EXHIBIT 10.64
CONFIDENTIAL PORTIONS OMITTED
PURSUANT TO RULE 24b-2
OF THE SECURITIES EXCHANGE ACT OF 1934
RESEARCH COLLABORATION AND LICENSE AGREEMENT
--------------------------------------------
THIS AGREEMENT is made this 13th day of January, 1999 (the "Effective Date")
between
N.V. ORGANON, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇.▇. ▇▇▇ ▇▇, 5340 BH Oss, the Netherlands
(hereinafter referred to as "Organon")
and
CORTEX PHARMACEUTICALS, INC., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ (hereinafter referred to as "Cortex")
WHEREAS
A. Cortex has considerable experience and expertise with respect to the use of
AMPAkines for the treatment of diseases and Cortex owns and has been
licensed intellectual property rights in this field.
B. Organon wishes to collaborate with Cortex to develop products for the
treatment of schizophrenia and schizophrenia related disorders and symptoms
and possibly depression and wishes to obtain a (sub)license from Cortex
under Cortex' relevant intellectual property rights.
NOW THEREFORE THE PARTIES HEREBY AGREE AS FOLLOWS
1. Definitions
-----------
1.1 "Affiliate" means in the case of each party any entity that directly or
indirectly controls, is controlled by, or is under common control with
that party. For such purpose the terms "control" means ownership or
control of at least 50% of the voting interest in the entity in question.
2
1.2 "AMPAkines" means compounds that modulate through an allosteric mechanism
AMPA-receptor mediated responses in vitro, [*].
1.3 "Cortex Compound" means the compounds listed in Exhibit I hereto.
1.4 "Cortex Technology" means all inventions, know-how, trade secrets, and
other proprietary information (whether patented or not), that relate to
AMPAkines and which are owned by or licensed to Cortex as of the
Effective Date or during the term of this Agreement, as to which Cortex
has the right to grant to Organon an exclusive license hereunder.
1.5 "Cost of Goods" means the cost invoiced by the manufacturer of the
Products for the Products as well as any pharmaceutical formulation,
packaging and/or package insert costs incurred by Organon.
1.6 "Depression Field" means the treatment of depression and depression
related disorders and symptoms as listed under the caption "Mood
disorders" of the most recent DSM at the date of first sale of Products
or captions applicable to depression and depression related disorders and
symptoms at that time and thereafter during commercialization.
1.7 "Development Candidate" means an AMPAkine which has undergone the
necessary preclinical in vitro and animal studies, formulation and
production work, and is [*].
1.8 "DSM" shall mean the Diagnostic and Statistical Manual of Mental
Disorders.
1.9 "Executive Committee" means the committee to be established pursuant to
Article 2 hereof.
1.10 "FTE" means the full time equivalent effort, for one year, of one person
who participates directly and effectively in the research activities
contemplated under this Agreement.
1.11 "Net Sales" means the total revenue from commercial sales received by a
party hereto, its Affiliates and/or
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licensees from the sale of a Product subject to royalties hereunder to
independent third parties less the following amounts:
(i) discounts, including cash and quantity discounts, trade allowances
or rebates actually allowed or granted,
(ii) credits or allowances actually granted upon claims or returns,
regardless of the party requesting the return,
(iii) separately itemised freight charges paid for delivery,
(iv) insurance costs,
(v) taxes or other governmental charges levied on or measured by the
invoiced amount, whether absorbed by the billing party or the
billed party.
1.12 "Organon Compound" means a compound originating from an Organon Library,
Organon internal development or otherwise obtained by Organon from any
potential third party.
1.13 "Organon Library" means a library or mixture of compounds, including
compounds contained or proposed to be contained therein, designed
synthesized and/or acquired by Organon (alone or with third parties) or
to which Organon otherwise has access to.
1.14 "Organon Patents" means patents Organon becomes owner of under Section 5.
1.15 "Patents" means all patents and patent applications (including
provisionals, divisionals, continuations, continuations in part,
reissues, re-examinations, substitutions, additions and any extensions to
such patents) as well as foreign counterparts thereof, claiming Cortex
Technology including Cortex Compounds and/or University of California
Patents. Patents owned by or licensed to Cortex at the Effective Date are
listed in Exhibit II hereto.
1.16 "Pharmacological Phase A" means screening in [*].
1.17 "Pharmacological Phase B" means screening in [*].
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1.18 "Phase I Studies" means human safety studies aiming at generating
sufficient safety data to allow initiation of full scale Phase II patient
studies.
1.19 "Phase II Studies" means dose finding studies in patients, aiming to
prove efficacy and safety of the Development Candidate and to define a
minimum effective dose and optimum effective dose.
1.20 "Phase III Studies" means all clinical studies in patients aiming at
generating sufficient data to allow submission of registration dossiers
in the United States, Europe and Japan.
1.21 "Product" means any AMPAkine developed and commercialised by Organon
pursuant to Section 4., which is manufactured, used or sold in a country
in which any of the manufacture, use or sale is covered by the Patents.
1.22 "Research" means the research program conducted by the parties pursuant
to Section 3 of this Agreement.
1.23 "Research Collaboration Compounds" means compounds designed and
synthesized under the Research Plan but excluding Cortex Compounds and
Organon Compounds.
1.24 "Research Committee" means a team to be established for the purposes of
the Research pursuant to Section 3.2 hereof.
1.25 "Research Plan" means the research activities to be conducted by the
parties pursuant to the Research. The initial Research Plan is attached
as Exhibit III which may be amended from time to time upon agreement of
the Executive Committee.
1.26 "Research Term" means the term of the Research referenced in Article 3.
1.27 "Restricted Compounds" means: Organon Compounds; compounds which are
still under investigation in the Research pursuant to Section 3.3 below;
Research Collaboration Compounds that are not AMPAkines; those Research
Collaboration Compounds and Cortex Compounds which have entered the
Selection Phase and those
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compounds which are developed and commercialized pursuant to Section 4.5
below.
1.28 "Schizophrenia Field" means the treatment of schizophrenia and
schizophrenia related disorders and symptoms as listed under the caption
"Schizophrenia and other Psychotic Disorders" of the most recent DSM at
the date of first sale of the Products or captions applicable to
schizophrenia and schizophrenia related disorders and symptoms at that
time and thereafter during commercialization.
1.29 "Selection Phase" means further pursuing of indicative pharmacology as
conducted under Phases A and B as well as a first assessment of [*]a
dossier describing the results of Phases A and B and above assessments.
1.30 "▇▇▇▇ Phase" means comprehensive [*].
1.31 "University of California Agreements" means the agreements entered into
by and between the Regents of the University of California and Cortex
under which agreements Cortex has been granted exclusive rights under the
University of California Patents.
1.32 "University of California Patents" means all patents and patent
applications (including provisionals, divisionals, continuations,
continuations in part, reissues, re-examinations, substitutions,
additions and any extensions to such patents) licensed and that will be
licensed by the University of California to Cortex. University of
California Patents licensed to Cortex at the Effective Date are listed in
Exhibit II hereto.
1.33 "Unrestricted Compounds" means AMPAkines which have been released by the
Research Committee and are therefore available for use and license (or,
in the case of Unrestricted Collaboration Compounds, sublicense pursuant
to Section 4.1.4) by Cortex but excluding Organon Compounds.
1.34 "Unrestricted Information" means data and information related to
Unrestricted Compounds compiled under the Research but limited to
information and data from research and development through
Pharmacological Phase B.
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Further data and information shall be considered restricted information
and may under no circumstances be disclosed by Cortex to third parties
unless with the prior written approval of Organon.
2. Executive Committee
-------------------
2.1 The parties will establish an Executive Committee for the purposes of
approving research plans, research budgets and changes thereto, and
supervising the execution of the Research Plan. The Executive Committee
shall have such even number of members as the parties shall agree, half
of the members being appointed by each party, with each of Cortex and
Organon having one vote. Organon can at its sole discretion decide which
compounds will become Development Candidates. In the event of deadlock on
any issue, such issue shall be referred for decision to the Chief
Executive Officers of each party, which officers shall have the
appropriate responsibility and authority to represent and bind such party
with respect to such issue or dispute. During the Research Term, the
Executive Committee shall meet at least once a year, and the location of
such meetings shall alternate between Irvine and Oss or ▇▇▇▇▇▇▇▇, all
unless otherwise agreed by the parties.
3. Research
--------
3.1 Research Term
-------------
The Research shall commence upon the Effective Date and shall continue
for two years thereafter. In the event [*] Research Plan, Organon, at its
discretion, has the right to terminate this Agreement or the Research
only upon four months prior written notice, unless Cortex [*] reasonably
acceptable to Organon.
3.2 Research Program
----------------
3.2.1 The parties agree to execute the Research Plan subject to the following:
(a) Cortex agrees that, during the Research Term, Cortex shall
collaborate exclusively with Organon within the Schizophrenia Field
and the Depression Field.
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(b) Organon shall, at its discretion, provide access to its proprietary
technologies and know-how, as may be useful in connection with the
Research and shall make available an average of [*] FTE's per year
during the Research Term.
For clarity of understanding, Cortex shall not have the right to
utilise such technologies and know-how other than in connection with
the Research.
3.2.2 The Research shall be implemented by the Research Committee, which shall
be comprised of an equal number of members, but not more than four, from
each party. The members of the Research Committee shall be nominated by
the Executive Committee. In the event of deadlock on any matter the
Research Committee shall refer such matter to the Executive Committee.
The Research Committee shall meet as often as may be required for the
purposes of the Research but in any event not less than four times per
year, again unless otherwise agreed by the parties. Reports on the
Research performed shall be exchanged by the parties well before the
Research Committee meetings. Written reports of such meetings and of the
status of the individual projects shall be submitted to the Executive
Committee. Unless otherwise agreed, meetings shall alternate between the
relevant sites of Cortex and Organon. Furthermore, the Research Committee
shall have at least monthly telephone conferences amongst other things to
decide upon the selection of Compounds. Decisions made during the
telephone conferences shall be confirmed in writing.
3.2.3 Organon shall pay Cortex's fully-burdened costs per year per FTE actively
engaged in the Research. The rate shall be [*] per FTE per year. This
payment also compensates Cortex for all ordinary travel expenses incurred
by such FTE's in attending meetings.
Unless otherwise agreed in writing, Cortex shall make available a maximum
of [*] effective FTE's per year the composition of which group of FTE's
shall be agreed upon by the parties. Such FTE's shall include a balanced
group of Ph.D. or equivalent and other scientists as described in the
Research Plan.
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The annual cost of such FTE's shall be due and payable in quarterly
instalments in advance, on the following schedule. The first such payment
shall be due and payable upon the Effective Date, and shall cover the
expected FTE's cost from such date through the end of the then current
quarterly period. Thereafter, for the remainder of the Research, payments
for the expected FTE's costs for each quarterly period shall be due and
payable on each January 15th, April 15th, July 15th and September 15th in
U.S. dollars by bank wire transfer. Cortex shall submit corresponding
invoices to Organon no later than forty five (45) days before the date
upon which payment is due. Such payments shall be subject to
reconciliation in accordance with Section 3.2.4 herein.
3.2.4 Cortex will keep records of the time spent by its FTEs on the Research.
Cortex will report the level of FTE effort to Organon on a quarterly
basis. Organon shall have the right to have these records audited, in the
same manner as is set forth in Section 8.4. During the course of the
Research, Cortex will notify Organon if it becomes apparent that the
level of effort at Cortex is expected to deviate from the level required
under Section 3.2.3.
At the end of each year of the Research Term the parties will restore any
imbalance between actual and funded FTE's either through appropriate
payments or refunds.
3.3 Compound Screening and Selection
--------------------------------
Cortex Compounds for Research
-----------------------------
At the commencement of the Research, Cortex will make all Cortex
Compounds available for screening pursuant to the Research Plan as
selected by the Research Committee, along with the structures and
properties (to the extent known) of such Cortex Compounds. Initially, all
such Cortex Compounds shall be Restricted Compounds. Within [*] of the
commencement of the Research, and provided that at the end of such [*]
period [*] FTE's are available at Cortex to perform the Research, the
Research Committee will release [*] Cortex Compounds to be Unrestricted
Compounds, and will release an additional [*] Cortex Compounds each [*]
days thereafter, until such time as not more than [*] Cortex Compounds,
which are under active consideration, remain Restricted Compounds.
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The Research Committee may decide to extend the [*] days and [*] days
periods respectively and reduce the number of Cortex Compounds to be
released in the 30 days periods. In the event less than [*] FTE's are
made available by Cortex at the end of the [*] days period the [*] days
period shall be extended until such [*] FTE's have been employed by
Cortex.
Collaboration and Organon Compounds for Research
------------------------------------------------
In addition, pursuant to the Research Plan, Cortex or Organon will
synthesize additional compounds which shall be Research Collaboration
Compounds. All such Research Collaboration Compounds initially shall be
Restricted Compounds. The Research Committee may also select for
screening appropriate Organon Compounds reasonably proposed for screening
by Organon.
Screening
---------
Cortex and Organon shall use reasonable efforts to conduct the screening
in the appropriate assays of all compounds selected for screening under
this Section 3.3, in accordance with the Research Plan.
Identification of Compounds for Continued Evaluation
----------------------------------------------------
Promptly after completing the screening of compounds in either
Pharmacological Phase A or Pharmacological Phase B under this Section
3.3, the parties will provide to the Research Committee the results of
such screening. The Research Committee will review such results during
monthly telephone conferences and quarterly meetings and will determine
which of the screened compounds meet the requirements established by the
Research Committee for continued evaluation. Such compounds which meet
the requirements shall remain Restricted Compounds and any screened
compounds which do not meet the requirements other than Organon
Compounds, shall become Unrestricted Compounds.
Research with Unrestricted Compounds
------------------------------------
The Research Committee may at any time during the Research select
Unrestricted Cortex Compounds and Unrestricted Research Collaboration
Compounds for research purposes only and not for further development but
with respect to the Cortex Compounds, only so long as
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Cortex is not under any contractual obligation to a third party
restricting access to such compounds.
Selection of Leads for (Pre)clinical Development
------------------------------------------------
Organon shall select Restricted Compounds that are most promising for the
Selection Phase and subsequently the ▇▇▇▇ Phase. Organon shall use
reasonable efforts to conduct, at its expense, all activities to be
performed under the Selection Phase and the ▇▇▇▇ Phase to select
Restricted Compounds as Development Candidates.
End of Research Term
--------------------
At the conclusion of the Research Term, all Cortex Compounds which are
not being evaluated as potential Development Candidates in the ▇▇▇▇ Phase
shall become Unrestricted Compounds. [*] months after the conclusion of
the Research Term, all Research Collaboration Compounds which have not
entered the ▇▇▇▇ Phase shall become Unrestricted Compounds unless such
Collaboration Compounds are by definition to be considered Restricted
Compounds. Organon shall own exclusively the Restricted Compounds other
than Cortex Compounds.
Disclosure of Information Regarding Unrestricted Compounds
----------------------------------------------------------
Organon agrees that Cortex shall be free to disclose Unrestricted
Information to third parties who are potential or actual corporate
partners or licensees of Cortex.
4. Licenses
--------
Rights granted
--------------
4.1.1 Cortex grants Organon the exclusive worldwide right, license and
sublicense under the University of California Agreements with the right
to sub(sub)license, to develop, have developed, use, have used,
manufacture, have manufactured, sell and have sold AMPAkines in the
Schizophrenia Field under the Cortex Technology and the Patents, as well
as any future Patents Cortex may own or have access to required for the
development, use, manufacture and sale of such Products.
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4.1.2 Cortex grants Organon an exclusive option to obtain the exclusive
worldwide right, license and sublicense under the University of
California Agreements, with the right to sub(sub)license, to develop,
have developed, use, have used, manufacture, have manufactured, sell and
have sold AMPAkines in the Depression Field under the Cortex Technology
and the Patents, as well as any future Patents Cortex may own or have
access to required for the development, use, manufacture and sale of
such Products. The option is granted by Cortex to Organon for a period
of [*] from the Effective Date. Latest [*] Organon shall inform Cortex
by written notice whether it wishes to exercise its option. In the event
Organon decides to exercise its option Organon shall spend at least [*]
per year during [*] on research and development using AMPAkines in the
Depression Field. Organon shall keep records of its expenses and Cortex
shall have the right to have these records audited in the same manner as
set forth in Section 8.4.
4.1.3 Cortex shall be permitted to grant third parties access or rights to, or
provide third parties with all Unrestricted Compounds (subject to the
limitations set forth in this Agreement). Cortex shall be permitted to
provide to third parties information with respect to Cortex Restricted
Compounds, provided such information was not developed as part of the
Research. To the extent Cortex has provided access to Cortex Compounds
to third parties before the date of this Agreement, such third parties
may continue their evaluations. However, in no event shall Cortex grant
rights to such compounds in conflict with this Agreement.
4.1.4.1 Organon grants Cortex the exclusive right and license, with the right to
sub-license to develop, have developed, use, have used, manufacture,
have manufactured, sell and have sold AMPAkines outside the
Schizophrenia Field and the Depression Field (with respect to the
Depression Field, provided Organon exercises its option under 4.1.2)
under Organon Patents covering the Unrestricted Research Collaboration
Compounds. Organon retains the right, however, to use such Unrestricted
Research Collaboration Compounds in its internal research.
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4.1.4.2 In the event Unrestricted Research Collaboration Compounds after first
commercialization by Cortex and/or its sublicenses show a [*], Organon
shall grant Cortex the right and license, with the right to sublicense
to develop, have developed, use, have used, manufacture, have
manufactured, sell and have sold such Research Collaboration Compounds
for such use provided such use does not compete with Organon's core
business at the time Cortex or its sublicensee commences development
for such [*].
4.1.4.3 In the event Unrestricted Research Collaboration Compounds during
screening by Cortex and/or its sublicensees show a [*] Organon shall
consider in good faith to grant Cortex the right and license, with the
right to sublicense to develop, have developed, use, have used,
manufacture, have manufactured, sell and have sold such Research
Collaboration Compounds for such use. In the event Organon is willing
to grant such right and license the terms and conditions for such use
shall be agreed upon by and between Organon and Cortex at such time.
4.2 Organon Milestone Payments.
---------------------------
4.2.1 In consideration of the rights granted to Organon under Section 4.1.1
Organon shall pay Cortex [*] within 14 days after execution of this
Agreement.
Furthermore, the following milestone payments shall be made by Organon
to Cortex with respect to the Schizophrenia Field:
(i) [*] upon identification and selection of the first Development
Candidate; and
(ii) [*] for the first Development Candidate that enters into Phase II
Studies; and
(iii)[*] for the first Development Candidate to enter into Phase III
Studies: and
(iv) [*] upon successful registration of the first Product in either;
any country of the European Union, United States or Japan.
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For clarity of understanding the payments referred to in this Section
4.2.1 shall each be payable only once; such that the maximum aggregate
payment will be [*] irrespective of the number of Development Candidates
selected, taken into development or Products registered and
commercialised in the Schizophrenia Field.
4.2.2 In the event Organon exercises its option under Section 4.1.2 Organon
shall pay Cortex.
The following milestone payments with respect to the Depression Field:
(i) [*] upon the earlier of [*] or the decision of Organon's R&D
Management for the first Development Candidate to enter into Phase
II Studies; and
(ii) [*] for the first Development Candidate to enter into Phase III
Studies; and
(iii) [*] upon successful registration of the first Product in either
any country of the European Union, United States or Japan.
For clarity of understanding the payments referred to in this Section
4.2.2 shall each be payable only once; such that the maximum aggregate
payment will be [*] irrespective of the number of Development Candidates
selected, taken into development or Products registered and
commercialised in the Depression Field.
4.3 Royalties
---------
4.3.1 As a further compensation for granting such rights to Organon, Organon
shall pay the following royalties to Cortex.
Organon shall pay to Cortex royalties on Net Sales of Products at the
rate of [*] of Net Sales generated in the United States and [*] of Net
Sales generated in the rest of the world from which royalties the Cost of
Goods of such Products will be deducted. Organon will however pay a
minimum of [*] of Net Sales.
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In the event Products are not covered by University of California
Patents, but by Patents other than University of California Patents only,
all royalties due by Organon will be reduced by [*] and the minimum
royalty referred to above will be reduced to [*].
4.3.2 In consideration of the rights granted to Cortex under Sections 4.1.4.1
and 4.1.4.2, Cortex shall pay Organon [*] royalties on the Net Sales of
products (incorporating Collaboration Compounds) sold by Cortex or Cortex
(sub)licensees respectively [*] in the event such products are sold in
the Depression Field (provided that Organon has decided not to exercise
its right under Section 4.1.2).
4.3.3 Royalties shall be paid until the expiration of the Patents by which
Products are covered.
4.4 Cost of Goods
-------------
Organon shall use commercially reasonable diligence to minimise the Cost
of Goods by having the Products manufactured, pharmaceutically formulated
and packed at a competitive price. In the event Cortex considers the Cost
of Goods to be too high, Cortex may obtain quotations from competitors of
equal reputation as Organon and Organon's supplier(s) that are able to
manufacture in FDA approved facilities the required quantities at the
same or better quality as Organon and Organon's supplier(s). In the event
the quotations from such third parties are lower than the cost incurred
by Organon and those offered by Organon's suppliers, Organon has the
right to adjust the Cost of Goods for the calculation of the royalties or
have the Products manufactured by such third parties. In the event it is
decided to have Products manufactured by third parties, Organon will be
allowed a reasonable period for the transfer of the manufacture so as not
to jeopardize continuity in the supply of Products.
4.5 Development and Commercialization
---------------------------------
Organon agrees to use commercially reasonable diligence to develop and
commercialise the Products. Organon will keep Cortex informed of the
progress of its development of Products.
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5. Maintenance of Patents, Title to new inventions and patent rights
------------------------------------------------------------------
5.1 The Patents listed in Exhibit II shall be filed, prosecuted and
maintained by the University of California. In the event the University
of California does no longer want to apply for, prosecute and/or maintain
any of such Patents Cortex shall do so, whereby Cortex shall do its best
efforts to have the Patents assigned to Cortex. In the event Cortex no
longer wishes to do so or does not wish to file patents in certain
countries, it shall inform Organon of such fact and grant Organon the
right to do so whereby ownership of such Patents shall be assigned to
Organon provided such ownership has been assigned by the University of
California to Cortex.
5.2 Except for what has been agreed upon under Section 5.3, inventions and
discoveries made by inventors employed by Cortex shall be owned by
Cortex. Inventions and discoveries made by inventors employed by Organon
shall be owned by Organon. Inventions and discoveries made by both
inventors employed by Cortex and inventors employed by Organon shall be
jointly owned.
Each party shall provide the other party with any and all available
information and documentation needed to prepare, file, prosecute, re-
examine patent applications. Both parties shall refrain from any action
that might endanger possible patent rights arising from the Research.
5.3 Parties agree to decide upon ownership of patents on compounds and/or use
of compounds resulting from the Research in accordance with the
following:
Inventions and discoveries with respect to Cortex Compounds shall be
owned by Cortex.
Inventions and discoveries with respect to Organon Compounds shall be
owned by Organon.
Inventions and discoveries with respect to Research Collaboration
Compounds shall be owned by Organon.
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5.4 Patent Committee.
----------------
The parties shall form a joint Patent Committee to review the preparation
and prosecution of the patents arising from the Research. The Patent
Committee shall also be informed by Cortex on the status of the
preparation and prosecution of the Patents. Cortex shall request the
University of California to use all reasonable efforts to amend any
Patent to include reasonable claims reasonably requested by Organon to
protect the products to be developed under this Agreement. The Patent
Committee shall include a patent attorney designated by each party and
one research manager designated by each party. Each party shall bear the
costs of its designated members participating in the Patent Committee.
All patent applications arising from the Research shall be evaluated in
accordance with the following process:
(a) The designated patent attorneys from each party shall advise the
Executive Committee on inventorship issues related to patents arising
from the Research.
(b) Unless otherwise agreed, patents and patent applications owned by one
party shall be drafted, filed, prosecuted and maintained by the party
that owns the patent rights, as provided in Sections 5.1 and 5.3 at
that party's expense. The Patent Committee shall decide which party
will draft and prosecute joint patents in consultation with the other
party. The expenses for the drafting and prosecution of such patent
shall be shared equally between the parties. In all cases, each party
shall keep the other party informed as to the status and progress of
all relevant patents and patent applications; and shall draft, file,
prosecute and maintain joint patents and patent applications in
consolation with the other party. In the event either party does not
want to apply for, prosecute and/or maintain patents it shall inform
the other party of such fact and the other party shall have the right
to do so whereby the ownership of such patents or patent applications
shall be assigned to such party.
(c) If there is a dispute between Cortex and Organon related to patents
arising from the Research,
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including, without limitation, issues regarding patent claims, the
scope of patent claims and inventorship, the parties shall refer the
matter to an independent patent attorney acceptable to both parties
for resolution. The decision of such independent patent attorney
shall be binding.
6. Patent Enforcement
------------------
6.1 Infringement Action by a Third Party
------------------------------------
6.1.1 Notice.
------
Each party shall promptly notify the other party if any legal proceedings
are commenced against any party or any purchaser of a Product, on the
ground that the manufacture, use or sale of such Product is an
infringement of a third party's patent or other intellectual property
rights.
6.1.2 Defense of Claims Involving Products.
------------------------------------
Organon shall have the right, and to the extent required by Section 7.1,
the obligation, to assume and solely manage the defense of any such
action or claim relating to the Organon Products, in its own name or in
the name of Cortex, if necessary. In such event
(i) Cortex shall take all appropriate or necessary actions to assist in
the defense of such action or claim
(ii) Organon shall bear all costs and expenses associated with such
action or claim (including, without limitation, legal fees and
expenses). [*] of the cost incurred by Organon in such defence of
any such action or claim shall be credited against Organon's royalty
obligations with respect to sales of Organon Products, provided that
such credit shall not exceed [*] of the royalty otherwise payable by
Organon. Any monetary recovery in connection with any such action or
claim shall first be applied to reimburse Organon for all costs and
expenses incurred by Organon, both internal and external, including
attorneys' fees and expenses. The remainder of any recovery received
by Organon shall first be remitted to Cortex to the extent necessary
to reimburse Cortex for the sums
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withheld by Organon by virtue of the royalty offset referred to
above. Any remainder shall be retained by Organon.
6.2 Infringement Action Against a Third Party
-----------------------------------------
6.2.1 Notice.
------
Each party shall promptly notify the other party if it becomes aware of
any infringement of any Patents or Organon Patents by any third party.
6.2.2 Maintenance of Lawsuits Involving Cortex Patents.
------------------------------------------------
Cortex shall have the right (but not the obligation) to file and maintain
lawsuits for infringement of any Patents by any third party, in its own
name or in the name of Organon, if necessary at its own cost and expense.
Organon shall give Cortex all reasonable assistance and cooperate in any
such proceedings filed by Cortex, including the entry into additional
agreements necessary to perfect Cortex's right to bring or maintain such
lawsuits. If Cortex does not exercise its right to enforce a patent
covering a Product, Cortex shall inform Organon within 14 days after such
notice of its decision not to exercise such right. In such event Organon
shall have the right to file and maintain such infringement action at its
own cost and expense, provided that the third party product which is the
subject of such infringement action is a competing product with respect
to the Product. [*] of the costs incurred by Organon in maintaining such
infringement action shall be credited against Organon's royalty
obligation with respect to sales of Organon Product in such country
pending such infringement action, provided that such credit shall not
exceed [*] of the royalty otherwise payable by Organon (the "Royalty
Offset"). Any monetary recovery in connection with any such infringement
action shall first be applied to reimburse the party bringing such suit
for all costs and expenses incurred by such party, both internal and
external, including attorneys' fees and expenses and then to reimburse
the other party's costs and expenses. Any remainder shall be equally
shared between the parties in the event Cortex brings suit. In the event
that Cortex declines to file and maintain a
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION
19
lawsuit for infringement of Patents and Organon assumes the maintenance
of such claim at its own cost and expense the remainder of any recovery
received by Organon shall first be remitted to Cortex to the extent
necessary to reimburse Cortex for the sums withheld by Organon by virtue
of the Royalty Offset as well as royalties on lost sales as awarded to
Organon. Any remainder shall be retained by Organon.
7. Indemnity; no warranties
------------------------
7.1 Each party agrees to indemnify, defend and hold harmless the other party,
and its respective officers, directors, shareholders, and employees, from
and against all claims, losses, costs, damages and liability of any kind,
including without limitation attorneys fees, (collectively "Liabilities")
arising in connection with its development, manufacture, use or sale of
products, except for Liabilities arising as a result of breach by the
other party of its obligations under this Agreement. Neither party shall
make any admission of liability nor take any other action which could
prejudice the defence of such claim or lawsuit by the indemnifying party.
7.2 Each party shall promptly notify the other of receipt of any claim or
lawsuit subject to Section 7.1 and shall cooperate with the other in
connection with the investigation and defense of such claim or lawsuit.
The party that manufactures, uses or sells its products shall have the
right to control the defense, with counsel of its choice, provided that
the indemnified party shall have the right to be represented by advisory
counsel at its own expense.
7.3 EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY
WARRANTY, AND EACH PARTY EXPRESSLY DISCLAIMS ALL DISCLAIMS, ALL IMPLIED
WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO ANY COMPOUNDS OR OTHER BIOLOGICAL OR
CHEMICAL MATERIALS OR INFORMATION PROVIDED TO THE OTHER PARTY PURSUANT TO
THIS AGREEMENT.
8. Payments and accounting
-----------------------
8.1 All payments hereunder shall be made in U.S. Dollars.
20
8.2 Organon shall keep true and correct accounts of sales of all products in
respect of which royalties are payable pursuant to this Agreement, and
the calculation of Net Sales and royalties with respect thereto, and
shall deliver to Cortex written statements thereof in such form as both
shall agree upon within sixty (60) days following the end of each
calendar quarter and at the same time shall pay to Cortex the amount of
such royalties shown to be due.
8.3 All royalties shall be earned in the local currency of the country where
the applicable Net Sales are made, but shall be converted for payment
into U.S. Dollars, in accordance with the standard procedures used by
Organon in converting currencies of world-wide product sales for its
products generally.
If royalties cannot be remitted from a country, the parties will work
together to arrive at an equitable solution for paying such royalties to
Cortex. Unless the parties mutually agree to the contrary, such
obligation shall be satisfied if royalty payments are paid to an account
of the party in the country in question.
Any withholding or other tax that Organon is required by law to withhold
and pay on behalf of Cortex with respect to the royalties payable to such
other party under this Agreement shall be deducted from said royalties
and paid contemporaneously with the remittance to Cortex; provided,
however, that in regard to any tax so deducted, Organon shall furnish
Cortex with proper evidence of the taxes paid on its behalf.
8.4 Cortex shall have the right to have an independent certified public
accountant of its own selection and at its own expense, except one to
whom Organon may have reasonable objection, examine the relevant books
and records of account of Organon during reasonable business hours, to
determine whether appropriate accounting and payment have been made
hereunder. Said independent certified public accountant shall treat as
confidential, and shall not disclose to party requesting the audit, any
other information not pertaining to the royalty amounts payable under
this Agreement. Such examination can be
21
undertaken at any time within two years after the date on which such
royalty amounts were due and payable. In the event royalties are
underpaid by more than 5% (five percent) the examined party shall by pay
costs of such examination.
8.5 In the event royalties due by Cortex under Section 4.3.2 the above terms
and conditions for payment and accounting shall similarly apply.
9. Warranties
----------
9.1 Cortex warrants that:
a) Cortex is a corporation duly organized under the laws of the State of
Delaware and is duly existing and in good standing under the laws of
the States of Delaware and California in the United States of
America, with full right, power and authority to enter into and
perform this Agreement and to grant all of the rights, powers and
authorities herein granted;
b) The execution, delivery and performance of this Agreement do not
conflict with, violate or breach any agreement to which Cortex is a
party, or Cortex' articles of incorporation or bylaws;
c) The University of California granted to Cortex in the University of
California Agreements exclusive, worldwide licenses with the right to
grant sub-licenses, under the University of California Patents to
make, have made, use, and sell the Products.
d) Cortex is authorized under the University of California Agreements to
enter into this Agreement with Organon;
e) The University of California has the responsibility and obligation
under the University of California Agreements to maintain the
University of California Patents and to the best knowledge and belief
of Cortex, the University of California Patents have been maintained
properly up to the date of this Agreement;
22
f) Cortex warrants that the University of California Agreements provide
that in the event the University of California Agreements are
terminated the University of California shall grant Organon a license
under terms and conditions similar to this Agreement.
9.2 Organon warrants that:
a) Organon is a corporation duly organized, existing and in good
standing under the laws of The Netherlands, with full right, power
and authority to enter into and perform this Agreement and to grant
all of the rights, powers and authorities herein granted;
b) The execution, delivery and performance of this Agreement do not
conflict with, violate or breach any agreement to which Organon is a
party, or Organon's articles of incorporation or by laws;
c) This Agreement has been duly executed and delivered by Organon and is
a legal, valid and binding obligation enforceable against Organon in
accordance with its terms.
10. Publicity and Publication
-------------------------
10.1 Publicity
---------
The parties will mutually agree on a press release to be issued upon
execution of this Agreement. Neither party shall make any subsequent
public announcement concerning the terms of this Agreement not previously
made public without the prior written approval of the other party with
regard to the form, content and precise timing of such announcement,
except (but with prior written notification to the other party) such as
may be required to be made by either party in order to comply with
applicable law, regulations or court orders. Such consent shall not be
unreasonably withheld or delayed by the other party. Prior to any such
public announcement, the party wishing to make the announcement will
submit a draft of the proposed announcement to the other party in
sufficient time to enable the other party to consider and
23
comment thereon. Nothing in this section shall preclude disclosures by
either party to third parties under confidentiality restrictions in order
to carry out the purposes of this Agreement or to define the scope of
rights which may be granted to a third party without violating this
Agreement.
10.2 Publications
------------
Neither party will publish or publicly disclose results arising from the
Research without the prior consent of the other party, which consent
shall not be unreasonably withheld. Parties, however, agree not to
publish details with respect to Development Candidates until such
Development Candidates have proven to be successful in Phase II Studies.
With respect to any proposed publication or public disclosure of results,
the following shall apply:
10.2.1 The Research Committee, and after the Research Term the Vice Presidents
Research of the respective parties, shall review any proposed publication
with respect to the content, authorship, acknowledgement, and shall
either approve release of the publication, or propose revisions to the
publication. Any disputes relating to the contents or authorship of any
publication(s) prepared by Cortex and Organon scientists participating in
the Research shall be referred to the Executive Committee for resolution.
10.2.2 The proposed publication shall be reviewed by the patent departments and
any other departments of Organon and Cortex in accordance with their
customary procedures.
10.2.3 At such time as the proposed publication has been reviewed and approved
by the Research Committee and the patent and/or other departments of
Organon and Cortex, the publication may be submitted for publishing.
11. Confidentiality
---------------
Except as specifically authorised under the terms of this Agreement each
party shall, for the term of this Agreement and for ten (10) years after
its termination for any reason whatsoever, treat any proprietary
24
information disclosed to it by the other party as strictly confidential,
and shall not disclose such proprietary information to third parties or
use it for purposes other than those authorised herein.
Except as set forth in the exceptions hereinafter any information, data
or material, including without limitation, software, technology, business
plans or information, communicated to the other which is identified as
confidential, or which the other party has reason to believe is
confidential, will be deemed and treated as proprietary information.
Proprietary information also includes proprietary chemical, physical or
biological materials, identified as confidential, exchanged pursuant to
this Agreement. Access to such proprietary information will be limited to
those employees or consultants of the party receiving such information or
of such party's Affiliates or sublicensees, who reasonably require such
information in order to carry out activities authorised pursuant to this
Agreement. Such employees or consultants will be advised of the
confidential nature of the Proprietary Information and the related
confidentiality undertaking.
Proprietary information shall not include, and the above confidentiality
undertaking shall in no event restrict or impair each party's right to
use or disclose any information which:
(a) at the time of disclosure is in the public domain or thereafter
becomes part of the public through no fault of the party receiving
such information;
(b) the party receiving such information can conclusively establish that
it was in its possession prior to the time of disclosure;
(c) is independently made available to the party receiving such
information by a third party who is not thereby in violation of a
confidential relationship with the other party, or
(d) the receiving party can establish was independently developed without
use of the Proprietary Information of the other party.
25
The receiving party shall not be restricted from disclosing such
information as is required to be disclosed by law, regulation, or court
or governmental order, provided that the receiving party reasonably
notifies the disclosing party prior to such disclosure of such
requirement.
Upon termination of this Agreement, and provided the Proprietary
Information is still of a confidential nature, the party recipient of the
Proprietary Information will upon request from the disclosing party
either return any such information or destroy the same.
12. Term and Termination
--------------------
12.1 The Research Term shall be as set forth in Article 3.
12.2 Unless terminated earlier under Section 12.3, this Agreement shall
continue in full force and effect until the expiration of all milestone
and royalty obligations of Organon under Article 4. Upon expiration of
this Agreement under this Section 12.2, Organon and Cortex shall have
fully paid-up licenses; and the provisions identified in Section 12.4
shall survive expiration hereof.
12.3 Early Termination
-----------------
(a) Organon shall have the right to terminate, upon four months prior
written notice, this Agreement as well as its rights and licenses
under this Agreement with respect to the Schizophrenia Field or the
Depression Field only; and
(b) In the event of material breach of this Agreement by either party,
which is not cured within sixty (60) days following receipt of
written notice of the alleged default from the non defaulting party,
the non defaulting party may terminate this Agreement upon 30
(thirty) days prior written notice.
12.4 Survival
--------
In all cases of early termination or expiration of this Agreement, the
following provisions shall survive,
26
together with any other obligations of either party which have accrued as
of the effective date of termination or expiration: Section 4.1.4,
Articles 5, 7, 9, 10, 11, 12 and 13.
12.5 All licenses granted under this Agreement are deemed to be, for purposes
of Section 365(n) of the U.S. Bankruptcy Code, licenses of right to
"intellectual property" as defined in Section 101 of such Code. The
parties agree that Organon may fully exercise all of its rights and
elections under the Bankruptcy code. The parties further agree that, in
the event Organon elects to retain its rights as a licensee under such
Code, Organon shall be entitled to complete access to the Cortex
Technology and Patents licensed to it hereunder and all embodiments of
such Cortex Technology and Patents, for the purposes of exploitation of
the licenses granted under this Agreement. Such embodiments of the Cortex
Technology and Patents shall be delivered to Organon not later than:
(a) the commencement of bankruptcy proceedings against Cortex, upon
written request, unless Cortex elects to perform its obligations
under the Agreement, or
(b) if not delivered under (a) above, upon the rejection of this
Agreement by or on behalf of the Cortex, upon written request.
12.6 IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER FOR LOST PROFITS OR
ANY CONSEQUENTIAL, INCIDENTAL OR INDIRECT DAMAGES TO THE OTHER PARTY,
HOWEVER CAUSED, IN CONNECTION WITH THIS AGREEMENT; PROVIDED THAT NOTHING
IN THIS SECTION 12.6 SHALL LIMIT THE INDEMNIFICATION OBLIGATIONS OF
EITHER PARTY PURSUANT TO ARTICLES 5 AS TO CONSEQUENTIAL, INCIDENTAL OR
INDIRECT DAMAGES TO THIRD PARTIES FOR WHICH THE INDEMNITEE MAY BE LIABLE.
13. Miscellaneous
-------------
13.1 Neither party shall have the right to assign its rights or obligations
under this Agreement to any third party other than an Affiliate of such
party without the prior written consent of the other party, which consent
shall not be unreasonably withheld, provided however, that either party
may, without such consent, assign this
27
Agreement and its rights and obligations hereunder in connection with the
transfer or sale of all or substantially all of its business to which
this Agreement relates, or in the event of a merger or consolidation.
This Agreement shall be binding on, and inure to the benefit of, the
permitted successors and assigns of the parties. All permitted
sublicenses and/or assignments by either party of any of its rights under
this Agreement shall be subject to all of the terms and conditions of
this Agreement, which shall be binding on the sublicensees and/or
assignees.
13.2 The parties hereto are independent contractors. Nothing contained herein
shall constitute either party the agent of the other party for any
purpose whatsoever, or constitute the parties as partners or joint
ventures. Employees of each party remain employees of said party and
shall be considered at no time agents of or render a fiduciary duty to
the other party. Neither party hereto shall have any implied right or
authority to assume or create any obligations on behalf of or in the name
of the other party or to bind the other party to any other contract,
agreement or undertaking with any third party.
13.3 No amendment, waiver of modification of this Agreement shall be valid or
binding on either party unless made in writing signed by both parties.
The failure of either party to enforce any provision of this Agreement at
any time shall not be construed as a present or future waiver of such or
any other provision of this Agreement. The express waiver by either party
of any provision or requirement hereunder shall not operate as a future
waiver of such or any other provision or requirement.
13.4 In the event that any provision in this Agreement shall be held to be
unlawful or invalid in any jurisdiction, the meaning of such provision
shall be construed to the greatest extent possible so as to render it
enforceable. If no such construction can render such provision
enforceable, it shall be severed, and the remainder of the Agreement
shall remain in full force and effect, only to the extent that such
remainder is consistent with the intentions of the parties as evidenced
by this Agreement as a whole. The parties shall use best efforts to
28
negotiate in good faith a reasonable substitute, valid and enforceable
provision effective in such jurisdiction.
13.5 Any notice required or permitted to be given by either party under this
Agreement shall be in writing, addressed, in the case of Cortex, to its
Chief Executive Officer, with copy to its General Counsel, and in the
case of Organon, to its President with copy to its General Counsel, at
the respective addresses of the parties shown in the first paragraph of
this Agreement, or such other address as may from time to time be
indicated in a notice given under this Section 13.5. All notices shall be
sent by certified or registered first class mail, telefax confirmed by
certified or registered first class mail, or personal delivery, and shall
be effective on receipt at the address referenced above.
13.6 Neither party will be deemed in breach of this Agreement as a result of
default, delay or failure to perform by such party which is due to causes
beyond the reasonable control of such party, including without
limitation, fire, earthquake, act of God, severe weather, act of war,
strikes, lockouts or other labour disputes, riots, civil disturbances,
actions or in actions of governmental authorities (except in response to
a breach by such party), or epidemics. In the event of any such force
majeure, the party affected shall promptly notify the other party, shall
use all reasonable efforts to overcome such force majeure, and shall keep
the other party informed with respect thereto.
13.7 All headings and captions used in this Agreement are for convenience
only, and are not intended to have substantive effect.
13.8 This Agreement may be executed by the parties in one or more identical
counterparts, all of which together shall constitute this Agreement.
13.9 This Agreement shall be governed by and construed in accordance with the
laws of the State of California.
29
13.10 Dispute Resolution
------------------
13.10.1 All disputes of all types under this Agreement shall be referred to the
Executive Committee for resolution. The Executive Committee shall use
all reasonable efforts to resolve such matters within thirty (30) days
after such referral, including referral of questions to outside
independent experts where the Executive Committee deems appropriate.
13.10.2 If the Executive Committee is unable to resolve such dispute the
dispute shall be referred to the Chief Executive Officers ("CEOs") of
the parties for resolution.
13.10.3 In the event the CEOs are not able to resolve such dispute within
thirty (30) days after the matter is referred to them, the following
shall apply:
(a) Prior to entering into binding arbitration in accordance with the
provisions of Section 13.10.3(b) below, the parties shall enter
into non-binding mediation. The mediation shall be conducted by an
independent mediator acceptable to both parties. Either party may
serve upon the other party a written demand for mediation. Such
mediation shall commence within thirty (30) days of the other
party's receipt of such demand, unless otherwise agreed in writing
by the parties. Each party shall make available to the mediation an
authorised representative with the capacity to bind such party, and
the mediation shall be conducted as deemed appropriate by the
mediator.
(b) In the event that the dispute cannot be resolved by the mediation
mechanism referenced in Section 13.10.3(a) the dispute shall be
referred to arbitration in accordance with the rules then
prevailing of the Center for Public Resources ("CPR") ▇▇▇ ▇▇▇▇▇
▇▇▇. ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ unless otherwise mutually agreed. The
arbitration shall be conducted in New York City, New York. Unless
otherwise agreed by the parties the arbitration panel shall consist
of arbitrators selected in accordance with the CPR rules.
30
This section 13.10.3 shall not limit the rights of any party to seek in
court of competent jurisdiction interim relief and only such interim
relief, as may be needed to maintain the status quo or otherwise protect
the subject matter of the dispute until the arbitrators have been
appointed and shall have had an opportunity to act.
13.11 This Agreement constitutes the entire agreement of the parties with
respect to the subject matter hereof and supersedes all previous
agreement, understandings and negotiations, whether oral or written, with
respect to such subject matter.
31
Executed and effective as of the date first set forth above.
N.V. ORGANON CORTEX PHARMACEUTICALS, INC.
By: ________________ By: _________________
Title: _____________ Title: ______________
By: ________________
Title: _____________
26
EXHIBIT I
Cortex Compounds
[* PAGES 1-23 OMITTED AND FILED SEPARATELY WITH COMMISSION]
12
4.1.4.2 In the event Unrestricted Research Collaboration Compounds after first
commercialization by Cortex and/or its sublicenses show a [*], Organon
shall grant Cortex the right and license, with the right to sublicense
to develop, have developed, use, have used, manufacture, have
manufactured, sell and have sold such Research Collaboration Compounds
for such use provided such use does not compete with Organon's core
business at the time Cortex or its sublicensee commences development
for such [*].
4.1.4.3 In the event Unrestricted Research Collaboration Compounds during
screening by Cortex and/or its sublicensees show a [*] Organon shall
consider in good faith to grant Cortex the right and license, with the
right to sublicense to develop, have developed, use, have used,
manufacture, have manufactured, sell and have sold such Research
Collaboration Compounds for such use. In the event Organon is willing
to grant such right and license the terms and conditions for such use
shall be agreed upon by and between Organon and Cortex at such time.
4.2 Organon Milestone Payments.
---------------------------
4.2.1 In consideration of the rights granted to Organon under Section 4.1.1
Organon shall pay Cortex [*] within 14 days after execution of this
Agreement.
Furthermore, the following milestone payments shall be made by Organon
to Cortex with respect to the Schizophrenia Field:
(i) [*] upon identification and selection of the first Development
Candidate; and
(ii) [*] for the first Development Candidate that enters into Phase II
Studies; and
(iii)[*] for the first Development Candidate to enter into Phase III
Studies: and
(iv) [*] upon successful registration of the first Product in either;
any country of the European Union, United States or Japan.
* CONFIDENTIAL PORTIONS OMITTED AND FILED SEPARATELY WITH COMMISSION
15
5. Maintenance of Patents, Title to new inventions and patent rights
------------------------------------------------------------------
5.1 The Patents listed in Exhibit II shall be filed, prosecuted and
maintained by the University of California. In the event the University
of California does no longer want to apply for, prosecute and/or maintain
any of such Patents Cortex shall do so, whereby Cortex shall do its best
efforts to have the Patents assigned to Cortex. In the event Cortex no
longer wishes to do so or does not wish to file patents in certain
countries, it shall inform Organon of such fact and grant Organon the
right to do so whereby ownership of such Patents shall be assigned to
Organon provided such ownership has been assigned by the University of
California to Cortex.
5.2 Except for what has been agreed upon under Section 5.3, inventions and
discoveries made by inventors employed by Cortex shall be owned by
Cortex. Inventions and discoveries made by inventors employed by Organon
shall be owned by Organon. Inventions and discoveries made by both
inventors employed by Cortex and inventors employed by Organon shall be
jointly owned.
Each party shall provide the other party with any and all available
information and documentation needed to prepare, file, prosecute, re-
examine patent applications. Both parties shall refrain from any action
that might endanger possible patent rights arising from the Research.
5.3 Parties agree to decide upon ownership of patents on compounds and/or use
of compounds resulting from the Research in accordance with the
following:
Inventions and discoveries with respect to Cortex Compounds shall be
owned by Cortex.
Inventions and discoveries with respect to Organon Compounds shall be
owned by Organon.
Inventions and discoveries with respect to Research Collaboration
Compounds shall be owned by Organon.
EXHIBIT II
▇▇▇▇▇▇ Patents
University of California Patents
[*PAGES 1-2 OMITTED AND FILED SEPARATELY WITH COMMISSION]
EXHIBIT III
Research Plan
[* PAGES 1-17 OMITTED AND FILED SEPARATELY WITH COMMISSION]
