attachments hereto, entered into as of the date written above, as well
as the SP/SB AGREEMENT, constitutes the entire agreement between the parties
relating to the subject matter hereof and supersedes all previous writings and
understandings. No terms or provisions of this Agreement shall be varied or
modified by any prior or subsequent statement, conduct or act of either of the
parties, except that the parties may amend this Agreement by written instruments
specifically referring to and executed in the same manner as this Agreement.
21. NOTICES
-------
21.1 Any notice required or permitted under this Agreement shall be
hand-delivered or sent by express delivery service or certified or registered
mail, postage prepaid, or by fax with written confirmation by mail, to the
following addresses of the parties:
HGS
HUMAN GENOME SCIENCES, INC.
Suite 300
9410 Key West Avenue
Rockville, Maryland 20850
Attention: Chief Executive Officer
(Fax #301-309-8512)
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copy to:
Mr. Elliot Olstein
Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart
& Olstein
6 Becker Farm Road
Roseland, New Jersey 07068
(Fax #201-994-1744)
SP
SCHERING CORPORATION
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
Attention: Vice President, Business Development
(Fax #: 908-298-5379)
cc: Director of Licensing
(Fax #: 908-298-2739)
and
SCHERING-PLOUGH LTD.
Toepferstrasse 5
CH-6004 Lucerne
Switzerland
Attention: President
(Fax # 41 41 4181626)
SB
SmithKline Beecham Corporation
709 Swedeland Road
King of Prussia, PA 19406
Attention: Vice President, ATG
(Fax # 610-270-6663)
21.2 Any notice required or permitted to be given concerning this
Agreement shall be effective upon receipt by the party to whom it is addressed.
22. ASSIGNMENT
----------
72
<PAGE>
22.1 This Agreement and the licenses herein granted shall be binding
upon and inure to the benefit of the assignees and successors in interest of the
respective parties. Neither this Agreement nor any interest hereunder shall be
assignable by a party without the written consent of the other parties and any
attempted assignment contrary to this paragraph shall be void and without force
and effect provided, however, that a party may assign this Agreement or any of
its rights or obligations hereunder to any AFFILIATE or to any THIRD PARTY with
which it may merge or consolidate, or to which it may transfer all or
substantially all of its assets to which this Agreement relates, without
obtaining the consent of the other party, provided that the assigning party
remains liable under this Agreement and that the THIRD PARTY assignee or
surviving entity assumes in writing all of its obligations under this Agreement.
23. RECORDING
---------
23.1 SP, SB and HGS each shall have the right, at any time, to record,
register, or otherwise notify this Agreement in appropriate governmental or
regulatory offices anywhere in the TERRITORY, and HGS, SB or SP, as the case may
be, shall provide reasonable assistance to the other in effecting such
recording, registering or notifying.
23.2 The parties acknowledge that this Agreement may be notified to the
European Community for compliance with applicable laws.
24. COUNTERPARTS
------------
73
<PAGE>
24.1 This Agreement may be executed in any number of counterparts, and
each such counterpart shall be deemed an original instrument, but all such
counterparts together shall constitute but one agreement.
25. WAIVER.
-------
25.1 Any delay or failure in enforcing a party's rights under this
Agreement or any waiver as to a particular default or other matter shall not
constitute a waiver of such party's rights to the future enforcement of its
rights under this Agreement, nor operate to bar the exercise or enforcement
thereof at any time or times thereafter, excepting only as to an express written
and signed waiver as to a particular matter for a particular period of time.
25.2 Notwithstanding the foregoing, in the event SP challenges whether
any payments contemplated hereunder (including, without limitation, upfront
payments, royalties or milestones) is due, it shall have the right to make such
payments under protest (reserving all rights hereunder) pending resolution of
such dispute.
26. INDEPENDENT RELATIONSHIP.
-------------------------
26.1 Nothing herein contained shall be deemed to create an employment,
agency, joint venture or partnership relationship between the parties hereto or
any of their agents or employees, or any other legal arrangement that would
impose liability upon one party for the act or failure to act of the other
party. No party shall have any power to enter into any contracts or commitments
or to incur any liabilities in the name of, or on behalf of, the other parties,
or to bind the other parties in any respect whatsoever.
74
<PAGE>
27. EXPORT CONTROL.
---------------
27.1 This Agreement is made subject to any restrictions concerning the
export of products or technical information from the United States of America
which may be imposed upon or related to HGS or SP or SB from time to time by the
government of the United States of America. Furthermore, SP agrees that it will
not export, directly or indirectly, any technical information acquired from HGS
or SB under this Agreement or any products using such technical information to
any country for which the United States government or any agency thereof at the
time of export requires an export license or other governmental approval,
without first obtaining the written consent to do so from the Department of
Commerce or other agency of the United States government when required by an
applicable statute or regulation.
28. CHANGE OF CONTROL.
------------------
28.1 In the event that a "Change of Control" causes HGS' rights and
obligations hereunder to pass to a "Major Pharmaceutical Company" (as defined
below) then such Major Pharmaceutical Company shall set up appropriate
procedures to ensure that RESEARCH PLANS submitted by SP are not used for
purposes other than those of Section 7 and 8 of this Agreement. SP shall have
the right, at its expense,through its own designated experts or like person
reasonably acceptable to such Major Pharmaceutical Company, to examine HGS'
records relating to such procedures to verify and report to SP that such Major
Pharmaceutical Company has complied with such procedures. Such examination shall
occur during regular business hours upon proper advance written notice during
the life of this Agreement and for six (6) months after its termination,
provided, however, that such examination shall not take place more often than
75
<PAGE>
once a year and not later than forty-five (45) days after written request is
made and provided, further, that such expert executes customary confidentiality
agreements prior to any such audit satisfactory in form and substance to such
Major Pharmaceutical Company, to maintain in confidence all information obtained
during the course of any such audit except for disclosure to SP as necessary for
the above purpose.
As used herein "Change of Control" shall mean (i) any merger,
reorganization, consolidation or combination in which HGS is not the surviving
corporation, (ii) any "person" (within the meaning of Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934), excluding SP and/or its
AFFILIATES, is or becomes the beneficial owner, directly or indirectly, of
securities of HGS representing 50% or more of either (a) the then-outstanding
shares of common stock of HGS or (b) the combined voting power of HGS'
then-outstanding voting securities; or (iii) approval by the shareholders of HGS
of a complete liquidation or the complete dissolution of HGS.
As used herein the term "Major Pharmaceutical Company" means any entity
(including any corporation, joint venture, partnership or unincorporated
entity), as well as any AFFILIATES or division(s) of such entity, that is
engaged in the research, development, manufacturing, registration and/or
marketing of drug products that are approved under NDAs, HRDs, ANDAs, Product
License Applications (including without limitation any entity that is a member
of PhRMA). "Major Pharmaceutical Company" shall also mean any entity which,
through or following a Change of Control, at any time would either itself meet
the definition of "Major Pharmaceutical Company" in the prior sentence or would
be an AFFILIATE of any entity which is or would meet such definition.
76
<PAGE>
29. ARBITRATION.
------------
29.1 Any matter or disagreement which is subject to arbitration under
Section 7 which has not been resolved within twenty (20) days, at SP's option,
shall be submitted to a mutually selected single arbitrator to so decide any
such matter or disagreement. The arbitrator shall conduct the arbitration in
accordance with the Rules of the American Arbitration Association, unless the
parties agree otherwise. If the parties are unable to mutually select an
arbitrator, the arbitrator shall be selected in accordance with the procedures
of the American Arbitration Association. The decision and award rendered by the
arbitrator shall be final and binding. Judgment upon the award may be entered in
any court having jurisdiction thereof. Any arbitration pursuant to this section
shall be held in Washington, D.C., or such other place as may be mutually agreed
upon in writing by the parties.
30. GUARANTEE
---------
30.1 Schering Corporation and Schering Plough Ltd. jointly and
severally guarantee that their respective AFFILIATES will perform all
obligations under this Agreement as if the AFFILIATES were signatories of this
Agreement.
30.2 SmithKline Beecham Corporation and SmithKline Beecham, plc,
jointly and severally guarantee that their respective AFFILIATES will perform
all obligations under this Agreement as if the AFFILIATES were signatories of
this Agreement.
31. MOST FAVORED LICENSEE.
----------------------
77
<PAGE>
31.1 In the event that prior to the EFFECTIVE DATE and/or during the
INITIAL RESEARCH TERM, HGS or SB, as applicable, enters into any agreement set
forth in Paragraph 15.8 then SP may, within sixty (60) days of SP's receipt from
HGS or SB, as the case may be, of a full, complete and correct copy of such
agreement, elect to substitute all material terms of any such agreement for the
material terms of this Agreement. HGS and/or SB, as the case may be, agree to
make representatives who are knowledgeable as to the terms and conditions of any
such agreement available to discuss such terms and conditions with
representatives of SP in order to permit SP to fairly determine whether or not
to exercise such option.
32. FURTHER ACTIONS
---------------
32.1 Each party agrees to execute, acknowledge and deliver such further
instruments, and to do all such other acts, as may be necessary or appropriate
in order to carry out the purposes and intent of this Agreement.
78
<PAGE>
IN WITNESS WHEREOF, the parties, through their authorized officers, have
executed this Agreement as of the date first written above.
SCHERING CORPORATION SCHERING-PLOUGH LTD.
BY:________________________ BY:_________________
Title:_____________________ Title:
HUMAN GENOME SCIENCES, INC.
BY:_______________________
Title:____________________
SMITHKLINE BEECHAM CORPORATION
BY:_______________________
Title:____________________
SMITHKLINE BEECHAM, plc
BY:_______________________
Title:____________________
79
<PAGE>
INDEX
1. DEFINITIONS......................................................... 2
-----------
2. SB AND HGS AND SP GRANTS AND COVENANTS..............................14
--------------------------------------
3. PAYMENTS AND ROYALTIES..............................................21
----------------------
4. RESEARCH TERM AND RESEARCH PLANS....................................27
--------------------------------
5. ADDITIONAL PAYMENTS ................................................29
-------------------
6. TECHNOLOGY TRANSFER AND ADDITIONAL LICENSED TECHNOLOGY..............29
------------------------------------------------------
7. THERAPEUTIC PROTEINS................................................34
--------------------
8. PRODUCT DEVELOPMENT.................................................41
-------------------
9. SP CO-RIGHTS........................................................41
------------
10. CONFIDENTIALITY.....................................................44
---------------
11. PATENT PROSECUTION AND LITIGATION...................................47
---------------------------------
12. STATEMENTS AND REMITTANCES..........................................56
--------------------------
13. TERM AND TERMINATION................................................58
--------------------
14. RIGHTS AND DUTIES UPON TERMINATION .................................61
----------------------------------
15. WARRANTIES AND REPRESENTATIONS ....................................62
------------------------------
16. INDEMNIFICATION.....................................................66
---------------
17. FORCE MAJEURE.......................................................69
-------------
18. GOVERNING LAW ......................................................70
-------------
19. SEPARABILITY........................................................70
------------
20. ENTIRE AGREEMENT....................................................71
----------------
21. NOTICES.............................................................71
-------
22. ASSIGNMENT..........................................................72
----------
<PAGE>
23. RECORDING...........................................................73
---------
24. COUNTERPARTS........................................................73
------------
25. WAIVER..............................................................74
-------
26. INDEPENDENT RELATIONSHIP............................................74
-------------------------
27. EXPORT CONTROL......................................................75
---------------
28. CHANGE OF CONTROL...................................................75
-----------------
29. ARBITRATION.........................................................77
-----------
30. GUARANTEE...........................................................77
---------
31. MOST FAVORED LICENSEE...............................................77
---------------------
32. FURTHER ACTIONS.....................................................78
---------------
<PAGE>
Appendix A
Drug or Antibody Research Plan
(Provided at end of Initial Research Term in order to maintain License)
1. Identification of HGS Clone ID(s) or other identification of Licensed
Technology.
2. Identification of the therapeutic utility of the Target.
3. Status of full length cloning and gene expression.
o When otherwise publicly disclosed full length nucleotide
sequence of the GENE encoding the TARGET or antigen used for
drug discovery or ANTIBODY PRODUCT, respectively.
4. Patent status
5. o Estimated date for the start of small molecule screening. (No
description of the screen(s) is required)
o Estimated date for start of laboratory animal immunization (for
Antibody Product).
6. Annual Update:
a) R&D product code #/INN/generic name (as available)
b) Notification when a compound enters clinical development
c) Notification of clinical development status
d) Notification when regulatory approvals are sought
<PAGE>
Appendix B
Takeda Chemical Industries, Ltd.
Merck KGaA
Synthelabo.
<PAGE>
Appendix C
Preliminary Drug or Antibody Research Plan
(During Initial Research Term)
SP is engaged in a small molecule drug screening assay or other drug discovery
program that uses Licensed Technology to identify a ________________
(therapeutic utility). The Target used in such assay or drug discovery program
is putatively identified as a ________________________ (biochemical/biological
function and/or expression specificity) and is specifically identified in SP
laboratory notebook _____________________, page _________________, on
_____________ (Date).
SP will provide annual updates that contain information on screening status,
whether any lead compounds have been identified and, if any, developmental
status of compound(s), with sufficient information for HGS to monitor the
progress of royalty-bearing drugs.
<PAGE>
Appendix D
Protein Research Plan
o Therapeutic Protein Identification
o Rationale
- Brief description of hypothesis
- Expected indications for product
o Biological data on protein
- Full length cloning
- Expression and purification
- Full length nucleotide sequence of the GENE encoding the
THERAPEUTIC PROTEIN
The protein preparation(s) used for the in vivo
activity demonstration must be purified to a
(previously agreed) specified level, and evidence of
this purity level must be included in the research
plan.
- In vivo demonstration of relevant pharmacological activity
(along with supporting demonstration of in vitro or ex vivo
demonstrations of activity if available)
In certain instances, in vivo demonstration of
activity will not be possible for scientific reasons.
In these specific cases, an ex vivo or in vitro
demonstration of activity will be acceptable.
o Patent status (full length gene patent application must have been
filed)
o Research and development plan
This plan need not contain detail of these activities, but rather
one-line descriptions of planned activities (with estimates of timing).
Not all of these plans/timing will be available when the initial plan
is submitted, but will be added as part of the yearly update of the
plan.
- Further preclinical studies of activity
- Preclinical development
- determination of pharmacokinetic profile
- initiation of toxicology studies
- steps to completion of IND package
- Certain key milestones in production/ scale-up
- Clinical development
Major phase transition (when available and appropriate)
<PAGE>
Appendix E
Material Uses: Immaterial Uses:
1. Use of relative abundance 1. A novel HGS-derived chemokine
information of cDNAs from HGS is being investigated. During
database to select, from a development, a publication in a
collection of independently scientific journal describes a new
developed ESTs, a candidate EST to loop structure for integrins that
pursue from which emanates a gene identifies tissue specificity. This
product. structure is present in the
chemokine. Subsequent search of the
2. Query of the HGS database public domain database for similar
identifies a new homolog to a known motifs leads to the identification
public domain gene sequence. This and development of a public domain
information is incorporated into a chemokine based on this motif clue.
screen from which a small molecule
drug emanates. 2. A focused program based on an
independently developed sequence is
3. Use of a clone or cell line underway. Query of the HGS database
provided by HGS which subsequently for tissue distribution does not
turns out to be more than 5% of the influence the conduct of the
Product. program.
4. A receptor antagonist screen is 3. A serotonin receptor antagonist
established. Using only a negative screen is established and a product
screen which was an HGS screen and that was active in a non-HGS assay
a positive screen which was not an is developed. The screen used a
HGS screen (e.g., only a binary battery of two or more negative
screen). serotonin screens at least one of
which was an HGS screen and one was
not an HGS screen.
4. Query of the HGS database
versus an independently invented
EST. The sequence is present but no
useful abundance information or
additional sequence information.
The research program is not
modified due to the query.
<PAGE>
Appendix E
Material Uses: Immaterial Uses:
5. Comparison on an independently
derived bacterial sequence to the
human sequence contained in the HGS
database. A bacterial sequence that
did not have a close match with an
HGS sequence was used as an
antibacterial target.
6. Using motif searching tools of
HGS bioinformatics against a public
domain database, a functional motif
is found to be present in a unique
class of chemokines. Using this
identification handle derived from
HGS bioinformatics, a unique
molecule from the public domain
database is identified.
7. Query of the HGS database
identifies a sequence partially
encoding a new receptor (greater
than 50% of the cDNA coding
sequence is available in the HGS
database). SP identifies greater
than 50% of the cDNA coding
sequence for the protein. SP,
through subsequent independent
research, not involving LICENSED
TECHNOLOGY, identifies a kinase
involved in signal transduction
from this receptor. This kinase
then becomes a target for drug
discovery and a DRUG PRODUCT is
subsequently discovered using this
kinase screen. For avoidance of
doubt, similar discovery of a
ligand of such receptor (as
differentiated from discovery of an
intracellular signal transduction
messenger, e.g. the kinase) and
subsequent use of such ligand as a
TARGET, is not prima facie
immaterial use of LICENSED
TECHNOLOGY or SP TECHNOLOGY.
8. Negative hybridization
experiments against HGS sequences
(e.g., gridding).
<PAGE>
Appendix E
Material Uses: Immaterial Uses:
9. Query of the HGS database
identifies 50% or more of the cDNA
coding sequence of a new receptor.
SP, through subsequent independent
research, not involving HGS
database searches on the receptor,
identifies a kinase involved in
signal transduction from this
receptor. Without the use of the
HGS database, this kinase is then
used to identify a further
downstream messenger. A drug screen
using this last messenger result in
a Drug Product.
<PAGE>
Appendix F
SOFTWARE
Specifications for Informative System ("HGS TECHNOLOGY") to be installed at SP
--------------------------------------------------------------------------------
I. Database and analysis server supplied by SP:
1. Multi-processor Unix Host (DEC Alpha server or equivalent)
2. Unix system software
2.1 Sybase SQL Server
2.2 Sybase Open Client Libraries
2.3 Sybase Replication Server
2.4 C compiler
2.5 TCP/IP networking services
2.6 Electronic mail facilities
2.7 Backup/recovery equipment and software
2.8 Netscape Communications Server
II. Macintosh client machines supplied by SP
1. Quadra and PowerMac models
2. Minimum 16MB of RAM
3. Minimum 14-inch color monitor; 17-inch recommended for active
users
4. 50MB of available disk space
5. TCP/IP network connection
6. Netscape Navigator (V2.0)
III. Network connectivity supplied SP
1. Installation and maintenance of dedicated circuit (at lease
56Kbps)
2. Encryption equipment
3. CSU/DSU line terminating equipment
4. Network router interface
IV. Macintosh client software supplied by HGS:
1. IRIS bioinformatics application
2. HGS BLAST Client
3. PSEM (Protein structure evaluation module)
<PAGE>
Appendix F
V. Server software supplied by HGS:
1. Components derived from the public domain are indicated: HGS
will install and configure the public domain software, but cannot provide a
warranty for its performance.
2. Database schema, stored procedures, triggers:
a) Unix command client
b) Data management utilities
c) BLAST sequence searching software (public domain)
d) FASTA sequence searching software (public domain)
e) BLOCKS motif searching software (public domain)
VI. Services provided by HGS:
1. Setup SP database schema
2. Testing of network and system components on SP equipment
3. Development of on-going data transfer mechanism
4. Training for end users of the Iris application
5. Training for technical people in system administration and
troubleshooting
6. Assistance developing customer analyses and reports
7. Telephone and e-mail support for the database and related
applications
Definition of requirement to achieve operational status of SOFTWARE at SP
-------------------------------------------------------------------------
This list identifies the software and services to be provided to SP by HGS that
will enable users of the SOFTWARE at SP to evaluate the LICENSED TECHNOLOGY.
Operational status of the SOFTWARE at SP shall be considered established upon
delivery of such software and services to SP and the Iris software running
successfully at SP facilities.
Services to be available to SP users from Macintosh workstations:
1. Sign on with user identification and password authentication
2. Retrieve sequences by identification code, gene name and
library
3. Export sequences in popular formats for sequence analysis
programs.
4. Retrieve library information and sequencing statistics
5. Retrieve sequence assemblies; display assembly alignments
<PAGE>
Appendix F
6. Customize tabular displays
7. Customize user dashboard
8. Prepare and save custom queries
9. Perform interactive BLAST searches
10. Perform Genbank and Medline lookups using the HGS Entrez
client
11. Perform interactive sequence assemblies
12. Perform simple modeling of putative proteins
13. Identify library distribution of related sequences
14. Perform library expression analyses
In addition to the establishment of the above-listed features and operational
capabilities of the SOFTWARE, HGS will complete an initial user training session
of SP users and will provide the following additional services to achieve
operational status of the SOFTWARE:
Services provided to SP Information Management staff:
1. Assist SP in installing dedicated, encrypted data circuit
2. Configure and test the database
3. Develop data transfer mechanism
4. Customize sequence classification methods for analysis of
Human ESTs
5. Train technical staff on system administration functions:
a. Configure Macintosh workstations
b. Setting up new users, modifying users parameters
c. Configuring local BLAST databases
d. Understanding the database schema
e. Understanding how data is processed and interpreted
f. Troubleshooting problems
g. Monitoring the HGS/SP data connection
h. Developing custom queries and reports
<PAGE>
Appendix G
--------------------------------------------------------------------------------
SUBJECT: __________________________ SECTION:
CURRENT BOOKKEEPING EXCHANGE RATES ADMINISTRATIVE AND GENERAL
--------------------------------------------------------------------------------
PURPOSE
-------
To provide general guidelines for the establishment and communication of current
bookkeeping exchange rates by Corporate Treasury to divisions and subsidiaries.
APPLICATION
-----------
Applies to Schering-Plough Corporation, its divisions and all subsidiaries.
POLICY
------
Establishment of Rates The current bookkeeping exchange rates will
be determined monthly by S-P Corporate
Treasury. The rates will be based on:
o The market rates for selling foreign
currencies in New York on the
morning of the 25th of each month;
the 31st in December or
o In thinly traded currencies the
local rate established in that
country for buying U.S. dollars
If the 25th occurs on a holiday, Saturday or
Sunday, the rates used are those of the last
business day prior to the 25th. If for any
reason a rate established is significantly
different from the rate prevailing locally,
the Chief Financial Officer of the
subsidiary should promptly telex Corporate
Treasury.
Notification Rates will be communicated to subsidiaries
on the last day of each accounting period by
Corporate Treasury (1st workday of ensuing
year at year-end). The communication will
advise each subsidiary of all Corporate wide
current rates, regardless of whether or not
they have changed from the prior accounting
period.
As there is no January closing, January
rates will not be issued and December rates
will remain in effect until the February
month-end closing.
Recordkeeping of Rates At the beginning of each year, a worksheet
similar to the example on page 4 (Exhibit A)
will be sent to all subsidiaries by
Corporate Treasury. Each subsidiary will
maintain a monthly record of all exchange
rates throughout the Corporate system which
may affect its accounting transactions and
reporting.
<PAGE>
Appendix G
--------------------------------------------------------------------------------
SUBJECT: __________________________ SECTION:
CURRENT BOOKKEEPING EXCHANGE RATES ADMINISTRATIVE AND GENERAL
--------------------------------------------------------------------------------
POLICY (Continued)
------
Recordkeeping of Rates The worksheet lists all countries in which
(cont'd) subsidiaries are located and for each
country gives:
1. The cable code (based on a country
abbreviation) so as to identify the
country for which there is a change in
exchange rate
2. The average annual exchange rate used in
the Operating Plan for the current year
and
3. The exchange rate established as of the
end of the previous year. Twelve columns
are provided for the subsidiary to
record changes in exchange rates from
the communication received each month.
Quoting of Rates To conform with practices generally
prevailing in each country, and to avoid any
confusion, all exchange rates will be quoted
in terms of the number of foreign currency
units per U.S. dollar. This means that for
those foreign currency units that are valued
at more than one U.S. dollar, the exchange
rates are quoted as a decimal of the foreign
currency unit.
For example, the pound sterling plan rate is
quoted as (pound).625 per U.S. dollar rather
than U.S. $1.60 per pound sterling.
Exchange rates are generally quoted as
follows:
o In three decimals for currencies with
less than one unit per U.S. dollar
(e.g., U.K. .625)
o In two decimals for those with one or
more but less than ten units (e.g.,
France 6.60)
o In one decimal for those with ten or
more but less than 100 units (e.g.,
Austria 13.5) and
o With no decimals for those with 100 or
more units (e.g., Italy 1450)
Rates will be quoted in more than three
digits only when necessary to conform to
rates required for official purposes locally
or when the exchange rate exceeds 1,000
(e.g., Italy 1450). If the rate exceeds
1,000, it should be rounded to three
significant digits (e.g., rate of 4633 would
be shown as 4630).
<PAGE>
Appendix G
--------------------------------------------------------------------------------
SUBJECT: __________________________ SECTION:
CURRENT BOOKKEEPING EXCHANGE RATES ADMINISTRATIVE AND GENERAL
--------------------------------------------------------------------------------
RESPONSIBILITY
--------------
The Corporate Treasury Department will:
A. Distribute the Current Bookkeeping Exchange Rate Worksheet at
the beginning of each year to all divisions and subsidiaries.
B. Establish and communicate the Current Bookkeeping Exchange
rate as stated in the above policy.
The chief financial officer of each subsidiary will maintain monthly records of
communicated exchange rates.
<PAGE>
Appendix H
Exhibit H: Biological Data Generated at SB by Use of Materials
Transferred from HGS
Material Transferred from HGS to SB: [Material_type]
Project ID: [PID]
Gene Match of Interest: [Tentative]
SEQUENCE INFORMATION
DNA sequence:
[DNA_seq]
Translated protein sequence:
[Prot_seq]
TISSUE DISTRIBUTION:
[Tissue_dist]
FUNCTIONAL STUDIES/BIOLOGICAL CHARACTERIZATION
[Function]