EXHIBIT 10.49
STRATEGIC ALLIANCE AGREEMENT
This STRATEGIC ALLIANCE AGREEMENT (the "Agreement"), having a date of
April 1, 2004, is made by and between, on the one hand, F. HOFFMANN-LA ROCHE
LTD, a Swiss corporation, having its principal place of business at
Grenzacherstrasse 124, CH-4070, Basel, Switzerland and HOFFMANN-LA ROCHE INC., a
New Jersey corporation, having its principal place of business at 340 Kingsland
Street, Nutley, New Jersey 07110 (collectively "Roche") and, on the other hand,
ARQULE, INC., a Delaware corporation, having its principal place of business at
19 Presidential Way, Woburn, Massachusetts 01801-5140 ("ArQule").
INTRODUCTION
1. ArQule has a development program relating to pharmaceutical
compounds for the treatment of oncological diseases based on its E2F1 technology
and associated compounds (the "ArQule Program"), and owns related intellectual
property rights.
2. Roche has expertise in the research, development, manufacture and
commercialization of pharmaceutical products.
3. Roche desires to secure rights to further develop and commercialize
products developed and to be developed pursuant to the ArQule Program.
4. In consideration of the mutual covenants and promises contained in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ArQule and Roche agree as follows:
ARTICLE 1 DEFINITIONS
As used in this Agreement, the following terms, whether used in the
singular or plural, shall have the following meanings:
[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS. OMITTED TEXT IS INDICATED BY A "*".
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1.1 "Adjusted Gross Sales" means the amount of gross sales of a Product
invoiced by Roche, its Affiliates and its sublicensees to independent
third parties less deductions for returns and return reserves (such
reserves consistent with International Financial Reporting Standards)
(including allowances actually given for spoiled, damaged, out-dated,
rejected or returned Product sold, withdrawals and recalls), rebates to
the extent consistently and reasonably applied by Roche to its products
(price reductions, rebates to social and welfare systems, charge backs
and charge back reserves (such reserves consistent with International
Financial Reporting Standards), cash sales incentives (but only to the
extent it is a sales related deduction which is accounted for within
Roche on a product-by-product basis)), government mandated rebates and
similar types of rebates (e.g., P.P.R.S. Medicaid, each as consistently
and reasonably applied by Roche to its products), volume (quantity)
discounts, each as consistently and reasonably applied by Roche to its
products, and taxes (value added or sales taxes, government mandated
exceptional taxes and other taxes directly linked to the gross sales
amount), it being understood that income and capital gains taxes are
not the type of taxes contemplated as a deduction in this definition of
Adjusted Gross Sales. Notwithstanding the foregoing, amounts received
by Roche, its Affiliates and sublicensees for the sale of Product among
Roche, its Affiliates or sublicensees for resale shall not be included
in the computation of Adjusted Gross Sales.
1.2 "Adverse Drug Reaction" and "Adverse Event" shall have the meaning
given at 21 C.F.R. 314.80 or 21 C.F.R. 312.32, as applicable, and in
the ICH guidelines. For purposes of this Agreement, "ICH guidelines"
means the E2A ICH Harmonized Tripartite Guideline: Clinical Safety Data
Management - Definitions and Standards for Expedited Reporting (as
currently in effect and adopted by the relevant regulatory agency).
1.3 "Affiliate" means (a) a business entity which owns, directly or
indirectly, more than fifty percent (50%) of the voting shares or other
means of control of a Party; or (b) a business entity in which more
than fifty percent (50%) of the voting shares or other means of control
are owned by a Party, either directly or indirectly; or (c) a business
entity, the majority ownership of which is directly or indirectly
common to the majority ownership of a Party. Anything to the contrary
in this paragraph notwithstanding, Genentech, Inc., a Delaware
corporation, and Chugai Pharmaceutical Co., Ltd., a Japanese
corporation, (each, a "Roche Entity"), shall not be deemed an Affiliate
of Roche unless Roche provides written notice to ArQule of its desire
to include a particular Roche Entity as an Affiliate of Roche and such
Roche Entity otherwise meets the definition of an Affiliate.
Notwithstanding such written notice, if any Roche Entity does not agree
to be bound by the terms and conditions of this Agreement, then such
Roche Entity shall have none of the rights and obligations of an
Affiliate of Roche under this Agreement, and such Roche Entity shall be
treated as a Third Party under this Agreement and, accordingly, Roche
may not grant a sublicense to such Roche Entity except as permitted by
Section 2.3 hereof. Notwithstanding the preceding
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provisions, once an entity ceases to be an Affiliate, then such entity
shall, without any further action, cease to have any rights, including
license and sublicense rights, under this Agreement that it has by
reason of being an Affiliate.
1.4 "Agreement Term" means the term of this Agreement, more fully described
in Section 17.2.
1.5 "ArQule Know-How" means all Know-How that ArQule owns, or otherwise has
the right to grant as part of and pertinent to the License that may be
granted herein, during the Agreement Term.
1.6 "ArQule Patent Rights" means all Patent Rights that ArQule owns or
otherwise controls and has the right to grant as part of the License
that may be granted herein during the Agreement Term. As of the date
set forth in the first paragraph of this Agreement, the ArQule Patent
Rights are as specified in Schedule 1.
1.7 "ArQule Program" has the meaning given in the first paragraph of the
Introduction of this Agreement.
1.8 "Backup Compound" means, as of the Option Exercise, any analog of the
Primary Compound and any other compound developed by ArQule that has
been screened for regulation of the E2F1 protein prior to the Effective
Date or as part of the Strategic Alliance, and as a direct result of
such screening has been determined to modulate E2F1 in cancer cells,
directly leading to apoptosis.
1.9 "Bioequivalent Product" means, with respect to a given Product sold in
a given country of the Territory by Roche, its Affiliate or
sublicensee, a product sold by a Third Party in such country containing
the same compound (or an acid, salt or ester thereof) as an Optioned
Compound.
1.10 "Clinical Candidate" means, subject to Section 4.3(a), as of or within
* following the date of the Option Exercise, a Backup Compound that has
commenced * studies.
1.11 "Combination Product" means any product containing both a
pharmaceutically active agent that causes it to be considered a Product
and one or more other pharmaceutically active agents that are not
Products.
1.12 "Compound Evaluation Report" shall have the meaning given in Section
9.3.
1.13 "Cover" (including the variations such as "Covered", "Coverage" or
"Covering") shall mean that the making, using, offering for sale,
selling or importing of a given compound or product would infringe a
claim of a Patent Right in the absence of a license under such Patent
Right. The determination of whether a compound or product is Covered by
a particular Patent Right shall be made on a country-by-country basis.
In the event of a disagreement between the Parties as to whether a
compound or product is Covered by a particular Valid Claim, the
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Parties shall refer such disagreement pursuant to the dispute
resolution process of Section 18.1.
1.14 "Effective Date" shall have the meaning given in Section 17.1(a).
1.15 "End of Phase 1" means the date of completion of a particular Phase 1
clinical trial.
1.16 "End of Phase 2" means the date of completion of a particular Phase 2
or Phase 2a clinical trial.
1.17 "EU Launch" means a Launch in any country in Europe.
1.18 "EU NDA Filing" means an application for marketing authorization filed
in the European Union for a given Product and a given Indication.
1.19 "Europe" means the United Kingdom, Germany, Italy, France, and Spain.
1.20 "FDA" means the US Food and Drug Administration.
1.21 "Field" means only all Indications. For the avoidance of doubt, the
Field does not include Specifically Excluded Areas.
1.22 "IND" means an Investigational New Drug Application filed with the FDA,
or the foreign equivalent, for human clinical testing of a drug.
1.23 "Indication" means any therapeutic indication for human cancer.
1.24 "Initiation of Phase 1" means the date that a human is first dosed with
a Product in a Phase 1 clinical trial.
1.25 "Initiation of Phase 2" means the date that a human is first dosed with
a Product in a Phase 2 clinical trial. In the event a Phase 1b clinical
trial and a Phase 2 clinical trial constitute component parts of a
combined trial, "Initiation of Phase 2" means the formal commencement
date pursuant to the applicable protocol of the Phase 2 clinical trial
component part.
1.26 "Initiation of Phase 3" means the date that a human is first dosed with
a Product in a Phase 3 clinical trial.
1.27 "Invention" means an invention that is conceived or reduced to practice
in the conduct of the Strategic Alliance.
1.28 "Invention Priority Application" means a patent application that can be
cited as a priority document for a patent filing.
1.29 "Joint Patent Rights" means all Patent Rights that ArQule and Roche
jointly own, or otherwise jointly have the right to grant as part of
the licenses herein, during the Agreement Term.
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1.30 "Joint R&D Committee" has the meaning given in Section 8.2.
1.31 "Know-How" means data, knowledge and information, including materials,
samples, chemical manufacturing data, toxicological data,
pharmacological data, preclinical data, assays, platforms,
formulations, specifications, quality control testing data, that are
necessary for the discovery, manufacture, development or
commercialization of Optioned Compounds or Products in the Territory.
1.32 "Launch" means, with respect to a Product in a country of the
Territory, the date of the first commercial sale to a Third Party by
Roche, its Affiliate or its sublicensee of the given Product in the
given country.
1.33 "License" has the meaning given in Section 2.1(a).
1.34 "License Rights Maintenance Fees" means the payments by Roche to ArQule
pursuant to Section 4.4 hereof.
1.35 "Major Indication" means an Indication for any one or more of the
following types of human cancer: *.
1.36 "Major Market Countries" means the US, Canada, Japan and any country in
Europe.
1.37 "Net Sales" means:
(a) for the US, the amount calculated by subtracting from the
amount of Adjusted Gross Sales a lump sum deduction of *
percent (*%) of Adjusted Gross Sales in lieu of those sales
related deductions which are not accounted for within Roche on
a product by product basis (e.g., outward freight, postage
charges, transportation insurance, packaging materials for
dispatch of goods, custom duties, bad debt, and legal
discounts granted later than at the time of invoicing);
(b) for the ROW Territory, the amount calculated by subtracting
from the amount of Adjusted Gross Sales a lump sum deduction
of * percent (*%) of Adjusted Gross Sales in lieu of those
sales related deductions which are not accounted for within
Roche on a product by product basis (e.g., outward freight,
postage charges, transportation insurance, packaging materials
for dispatch of goods, custom duties, bad debt, and legal
discounts granted later than at the time of invoicing).
Notwithstanding the foregoing, amounts received by Roche, its
Affiliates and sublicensees for the sale of Product among
Roche, its Affiliates or sublicensees for resale shall not be
included in the computation of Net Sales.
1.38 "Option Exercise" has the meaning given in Section 2.1(a).
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1.39 "Option Exercise Period" means the period beginning on the last day of
the Option Term, and ending * calendar days thereafter.
1.40 "Option Term" means the period commencing on the Effective Date and
ending on the date that is the earlier of the Option Trigger Date and
*, except as extended pursuant to Section 4.5.
1.41 "Option Trigger Date" means the date on which ArQule has delivered to
Roche the Compound Evaluation Report.
1.42 "Optioned Compounds" means the Primary Compound, the Clinical
Candidates and, if Roche makes the payment set forth in Section 4.3(b),
then also the Potential Optioned Compounds.
1.43 "Other Indication" means any Indication that is not a Major Indication.
1.44 "Party" means Roche or ArQule, and "Parties" means Roche and ArQule.
1.45 "Patent Rights" means all rights under any patent or patent
application, in any country of the Territory, including any patents
issuing on such patent application, and further including any
substitution, extension or supplementary protection certificate,
reissue, reexamination, renewal, division, continuation or
continuation-in-part of any of the foregoing, Covering a Product or an
Optioned Compound in the Territory.
1.46 "Phase 1" means the first phase of human clinical trials of a drug
required by the FDA to gain evidence of safety in patients, as
described in 21 C.F.R. Part 312, as it may be amended.
1.47 "Phase 1a" means the currently ongoing Phase 1 trial of the Primary
Compound governed by the IND filed on July 7, 2003.
1.48 "Phase 1b" means a Phase 1 study of the Primary Compound (in a
combination protocol) subsequent to Phase 1a.
1.49 "Phase 2" means the second phase of human clinical trials of a drug
required by the FDA to gain evidence of efficacy in the target
population for an Indication, determine optimal dosage, and obtain
expanded evidence of safety for Product(s), as described in 21 C.F.R.
Part 312, as it may be amended.
1.50 "Phase 2a" means the first set of exposure response studies in patients
in Phase 2 trials (conducted in a Major Market Country) collectively
designed to demonstrate clinical proof of concept. These studies shall
incorporate early stopping rules, where feasible and appropriate.
1.51 "Phase 3" means the third phase of human clinical trials of a drug
required by the FDA to gain evidence of efficacy in the target
population for an Indication and
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obtain expanded evidence of safety for Product(s), as described in 21
C.F.R. Part 312, as it may be amended.
1.52 "Potential Optioned Compounds" means, as of the date of the Option
Exercise, those Backup Compounds which have not been selected as
Clinical Candidates.
1.53 "Primary Compound" means the compound known as ARQ 501.
1.54 "Primary Compound Trials" means at least * clinical trials with respect
to the Primary Compound, of which (a) * shall be in *, (b) * shall be
in * as a * and (c) * shall be in * either as a * or as a * protocol
(to be determined by the Joint R&D Committee), in each case for tumor
types to be determined by the Joint R&D Committee.
1.55 "Product" means any and all products for use in the Field that include,
in whole or as a component thereof, an Optioned Compound. "Product"
shall also include any and all products that include, in whole or as a
component thereof, any Optioned Compound to which Roche has acquired a
license pursuant to Section 2.1(b).
1.56 "Publishing Party" shall have the meaning set forth in Section 16.4(a).
1.57 "Reasonable Diligence" means the same standard of effort as used by the
Parties, or in any case not less than common in the industry taken as a
whole for similarly situated companies, for the activities to be
undertaken pursuant to this Agreement, including, in the case of Roche,
activities relating to development, clinical testing, manufacturing,
marketing and sale, with respect to a product which (i) is intended to
receive approval from FDA or another regulatory agency in Major Market
Countries and (ii) has similar potential for treatment of an Indication
as do the Optioned Compounds, taking into account scientific, business,
marketing and return on investment considerations. It is understood
that such compound potential may change from time to time based upon
changing scientific, business, marketing and return on investment
considerations. The Parties also acknowledge that, even within the
Major Market Countries, Roche and its Affiliates do not always seek to
market their own products in every such country or seek to obtain
regulatory approval in every such country or for every potential
indication or every compound that has potential for an indication. As a
result, the exercise by Roche of Reasonable Diligence is to be
determined by judging its efforts taken as a whole.
1.58 "Research Plan" means the plan of research and development attached as
Schedule 2, developed by the Parties, outlining the work expected to be
performed by ArQule as part of the Strategic Alliance, as such plan may
be updated from time to time as provided in this Agreement.
1.59 "Regulatory Approval" means any approvals (including pricing and
reimbursement approvals), licenses, registrations or authorizations of
any national or international or local regulatory authority,
department, bureau or other
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governmental entity, necessary for the manufacture, marketing and sale
of a Product in a regulatory jurisdiction in the Territory.
1.60 "Roche Patent Rights" means all Patent Rights that Roche owns or
otherwise controls and has the right to grant as part of the licenses
herein, during the Agreement Term.
1.61 "ROW Territory" means all countries and territories in the world other
than the US.
1.62 "Serious Adverse Drug Reaction" and "Serious Adverse Event" shall have
the meaning given at 21 C.F.R. 314.80 or 21 C.F.R. 312.32, as
applicable, and the ICH guidelines.
1.63 "Specifically Excluded Areas" means (i) the *, and (ii) the *.
1.64 "Strategic Alliance" means discovery and development by ArQule of
pharmaceutical compounds in the Field during the Agreement Term and
development and commercialization of such compounds by Roche and ArQule
pursuant to this Agreement.
1.65 "Territory" means all countries and territories in the world, provided
however that in the event Roche exercises its right of termination
pursuant to Section 17.4(c) with respect to any country or countries,
such country or countries shall be excluded from the definition of
"Territory."
1.66 "Third Party" means a person or entity other than (i) ArQule or any of
its Affiliates or (ii) Roche or any of its Affiliates.
1.67 "US" means the United States of America and its possessions and
territories, including Puerto Rico.
1.68 "US Launch" means Launch in the US.
1.69 "US NDA" means a New Drug Application filed with the FDA for a drug.
1.70 "US NDA Filing" means for a given Product, the date that a US NDA is
filed with the FDA for such Product for an Indication.
1.71 "Valid Claim" means a claim in any (i) unexpired and issued patent
right that has not been (x) held permanently revoked, unenforceable or
invalid by a final unappealable decision of a court or government
agency of competent jurisdiction over such claim or (y) admitted to be
invalid or unenforceable through disclaimers, consent decrees or
otherwise, or (ii) pending patent application that has been on file
with the applicable patent office for no more than ten (10) years and
for which there has been reasonably consistent activity to advance to
issuance of a patent.
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ARTICLE 2 GRANTS
2.1 Grants.
(a) Subject to the terms and conditions of this Agreement,
commencing on the Effective Date and ending at the conclusion
of the Option Exercise Period, Roche shall have the right with
respect to the Products to exercise an option ("Option
Exercise") to obtain a sole and exclusive license, including
the right to grant sublicenses in accordance with Section 2.3,
under the ArQule Patent Rights and Joint Patent Rights, and a
non-exclusive license to use the ArQule Know-How, in each case
solely to make, use, offer for sale, sell and import the
Products in the Territory for use in the Field (the
"License").
(b) If Roche has effected the Option Exercise, and, within * after
the date of Option Exercise, Roche has delivered a written
notice to ArQule designating a particular Optioned Compound as
subject to this Section 2.1(b), then, subject to the terms and
conditions of this Agreement, Roche shall have, with respect
to such designated Optioned Compound and its associated
Products, for no further consideration, a sole and exclusive
license, including the right to grant sublicenses in
accordance with Section 2.3, under the ArQule Patent Rights,
and a non-exclusive license to use the ArQule Know-How, in
each case solely to make, use, offer for sale, sell and import
such product in the Territory for use outside the Field
(except that such licenses shall exclude Specifically Excluded
Areas).
(c) The right of Roche to effect the Option Exercise shall be made
by Roche giving ArQule written notice to such effect prior to
the conclusion of the Option Exercise Period and making or
having made payment to ArQule of (1) all research and
development payments specified in Section 4.1, (2) either (i)
the one-time payment specified in Section 4.3(a) or (ii) the
one-time payment specified in Section 4.3(b), and (3) any of
the License Rights Maintenance Fees due and payable pursuant
to Section 4.4, or, subject to Section 8.2(f), if an event or
events described in Section 4.4 which, but for having occurred
prior to the date of Option Exercise, would have triggered the
payment of such License Rights Maintenance Fee(s), the License
Rights Maintenance Fee(s) associated with such event or
events.
(d) If Roche exercises its right to obtain the License as provided
in this Section 2.1, ArQule shall be deemed to have granted
such License hereunder without any requirement for further
action by or on behalf of either Party. For the avoidance of
doubt, except as may be provided pursuant to Section 2.1(g),
Roche shall have no license or other rights (except for the
right to effect the Option Exercise) in or to any ArQule
Patent Rights, ArQule Know-How or Optioned Compound unless and
until it effects the Option Exercise.
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(e) From and after the Option Exercise, Roche shall be responsible
for and pay all costs and expenses relating to the continued
development of Products, including obtaining all Regulatory
Approvals with respect thereto.
(f) Except as expressly provided in Sections 2.1(b) and 2.1(h),
nothing in this Agreement grants to Roche any option, right or
license to use ArQule Know-How or ArQule Patent Rights for any
purpose other than to make, use, offer for sale, sell and
import Products in the Territory for use in the Field.
Further, except as expressly provided in this Agreement to the
contrary, nothing in this Agreement shall limit the right of
ArQule to use ArQule Know-How or ArQule Patent Rights for any
purpose not related to the making, using, offering for sale,
selling or importing of Products in the Territory for use in
the Field, including without limitation Potential Optioned
Compounds.
(g) In the event that ArQule provides Roche with any compound or
other material (including any Optioned Compound or Potential
Optioned Compound) prior to the Option Exercise, Roche shall
have the right to use such compound or other material solely
for the purpose of evaluating whether to effect the Option
Exercise. The foregoing right shall not include the right to
grant sublicenses, and such right shall expire upon the
earlier of the Option Exercise, if any, and the expiration of
the Option Term.
(h) In the event that, after Roche has exercised its option
pursuant to Section 2.1(a) but prior to the end of the
Agreement Term, ArQule wishes to license to any Third Party
any ArQule Patent Rights Covering any Optioned Compound (other
than any Optioned Compound to which Roche has acquired a
license pursuant to Section 2.1(b)) outside of the Field
(other than for Specifically Excluded Areas) (the "Rights"),
the following procedures must be followed and the following
conditions must be satisfied before ArQule may license such
Rights to a Third Party:
(i) ArQule shall, prior to entering into negotiations
with any Third Party, deliver to Roche written notice of
ArQule's interest in negotiating such a license;
(ii) ArQule shall not, unless Roche indicates
otherwise in a written notice to ArQule to the contrary,
participate in any negotiations with any Third Party for a
period of * following such notice. If Roche provides the
notice referred to in section 2.1(h)(iii), the * period
referred to in the preceding sentence shall be extended to *
following receipt by ArQule of the notice referred to in
Section 2.1(h)(iii);
(iii) If, on or before the expiration of such *
period, Roche provides to ArQule written notice of Roche's
interest in negotiating a
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license to the Rights, ArQule and Roche shall engage in
negotiations in good faith, for a period not to exceed * from
ArQule's receipt of the notice from Roche, to enter into a
license agreement for the Rights. Nothing in this Section
2.1(h)(iii) shall require either Party to enter into any such
license agreement; and
(iv) In the event Roche fails to provide to ArQule
notice of Roche's interest in negotiating a license agreement
within the * period referred to in Section 2.1(h)(ii), or in
the event the Parties fail to enter into such a license
agreement within the * period referred to in Section
2.1(h)(iii), ArQule shall be free to license the Rights to any
Third Party on any terms and conditions.
2.2 ArQule's Rights to Grant Licenses to Third Parties. In the event that
Roche declines or fails to exercise its right to obtain the License,
ArQule shall be free to license or grant any rights to a Third Party
with respect to any Potential Optioned Compound or Optioned Compound in
the Field or otherwise.
2.3 Sublicense Rights.
(a) Subject to the restriction set forth in Section 2.3(b), the
rights and licenses granted to Roche in the event of an Option
Exercise shall include the right of Roche to grant written
sublicenses to its Affiliates and Third Parties under such
rights and licenses, in whole or in part, solely to the extent
necessary to make, use, offer for sale, sell or import
Products in the Territory for use in the Field. If Roche
grants such a sublicense, Roche shall ensure that all of the
applicable terms and conditions of this Agreement shall apply
to the Affiliate or Third Party sublicensee to the same extent
as they apply to Roche for all purposes. Roche assumes full
responsibility for the performance of all obligations and
observance of all terms so imposed on such Affiliate or Third
Party sublicensee and shall itself account to ArQule for all
payments due under this Agreement by reason of such
sublicense.
(b) Notwithstanding Section 2.3(a), for so long as ArQule has a
co-promotion right with respect to a Product, Roche shall not
have the right to sublicense the rights granted to Roche in
the event of an Option Exercise to any Third Party with
respect to such Product in the US, except upon the prior
written approval of ArQule, which approval may be granted or
withheld by ArQule in its sole discretion.
(c) Any sublicense may, at the written election of ArQule in its
sole discretion, continue in full force and effect after the
termination (in whole or in part) of the underlying License
granted herein to Roche, and all sublicenses shall contain a
provision to this effect. Upon the License that will be
granted herein to Roche in the event of an Option Exercise
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becoming fully paid up pursuant to Section 17.2, any and all
sublicenses granted by Roche similarly shall become fully paid
up as to ArQule.
2.4 ArQule Co-Promotion Right. ArQule shall have the right to co-promote
each Product in the US, on a Product-by-Product basis, as specified in
this Section 2.4. For purposes of this Agreement, "co-promote" and
"co-promotion" shall mean the marketing, promotion, detailing and
advertisement of a Product by or on behalf of ArQule or any of its
Affiliates under the relevant Regulatory Approvals and the then
existing trademarks. * shall not * of a *. ArQule may exercise its
co-promotion right with respect to each Product by giving written
notice thereof to Roche at any time during the period commencing upon
the Initiation of * for such Product and ending * following such date,
provided that at the time of such exercise ArQule has an established
sales force or has committed resources and funds to hire a sales force
sufficient to meet ArQule's co-promotion obligations. Upon ArQule's
exercise of its co-promotion right with respect to any Product, the
Parties shall negotiate in good faith and enter into a written
co-promotion agreement (the "Co-Promotion Agreement"). In addition to
any other terms agreed to by the Parties, the Co-Promotion Agreement
shall contain the terms set forth in Schedule 3 hereto.
2.5 Requirement to Divest. If Roche is required by a relevant government
authority in a given country of the Territory to divest rights to an
Optioned Compound and/or Product with respect to which Roche has not
commenced * prior to the order to divest, then Roche shall use its
Reasonable Diligence to obtain authority to fulfill such requirement by
* in and to such Optioned Compound and/or Product in accordance with
the transfer procedures specified in Section 17.6. If Roche is required
by a relevant government authority in a given country of the Territory
to divest rights to an Optioned Compound and/or Product with respect to
which Roche has commenced * prior to the order to divest, then Roche
shall * to other potential acquirers of such rights, including in
bidding or other acquisition processes.
ARTICLE 3 DILIGENCE
3.1 Diligence.
(a) ArQule shall use Reasonable Diligence in proceeding with the
development of the Optioned Compounds in the Field, except
that ArQule's obligation hereunder shall expire upon the
earlier of the Option Exercise, if any, and the expiration of
the Option Term. From and after the Option Exercise, Roche
shall use Reasonable Diligence in proceeding with the
development of at least one Product, including obtaining
required Regulatory Approvals, and manufacturing, marketing
and selling such Product or Products in the Major Market
Countries.
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(b) If either Party believes in good faith that the other Party
has failed to utilize Reasonable Diligence as required by this
Section 3.1, then such Party may give the other Party written
notice of such alleged failure, identifying the Optioned
Compounds or Product (if known) and giving specific detailed
reasons supporting such allegation. Within * following the
other Party's receipt of any such notice ("Response Period"),
the other Party shall have the right to provide such Party
with a written response specifying, in reasonable detail, how
it has used Reasonable Diligence as required hereby.
(c) If the other Party has failed to provide within the Response
Period a written response, in reasonable detail, indicating
the manner in which it is in compliance with its obligations
under this Section 3.1 or in which it has remedied any breach
thereof, or the other Party has failed within the Response
Period to remedy any breach of its obligations under this
Section 3.1, then the Party alleging failure of Reasonable
Diligence shall have the right to terminate this Agreement
upon written notice to such Party effective as of the end of
the Response Period, in addition to any other rights it may
have under this Agreement as a result of such breach.
(d) In the event of a dispute between the Parties with respect to
whether either Party has complied with its obligation under
this Section 3.1, then such dispute shall be resolved in
accordance with Article 18. The consequences of any
termination under this Section 3.1 are set forth in Section
17.6.
(e) Roche acknowledges that ArQule may subcontract, and is
permitted to subcontract, ArQule's obligations under this
Agreement. However, prior to entering into any material
subcontracts, ArQule shall first solicit the advice and input
of Roche with respect to such subcontract.
3.2 Non-Exclusive Remedy. The Parties confirm and agree that nothing in
this Article 3 limits the obligations or rights of Roche or ArQule
under this Agreement.
ARTICLE 4 PAYMENTS TO ARQULE
4.1 Research and Development Payments.
(a) Roche shall reimburse to ArQule a total of * dollars ($*) for
the ArQule Program research and development costs and expenses
incurred by ArQule on or before the end of the Option Term.
These payments shall be non-refundable and non-creditable, and
shall be due and payable, except as provided in Section
4.1(b), as follows:
(i) Within * after the Effective Date, a payment of *
dollars ($*);
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(ii) A payment of * dollars ($*) due and payable
within 30 days after * and receipt of an invoice for such
amount; and
(iii) Aggregate payments totaling $*, payable in *
equal quarterly installments of $* per installment, each
installment due and payable within * after (i) the first day
of each calendar quarter and receipt of an invoice from
ArQule, with the first such installment of $* to be due and
payable within * after * and receipt of an invoice from ArQule
for such amount.
(b) Notwithstanding Section 4.1(a), if Roche effects the Option
Exercise, the entire amount of the payment otherwise due and
not yet paid pursuant to Section 4.1(a) shall be immediately
due and payable in full upon such exercise.
4.2 Decision. By the end of the Option Exercise Period, Roche shall advise
ArQule in writing of its decision to (i) effect the Exercise Option
pursuant to Section 4.3 below, (ii) extend the Option Term by a period
of up to an additional * pursuant to Section 4.5, or (iii) terminate
this Agreement pursuant to Section 17.4. Failure of Roche to timely
advise ArQule in writing of its decision shall be deemed a termination
pursuant to Section 17.4.
4.3 Payment Upon Option Exercise.
(a) If Roche effects the Option Exercise with respect to the
Primary Compound and the Clinical Candidates, then Roche shall
pay to ArQule concurrent with its notice that it is effecting
the Option Exercise a one-time payment of * dollars ($*),
which amount shall be non-refundable and non-creditable; and
thereupon Roche shall obtain the License with respect to the
associated Products. Roche shall also pay to ArQule the
remaining amounts, if any, due under Section 4.1(b) concurrent
with its notice that it is effecting the Option Exercise and
any amounts due and payable pursuant to Section 2.1(c)(3). If
there are fewer than * Clinical Candidates as of the date of
Option Exercise, Roche may elect, in a writing delivered to
ArQule at the time of the Option Exercise, for its License to
extend to additional Back-Up Compounds, up to the number of
compounds fewer than * as to which Roche would otherwise have
a License. For example, if there are * Clinical Candidates as
of the date of Option Exercise, then Roche shall have the
right to extend the License to * additional Back-Up Compound.
If Roche desires to exercise such election, then Roche shall
give such written notice to ArQule of its election, and
Roche's rights to other Back-Up Compounds that * during the *
month period after the Option Term shall become null and void.
(b) If Roche effects the Option Exercise with respect to the
Primary Compound, the Clinical Candidates and the Potential
Optioned Compounds, then Roche shall pay to ArQule concurrent
with its notice
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that it is effecting the Option Exercise a one-time payment of
* dollars ($*), which amount shall be non-refundable and
non-creditable; and thereupon Roche shall obtain the License
with respect to the associated Products. Roche shall also pay
to ArQule the remaining amounts, if any, due under Section
4.1(b) concurrent with its notice that it is effecting the
Option Exercise and any amounts due and payable pursuant to
Section 2.1(c)(3).
4.4 License Rights Maintenance Fees.
(a) Major Indications. Roche shall pay to ArQule, in order to
maintain the License (in the event that the Option Exercise
has occurred) and the other provisions of this Agreement with
respect to such Product, the following nonrefundable payments
(shown in millions of US dollars) upon the first occurrence of
the following events for each Product that is for a Major
Indication:
First Second Third
Major Major Major
Event Indication Indication Indication
- ----- ---------- ---------- ----------
* * * *
(b) Other Indications. Roche shall pay to ArQule, in order to
maintain the License (in the event that the Option Exercise
has occurred) and the other provisions of this Agreement with
respect to such Product, the following nonrefundable payments
(shown in millions of US dollars) upon the first occurrence of
the following events for each Product that is for an Other
Indication:
Any
Other
Event Indication
- ----- ----------
* *
(c) Clinical Candidates. Roche shall pay to ArQule, in order to
maintain the option set forth in Section 2.1(a), or the
License (in the event that the Option Exercise has occurred)
and the other provisions of this Agreement with respect to
such Product, the following non-refundable and non-creditable
payments for each Clinical Candidate developed in the Field:
(i) * dollars ($*) upon the first *; and
(ii) * dollars ($*) upon the first *. In the event
that ArQule progresses a Clinical Candidate to * or * without
*, such payment shall be due upon the first such Filing, in
addition to any other payments triggered by such Filing.
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(d) Timing of Payments. Each payment in Section 4.4 (a) through
4.4 (c) shall be due and payable by Roche within * after
occurrence of the applicable event.
(e) Successive Events. Roche shall make each of such payments only
once for the first occurrence of the requisite event for such
Product or Clinical Candidate, regardless of how many times
the event may be subsequently achieved with such Product or
Clinical Candidate.
(f) Effect on Royalty Payments. No amount payable under this
Article 4 shall reduce any royalties payable under Article 5
except that the payments set forth in Sections 4.4 (a) and
4.4(b) corresponding to US Launch and EU Launch events shall
result in a credit of *% of each such payment (if any) against
Roche's royalty obligations set forth in Article 5.
4.5 Payment for Extension of Option Term. If, at the end of the Option
Term, the Option Trigger Date has not yet occurred, ArQule shall advise
Roche in writing of the aspects of the deliverables not achieved and a
proposed budget to complete such deliverables by *. If Roche has a
positive interest to continue the Strategic Alliance but not yet to
exercise its Option, Roche may elect to extend the Option Term for one
additional year, from *, to *, by giving written notice to ArQule and
paying ArQule an amount equal to the amount of the proposed budget as
described in the preceding sentence, but not to exceed * dollars ($*),
on or before *. ArQule shall use the payment provided by Roche under
this Section 4.5 only in support of the Strategic Alliance. In the
event ArQule's actual expenditures for such additional year in support
of the Strategic Alliance are less than the budgeted amount (or such
lesser amount if the budgeted amount exceeds $*), ArQule shall return
to Roche such difference no later than *. However, Roche shall not have
any responsibility or liability to ArQule for any actual expenditures
exceeding the budgeted amount.
ARTICLE 5 ROYALTIES
5.1 Royalties. Roche shall pay to ArQule the following payments based on
the Net Sales of a given Product, which payments shall be subject to
adjustment as provided in this Article 5. Such royalty payments shall
be calculated by multiplying the percentages specified below by the *
Net Sales of such Product and as provided further in Section 7.2:
ANNUAL NET SALES PERCENT (%) OF NET SALES
---------------- ------------------------
(IN MILLIONS OF US DOLLARS)
* *
5.2 Term of Royalty Payments. Roche's obligation to make royalty payments
to ArQule under Section 5.1 with respect to a Product shall commence on
the Launch of such Product in any country. The Adjusted Gross Sales in
a given
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country shall be included for purposes of calculating royalties under
Section 5.1 from such Launch date until the later of (a) expiration of
the last to expire Valid Claim Covering the sale of such Product in
such country and (b) * from the Launch of such Product in such country.
For purposes of this Section 5.2, the EU will be considered as one
country.
5.3 Adjustments Related to Valid Claims from ArQule Patent Rights. With
respect to a given Product in a given calendar quarter, if in a country
of the Territory no Valid Claim from ArQule Patent Rights Covers the
sale of such Product, then Roche may calculate royalties for such
Product using only * percent (*%) of the amount of Adjusted Gross Sales
that Roche would have used for such country to calculate royalties for
such Product if a Valid Claim from ArQule Patent Rights Covered such
Product in such country; provided however that if a Valid Claim from
ArQule Patent Rights Covering such Product later exists in such
country, Roche shall resume calculating and paying royalties using one
hundred percent (100%) of such amount.
5.4 Adjustments Related to Valid Claims from Joint Patent Rights. With
respect to a given Product in a given calendar quarter, if in a country
in the Territory (a) no Valid Claim from an ArQule Patent Right Covers
such Product, but (b) only a Valid Claim or Claims from one or more
Joint Patent Rights Covers such Product, and (c) Roche sublicenses the
Product to a Third Party and, but for the provisions of this Agreement,
by operation of the law of such country, ArQule must consent to such
sublicense, then Roche may calculate royalties for such Product with
respect to such calendar quarter by including only * percent (*%) of
the amount of Adjusted Gross Sales that Roche would have otherwise
included for such country to calculate royalties for such Product if a
Valid Claim from ArQule Patent Rights Covered it as well; provided,
however, that if such Product subsequently is Covered in such country
by ArQule Patent Rights as well, Roche shall resume calculating and
paying royalties using one hundred percent (100%) of such amount. In
the event that (x) no Joint Patent Rights Cover such Product, or (y)
for a sublicense described in clause (c) of the preceding sentence, no
consent would, but for the provisions of this Agreement, be required in
a country, then Roche may calculate royalties for such Product using
only * percent (*%) of the amount of Adjusted Gross Sales that Roche
would have used for such country to calculate royalties for such
Product if a Valid Claim from ArQule Patent Rights Covered such Product
in such country; provided however that if, subsequent to such time,
neither condition described in clause (x) or clause (y) of this
sentence any longer exists, Roche shall resume calculating and paying
royalties using * percent (*%) of such amount during the time they are
satisfied.
5.5 Adjustments Related to Third Party Competition. With respect to a given
Product in a given calendar quarter, if in a country of the Territory
(a) a Third Party is selling a Bioequivalent Product, (b) Roche has an
obligation to make payments under this Agreement with respect to
Adjusted Gross Sales of the given Product in such country, (c) a Valid
Claim Covers the sale of the Bioequivalent Product in such country, (d)
in such country, sales of units of Bioequivalent Products
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(adjusted as necessary so that units of Bioequivalent Products and
Products are comparable) in aggregate total at least * percent (*%) of
the aggregate sales of units of Bioequivalent Products and Products as
measured at the end of such calendar quarter, and (e) Roche has, if it
is reasonable under the circumstances, brought in such country and
continued to diligently prosecute a patent infringement suit under any
relevant Valid Claims against the Third Party or another in privity
with respect to such Bioequivalent Product, then Roche shall have the
right to calculate royalties with respect to such calendar quarter by
including only * percent (*%) of the amount of Adjusted Gross Sales
that Roche would have otherwise included for such country to calculate
sales-based payments if no Bioequivalent Product existed in such
country.
5.6 Third Party Payments. ArQule shall be solely responsible for all
payments to Third Parties incurred pursuant to any license agreements
entered into by ArQule prior to and as of the Effective Date. Roche
shall be solely responsible for all payments to Third Parties incurred
pursuant to license agreements entered into by Roche prior to, as of or
after the Effective Date. With respect to license agreements related to
any Product and entered into by ArQule after the Effective Date but
prior to the date of the Option Exercise, the Parties shall equally
share the responsibility for all payments due to Third Parties made
pursuant to such license agreements; provided, however, that if Roche
does not agree in writing to the terms and conditions of such license
agreement, then ArQule shall be solely responsible, and further
provided that subsequent to the date of the Option Exercise, Roche
shall be solely responsible for all such payments.
If a Third Party claims a payment is due from ArQule under a license
agreement related to any Product and entered into by ArQule and ArQule
does not agree to make such payment, during the Agreement Term ArQule
shall immediately advise Roche in writing of such disagreement and
shall use Reasonable Diligence to provide Roche with a right to assume
such agreement.
5.7 Combination Products. In the event Roche or any of its Affiliates or
sublicensees intends to sell a Combination Product, the Parties shall
meet approximately one (1) year prior to the anticipated commercial
launch of such Combination Product to negotiate in good faith and agree
to an appropriate adjustment to the calculation of Adjusted Gross Sales
to reflect the relative significance and value (including consideration
of relative market share, sales potential and price potential) of the
Product and the other pharmaceutically active agent(s) contained in the
Combination Product. If, after good faith negotiations (not to exceed
ninety (90) days), the Parties cannot agree to an appropriate
adjustment, Adjusted Gross Sales shall equal Adjusted Gross Sales of
the Combination Product multiplied by a fraction, the numerator of
which is the reasonable fair market value (including consideration of
relative market share, sales potential and price potential) of the
Product and the denominator of which is the reasonable fair market
value (including consideration of relative market share, sales
potential and price potential) in the aggregate of all pharmaceutically
active agents contained in the Combination Product. If the Parties
cannot agree to the relevant fair market
- 18 -
values for purposes of the preceding sentence, such disagreement shall
be resolved in accordance with the dispute resolution procedure
specified in Section 18.3.
5.8 Application of Adjustments. For each Product with respect to which
Roche is entitled to an adjustment in royalty payments pursuant to
Sections 5.3, 5.4 and 5.5, such adjustment shall be applied pursuant to
only the first to occur of the events described or referred to in each
of the foregoing sections, and not to any subsequent event.
Notwithstanding the foregoing, or any other provision of this
Agreement, in no event shall any credit or adjustment pursuant to
Sections 5.3, 5.4 or 5.5 result in ArQule receiving royalties for a
given calendar quarter pursuant to Section 5.1 in an amount less than *
percent (*%) of the amounts set forth therein if no adjustment(s) had
been made. Credits and adjustments not utilized pursuant to the
immediately preceding sentence may be carried forward to any quarter
that the credit or adjustment is not fully utilized in accordance with
this Section 5.8 until utilized.
5.9 Allowances to Third Parties. In case of a sale or disposal of a Product
for value other than in an arm's length transaction exclusively for
money, such as barter or counter-trade, sales shall be calculated using
the fair market value of such Product (if higher than the stated sales
price) in the country of disposal.
ARTICLE 6 MILESTONE PAYMENTS
6.1 Milestone Adjusted Gross Sales Payments. Roche shall pay to ArQule the
following one-time payments for each Product, payable the first time
the applicable sales threshold is met, based upon the total Adjusted
Gross Sales throughout the world for such Product.
ANNUAL ADJUSTED GROSS SALES GREATER THAN PAYMENT (IN MILLIONS OF US DOLLARS)
- ---------------------------------------- -----------------------------------
(IN MILLIONS OF US DOLLARS)
* *
ARTICLE 7 PAYMENT, REPORTING, AUDITING
7.1 Currency and Conversion.
(a) All payments under this Agreement are stated and shall be
payable in US Dollars by wire transfer of immediately
available funds in accordance with the instructions of the
Party being paid.
(b) Whenever calculation of Adjusted Gross Sales requires
conversion from any foreign currency, Roche shall convert the
amount of Adjusted Gross Sales in such foreign currency as
computed in Roche's central Swiss
- 19 -
Francs Sales Statistics for the countries concerned, using for
internal foreign currency translation Roche's then current
standard practices actually used on a consistent basis in
preparing its audited financial statements.
(c) For sublicensees in a country, when calculating the Adjusted
Gross Sales, Roche shall require the sublicensee to report to
Roche the amount of such sales within * from the end of the
reporting period, after having converted each applicable
monthly sales in foreign currency into Swiss Francs using the
average rate of exchange published in the Wall Street Journal
(or some other source agreed upon by the Parties for any
particular country) for each month of the reporting period.
7.2 Payments.
(a) After the Launch of a Product in any country of the Territory:
(i) Roche shall calculate royalty payments set forth
in Article 5 and milestone payments set forth in Article 6
quarterly as of * (each being the last day of a reporting
period).
(ii) In calculating the payments due to ArQule, until
Adjusted Gross Sales of all Products in any calendar year have
exceeded * Dollars ($*), the royalty payable to ArQule shall
be calculated according to Article 5.
After Adjusted Gross Sales of all Products in any calendar
year have exceeded * Dollars ($*), then the royalty payable to
ArQule shall be calculated for the remainder of the Agreement
Term (without regard to whether Adjusted Gross Sales
subsequently exceed * Dollars ($*)) in each quarterly period
on an annualized basis, based on the Net Sales for the period
between January 1 of such year and the end of the most recent
quarter. Thus, for example, if in year 2008 Adjusted Gross
Sales exceeded $* and in the period between January 1, 2009
and March 31, 2009, Net Sales are $*, then the royalty for
such period shall be * and the total royalty payment due for
the three month period shall be $*.
(iii) Following the quarter ended December 31 in each
year in which royalties are calculated on an annualized basis
(i.e., pursuant to the second sentence of Section 7.2(a)(ii)),
Roche shall determine the royalties due for the immediately
preceding calendar year, and adjust the payment due to ArQule
for the quarter ended December 31 by the amount necessary to
make the aggregate payments made for the four quarters of such
year equal the amount due for the entire year. Thus, if during
2011 Adjusted Gross Sales for all Products first exceed $*,
and if after the quarter ended December 31, 2012, payments
made to ArQule for the preceding three quarters in the
aggregate were $*, and Net Sales for the
- 20 -
entire year were $*, the total royalty due for the year would
be $*, and the amount due for the quarter ended December 31
would be $*.
(iv) Roche shall pay such payments quarterly within *
after the end of each reporting period in which Net Sales
occur during the Agreement Term.
(b) With each such payment, Roche shall deliver to ArQule the
following information, and methodology for its calculation,
stated separately for the US and the ROW Territory:
(i) Net Sales for each Product; and
(ii) the royalty payments and milestone payments due
to ArQule for such reporting period.
(c) If ArQule reasonably requests additional information relating
to gross sales of any Product in any of the Major Market
Countries, deductions therefrom to calculate Adjusted Gross
Sales and/or adjustments thereto, Roche agrees to provide
promptly such information to ArQule.
(d) In the event Roche does not pay ArQule any amounts due under
this Agreement, including pursuant to Articles 4, 5 and 6,
within the applicable time period set forth herein, without
limiting ArQule's rights under Article 17, such payment shall
bear interest, to the extent permitted by applicable law, at
the rate of interest (prime rate) as published from time to
time in the weekly Federal Reserve H.15 bulletin (or a
successor or similar publication) plus * percent (*%) for the
applicable period calculated on the number of days such a
payment is overdue.
7.3 Taxes.
(a) ArQule shall pay all applicable taxes levied on ArQule under
this Agreement.
(b) If provision is made in law or regulation of any country for
withholding of taxes of any type, levies on ArQule or other
charges against ArQule with respect to any amounts payable
under this Agreement to ArQule, Roche shall promptly pay such
tax, levy or charge for and on behalf of ArQule to the proper
governmental authority, and shall promptly furnish ArQule with
a receipt evidencing such payment. Roche shall have the right
to deduct any such tax, levy or charge actually paid from
payment due ArQule hereunder or to be promptly reimbursed by
ArQule if no further payments are due ArQule hereunder. Each
Party agrees to assist the other Party in claiming exemption
from such deductions or withholdings under double taxation or
similar agreement or treaty from time to time in force and in
minimizing the amount required to be so withheld or deducted.
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7.4 Accounting.
(a) During the Agreement Term and for a period of * thereafter,
Roche shall, and shall cause its Affiliates and sublicensees
to, maintain at their respective principal places of business
records and books of account containing all particulars that
may be necessary for the purpose of calculating all payments
due under this Agreement. ArQule shall have the right to
engage on its own behalf Roche's independent, certified public
accountant, to perform, on behalf of ArQule, during the
Agreement Term and for a period of five years thereafter, an
audit of such books and records of Roche and its Affiliates
and sublicensees as may be necessary to confirm any amounts
payable to ArQule under this Agreement for the period or
periods requested by ArQule or to confirm the accuracy of any
report made under this Agreement.
(b) Such audits shall be conducted during normal business hours
upon reasonable prior written notice from ArQule (minimum of
*) in such a manner as to not unnecessarily interfere with
Roche's normal business activities, and shall be permitted
with respect to records and books covering the * immediately
preceding the date of notification of the audit.
(c) Audits conducted pursuant to this Section 7.4 shall not occur
more frequently than once per calendar year nor more
frequently than once with respect to records covering any
specific period of time. Notwithstanding the preceding, if
ArQule reasonably believes, after reviewing information
received from Roche's independent public accountant, that an
additional audit is appropriate to address an apparent
discrepancy between Roche's returns and other information as
is necessary for reporting hereunder, ArQule shall have the
right, by an audit specialty firm reasonably acceptable to
Roche, employed by ArQule and at ArQule's own expense (subject
to Section 7.4(e) below), to perform such additional audit.
(d) ArQule shall use all information, data, documents and
abstracts obtained during an audit conducted pursuant to this
Section 7.4 solely for the purposes described in Section
7.4(a). ArQule shall treat all such information, data,
documents and abstracts as Roche Confidential Information
subject to Article 16 of this Agreement and, except in the
event of a dispute between the Parties regarding amounts
payable hereunder or the results of any audit, ArQule shall
not retain such information, data, documents and abstracts for
more than * from the end of the calendar year to which each
shall pertain. Audit results shall be shared by Roche and
ArQule.
(e) If any audit hereunder reveals an underpayment, Roche shall
promptly make up such underpayment. If any audit hereunder
reveals an overpayment, ArQule shall promptly reimburse such
overpayment. ArQule shall bear the full cost of any audit
under this Section 7.4, unless
-22-
such audit discloses an underpayment by Roche of more than *
percent (*%) of the amount owed hereunder in which case Roche
shall bear the full cost of such audit as performed by Roche's
or ArQule's independent, certified public accountant and any
audit specialty firm employed by ArQule, together with
interest on any such underpayment from the date otherwise due
through the date of payment at the rate set forth in Section
7.2(d).
(f) The failure of ArQule to request verification of any payment
calculation within the * period following receipt of such
payment shall be considered acceptance of such calculation by
ArQule.
ARTICLE 8 GOVERNANCE
8.1 Strategic Alliance. The Parties hereby establish a Strategic Alliance
with respect to the development of Products.
8.2 Joint R&D Committee. Until the earlier of the Option Exercise, if any,
and the expiration of the Option Term, a joint research and development
team (the "Joint R&D Committee") shall govern the research and
development activities of the Strategic Alliance, including preparing
development plans, considering and adopting modifications to the
Research Plan, supervising ongoing research and development activities
(including scale-up, formulation and synthesis plans), recommending
actions in response to unforeseen events, assessing the compounds that
are being considered as candidates for Clinical Candidate Selection,
developing the requirements for the Compound Evaluation Report, and
supervising the transition of development and manufacturing activities
from ArQule to Roche. After such time, the Joint R&D Committee shall be
automatically dissolved.
(a) Organization. The Joint R&D Committee shall consist of *
members, * members to be designated by Roche and * members to
be designated by ArQule. Each Party shall notify the other
Party in writing of the members designated by such Party
within thirty (30) days after the Effective Date. Any Party
may withdraw the designation of any of its members of the
Joint R&D Committee and designate a replacement at any time by
giving prior written notice of the withdrawal and identifying
the replacement to the other Party. The chairperson of the
Joint R&D Committee shall be from ArQule.
(b) Meetings. The Joint R&D Committee shall hold no fewer than
semi-annual meetings on mutually agreeable dates, with the
location of the meetings to alternate between ArQule and
Roche, or any of their respective Affiliates' facilities. The
frequency and location of such meetings may be modified by
mutual agreement of the Parties. Notwithstanding the
foregoing, one of the semi-annual meetings per year
-23-
may be held by videoconference. Each Party shall pay its own
expenses associated with meetings. Each Party may, in its
discretion, invite employees of such Party who are not members
of the Joint R&D Committee to attend meetings of the Joint R&D
Committee on a non-voting basis.
(c) Decision-Making. Decisions of the Joint R&D Committee shall be
by consensus, with each Party getting one vote. If the Joint
R&D Committee is unable to decide a matter by consensus, the
Parties shall refer such matter for resolution to the * or the
* on behalf of Roche and the * of ArQule ("Alliance
Executives"). If the Alliance Executives are unable to resolve
any such matter after good faith discussions, then the final
decision shall rest with ArQule. For disputes involving
preclinical issues, the Parties shall refer such matter for
resolution to the * of Hoffmann-La Roche Inc. and the * of
ArQule prior to referring the matter to the Alliance
Executives. *.
(d) Clinical Candidate Selection. The chairperson of the Joint R&D
Committee shall provide no less than thirty (30) days prior
written notice to the other members of the Joint R&D Committee
of any meeting of the Joint R&D Committee at which
consideration of any compound as a candidate for (1) pilot pK
or pilot toxicology studies, (2) Clinical Candidate, or (3)
Phase 1 will be on the agenda. Joint R&D Committee members
shall be free to invite any subject matter experts to attend
such meeting. Joint R&D Committee members, with the possible
input of such experts, if any, shall consider pertinent data
concerning the compound in question, considering Schedule 5 to
this Agreement.
(e) The Joint R&D Committee shall appoint a subcommittee (the "CMC
Subcommittee) to handle day-to-day issues relating to
chemistry/manufacturing/control technical development ("CMC")
issues (e.g., synthetic route, market formulation and supply
chain structure). This CMC Subcommittee shall report to the
Joint R&D Committee and shall meet regularly as needed, but no
less often than quarterly. Schedule 6 of this Agreement
provides guidance as to the issues and matters to be
considered by the CMC Subcommittee.
(f) *.
8.3 Progress Reports. Within thirty (30) days after the end of each
calendar quarter, ArQule shall prepare and deliver to Roche a written
progress report for the Joint R&D Committee summarizing in reasonable
detail the results to date of the Strategic Alliance. After each
meeting, the Joint R&D Committee shall prepare a report summarizing the
discussions held and conclusions reached and setting forth plans for
the Strategic Alliance for the next six (6) months.
-24-
8.4 Joint Development Committee. No fewer than * to the anticipated
date as of which the first Optioned Compound will be at the *, the
Parties shall establish a joint development committee (the "Joint
Development Committee") to conduct reviews of Roche's development of
Products in the Territory and to provide Roche with strategic guidance
with respect to Roche's development of Products in the Territory. Prior
to the Launch of a Product, Roche shall provide the Joint Development
Committee with quarterly reports on the status of its clinical
development and commercialization efforts relating to such Product,
which reports shall include a description of Regulatory Approvals and
efforts associated therewith. After Launch of a Product, Roche shall
provide such reports on an annual basis. In addition, both prior to and
following Launch of a Product, Roche shall provide to ArQule with
reports on all significant clinical and regulatory issues relating to
such Product as soon as possible following the occurrence of each such
issue, but in all events no later than ten (10) days following such
occurrence. The Joint Development Committee shall make recommendations
and provide strategic guidance with respect to issues raised in such
reports.
(a) Organization. The Joint Development Committee shall consist of
* members, * members to be designated by Roche and * members
to be designated by ArQule. Each Party shall notify the other
Party in writing of the members designated by such Party
within sixty (60) days prior to the date as of which the first
Optioned Compound will be at the *. Any Party may withdraw the
designation of any of its members of the Joint Development
Committee and designate a replacement at any time by giving
prior written notice of the withdrawal and identifying the
replacement to the other Party. The chairperson of the Joint
Development Committee shall be from Roche.
(b) Meetings. For so long as the Joint Development Committee
contemplates clinical development of any Optioned Compounds
for the purpose of obtaining Regulatory Approval in the
Territory, the Joint Development Committee shall hold no fewer
than semi-annual meetings on mutually agreeable dates, with
the location of the meetings to alternate between ArQule and
Roche, or any of their respective Affiliates' facilities.
After Launch of a Product, the Joint Development Committee may
hold annual meetings unless the Parties mutually agree to more
frequent meetings. The frequency and location of such meetings
may be modified by mutual agreement of the Parties.
Notwithstanding the foregoing, one of the semi-annual meetings
per year may be held by videoconference. Each Party shall pay
its own expenses associated with meetings. Each Party may, in
its discretion, invite employees of such Party who are not
members of the Joint Development Committee to attend meetings
of the Joint Development Committee on a non-voting basis.
(c) Decision-Making. Decisions of the Joint Development Committee
shall be by consensus, with each Party getting one vote. If
the Joint Development Committee is unable to decide a matter
by consensus, the
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Parties shall refer such matter for resolution to the Alliance
Executives. Subject to Section 8.4(d), if the Alliance
Executives are unable to resolve any such matter after good
faith discussions, then the final decision shall rest with
Roche.
(d) Coordination. Subsequent to the date of Option Exercise, the
Joint Development Committee shall also conduct reviews of
ArQule's development of Optioned Compounds in the Territory
for the Specifically Excluded Areas defined in Section
1.63(i). Subsequent to the date of Option Exercise, ArQule
shall provide the Joint Development Committee with semi-annual
reports on the status of its clinical development and
commercialization efforts relating to Optioned Compounds for
the Specifically Excluded Areas defined in Section 1.63(i),
including reports on all related significant clinical and
regulatory issues as soon as possible following the occurrence
of each such issue, but in all events no later than ten (10)
days following such occurrence. Subsequent to the date of the
Option Exercise, with respect to an Optioned Compound
designated by Roche as subject to Section 2.1(b), ArQule shall
not conduct a particular clinical trial for the Specifically
Excluded Areas defined in Section 1.63(i) with respect to
which it had not commenced any part thereof prior to the date
of such Section 2.1(b) designation if the Joint Development
Committee determines that such particular activity would with
reasonable likelihood have a material adverse impact on the
potential of such Optioned Compound in the Field, from a
business or scientific perspective ("Impact"). Should the
Joint Development Committee not be able to reach consensus as
to whether such particular activity would with reasonable
likelihood have an Impact, any member of the Joint Development
Committee may cause the determination to be submitted for
consideration by the Alliance Executives. Notwithstanding
Section 8.4(c), in the event after good faith discussions, the
Alliance Executives do not reach agreement on such
determination, either Party may submit the matter for
determination in accordance with the arbitration procedures
set forth in Section 18.3.
ARTICLE 9 CLINICAL DEVELOPMENT
9.1 ArQule Responsibilities. ArQule, at its sole cost, shall use Reasonable
Diligence to pursue clinical development of the Optioned Compounds in
the Field through the earlier of the Option Exercise, if any, and the
expiration of the Option Term and, subject to the provisions of
Sections 3.1 and 8.2 hereof, and oversight of the Joint R&D Committee,
shall have sole control of all such clinical development activities.
ArQule shall from time to time review and, as necessary or appropriate,
propose modifications to the Research Plan to the Joint R&D Committee.
The Joint R&D Committee may adopt any such modifications or make other
modifications as it considers appropriate, in accordance with Section
8.2. After the date of Option Exercise, if any, ArQule shall provide
Roche within
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30 days of each anniversary of the Effective Date, a written report
concerning development of any of the Optioned Compounds outside of the
Field (subject to any ArQule obligations of confidentiality to Third
Parties). During the Option Term, ArQule shall provide Roche with such
written reports on a quarterly basis.
9.2 Trials and Development. As part of its responsibilities described in
Section 9.1, ArQule agrees to use Reasonable Diligence to:
(a) conduct the currently ongoing monotherapy Phase 1a trial of
the Primary Compound;
(b) conduct the Primary Compound Trials, until ArQule delivers *
data to Roche that satisfies the requirements of Section
9.3(a);
(c) conduct clinical trials for a Backup Compound * through the *;
(d) conduct evaluation of one or more additional Backup Compounds
for *; and
(e) prepare a plan for the synthetic route, market formulation and
supply chain structure for Products.
9.3 Compound Evaluation Report. ArQule shall use Reasonable Diligence to
prepare and deliver to Roche, at such time as ArQule determines
appropriate consistent with its progress in pursuing clinical
development in the ArQule Program, a report ("Compound Evaluation
Report") containing the following:
(a) data covering the criteria listed in Schedule 4 from at least
the following studies involving the Primary Compound: (i) a *
trial; and (ii) the Primary Compound Trials.; and
(b) with respect to at least one Backup Compound that is at the *,
data covering the criteria listed in Schedule 5 from at least
* trial and the studies on such Backup Compound(s) that
include pre-clinical data confirming mechanism of action,
pharmacology, pK exposure, preclinical efficacy and clinical
toxicity profile and such other matters as the Joint R&D
Committee shall reasonably determine appropriate.
9.4 Roche Responsibilities. Roche, at its sole cost, shall use Reasonable
Diligence to (1) pursue clinical development of the Optioned Compounds
in the Field from and after the date of the Option Exercise and,
subject to the provisions of Section 3.1 hereof and oversight of the
Joint Development Committee, be responsible for all such clinical
development activities; and (2) obtain all Regulatory Approvals,
including authorizations as may be required for the production,
importation, pricing, reimbursement, and sale of Products in the
Territory. For avoidance of doubt, Roche shall have sole discretion as
to which Optioned Compound shall be pursued for further development as
a Product, and Roche's decision not to pursue development of a
particular Optioned Compound in favor of pursuing
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development of another Optioned Compound shall not constitute a breach
of Roche's diligence obligations. Roche shall notify ArQule of all
Serious Adverse Drug Reactions and Serious Adverse Events occurring
during any clinical study of an Optioned Compound within * of Roche's
notice to the applicable regulatory authority. Roche shall notify
ArQule of all Adverse Drug Reactions and Adverse Events occurring
during any clinical study of an Optioned Compound within * of Roche's
notice to the applicable regulatory authority. Upon the Option
Exercise, the Parties shall cooperate to effect on orderly transition
to Roche of ArQule's database of information relating to the Optioned
Compounds.
9.5 Interpretation. For purposes of Sections 9.2 and 9.3, Phase 1b and
Phase 2 may constitute distinct clinical trials or may constitute
component parts of a combined trial.
ARTICLE 10 REGULATORY MATTERS
10.1 ArQule Regulatory Approvals. ArQule, at its sole cost, except as
provided in Section 4.1, shall pursue all Regulatory Approvals related
to each Product through the date of the Option Exercise.
10.2 Roche Regulatory Approvals.
(a) Roche, at its sole cost, shall pursue all Regulatory Approvals
related to Products from and after the date of the Option
Exercise, including the preparation and filing of applications
for Regulatory Approvals, as well as any and all governmental
approvals required to manufacture, have manufactured and sell
Products. Without limiting the generality of the foregoing,
from and after the Option Exercise, and during the Agreement
Term, Roche shall be responsible for pursuing, compiling and
submitting all regulatory filing documentation, and for
interacting with regulatory authorities, for all Products in
all countries in the Territory. During such time, Roche or its
Affiliates shall own and file, at its cost, all regulatory
filings and Regulatory Approvals for all Products in all
countries of the Territory. Roche shall supply ArQule with a
copy of all material communications related to any Product to
and from any regulatory authority for all Major Market
Countries, promptly after receipt of such communication from
such authority or concurrently with sending such communication
to such authority, as applicable. Upon request of ArQule,
Roche shall supply ArQule with a copy of all such
communications in all other countries. Roche shall also notify
ArQule of any status change or action undertaken by a data
protection authority in any country in Europe with respect to
Roche's status as a registered entity under the data
protection laws or regulations of such country.
(b) From and after the Option Exercise, Roche, at its sole cost,
shall report to appropriate authorities in accordance with and
as required by all
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applicable laws, rules and regulations all Adverse Events,
Adverse Drug Reactions, Serious Adverse Events and Serious
Adverse Drug Reactions related to use of Products anywhere in
the Territory. Roche shall provide ArQule with a copy of each
such report relating to Serious Adverse Events and Serious
Adverse Drug Reactions within * of the submission of such
report to the applicable regulatory authority. Roche shall
provide ArQule with a copy of each report relating to Adverse
Drug Reactions and Adverse Events within * of Roche's
submission of such report to the applicable regulatory
authority. Historical data from ArQule's drug safety database
shall be transferred to Roche prior to transfer of regulatory
responsibilities from ArQule to Roche. Serious Adverse Events
and Serious Adverse Drug Reactions related to the use of
Product in the Territory shall be in a single reference
database, developed, centralized, held and owned by Roche.
ArQule may request database searches from the reference
database.
10.3 Pharmacovigilance. Subsequent to the date of Option Exercise, if any,
if ArQule decides to perform clinical studies outside the Field
involving one or more Optioned Compounds, then prior to initiating such
clinical studies, the Parties shall enter into a pharmacovigilance
agreement governing the exchange of drug safety information.
ARTICLE 11 MANUFACTURE AND SUPPLY
11.1 Clinical Supply of Product. ArQule shall supply, either by itself or
through a Third Party, at its own cost all clinical supply of each
Optioned Compound, Product and placebo to be used in the Territory
through the date of the Option Exercise, either by itself or through a
Third Party.
As of the date of Option Exercise, ArQule shall supply, or cause to be
supplied, to Roche its clinical requirements of Optioned Compound(s)
and Product(s) and placebo, provided that (i) such requirements shall
be supplied to Roche at ArQule's direct manufacturing costs and
allocation of manufacturing overhead, and (ii) ArQule's supply
obligation shall not continue for more than * after Option Exercise,
and (iii) ArQule shall maintain the same Product(s) and Optioned
Compound(s) and placebo quality and specifications as immediately prior
to Option Exercise, and (iv) Roche shall use Reasonable Diligence in
effecting a transfer as soon as practicable of Product(s) and Optioned
Compound(s) and placebo manufacturing activities from ArQule to Roche.
ArQule shall also transfer to Roche a manufacturing transfer package
that will enable Roche to manufacture the Product(s) and Optioned
Compound(s) and placebo in a timely manner.
After transition of manufacturing to Roche as contemplated in the
preceding paragraph, Roche shall supply either by itself or through a
Third Party at its own cost all of its clinical supply of Optioned
Compound, Product and placebo. The
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Parties shall cooperate in all reasonable respects relating to the
transition of manufacturing activities from ArQule to Roche.
11.2 Commercial Supply. From and after the date of the Option Exercise,
Roche shall be solely and exclusively responsible at its own expense
for the manufacture and supply of Products for sale in the Territory,
either by itself or through Third Parties.
ARTICLE 12 COMMERCIALIZATION
Except as expressly set forth in any Co-Promotion Agreement entered
into by the Parties pursuant to Section 2.4, from and after the Option Exercise,
Roche, at its own expense, shall have sole responsibility and decision making
authority for the marketing, promotion, sale and distribution of Products in the
Territory. During the Agreement Term, Roche will fully inform ArQule in writing
on a regular basis (but no less frequently than once per quarter) regarding the
commercialization of Products in the Territory by Roche, its Affiliates and
sublicensees.
ARTICLE 13 TRADEMARKS
Roche shall own all trademarks used on or in connection with Products
in the Territory, and shall, at its sole cost, be responsible for procurement,
maintenance, enforcement and defense of all trademarks used on or in connection
with Products in the Territory.
ARTICLE 14 PATENT RIGHTS
14.1 Ownership of Patent Rights.
(a) Generally. Ownership of any Patent Rights developed in the
course of the Strategic Alliance shall be determined in
accordance with United States patent law.
(b) ArQule Inventions. ArQule or its Affiliates, as applicable,
shall own all Inventions having as inventors only employees,
consultants or agents of ArQule or any of its Affiliates. Each
of ArQule and its Affiliates shall require all of its
employees, consultants and agents to assign all Inventions
made by them to ArQule.
(c) Roche Inventions. Roche or its Affiliates, as applicable,
shall own all Inventions having as inventors only employees,
consultants or agents of Roche or any of its Affiliates. Each
of Roche and its Affiliates shall require all of its
employees, consultants and agents to assign all Inventions
made by them to Roche.
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(d) Joint Inventions. ArQule and Roche or their respective
Affiliates, as applicable, shall own jointly all Inventions
having as inventors employees, consultants or agents of ArQule
and Roche or any of their respective Affiliates. The Parties
will agree on a case by case basis the appropriate allocation
of cost and control concerning matters regarding the patent
prosecution, maintenance, defense and infringement of such
jointly owned Inventions and Joint Patent Rights.
(e) Disputes. For the avoidance of doubt, all disputes as to
inventorship shall be settled in accordance with Section 18.1.
14.2 Patent Prosecution and Maintenance.
(a) General. ArQule shall have the right, but not the obligation,
to prepare, file, prosecute and pursue any proceeding before
the US Patent and Trademark Office, and the foreign
equivalents thereof (including interference, re-examination
and opposition proceedings), and to maintain (collectively,
"Handle") all ArQule Patent Rights. Should ArQule decide that
it does not desire to Handle an ArQule Patent Right in a given
country, it shall provide written notice to Roche thereof no
less than * prior to the date when the ArQule Patent Right
would become abandoned in such country. After receiving such
notice, Roche may, but is not obligated, to Handle such ArQule
Patent Right in such country, at Roche's sole cost and in
Roche's name, to the extent Roche desires to do so.
(b) ArQule Prosecution Obligations Prior to Option Exercise.
ArQule shall have an obligation to keep Roche informed
generally as specified in this Section 14.2(b) as to the
status of any pending patent applications and issued patents
in the ArQule Patent Rights. During the Agreement Term, ArQule
will provide Roche with updates as to the status of ArQule's
prosecution of the ArQule Patent Rights or Joint Patent
Rights, if any, on a regular basis (but no less than once per
quarter).
(c) ArQule Prosecution Obligations After Option Exercise. After
the Option Exercise, Roche shall reimburse ArQule, on a
patent-by-patent basis, for * percent (*%) of reasonable and
documented costs for Handling ArQule Patent Rights incurred
after the date of the Option Exercise, provided such ArQule
Patent Right Covers per se an Optioned Compound.
If Roche obtains the License, then:
(i) Subject to Subsection (ii), below, ArQule shall
use reasonable efforts to consult with Roche as to the
Handling of the ArQule Patent Rights in sufficient time before
any action is due (for example, thirty (30) days in advance
for instances where actions are due within three (3) months of
a communication from a patent office) to allow Roche
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to provide comments thereon, which comments ArQule must
reasonably consider if provided to ArQule at least * before
such action is due.
(ii) ArQule shall notify and consult with Roche in
accordance with the provisions of this Section 14.2(c) prior
to filing any patent application included in the ArQule Patent
Rights. ArQule shall prepare and send to Roche a draft of each
such patent application for Roche's comment, which Roche shall
provide within * after receipt of such draft application
("Comment Period"). After reasonably considering Roche's
comments, ArQule shall file such patent application.
Notwithstanding the foregoing, ArQule shall have the right to
shorten the Comment Period if in its reasonable discretion
ArQule believes it is necessary to file any patent application
on an expedited basis. If Roche fails to provide comments on a
draft within the applicable Comment Period, ArQule shall be
free to file such application at the end of the Comment Period
or later. For the avoidance of doubt, notwithstanding any
comments that Roche may make on a draft patent application,
ArQule shall have ultimate decision making authority with
respect to the content of each patent application included in
the ArQule Patent Rights.
(iii) Within * after the filing of an Invention
Priority Application, ArQule shall provide Roche with a
written list of countries ("Country List") in which ArQule
intends to file patent applications included in the ArQule
Patent Rights that claim priority from the given Invention
Priority Application. For purposes of this Section 14.2, the
terms "Country" and "Countries" shall be deemed to include
regional groupings of countries. For the avoidance of doubt,
an Invention Priority Application may be a PCT application.
Roche, as promptly as practicable, but in no event later than
* after receipt of such Country List, shall notify ArQule in
writing of those countries on the Country List and any
additional countries ("Additional Countries") where Roche
requests that such patent applications be filed. Promptly
after receipt of Roche's notice, ArQule shall notify Roche if
it agrees with the filing of such applications in such
Additional Countries selected by Roche. Should Roche not
respond to ArQule within * after the date that ArQule provides
the Country List to Roche, then ArQule shall be free to file
such patent applications, at ArQule's *, in the countries on
the Country List and any other countries that ArQule may
select.
(iv) Provided that ArQule receives Roche's comments
within the * period specified in Section 14.2(c)(iii) above,
ArQule shall file patent applications in those countries where
Roche and ArQule agree in writing to the filing of patent
applications ("Mutually Agreed to Countries") as well as in
Additional Countries selected by Roche that are not within the
Mutually Agreed to Countries, provided that Roche shall
reimburse ArQule for * to the Handling of such patent
applications and of any patents issuing therefrom in the
Additional Countries. ArQule shall
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have the option of filing an international (PCT) application
designating at least the Mutually Agreed to Countries, to be
followed by national filings in the desired countries, or
commencing immediately with national filings.
(v) If Roche decides at any time not to continue
funding the prosecution of a patent application or maintenance
of a patent included in the ArQule Patent Rights in any
country under this Section 14.2, Roche shall notify ArQule in
writing ("Withdrawal Notice"), and Roche shall be relieved
from paying any further expenses incurred after ArQule's
receipt of such Withdrawal Notice with regard to such patent
filing in such country. After receiving the Withdrawal Notice,
ArQule may, but is not obligated to, continue to prosecute and
maintain the patent filing in such country at its sole expense
and discretion.
(vi) If ArQule decides at any time not to continue
the prosecution of a patent application or maintenance of a
patent included in the ArQule Patent Rights in any country
under this Section 14.2, and such patent application or patent
is not one as to which Roche has already sent a Withdrawal
Notice, then ArQule shall notify Roche in writing no less than
* prior to the date when such patent application or patent
would become abandoned in such country. After providing such
notice, ArQule shall have no further obligation to prosecute
such patent application or to maintain such patent in such
country. At Roche's written request, no later than * after
receipt of ArQule's written notice, and at Roche's sole cost,
ArQule shall then assign to Roche such patent application or
patent in such country, and Roche may thereafter continue to
prosecute and maintain such patent filing in such country, at
Roche's sole cost and in Roche's name, to the extent Roche
desires to do so.
(vii) For the Mutually Agreed to Countries and
Additional Countries, ArQule shall use reasonable efforts to
consult with Roche as to the prosecution and maintenance of
all patent applications and patents included in the ArQule
Patent Rights in sufficient time before any action is due (for
example, * in advance for instances where actions are due
within * of a communication from a patent office) to allow
Roche to provide comments thereon, which comments ArQule must
reasonably consider if provided to ArQule at least * before
such action is due. For the avoidance of doubt,
notwithstanding any comments that Roche may make on a draft
pursuant to this Section 14.2(c)(vii), ArQule shall have
ultimate decision making authority with respect to the content
of each such action.
14.3 Cooperation. The Parties shall cooperate in the preparation, filing and
prosecution of all patent applications filed under this Article 14, and
the maintenance of all patents issuing therefrom, including obtaining
and executing necessary powers of attorney and assignments by the named
inventors, providing relevant technical and other information as may be
requested concerning the Invention(s) disclosed in any such patent
application, obtaining execution of such
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other documents that may be needed in the filing or prosecution of such
patent applications, discussing in good faith United States and foreign
filing strategy, and, as requested, updating each other regarding the
status of any such patent applications.
14.4 Patent Marking. Roche shall, and shall cause its Affiliates and
sublicensees to, mark all Products sold or otherwise distributed
pursuant to this Agreement in accordance with the applicable patent
statutes and other relevant regulations in the country or countries of
manufacture, sale or other distribution thereof.
14.5 Infringement.
(a) The provisions of this Section 14.5 shall apply to all
Infringements (as hereinafter defined) that are not
Hatch-Waxman Suits (as defined in Section 14.6 below).
(b) During the Agreement Term, each Party shall promptly provide
written notice to the other Party of any known or suspected
infringement of any ArQule Patent Right or Joint Patent Right
in the Field by a Third Party (an "Infringement").
(c) Prior to the Option Exercise, ArQule shall have the first
right to bring and control any action or proceeding with
respect to an Infringement of an ArQule Patent Right at
ArQule's own expense and by counsel of its own choice, and
Roche shall have the right, at its own expense, to be
represented in any such action or proceeding by counsel of its
own choice. Notwithstanding the foregoing, if ArQule fails to
bring any such action or proceeding with respect to an
Infringement within (a) thirty (30) days following the notice
of alleged infringement or (b) ninety (90) days before the
time limit, if any, set forth in the applicable laws and
regulations for the filing of such actions, whichever comes
first, Roche shall have the right to bring and control any
such action or proceeding at its own expense and by counsel of
its own choice, and ArQule shall have the right, at its own
expense, to be represented in any such action or proceeding by
counsel of its own choice.
(d) After the Option Exercise, Roche shall have the first right to
bring and control any action or proceeding with respect to an
Infringement of an ArQule Patent Right at Roche's own expense
and by counsel of its own choice; at all times, Roche shall
have the first right to bring and control any action or
proceeding with respect to an Infringement of any Joint Patent
Right at Roche's own expense and by counsel of its own choice.
However, ArQule shall have the right, at its own expense, to
be represented in any such action or proceeding by counsel of
its own choice. Notwithstanding the foregoing, if Roche fails
to bring any such action or proceeding with respect to an
Infringement within (a) * following the notice of alleged
infringement or (b) * before the time limit, if any, set
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forth in the appropriate laws and regulations for the filing
of such actions, whichever comes first, ArQule shall have the
right to bring and control any such action or proceeding at
its own expense and by counsel of its own choice, and Roche
shall have the right, at its own expense, to be represented in
any such action or proceeding by counsel of its own choice.
(e) A Party that elects to bring and control an Infringement
action or proceeding pursuant to this Section 14.5 (the
"Initiating Party") shall provide prompt written notice to the
other Party of any such proceeding commenced or action taken
in connection with such proceeding by such Initiating Party.
(f) The Initiating Party shall keep the other Party informed of
the status of any such proceeding or action and shall provide
the other Party with copies of all substantive documents and
communications filed in such proceeding or action concurrent
with filing such documents.
(g) The Initiating Party shall have the sole and exclusive right
to select counsel for any such proceeding or action. The
Initiating Party shall, except as provided below, pay all
expenses of the proceeding or action, including the Initiating
Party's attorneys' fees and court costs. Prior to the Option
Exercise, ArQule shall pay its own attorneys' fees and court
costs and shall be entitled to retain all damages, settlement
payments and other consideration received as a result of such
proceeding or action. After the Option Exercise, the Parties'
attorneys' fees and court costs in connection with any such
proceeding or action shall be reimbursed and deducted from any
damages, settlement payments and other consideration received
as a result of such proceeding or action, and the balance
thereof shall belong to the Initiating Party, except to the
extent such damages, settlement payments or other
consideration are attributable to lost profits with respect to
Products in the Territory, in which case the Parties shall
share the balance of such recovery as follows: ArQule shall
receive the royalty that it would have been paid pursuant to
Article 5 and the milestone payments that it would have been
paid pursuant to Article 6 had the infringing sales been made
by Roche, and Roche shall receive the remaining balance
thereof.
(h) If the Initiating Party believes it reasonably necessary, upon
written request to the other Party, the other Party shall join
as a party to any proceeding or action brought pursuant to
this Section 14.5 but shall be under no obligation to
participate in such proceeding or action except to the extent
that participation is required as the result of its being a
named party to the proceeding or action. At the Initiating
Party's written request, the other Party shall offer
reasonable assistance to the Initiating Party in connection
with any proceeding or action brought pursuant to this Section
14.5 at no charge to the Initiating Party, except that the
Initiating Party shall reimburse the other Party for
reasonable out-of-pocket
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expenses incurred by such other Party in rendering such
assistance. The other Party shall have the right to
participate and have its own representation in any such
proceeding or action at its own expense.
(i) Prior to the Option Exercise, ArQule shall have the sole right
to control any settlement and all negotiations relating to any
proceeding or action brought with respect to an Infringement
of an ArQule Patent Right, and Roche shall have the sole right
to control any settlement and all negotiations relating to any
proceeding or action brought with respect to an Infringement
of a Joint Patent Right. After the Option Exercise, the
Initiating Party shall have the right to control settlement
and all negotiations relating to an Infringement; provided,
however, that the Initiating Party shall not enter into a
settlement without the written consent of the other Party, not
to be unreasonably withheld.
(j) For the avoidance of doubt, ArQule shall have the sole right,
but not the obligation, to bring, control and settle any
action or proceeding with respect to any ArQule Patent Right
relating to an infringement not in the Field, at its own
expense, without notice or any other obligation to Roche.
14.6 Hatch-Waxman Suits. Notwithstanding the provisions of Section 14.5,
should a Party receive a certification for a Product pursuant to the
Drug Price Competition and Patent Term Restoration Act of 1984 (Public
Law 98-417), as amended, or its equivalent in a country other than the
US (each a "Hatch-Waxman Suit"), then such Party shall immediately
provide the other Party with a copy of such certification. Prior to the
Option Exercise, ArQule shall have the sole right to enforce ArQule
Patent Rights Covering such Product and Roche shall have the sole right
to enforce Joint Patent Rights Covering such Product. After the Option
Exercise, Roche shall have the right to enforce ArQule Patent Rights
and Joint Patent Rights Covering such Product in the Field; and Roche
shall have * from the date on which it receives or provides a copy of
such certification to provide written notice to ArQule ("H-W Suit
Notice") whether Roche will bring suit, at its expense, within a *
period from the date of such certification. Should such * period expire
without Roche bringing suit or providing such H-W Suit Notice, then
ArQule shall be free to immediately bring suit in its name. If Roche
brings suit, at Roche's written request, ArQule agrees to be named as a
party to such suit.
14.7 Defense. Prior to the Option Exercise, if a Third Party commences,
either as a claim or as a counterclaim, an action or proceeding
challenging any ArQule Patent Right or Joint Patent Right, ArQule shall
have the sole right to defend such ArQule Patent Right and Roche shall
have the sole right to defend such Joint Patent Right against such
challenge. After the Option Exercise, if a Third Party commences,
either as a claim or as a counterclaim, an action or proceeding
challenging any ArQule Patent Right or Joint Patent Right in the Field,
then Roche shall have the first right to defend such Patent Right
against such challenge at Roche's own expense and by counsel of its own
choice, and ArQule shall have the right, at its own expense, to be
represented in any such action or proceeding
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by counsel of its own choice. Notwithstanding the foregoing, if Roche
does not on a timely basis commence to defend such ArQule Patent Right
or Joint Patent Right against such challenge, ArQule shall have the
right to defend such ArQule Patent Right or Joint Patent Right against
such challenge at its own expense and by counsel of its own choice, and
Roche shall have the right, at its own expense, to be represented in
any such action or proceeding by counsel of its own choice. The Party
defending an ArQule Patent Right or Joint Patent Right pursuant to this
Section 14.7 shall have the right to control settlement and all
negotiations relating to the defense; provided, however, that such
Party shall not enter into a settlement without the written consent of
the other Party, not to be unreasonably withheld. For the avoidance of
doubt, ArQule shall have the sole right, but not the obligation, to
defend, control and settle any Third Party challenges of an ArQule
Patent Right or Joint Patent Right outside the Field, at its own
expense, without notice or any other obligation to Roche. Any damages,
settlement payments and other consideration received as a result of the
defense of an ArQule Patent Right or Joint Patent Right pursuant to
this Section 14.7 shall be allocated between the Parties in accordance
with the procedure specified in Section 14.5(g).
14.8 Cooperation Relating to Infringements and Defense. Each Party shall
cooperate fully with the other Party in any action or proceeding
brought in connection with an Infringement or in any defense of an
ArQule Patent Right against challenge by a Third Party, and shall
provide all assistance reasonably requested by such other Party in
carrying on such action, proceeding or defense.
14.9 Patent Notices. All notices required or permitted under this Article 14
to Roche shall be given to:
F. Hoffmann-La Roche Ltd
Grenzacherstrasse 124
CH-4070
Basel, Switzerland
Attn: Head, Patent Law
with copies of all notices relating to U.S. cases to:
Hoffmann-La Roche Inc.
340 Kingsland Street
Nutley, New Jersey 07110
Attn: Chief Patent Counsel
All notices required or permitted under this Article 14 to ArQule shall
be given to:
ArQule, Inc.
19 Presidential Way
Woburn, Massachusetts 01801-5140
Attn: General Counsel
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with copies of all notices to:
Arnold & Porter
555 Twelfth Street, NW
Washington, D.C. 20004
Attn: David Marsh, Esq.
Notices under this Section shall be effective when delivered to the
addressee at the address listed above, or such other address as the
addressee shall have specified in a written notice actually received by
the addresser.
ARTICLE 15 REPRESENTATIONS AND WARRANTIES
15.1 Representations and Warranties of the Parties. Each Party warrants and
represents to the other Party that:
(a) it has the full right and authority to enter into this
Agreement and that it is not aware of any impediment that
would inhibit its ability to perform the terms and conditions
imposed on it by this Agreement;
(b) all corporate action on the part of such Party, its officers,
directors and stockholders necessary for (i) the
authorization, execution and delivery of this Agreement and
(ii) the performance of all obligations of such Party
hereunder has been taken, and this Agreement constitutes the
legal and binding obligation of such Party, enforceable
against such Party in accordance with its terms; and
(c) the execution of this Agreement and the performance of the
transactions contemplated by this Agreement by such Party will
not conflict with or result in a breach of any of the terms,
conditions or provisions of, or constitute a default under any
agreement or other instrument to which such Party is a party
or by which it or any of its property is bound.
15.2 Representations and Warranties of ArQule.
(a) Right to Grant Licenses. ArQule represents and warrants to
Roche that it has the right to grant Roche any License that
may be granted to Roche under this Agreement.
(b) No Material Misstatements. ArQule represents and warrants to
Roche that its senior executives have not intentionally failed
to disclose any information actually known to them which, in
their reasonable opinion, would be material to Roche entering
into this Agreement, and to the actual knowledge of such
senior executives no information provided to Roche in
connection with this Agreement contains any untrue statement
of material fact or omits to state a material fact.
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(c) As of the date set forth in the first paragraph of this
Agreement, the only existing licenses held by ArQule that
reasonably relate to the Strategic Alliance are those listed
in Schedule 7.
15.3 Disclaimer. THE FOREGOING REPRESENTATIONS AND WARRANTIES ARE IN LIEU OF
ALL OTHER REPRESENTATIONS AND WARRANTIES NOT EXPRESSLY SET FORTH
HEREIN. EACH OF ARQULE AND ROCHE DISCLAIM ALL OTHER REPRESENTATIONS AND
WARRANTIES, WHETHER EXPRESS OR IMPLIED, WITH RESPECT TO THEIR
RESPECTIVE RESEARCH, DEVELOPMENT AND COMMERCIALIZATION EFFORTS
HEREUNDER, INCLUDING WHETHER THE PRODUCTS CAN BE SUCCESSFULLY DEVELOPED
OR MARKETED, AND THE ACCURACY, PERFORMANCE, UTILITY, RELIABILITY,
TECHNOLOGICAL OR COMMERCIAL VALUE, COMPREHENSIVENESS, MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE WHATSOEVER OF THE PRODUCTS OR ANY
RESEARCH. EXCEPT WITH RESPECT TO A BREACH OF ARTICLE 16 AND ANY CLAIM
FOR INDEMNIFICATION PURSUANT TO SECTION 19.1, IN NO EVENT SHALL EITHER
ARQULE OR ROCHE BE LIABLE FOR ANY SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES ARISING OUT OF THIS AGREEMENT BASED ON CONTRACT,
TORT OR ANY OTHER LEGAL THEORY.
ARTICLE 16 CONFIDENTIAL INFORMATION
16.1 Treatment of Confidential Information. In carrying out rights and
obligations under this Agreement, each Party will be sharing
proprietary information ("Confidential Information") with the other
Party. Except as expressly permitted by this Agreement, each Party
shall, and shall cause its Affiliates to, treat Confidential
Information received from the other Party (the "Disclosing Party") as
it treats its own proprietary information. In particular, during the
Agreement Term and for a period of * thereafter, the Party in receipt
of the Disclosing Party's Confidential Information (the "Receiving
Party") shall not disclose, divulge or otherwise communicate such
Confidential Information to any Third Party, or use it for any purpose
except pursuant to and in order to carry out its obligations under this
Agreement. Notwithstanding the foregoing, the Receiving Party may
disclose Confidential Information of the Disclosing Party to the
Receiving Party's directors, officers, employees, Affiliates,
consultants, subcontractors, sublicensees or agents to the extent
reasonably necessary to carry out its obligations under this Agreement,
provided that such directors, officers, employees, Affiliates,
consultants, subcontractors, sublicensees or agents have been advised
of the confidential nature of such information and have agreed to
maintain such information as confidential to the same extent required
by this Article 16.
16.2 Exceptions to Definition of Confidential Information. Confidential
Information shall not include information that the Receiving Party can
demonstrate:
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(a) was known by the Receiving Party or its Affiliates prior to
the date it was disclosed to the Receiving Party or its
Affiliates by the Disclosing Party or its Affiliates, as
evidenced by the prior written records of the Receiving Party
or its Affiliates; or
(b) is lawfully disclosed to the Receiving Party or its Affiliates
by a Third Party rightfully in possession of such information,
either before or after the date of the disclosure to the
Receiving Party or its Affiliates; or
(c) becomes generally known to the public through no act or
omission on the part of the Receiving Party or its Affiliates,
either before or after the date of the disclosure to the
Receiving Party or its Affiliates, but such exclusion applies
only after such information is published or becomes generally
known; or
(d) is independently developed by the Receiving Party or its
Affiliates without reference to or reliance upon any
Confidential Information of the Disclosing Party or its
Affiliates; or
(e) is reasonably determined by the Receiving Party's legal
counsel to be required to be disclosed by the Receiving Party
or its Affiliates to comply with applicable securities or
other laws, to defend or prosecute litigation or to comply
with governmental regulations, provided that the Receiving
Party or its Affiliates use all reasonable efforts to provide
prior written notice of such disclosure to the Disclosing
Party or its Affiliates and to take reasonable and lawful
actions to avoid or limit such disclosure or to assist the
Disclosing Party in avoiding or limiting such disclosure; or
(f) is disclosed to the Receiving Party's financial sources or
potential acquirers of its stock or assets (directly or
indirectly) so long as any such disclosure is made pursuant to
a written confidentiality agreement between the Receiving
Party and such financial source or potential acquirer that is
at least as protective of the Disclosing Party's Confidential
Information as the provisions of this Article 16. Disclosures
permitted pursuant to this Section 16.2(f) include disclosure
of this Agreement to financial sources or potential acquirers.
16.3 Exceptions. The restrictions set forth in this Article 16 shall not
prevent either Party from (i) preparing, filing, prosecuting or
maintaining a patent application or its resulting patents related to a
Product in accordance with Article 14 or (ii) disclosing Confidential
Information to governmental agencies to the extent required or
desirable to obtain a Regulatory Approval, provided that the Party
disclosing Confidential Information of the Disclosing Party shall use
all reasonable efforts to provide prior written notice of such
disclosure to the Disclosing Party and to take reasonable and lawful
actions to avoid or limit such disclosure or to assist the Disclosing
Party in avoiding or limiting such disclosure.
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16.4 Publications. After the Option Exercise, the following provisions shall
apply to the Parties with respect to all publications, presentations
and other public disseminations of any information relating to Optioned
Compounds (whether or not used in the Field) or to scientific work
performed as part of the Strategic Alliance:
(a) The Party desiring to publish, present or otherwise publicly
disseminate such information (the "Publishing Party") shall
provide the other Party with a copy of any proposed
publication, presentation or other public dissemination at
least * prior to submission for publication, presentation or
other public dissemination so as to provide such other Party
an opportunity to recommend any changes it reasonably believes
are necessary to preserve the Confidential Information
belonging in whole or in part to such other Party or to
preserve such other Party's ability to obtain a patent or
patents Covering any Invention. The incorporation of such
recommended changes shall not be unreasonably refused.
(b) If such other Party provides written notice ("Notice") to the
Publishing Party within * of receipt of the copy of the
proposed publication, presentation or other public
dissemination that such publication, presentation or other
public dissemination in its reasonable judgment (i) discloses
information about an Invention for which the other Party
desires patent protection or (ii) discloses Confidential
Information of the other Party, the Publishing Party shall
prevent such publication or delay such publication,
presentation or other dissemination until the Parties have
agreed on mutually acceptable modifications thereto so as not
to prejudice the other Party's right to obtain a patent and
not to disclose the other Party's Confidential Information. In
the case of Inventions, a delay shall be for a period
reasonably sufficient to permit the timely preparation and
filing of a patent application(s) or application(s) on the
Invention, and in no event less than * from the date of
Notice.
ARTICLE 17 TERM AND TERMINATION
17.1 HSR Condition Subsequent.
(a) If the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act") applies to the transactions currently
contemplated by this Agreement, the effectiveness of this
Agreement and the transactions contemplated hereunder shall be
subject to and shall be contingent upon the satisfaction of
the following condition subsequent to the execution of this
Agreement. The condition subsequent shall be the earlier to
occur of (i) approval of the transaction by the Federal Trade
Commission or the appropriate US anti-trust authorities or
(ii) the expiration or termination of all applicable waiting
periods, requests for information (and any extensions thereof)
under the HSR Act. If the HSR Act does not apply to
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the transactions currently contemplated by this Agreement, the
effectiveness of this Agreement and the transactions
contemplated hereunder shall commence on the date set forth in
the first paragraph of this Agreement. For purposes of this
Agreement, "Effective Date" means the date as of which the
Agreement becomes effective pursuant to this Section 17.1(a).
(b) Subject to the terms and conditions of this Agreement, each
Party shall use all reasonable efforts to take, or cause to be
taken, all reasonable actions and to do, or cause to be done,
all things necessary and appropriate to satisfy the foregoing
condition subsequent and to consummate the transactions
contemplated by this Agreement in accordance with the terms
hereof.
(c) Each Party shall cooperate with the other Party in the
preparation, execution and filing of all documents that are
required or permitted to be filed on or before the Effective
Date for the purpose of consummating this transaction,
including filings pursuant to the HSR Act. Each Party shall
bear its own costs with respect to preparing, executing and
filing such documents.
17.2 Agreement Term. The Agreement Term shall commence on the Effective Date
and end, unless earlier terminated upon the mutual written agreement of
the Parties or in accordance with the provisions of this Article 17, on
the date of expiration of all royalty and other payment obligations
(the "Expiration Date") under this Agreement. Upon the Expiration Date,
if the Option Exercise has occurred, the License granted to Roche by
ArQule under this Agreement to make, have made, use, offer for sale,
sell and import Products shall be fully paid-up.
17.3 Termination for Breach.
(a) Each Party ("Non-Breaching Party") shall be entitled to
terminate this Agreement by written notice to the other Party
("Breaching Party") in the event that the Breaching Party is
in default of any of its material obligations hereunder and
fails to remedy such default within sixty (60) days (or, in
the case of payment defaults, within thirty (30)) days after
provision of written notice thereof by the Non-Breaching
Party.
(b) The effective date of termination under this Section 17.3 for
an unremedied breach of a material obligation shall be the
date * (or, in the case of an unremedied payment default, *)
after provision of written notice thereof by the Non-Breaching
Party.
17.4 Roche's Rights to Terminate.
(a) Roche shall have the unilateral right to terminate this
Agreement effective *, by providing written notice to ArQule
any time between * and the close of business on *.
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(b) Roche shall have the unilateral right to terminate this
Agreement at any time prior to the Option Exercise in the
event that the FDA imposes a clinical hold on any clinical
trial of the Primary Compound or a Clinical Candidate pursuant
to 21 C.F.R. 312.42(d), and such hold is not lifted within *.
Roche may exercise its right to terminate this Agreement
pursuant to this Section 17.4(b) by providing written notice
to ArQule within * after the end of such * period.
(c) Roche shall have the unilateral right to terminate this
Agreement, at any time following the Option Exercise, on a
country-by-country basis or Product-by-Product basis, either
on a worldwide basis or on a country-by-country basis, by
providing * prior written notice to ArQule. Notwithstanding
the preceding sentence, if for an affected country, there has
been a Launch of a Product in that country, or for an affected
Product, such Product has been Launched, then such prior
notice must be for *.
(d) Roche shall have the unilateral right to terminate this
Agreement at any time following the first anniversary of the
Effective Date, by providing * prior written notice to ArQule.
Notwithstanding the preceding sentence, if there has been a
Launch of a Product in a Major Market Country, then such prior
notice must be for *.
(e) The effective date of termination under this Section 17.4
shall be the date of the notice in the case of a termination
under Section 17.4(a) or Section 17.4(b), or the date * (or *
as the case may be) after Roche provides such written notice
to ArQule in the case of a termination under Section 17.4(c)
or Section 17.4(d). In the case of a termination under Section
17.4(a) or Section 17.4(b), Roche shall have no obligation to
pay any amounts under Article 4 not yet due as of the
effective date of termination. In the case of a termination
under Section 17.4(c) or Section 17.4(d), Roche shall have no
obligation to pay any amounts under Section 4.4 not yet due as
of the effective date of termination, that may otherwise be
triggered during the * or * period (as the case may be) prior
to the effective date of termination, where such termination
is of this Agreement in its entirety; provided that Roche
shall not be relieved of any of its payment obligations under
Section 4.1 with respect to such * period where such
termination is of this Agreement in its entirety; and further
provided that Roche shall not be relieved of any of its
payment obligations under this Agreement in the event the
termination is not of this Agreement in its entirety.
17.5 ArQule's Right to Terminate. ArQule shall have the unilateral right to
terminate this Agreement in its entirety if Roche has not effected the
Option Exercise on or before the conclusion of the Option Term.
17.6 Consequences of Termination.
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(a) Reversion of License and Assignment of Roche Rights. Upon any
termination of this Agreement pursuant to this Article 17
including, without limitation, a termination pursuant to
Section 17.4(c), any and all affected rights and licenses
(including the Licenses to affected Products or countries if
the Option Exercise has occurred) of any kind or nature
granted by ArQule to Roche under this Agreement shall
terminate on the effective date of termination. In the event
of any such termination, the following provisions shall apply:
(i) Roche shall, upon ArQule's written request,
assign and transfer to ArQule, or its Affiliates as requested
by ArQule, at no expense to ArQule or its Affiliates, and free
of any liens, pledges, or security interests or encumbrances
other than those incurred in the commercialization of the
Product, all of Roche's right, title and interest in and to
(i) all regulatory filings (such as INDs and drug master
files), Regulatory Approvals, and clinical trial agreements
(to the extent assignable and not cancelled) for the
Product(s) or any Optioned Compounds, and (ii) all data,
including clinical data, materials and information of any kind
or nature whatsoever, in Roche's possession or in the
possession of its Affiliates or its or their respective agents
related to the Product(s) or any Optioned Compounds and (iii)
all rights relating to the infringement of ArQule Patent
Rights and Joint Patent Rights, related to and necessary for
the commercialization of the relevant Product(s) or Optioned
Compounds. Without limiting the generality of the preceding
sentence, ArQule shall, upon such transfer, have the right to
disclose such filings, approvals and data as necessary or
desirable for the further development and commercialization of
the Optioned Compounds and the Products, including disclosures
to (i) governmental agencies of the country or country to the
extent required or desirable to secure government approval for
the development, manufacturing or sale of a Product in the
country, (ii) Third Parties acting on behalf of ArQule, its
Affiliates or sublicensees, to the extent reasonably necessary
or desirable for the development, manufacture, or sale of a
Product or an Optioned Compound in the country, and (iii)
Third Parties to the extent reasonably necessary or desirable
to market a Product in the country. All such filings,
approvals and data transferred to ArQule pursuant to this
Section 17.6 shall be deemed to be ArQule Confidential
Information.
(ii) In addition, for each Product and for the
Territory, or in the case of a termination pursuant to Section
17.4(c), for each terminated Product or country, Roche hereby
grants to ArQule the right to obtain a sole and exclusive,
royalty bearing license, (i) under Roche Patent Rights, Joint
Patent Rights and Roche Know-How Covering the Product, to
make, have made, use, offer for sale, sell and import such
Product(s) in the Territory and (ii) to use all trademarks and
trademark applications used or intended for use on or in
connection with the Product(s) or any Optioned Compound in the
Territory. ArQule may exercise such right by giving
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written notice thereof to Roche within ninety (90) days after
the date of termination of this Agreement. In consideration of
such license, ArQule shall pay Roche reasonable milestones and
royalties consistent with industry practices as may be
mutually agreed upon by the Parties; and if the Parties are
unable to agree upon such financial terms, such matter shall
be resolved by arbitration in accordance with Section 18.3.
(iii) Roche shall supply, or cause to be supplied,
to ArQule, upon ArQule's written request, ArQule's or its
licensee's clinical and/or commercial requirements of Optioned
Compound(s) and Product(s), pursuant to a supply agreement to
be negotiated in good faith by the Parties, provided that (i)
such requirements shall be supplied to ArQule or its licensee
at Roche's direct manufacturing costs and allocation of
manufacturing overhead, plus, only in the case of commercial
requirements produced by Roche itself, *, and (ii) Roche's
supply obligation shall not continue for more than * after the
termination of this Agreement, and (iii) Roche shall maintain
the same Product(s) and Optioned Compound(s) quality and
specifications as immediately prior to notice of termination,
and (iv) as to other terms, such agreement shall be reasonably
consistent with Roche's other arm's length supply agreements,
and (v) ArQule shall use Reasonable Diligence in effecting a
transfer as soon as practicable of Product(s) and Optioned
Compound(s) manufacturing activities from Roche to another
supplier. Roche shall also transfer to ArQule and its
designated supplier a manufacturing transfer package that will
enable ArQule or such designated supplier to manufacture the
Product(s) and Optioned Compound(s) in a timely manner. In
addition to or in lieu of the foregoing, ArQule may offer to
purchase from Roche all or part of its remaining inventory of
Product(s) and Optioned Compound(s).
Roche shall take prompt actions, including the execution of
such instruments, agreements and documents, as are necessary
or desirable to effect the foregoing. It is agreed such
transfers and actions shall be completed in a manner that will
permit ArQule to continue without interruption the business of
developing, manufacturing, marketing and selling the
Product(s) and Optioned Compound(s). At ArQule's request,
Roche, at its own expense, shall use Reasonable Diligence to
effect the assignment to ArQule of any manufacture and supply
agreements that it has with Third Parties with respect to the
manufacture and supply of Product(s) or Optioned Compound(s).
(b) Royalty and Payment Obligations. Termination of this Agreement
by either Party for any reason will not release Roche from any
obligation to pay royalties or milestones or to make any
payments to ArQule which were accrued prior to the effective
date of termination (including for sales made and events
achieved under Articles 5 and 6, prior to the date of
termination). However, termination of this Agreement by either
Party for
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any reason will release Roche from any obligation to pay
royalties or make any payments to ArQule which would have
otherwise become accrued after the effective date of
termination (provided that Roche shall be obligated to pay
royalties and milestones for payments received after the
effective date of termination for Products sold prior to such
effective date).
(c) Effect of Termination. Upon any termination of this Agreement,
other than pursuant to Section 17.3 and as provided in Section
17.7, there shall be no liabilities or obligations on the part
of either Party other than those set forth in Section 17.6(a)
and (b).
(d) Non-exclusive remedy for breach. The provisions of this
Section 17.6 are not intended to be exclusive and are without
prejudice to the rights of the Parties to seek any other
rights and remedies that they may have under this Agreement or
otherwise.
17.7 Termination for Failure to Satisfy Condition Subsequent. Either Party
may terminate this Agreement in its entirety, upon * prior written
notice to the other Party if the condition subsequent under Section
17.1 has not been fulfilled within * after the date in the first
paragraph of this Agreement, in which case, upon termination there
shall be no liabilities for obligations on the part of either Party
(other than as provided pursuant to Sections 16.1, 17.6(a) and 17.8 and
except for any breach of Section 16.1), provided, however, that prior
to any such termination, the Parties shall negotiate in good faith such
revisions as may be appropriate to satisfy such conditions.
17.8 Survival of Obligations. Section 2.3, Article 7, Article 15, Article
16, Section 17.6, Section 17.8, Article 18 and Article 19, and any
definitions used in any such Section or Article, shall survive the
termination of this Agreement in its entirety. Except for obligations
which clearly are not intended to continue in respect of a partial
termination pursuant to Section 17.4(c) (including the applicable
diligence obligation), with respect to the country or Product
terminated, all obligations in this Agreement shall survive such
partial termination.
ARTICLE 18 LAW AND ARBITRATION
18.1 Law. This Agreement shall be governed by the laws of the State of
Delaware applicable to contracts made and to be performed entirely
within such jurisdiction and without giving effect to its choice or
conflict of laws, rules or principles. Each of the Parties irrevocably
submits to the exclusive jurisdiction of any court of the State of
Delaware or in the United States District Court for the District of
Delaware for the purpose of any suit, action or other proceeding
arising out of or relating to this Agreement, and irrevocably agrees
that all claims in respect of such action or proceedings shall be heard
and determined in any such Delaware or
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United States District Court for the District of Delaware. Each Party
further agrees that service of any process, summons, notice or document
by registered mail to the address of such Party set forth in Section
19.6 shall be effective service of process for any action or proceeding
brought against such Party in any such court. Each Party hereby
irrevocably and unconditionally waives any objection to the laying of
venue of any action or proceeding arising out of or relating to this
Agreement in any such court and further irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such
action or proceeding brought in any such court has been brought in any
inconvenient forum. Each Party further agrees that a final,
nonappealable judgment in any such action or proceeding shall be
conclusive and may be enforced in any other jurisdictions by suit on
the judgment or in any other manner provided by law.
18.2 No Offsets. In the event of a dispute, a Party shall have no right to
toll or delay any obligation in this Agreement unrelated to the dispute
as a result of the Dispute. For example, if Roche owes ArQule five
million dollars ($5,000,000) and claims a separate two million dollars
($2,000,000) payment is not due by reason of breach of ArQule, then
Roche shall pay the five million dollars ($5,000,000), and the Parties
shall resolve such two million dollars ($2,000,000) dispute pursuant to
this Article 18.
18.3 AAA. All disputes, controversies or claims (each a "Dispute") arising
out of or in relation to the last sentence of each of Sections 5.7,
8.4(d) and 17.6(a)(ii) shall be settled by arbitration conducted in
accordance with the rules then in effect of the American Arbitration
Association ("AAA"). All other disputes not resolved by the Parties
shall be resolved pursuant to Section 18.1. Either Party may submit a
Dispute to arbitration if the Parties are not able to settle such
Dispute amicably within forty-five (45) days after appropriate officers
of the Parties have had good faith discussions to resolve the Dispute.
Any such arbitration shall take place in Wilmington, Delaware, or in a
venue mutually agreed by the Parties. Any such arbitration shall be
conducted by a panel of three (3) arbitrators. Each Party shall
designate one (1) arbitrator, and the two (2) arbitrators designated by
the Parties shall select the third arbitrator, all within the time
limits established by the then existing rules of the AAA. If scientific
or technical matters are a central issue of the Dispute, at least one
of the arbitrators chosen hereunder shall have educational training
and/or experience sufficient to demonstrate a reasonable level of
knowledge in the Field and pharmaceutical drug development. If the two
(2) arbitrators designated by the Parties are unable to agree upon a
third arbitrator within two (2) months after submission of the matter
to arbitration, the AAA shall select such third arbitrator within three
(3) months of such original submission. The written decision of the
panel of arbitrators shall be final and binding on the Parties and may
be enforced in any court having jurisdiction over the Parties or their
current assets.
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ARTICLE 19 MISCELLANEOUS
19.1 Indemnification.
(a) Roche shall defend ArQule and its Affiliates and its and their
respective directors, officers, employees and agents (the
"ArQule Indemnified Parties") at Roche's cost and expense, and
shall indemnify and hold ArQule and the ArQule Indemnified
Parties harmless from and against any claims, losses, costs,
damages, fees or expenses (including reasonable attorney's
fees) (each a "Claim") to the extent arising out of or
otherwise relating to (i) acts or omissions of Roche or its
Affiliates in the conduct of the Strategic Alliance, (ii) the
development, manufacture, use, offer for sale, sale or other
disposition of any product by Roche, its Affiliates or
sublicensees, and each of their respective distributors,
representatives or anyone in privity therewith, or (iii) the
gross negligence or willful misconduct of Roche, its
Affiliates or sublicensees and each of their respective
distributors, representatives or anyone in privity therewith.
In the event of a Claim against the ArQule Indemnified Parties
by a Third Party, ArQule shall promptly notify Roche in
writing of the Claim (provided that any failure or delay to so
notify Roche shall not excuse any obligation of Roche except
to the extent Roche is actually prejudiced thereby) and Roche
solely shall manage and control, at its sole expense, the
defense of the Claim and its settlement; provided further that
Roche shall not settle any Claim if such settlement may have
an adverse effect on ArQule without the prior written consent
of ArQule, which consent shall not be unreasonably withheld.
The ArQule Indemnified Parties shall cooperate with Roche and
may, at their option and expense, be represented in any such
action or proceeding. The ArQule Indemnified Parties shall
provide Roche with access to any and all documents and
information in their possession relating to the Claim. Roche
shall not be liable for any litigation costs or expenses
incurred by the ArQule Indemnified Parties without Roche's
written authorization.
(b) ArQule shall defend Roche and its Affiliates and its and their
respective directors, officers, employees and agents (the
"Roche Indemnified Parties") at ArQule's cost and expense, and
shall indemnify and hold Roche and the Roche Indemnified
Parties harmless from and against any Claim to the extent
arising out of or otherwise relating to (i) acts or omissions
of ArQule in the conduct of the Strategic Alliance, (ii) the
development, manufacture, use, offer for sale, sale or other
disposition of any product by ArQule, its Affiliates,
licensees other than Roche, sublicensees and each of their
respective distributors, representatives or anyone in privity
therewith (but only to the extent such Claim is a consequence
of acts or omissions with respect to ArQule's obligations
arising under Section 2.4, Article 3 and/or Article 17), or
(iii) the gross negligence or willful misconduct of ArQule,
its Affiliates, licensees other than Roche, sublicensees and
each of their respective distributors,
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representatives or anyone in privity therewith. In the event
of a Claim against the Roche Indemnified Parties by a Third
Party, Roche shall promptly notify ArQule in writing of the
Claim (provided that any failure or delay to notify shall not
excuse any obligation of ArQule except to the extent ArQule is
actually prejudiced thereby) and ArQule solely shall manage
and control, at its sole expense, the defense of the Claim and
its settlement; provided further that ArQule shall not settle
any Claim if such settlement may have an adverse effect on
Roche without the prior written consent of Roche, which
consent shall not be unreasonably withheld. The Roche
Indemnified Parties shall cooperate with ArQule and may, at
their option and expense, be represented in any such action or
proceeding. The Roche Indemnified Parties shall provide ArQule
with access to any and all documents and information in their
possession relating to the Claim. ArQule shall not be liable
for any litigation costs or expenses incurred by the Roche
Indemnified Parties without ArQule's written authorization.
19.2 Publicity. Neither Party shall make any publicity, news release or
other public announcement, written or oral, relating to this Agreement,
including its terms, without the prior approval of the other Party,
except solely to the extent a Party is advised by its legal counsel
that the same is required by law. Approval required pursuant to the
preceding sentence shall not be unreasonably withheld. Each Party shall
to the extent consistent with applicable laws and regulations limit the
public disclosure of the financial terms set forth in this Agreement
(such as by requesting confidential treatment of such terms in
documents required to be filed with the US Securities and Exchange
Commission).
19.3 Force Majeure. Except with respect to a Party's obligation to make
payments to the other Party hereunder, neither Party to this Agreement
shall be responsible to the other Party for nonperformance or delay in
performance of the terms or conditions of this Agreement due to acts of
God, acts of governments, war, riots, strikes, accidents in
transportation, or other causes beyond the reasonable control of such
Party, but such force majeure shall toll any and all obligations (other
than payment obligations) and time periods for so long as such force
majeure continues. Upon the occurrence of an event of force majeure,
the Party whose performance is affected thereby shall notify the other
Party promptly of such event. Upon the cessation of such event, such
Party shall take all reasonable steps within its power to resume with
the least possible delay compliance with its obligations hereunder.
19.4 Bankruptcy. The License (and to the extent applicable rights) that may
be granted under or pursuant to this Agreement by ArQule to Roche are,
and shall otherwise be deemed to be, for purposes of Section 365(n) of
Title 11, US Code (the "Bankruptcy Code"), licenses of rights to
"intellectual property" as defined under Section 101(35A) of the
Bankruptcy Code. The Parties agree that during the Agreement Term,
Roche, as a licensee of such rights under this Agreement, shall retain
and may fully exercise all of its rights and elections under the
Bankruptcy Code, subject to the continued performance of its
obligations under this
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Agreement. Nothing in this Section 19.4 shall be construed to expand
Roche's rights under Section 365(n) of the Bankruptcy Code or to confer
any rights on Roche that it would not otherwise have under such
section.
19.5 Waiver. The waiver by a Party of a breach or a default of any provision
of this Agreement by the other Party shall not be construed as a waiver
of any subsequent breach of the same or any other provision hereof, nor
shall any delay or omission on the part of a Party to exercise or avail
itself of any right, power or privilege that it has or may have
hereunder operate as a waiver of that or any other right, power or
privilege of such Party hereunder.
19.6 Notices. Any notice or other communication required or permitted to be
given in connection with this Agreement must be in writing and may be
given by any of the following methods: (i) personal delivery with a
signed acknowledgement of receipt; (ii) registered or certified mail,
postage prepaid, return receipt requested; or (iii) by overnight
delivery service with a signed acknowledgement of receipt. Notice shall
be effective when delivered to the addressee at the address listed
below or, as applicable, the address listed in Article 14, or such
other address as the addressee shall have specified in a written notice
actually received by the addresser.
If to ArQule:
ArQule, Inc.
19 Presidential Way
Woburn, Massachusetts 01801-5140
Attn: General Counsel
and
Arnold & Porter
1600 Tysons Boulevard, Suite 900
McLean, Virginia 22102
Attn: Steve Parker, Esq.
If to Roche:
F. Hoffmann-La Roche Ltd
Grenzacherstrasse 124
CH-4070
Basel, Switzerland
Attn: Legal Department
and
Hoffmann La-Roche Inc.
340 Kingsland Street
Nutley, NJ 07110
Attn.: Corporate Secretary
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19.7 Relationship of the Parties. The Parties are independent contractors.
Nothing herein is intended or shall be deemed to constitute a
partnership, agency, joint venture or employment relationship between
the Parties. Neither Party shall be responsible for the acts or
omissions of the other Party, and neither Party will have authority to
speak for, represent or obligate the other Party in any way without
prior written authority from the other Party.
19.8 Entire Agreement. This Agreement and the Schedules attached hereto
(which Schedules are incorporated herein by reference and are deemed to
be a part of this Agreement for all purposes) contain the entire
agreement of the Parties with respect to the subject matter hereof and
supersede all prior understandings and writings between the Parties
relating thereto, including the Non-Disclosure Agreement dated as of
October 1, 2002 by and between Hoffmann-La Roche Inc. and Cyclis
Pharmaceuticals, Inc., which agreement was assigned to ArQule (such
assignment accepted and agreed to by Hoffmann-La Roche Inc. on
September 29, 2003). No amendment, waiver, alteration or modification
of any of the provisions of this Agreement shall be binding unless made
in writing and signed by the Parties.
19.9 Headings. The headings contained in this Agreement are for convenience
of reference only and shall not be considered in interpreting this
Agreement.
19.10 Severability. In the event that any provision of this Agreement is held
by a court of competent jurisdiction to be unenforceable because it is
invalid or in conflict with any law of any relevant jurisdiction, the
validity of the remaining provisions of this Agreement shall not be
affected thereby, and the Parties shall negotiate a substitute
provision that, to the extent possible, accomplishes the original
business purpose of the unenforceable provision. During the period of
such negotiation, and thereafter if no substituted provision is agreed
upon in writing by the Parties, any such provision which is enforceable
in part but not in whole shall be enforced to the maximum extent
permitted by law.
19.11 Assignment. Neither this Agreement nor any of the rights or obligations
hereunder may be assigned by either Party without the prior written
consent of the other Party, except to an Affiliate of the assigning
Party or to any other party who acquires all or substantially all of
the pharmaceutical or drug development business of the assigning Party
by merger, sale of assets or otherwise, so long as such Affiliate or
other party agrees in writing to be bound by all the terms of this
Agreement.
19.12 Successors and Assigns. Except as otherwise provided herein, this
Agreement shall be binding upon and inure to the benefit of the Parties
hereto and their successors and permitted assigns.
19.13 Non-Solicitation. Roche agrees that, during the period from the
Effective Date to the date that is * after the Effective Date, it shall
not directly or indirectly solicit the services (by way of employment
or otherwise), or employ or otherwise engage
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the services, of any * of ArQule holding any position at or more senior
than the *; provided however that the foregoing restriction shall not
prohibit Roche from conducting general solicitations in newspapers or
other media in connection with its hiring.
19.14 Interpretation. The words "include," "includes" and "including" when
used in this Agreement shall be deemed to be followed by the phrase
"without limitation." All references herein to Articles, Sections, and
Schedules shall be deemed references to Articles and Sections of, and
Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with
International Financial Reporting Standards ("IFRS"), as in effect from
time to time. Unless the context otherwise requires, countries shall
include all territories thereof.
19.15 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which together shall
constitute one and the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed in their names by their properly and duly authorized officers or
representatives as of the date first written above.
ARQULE, INC. HOFFMANN-LA ROCHE INC.
By: _____________________________ By: _________________________________
Title: ____________________________ Title: ______________________________
F. HOFFMANN-LA ROCHE LTD
By: _________________________________
Title: _____________________________
By: _________________________________
Title: ______________________________
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SCHEDULE 1
ARQULE PATENT RIGHTS
*
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SCHEDULE 2
RESEARCH PLAN
OVERVIEW
*
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SCHEDULE 3
SUMMARY TERMS FOR CO-PROMOTION OF PRODUCT
1. CO-PROMOTION TERRITORY. The "Co-Promotion Territory" shall be the United
States of America and its possessions and territories, including Puerto
Rico.
2. TERM AND TERMINATION. The "Co-Promotion Term" for each Product shall be
for a period commencing on the date of first commercial sale of such
Product pursuant to the co-promotion and ending on the earlier of (1) *
after such date or (2) * by ArQule or its Third Party licensee of an E2F1
activator. In addition to any other termination rights that may be
specified in the Co-Promotion Agreement, ArQule shall have the right to
terminate the Co-Promotion Agreement at any time upon * prior written
notice.
3. ASSIGNABILITY. ArQule may not assign its co-promotion rights without
Roche's express written consent; provided, however, that ArQule may
assign such rights to any Affiliate of ArQule.
4. MARKETING. If ArQule exercises its right to co-promote a Product, the
Parties' respective rights and obligations with respect to detailing and
marketing shall be set forth in the Co-Promotion Agreement. The
Co-Promotion Agreement shall provide that ArQule shall provide up to *
full time professional trained sales employees of ArQule or its Affiliate
to conduct details for Product in the Territory. The JPT (see below)
shall decide upon the number and type of details such representatives
will provide. Except as otherwise provided herein, *. Each Party shall be
responsible for the costs relating to its sales force, except that Roche
shall reimburse ArQule for Product specific sales territory performance
versus goal (i.e., bonus), which rates the JPT shall determine.
5. GOVERNANCE. Within ninety (90) days after ArQule's notice to Roche that
it wishes to co-promote a Product, the Parties shall form a Joint
Promotional Team ("JPT"), which shall oversee the co-promotional
activities of the Parties with respect to such Product. The JPT shall
consist of * members, * members to be designated by Roche and * members
to be designated by ArQule. Any Party may withdraw the designation of
any of its members of the JPT and designate a replacement at any time
by giving prior written notice of the withdrawal and identifying the
replacement to the other Party. Decisions of the JPT shall be by
consensus. The chairperson of the JPT shall be from Roche. If the JPT
is unable to decide a matter by consensus, the Parties shall refer such
matter for resolution to the Alliance Executives. If the Alliance
Executives are unable to resolve any such matter after good faith
discussions, then the final decision shall rest with Roche.
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6. ROCHE'S OBLIGATIONS AND AUTHORITY. Roche shall be ultimately responsible
for establishing and modifying the terms and conditions with respect to
the sale of the Product, including pricing for the Product. Roche shall
provide ArQule, without charge, with the same training materials
regarding the detailing and promotion of the Product as Roche uses to
train its own sales force, and with such promotional materials as may be
specified in the Co-Promotion Plan. ArQule shall then supply such copies
of such training and/or promotional materials to its sales force. At
ArQule's request, Roche shall make available sales and training personnel
to assist ArQule in training ArQule's sales force to detail and promote
the Product. For avoidance of doubt, each Party has final responsibility
for the adequate training of its own sales force.
7. INDEMNIFICATION. Each Party shall indemnify the other Party for all Third
Party claims relating to the marketing or promotion of the Product to the
extent that such indemnifying Party or its representatives are negligent
or fail to promote the Product in accordance with applicable federal,
state and local laws, rules and regulations.
8. DEFINITIVE AGREEMENT. Any of the terms described in this Heads of
Agreement may be modified in the Co-Promotion Agreement. In addition, the
Co-Promotion Agreement shall contain ordinary and customary terms for an
agreement in which a pharmaceutical product of like nature is co-promoted
in the US, such as insurance, warranties and the like.
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SCHEDULE 4
PRIMARY COMPOUND CLINICAL DELIVERABLES
*
- 1 -
SCHEDULE 5
BACKUP COMPOUND PRE-CLINICAL DELIVERABLES
*
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SCHEDULE 6
PRIMARY OR BACKUP COMPOUNDS CMC TECHNICAL POINTS TO CONSIDER
*
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SCHEDULE 7
EXISTING ARQULE LICENSES
Exclusive License Agreement Between the Dana-Farber Cancer Institute and
CoPharma, Inc., dated as of January 31, 2001 (as amended)
License Agreement By and Amongst the Beth Israel Deaconess Medical Center, the
Dana-Farber Cancer Institute, and Cyclis Pharmaceuticals, Inc., dated as of
September 26, 2002 (as amended)
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