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ARRAY DELIVERY AND TESTING AGREEMENT
between
ARQULE, INC.
and
MONSANTO COMPANY
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ARRAY DELIVERY AND TESTING AGREEMENT
This Agreement, dated as of December 23, 1996, is between ArQule, Inc.
("ArQule"), a Delaware corporation, and Monsanto Company ("Monsanto"), a
Delaware corporation.
R E C I T A L S
- - - - - - - -
WHEREAS, ArQule has developed certain technology that has applications in
the discovery and development of compounds for use in agriculture and in planta;
WHEREAS, Monsanto desires that ArQule apply its technologies to the
research and development of compounds with agricultural and in planta
applications for Monsanto; and
WHEREAS, in exchange for payment by Monsanto of research funds, milestone
payments and royalties, ArQule is willing to provide compound arrays for
Monsanto testing and perform certain other compound development activities,
subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth in this
Agreement, the parties hereby agree as follows:
1. Definitions.
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"ACTIVE HOMOLOG" shall mean any ArQule Derivative Compound or
Monsanto Derivative Compound that exhibits substantial homology with an Active
ArQule Compound or Active Monsanto Compound, respectively, as determined by the
Research Committee.
"ACTIVE ARQULE COMPOUND" shall mean any ArQule Compound or ArQule
Derivative Compound which exhibits confirmed significant functional activity
against a Target. The Research Committee shall establish the criteria for
"significant functional activity" at the time of selection of each Target.
"ACTIVE COMPOUND" shall mean any Active ArQule Compound or Active
Monsanto Compound.
"ACTIVE MONSANTO COMPOUND" shall mean any Monsanto Compound or
Monsanto Derivative Compound which exhibits confirmed significant functional
activity against a Target. The Research Committee shall establish the criteria
for "significant functional activity" at the time of selection of each Target.
"ADVANCED FIELD TRIALS" shall mean advanced testing trials conducted
by or for Monsanto in a manner representative of actual agricultural or
industrial practices including (i) determining the performance or safety of a
Licensed Compound or (ii) greenhouse, growth chamber or laboratory testing
including radio-labeled synthesis and associated testing, advanced toxicity,
environmental fate, and toxicity on non-target species including mammals and/or
assembling field information necessary to obtain an EUP.
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"AGREEMENT" shall mean this Array Delivery and Testing Agreement,
together with Exhibit A and Exhibit B hereto.
"ARQULE COMPOUND" shall mean any chemical molecule that is
synthesized by ArQule using its proprietary technology and provided by ArQule to
Monsanto under the Mapping Array(TM) Program or the Directed Array(TM) Program
as described below.
"ARQULE DERIVATIVE COMPOUND" shall mean a Derivative Compound
synthesized by ArQule from an ArQule Compound under the Directed Array(TM)
Program described in Section 3.3.
"ARQULE INTERNAL DISCOVERY PROGRAM" shall mean any testing or
screening activity performed by ArQule itself with the primary purpose of
determining the functional activity in the Field of ArQule Compounds or ArQule
Derivative Compounds, but shall not include any advanced field trials.
"ARQULE PATENT RIGHTS" shall mean Patent Rights controlled or owned
by ArQule as of the Effective Date or during the Research Period, as set forth
in Section 5.1(b).
"ARQULE TECHNOLOGY" shall mean all information and data which is
owned by or licensed by third parties to ArQule during the Research Program and
is necessary or useful to conduct the screening to discover Active Compounds and
Licensed Compounds or to develop, make, use, sell or seek regulatory approval in
any country to market a product containing a Licensed Compound; all to the
extent and only to the extent that ArQule now has or hereafter will have the
right to grant licenses, immunities or other rights thereunder.
"ARRAY" shall mean a set of samples of structurally related chemical
compounds arranged in a format such as a microtiter screening plate or another
format as mutually agreed to by the Parties.
"BASE RATE OF INTEREST" shall mean the base rate of interest charged
to its best commercial customers from time to time by the Bank of Boston or its
successor.
"CHEMICAL THEME" shall mean the chemical or structural
characteristics shared by a group of compounds as determined by the Research
Committee pursuant to Section 2.2.
"CONFIDENTIAL INFORMATION" shall have the meaning set forth in
Section 8.1.
"CONTRACT YEAR" shall mean each twelve (12) month fiscal year of the
Research Period, commencing on January 1 of each year and concluding twelve (12)
months thereafter.
"DERIVATIVE COMPOUND" shall mean a chemical compound structurally
derived in one or more steps from another by a process of modification (either
through manipulation of a compound or synthesis from structural information
provided hereunder) or partial substitution of at least one component wherein at
least one structural feature is retained at each process step. The number of
intermediate steps or compounds is not relevant to the classification of a
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compound as a Derivative Compound. A compound need not have structural
similarity to another compound in order to be classified as a Derivative
Compound.
"DIRECTED ARRAY" shall mean an Array comprised of ArQule Derivative
Compounds synthesized by ArQule under the Directed Array(TM) Program described
in Section 3.3.
"DIRECTED ARRAY(TM) PROGRAM" shall mean a Directed Array(TM) Program
conducted by ArQule as set forth in Section 3.3, with each Directed Array(TM)
Program consisting of multiple Arrays derived from one (1) Monsanto Compound, or
one (1) Monsanto Derivative Compound, or one (1) ArQule Compound, or one (1)
ArQule Derivative Compound.
"DISCLOSING PARTY" shall mean that Party disclosing Confidential
Information to the other Party under Section 8.
"EU" shall mean Austria, Belgium, Denmark, Finland, France, Germany,
Greece, Ireland, Italy, Luxembourg, Netherlands, Norway, Portugal, Spain,
Sweden, United Kingdom and such other countries that may be subsequently
admitted to or excluded from the EU.
"EUP" shall mean an Experimental Use Permit.
"EFFECTIVE DATE" shall mean the date of execution of this Agreement
by the Parties hereto, at which time this Agreement shall become effective.
"EPA" shall mean the Environmental Protection Agency (or its foreign
equivalent responsible for approval of commercial use of Licensed Compounds as
defined in the Field).
"EXPERIMENTAL USE PERMIT" shall mean a permit for field application
issued by the EPA prior to label approval.
"EXTRAORDINARY EXPENSES" shall mean those unusual capital expenses
incurred by ArQule at the request of Monsanto which are not contemplated by the
original Research Plan executed by the Parties.
"FIELD" shall mean the field of all agricultural and in planta
applications of any Licensed Compound.
"JOINT PATENT RIGHTS" shall mean any Patent Rights that are jointly
owned by the Parties as of the Effective Date or during the Research Period, as
set forth in Section 5.1(c).
"LICENSED COMPOUND" shall mean any Active Compound and Active
Homologs thereto with respect to which the Research Committee has elected to
conduct Preliminary Field Trials.
"MAPPING ARRAY" shall mean an Array of ArQule Compounds synthesized
by ArQule under the Mapping Array(TM) Program.
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"MAPPING ARRAY(TM) PROGRAM" shall mean the Mapping Array(TM)
component of the Research Program.
MATERIALS TRANSFER AGREEMENT shall mean that agreement the form of
which is attached as Exhibit B hereto.
"MONSANTO COMPOUND" shall mean any chemical molecule provided by
Monsanto or its Primary Affiliates to ArQule under the Mapping Array(TM) Program
or the Directed Array(TM) Program.
"MONSANTO DERIVATIVE COMPOUND " shall mean a Derivative Compound
synthesized by ArQule from a Monsanto Compound under the Directed Array(TM)
Program.
"MONSANTO PATENT RIGHTS" shall mean Patent Rights controlled or
owned by Monsanto as of the Effective Date or during the Research Period, as set
forth in Section 5.1(a).
"NET SALES" shall mean the aggregate Net Sales Price of
Royalty-Bearing Products in any Royalty Period.
. "NET SALES PRICE" shall mean the gross amount received on sales by
Monsanto, its Secondary Affiliates and Sublicensees of Royalty-Bearing Products,
less the following amounts actually paid out by Monsanto, its Secondary
Affiliates or Sublicensees or credited against the amounts received by them from
the sale or distribution of Royalty-Bearing Product [
]*. In the event that
Monsanto, its Secondary Affiliates or Sublicensees receives non-monetary
consideration for any Royalty-Bearing Products, the Net Sales Price shall be
calculated based on the average price charged by Monsanto, its Secondary
Affiliates or Sublicensees for such Royalty-Bearing Products in the same
territory during the preceding Royalty Period less the items set forth in items
(i) through (iv) above.
"PARTY" means ArQule or Monsanto or their respective Primary
Affiliates; "PARTIES" means ArQule and Monsanto and their respective Primary
Affiliates.
"PATENT RIGHTS" shall mean all Valid Claims of all issued and
subsisting patents and reissues, reexaminations, extensions and supplementary
protection certificates thereof and all patent applications and any divisions,
continuations, or continuations-in-part thereof.
"PRELIMINARY FIELD TRIALS" shall mean, with respect to any Licensed
Compound, preliminary testing first conducted by or for Monsanto to determine
efficacy conducted under anticipated use conditions, generally in an external
environment. Preliminary Field Trials does not include primary testing, which
includes greenhouse, growth chamber or laboratory testing
* Confidential information omitted and filed with the Commission.
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including associated testing for environmental fate, toxicity, and toxicity on
non-target species including mammals.
. "PRIMARY AFFILIATE" of a Party shall mean a corporation or other
legal entity that owns, directly or indirectly, fifty percent (50%) or more of
the outstanding equity securities of a corporation which are entitled to vote in
the election of directors or a fifty percent (50%) or greater interest in the
net assets or profits of an entity which is not a corporation or any similar
type of control relationship.
"PRODUCT TEAM" shall mean a group of Monsanto employees formed to
facilitate product development analysis following successful completion of
Advanced Field Trials.
"RECEIVING PARTY" shall mean that Party receiving Confidential
Information under Section 8.1.
"RESEARCH COMMITTEE" shall have the meaning set forth in
Section 2.1.
"RESEARCH PERIOD" shall mean the period during which the applicable
aspect (Mapping Array(TM) Program or Directed Array(TM) Program) of the Research
Program remains in effect.
"RESEARCH PROGRAM" shall mean, collectively, each of the Directed
Array(TM) Programs and the Mapping Array(TM) Program.
"RESEARCH PLAN" shall mean a plan of research for the Directed
Array(TM) Program covering a minimum of a six-month period, which shall be
updated quarterly pursuant to Section 2.2 to reflect developments during the
previous three (3) months and extended for the subsequent three (3) months. A
form of the initial Research Plan shall be attached as EXHIBIT A to this
Agreement, and shall be executed by the Parties prior to March 1, 1997.
"ROYALTY-BEARING PRODUCT" shall mean a commercial product containing
as one of its constituents (a) any Active ArQule Compound; (b) any ArQule
Derivative Compound; (c) any Monsanto Derivative Compound; or (d) any other
compound discovered or designed by Monsanto directly as a result of information
provided by ArQule to Monsanto under the Mapping Array(TM) Program or Directed
Array(TM) Program, which information forms the primary basis for such discovery
or development.
"ROYALTY PERIOD" shall mean, with respect to each Royalty-Bearing
Product, every calendar quarter, or partial calendar quarter, commencing with
the first arms-length, commercial sale of such Royalty-Bearing Product in any
country and ending at the end of the quarter during which all Patent Rights
covering such Royalty-Bearing Product expire in the applicable country provided
that if there is no Valid Claim covering a Royalty Bearing Product at the end of
ten (10) years from the date of the first arms-length commercial sale in that
country of the applicable Licensed Product, then the Royalty Period shall be
deemed to have terminated for all purposes with respect to that Royalty-Bearing
Product in that country.
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"SECONDARY AFFILIATE" of a Party shall mean a corporation or other
legal entity that owns, directly or indirectly, twenty percent (20%) or more of
the outstanding equity securities of a corporation which are entitled to vote in
the election of directors or a twenty percent (20%) or greater interest in the
net assets or profits of an entity which is not a corporation or any similar
type of control relationship.
"SUBLICENSEE" shall mean any third party (not including a Secondary
Affiliate) licensed by Monsanto to make, use (except where the implied right to
use accompanies the sale to the third party of any Royalty-Bearing Product by
Monsanto or its Secondary Affiliates or Sublicensees), sell, import, export,
advertise, promote and otherwise commercialize any Royalty-Bearing Product.
"TARGET" shall mean any target within the Field selected by
Monsanto. A biological target used for purposes of toxicity testing shall be
deemed a Target within the Field.
"VALID CLAIM" shall mean either (a) a claim of an issued and
subsisting patent that has not been held finally unenforceable or invalid by an
agency, court or other tribunal of competent jurisdiction in any unappealable or
unappealed decision the time for appeal of which has expired or (b) a claim of a
pending patent application that has not been abandoned or finally rejected
without the possibility of appeal or refiling.
The above definitions are intended to encompass the defined terms in
both the singular and plural tenses.
2. Management of Research Program.
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2.1. COMPOSITION OF RESEARCH COMMITTEE. The Parties hereby establish a
Research Committee comprised of four (4) members, with two (2) representatives
appointed by each Party. The initial members of the Research Committee shall be
as follows:
ArQule Representatives Monsanto Representatives
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▇▇▇▇▇ ▇▇▇▇▇▇, Ph.D. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Ph.D.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Ph.D. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Ph.D.
A Party may change one or more of its representatives to the Research Committee
at any time upon notice to the other Party. Each Party will designate one of its
representatives as its team leader.
2.2. DUTIES OF THE RESEARCH COMMITTEE. The Research Committee shall
direct and administer the Research Program. With respect to each Directed
Array(TM) Program, the Research Committee shall specifically determine the
following: (i) the appropriate objectives of each Chemical Theme and/or Active
Compound to be submitted to the Directed Array(TM) Program; (ii) the appropriate
number and type of Chemical Themes to be submitted to the Directed Array(TM)
Program, subject to ArQule's right to exclude certain compounds as set forth in
Section 3.2.3 below; (iii) the appropriate number of compounds that ArQule
should generate in a Directed
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Array(TM) for a particular Chemical Theme; and (iv) the appropriate amount of
each compound in a Directed Array(TM) that ArQule should deliver to Monsanto for
further research and development. The scope of each Chemical Theme will be
determined on the basis of the following criteria: (i) the specific reaction or
reaction sequence used to combine members of two or more discrete chemical units
in which each chemical unit bears the functional group(s) required for the
specific reaction(s) that result in the combination of the chemical units; and
(ii) the extent to which a class of compounds is related by a recurring
structural motif associated with a particular biological activity. In addition,
the Research Committee shall (i) review test reports provided by Monsanto as to
the significant functional activity derived from testing each Mapping Array(TM)
and, based on such results, recommend to ArQule whether to develop Directed
Arrays(TM) for any Active ArQule Compound, (ii) determine, subject to
availability in the case of Active ArQule Compounds as provided in Section
3.2.3, whether any Active Compound and/or any Active Homolog thereto should be
designated as a Licensed Compound; (iii) determine and update the list of
Licensed Compounds; (iv) determine the allocation of the funding and personnel
resources to be contributed by the Parties under this Agreement; (v) revise and
extend the Research Plan each calendar quarter for the subsequent six (6) months
based on prior developments; and (vi) resolve matters involving scientific
questions.
2.3. MEETINGS OF THE RESEARCH COMMITTEE. The Research Committee shall
conduct monthly telephone conferences and shall prepare and deliver a brief
written report describing the significant issues and discussions that take place
during such telephone conferences. A representative of the Research Committee
jointly appointed by its members shall provide each member with five (5)
business days notice of the time of any such telephone conferences and the
proposed agenda with respect thereto, unless waived by all members. The Research
Committee shall meet at least once each quarter at the facilities of ArQule, or
at such other times and locations as the Research Committee determines. A
representative of the Research Committee jointly appointed by its members shall
provide each member with five (5) business days notice of the time and location
of meetings, unless such notice is waived by all members. If a designated
representative of a Party cannot attend any meeting of the Research Committee,
such Party may designate a different representative for that meeting without
notice to the other Party, and the substitute member will have full power to
vote on behalf of the permanent member. Except as otherwise provided in this
Section 2, all actions and decisions of the Research Committee will require the
unanimous consent of all of its members. If the Research Committee fails to
reach agreement upon any matter, the dispute will be resolved in accordance with
the procedures set forth in Section 12.5 below. Within ten (10) days following
each quarterly meeting of the Research Committee, the Research Committee shall
prepare and deliver, to both Parties, a written report describing the decisions
made, conclusions and actions agreed upon.
2.4. COOPERATION. Each Party agrees to provide the Research Committee
with information and documentation as reasonably required for the Research
Committee to fulfill its duties under this Agreement. In addition, each Party
agrees to make available its employees and consultants as reasonably requested
by the Research Committee. The Parties anticipate that members of the Research
Committee will communicate informally with each other and with employees and
consultants of the Parties on matters relating to the Directed Array(TM)
Program.
2.5. VISITS TO FACILITIES. Members of the Research Committee shall have
reasonable access to the facilities of each Party where activities under this
Agreement are in progress, but
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only during normal business hours and with reasonable prior notice. Each Party
shall bear its own expenses in connection with such site visits.
3. Access Fee; Description of Programs.
-----------------------------------
3.1. ACCESS FEE. In partial consideration for Monsanto's obtaining access
to ArQule's Mapping Array(TM) Program and Directed Array(TM) Program as provided
herein, Monsanto shall pay to ArQule a technology access fee equal to
[ ]*, payable in [ ]* equal installments of [ ]* each, with the
first such payment to be made on the [ ]* and the remaining [ ]*
payments to be made on [ ]*.
3.2. Mapping Array(TM) Program.
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3.2.1. CONDUCT OF MAPPING ARRAY(TM) PROGRAM. During each Contract
Year, ArQule will supply Monsanto with Mapping Arrays(TM) containing
approximately [ ]* each of not less than [ ]* different ArQule
Compounds not included in any other Mapping Array(TM) supplied to Monsanto,
based on approximately [ ]* different Chemical Themes per year; provided,
however, that ArQule hereby agrees that the first Mapping Array(TM) containing
at least [ ]* ArQule Compounds to be delivered under this Agreement will be
shipped no later than [ ]*, and the difference between [ ]* and
the number of ArQule Compounds so delivered by [ ]* will be
delivered to Monsanto prior to [ ]*. Promptly upon its receipt of any
such Mapping Arrays, Monsanto shall commence testing of such Mapping Arrays(TM)
for activity against Targets. Upon the completion by Monsanto of its testing of
any such Mapping Arrays, Monsanto shall provide the Research Committee with
notice of the discovery of Active ArQule Compounds, together with relevant
information concerning the functional activity identified.
3.2.2. TIMING OF DELIVERY. ArQule shall provide to Monsanto all
ArQule Compounds for screening in the Field pursuant to the Mapping Array(TM)
Program contemporaneously with the date of delivery of such compound to any
other third party Mapping Array(TM) partner for screening in the Field.
3.2.3. MUTUAL DISCLOSURE. Initially, ArQule will identify the
Chemical Theme of each Mapping Array(TM) but not the structures of the
individual ArQule Compounds in the Mapping Arrays. Monsanto may screen the
Mapping Arrays(TM) against any Targets within the Field during the term of this
Agreement. Initially, Monsanto will not disclose the Targets screened. If
Monsanto detects any Active ArQule Compound in a Mapping Array(TM), ArQule will
disclose (a) the structure of each Active ArQule Compound and (b) the
structures, but not the locations in the Mapping Array(TM), of all other ArQule
Compounds in the Mapping Array(TM) and Monsanto will disclose (a) the identity
of the Target and (b) the level of activity. All such disclosed information
shall be treated as Confidential Information by the receiving Party. Monsanto
may subsequently request that the Research Committee designate such Active
ArQule Compound and up to five Active Homologs thereof as a Licensed Compound.
In such event, ArQule will promptly notify the Research Committee if, as of the
date of such request, any such Active ArQule Compound or such Active Homolog
thereof (i) has been licensed to a third party, (ii) is included in an existing
ArQule Internal Discovery Program and ArQule has previously notified Monsanto of
the inclusion of such compound in an ArQule Internal Discovery Program
* Confidential information omitted and filed with the Commission.
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pursuant to the terms of Section 3.2.6, or (iii) is included within a Directed
Array(TM) Program for a third party, in which case such Active ArQule Compound
or Active Homolog thereof may not be designated as a Licensed Compound. Unless
(i) the Active ArQule Compound or Active Homolog thereof has been licensed to a
third party in the Field, (ii) is included in an existing ArQule Internal
Discovery Program and ArQule has previously notified Monsanto of the inclusion
of such compound in an ArQule Internal Discovery Program pursuant to the terms
of Section 3.2.6, or (iii) is included within a Directed Array(TM) Program for a
third party in the Field, the Research Committee shall designate such Active
ArQule Compound and such Active Homologs thereof as a Licensed Compound.
Monsanto may, by written notice to ArQule given within thirty (30) days of the
determination by the Research Committee that any such Active ArQule Compound and
such Active Homologs thereof should properly be designated as a Licensed
Compound, elect to either (i) further develop any such Active ArQule Compound
and such Active Homologs thereof itself or through a third party, or (ii)
subject to the approval of the Research Committee, submit such Active ArQule
Compound to the Directed Array(TM) Program under Section 3.3.
3.2.4. MAPPING ARRAY(TM) PROGRAM PAYMENTS. In consideration of the
performance by ArQule of the Mapping Array(TM) Program, Monsanto shall pay
ArQule a delivery fee equal to [ ]*, payable
[ ]* days of [ ]*
of [ ]* due for [ ]*
to be provided by ArQule in such [ ]*. Thereafter, Monsanto shall
make the following annual payment to ArQule [ ]*
of such [ ]*
due for that [ ]*
remainder of the scheduled [ ]*:
Annual Payment = [ ]* x (1 + CPI)
Where CPI is a fraction, the numerator of which is the difference between
the Consumer Price Index (CPI-U; U.S. City Average for all items; 1982-84
= 100) as of the last month of the immediately preceding Contract Year and
the Consumer Price Index as of the month immediately preceding the
Effective Date and the denominator of which is the Consumer Price Index as
of the month immediately preceding the Effective Date.
3.2.5. TERM OF MAPPING ARRAY(TM) PROGRAM. The Mapping Array(TM)
Program shall commence on the Effective Date and continue for a period of five
(5) Contract Years, unless earlier terminated as provided in this Section 3.2.5
or Article 11 below; PROVIDED, HOWEVER, that upon six (6) months prior written
notice by Monsanto, the Mapping Array(TM) Program may be extended for up to two
(2) additional one-year periods. Monsanto may terminate the Mapping Array(TM)
Program at its discretion upon six (6) months written notice to ArQule at any
time subject to the payment by Monsanto of all amounts that would have been due
to ArQule during the entire term of this Agreement pursuant to the terms of
Sections 3.1 and 3.2.4 herein if the Mapping Array(TM) Program had not been so
terminated. Upon notice of termination, ArQule
* Confidential information omitted and filed with the Commission.
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shall use reasonable efforts to complete the Mapping Array(TM) Programs then
underway in a reasonable and orderly fashion.
3.2.6 ARQULE INTERNAL DISCOVERY PROGRAM. In the event ArQule shall
commence an Internal Discovery Program including a compound previously provided
to Monsanto pursuant to the Mapping Array(TM) Program, ArQule shall promptly
notify Monsanto of the location of each such compound within any Mapping
Array(TM) previously provided to Monsanto.
3.3. Directed Array(TM) Program.
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3.3.1. DESCRIPTION OF DIRECTED ARRAY(TM) PROGRAM. Under the
direction of the Research Committee and in accordance with the Research Plan,
ArQule will synthesize multiple Directed Arrays(TM) of compounds derived from
(i) each Monsanto Compound provided to ArQule by Monsanto, or (ii) each Active
ArQule Compound provided by ArQule to Monsanto under the Mapping Array(TM)
Program and approved by the Research Committee for inclusion in the Directed
Array(TM) Program, subject to Section 3.3.2 below. The number of Chemical Themes
to be submitted to the Directed Array(TM) Program and the number of ArQule
Derivative Compounds to be produced per Chemical Theme will be determined by the
Research Committee. The Parties intend that ArQule will produce approximately
[ ]* of each ArQule Derivative Compound in the Directed
Arrays, subject to the availability of the original Monsanto Compounds and/or
the ArQule Compounds; PROVIDED, HOWEVER that the amount of each ArQule
Derivative Compound that ArQule actually produces will ultimately be determined
by the Research Committee.
3.3.2. COMPOUNDS EXCLUDED FROM THE DIRECTED ARRAY(TM) PROGRAM.
ArQule shall have the right, at any time Monsanto seeks to include any Active
ArQule Compound in any Directed Array(TM) Program, to exclude from such Directed
Array(TM) Program any Active ArQule Compound that is at that time included
within a Directed Array(TM) Program for a third party for development in the
Field.
3.3.3. CONDUCT OF DIRECTED ARRAY(TM) PROGRAM. The Directed
Array(TM) Program shall be conducted in a good scientific manner and in
compliance with all applicable legal requirements. The conduct of the Directed
Array(TM) Program shall be the primary responsibility of ArQule with
participation by Monsanto. Monsanto shall propose Chemical Themes to the
Research Committee for inclusion in the Directed Array(TM) Program based on
either an Active ArQule Compound from the Mapping Array(TM) or an Active
Monsanto Compound. If the Research Committee approves the inclusion of the
proposed Chemical Theme, then Monsanto may either deliver to ArQule amounts of
the Active Monsanto Compound or the structural information sufficient for ArQule
to synthesize the Active Monsanto Compound. If ArQule is requested to synthesize
the Active Monsanto Compound, then Monsanto shall specify to ArQule the required
amount and purity of Monsanto Compounds for that Chemical Theme, as directed by
the Research Committee. ArQule shall thereupon diligently synthesize Directed
Arrays(TM) of ArQule Derivative Compounds or Monsanto Derivative Compounds, as
the case may be, in accordance with the Research Plan. Monsanto shall, in its
discretion, test all compounds in the Directed Arrays. The Parties shall
continue the procedure described in this Section 3.3.3 for each Active Compound
until the earliest to occur of (i) the determination by the Research Committee,
in accordance with Section 2.2, to designate any such Active Compound and any
Active
* Confidential information omitted and filed with the Commission.
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Homolog thereto as a Licensed Compound, (ii) the determination by the Research
Committee to cease further testing of such Active Compound, or (iii) the
termination of this Agreement in accordance with Section 11.
3.3.4. Directed Array(TM) Program Payments.
-----------------------------------
(a) DELIVERY FEE. In consideration of the performance by
ArQule of the Directed Array(TM) Program, Monsanto shall pay ArQule a delivery
fee equal to [ ]* per Directed Array(TM) Program during [ ]*.
Thereafter, Monsanto shall make the following annual payment to ArQule during
[ ]*.
Annual Payment = [ ]* x (1 + CPI)
Where CPI is a fraction, the numerator of which is the difference between
the Consumer Price Index (CPI-U; U.S. City Average for all items; 1982-84
= 100) as of the last month of the immediately preceding Contract Year and
the Consumer Price Index as of the month immediately preceding the
Effective Date and the denominator of which is the Consumer Price Index as
of the month immediately preceding the Effective Date.
(b) EXPENSES. In addition to the amounts payable pursuant to
Section 3.3.4(a) above, Monsanto shall pay any and all Extraordinary Expenses of
ArQule, as required and approved in advance by the Research Committee.
3.3.5. TERM OF DIRECTED ARRAY(TM) PROGRAM. The Directed Array(TM) Program
shall commence upon execution of the Research Plan by each of the team leaders
of Research Committee and continue for a period of five (5) Contract Years,
unless earlier terminated as provided in this Section 3.3.5 or Article 11 below;
PROVIDED, HOWEVER, that upon six (6) months prior written notice by Monsanto,
the Directed Array(TM) Program may be extended for up to two (2) additional
one-year periods. Monsanto may terminate the Directed Array(TM) Program at its
discretion upon six (6) months written notice to ArQule at any time subject to
the payment by Monsanto of all amounts that would have been due to ArQule during
the entire term of this Agreement pursuant to Section 3.3.4 herein if the
Directed Array(TM) Program had not been so terminated. Upon notice of
termination, ArQule shall use reasonable efforts to complete the Directed
Array(TM) Programs then underway in a reasonable and orderly fashion.
* Confidential information omitted and filed with the Commission.
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4. License Grants; Diligence.
-------------------------
4.1. SCREENING LICENSES. ArQule hereby grants to Monsanto (a) a
nonexclusive, worldwide, royalty-free license (without the right to sublicense)
to test Mapping Arrays(TM) against Targets in the Field and to perform other
analytical work on the compounds in the Mapping Arrays(TM), and (b) an exclusive
(including to the exclusion of ArQule), worldwide, royalty-free license (without
the right to sublicense) to test any Directed Arrays(TM) for significant
functional activity against Targets in the Field and to perform other analytical
work on the compounds in the Directed Arrays(TM).
4.2. COMMERCIALIZATION LICENSES. Upon the identification by Monsanto of
any Active Compound and the determination by the Research Committee that such
Active Compound or any Active Homolog thereof should properly be designated as a
Licensed Compound, ArQule, without any further action, shall be deemed to have
granted to Monsanto, under ArQule Patent Rights, ArQule's interest in any Joint
Patent Rights and ArQule Technology, an exclusive (including to the exclusion of
ArQule), worldwide, royalty-bearing license (with the right to grant
sublicenses) (i) to develop (including the making of Derivative Compounds), have
developed, make, or have made Royalty-Bearing Products incorporating or using
any patent or other intellectual property rights of ArQule covering the
composition, manufacture or use of such Licensed Compound for use, distribution
and sale in the Field, and (ii) to distribute for sale and sell in the Field
Royalty-Bearing Products incorporating or using any patent or other intellectual
property rights of ArQule covering the composition, manufacture or use of such
Licensed Compound, and (iii) to use in the Field Royalty-Bearing Products
incorporating or using any patent or other intellectual property rights of
ArQule covering the composition, manufacture or use of such Licensed Compound.
4.3. TERMINATION OF LICENSES. The licenses granted to Monsanto by ArQule
pursuant to Sections 4.1 and 4.2 and the license granted to ArQule by Monsanto
pursuant to Section 4.8 shall continue in perpetuity unless this Agreement
terminates pursuant to Sections 11.2 or 11.3 or such licenses terminate pursuant
to section 4.4.
4.4. RETURN OF MATERIALS. Except as provided in Section 4.5 below,
Monsanto agrees to use reasonable commercial efforts to develop and market
Royalty-Bearing Products based on or incorporating any Licensed Compound, using
a level of effort consistent with that used for other Monsanto products having
similar commercial potential. Monsanto shall have the sole and absolute
discretion to make all decisions relating to the research, development,
marketing and other commercialization activities with respect to any Licensed
Compound or any Royalty-Bearing Product derived therefrom. In the event that
Monsanto takes no action to protect its intellectual property rights or further
develop any Licensed Compound for a period of [ ]* after the earlier
of (i) the time at which a milestone payment is due but has not been paid by
Monsanto, or (ii) the failure of Monsanto to continue with or initiate any
activity that could reasonably lead to a milestone payment as determined by the
Research Committee, then Monsanto shall so notify ArQule and ArQule shall have
the right, upon reasonable notice, to terminate any license granted to Monsanto
under Sections 4.1 or 4.2 with respect to such Licensed Compound.
* Confidential information omitted and filed with the Commission.
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4.5. COMMENCEMENT OF DILIGENCE. Notwithstanding anything to the contrary
in this Agreement, the Parties hereby agree that the diligence obligations
described in Section 4.4 shall not commence with respect to any Licensed
Compound that is included within a Directed Array(TM) Program until such time as
such Directed Array(TM) Program is completed.
4.6. LICENSE REQUIREMENTS. The Parties recognize and agree that Monsanto
does not and will not at any time need any license or other permission or
authorization from ArQule for any activities (including by way of example and
not limitation) making, using, offering for sale, selling and importing
concerning or involving any compound or composition or its manufacture or use
unless ArQule owns (to the exclusion of Monsanto) (i) ArQule Patent Rights, or
(ii) proprietary and confidential ArQule Technology covering such compound or
composition or its manufacture or use.
4.7. SCREENING OF ARQULE COMPOUNDS. During any Research Period, Monsanto
shall have the right, either directly or through Monsanto's Primary Affiliates
or third parties (including Secondary Affiliates who are not also Primary
Affiliates) selected by Monsanto, to perform such testing as Monsanto deems
appropriate on ArQule Compounds and ArQule Derivative Compounds received
hereunder, provided that, prior to delivering any ArQule Compounds or ArQule
Derivative Compounds to any such third party(including Secondary Affiliates who
are not also Primary Affiliates), Monsanto, ArQule and each such third
party(including Secondary Affiliates who are not also Primary Affiliates) enter
into a Materials Transfer Agreement substantially in the form of the attached
Exhibit B.
4.8. GRANT OF LICENSE TO ARQULE. Monsanto hereby grants to ArQule an
exclusive (including to the exclusion of Monsanto), worldwide, royalty-free
license (with the right to sublicense) to make, have made, use, sell, have sold,
import, export and distribute for sale outside of the Field compounds containing
or using any intellectual property rights of Monsanto covering the composition,
manufacture or use of Licensed Compounds.
4.9 REVERSE ENGINEERING. Monsanto shall not attempt to reverse engineer,
or attempt to determine the structure of, any ArQule Compound in a Mapping
Array(TM) until the structure of such compound has been disclosed to Monsanto by
ArQule and Monsanto has disclosed to ArQule the identity of the Target and level
of activity, all pursuant to Section 3.2.3.
5. Intellectual Property Rights.
----------------------------
5.1. Ownership of Patent Rights.
--------------------------
(a) MONSANTO PATENT RIGHTS. Monsanto will solely own any Patent
Rights applied for or obtained by either Party covering (i) Monsanto
Compounds, or (ii) Monsanto Derivative Compounds, except, and only to the
extent that ArQule can show that any such compounds were independently
developed by ArQule employees who had no access to Monsanto Confidential
Information or any information of ArQule developed or furthered as a
result of this Agreement. The parties express no intent as to the
ownership of Monsanto Compounds or Monsanto Derivative Compounds to the
extent such compounds (i) were already within a Mapping Array(TM) Program
before such compounds were proposed to be included in the Directed
Array(TM) Program, or (ii) were
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under development by ArQule (including programs with academic
collaborators or corporate partners) before such compound was proposed to
be included in the Directed Array(TM) Program. Monsanto will solely own
any Patent Rights filed by either Party covering Licensed Compounds.
Monsanto will solely own any Patent Rights filed by either Party covering
any method of making or using any ArQule Compound, ArQule Derivative
Compound, Monsanto Compound or Monsanto Derivative Compound where such
method is invented solely by Monsanto.
(b) ARQULE PATENT RIGHTS. ArQule will solely own any Patent Rights
applied for or obtained by either Party covering (i) ArQule Compounds or
ArQule Derivative Compounds not owned by Monsanto pursuant to 5.1(a), or
(ii) any method of making or using any ArQule Compound, ArQule Derivative
Compound, Monsanto Compound or Monsanto Derivative Compound where such
method is invented solely by ArQule.
(c) JOINT PATENT RIGHTS. ArQule and Monsanto will jointly own any
Patent Rights applied for or obtained by either Party covering any method
of making or using any ArQule Compound, ArQule Derivative Compound,
Monsanto Compound or Monsanto Derivative Compound where such method is
invented jointly by Monsanto and ArQule.
5.2. MANAGEMENT OF JOINT PATENT RIGHTS. In the case of Joint Patent
Rights, Monsanto shall have all control over and shall bear all responsibility
for, and the expense of, the preparation, filing, prosecution, and maintenance
of any Joint Patent Rights claiming such inventions. Monsanto shall consult with
ArQule as to the preparation, filing, prosecution, and maintenance of such Joint
Patent Right reasonably prior to any deadline or action with the U.S. Patent &
Trademark Office or its foreign equivalent, and shall furnish to ArQule copies
of all relevant documents reasonably in advance of such consultation. In the
event that Monsanto desires to abandon such Joint Patent Right, or if Monsanto
later declines responsibility for such Joint Patent Right, Monsanto shall
provide reasonable prior written notice to ArQule of such intention to abandon
or decline responsibility, and ArQule shall have the right, at its expense, to
prepare, file, prosecute, and maintain such Joint Patent Rights.
5.3. COOPERATION OF THE PARTIES. Each Party agrees to cooperate fully in
the preparation, filing, and prosecution of any Patent Rights under this
Agreement. Such cooperation includes, but is not limited to:
(a) executing all papers and instruments, or requiring its
employees or agents, to execute such papers and instruments, so as to
effectuate the ownership of Patent Rights set forth in Section 5.1 above
and to enable the other Party to apply for and to prosecute patent
applications in any country;
(b) promptly informing the other Party of any matters coming
to such Party's attention that may affect the preparation, filing, or
prosecution of any such patent applications; and
(c) undertaking no actions that are potentially deleterious to
the preparation, filing, or prosecution of such patent applications.
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5.4. INFRINGEMENT BY THIRD PARTIES. ArQule and Monsanto shall each
promptly notify the other in writing of any alleged or threatened infringement
by a third party of any ArQule Patent Right, Monsanto Patent Right or Joint
Patent Right of which they become aware. The Parties shall consult concerning
the action(s) to be taken in connection with any such alleged or threatened
infringement.
6. Ownership of Compounds.
----------------------
All Monsanto Compounds, Monsanto Derivative Compounds, ArQule Compounds
and ArQule Derivative Compounds shall be owned in the same manner as the patent
rights to such compounds are owned as set forth in Article 5.
7. Payments, Reports, and Records.
------------------------------
7.1. MILESTONE PAYMENTS. In partial consideration of the rights granted
Monsanto under this Agreement, Monsanto shall pay ArQule the following amounts
within forty-five (45) days after each occurrence of the following milestones:
Payment Milestone
------- ---------
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
[ ]* [ ]*
----------
(1). A single milestone payment will be made for each Active Compound along with
up to [five (5)] Active Homologs thereof as determined by the Research Committee.
* Confidential information omitted and filed with the Commission.
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Such milestone payments shall be non-refundable and shall not be credited
against royalties payable to ArQule under this Agreement. Monsanto shall
promptly notify ArQule of each occurrence of any of the foregoing milestones.
7.2. Royalties.
---------
(a) In consideration of the licenses granted to Monsanto hereunder,
Monsanto shall pay to ArQule a royalty of [ ]* of Net Sales of
Royalty-Bearing Products.
(b) No royalty shall accrue on sales among Monsanto, its Secondary
Affiliates and Sublicensees. Royalties shall only accrue on sales by Monsanto,
its Secondary Affiliates and Sublicensees to parties other than Monsanto, its
Secondary Affiliates and Sublicensees and shall be payable only once for any
given unit of Royalty-Bearing Product sold.
7.3. REPORTS AND PAYMENTS. Within thirty (30) days after the conclusion
of each Royalty Period, Monsanto shall deliver to ArQule a report containing the
following information:
(a) gross sales of Royalty-Bearing Products by Monsanto, its
Secondary Affiliates and Sublicensees during the applicable Royalty Period in
each country of sale;
(b) adjustments and calculation of Net Sales for the
applicable Royalty Period in each country of sale; and
(c) total Net Sales in U.S. dollars, together with the
exchange rates used for conversion.
All such reports shall be maintained in confidence by ArQule. If no royalties
are due to ArQule for any reporting period, the report shall so state.
Concurrent with this report, Monsanto shall remit to ArQule any payment due for
the applicable Royalty Period using a method of payment mutually agreed to by
the Parties. All amounts payable to ArQule under this Section will first be
calculated in the currency of sale and then converted into U.S. dollars in
accordance with Section 7.4, and such amounts shall be paid without deduction,
except as required by law, of any withholding taxes, value-added taxes, or other
charges applicable to such payments.
7.4. INVOICES; PAYMENTS IN U.S. DOLLARS. With the exception of royalty
payments due under Section 7.2, ArQule shall submit invoices to Monsanto for
each payment due ArQule hereunder (including without limitation all payments due
pursuant to Sections 3.1, 3.2.4 and 3.3.4(a)), and Monsanto shall pay such
invoices within forty-five (45) days of receipt thereof. All payments due under
this Agreement shall, except as provided in Section 7.5 below, be payable in
United States dollars. Conversion of foreign currency to U.S. dollars shall be
made at the conversion rate existing in the United States (as reported in THE
WALL STREET JOURNAL) on the last working day of the calendar quarter preceding
the applicable calendar quarter. Such payments shall be without deduction of
exchange, collection, or other charges.
* Confidential information omitted and filed with the Commission.
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7.5. PAYMENTS IN OTHER CURRENCIES. If by law, regulation, or fiscal
policy of a particular country, conversion into United States dollars or
transfer of funds of a convertible currency to the United States is restricted
or forbidden, Monsanto shall give ArQule prompt written notice of such
restriction, which notice shall satisfy the forty-five day payment deadline
described in Section 7.4. Monsanto shall pay any amounts due ArQule through
whatever lawful methods ArQule reasonably designates; provided, however, that if
ArQule fails to designate such payment method within forty-five (45) days after
ArQule is notified of the restriction, then Monsanto may deposit such payment in
local currency to the credit of ArQule in a recognized banking institution
selected by Monsanto and identified by written notice to ArQule, and such
deposit shall fulfill all obligations of Monsanto to ArQule with respect to such
payment.
7.7. RECORDS. Monsanto and its Secondary Affiliates shall maintain
complete and accurate records of Royalty-Bearing Products made, used or sold by
them or their Sublicensees under this Agreement, and any amounts payable to
ArQule in relation to such Royalty-Bearing Products, which records shall contain
sufficient information to permit ArQule to confirm the accuracy of any reports
delivered to ArQule in accordance with Section 7.3. The relevant Party shall
retain such records relating to a given Royalty Period for at least three (3)
years after the conclusion of that Royalty Period. Each Party (acting as the
"Auditing Party") shall have the right, at its own expense, to cause an
independent certified public accountant to inspect such records of the other
Party (the "Audited Party") during normal business hours for the sole purpose of
verifying any reports and payments delivered under this Agreement. Such
accountant shall not disclose to the Auditing Party any information other than
information relating to accuracy of reports and payments delivered under this
Agreement and shall provide the Audited Party with a copy of any report given to
the Auditing Party. The Parties shall reconcile any underpayment or overpayment
within forty-five (45) days after the accountant delivers the results of the
audit. In the event that any audit performed under this Section reveals an
underpayment in excess of five percent (5%) in any Royalty Period, the Audited
Party shall bear the full cost of such audit. Each Party may exercise its rights
under this Section only once every year and only with reasonable prior notice to
the other Party.
7.8. LATE PAYMENTS. Any payments by Monsanto that are not paid on or
before the date such payments are due under this Agreement shall bear interest,
to the extent permitted by law, at two percentage points above the Base Rate of
Interest calculated based on the number of days that payment is delinquent.
8. Confidential Information.
------------------------
8.1. DEFINITION OF CONFIDENTIAL INFORMATION. Confidential Information
shall mean any technical or business information furnished by the Disclosing
Party to the Receiving Party in connection with this Agreement and specifically
designated as confidential. Such Confidential Information may include, without
limitation, the identity of a chemical compound, the use of a chemical compound,
trade secrets, know-how, inventions, technical data or specifications, testing
methods, business or financial information, research and development activities,
product and marketing plans, and customer and supplier information.
8.2. Obligations. The Receiving Party agrees that it shall:
-----------
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(a) maintain all Confidential Information in strict
confidence, except that the Receiving Party may disclose or permit the
disclosure of any Confidential Information to its, and its Primary
Affiliates, directors, officers, employees, consultants, and advisors who
are obligated to maintain the confidential nature of such Confidential
Information and who need to know such Confidential Information for the
purposes set forth in this Agreement;
(b) use all Confidential Information solely for the purposes
set forth in, or as permitted by, this Agreement; and
(c) allow its Primary Affiliates, directors, officers,
employees, consultants, and advisors to reproduce the Confidential
Information only to the extent necessary to effect the purposes set forth
in this Agreement, with all such reproductions being considered
Confidential Information.
8.3. EXCEPTIONS. The obligations of the Receiving Party under Section
8.2 above shall not apply to any specific Confidential Information to the extent
that the Receiving Party can demonstrate that such Confidential Information:
(a) was in the public domain prior to the time of its
disclosure under this Agreement;
(b) entered the public domain after the time of its
disclosure under this Agreement through means other than an unauthorized
disclosure resulting from an act or omission by the Receiving Party, its
Primary Affiliates, directors, officers, employees, consultants, advisors
or agents;
(c) was independently developed or discovered by the
Receiving Party without use of the Confidential Information;
(d) is or was disclosed to the Receiving Party at any time,
whether prior to or after the time of its disclosure under this Agreement,
by a third party having no fiduciary relationship with the Disclosing
Party and having no obligation of confidentiality to the Disclosing Party
with respect to such Confidential Information; or
(e) is required to be disclosed to comply with applicable
laws or regulations (such as disclosure to the EPA or the United States
Patent and Trademark Office or to their foreign equivalents), or to comply
with a court or administrative order, provided that the Disclosing Party
receives prior written notice of such disclosure and that the Receiving
Party takes all reasonable and lawful actions to obtain confidential
treatment for such disclosure and, if possible, to minimize the extent of
such disclosure.
8.4. PUBLICATIONS. ArQule shall not publish any information with respect
to ArQule Derivative Compounds, Monsanto Compounds, or Monsanto Derivative
Compounds without the prior written permission of Monsanto, which may be
withheld in its sole discretion.
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8.5. SURVIVAL OF OBLIGATIONS. The obligations set forth in this Article
shall remain in effect after termination of this Agreement, except that the
obligations of the Receiving Party to destroy or return Confidential Information
to the Disclosing Party shall survive until fulfilled.
9. Representations and Warranties.
------------------------------
9.1. AUTHORIZATION. Each Party represents and warrants to the other that
it has the legal right and power to enter into this Agreement, to extend the
rights and licenses granted to the other in this Agreement, and to fully perform
its obligations hereunder, and that the performance of such obligations will not
conflict with its charter documents or any agreements, contracts, or other
arrangements to which it is a party.
9.2. PRIOR LICENSES IN FIELD. ArQule hereby represents and warrants that
as of the Effective Date it has granted no other license, right or interest to
ArQule Compounds to any third party for the testing, making, use, development or
sale of ArQule Compounds in the Field.
9.3. NON-INFRINGEMENT. ArQule represents that to its knowledge the
conduct of the business of ArQule as it is currently being conducted or as it is
proposed to be conducted pursuant to this Agreement does not conflict with or
infringe on the intellectual property of any other person, and ArQule has not
received any claim or notice from any person to such effect which is still
pending. ArQule has no knowledge of any claim or fact that would give rise to a
claim that any of the ArQule Patents is invalid or unenforceable. To ArQule's
knowledge, the ArQule Patents are not infringed by any third party.
10. Indemnification and Insurance.
-----------------------------
10.1. Indemnification. Each Party (the "Indemnitor") shall indemnify,
defend, and hold harmless the other Party and its Primary Affiliates and their
directors, officers, employees, and agents and their respective successors,
heirs and assigns (the "Indemnitees"), against any liability, damage, loss, or
expense (including reasonable attorneys fees and expenses of litigation)
incurred by or imposed upon the Indemnitees or any one of them in connection
with any claims, suits, actions, demands, or judgments arising out of any theory
of product liability (including, but not limited to, actions in the form of
tort, warranty, or strict liability) concerning any product (or any process or
service) that is made, used, or sold by the Indemnitor pursuant to any right or
license granted under this Agreement; provided, however, that such
indemnification right shall not apply to any liability, damage, loss, or expense
to the extent directly attributable to the negligent activities, reckless
misconduct, or intentional misconduct of the Indemnitees.
10.2. Procedures. Any Indemnitee that intends to claim indemnification
under Section 10.1 shall promptly notify the appropriate Indemnitor of any claim
in respect of which the Indemnitee intends to claim such indemnification, and
the Indemnitor shall assume the defense thereof with counsel mutually
satisfactory to the Parties; provided, however, that an Indemnitee shall have
the right to retain its own counsel, with the fees and expenses to be paid by
the Indemnitor, if representation of such Indemnitee by the counsel retained by
the Indemnitor would be inappropriate due to actual or potential differing
interests between such Indemnitee and any other party represented by such
counsel in such proceedings. The indemnity agreement in Section 10.1. shall not
apply to amounts paid in settlement of any loss, claim, liability or action if
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such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve the
Indemnitor of any liability to the Indemnitee under Section 10.1. Each party and
its Primary Affiliates and their employees and agents shall cooperate fully with
the other party and its legal representatives in the investigation of any
action, claim or liability covered by this indemnification.
10.3. Insurance. Each party shall maintain at least $5,000,000 in
insurance coverage for its own potential liabilities to the Indemnitees as set
forth in this Article 10.
11. Term and Termination.
--------------------
11.1. TERM. This Agreement shall commence on the Effective Date and shall
remain in effect until [ ]*
as provided in this Article 11.
11.2. BREACH OF PAYMENT OBLIGATIONS. In the event that Monsanto fails to
make timely payment of any amounts due to ArQule under this Agreement, ArQule
may terminate this Agreement upon ninety (90) days written notice to Monsanto,
unless Monsanto pays all past-due amounts within such ninety-day notice period.
11.3. MATERIAL BREACH. In the event that either party commits a material
breach of any of its obligations under this Agreement (other than as provided in
Section 11.2) and such party fails (i) to remedy that breach within ninety (90)
days after receiving written notice thereof from the other party or (ii) to
commence dispute resolution pursuant to Section 12.5, within ninety (90) days
after receiving written notice of that breach from the other party, the other
party may immediately terminate this Agreement upon written notice to the
breaching party.
11.4. EFFECT OF TERMINATION. Termination of this Agreement shall not
relieve the parties of any obligation accruing prior to such termination. The
provisions of Article 4, Article 5, Article 6 and Article 7 (with respect only
to milestone payments and royalties accrued at the time of termination but not
yet paid), Article 8, Article 9 and Article 12 shall survive the expiration or
termination of this Agreement.
12. Miscellaneous.
-------------
12.1. RELATIONSHIP OF PARTIES. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, employer-employee or joint
venture relationship between the parties. No party shall incur any debts or make
any commitments for the other, except to the extent, if at all, specifically
provided herein.
12.2. PUBLICITY. Neither party shall use the name of the other party or
reveal the terms of this Agreement in any publicity or advertising without the
prior written approval of the other party, except that (i) either party may use
the text of a written statement approved in advance by both parties without
further approval, (ii) either party shall have the right to identify the other
party and to disclose the terms of this Agreement as required by applicable
securities laws or
* Confidential information omitted and filed with the Commission.
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other applicable law or regulation, and (iii) either party may use the name of
the other party and reveal the existence of this Agreement.
12.3. NON-SOLICITATION. During the term of this Agreement and thereafter
for a period of two (2) years, each party agrees not to seek to persuade or
induce any employee of the other party to discontinue his or her employment with
that party in order to become employed by or associated with any business,
enterprise, or effort that is associated with its own business.
12.4. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
12.5. Dispute Resolution Procedures.
-----------------------------
(a) The parties hereby agree that they will attempt in good
faith to resolve any controversy, claim or dispute ("Dispute") arising out
of or relating to this Agreement promptly by negotiations. Any such
Dispute which is not settled by the parties within fifteen (15) days after
notice of such Dispute is given by one party to the other in writing shall
be referred to the President of ArQule and the Director of Plant
Protection of the Ceregen division of Monsanto who are authorized to
settle such Disputes on behalf of their respective companies ("Senior
Executives"). The Senior Executives will meet for negotiations within
fifteen (15) days of the end of the 15 day negotiation period referred to
above, at a time and place mutually acceptable to both Senior Executives.
If the Dispute has not been resolved within thirty (30) days after the end
of the 15 day negotiation period referred to above (which period may be
extended by mutual agreement), subject to any rights to injunctive relief
and unless otherwise specifically provided for herein, any Dispute will be
settled first by non-binding mediation and thereafter by arbitration as
described in subsections (b) and (c) below.
(b) Any Dispute which is not resolved by the parties within
the time period described in subsection (a) shall be submitted to an
alternative dispute resolution process ("ADR"). Within five (5) business
days after the expiration of the thirty (30) day period set forth in
subsection (a), each party shall select for itself a representative with
the authority to bind such party and shall notify the other party in
writing of the name and title of such representative. Within ten (10)
business days after the date of delivery of such notice, the
representatives shall schedule a date for engaging in non-binding ADR with
a neutral mediator or dispute resolution firm mutually acceptable to both
representatives. Any such mediation shall be held in Boston, Massachusetts
if brought by Monsanto and St. Louis, Missouri if brought by ArQule.
Thereafter, the representatives of the parties shall engage in good faith
in an ADR process under the auspices of such individual or firm. If the
representatives of the parties have not been able to resolve the Dispute
within thirty (30) business days after the conclusion of the ADR process,
or if the representatives of the parties fail to schedule a date for
engaging in non-binding ADR within the ten (10) day period set forth
above, the Dispute shall be settled by binding arbitration as set forth in
subsection (c) below. If the representatives of the parties resolve the
dispute within the thirty (30) day period set forth above, then such
resolution shall be binding upon the parties. If either party fails to
abide by such resolution, the other party can immediately refer the matter
to arbitration under Section 13.5(c).
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(c) If the parties have not been able to resolve the Dispute
as provided in subsections (a) and (b) above, the Dispute shall be finally
settled by binding arbitration. Any arbitration hereunder shall be
conducted under rules of the American Arbitration Association. The
arbitration shall be conducted before three arbitrators chosen according
to the following procedure: each of the parties shall appoint one
arbitrator and the two so nominated shall choose the third, PROVIDED THAT
in the case of a dispute as to decisions of the Research Committee each
party shall designate one (1) neutral having the following minimum
scientific qualifications: a Ph.D. degree in chemistry or life sciences
and/or an M.D. degree plus at least ten (10) years of relevant business or
scientific research experience. These two (2) neutrals shall select a
third neutral having the same minimum scientific qualifications within
fourteen (14) days of the appointment of the first two (2) neutrals.
None of the neutrals shall be an employee, director or shareholder of
either party or any of their subsidiaries, Secondary Affiliates or
otherwise have a materially conflicting interest in the outcome of such
proceeding. If the arbitrators chosen by the parties cannot agree on the
choice of the third arbitrator within a period of thirty (30) days after
their appointment, then the third arbitrator with such requisite
qualifications shall be appointed by the Court of Arbitration of the
American Arbitration Association. Any such arbitration shall be held in
Boston, Massachusetts if brought by Monsanto and St. Louis, Missouri if
brought by ArQule or such other location as the arbitrators may agree. The
arbitrators shall have the authority to grant specific performance, and to
allocate between the parties the costs of arbitration in such equitable
manner as they determine. The arbitral award (i) shall be final and
binding upon the parties; and (ii) may be entered in any court of
competent jurisdiction.
(d) Nothing contained in this Section or any other provisions
of this Agreement shall be construed to limit or preclude a party from
bringing any action in any court of competent jurisdiction for injunctive
or other provisional relief to compel the other party to comply with its
obligations hereunder before or during the pendency of mediation or
arbitration proceedings. The parties hereby irrevocably consent to submit
to the jurisdiction of the federal courts located within the Commonwealth
of Massachusetts and the state of Missouri and agree that venue is proper
in any such court and will not seek to alter or contest such venue.
12.6. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall be deemed to be one and the same instrument.
12.7. HEADINGS. All headings in this Agreement are for convenience only
and shall not affect the meaning of any provision hereof.
12.8. BINDING EFFECT. This Agreement shall inure to the benefit of and be
binding upon the parties, their Primary Affiliates, and their respective lawful
successors and assigns.
12.9. ASSIGNMENT. This Agreement may not be assigned by either party
without the prior written consent of the other party, except that either party
may assign this Agreement to a successor in connection with the merger,
consolidation, spin-off or sale of all or substantially all
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of its assets or that portion of its business pertaining to the subject matter
of this Agreement. Monsanto has the right to extend its rights and benefits
under this Agreement to any Primary Affiliate.
12.10. NOTICES. All notices, requests, demands and other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and shall be deemed to have been duly given upon the date of receipt if
delivered by hand, recognized international overnight courier, confirmed
facsimile transmission, or registered or certified mail, return receipt
requested, postage prepaid to the following addresses or facsimile numbers:
If to Monsanto: If to ArQule:
Monsanto Company ArQule, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇ Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: with a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP ▇▇▇▇▇▇ & Dodge
One Metropolitan Sq., Suite 3600 ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
Tel: (▇▇▇) ▇▇▇-▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section.
12.11. AMENDMENT AND WAIVER. This Agreement may be amended, supplemented,
or otherwise modified only by means of a written instrument signed by both
parties. Any waiver of any rights or failure to act in a specific instance shall
relate only to such instance and shall not be construed as an agreement to waive
any rights or fail to act in any other instance, whether or not similar.
12.12. SEVERABILITY. In the event that any provision of this Agreement
shall, for any reason, be held to be invalid or unenforceable in any respect,
such invalidity or unenforceability shall not affect any other provision hereof,
and the parties shall negotiate in good faith to modify the Agreement to
preserve (to the extent possible) their original intent.
12.13. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements or understandings between the parties relating to the subject
matter hereof.
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12.14. FORCE MAJEURE. Neither party shall be held liable or responsible
to the other party, nor be deemed to be in breach of this Agreement, for failure
or delay in fulfilling or performing any provisions of this Agreement when such
failure or delay is caused by or results from any cause whatsoever outside the
reasonable control of the party concerned including, but not limited to, fire,
explosion, breakdown of plant, strike, lock-out, labor disputes, casualty or
accident, lack or failure of transportation facilities, flood, lack or failure
of sources of supply or of labor, raw materials or energy, civil commotion,
embargo, any law, regulation, decision, demand or requirement of any national or
local government or authority. The party claiming relief shall, without delay,
notify the other party by registered airmail or by telefax of the interruption
and cessation thereof and shall use its best efforts to remedy the effects of
such hindrance with all reasonable dispatch. The onus of proving that any such
Force Majeure event exists shall rest upon the party so asserting. During the
period that one party is prevented from performing its obligations under this
Agreement due to a Force Majeure event, the other party may, in its sole
discretion, suspend any obligations that relate thereto. Upon cessation of such
Force Majeure event the parties hereto shall use their best efforts to make up
for any suspended obligations. If such Force Majeure event is anticipated to
continue, or has existed for nine (9) consecutive months or more, this Agreement
may be forthwith terminated by either party by registered airmail or by telefax.
In case of such termination the terminating party will not be required to pay to
the other party any indemnity whatsoever.
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered this
Agreement as a sealed instrument effective as of the date first above written.
MONSANTO COMPANY ARQULE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇ By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------ --------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director, Commercial Partnerships Title: President and Chief Executive
and Licenses
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EXHIBIT A
RESEARCH PLAN
[ ]*
* Confidential information omitted and filed with the Commission.
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EXHIBIT B
FORM OF MATERIALS TRANSFER AGREEMENT
This Agreement, dated as of __________, __, _____, is between ArQule, Inc.
("ArQule"), a Delaware corporation, and Monsanto Company ("Monsanto"), a
Delaware corporation and _________________, a ___________________ ("Recipient").
WHEREAS, Monsanto and ArQule have entered into that certain Array Delivery
and Testing Agreement, dated as December 23, 1996, ("Array Delivery Agreement"),
pursuant to which ArQule agreed to provide Monsanto with certain compound arrays
for screening on the terms and subject to the conditions set forth in the Array
Delivery Agreement and to perform certain other compound development activities;
and
WHEREAS, pursuant to Section 4.1 of the Array Delivery Agreement, Monsanto
is permitted to deliver such compounds to third parties such as Recipient,
provided such parties execute and deliver this Agreement to ArQule.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and conditions contained herein and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. SUPPLY OF MATERIALS: Within ____ days after receiving an original of
this Agreement executed by all parties, Monsanto will supply Recipient with the
compounds set forth on Exhibit 1 (the "Materials"). Upon written request,
Monsanto may provide the Recipient with additional quantities of such Materials
or with additional compounds, which compounds shall also be considered Materials
for the purposes of this Agreement.
2. USE AND TRANSFER RESTRICTIONS: Recipient acknowledges and agrees that
the Materials may be proprietary to and owned by ArQule and are or may be
covered by claims of U.S. and international patents or patent applications of
ArQule and/or Monsanto. Recipient agrees to use the Materials solely to screen
them for potential agricultural and in planta use for Monsanto using the assay
procedure previously disclosed to Monsanto. Recipient agrees (i) not to transfer
such Materials to any third party without the prior written consent of ArQule
and Monsanto, (ii) to permit access to the Materials only to its employees and
consultants requiring such access, (iii) to inform such employees and
consultants of the proprietary nature of the Materials, (iv) to take reasonable
precautions, at least as stringent as those observed by Recipient to protect its
own proprietary materials, to ensure that such employees and consultants observe
the obligations of Recipient pursuant to this Section and (v) to execute and
deliver any documents of assignment or conveyance that may be necessary to
effectuate the ownership rights of ArQule or Monsanto in the Materials. Upon the
expiration of this Agreement, Recipient shall, at the instruction of ArQule or
Monsanto, either destroy or return any unused Materials.
3. COMPLIANCE WITH LAW: Recipient agrees to comply with all federal,
state, and local laws and regulations applicable to the use, testing, storage,
disposal, and transfer of the Materials. Recipient assumes sole responsibility
for any violation of such laws or regulations by Recipient or any of its
affiliates or sublicensees.
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4. TERMINATION: This Agreement shall commence on the date last written
below and continue for a period of ____ months. Sections 3, 6 and 7 shall
survive termination of this Agreement.
5. NO WARRANTIES: Any Materials delivered pursuant to this Agreement are
understood to be experimental in nature and may have hazardous properties.
Recipient should assume that the Materials are dangerous and should use
appropriate precautions. NEITHER MONSANTO NOR ARQULE MAKES ANY REPRESENTATIONS,
OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, WITH RESPECT
TO THE COMPOUNDS. THERE ARE NO EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE, OR THAT THE USE OF THE MATERIALS WILL NOT
INFRINGE ANY PATENT RIGHTS OF OTHERS.
6. ASSIGNMENT OF INVENTIONS: Recipient agrees promptly to disclose to
Monsanto any and all ideas, concepts, discoveries, inventions, developments,
improvements, trade secrets, technical data, know-how or [agricultural or in
planta] materials that are conceived, devised, invented, developed or reduced to
practice or tangible medium by Recipient, or any of its agents, employees or
contractors, or under its direction, during the term of this Agreement and which
arise out of its screening or evaluation of the Materials (hereinafter
"Inventions"). Recipient hereby assigns to Monsanto all of its right, title and
interest in and to the Inventions and any and all related patent rights,
copyrights and applications and registrations therefor. During and after the
expiration of this Agreement, Recipient shall cooperate with Monsanto, at
Monsanto's expense, in obtaining proprietary protection for the Inventions and
shall execute all documents which Monsanto shall reasonably request in order to
perfect Monsanto's rights in the Inventions.
7. INDEMNIFICATION: Recipient assumes all liability for, and agrees to
indemnify, defend, and hold harmless ArQule and Monsanto and their respective
directors, officers, representatives, employees, and agents against, all losses,
expenses (including without limitation any legal fees and expenses), claims,
demands, damages, judgments, suits, or other actions arising from the use,
testing, storage, or disposal of the Materials by Recipient and its agents,
employees or contractors, or from any breach of its obligations under Section 2
of this Agreement.
8. MISCELLANEOUS: This Agreement shall not be assigned or otherwise
transferred by Recipient without the prior written consent of ArQule and
Monsanto. This Agreement shall be governed by the laws of the State of New York.
This Agreement constitutes the entire understanding of the parties and
supersedes all prior agreements, written or oral, with respect to the subject
matter hereof.
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Recipient
--------------------------
Name:
Title:
Date:
Tel:
Fax:
ACCEPTED AND AGREED:
ArQule, Inc.
------------------------
Name:
Title:
Date:
ACCEPTED AND AGREED:
Monsanto Company
------------------------
Name:
Title:
Date: