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CONFIDENTIAL TREATMENT REQUESTED EXHIBIT 10.11
AGREEMENT
This Agreement (the "AGREEMENT") is made as of March 21, 1997 (the
"EFFECTIVE DATE"), by and among Lexicon Genetics, Inc., a Delaware corporation
having its principal offices at 4000 Research Forest Drive, The Woodlands, Texas
77381 ("LEXICON") and Merck Genome Research Institute, a Delaware not-for-profit
corporation having its principal offices at 770 Sumneytown Pike, West Point,
Pennsylvania 19486 ("MGRI").
PRELIMINARY STATEMENT
WHEREAS, MGRI is a non-profit corporation dedicated to the support of
research regarding the genome, and in furtherance of such research provides
support to various nonprofit research organizations which are doing research
with regard to the genome; and
WHEREAS, Lexicon is conducting research to develop a proprietary
library of embryonic stem cell clones containing mutations in genes designed to
accelerate genomic research which it calls "OmniBankTM "; and
WHEREAS, Lexicon owns or has rights to, and expertise in, certain
methods of producing "Mutant Mice", as defined herein, derived from OmniBankTM;
and
WHEREAS, MGRI intends to distribute or contribute the Mutant Mice to
one or more not-for-profit organizations ("NFP") which will distribute the
Mutant Mice for "Research" as defined herein; and
WHEREAS, MGRI is willing to pay Lexicon to produce Mutant Mice for such
distribution and Lexicon is willing to produce such Mutant Mice;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained in this Agreement, the parties agree as follows:
ARTICLE I
1. DEFINITIONS
Capitalized terms used in this Agreement, both in the singular and the
plural, which are not otherwise defined herein shall have the following
respective meanings:
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***** denotes confidential information with respect to which a separate
confidential treatment request has been filed with the Securities and
Exchange Commission.
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1.1 "CLAIM" means any pending or threatened claim, demand, investigation,
cause of action, suit, default, assessment, litigation, third party
action, arbitration proceeding or proceeding by or before any
governmental authority or any other Person.
1.2 "CONFIDENTIAL INFORMATION" shall mean any information which either
party or a member ("Member") of the Mutation Selection Committee has
treated as confidential, including but not limited to information
relating to OmniBankTM , which information is disclosed by either party
or a Member to MGRI and/or Lexicon, as necessary or useful to the
parties under this Agreement and which has been designated in writing
by the disclosing party as Confidential Information at the time of such
disclosure. Confidential Information shall specifically include any
information disclosed by or among the parties or their agents during
the negotiations for this Agreement. Confidential Information does not
include, however, any information which (i) was rightfully in the
possession of the receiving party prior to the date of disclosure to
it, (ii) was in the public domain prior to the date of disclosure,
(iii) becomes part of the public domain by publication or by other
means, except through an unauthorized act or omission on the part of
the receiving party or any other Person, (iv) is supplied to the
receiving party without restriction by a Third Party who is under no
obligation to the disclosing party to maintain such information in
confidence or (v) any information developed independently by or for the
receiving party, provided, however, that it is conclusively established
that such information was independently developed.
1.3. "LEXICON INTELLECTUAL PROPERTY" shall mean all trade secrets, know-how,
patents, patent applications, trademarks, copyrights and other
intellectual property of any type owned or controlled by Lexicon as of
the Effective Date or in the future, including, without limitation,
Confidential Information, which is necessary or useful to the parties
in performing the work required or permitted under this Agreement.
1.4 "LIABILITY" means, with respect to any Person, any indebtedness,
obligation and other liability of such Person, whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become
due.
1.5 "LOSSES" means any and all damages (including consequential, punitive
and exemplary), fines, penalties, judgments, deficiencies, losses,
costs and expenses, including court costs, reasonable fees of
attorneys, accountants and other experts and other reasonable expenses
associated with any Claim.
1.6 "MUTANT MICE" shall mean a line of mice heterozygous for a Standard
Mutation, chosen by the Mutation Selection Committee, wherein such mice
transmit the Standard Mutation, in the form of a mutant allele, through
the germ line.
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1.7 "MUTATION SELECTION COMMITTEE" and "COMMITTEE" shall mean *****.
1.8 "OMNIBANK(TM)" shall mean Lexicon's proprietary library of embryonic
stem cell clones containing mutations in particular genes, which genes
are identified by DNA sequence.
1.9 "RESEARCH" shall mean research which does not relate to the sale,
lease, license or other transfer of the Mutant Mice or to the sale of
services involving the use of the Mutant Mice.
1.10 "PERSON" means any individual, firm, corporation, trust, association,
company, limited liability company, joint stock company, partnership,
joint venture, governmental authority or other entity or enterprise.
1.11 "SET" shall mean up to ***** of Mutant Mice which are heterozygous for
one selected Standard Mutation.
1.12 "STANDARD MUTATION" shall mean a gene trap insertion generated as part
of Lexicon's OmniBankTM program for a specific gene.
1.13 "THIRD PARTY" shall mean any Person other than Lexicon, MGRI or NFP.
ARTICLE II
2. DEVELOPMENT
2.1 DEVELOPMENT. Lexicon hereby agrees to generate and develop 150
different Sets of Mutant Mice (i.e., each Set shall have a different
Standard Mutation) pursuant to the terms herein.
2.2 GENERATION OF STANDARD MUTATIONS. Upon the Effective Date, Lexicon will
commence the generation of Standard Mutations in embryonic stem cells
for the production of the Mutant Mice from OmniBankTM. Lexicon will
generate Standard Mutations for the production of Mutant Mice no later
than the date of the first meeting of the Mutation Selection Committee.
Lexicon will continue to generate Standard Mutations for no less than
two years after the first annual anniversary of the Effective Date
unless such work is completed earlier.
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2.3 SELECTION OF THE STANDARD MUTATIONS. The Mutation Selection Committee
shall meet to select the Standard Mutations to be included in each
group of Mutant Mice to be produced by Lexicon hereunder. Such meetings
shall be coordinated by Lexicon and called and administered by MGRI.
The first meeting shall be held no sooner than ***** after the
Effective Date, and subsequent meetings shall be held no more
frequently than every ***** thereafter unless otherwise agreed to by
the parties hereto. Sufficiently in advance of each such meeting to
enable Committee review and preparation, Lexicon shall provide the
Committee with all information, including Confidential Information,
necessary or useful to the Committee in performing its selections of
Standard Mutations and concerning the Standard Mutations that have been
generated by Lexicon up to that time. MGRI shall designate a
Chairperson of the Committee. At each meeting Lexicon shall report to
the Committee all of the Standard Mutations that have been generated up
to that time; provided, however, Lexicon shall not be required to
include in such report Standard Mutations for which Lexicon has, at
such time, entered into an agreement with a Third Party for the
production of Mutant Mice with such Standard Mutations. The Committee
shall discuss the Standard Mutations listed in the report and choose
from that list those Standard Mutations to be included in the next
group of Mutant Mice to be produced by Lexicon as provided in Section
2.4; provided, however, that the Committee shall not knowingly select a
Standard Mutation which has already been the subject of published data
from Third Parties including, without limitation, patents, published
patent applications, or presented or published research. Subject in all
cases to the confidentiality provisions herein, the Committee may, in
its discretion, solicit advice from Third Parties regarding the
appropriate fields of research and Standard Mutations to consider for
selection.
2.3.1 At each meeting, the Mutation Selection Committee shall choose
that number of Standard Mutations equal to ***** in accordance
with Section 2.4. The Committee shall determine the process by
which it selects the Standard Mutations to be incorporated in
the Mutant Mice. In addition to the selected Standard
Mutations, the Committee shall provide Lexicon with a list of
not fewer than ***** alternate Standard Mutations. If Lexicon
is unable to produce a Mutuant Mouse with a given selected
Standard Mutation due to third party rights, as provided in
Section 4.4 or nonviability of the heterozygous Mutant Mice,
as provided in Section 2.4, the next listed alternate Standard
Mutation shall become a selected Standard Mutation in lieu of
the original selected Standard Mutation.
2.3.2 The Committee shall immediately notify Lexicon in writing of
its selections. A Committee selection may not be withdrawn or
modified if Lexicon has begun working on such selection,
except with the written consent of Lexicon, which may be
withheld in its sole reasonable discretion.
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2.3.3 If for any reason the Committee fails to meet and notify
Lexicon of its selections within the time provided above, the
delivery date for the corresponding group of Mutant Mice shall
be delayed an equivalent amount of time.
2.4 PRODUCTION OF MUTANT MICE. Lexicon will commence production of each
group of Mutant Mice within ***** of receiving notification of the
Mutation Selection Committee's decisions. Lexicon will complete the
production of ***** selected by the Mutation Selection Committee, no
later than ***** anniversary of the Effective Date, an additional group
of ***** no later than the ***** anniversary of the Effective Date and
***** no later than each of ***** anniversaries of the Effective Date.
If the nature of any of the Standard Mutations chosen prevents the
production of a living Mutant Mouse heterozygous for such Standard
Mutation, the parties hereto shall evaluate such conclusion and shall
agree that either an alternate Standard Mutation shall be substituted
for such selected Standard Mutation or Lexicon shall be deemed to have
met its obligations hereunder by production and delivery of an
embryonic stem cell with the original Standard Mutation.
2.5 SELECTION OF NFP. MGRI will select, after consultation with Lexicon,
one or more not-for-profit organizations to act as the NFP. Such
selection shall be made no later than the first anniversary of the
Effective Date.
2.6 DELIVERY OF MUTANT MICE. Upon the birth of the first generation of any
type of Mutant Mouse hereunder and provided such litter contains at
least ***** Mutant Mice, Lexicon shall deliver one-half of such litter,
dividing the males and females as evenly as possible, to MGRI or NFP.
Delivery shall be in accordance with MGRI's, NFP's and Lexicon's mouse
transfer policies. Lexicon shall certify to MGRI and NFP that each
Mutant Mouse is heterozygous for the identified Standard Mutation. If
the first generation litter does not include ***** Lexicon shall
deliver breeding pairs from the second generation. Lexicon shall not be
obligated to deliver a full Set for any Standard Mutation unless NFP or
MGRI requests such a delivery. Normal packing and shipping costs for
delivery by public carrier to MGRI and NFP shall be at Lexicon's
expense. MGRI or NFP may elect, at its sole expense, to provide for an
alternative delivery method.
2.7 BACK-UP COLONY. Lexicon shall maintain a back-up colony of ***** for
each Standard Mutation for a minimum of *****.
2.8 PROJECT MANAGERS. Each party shall identify an employee who is the
Project Manager for the work contemplated by this Agreement. The
Project Managers shall be responsible for the coordination of his or
her employer's efforts hereunder with the other parties and resolving,
if possible, any issues or problems which arise. A party may replace
its Project Manager at any time in its sole discretion.
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2.9 OWNERSHIP/LICENSE GRANT.
2.9.1 Subject to the license granted below, Lexicon shall own and
retain all rights to the Mutant Mice, including, but not
limited to, the rights to produce, breed, sell or license the
Mutant Mice and Lexicon Intellectual Property, as well as all
inventions or discoveries made solely by its employees in the
course of producing the Mutant Mice.
2.9.2 Lexicon hereby grants to MGRI a worldwide exclusive license
under the Lexicon Intellectual Property, sublicensable by it
consistent with its not-for-profit status, to use and breed,
have bred, and to distribute the Mutant Mice for Research.
MGRI and/or NFP shall notify all recipients of the Mutant Mice
in writing of the restrictions on use of the Mutant Mice under
Section 4.2 and shall upon delivering any Mutant Mice to a
Third Party provide Lexicon with the name and address of such
party and the type of Mutant Mouse delivered. Notwithstanding
the foregoing license grant, Lexicon reserves to itself and
its "Collaborators", as hereinafter defined, a personal,
nontransferable right to breed, have bred and use (but not
distribute) Mutant Mice for Research. "Collaborator" shall
mean any Third Party with whom Lexicon enters into an
agreement to perform cooperative Research. Collaborators shall
agree to use the Mutant Mice only in performing the
collaborative Research with Lexicon and shall acknowledge in
writing the limitations of Section 4.2(i) and 4.2(ii). Lexicon
shall not enter into any cooperative Research agreement for a
particular Mutant Mouse with a Collaborator prior to the date
on which MGRI or NFP makes such Mutant Mouse publicly
available.
2.9.3 Except for the license granted in this Section 2.9, Lexicon
does not grant to MGRI or NFP any license under the Lexicon
Intellectual Property.
2.10 DISTRIBUTION. MGRI shall use, and agrees to require NFP to use,
reasonable efforts to ensure wide spread availability and distribution
of the Mutant Mice for Research.
ARTICLE III
3. PAYMENT.
3.1 PAYMENT TO LEXICON. Subject to the terms and conditions set forth in
this Agreement, in consideration of the development, production and
delivery to MGRI and/or NFP of the Mutant Mice as provided herein, MGRI
agrees to pay Lexicon a total of Eight Million Dollars in accordance
with the schedule set forth in Exhibit A.
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3.1.1 All payments which are required to be made to Lexicon upon
delivery of Mutant Mice to MGRI or NFP shall occur only after
receipt of certification from Lexicon that each delivered Set
of Mutant Mice is heterozygous for the selected Standard
Mutation and, in the event of delivery to NFP, after NFP
certifies in writing to MGRI that it has received the Mutant
Mice and Lexicon's certification. NFP shall send its
certification to MGRI as promptly as possible after receipt of
the Mutant Mice, with a copy to Lexicon, but in no event later
than ***** after NFP has physically received the Mutant Mice.
3.1.2 All payments may be made by check delivered to Lexicon at its
principal offices at The Woodlands, Texas, or by wire transfer
to an account identified in writing sufficiently in advance by
Lexicon.
3.2 COSTS INCURRED BY COMMITTEE. MGRI shall reimburse all reasonable
costs incurred by the Mutation Selection Committee in performing its
duties hereunder, including, without limitation, Members' reasonable
travel costs and other reasonable Committee meeting expenses. In
determining whether costs are reasonable, MGRI shall apply the same
standards that it applies to consultants and employees working for MGRI
who travel at MGRI's request. To avoid misunderstandings, the
Chairperson of the Mutation Selection Committee shall advise MGRI in
writing of any expenses that the Committee anticipates incurring in
connection with a meeting other than travel, hotel and meals at least
30 days prior to the meeting.
3.3 LATE PAYMENT. If any payment due hereunder is not made when due,
Lexicon shall notify MGRI and NFP by letter, advising them that, at
Lexicon's option, upon the expiration of ***** from the date of such
letter, Lexicon may cease work on the production of Mutant Mice and/or
cease delivery of Mutant Mice until such late payment has been made by
MGRI.
ARTICLE IV
4. COVENANTS AND CONDITIONS
4.1 BEST COMMERCIALLY REASONABLE EFFORTS. Lexicon shall use its best
commercially reasonable efforts to produce and deliver the Mutant Mice
in accordance with the terms of this Agreement. MGRI recognizes that
the production of the Mutant Mice involves a number of technologically
complex steps and that technical obstacles from time to time on
occasion may prevent Lexicon from producing some of the Mutant Mice on
the schedule provided for herein. Lexicon shall immediately notify the
Committee, MGRI and NFP of any such technical obstacle encountered and
its analysis of whether the obstacle can be overcome and the time
required to do so. If, after consultation with NFP and MGRI, Lexicon
determines that production of such Mutant Mice within the time periods
provided
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for herein is not feasible using its best commercially reasonable
efforts, Lexicon may notify MGRI and NFP in writing that it is
extending the relevant delivery date to a date that can be accomplished
using its best commercially reasonable efforts. Such amended delivery
date shall then be substituted for the original date currently provided
in Section 2.2, provided however that under no circumstances shall any
date be extended for more than one year from its original date
currently provided in Section 2.2.
4.2 RESTRICTIONS ON USE OF MUTANT MICE. MGRI agrees to use the Mutant Mice
only for Research and otherwise only as is consistent with MGRI's
not-for-profit status. NFP and MGRI may provide any of the Mutant Mice
that NFP receives to Third Party researchers for use in Research,
provided that each such Third Party acknowledges in writing that (i) no
right is granted to further sell, lease, license or otherwise transfer
the Mutant Mice provided or any of their progeny, however produced; and
(ii) the Mutant Mice are provided for Research purposes only. NFP
and/or MGRI shall require each recipient of Mutant Mice to agree to
indemnify, defend and hold harmless all the parties hereto from and
against any and all claims, losses, liabilities and damages arising
from or related to the recipient's use of the Mutant Mice.
4.3 NO INFRINGEMENT OF THIRD PARTY RIGHTS. Lexicon shall not be obligated
to generate any Standard Mutation or produce or deliver any Mutant
Mouse or embryonic stem cell if Lexicon reasonably believes, with the
advice of its patent counsel and after consultation with NFP and the
Committee, such action would infringe upon the intellectual property
rights of a Third Party. In such event, Lexicon shall consult with NFP
and the Committee to achieve an acceptable solution including but not
limited to the generation of a non-infringing Standard Mutation and the
production of non-infringing Mutant Mice. If no acceptable solution is
reasonably available, MGRI may exercise its right to terminate this
Agreement pursuant to Section 8.3.
ARTICLE V
5. CONFIDENTIALITY
5.1 In the course of producing and delivering the Mutant Mice, the parties
hereto and the Members of the Committee may disclose Confidential
Information to a party, NFP and/or to the Members of the Committee as
necessary and useful to the performance of the parties' obligations and
to enable the parties to realize their respective benefits under this
Agreement. The parties receiving Confidential Information shall not
disclose any of the Confidential Information to any Third Party or use
any of the Confidential Information for their own benefit or any Third
Party's benefit except as expressly permitted hereunder. Members shall
not further disclose Confidential Information; provided however that
Members who are also employees of NFP may disclose such Confidential
Information to other employees and
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consultants who have a need to know such Confidential Information in
order to perform this Agreement, provided that such other NFP employees
and consultants agree in writing to maintain such Confidential
Information in confidence in accordance with the terms of this
Agreement.
5.2 NFP and Members shall sign a Confidentiality Agreement in a form
satisfactory to Lexicon and MGRI.
5.3 Except as otherwise provided or permitted herein, upon expiration or
termination of this Agreement, NFP, the Members and any party receiving
Confidential Information shall destroy or deliver to the disclosing
party any and all documents (including all copies) containing
Confidential Information which are then in their possession (if any),
and, at the disclosing party's request, shall certify that all such
documents have been destroyed or delivered to the disclosing party and
that they do not retain any such documents or any copies thereof;
provided, however, that Lexicon, NFP and MGRI may retain one copy of
each such document for record purposes only. The confidentiality
obligations set forth in this Section will remain in effect for ten
(10) years.
5.4 Lexicon may require any Third Party receiving a Mutant Mouse to agree
in writing to similar confidentiality provisions prior to being given
any Confidential Information.
5.5 The terms of this Agreement shall be treated as Confidential
Information and shall not be disclosed to anyone (except for the
parties' respective employees, consultants, agents and attorneys
assisting in the review and negotiation of this Agreement who have a
need to know the terms of this Agreement) without the written
permission of MGRI and Lexicon. Notwithstanding the foregoing, the
parties intend to jointly announce the execution of this Agreement and
the results of other activities pursuant to this Agreement. Such
announcements shall first be agreed upon by the parties in writing and
may include disclosure of the amounts paid or to be paid to Lexicon
hereunder and the number of Mutant Mice to be produced hereunder. If
either party desires to release a separate announcement relating to
this Agreement, it shall first allow the other party to approve in
writing such proposed announcement; such approval shall not be
unreasonably delayed or denied.
ARTICLE VI
6. WARRANTIES AND LIMITATIONS
6.1 Lexicon represents and warrants to MGRI that as of the Effective Date:
6.1.1 to the best of Lexicon's knowledge, Lexicon Intellectual
Property existing as of the Effective Date is subsisting and
are not invalid or unenforceable, in whole or in part;
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6.1.2 it has the full right, power and authority to enter into this
Agreement;
6.1.3 to the best of Lexicon's knowledge, Lexicon Intellectual
Property practiced as anticipated herein for the creation of
Mutant Mice does not infringe on any intellectual property
rights owned by any Third Party, and does not result from a
misappropriation by Lexicon of any property owned by any Third
Party;
6.1.4 to the best of Lexicon's knowledge, there are no claims,
liabilities, losses, judgments or settlements by or against
Lexicon relating to OmniBank or affecting the Lexicon
Intellectual Property or that would operate to prevent Lexicon
from fulfilling its obligations in whole or in part under this
Agreement;
6.1.5 to the best of Lexicon's knowledge, the information Lexicon
has provided to MGRI during the negotiation of this Agreement
is true and correct as of the Effective Date;
6.1.6 during the course of producing the Standard Mutations and
Mutant Mice, Lexicon will not knowingly infringe any valid
patents; provided, however, Lexicon shall not be obligated to
undertake any review or investigation to confirm that no such
infringement exists;
6.1.7 each Mutant Mouse delivered to NFP shall be heterozygous for
one of the selected Standard Mutations and, subject to the
terms and conditions of this Agreement, it shall deliver a Set
of the Mutant Mice for each selected Standard Mutation.
6.2. MGRI represents and warrants to Lexicon that as of the Effective Date
it has the full right, power and authority to enter into this
Agreement.
6.3 EXCEPT FOR THOSE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
SECTION 6, LEXICON MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER,
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE,
REGARDING THE MUTANT MICE. NOTWITHSTANDING ANYTHING CONTAINED HEREIN TO
THE CONTRARY, LEXICON MAKES NO REPRESENTATION OR WARRANTY THAT ALL
PATENT RIGHTS OF THIRD PARTIES WHICH MAY BE REQUIRED TO MAKE OR USE
MUTANT MICE, IF ANY, HAVE BEEN SECURED. NOTWITHSTANDING THE ABOVE,
LEXICON AGREES TO DISCLOSE TO NFP AND MGRI ANY THIRD PARTY RIGHTS,
INCLUDING WITHOUT LIMITATION INTELLECTUAL PROPERTY RIGHTS, WHICH BECOME
KNOWN TO LEXICON WHICH MAY BE REQUIRED TO AVOID CONFLICT WITH THE TERMS
OF THIS AGREEMENT OR WHICH WOULD OBSTRUCT OR PREVENT
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USE OF THE MUTANT MICE BY NFP, MGRI OR THIRD PARTIES. LEXICON SHALL NOT
BE LIABLE FOR, OR RESPONSIBLE FOR, OBTAINING OR PAYING THE COSTS OF ANY
LICENSE FROM ANY THIRD PARTY WHICH MAY BE REQUIRED TO PRODUCE OR USE
ANY OF THE MUTANT MICE. IF LEXICON DETERMINES SUCH A LICENSE IS
REQUIRED, IT MAY TERMINATE PRODUCTION OF SUCH MUTANT MOUSE WITHOUT
PENALTY UNLESS NFP OR MGRI OBTAINS THE REQUIRED LICENSE AT ITS SOLE
EXPENSE.
6.4 NONE OF THE PARTIES HERETO SHALL HAVE ANY LIABILITY WITH REGARD TO ANY
CLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT EXCEPT FOR A CLAIM
OF A MATERIAL BREACH OF ITS OBLIGATIONS HEREUNDER.
ARTICLE VII
7. INDEMNIFICATION
Each party (the "Indemnifying Party") agrees to indemnify, defend and
hold harmless, to the fullest extent permitted by law, the other party,
their affiliates, directors, officers, shareholders, employees, agents,
attorneys and each of the Members (collectively, the "Indemnified
Persons"), from and against any and all Claims, Liabilities and Losses
which may be imposed on, incurred by or asserted against any
Indemnified Person arising out of or resulting from, directly or
indirectly any material breach of this Agreement by the Indemnifying
Party; provided, however, that an Indemnifying Party shall not be
liable for any portion of any Claims, Liabilities or Losses resulting
from a material breach by the Indemnified Person of its obligations
under this Agreement or from the gross negligence, fraud or intentional
misconduct of the Indemnified Person or related Indemnified Persons.
ARTICLE VIII
8. TERMINATION AND RIGHTS UPON TERMINATION
8.1 MGRI shall have the right to terminate this Agreement on 60 days
written notice in the event that:
8.1.1 Lexicon fails or is unable to provide the Committee with at
least 500 Standard Mutations to consider for selection at
the first Committee Meeting, and 1,000 Standard Mutations to
consider for selection at each subsequent meeting of the
Committee;
8.1.2 Lexicon fails or is unable to deliver at least 40 sets of
Mutant Mice with the selected Standard Mutations acceptable to
NFP in accordance with this Agreement within three years of
the Effective Date;
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8.1.3 Lexicon has failed or has been unable to deliver 150 sets of
Mutant Mice acceptable to NFP in accordance with this
Agreement by the sixth annual anniversary of the Effective
Date;
8.1.4 Lexicon's delivery of Mutant Mice fail to comply with the
delivery procedures, to be agreed upon by Lexicon, NFP and
MGRI, on more than three occasions; or
8.1.5 Lexicon materially breaches this Agreement and fails to cure
such breach within thirty (30) days or, if such breach cannot
reasonably be cured within thirty (30) days commences to cure
such breach within thirty (30) days and diligently completes
such cure.
Termination pursuant to this provision shall be effective on the
sixtieth day after notice to Lexicon ("Termination Date").
8.2 Lexicon may terminate this Agreement effective thirty (30) days after
notice has been given to each of NFP and MGRI in the event that Lexicon
has performed all of its obligations under this Agreement and MGRI
fails to make the payments required in accordance with the terms of
this Agreement.
8.3 MGRI shall have the right to terminate this Agreement on thirty (30)
days notice if either (a) MGRI and the Committee determine that they
cannot identify, from the list of Standard Mutations reported by
Lexicon, any Standard Mutations of scientific interest to use in the
production of Mutant Mice, or (b) MGRI determines, in its sole
discretion and after consultation with Lexicon and NFP, that
performance of the Agreement by any party infringes on the intellectual
property rights of a third party and MGRI also determines, in its sole
discretion and after consultation with Lexicon and NFP, that a license
to such rights is not available on economically reasonable terms.
8.4 In the event of a termination of this Agreement pursuant to Section 8.1
or 8.3(a), the amount due to Lexicon pursuant to this Agreement shall
be calculated as follows: ((number of Sets and partial Sets accepted
under Section 2.6 delivered to and accepted by NFP) divided by 120) x
($8,000,000) (the "Total Payment"). If Lexicon has received more than
the Total Payment from MGRI, it shall return the balance within 30 days
after the Termination Date to MGRI. If Lexicon has received less than
the Total Payment, MGRI shall pay Lexicon the difference between the
amount already paid to Lexicon and the Total Payment within 30 days of
the Termination Date.
8.5 In the event of termination of this Agreement pursuant to Section
8.3(b) the parties shall review the status of the work hereunder at the
time of termination and the costs expended and negotiate in good faith
the amounts to be paid or re-paid, as the case may be, by one party to
the other.
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8.6 In the event of termination of this Agreement pursuant to Section 9.7,
Lexicon shall provide MGRI with a written accounting of funds expended
pursuant to this Agreement (the "Total Costs"). If Lexicon has received
payments hereunder in excess of the Total Costs Lexicon shall with such
written accounting refund to MGRI the amount of such excess.
8.7 The rights and obligations under Sections 2.7, 4.3, Article 5, Sections
6.3, 6.4, Article 7, Sections 8.4, 8.5, 8.6, 9.6 and 9.11 shall survive
termination of this Agreement by any party for any reason, delivery and
payment for all of the Mutant Mice to be delivered hereunder and any
expiration of this Agreement.
ARTICLE IX
9. MISCELLANEOUS
9.1 COMPLIANCE WITH LAWS. Lexicon acknowledges, and NFP shall acknowledge,
that it is subject to and agrees to abide by all laws (including the
Export Administration Act of 1979 and Arms Export Control Act)
controlling the export of technical data, computer software, laboratory
prototypes, biological material and other commodities. The transfer
and/or export of any of such items may require a license from
Governmental Authorities or written assurances by NFP, Lexicon or a
Third Party requesting a Mutant Mouse that it shall not export such
items to certain foreign countries without prior approval of such
Governmental Authorities. MGRI acknowledges and agrees that Lexicon is
not making any representation or warranty herein as to the existence or
absence of any such requirement or that, if any such requirement
exists, that it will be issued.
9.2 NOTICES. Any and all notices, requests or other communications
hereunder shall be given in writing and delivered by (a) regular,
overnight or registered or certified mail (return receipt requested),
with first class postage prepaid, (b) hand delivery, (c) facsimile
transmission or (d) overnight courier service, to the parties at the
addresses or facsimile numbers provided on the signature page hereto,
or at such other addresses or numbers as shall be designated by any
party in a notice to the other parties given in accordance with this
Section 9.2. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given, (A) in the case
of a notice sent by regular mail, on the date actually received by the
addressee, (B) in the case of a notice sent by registered or certified
mail, on the date received (or refused) as shown on the return receipt,
(C) in the case of a notice delivered by hand, when personally
delivered, (D) in the case of a notice sent by facsimile, upon
transmission subject to telephone confirmation of receipt, and (E) in
the case of a notice sent by overnight mail or overnight courier
service, the date delivered at the designated address, in each case
given or addressed as aforesaid.
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9.3 BENEFIT AND BURDEN. This Agreement shall inure to the benefit of, and
shall be binding upon, the parties and their respective successors and
any permitted assigns.
9.4 NO THIRD PARTY RIGHTS. Nothing in this Agreement shall be deemed to
create any right in any creditor or other Person other than the
Indemnified Parties pursuant to Article VII, and this Agreement shall
not be construed in any respect to be a contract in whole or in part
for the benefit of any third party (other than the Indemnified
Parties).
9.5 AMENDMENTS AND WAIVER. No amendment, modification, restatement or
supplement of this Agreement shall be valid unless the same is in
writing and signed by the parties hereto. No waiver of any provision of
this Agreement shall be valid unless in writing and signed by the party
against whom that waiver is sought to be enforced. No failure or delay
on the part of any party in exercising any right, power or privilege
hereunder and no course of dealing between or among any of the parties
shall operate as a waiver of any right, power or privilege hereunder.
No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege hereunder. No notice to
or demand on any party in any case shall entitle such party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any party to any other or further
action in any circumstances without notice or demand.
9.6 ASSIGNMENTS. Neither this Agreement nor any right, interest or
obligation hereunder may be assigned by either of the parties without
the prior written consent of all parties hereto and any attempt to do
so shall be null and void.
9.7 FORCE MAJEURE. A non-performing party shall not be liable in damages
for any delay or default in its performance, if such delay or default
is caused by conditions beyond its control, including acts of God, war
or insurrection, strikes, fire, or floods; provided, however, that any
party shall have the right to terminate this Agreement upon thirty (30)
days prior written notice if the other party is unable to fulfill its
obligations under this Agreement due to any of the above-mentioned
causes and such inability continues for a period of six (6) months.
9.8 COUNTERPARTS. This Agreement may be executed in counterparts and by the
different parties in separate counterparts, each of which when so
executed shall be deemed an original and all of which taken together
shall constitute one and the same agreement.
9.9 SEVERABILITY. Should any clause, sentence, paragraph, subsection,
Section or Article of this Agreement be judicially declared to be
invalid, unenforceable or void, such decision will not have the effect
of invalidating or voiding the remainder of this Agreement, and the
part or parts of this Agreement so held to be invalid, unenforceable or
void will be deemed to have been stricken herefrom by the parties, and
the remainder will have the same force and
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effectiveness as if such stricken part or parts had never been included
herein, provided however that in lieu of such invalid, unenforceable or
void clause, sentence, paragraph, subsection, Section or Article, the
parties working together in good faith are able to include as a
negotiated part of this Agreement a valid and enforceable provision as
similar in terms as may be possible which preserves the economic
benefits to the parties.
9.10 APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
9.11 ARBITRATION. All disputes and disagreements between or among any or all
of the parties hereto (each, a "Dispute") arising in connection with or
related to this Agreement shall be resolved by binding arbitration
administered by the American Arbitration Association (the "AAA") in New
Jersey in accordance with, and in the following order of priority, (i)
the terms of these arbitration provisions, (ii) the Commercial
Arbitration Rules of the AAA, (iii) the Federal Arbitration Act (Title
9 of the United States Code) and (iv) to the extent the foregoing are
inapplicable, unenforceable or invalid, the laws of the State of New
Jersey. The validity and enforceability of these arbitration provisions
shall be determined in accordance with this same order of priority. In
the event of any inconsistency between these arbitration provisions and
such rules and statutes, these arbitration provisions shall control.
Each of the parties may bring any action in any court of competent
jurisdiction to (A) compel arbitration of any Dispute, (B) obtain
interim measures of protection pending arbitration of any Dispute
and/or (C) enforce any decision of the arbitrators, including the final
award. If either of the parties fails or refuses to submit to binding
arbitration following a lawful demand by the other, the party so
failing or refusing shall bear all costs and expenses incurred by the
other in compelling arbitration of such Dispute.
9.12 EXPENSES. Each of the parties shall pay its own legal and accounting
expenses incident to the negotiation and administration and performance
of this Agreement and the transactions contemplated hereby.
9.13 CAPTIONS. The captions and headings contained in this Agreement shall
not be considered or given any effect in construing the provisions
hereof if any question of intent should arise.
9.14 CONSTRUCTION. No provision of this Agreement shall be interpreted or
construed against any of the parties solely because that party or its
legal representative drafted such provision.
9.15 ENTIRE AGREEMENT. This Agreement sets forth all of the promises,
agreements, conditions, understandings, warranties and representations
among the parties with respect to the transactions contemplated hereby,
and supersedes all prior agreements, arrangements and
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understandings among the parties, whether written, oral or otherwise.
There are no promises, agreements, conditions, understandings,
warranties or representations, oral or written, express or implied,
among the parties concerning the subject matter hereof except as set
forth herein.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the Effective Date.
LEXICON GENETICS, INC.
By: /s/ Arthur T. Sands
-------------------------------------
Arthur T. Sands, M.D., Ph.D.
President
Address: 4000 Research Forest Drive
The Woodlands, Texas 77381
Attention: President
Facsimile No: 281-364-0155
Telephone No: 281-364-0100
MERCK GENOME RESEARCH INSTITUTE
By: /s/ C. Thomas Caskey
------------------------------------
C. Thomas Caskey, M.D., F.A.C.P.
President
Address: 700 Sumneytown Pike
P.O. Box 4, WP26-207
West Point, Pennsylvania 19486
Attention: President
Facsimile No: 215-652-4538
Telephone No: 215-652-7399
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EXHIBIT A
(PAYMENT SCHEDULE)
Payment Due Date Amount
1. Within ***** of signing this Agreement $4,000,000
2. Within ***** of NFP's acceptance of the ***** of Mutant Mice $1,000,000
delivered by Lexicon
3. Within ***** of NFP's acceptance of the ***** of Mutant Mice $1,000,000
delivered by Lexicon
4. Within ***** of NFP's acceptance of the ***** of Mutant Mice $1,000,000
delivered by Lexicon
5. Within ***** of NFP's acceptance of the ***** of Mutant Mice $1,000,000
delivered by Lexicon