1
Exhibit 10.14
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RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT
between
ARQULE, INC.
and
SOLVAY DUPHAR B.V.
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TABLE OF CONTENTS
Page
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1. Definitions................................................- 1 -
1.1. "Active ArQule Compounds".........................- 1 -
1.2. "Affiliate".......................................- 1 -
1.3. "Agreement".......................................- 2 -
1.4. "AMAP"............................................- 2 -
1.5. "AMAP Chemistry"..................................- 2 -
1.6. "AMAP Technology".................................- 2 -
1.7. "AMAP Improvement"................................- 2 -
1.8. "AMAP Installation Date"..........................- 2 -
1.9. "ArQule Compounds"................................- 2 -
1.10. "ArQule Patent Rights"............................- 2 -
1.11. "ArQule Technology"...............................- 2 -
1.12. "Array"...........................................- 2 -
1.13. "Base Rate of Interest"...........................- 2 -
1.14. "Chemical Theme"..................................- 3 -
1.15. "Confidential Information"........................- 3 -
1.16. "Contract Year"...................................- 3 -
1.17. "Derivative"......................................- 3 -
1.18. "Directed Array"..................................- 3 -
1.19. "Directed Array Program" or "DA Program"..........- 3 -
1.20. "Disclosing Party"................................- 3 -
1.21. "Field"...........................................- 3 -
1.22. "Full-Time Equivalent" or "FTE"...................- 3 -
1.23. "Joint Patent Rights".............................- 3 -
1.24. "Lead Compound"...................................- 3 -
1.25. "Net Sales".......................................- 3 -
1.26. "Net Sales Price".................................- 3 -
1.27. "Patent Rights"...................................- 4 -
1.28. "Phase II Clinical Trials"........................- 4 -
1.29. "Phase III Clinical Trials".......................- 4 -
1.30. "Priority Substance"..............................- 4 -
1.31. "Project Declaration".............................- 4 -
1.32. "Proprietary Materials"...........................- 4 -
1.33. "Receiving Party".................................- 4 -
1.34. "Research Committee"..............................- 4 -
1.35. "Research Period".................................- 4 -
1.36. "Research Plan"...................................- 5 -
1.37. "Research Programs"...............................- 5 -
1.38. "Royalty-Bearing Product".........................- 5 -
1.39. "Royalty Period"..................................- 5 -
1.40. "Screening Array".................................- 5 -
1.41. "Screening Array Program" or "SA Program".........- 5 -
(i)
3
1.42. "Solvay Duphar Compounds"................................- 5 -
1.43. "Solvay Duphar Patent Rights"............................- 5 -
1.44. "Target".................................................- 5 -
1.45. "Third Party Screening Array Partner.....................- 5 -
1.46. "Transferring Party".....................................- 6 -
2. Management of Research Programs...................................- 6 -
2.1. Composition of Research Committee........................- 6 -
2.2. Duties of the Research Committee.........................- 6 -
2.3. Compounds Excluded from the DA Program...................- 7 -
2.4. Meetings of the Research Committee.......................- 7 -
2.5. Cooperation..............................................- 7 -
2.6. Visits to Facilities.....................................- 7 -
3. Screening Array Program...........................................- 8 -
3.1. Description of Program...................................- 8 -
3.1.1. Supply of Screening Arrays......................- 8 -
3.1.2. Identification of Active ArQule Compounds.......- 8 -
3.2. Payment..................................................- 8 -
3.3. Termination of SA Program................................- 9 -
4. Directed Array Program............................................- 9 -
4.1. Description of Program...................................- 9 -
4.2. Conduct of Program......................................- 10 -
4.3. Payments................................................- 10 -
4.4. Termination of DA Program...............................- 11 -
5. Ownership of Compounds...........................................- 11 -
5.1. Solvay Duphar Compounds.................................- 11 -
5.2. ArQule Compounds........................................- 11 -
6. Intellectual Property Rights.....................................- 11 -
6.1. Ownership of Patent Rights..............................- 11 -
6.2. Prosecution of Patent Rights on Active ArQule
Compounds...............................................- 12 -
6.3. Management of Joint Patent Rights.......................- 12 -
6.4. Cooperation of the Parties..............................- 12 -
6.5. Infringement by Third Parties...........................- 13 -
6.5.1. Prosecution by Solvay Duphar...................- 13 -
6.5.2. Prosecution by ArQule..........................- 13 -
6.6. Infringement of Third Party Patent Rights...............- 13 -
6.7. Claims Brought by Third Parties.........................- 14 -
6.8. Cooperation in Infringement Actions.....................- 14 -
7. License Grants...................................................- 14 -
7.1. ArQule Screening License................................- 14 -
7.2. ArQule Commercial License...............................- 14 -
7.3. Limitations on Sublicenses..............................- 15 -
(ii)
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7.4. Solvay Duphar License Outside the Field.................- 15 -
7.5. AMAP License............................................- 15 -
7.6. Diligence...............................................- 15 -
7.7. Reports of Development Progress.........................- 15 -
7.8. Reversion of Rights.....................................- 16 -
8. AMAP Technology..................................................- 16 -
8.1. Access to AMAP Technology...............................- 16 -
8.2. AMAP Installation Date..................................- 18 -
8.3. License of AMAP Technology..............................- 18 -
8.4. AMAP Improvements.......................................- 18 -
8.5. Protection of AMAP Technology...........................- 19 -
8.6. Acceleration of Transfer................................- 19 -
9. Payments, Reports, and Records...................................- 19 -
9.1. Milestone Payments......................................- 19 -
9.2. Royalties...............................................- 19 -
9.3. Reports and Payments....................................- 19 -
9.4. Invoices; Payments in U.S. Dollars......................- 20 -
9.5. Payments in Other Currencies............................- 20 -
9.6. Records.................................................- 20 -
9.7. Late Payments...........................................- 21 -
10. Confidential Information and Proprietary Materials...............- 21 -
10.1. Confidential Information................................- 21 -
10.1.1. Definition of Confidential Information....- 21 -
10.1.2. Designation of Confidential Information...- 21 -
10.1.3. Obligations...............................- 21 -
10.1.4. Exceptions................................- 22 -
10.2. Proprietary Materials...................................- 22 -
10.2.1. Definition of Proprietary Materials.......- 22 -
10.2.2. Limited Use...............................- 23 -
10.2.3. Limited Disposition.......................- 23 -
10.2.4. Reverse Engineering.......................- 23 -
10.3. Return of Confidential Information and Proprietary
Materials...............................................- 23 -
10.4. Publications............................................- 23 -
10.5. Survival of Obligations.................................- 23 -
11. Other Rights and Obligations Between the Parties.................- 24 -
11.1. Manufacturing...........................................- 24 -
11.2. ArQule's Right to Acquire Solvay Duphar Products........- 24 -
11.3. Sale of ArQule Pharmaceutical Business..................- 24 -
12. Representations and Warranties...................................- 25 -
12.1. Authorization...........................................- 25 -
12.2. Ownership...............................................- 25 -
12.3. Intellectual Property Rights............................- 25 -
(iii)
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12.4. AMAP...............................................- 25 -
13. Indemnification and Insurance...............................- 25 -
13.1. Indemnification....................................- 25 -
13.2. Procedures.........................................- 25 -
13.3. Insurance..........................................- 26 -
14. Term and Termination........................................- 26 -
14.1. Term...............................................- 26 -
14.2. Breach of Payment Obligations......................- 26 -
14.3. Material Breach....................................- 26 -
14.4. Effect of Termination..............................- 26 -
15. Miscellaneous...............................................- 26 -
15.1. Relationship of Parties............................- 26 -
15.2. Publicity..........................................- 27 -
15.3. Non-Solicitation...................................- 27 -
15.4. Governing Law......................................- 27 -
15.5. Dispute Resolution Procedures......................- 27 -
15.6. Counterparts.......................................- 28 -
15.7. Headings...........................................- 28 -
15.8. Binding Effect.....................................- 28 -
15.9. Assignment.........................................- 28 -
15.10. Notices............................................- 29 -
15.11. Amendment and Waiver...............................- 30 -
15.12. Severability.......................................- 30 -
15.13. Entire Agreement...................................- 30 -
15.14. Hardship...........................................- 30 -
15.15. Force Majeure......................................- 30 -
EXHIBIT A ArQule Patent Rights
EXHIBIT B Research Plan
EXHIBIT C Installation Criteria
(iv)
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RESEARCH, DEVELOPMENT AND LICENSE AGREEMENT
This Agreement, effective as of November 2, 1995 (the "Effective
Date"), is between ArQule, Inc. ("ArQule"), a Delaware corporation, and Solvay
Duphar B.V. ("Solvay Duphar"), a Dutch corporation.
R E C I T A L S
WHEREAS, ArQule has developed certain technology that has applications
in the discovery and development of pharmaceutical compounds;
WHEREAS, ArQule intends to produce compound Arrays (as defined below)
containing large numbers of diverse organic compounds, and is willing to provide
such Arrays to outside parties;
WHEREAS, Solvay Duphar desires to obtain access to such Arrays for the
purpose of screening for compounds with potential pharmaceutical activity;
WHEREAS, Solvay Duphar desires that ArQule apply its technologies to
the research and development of pharmaceutical compounds for Solvay Duphar and
that ArQule transfer to Solvay Duphar certain proprietary technology relating to
the automated assembly and synthesis of Arrays; and
WHEREAS, in exchange for payment by Solvay Duphar of research funds,
screening fees, milestone payments, and royalties, as well as a substantial
equity investment, ArQule is willing to perform certain research and development
activities for Solvay Duphar, and to provide Solvay Duphar and its Affiliates
with Arrays and with technology relating to the automated assembly and synthesis
of Arrays, subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth in
this Agreement, the parties hereby agree as follows:
1. Definitions.
1.1. "Active ArQule Compounds" shall mean those ArQule Compounds that
have exhibited biological activity against a Target and as to which Solvay
Duphar has notified ArQule pursuant to Section 3.1.2.
1.2. "Affiliate" shall mean a corporation or other legal entity that
controls, is controlled by, or is under common control with such party. For
purposes of this definition, "control" means the ownership, directly or
indirectly, of fifty percent (50%) or more of the
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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.
1.3. "Agreement" shall mean this Research, Development and License
Agreement, together with Exhibits A through C hereto.
1.4. "AMAP" shall mean the Automated Molecular Assembly Plant developed
by ArQule, which is an integrated system of automated chemical processing
substations, automation methods, and information management tools used for
combinatorial synthesis, analysis, and purification of organic chemical
compounds.
1.5. "AMAP Chemistry" shall mean the reaction conditions (e.g.,
temperature, type and concentration of reactants, solvents, and reaction times)
or similar methods or processes for the synthesis of Arrays by ArQule in the
AMAP.
1.6. "AMAP Technology" shall mean all Patent Rights, trade secrets, and
know-how relating to the AMAP, excluding the AMAP Chemistry, that are owned or
controlled by ArQule at the time of the AMAP Installation Date.
1.7. "AMAP Improvement" shall mean any modification or improvement to
the AMAP Technology, excluding the AMAP Chemistry, whether or not patentable or
copyrightable, that is owned or controlled by Solvay Duphar during the Research
Period or by ArQule after the AMAP Installation Date but during the Research
Period.
1.8. "AMAP Installation Date" shall have the meaning set forth in
Section 8.2.
1.9. "ArQule Compounds" shall mean chemical compounds provided by
ArQule to Solvay Duphar under the Screening Array Program.
1.10. "ArQule Patent Rights" shall mean Patent Rights owned or
controlled by ArQule as of the Effective Date or during the Research Period, and
for a period of one (1) year thereafter, except for any Patent Rights relating
to AMAP Technology or AMAP Improvements. The ArQule Patent Rights as of the
Effective Date are listed in Exhibit A.
1.11. "ArQule Technology" shall mean all trade secrets, know-how,
Confidential Information, and Proprietary Materials that are owned or controlled
by ArQule as of the Effective Date or acquired during the Research Period,
except for any AMAP Technology or AMAP Improvements.
1.12. "Array" shall mean a set of samples of structurally related
chemical compounds arranged in a format such as a microtiter screening plate.
1.13. "Base Rate of Interest" shall mean the base rate of interest
declared from time to time by the Bank of Boston.
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1.14. "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.
1.15. "Confidential Information" shall have the meaning set forth in
Section 10.1.1.
1.16. "Contract Year" shall mean each calendar year of the Research
Period, except that the first Contract Year will commence on the Effective Date
and conclude on December 31, 1996.
1.17. "Derivative" shall mean a chemical compound structurally derived
in one or more steps from another by a process of modification or partial
substitution of at least one component wherein at least one structural feature
is retained at each process step. The number of intermediate steps or compounds
is not relevant to the classification of a compound as a Derivative. A compound
need not have structural similarity to another compound in order to be
classified as a Derivative.
1.18. "Directed Array" shall mean an Array comprised of Derivatives
synthesized by ArQule pursuant to the Directed Array Program.
1.19. "Directed Array Program" or "DA Program" shall mean the Directed
Array component of the Research Programs between ArQule and Solvay Duphar, as
set forth in Article 4.
1.20. "Disclosing Party" shall mean that party disclosing Confidential
Information to the other party under Section 10.1.
1.21. "Field" shall mean applications of a therapeutic drug in human or
animal health.
1.22. "Full-Time Equivalent" or "FTE" shall mean one (1) or more
employees of a party who, collectively, spend time and effort working on a
specific project or task equivalent to the time and effort of one (1) full-time
employee of a party working on such project or task (approx. 2,000 hours per
year). The term "ArQule FTE" shall have the meaning specified in Section 4.2.
1.23. "Joint Patent Rights" shall mean any Patent Rights that are
jointly owned by the parties, as set forth in Section 6.1(b).
1.24. "Lead Compound" shall mean a compound that fulfills Solvay
Duphar's primary criteria (with respect to potency, selectivity and biological
availability) in a project line.
1.25. "Net Sales" shall mean the aggregate Net Sales Price of
Royalty-Bearing Products in any Royalty Period.
1.26. "Net Sales Price" shall mean *
* confidential treatment has been
requested for marked portions
- 3 -
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*
1.27. "Patent Rights" shall mean all Valid Claims of all issued patents
and reissues, reexaminations, extensions and supplementary protection
certificates thereof and all patent applications and any divisions,
continuations, or continuations-in-part thereof or patents issuing thereon. For
the purposes of this Section, "Valid Claim" shall mean either (a) a claim of an
issued patent that has not been held unenforceable or invalid by an agency or a
court of competent jurisdiction in any unappealable or unappealed decision or
(b) a claim of a pending patent application that has not been abandoned or
finally rejected without the possibility of appeal or refiling.
1.28. "Phase II Clinical Trials" shall mean clinical trials in a small
sample of the intended patient population to assess the efficacy for a specific
indication of a compound proposed to be used as a therapeutic or diagnostic
pharmaceutical product, to determine dose tolerance and the optimal dose range
as well as to gather additional information relating to safety and potential
adverse effects, and meeting the requirements established by the U. S.
Food and Drug Administration for Phase II clinical trials.
1.29. "Phase III Clinical Trials" shall mean clinical trials designed
to demonstrate safety and efficacy of a compound proposed to be used as a
therapeutic or diagnostic pharmaceutical product in an expanded patient
population at geographically dispersed study sites, meeting the requirements
established by the U.S. Food and Drug Administration for Phase III clinical
trials.
1.30. "Priority Substance" shall mean a compound selected by Solvay
Duphar or an Affiliate of Solvay Duphar to enter into the preclinical research
phase.
1.31. "Project Declaration" shall mean, with respect to a compound, the
decision to commence human clinical trials.
1.32. "Proprietary Materials" shall have the meaning set forth in
Section 10.2.1.
1.33. "Receiving Party" shall mean that party receiving Confidential
Information under Section 10.1, or Proprietary Materials under Section 10.2, as
the case may be.
1.34. "Research Committee" shall have the meaning set forth in Section
2.1.
1.35. "Research Period" shall mean the period during which the DA
Program or the SA Program, or both, remain in effect. The maximum duration of
the Research Period shall be five (5) years, unless extended by the mutual
agreement of the parties.
* confidential treatment has been
requested for marked portions
- 4 -
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1.36. "Research Plan" shall mean a plan of research for the DA Program
covering 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. The initial Research Plan is
attached as Exhibit B to this Agreement.
1.37. "Research Programs" shall mean, collectively, the Directed Array
Program and the Screening Array Program.
1.38. "Royalty-Bearing Product" shall mean a product containing as one
of its constituents (a) any Active ArQule Compound, (b) any Solvay Duphar
Compound that ArQule synthesized in the DA Program, including Derivatives
thereof developed by Solvay Duphar; or (c) any other compound discovered or
designed by Solvay Duphar for a Target as a result of information provided by
ArQule to Solvay Duphar under the Research Programs.
1.39. "Royalty Period" shall mean every calendar quarter, or partial
calendar quarter, commencing with the first commercial sale of a Royalty-Bearing
Product in any country. The last Royalty Period for any Royalty-Bearing Product
in any country shall be the quarter during which all Patent Rights covering such
Royalty-Bearing Product expire in such country.
1.40. "Screening Array" shall mean an Array of ArQule Compounds.
1.41. "Screening Array Program" or "SA Program" shall mean the
Screening Array component of the Research Programs between ArQule and Solvay
Duphar, as set forth in Article 3.
1.42. "Solvay Duphar Compounds" shall mean all chemical compounds made
by or for Solvay Duphar under this Agreement, including compounds provided by
Solvay Duphar or its Affiliates to ArQule under the Directed Array Program and
any Derivatives thereof, and Derivatives of Active ArQule Compounds, either
developed by ArQule under the Directed Array Program or by Solvay Duphar alone.
1.43. "Solvay Duphar Patent Rights" shall mean Patent Rights owned or
controlled by Solvay Duphar, except for any Patent Rights relating to AMAP
Improvements.
1.44. "Target" shall mean the biological target against which activity
of an Active ArQule Compound was revealed, together with any related
biomolecules that (a) exhibit substantial structural homology with the
identified biomolecule, as measured by the degree of similarity in the primary
structure (i.e., amino acid sequence, nucleotide sequence, monosaccharide
linkages) and secondary structure (i.e., three-dimensional structure), (b)
perform a substantially similar function as the identified biomolecule, and (c)
have therapeutic relevance. Biological targets shall not be considered as
exhibiting substantial structural homology nor functional similarity if such
biological targets are generally recognized by the scientific community as being
different.
1.45. "Third Party Screening Array Partner" shall mean a third party to
whom ArQule provides Screening Arrays.
* confidential treatment has been
requested for marked portions
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1.46. "Transferring Party" shall mean the party furnishing Proprietary
Materials to the other party under Section 10.2.
1.47. The above definitions are intended to encompass the defined terms
in both the singular and plural tenses.
2. Management of Research Programs.
2.1. Composition of Research Committee. The parties hereby establish a
Research Committee comprised of six (6) members, with three (3) representatives
appointed by each party. The initial members of the Research Committee shall be
as follows:
ArQule Representatives Solvay Duphar Representatives
---------------------- -----------------------------
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇
A party may change one or more of its representatives to the Research Committee
at any time upon notice to the other party. Each party will designate one of its
representatives as its team leader.
2.2. Duties of the Research Committee. The Research Committee shall
direct and administer the Research Programs. With respect to the Research
Programs, the Solvay Duphar representatives on the Research Committee shall, in
consultation with the ArQule representatives, determine the identity, scope and
priority of each Chemical Theme. The identity and scope of such 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.
With respect to the SA Program, the Research Committee shall specifically
determine the following: (i) the appropriate number and type of Chemical Themes
represented in the Arrays delivered to Solvay Duphar each Contract Year; (ii)
the appropriate number of compounds for each Chemical Theme in the Arrays
delivered to Solvay Duphar each Contract Year; and (iii) the appropriate amount
of each compound to be provided for a particular Chemical Theme. With respect to
the DA Program, the Research Committee shall specifically determine the
following: (i) the appropriate number and type of Chemical Themes for submission
to the DA Program, subject to ArQule's right to exclude certain compounds as set
forth in Section 2.3 below; (ii) the appropriate number of compounds that ArQule
should generate in a Directed Array for a particular Chemical Theme; and (iii)
the appropriate amount of each compound in a Directed Array that ArQule should
deliver to Solvay Duphar for further research and development. In
* confidential treatment has been
requested for marked portions
- 6 -
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addition, the Research Committee shall (i) determine the allocation of the
funding and personnel resources to be contributed by the parties under this
Agreement, (ii) revise and extend the Research Plan each calendar quarter for
the subsequent six (6) months based on prior developments, (iii) resolve matters
involving scientific questions, and (iv) resolve publication disputes that may
arise under Section 10.4.
2.3. Compounds Excluded from the DA Program. ArQule shall have the
right, at the time Solvay Duphar seeks to include any compound(s) in the DA
Program, to exclude from the DA Program any compound(s) that is at that time
either (i) included within a directed array program for a third party or (ii)
included within an existing ArQule internal development program, provided that
the circumstances upon which the exclusion is based have, at the time ArQule
seeks to assert the exclusion, been disclosed to the ArQule Board of Directors.
2.4. 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 telephone conferences, unless such notice is
waived by all members. ArQule will prepare and deliver to the members of the
Research Committee a brief progress report at least one week in advance of the
telephone conference, which report will list the ArQule employees then working
on the Research Programs. 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 15.5 below. Subsequent to each quarterly meeting, the Research Committee
shall prepare and deliver, to both parties, a written report describing the
decisions made, conclusions and actions agreed upon.
2.5. 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 Research Programs.
2.6. 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
* confidential treatment has been
requested for marked portions
- 7 -
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progress, but only during normal business hours and with reasonable prior
notice. Each party shall bear its own expenses in connection with such site
visits.
3. Screening Array Program.
3.1. Description of Program.
3.1.1. Supply of Screening Arrays. During each Contract Year,
ArQule will supply Solvay Duphar with Screening Arrays containing approximately
* each of * chemical compounds not included in any other
Screening Array provided to Solvay Duphar by ArQule and based on approximately
* Chemical Themes. The amounts of each compound in each Array and the
number of Chemical Themes per year are non-binding objectives, however, ArQule
shall have a binding obligation, subject to Section 3.2, to furnish Solvay
Duphar with * different compounds, not included in any other Screening
Array provided to Solvay Duphar by ArQule, per year.
3.1.2. Identification of Active ArQule Compounds. Initially,
ArQule will identify the Chemical Theme of each Screening Array but not the
structures of the individual compounds in the Screening Arrays. Solvay Duphar
may screen the Screening Arrays against any biological targets during the SA
Program and thereafter. Initially, Solvay Duphar will not disclose the targets
screened. If Solvay Duphar detects any Active ArQule Compounds in a Screening
Array, ArQule will disclose (i) the structure of each Active ArQule Compound and
(ii) the structures, but not the locations in the Screening Array, of all other
ArQule Compounds in the Screening Array and Solvay Duphar will disclose (a) the
identity of the Target and (b) the level of activity. All such disclosed
information shall be treated as Confidential Information by both parties. Solvay
Duphar agrees to screen ArQule Compounds only against targets that, in its
reasonable business judgement, are therapeutically relevant. Solvay Duphar
agrees to notify ArQule of Active ArQule Compounds only if the level of activity
detected is sufficient, in its reasonable business judgement, to warrant further
development (including the making of Derivatives) of the Active ArQule Compound.
Solvay Duphar may further develop (including the making of Derivatives) Active
ArQule Compounds itself or it may submit Active ArQule Compounds to the Directed
Array Program under Article 4.
3.2. Payment. In consideration of the performance by ArQule of the SA
Program in accordance with this Agreement, during the first Contract Year,
Solvay Duphar shall pay ArQule a screening fee in the amount of *
Dollars * , payable as follows:
* On the Effective Date
* On January 2, 1996.
* On June 1, 1996.
* confidential treatment has been
requested for marked portions
- 8 -
14
Thereafter, Solvay Duphar shall pay ArQule an annual screening fee in the amount
of * Dollars * during each Contract Year, payable in
advance in equal quarterly installments; provided, however, that Solvay Duphar
may suspend payment of the screening fee for any Contract Year if ArQule fails
to supply Solvay Duphar with * different compounds in the prior Contract
Year, which suspension shall remain in effect until ArQule remedies the
deficiency. The suspension of payments set forth in the preceding sentence shall
be Solvay Duphar's sole remedy for any ArQule failure to deliver *
different compounds in any Contract Year except that if, upon the expiration of
the second quarter of the final Contract Year of the SA Program, the parties
determine that, based on the number of compounds delivered to date and ArQule's
forecast of the remaining compounds to be delivered during the balance of the
final Contract Year, ArQule will be unable to deliver a total of *
different compounds to Solvay Duphar during the remainder of the final Contract
Year, the parties will appropriately adjust downward the quarterly payments to
be made by Solvay Duphar during the balance of the Contract Year. Any
disagreement concerning the forecast will be resolved pursuant to the dispute
resolution procedures of Section 15.5. Upon completion of the final Contract
Year of the SA Program a final financial reconciliation will be made, either by
Solvay Duphar paying ArQule an additional amount, or by ArQule refunding to
Solvay Duphar a portion of the amounts previously paid it, so that Solvay Duphar
will have paid screening fees to ArQule in the amount of * per compound for
all compounds delivered to Solvay Duphar under the SA Program. ArQule agrees to
use its best efforts to provide Solvay Duphar with compounds as they become
available throughout each Contract Year in order to avoid the delivery of large
numbers of compounds in a short period of time, but in any case, no later than
the date such compounds are provided to any Third Party Screening Array Partner.
3.3. Termination of SA Program. The SA 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 or in Article 14 below. Solvay
Duphar may terminate the SA Program at its discretion upon twelve (12) months
written notice to ArQule and payment of the following amounts as final
settlement at the conclusion of the twelve-month notice period:
Notice During First Contract Year: *
Notice After First Contract Year: To be determined by the Research
Committee based upon a downward
sliding scale related to ArQule's
commercial success of the Screening
Array Program, not to exceed
* .
Termination of the SA Program shall have no effect on the continuation of the DA
Program.
4. Directed Array Program.
4.1. Description of Program. Under the direction of the Research
Committee and in accordance with the Research Plan, ArQule will synthesize
Arrays of compounds derived from (i) Solvay Duphar Compounds provided to ArQule
by Solvay Duphar and/or (ii) Active ArQule Compounds provided by ArQule to
Solvay Duphar under the SA Program and then
* confidential treatment has been
requested for marked portions
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15
requested by Solvay Duphar to be included in the DA Program. The parties intend
that, during the Research Period, ArQule will produce such Directed Arrays based
on approximately * different Chemical Themes per year,
which will result in the production of approximately * Derivatives
per Chemical Theme per year; provided, however, that the number of Chemical
Themes actually submitted to the DA Program and the number of Derivatives
actually produced per Chemical Theme will be determined by the Research
Committee; and further provided that the intentions of the parties set forth
herein and in the Research Plan shall be appropriately adjusted in the event of
early termination of the DA Program. The parties also intend that ArQule will
produce approximately * of each Derivative in the Directed
Arrays, subject to the availability of the original Solvay Duphar Compounds or
Active ArQule Compounds; the amount of each Derivative that ArQule actually
produces, however, will be determined by the Research Committee. ArQule agrees
that any Derivatives of Active ArQule Compounds provided to Solvay Duphar under
the DA Program (i) will not have been provided by ArQule to any third party and
(ii) will not in the future be provided by ArQule to any third party.
4.2. Conduct of Program. The conduct of the DA Program shall be the
primary responsibility of ArQule with participation by Solvay Duphar. ArQule
shall commit * Full-Time Equivalent employees to the DA Program (the
"ArQule FTEs"). The ArQule FTEs will be adequate and have the required skills
for carrying out the DA Program. Solvay Duphar shall propose Chemical Themes to
the Research Committee for inclusion in the DA Program. If the Research
Committee approves the inclusion of the proposed Chemical Theme, Solvay Duphar
shall provide ArQule with the requisite amount and purity of Solvay Duphar
Compounds for that Chemical Theme or, in the case of Active ArQule Compounds,
either ArQule or Solvay Duphar shall produce the requisite amount of the Active
ArQule Compound, as directed by the Research Committee. ArQule shall thereupon
synthesize Directed Arrays of Derivatives of Solvay Duphar Compounds or Active
ArQule Compounds. ArQule shall diligently perform this synthesis work in
accordance with the Research Plan. Solvay Duphar shall, in its discretion, test
all compounds in the Directed Arrays. The DA Program shall be conducted in a
good scientific manner and in compliance with all applicable legal requirements.
4.3. Payments. In consideration of the performance by ArQule of the DA
Program, during the first Contract Year, Solvay Duphar shall pay ArQule research
and development funding in the amount of *
Dollars * , payable as follows:
* On the Effective Date
* On January 2, 1996.
* On June 1, 1996.
Thereafter, Solvay Duphar shall make the following annual payment to ArQule
during each Contract Year, payable in advance in equal quarterly installments:
* confidential treatment has been
requested for marked portions
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16
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.
ArQule shall use such payments to conduct the DA Program in accordance with this
Agreement.
4.4. Termination of DA Program. The DA 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 or in Article 14 below. Solvay
Duphar may terminate the DA Program at its discretion upon six (6) months
written notice to ArQule together with payment, as final settlement, in the
amount of * percent * of the annual research payment for the Contract
Year in which such notice was given, as described in Section 4.3. Termination of
the DA Program shall have no effect on the continuation of the SA Program.
5. Ownership of Compounds.
5.1. Solvay Duphar Compounds. All Solvay Duphar Compounds are owned by
Solvay Duphar or its Affiliates, except, and only to the extent that, with
respect to the DA Program, ArQule can show that any such compound (i) was under
development by ArQule (including programs with academic collaborators or
corporate partners) before such Solvay Duphar Compound was proposed to be
included in the Directed Array Program; (ii) was independently developed by
ArQule employees who had no access to Solvay Duphar Confidential Information
regarding the particular Solvay Duphar Compound; or (iii) was already within a
screening array before such compound was proposed to be included in the Directed
Array Program.
5.2. ArQule Compounds. All ArQule Compounds are owned by ArQule except,
and only to the extent that, Solvay Duphar can show that any such compound was
in the possession of Solvay Duphar before it was provided by ArQule to Solvay
Duphar or its Affiliates.
6. Intellectual Property Rights.
6.1. Ownership of Patent Rights.
(a) ArQule Patent Rights. Any Patent Rights filed by
either party covering only Active ArQule Compounds will be owned solely
by ArQule except as provided in Section 6.1(b)(ii).
* confidential treatment has been
requested for marked portions
- 11 -
17
(b) Joint Patent Rights. Any Patent Rights (i) filed
by either party covering both Active ArQule Compounds and Solvay Duphar
Compounds and/or (ii) claiming an Active ArQule Compound and uses
thereof discovered by Solvay Duphar, shall be owned jointly by ArQule
and Solvay Duphar.
(c) Solvay Duphar Patent Rights. Any Patent Rights
filed by either party covering Solvay Duphar Compounds only will be
owned solely by Solvay Duphar.
6.2. Prosecution of Patent Rights on Active ArQule Compounds. ArQule
agrees to cooperate with Solvay Duphar in order to maximize the duration of
patent protection on Active ArQule Compounds, and both parties agree to cause
their patent counsel to consult with each other for such purpose. ArQule agrees
not to file patent applications on Screening Arrays that disclose the specific
compounds in those Screening Arrays. Upon notification of activity and
disclosure of a Target by Solvay Duphar, ArQule will agree to defer filing
patent applications on the Active ArQule Compound(s) until a time reasonably
acceptable to Solvay Duphar, provided that such deferral does not, in the
opinion of patent counsel of both parties, jeopardize the ability to pursue
patent protection on such Active ArQule Compounds. If both patent counsel cannot
agree, the matter will be referred to the Research Committee for resolution. If,
after the expiration of fifteen (15) days from such referral, the Research
Committee has not agreed, the matter will be resolved pursuant to the dispute
resolution procedures set forth in Section 15.5. A Joint Patent application
covering both the use and composition of matter of the Active ArQule Compound
will be filed shortly before any public disclosure necessitated by the
development process (typically commencement of clinical trials).
6.3. Management of Joint Patent Rights. In the case of Joint Patent
Rights, the parties shall agree on the allocation of responsibility for, and the
expense of, the preparation, filing, prosecution, and maintenance of any Joint
Patent Rights claiming such inventions. In the event of any disagreement
concerning any Joint Patent Rights, the matter shall be resolved by the Research
Committee or, in the absence thereof, by the CEO of ArQule and the Vice
President-Research of Solvay Duphar. The party controlling a Joint Patent Right
shall consult with the other party 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 any foreign patent office, and
shall furnish to the other party copies of all relevant documents reasonably in
advance of such consultation. In the event that the party controlling a Joint
Patent Right desires to abandon such Joint Patent Right, or if the party
assuming control of a Joint Patent Right later declines responsibility for such
Joint Patent Right, the controlling party shall provide reasonable prior written
notice to the other party of such intention to abandon or decline
responsibility, and such other party shall have the right, at its expense, to
prepare, file, prosecute, and maintain such Joint Patent Rights.
6.4. 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:
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18
(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 6.1 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 a 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.
6.5. Infringement by Third Parties. ArQule and Solvay Duphar shall each
promptly notify the other in writing of any alleged or threatened infringement
by a third party of any ArQule Patent Right or Joint Patent Right exclusively
licensed to Solvay Duphar within the Field of which they become aware. The
parties shall consult concerning the action(s) to be taken.
6.5.1. Prosecution by Solvay Duphar. Solvay Duphar shall have
the right, but not the obligation, to prosecute, at its own expense, any such
third party infringement. Any such action shall be under Solvay Duphar's
control, but ArQule shall have the right to join any such suit or action brought
by Solvay Duphar and, in such event, shall pay one-half of the cost of such
action.
Provided that ArQule has joined in the action and shared the costs thereof as
stated in the preceding sentence, no settlement, consent judgment or other
voluntary final disposition of the action may be entered into without the
consent of ArQule, which consent shall not unreasonably be withheld. Any
recovery or damages derived from such action shall first be used to reimburse
Solvay Duphar (and ArQule, if it has joined in the action) for all legal
expenses (including, in the case of any party utilizing in-house legal counsel,
the direct costs of such in-house counsel) relating to the action. Any recovery
or damages still remaining shall, if ArQule has not joined in the action, be
retained by Solvay Duphar or, if ArQule has joined in the action, shall be
shared equally by the parties.
6.5.2. Prosecution by ArQule. If Solvay Duphar notifies ArQule
that it does not intend to prosecute the infringement or if, within three (3)
months after Solvay Duphar first becomes aware of the infringement Solvay Duphar
fails to cause any such infringement to terminate or to bring an action to
compel termination ArQule shall have the right, but not the obligation to bring
such action. ArQule shall retain any recovery or damages derived from such
action.
6.6. Infringement of Third Party Patent Rights. Solvay Duphar shall
promptly notify ArQule if any action is brought against Solvay Duphar alleging
infringement of any third-party patent right as a result of the exercise of
Solvay Duphar's rights under Section 7.2. Solvay Duphar shall have the right,
but not the obligation, to defend, at its own expense, any such action.
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19
6.7. Claims Brought by Third Parties. In the event that any action or
claim involving or relating to any ArQule Patent Right or Joint Patent Right
shall be brought against Solvay Duphar, Solvay Duphar shall promptly notify
ArQule in writing, and the parties shall consult concerning the action to be
taken. Such third party actions or claims include, without limitation, actions
or claims alleging invalidity, unenforceability or non- infringement of any
ArQule Patent Right or Joint Patent Right and any defense to a claim of
infringement thereof.
In the case of any action or claim involving or relating to ArQule Patent
Rights, ArQule, at its sole option, shall have the right, within thirty (30)
days of commencement of such action, to intervene, take over and duly prosecute
the sole defense of the action at its own expense.
In the case of any action or claim involving or relating to Joint Patent Rights,
Solvay Duphar shall have the right, but not the obligation, to defend, at its
own expense, any such action or claim, but ArQule shall have the right to join
any such defense brought by Solvay Duphar and, in such event, shall pay one-half
of the cost thereof. Provided that ArQule has joined in such defense and shared
the costs thereof as stated in the preceding sentence, no settlement, consent
judgment or other voluntary final disposition of the action may be entered into
without the consent of ArQule, which consent shall not unreasonably be withheld.
If Solvay Duphar does not defend against the action or claim, ArQule shall have
the right, but not the obligation to do so at its own expense.
6.8. Cooperation in Infringement Actions. In any action (i) prosecuted
or defended against by either party involving or relating to the ArQule Patent
Rights or the Joint Patent Rights or (ii) in which either party defends against
any claim of infringement or contributory infringement of third-party patents
due to activities performed under this Agreement, the other party hereto (the
"Cooperating Party") shall, at the request of the party initiating or defending
against such action or claim, cooperate in all reasonable respects and to the
extent reasonably possible shall make available to such party all information
relevant to such action or claim including, without limitation, records,
material, and testimony. The Cooperating Party shall bear its own costs related
to such cooperation under Subsection (i) above, but such cooperation shall be at
the expense of the other party under Subsection (ii) above.
7. License Grants.
7.1. ArQule Screening License. ArQule hereby grants Solvay Duphar and
its Affiliates: (i) a nonexclusive, worldwide, royalty-free, perpetual license
(without the right to grant sublicenses) under ArQule Patent Rights and ArQule
Technology to use the ArQule Compounds to screen against any biological targets
in the Field.
7.2. ArQule Commercial License. Upon notice of Solvay Duphar's
identification of Active ArQule Compounds and disclosure of information to
ArQule, pursuant to Section 3.1.2, and provided that no Third Party Screening
Array Partner has already licensed such Active ArQule Compounds in the Field,
ArQule agrees to grant to Solvay Duphar and its Affiliates an exclusive,
worldwide, royalty-bearing license (with a limited right to sublicense, as set
forth in Section 7.3) in the Field under ArQule Patent Rights, under
- 14 -
20
ArQule's interest in any Joint Patent Rights and under ArQule Technology, to
develop, have developed, make, have made, use, have used, sell and have sold in
the Field products incorporating such Active ArQule Compounds.
7.3. Limitations on Sublicenses. Solvay Duphar shall not have the right
to grant to third parties the right to make Derivatives of Active ArQule
Compounds or of their Derivatives, except for those Derivatives that are Solvay
Duphar Compounds.
7.4. Solvay Duphar License Outside the Field. Solvay Duphar hereby
grants to ArQule and its Affiliates a worldwide, royalty-free, exclusive license
(with the right to sublicense) under Solvay Duphar's rights in any Joint Patent
Rights covering Active ArQule Compounds to develop, have developed, make, have
made, use, have used, sell and have sold outside the Field products
incorporating such Active ArQule Compounds.
7.5. AMAP License. ArQule agrees to grant to Solvay Duphar the licenses
to the AMAP Technology, AMAP Chemistry and ArQule Technology set forth in, and
subject to the conditions of, Section 8.3.
7.6. Diligence. Solvay Duphar agrees to use reasonable commercial
efforts to develop and market Royalty-Bearing Products based on or incorporating
any Active ArQule Compound for which it has obtained a license under Section
7.2, or Derivatives thereof, using a level of effort consistent with that used
for other Solvay Duphar products having similar commercial potential. The
parties hereby acknowledge their understanding that Solvay Duphar's obligations
under this Section do not apply to each Active ArQule Compound licensed under
Section 7.2 in itself, but only to at least one compound out of each group of
Active ArQule Compounds and Derivatives thereof that is active against the same
Target. Subject to Sections 7.7 and 7.8, Solvay Duphar 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 Active
ArQule Compound or its Derivatives or any Royalty-Bearing Product derived
therefrom.
7.7. Reports of Development Progress. Solvay Duphar agrees to keep
ArQule informed of its development progress with respect to each Active ArQule
Compound or Derivative thereof for which it has obtained a license under Section
7.2 as follows:
(a) Initial Research Plan. Within 60 days after
obtaining a license, Solvay Duphar will provide ArQule with a
time line of its planned research activities for that Active
ArQule Compound and will keep ArQule periodically informed of
its progress under such schedule.
(b) Lead Compound. Solvay Duphar will notify ArQule
of the designation of any Active ArQule Compound or
Derivatives thereof as a Lead Compound. Within 60 days of such
designation, Solvay Duphar will provide ArQule with a copy of
a revised time line of its research activities for that Lead
Compound and will keep ArQule periodically informed of its
progress under such schedule.
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21
(c) Priority Substance. Solvay Duphar will notify
ArQule of the designation of any Active ArQule Compound or
Derivatives thereof as a Priority Substance. Within 60 days of
such designation, Solvay Duphar will provide ArQule with a
copy of a revised time line of its research activities for
that Priority Substance and will keep ArQule periodically
informed of its progress under such schedule.
(d) Project Declaration. Solvay Duphar will promptly
notify ArQule of a Project Declaration for any Active ArQule
Compound or Derivatives thereof.
(e) Discontinuation of Development. Solvay Duphar
agrees to notify ArQule if it decides to discontinue
development or marketing of any Active ArQule Compound or
Derivatives thereof.
In addition, throughout the term of this Agreement, Solvay Duphar will submit to
ArQule quarterly reports of the activities of Solvay Duphar and its Affiliates
with respect to all such compounds during the prior three-month period. These
reports will include relevant chemical and biological data and other information
sufficient to allow ArQule to determine whether Solvay Duphar and/or its
Affiliates are engaging in significant activity with respect to each such
compound prior to Project Declaration. The information in such reports shall be
considered Confidential Information under Section 10.1. hereof. During the
Research Period, Solvay Duphar shall provide such reports on a schedule such
that they can be reviewed at the quarterly meetings of the Research Committee.
7.8. Reversion of Rights. In the event that (i) Solvay Duphar notifies
ArQule pursuant to Section 7.7(e) above that it has determined to discontinue
the development of any Active ArQule Compound or Derivatives thereof or (ii)
Solvay Duphar and/or its Affiliates fail, prior to Project Declaration with
respect thereto, to engage in significant activities for a continuous period of
six (6) months with respect to any Active ArQule Compound, or Derivatives
thereof and such failure is not cured within thirty (30) days of notice thereof,
ArQule shall, subject to the provisions set forth below, have the right,
immediately upon notice, to terminate the license granted to Solvay Duphar under
Section 7.2 with respect to such Active ArQule Compound, and ArQule will
thereafter be free to grant licenses to third parties under ArQule Patent Rights
and ArQule Technology to make, use, sell and have sold in the Field products
incorporating that Active ArQule Compound. Any dispute concerning whether Solvay
Duphar or its Affiliates have engaged in significant activity within the meaning
of Section 7.8(ii) above shall be resolved under the dispute resolution
provisions of Section 15.5.
8. AMAP Technology.
8.1. Access to AMAP Technology. Except as set forth in Section 8.6
below, during the Research Period, but not before December 31, 1997, ArQule
hereby agrees to provide the AMAP Technology to Solvay Duphar in accordance with
this Section upon one
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22
hundred and twenty (120) days prior written notice to ArQule, provided that
Solvay Duphar is not then in default of any of its material obligations under
Sections 3.2 and 4.3.
(a) ArQule will make available to Solvay Duphar
complete copies of any documentation then in its possession relating to
the AMAP Technology, including copies of patents and patent
applications and documentation of know-how and trade secrets.
(b) ArQule will make available to Solvay Duphar a
certain limited AMAP Chemistry sufficient to enable Solvay Duphar to
verify the functionality of the AMAP. In addition, during the term of
the Research Program, ArQule will make available to Solvay Duphar all
AMAP Chemistry and ArQule Technology used by ArQule in connection with
the Directed Array Program.
(c) ArQule will provide Solvay Duphar employees with
technical assistance at ArQule as reasonably necessary for Solvay
Duphar to acquire the AMAP Technology. Such technical assistance will
include (i) reasonable access to the ArQule AMAP equipment and software
and (ii) reasonable instruction by ArQule employees regarding use of
the AMAP equipment and software. Such technical assistance at ArQule
will be provided by the ArQule FTEs, unless the Research Committee
determines that the ArQule FTEs are unavailable for such purposes. The
cost of any such ArQule personnel and resources beyond the ArQule FTEs
shall be borne by Solvay Duphar, at ArQule's then-current standard
rates and charges. At no time shall the number of Solvay Duphar
employees on the premises of ArQule exceed five (5) persons. Solvay
Duphar shall pay all expenses incurred by its employees, including
travel, meals, and lodging.
(d) ArQule will provide Solvay Duphar with technical
assistance at the premises of Solvay Duphar and/or of its Affiliates as
reasonably necessary to enable Solvay Duphar to develop a functional
AMAP. ArQule will provide Solvay Duphar, in addition to the ArQule
FTEs, with one (1) qualified individual for up to four (4) weeks for
such assistance, except that Solvay Duphar shall pay all reasonable
expenses incurred by such employee, including travel, meals, and
lodging.
(e) With the approval of the Research Committee,
Solvay Duphar may redirect the efforts of ArQule FTEs dedicated to the
DA Program in order to facilitate the transfer of AMAP Technology at
ArQule.
(f) Solvay Duphar shall purchase all equipment and
supplies that are required to assemble a functional AMAP at Solvay
Duphar. Solvay Duphar shall have complete discretion regarding its
purchases of equipment and supplies, including decisions as to the type
of equipment, vendor, and price, but shall consult with ArQule prior to
making any purchase. ArQule shall have no obligation to supply any such
equipment or supplies.
(g) ArQule shall provide Solvay Duphar with two (2)
copies of its proprietary AMAP software in source-code and object-code
form, at no additional
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23
charge, subject to the terms and conditions of a mutually acceptable
software license agreement.
8.2. AMAP Installation Date. ArQule shall have fulfilled its
obligations under Section 8.1 upon the successful installation, as provided for
in this Section 8.2, of a functional AMAP at Solvay Duphar, as determined by the
criteria set forth in Exhibit C (the "Installation Criteria"). Solvay Duphar
shall provide ArQule with written certification that ArQule has satisfied the
Installation Criteria. If the parties disagree on whether ArQule has satisfied
the Installation Criteria, the matter shall be resolved by the Research
Committee. The date upon which ArQule has satisfied the Installation Criteria
shall be referred to as the "AMAP Installation Date." ArQule shall have no
further obligation to Solvay Duphar under Section 8.1 after the AMAP
Installation Date except to the extent set forth in Sections 8.1(b) and 8.4
hereof.
8.3. License of AMAP Technology. In the event that Solvay Duphar elects
to obtain the AMAP Technology as set forth in Section 8.1 above, ArQule agrees
to grant Solvay Duphar and its Affiliates a perpetual, royalty-free,
non-exclusive license (without the right to sublicense) to use the AMAP
Technology, and the ArQule Technology and AMAP Chemistry transferred to Solvay
Duphar pursuant to Section 8.1(b), for its own internal research and development
efforts on products in the Field. Solvay Duphar has no right to provide the AMAP
Technology or the AMAP Chemistry to third parties, nor may it use the AMAP
Technology or the AMAP Chemistry to provide Arrays to third parties.
8.4. AMAP Improvements. In the event that Solvay Duphar elects to
obtain the AMAP Technology as set forth in Section 8.1 above, the parties hereby
agree as follows:
(a) During the Research Period, each party shall
notify the other party promptly after the discovery or development of
any AMAP Improvement. Such notice shall include a brief description of
the invention together with the relevant invention disclosure form.
(b) ArQule will provide Solvay Duphar and its
Affiliates with the AMAP Chemistry, AMAP Technology and any ArQule
Technology used by ArQule in the Directed Array Program.
(c) During the Research Period, each party shall
provide the other party with technical assistance as reasonably
necessary to allow the other party to acquire any AMAP Improvement at
the receiving party's expense.
(d) ArQule hereby grants Solvay Duphar and its
Affiliates a perpetual, royalty-free, non-exclusive license (without
the right to sublicense) to use any AMAP Improvements for its own
internal research and development efforts on products in the Field.
(e) Solvay Duphar hereby grants ArQule and its
Affiliates a perpetual, royalty-free, non-exclusive license (with the
right to sublicense) to use any AMAP Improvements for any purpose.
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24
8.5. Protection of AMAP Technology. Solvay Duphar acknowledges and
agrees that the AMAP Technology is Confidential Information of ArQule within the
meaning of Section 10.1, and includes trade secrets of ArQule. Solvay Duphar
shall not disclose or transfer any AMAP Technology to any third party, except to
its Affiliates, without the prior written consent of ArQule. Solvay Duphar shall
instruct its employees who have access to the AMAP Technology as to its
confidential status, and shall contractually bind such employees to observe its
obligations under this Section.
8.6. Acceleration of Transfer. During the second Contract Year, Solvay
Duphar may elect to commence transfer of the AMAP Technology pursuant to Section
8.1. at any time, rather than after the second Contract Year, in the event of an
acquisition of ArQule or that portion of its business pertaining to the subject
matter of this Agreement.
9. Payments, Reports, and Records.
9.1. Milestone Payments. In partial consideration of the rights granted
Solvay Duphar under this Agreement, Solvay Duphar shall pay ArQule the following
amounts within thirty (30) days after each occurrence of the following
milestones:
* Commencement by Solvay Duphar, at its own
discretion,
*
* *
Such milestone payments shall be non-refundable and shall not be credited
against royalties payable to ArQule under this Agreement. Solvay Duphar shall
promptly notify ArQule of each occurrence of either of the foregoing milestones.
9.2. Royalties. In partial consideration of the rights granted to
Solvay Duphar under this Agreement, Solvay Duphar shall pay to ArQule a royalty
of * percent * of Net Sales in countries where, and for as long as, the
manufacture or sale of such Royalty- Bearing Products is covered by Patent
Rights.
9.3. Reports and Payments. Within thirty (30) days after the conclusion
of each Royalty Period, Solvay Duphar shall deliver to ArQule a report
containing the following information:
(a) gross sales of Royalty-Bearing Products by Solvay Duphar
and its Affiliates and sublicensees during the applicable Royalty
Period in each country of sale;
* confidential treatment has been
requested for marked portions
- 19 -
25
(b) 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, Solvay Duphar shall remit to ArQule any payment due
for the applicable Royalty Period. The method of payment shall be mutually
agreed to. All amounts payable to ArQule under this Section will first be
calculated in the currency of sale and then converted into U.S. dollars in
accordance with Section 9.5, and such amounts shall be paid without deduction of
any withholding taxes, value-added taxes, or other charges applicable to such
payments.
9.4. Invoices; Payments in U.S. Dollars. With the exception of royalty
payments due under Section 9.2, ArQule shall submit invoices to Solvay Duphar
for each payment due ArQule hereunder, and Solvay Duphar shall pay such invoices
within thirty (30) days of receipt thereof. All payments due under this
Agreement shall, except as provided in Section 9.5 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.
9.5. 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, Solvay Duphar shall give ArQule prompt written notice of such
restriction, which notice shall satisfy the thirty-day payment deadline
described in Section 9.4. Solvay Duphar 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 thirty (30) days after
ArQule is notified of the restriction, then Solvay Duphar may deposit such
payment in local currency to the credit of ArQule in a recognized banking
institution selected by Solvay Duphar and identified by written notice to
ArQule, and such deposit shall fulfill all obligations of Solvay Duphar to
ArQule with respect to such payment.
9.6. Records. Solvay Duphar and its 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 9.4. 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.
ArQule will maintain complete and accurate records of the activities
engaged in by the ArQule FTEs, which records shall contain sufficient
information to permit Solvay Duphar to confirm the compliance of ArQule with
Section 4.2.
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26
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 thirty (30) 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.
9.7. Late Payments. Any payments by Solvay Duphar 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.
10. Confidential Information and Proprietary Materials.
10.1. Confidential Information.
10.1.1. 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. The parties expressly agree that the structures of Active ArQule
Compounds and the identity of the related Target shall be considered
Confidential Information until such time as the parties have mutually agreed to
disclose such information in patent filings pursuant to Section 6.2.
10.1.2. Designation of Confidential Information. Confidential
Information that is disclosed in writing shall be marked with a legend
indicating its confidential status. Confidential Information that is disclosed
orally or visually shall be documented in a written notice prepared by the
Disclosing Party and delivered to the Receiving Party within thirty (30) days of
the date of disclosure; such notice shall summarize the Confidential Information
disclosed to the Receiving Party and reference the time and place of disclosure.
10.1.3. Obligations. The Receiving Party agrees that it shall:
(a) maintain all Confidential Information in strict
confidence, except that the Receiving Party may disclose or permit the
disclosure of any Confidential
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27
Information to its, and its Affiliates', directors, officers,
employees, consultants, and advisors who are obligated to maintain the
confidential nature of such Confidential Information and who need to
know such Confidential Information for the purposes set forth in this
Agreement;
(b) use all Confidential Information solely for the
purposes set forth in, or as permitted by, this Agreement; and
(c) allow its directors, officers, employees,
consultants, and advisors to reproduce the Confidential Information
only to the extent necessary to effect the purposes set forth in this
Agreement, with all such reproductions being considered Confidential
Information.
10.1.4. Exceptions. The obligations of the Receiving Party
under Section 10.1.3 above shall not apply to the extent that the Receiving
Party can demonstrate that certain Confidential Information:
(a) was in the public domain prior to the time of its
disclosure under this Agreement;
(b) entered the public domain after the time of its
disclosure under this Agreement through means other than an
unauthorized disclosure resulting from an act or omission by the
Receiving Party;
(c) was independently developed or discovered by the
Receiving Party without use of the Confidential Information;
(d) is or was disclosed to the Receiving Party at any
time, whether prior to or after the time of its disclosure under this
Agreement, by a third party having no fiduciary relationship with the
Disclosing Party and having no obligation of 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 United States
Food and Drug Administration 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.
10.2. Proprietary Materials.
10.2.1. Definition of Proprietary Materials. "Proprietary
Materials" shall mean any tangible chemical, biological, or physical research
materials that are furnished by the Transferring Party to the Receiving Party in
connection with this Agreement regardless of whether such materials are
specifically designated as proprietary to the
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28
Transferring Party. Proprietary Materials shall include, without limitation, all
ArQule Compounds and Solvay Duphar Compounds.
10.2.2. Limited Use. The Receiving Party shall use Proprietary
Materials solely for the purposes set forth in this Agreement. The Receiving
Party shall use the Proprietary Materials only in compliance with all applicable
governmental laws and regulations.
10.2.3. Limited Disposition. The Receiving Party shall not
transfer or distribute any Proprietary Materials to any third party, except to
its Affiliates, without the prior written consent of the Transferring Party.
10.2.4. Reverse Engineering. Solvay Duphar shall not attempt
to reverse engineer, or attempt to determine the structure of, any ArQule
Compound in a Screening Array until the structure of such compound has been
disclosed to Solvay Duphar by ArQule following notification by Solvay Duphar of
the location of an Active ArQule Compound and the Target pursuant to Section
3.1.2.
10.3. Return of Confidential Information and Proprietary Materials.
Upon the termination of this Agreement, at the request of the Disclosing Party,
the Receiving Party shall destroy or return to the Disclosing Party all
originals, copies, and summaries of documents, materials, and other tangible
manifestations of Confidential Information in the possession or control of the
Receiving Party, except that the Receiving Party may retain one copy of the
Confidential Information in the possession of its legal counsel (for ArQule) and
its Legal and Trademarks Department (for Solvay Duphar) solely for the purpose
of monitoring its obligations under this Agreement. Upon the termination of this
Agreement, the Receiving Party shall at the instruction of the Transferring
Party either destroy or return any unused Proprietary Materials.
10.4. Publications. In the event that either party desires to publicly
disclose (through journals, lectures, or otherwise) any results relating to the
Research Programs, such party (the "Publishing Party") shall furnish the other
party (the "Reviewing Party") with (i) a copy of any written publication at
least sixty (60) days prior to submission or (ii) a summary or abstract of an
oral disclosure at least thirty (30) days prior to the intended disclosure date.
The Reviewing Party shall have the right to (i) consent to the disclosure with
modifications to protect patentable inventions or prevent disclosure of
Confidential Information, (ii) delay the disclosure for a period of ninety (90)
days to enable the preparation and filing of a patent application, or (iii)
refuse to allow the disclosure in order to maintain certain information as a
trade secret, which refusal shall not be unreasonably exercised. Any
disagreements arising under this Section shall be referred to the Research
Committee.
10.5. Survival of Obligations. The obligations set forth in this
Article shall remain in effect for a period of five (5) years after termination
of this Agreement, except that the obligations of the Receiving Party to return
or destroy Confidential Information to the Disclosing Party and to return or
destroy Proprietary Materials received from the Transferring Party shall survive
until fulfilled.
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29
11. Other Rights and Obligations Between the Parties.
11.1. Manufacturing. In the event that Solvay Duphar or a Solvay Duphar
Affiliate decides, in its sole discretion, to contract with an outside party for
the manufacture of a Royalty-Bearing Product arising from the DA Program, Solvay
Duphar shall not offer such manufacturing rights to such third party except as
provided in this Section. Solvay Duphar hereby grants ArQule a right of first
offer to obtain such manufacturing rights in the form of a nonexclusive
manufacturing license under any applicable Solvay Duphar Patent Rights and
technical information (the "Offer Right"). ArQule may exercise the Offer Right
upon presentation of a written offer to Solvay Duphar within thirty (30) days
after ArQule receives a written notice from Solvay Duphar which describes the
substance, quantities, and requisite manufacturing specifications. Solvay Duphar
shall respond to the ArQule offer within sixty (60) days. Solvay Duphar shall
have the right to reject the ArQule offer on any grounds including but not
limited to: high cost, lack of time-effectiveness, inability to meet quality
standards, inability to meet government requirements, lack of necessary skills,
or lack of necessary equipment or facilities. If Solvay Duphar rejects the
ArQule offer, Solvay Duphar shall furnish ArQule with a brief explanation of the
reason for its decision, and Solvay Duphar shall be free to offer such
manufacturing rights to any third party; provided, however, that Solvay Duphar
may only grant such rights to a third party on terms that are more favorable, in
the aggregate, than the terms of the ArQule offer based upon the reasons that
Solvay Duphar provided ArQule for rejection of the ArQule offer.
11.2. ArQule's Right to Acquire Solvay Duphar Products. In the event
that Solvay Duphar or an Affiliate decides, in its sole discretion, to terminate
development after completion of a Phase II Clinical Trial (or its foreign
equivalent) of a Royalty-Bearing Product, Solvay Duphar shall promptly notify
ArQule of its decision, and ArQule shall have a period of ninety (90) days to
offer to purchase or license such product from Solvay Duphar. ArQule
acknowledges and agrees that Solvay Duphar may solicit and receive offers from
third parties during this ninety-day period, provided that Solvay Duphar shall
not accept any offer unless and until it has received and reasonably considered
the ArQule offer. Solvay Duphar may reject the ArQule offer for any reason, in
its sole discretion.
11.3. Sale of ArQule Pharmaceutical Business. If ArQule elects to
spin-off or otherwise sell or convey all or any portion of its pharmaceutical
business to a third party, then ArQule shall provide Solvay Duphar with written
notice of such intention. ArQule hereby grants to Solvay Duphar an exclusive
right of first negotiation to purchase such business (the "Negotiation Right").
Solvay Duphar may exercise this Negotiation Right upon written notice to ArQule
within thirty (30) days from the date upon which ArQule notified Solvay Duphar
of its intention to sell. In the event that Solvay Duphar elects to exercise
the Negotiation Right, the parties shall attempt to negotiate in good faith
the terms and conditions of an asset purchase agreement. If the parties are
unable to reach agreement within one hundred and twenty (120) days after the
date upon which Solvay Duphar exercised the Negotiation Right, then ArQule
will be free to sell such portion of its business to any third party, provided
that, during the longer of the term of this Agreement or one (1) year from the
expiration of said one hundred twenty (120)-day period, the terms of such sale
are no more favorable, in the aggregate, to such third party than those last
offered to Solvay Duphar.
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12. Representations and Warranties.
12.1. 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.
12.2. Ownership. ArQule represents and warrants that, as of the
Effective Date, it possesses the exclusive right, title, and interest in and to
the ArQule Technology and the ArQule Patent Rights and that it has the full
legal right and power to enter into the obligations and grant the rights and
licenses set forth in this Agreement.
12.3. Intellectual Property Rights. This Agreement incorporates by
reference, and ArQule hereby extends to Solvay Duphar, the representations and
warranties made by ArQule in Section 2.10 of the Series B Convertible Preferred
Stock Purchase Agreement entered into by ArQule and Solvay Physica B.V.
concurrently with this Agreement.
12.4. AMAP. ArQule represents and warrants that, if Solvay Duphar
elects to acquire the AMAP Technology pursuant to Section 8.1, the AMAP
Technology transferred to Solvay Duphar will be adequate to operate the AMAP.
13. Indemnification and Insurance.
13.1. Indemnification. Each party (the "Indemnitor") shall indemnify,
defend, and hold harmless the other party and its 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 such other party 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.
13.2. Procedures. Any Indemnitee that intends to claim indemnification
under Section 13.1 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
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31
indemnity agreement in Section 13.1. shall not apply to amounts paid in
settlement of any loss, claim, liability or action if such settlement is
effected without the consent of Solvay Duphar, 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 13.1. Each party and its 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.
13.3. Insurance. Each party shall maintain reasonably adequate
insurance or self-insurance coverage for its own potential liabilities to the
Indemnitees as set forth in this Article.
14. Term and Termination.
14.1. Term. This Agreement shall commence on the Effective Date and
shall remain in effect until the expiration of the last to expire of the
applicable ArQule, Solvay Duphar or Joint Patent Rights, unless earlier
terminated as provided in this Article 14. Thereafter, Solvay Duphar shall have
a non-exclusive, paid-up royalty-free license to ArQule Technology and the
royalty-free non-exclusive licenses to AMAP Chemistry and AMAP Technology set
forth in Section 8.3. and to AMAP Improvements set forth in Section 8.4(d) shall
remain in effect.
14.2. Breach of Payment Obligations. In the event that Solvay Duphar
fails to make timely payment of any amounts due to ArQule under this Agreement,
ArQule may terminate this Agreement upon thirty (30) days written notice to
Solvay Duphar, unless Solvay Duphar pays all past-due amounts within such
thirty-day notice period.
14.3. Material Breach. In the event that either party commits a
material breach of any of its obligations under this Agreement 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 15.5., 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. The failure
of ArQule to deliver * compounds per year under the Screening Array
Program shall not be considered a material breach of the Agreement.
14.4. Effect of Termination. The following provisions shall survive the
expiration or termination of this Agreement: Articles 1, 5, 6, 9, 10, and 13;
Sections 8.3, 8.4, 8.5, 14.1, 14.4, 15.2, 15.3, and 15.5.
15. Miscellaneous.
15.1. Relationship of Parties. Nothing in this Agreement is intended or
shall be deemed to constitute a partnership, agency, employer-employee or joint
venture relationship
* confidential treatment has been
requested for marked portions
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32
between the parties. No party shall incur any debts or make any commitments for
the other, except to the extent, if at all, specifically provided therein.
15.2. Publicity. Neither party shall use the name of the other party or
reveal the terms of this Agreement in any publicity or advertising without the
prior written approval of the other party, except that (i) either party may use
the text of a written statement approved in advance by both parties without
further approval, (ii) either party shall have the right to identify the other
party and to disclose the terms of this Agreement as required by applicable
securities laws or other applicable law or regulation, and (iii) either party
may use the name of the other party and reveal the existence of this Agreement.
15.3. 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.
15.4. Governing Law. The License Agreement shall be governed by and
construed in accordance with the laws of England.
15.5. 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 a senior executive of ArQule and
the Vice President-Research of Solvay Duphar 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 London, England. Thereafter, the
representatives of the parties shall engage in good
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33
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 15.5(c).
(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 the "Rules of Conciliation and Arbitration" of
the International Chamber of Commerce. The arbitration shall be
conducted in the English language 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. 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 shall be appointed by the Court
of Arbitration of the International Chamber of Commerce. Any such
arbitration shall be held in London, England. 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 in accordance with the 1958 Convention on the Recognition
and Enforcement of Arbitral Awards.
(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 courts of England and/or
any other court having jurisdiction for this purpose.
15.6. 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.
15.7. Headings. All headings in this Agreement are for convenience only
and shall not affect the meaning of any provision hereof.
15.8. Binding Effect. This Agreement shall inure to the benefit of and
be binding upon the parties, their Affiliates, and their respective lawful
successors and assigns.
15.9. 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
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34
to a successor in connection with the merger, consolidation, or sale of all or
substantially all of its assets or that portion of its business pertaining to
the subject matter of this Agreement. Notwithstanding the foregoing, during the
first Contract Year, ArQule must obtain the written consent of Solvay Duphar
prior to any acquisition of ArQule or that portion of its business pertaining to
the subject matter of this Agreement.
15.10. 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:
(a) With regard to notices under Sections 3.4, 4.4, 6.5-6.8,
7.8, 9.1, 11.1- 11.3, 14.2, 14.4, 15.5 and 15.9:
If to Solvay Duphar: If to ArQule:
Solvay Duphar B.V. ArQule, Inc.
▇.▇. van ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
1381 CP Weesp ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
the Netherlands Attention: President
Attention: Vice President-Research
Dr. A. de Jonge
Tel: (▇)▇▇▇▇-▇▇▇▇▇ Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇)▇▇▇▇-▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and with a copy to:
Solvay Duphar B.V. ▇▇▇▇▇▇ & ▇▇▇▇▇
▇.▇. van ▇▇▇▇▇▇▇▇▇▇ ▇▇ One Beacon Street
1381 CP Weesp ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
the Netherlands Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
Attention: Director of Corporate
Technology Acquisition Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇. ▇. ▇▇▇ ▇▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Legal and Trademarks Department
Tel: (▇)▇▇▇▇-▇▇▇▇▇
Fax: (▇)▇▇▇▇-▇▇▇▇▇
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35
and
(b) With regard to all other communications:
If to Solvay Duphar: If to ArQule:
Solvay Duphar B.V. ArQule, Inc.
▇.▇. van ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
1381 CP Weesp ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
the Netherlands Attention: President
Attention: Director of Corporate
Technology Acquisition Tel: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇. ▇. ▇▇▇ ▇▇▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Tel: (▇)▇▇▇▇-▇▇▇▇▇
Fax: (▇)▇▇▇▇-▇▇▇▇▇
Either party may change its designated address and facsimile number by notice to
the other party in the manner provided in this Section.
15.11. 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.
15.12. 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.
15.13. 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.
15.14. Hardship. The underlying objective of this Agreement is to
realize in an economical and reasonable way the mutual interests and
requirements of the parties. If at any time this Agreement should no longer meet
this objective because of technical developments, economic developments or
political changes that could not reasonably be foreseen at the time of signing
this Agreement thus causing undue and prolonged hardship, the parties shall meet
in order to bring about a mutually agreeable solution according to the economic
and reasonable objectives of this Agreement.
15.15. 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
- 30 -
36
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, blockage or 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.
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Agreement as a sealed instrument effective as of the date first above
written.
SOLVAY DUPHAR B.V. ARQULE, INC.
By: /s/ Mr. Jan Van Houtenlaan By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
___________________________ __________________
Name:_________________________ Name:_________________________
Title: President Title: Chairman
________________________ _______________________
-31-
37
EXHIBIT A
ArQule Patent Rights*
[THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
* Confidential treatment has been
requested for marked portions
38
Exhibit B
---------
Research Plan Solvay - ArQule Collaboration
-------------------------------------------
For the period October 1995 - June 30, 1996.
1. Main Aim
--------
The collaboration is aimed at accelerating Solvay's search for new innovative
therapeutics by increasing the number and diversity of compounds through the
application of combinatorial parallel synthesis chemistry technology.
2. Research Committee / Meetings / Progress Reports
------------------------------------------------
Composition of the Research Committee.
For ArQule: ▇.▇. ▇▇▇▇▇▇, PhD
▇.▇. ▇▇▇▇▇ ▇▇. PhD (ArQule teamleader)
▇.▇. ▇▇▇▇▇▇▇
For Solvay: ▇.▇. ▇▇▇▇▇, PhD
U. Prouschofe, PhD
▇. ▇▇▇ ▇▇▇▇▇▇, PhD (Solvay teamleader)
The Research Committee will meet quarterly to adapt and further define the
research plan for the next 6 months and to discuss progress over the past 3
months. Chemical themes to be included in the Directed Array program and
priority within the Research program will be decided upon by Solvay in
consultation with ArQule. ArQule will provide Solvay with all relevant
information to ArQule's best knowledge to enable sound decision making.
Performance objectives, with respect to timing and number of compounds/number of
themes, will be mutually defined by the Research Committee.
Progress will be discussed at least once per month (by video or telephone
conference) on basis of a written monthly progress report. The monthly progress
report will be prepared by ArQule and will be sent to each of the Solvay
Research Committee members in time for receipt at least 7 days prior to the
progress discussion. The monthly progress report will contain any (updated)
listing of the Arqule employees fully or partly involved in the Solvay Research
program. With the extent of involvement indicated, in addition to adequate
information with respect to status and progress of the running activities.
The Research Committee aims for an open and highly interactive collaboration
with the best scientific technical input from both sides. In addition to the
Research Committee members, other ArQule or Solvay employees may be involved in
part of the discussion upon agreement of the Research Committee team leaders.
3. Term
----
39
The term for the research plan outlined below starts at the effective closure
date of the Research Development and license agreement and ends at June 30,
1996. The first quarter ArQule will have provided the equivalence of 30 months
FTE capacity.
The program outlined below for the first quarter is definitive and will be
executed as agreed. Deviation will need the prior written approval of both the
ArQule and the Solvay teamleaders.
4. Selected Solvay Directed Arrays
-------------------------------
4.1 Description
-----------
The Solvay Directed Arrays selected for the first two quarters of the
collaboration are listed below with corresponding code numbers (SAxxx),
identifying the array, which will be used for reference.
[Confidential information]*
Table 1 Solvay Directed Arrays
------------------------------
NOTE: Number of compounds resulting from chemistry 'try-out'. If chemistry
proofs tangible, the final number of compounds for this array might
significantly increased.
More detailed descriptions, including the chemical themes involved, are included
in the annexes which are part of this research program.
4.2 Quality Control
---------------
Quality control will be performed by ArQule. ArQule guarantees that each Solvay
Directed Array complies with the following specifications:
(i) Mass Spectrometry data on MW are in accordance with the array design.
(ii) Amount per compound delivered is no less than *.
(iii) Purity of delivered compounds estimated by HPLC will be no less that
*, unless it has been otherwise decided upon discussion in the Research
Committee.
It is noted here that the purity specification of 80% in combination with the
numbers of compounds to be delivered can only be guaranteed after installation
of the AMPA chromatography substation at the ArQule which is expected by be
operational in *.
4.3 Research Objectives
-------------------
Depending on the array the following research objectives apply:
(i) completed synthesis (and/or delivery by solvay) of core molecules.
(ii) completed development of new chemical reactions, if needed.
(iii) completed synthesis of building blocks.
* Confidential treatment has been
requested for marked portions
40
(iv) completed delivery of the Solvay Directed Array including all necessary
information and documentation of Solvay.
Necessary information/documentation at delivery includes all chemical structures
of compounds, all data on impurities, the synthetic methodology applied and
information necessary to incorporate the array in Solvay's screening and to
enable adequate chemical data handling.
4.4 Estimated capacity need and time plan
-------------------------------------
*
Time and capacity plan
----------------------
Within the first two quarters of the Directed Array program all work to be done
on the arrays SASCI - SO507 can be completed. Furthermore some new arrays, to be
defined at the next quarter. Table 2 shows the timeline of completing the
research objectives defined for each of the arrays.
*
Table 2 Timeline of completion of research objectives
------------------------------------------------------
Indicated are the months of completion. Exact dates of completions depend on the
start of the program and thus on closure date of the transaction.
NOTES: Research objectives (i) - (iv) refer to the research objectives defined
above.
Delivery of library (* compounds) resulting from the chemistry
'try-outs' of SA504.
For reasons of efficiency Solvay Directed Arrays will be prepared and delivered
in parts based on common chemical reaction types.
Delivery dates of (parts of) the arrays as well as the number of compounds to
be delivered at those dates are indicated in the appended are descriptions.
Solvary-ArQule Cooperation
Directed Array Program: Definition
of Themes and Library Composition
*
* Confidential treatment has been
requested for marked portions
41
EXHIBIT C
Installation Criteria
An AMAP is a system containing the following components and capabilities.
1. Informatics Platform
(a) Reagent Inventory and Tracking System
(b) Array Software for Synthesis Design and Implementation
(c) Software for Acquisition, Analysis and Interpretation of
Data
(d) Array and Compound Registration and Tracking
2. Robotics/Hardware/Capabilities
(a) Synthesis Apparatus
(b) Weighing/Dissolution/Solubility Testing
(c) Heating/Cooling/Agitation
(d) Concentration
(e) Isolation, Extraction, Purification and Chromatography
3. Analytical Hardware
(a) LAN/LIM System for Data Acquisition, Interpretation and
Management
(b) Analytical Methodology/Techniques
A chemistry set, pre-tested at ArQule, will be provided by ArQule to Solvay to
validate the installed system. The chemistry is to be run on the new system to
completely test all components of the system. If the chemistry/system performs
in a manner equivalent to the performance of the same chemistry set on ArQule's
own AMAP, the system shall be considered successfully installed.