Exhibit 10.13
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR PORTIONS OF THIS EXHIBIT. THE
CONFIDENTIAL PORTIONS HAVE BEEN REDACTED AND ARE DENOTED BY [***]. THE
CONFIDENTIAL PORTIONS HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION.
[Letterhead of Eli Lilly and Company]
October 8, 1997
Ms. Karen Hamlin
Senior Director of Operations
Scriptgen Pharmaceuticals, Inc.
200 Boston Avenue
Medford. MA 02155
Re: Amendment to ATLAS Screen Agreement
Dear Ms. Hamlin:
Pursuant to the agreement dated effective as of May 8, 1997 (the
"Agreement"), by and between Scriptgen Pharmaceuticals, Inc. ("Scriptgen"),
and Eli Lilly and Company ("Lilly"), the parties entered into a
collaboration, whereby Scriptgen, among other things, would run the ATLAS
Screens for each of the Initial Target Proteins [***] compounds for each
initial Target Protein.
Scriptgen and Lilly have recently discussed whether Lilly was interested in
running the ATLAS Screens for each of the Initial Target Proteins using
additional compounds above the initial [***] compounds set forth in the
Agreement. As you know, Lilly has determined that it is interested in using
additional compounds for such purpose. Accordingly, so that Scriptgen may
expeditiously commence running the ATLAS Screen with respect to such
additional compounds, the Parties agree as follows:
A. Section 1.22.
The parties hereby amend Section 1.22 in its entirety to read as
follows:
Section 1.22. "Project Phase II" means the phase of the Project that
follows Project Phase I which utilizes ATLAS Screening to establish the
Ms. Karen Hamlin
October 8, 1997
Page 2
optimal conditions for the specific high throughput screen for each Initial
Target Protein. This phase will result in the assay being fully validated and
standard deviations established for a sub set of compounds and controls.
Assay sensitivity will also be established, during this phase, so as to
determine the Initial Target Protein requirements for the screening,
Except as otherwise provided in this Section 1.22, up to [***] Lilly
Compounds selected by Lilly shaIl be used for Project purposes as
contemplated hereunder. [***] Scriptgen Compounds will be provided by
Scriptgen for Project purposes including, without limitation, screening and
validation, [***] If Scriptgen Compounds are requested by Lilly for Project
purposes above the [***] limitation described above or for replacement of any
of the [***] described above, Lilly will be [***]. Lilly shall be given an
opportunity to select all available Scriptgen Compounds from the Scriptgen
Library prior to the commencement of Project Phase III including a reasonable
opportunity to review and screen such Scriptgen Compounds prior to such
selection, although Lilly will use its best efforts to complete the selection
process within [***]. Except as otherwise provided for in this Agreement,
such selection process shall be at no additional cost to Lilly provided Lilly
selects Scriptgen Compounds on a plate by plate basis (each plate contains
[***]). In the event, Lilly desires to select Scriptgen Compounds not on a
plate by plate basis, [***]
At the commencement of this phase, Lilly will provide to Scriptgen,
approximately [***] of each Initial Target Protein or as otherwise mutually
agreed to by the parties. This phase will take [***] (i.e., a total of [***])
to complete provided antibodies are furnished by Lilly. In the event
antibodies are not furnished by Lilly, this phase will take approximately
[***] to complete and a total of [***] For avoidance of any doubt, if Lilly
does not furnish the antibodies necessary for the Project or portions
thereof, Scriptgen shall bear the ultimate responsiblity and obligation for
furnishing the antibodies necessary for the Project at its sole expense.
Project Phase II is more fully described in the Project Plan.
Ms. Karen Hamlin
October 8, 1997
Page 3
B. Section 1.23.
The parties hereby amend Section 1.23 in its entirety to read as
follows:
Section 1.23. "Project Phase III means the phase of the Project that
follows Project Phase II and involves running the ATLAS Screens for each of
the Initial Target Proteins using at Lilly's sole discretion up to [***]
and/or Natural Products for each Initial Target Protein, These compounds
and/or Natural Products will be furnished by either Lilly or the Scriptgen
Library as more fully described in Section 1.22 of this Agreement or as the
parties may otherwise mutually agree in writing. At the commencement of this
phase, Lilly will provide to Scriptgen, approximately [***] of each Initial
Target Protein or as otherwise mutually agreed to by the parties. During this
phase, Scriptgen will [***] for each compound, and determine an [***].
Scriptgen estimates that this phase will take [***] and [***]. Project Phase
III is more fully described in the Project Plan.
In addition, Scriptgen will use the ATLAS assay to evaluate [***]
samples supplied by Lilly for up to 10 Natural Product Successful Compound
extracts per Target Protein. These samples will be produced at Lilly in the
initial phases of [***] of the Natural Product extracts called [***]. The
testing of these samples may occur after the Final Comprehensive Report has
been. sent to Lilly, but in no event any later than six (6) months after
receipt by Lilly of the Final Comprehensive Report.
C. Section 2.1.
The parties hereby amend Section 2.1 in its entirety to read as
follows:
Section 2.1. Commencement and Reasonable Efforts. Upon execution of
this Agreement, Lilly and Scriptgen shall commence work on the Project that
is generally described in the Project Plan. Both parties will carry out their
respective roles and use reasonable efforts in conducting work on the Project
in order to achieve the research contemplated in this Agreement. Except as
the parties may otherwise agree in writing or as otherwise
Ms. Karen Hamlin
October 8, 1997
Page 4
provided in this Agreement, Scriptgen shall use its reasonably commercial
efforts to complete the Project with respect to the Initial Target Proteins
within [***] after it receives the Initial Target Proteins. The parties
hereby acknowledge that the time period outlined in the preceding sentence
may need to be extended as may be applicable depending upon the number of
Initial Target Proteins that are substituted under Section 1.21 of this
Agreement.
D. Section 2.6.
The parties hereby amend Section 2.6 in its entirety to read as
follows:
Section 2.6 Additional Target Proteins. In the event that Proof of
Principle is achieved (either (a) or (b) as defined in Section 1.25) and
Lilly has received the Final Comprehensive Report for the last Initial Target
Protein within at least nintey (90) days after the expiration of the timeline
set forth in the last sentence of Section 2.1 of this Agreement (provided
that such period shall be extended to the extent that any delay beyond such
period was caused by Lilly), Lilly and Scriptgen hereby agree to expand the
Project to include two (2) additional Target Proteins for ATLAS Screening
(the "Additional Target Proteins") under exactly the same terms as are
applicable to the Initial Target Proteins under this Agreement except that:
(a) the Research Fee described in Section 3.1 shall be [***] for both of the
Additional Target Proteins as opposed to the [***] Research Fee that applies
to the Initial Target Proteins; (b) the first installment payment of such
Research Fee under Section 3.2 hereof, for the Additional Target Proteins
shall be paid within [***] as opposed to thirty (30) days after the execution
of this Agreement; (c) the original terms set forth in Section 1.22, 1.23 and
2.1 of the Agreement shall continue to be applicable with respect to the
Additional Target Proteins as opposed to the amended versions of Section
1.22, 1.23 and 2.1 as described in this Amendment unless Lilly elects, at its
sole discretion, to exercise its Additional Compound Option (as defined below
in this Section 2.6); and (d) Section 3.4 of this Amendment shall not be
applicable with respect to the Additional Target Proteins unless Lilly
elects, at its sole discretion, to exercise its Additional Compound Option
(as defined below in this Section 2.6) For avoidance of any doubt the second
installment payment of the Research Fee shall be paid within [***] with
respect to the Additional Target Proteins.
Ms. Karen Hamlin
October 8, 1997
Page 5
Lilly may, at its sole discretion, elect to increase the compounds screened
against the Additional Target Proteins pursuant to the same terms that apply
to the Initial Target Proteins as described in Sections 1.22, 1.23, 2.1 and
3.4 of this Amendment except that the first payment installment under Section
3.4 with respect to the Additional Target Proteins shall be within ten (10)
days of Lilly exercising the Additional Compound Option as opposed to ten
(10) days within execution of this Amendment ("Additional Compound Option").
In order for Lilly to elect to exercise its Additional Compound Option, Lilly
shall provide Scriptgen with written notice of the same prior to the
commencement of Project Phase III with respect to the Additional Target
Proteins.
E. Section 3.4.
The parties hereby amend the Agreement to add the following Section
3.4:
In consideration for the additional screening services and use of
Scriptgen Compounds for Project purposes as described herein, Lilly hereby
agrees to pay Scriptgen [***] in two (2) equal installments. The first
payment shall be made within ten (10) days of execution of this Amendment.
The second payment shall be made within thirty (30) days after Lilly's
receipt of the Final Comprehensive Report.
F. Effect of Amendment. Except for the foregoing set forth in this letter
amendment, the rights and obligations of the parties under the Agreement
shall remain unaltered.
Ms. Karen Hamlin
October 8, 1997
Page 6
To acknowledge Scriptgen's acceptance of the agreed terms as described
herein, please sign in the space provided below, and return a signed copy of
this letter to David P. Trummel.
Very truly yours,
/s/ August M. Watanabe
----------------------
August M. Watanabe
Executive Vice President
aw
cc. Dr. A. J. Weinstein
Mr. Rajiv Gulati
Mr. D. P. Trummel
ACCEPTED AND AGREED:
SCRIPTGEN PHARMACEUTICALS, INC
By /s/ Karen Hamlin
----------------------
Karen Hamlin
Senior Director of Operations
Date October 14, 1997
----------------
AGREEMENT
This Agreement (the "Agreement") effective as of the last date of
signature hereto, (the "Effective Date") is entered into by and between Eli
Lilly And Company, an Indiana Corporation having its principal place of
business at Lilly Corporate Center, Indianapolis, Indiana 46285 (collectively
with its Affiliates "Lilly") and Scriptgen Pharmaceuticals Inc., a Delaware
Corporation, having its principal place of business at 200 Boston Avenue,
Medford MA 02155 ("Scriptgen"), agree as follows:
Recitals
1. Lilly is in the business of developing, manufacturing and marketing
pharmaceutical and veterinary agents.
2. Scriptgen is in business of, among other things, discovering and
developing pharmaceutical agents and conducting scientific research on
proteins utilizing screens developed through ATLAS Screening.
3. Lilly is interested in funding and collaborating with Scriptgen on a
research project to be carried out by Scriptgen involving certain target
proteins of Lilly and two (2) screens developed by Scriptgen.
4. Scriptgen is willing to undertake such research project aimed at,
among other things, identifying and validating [***] drug candidates in the
[***] areas.
NOW, THEREFORE, it is agreed by and between the parties
Article I
Definitions
When used in this Agreement, each of the following terms shall have the
meaning set forth in this Article. Defined terms may be used in the singular
or plural form.
Section 1.1. "Additional Target Protein" shall have the meaning as set
forth in Section 2.6 of this Agreement.
Section 1.2. "Affiliate" means (a) any corporation or business entity
of which Lilly, at the time in question, directly or indirectly owns or
controls fifty percent (50%) or more of the stock having the right to vote
for directors thereof or otherwise controls the management of the corporation
or business
2
entity, or (b) any corporation, individual or business entity which now or
hereafter directly or indirectly owns or controls fifty percent (50%) or more
of the stock of Lilly having the right to vote for directors thereof or
otherwise controls the management of Lilly, or (c) any corporation,
individual or business entity which now or hereafter is under common control
with Lilly.
SECTION 1.3, "ATLAS Screening" (Any Target Ligand Affinity Screen)
means the process used to develop a screen utilizing Scriptgen's patented
proprietary high throughput screening technology which enables efficient
screening of a large library of compounds for binding affinity to a
particular protein of interest. ATLAS Screening is more fully described in
the attached Exhibit B, incorporated herein by reference. "ATLAS Screen"
means a screen developed through ATLAS Screening.
SECTION 1.4. "Confidential Information" means all non-public
information, data and materials, including, without limitation, proprietary
information and materials (whether or not patentable) regarding a party's
technology, products, business information or objectives.
SECTION 1.5. "Field" shall mean discovery of compounds for the
development of [***].
SECTION 1.6. "Final Comprehensive Report" shall have the meaning as set
forth in Section 4.1 of this Agreement.
SECTION 1.7. "Initial Target Proteins" shall mean the first two (2)
Target Proteins, or substitutes thereof, provided by Lilly to Scriptgen for
the Project.
SECTION 1.8. "Know-How" means all unpatented and unpatentable
information, data or materials, including without limitation: instructions;
processes; formulae; biological materials; and chemical, pharmacological,
toxicological, pharmaceutical, physical and analytical, clinical, safety,
manufacturing and quality control data and information related to compounds,
Target Proteins, Successful Compounds and other similar or related items
within the scope of the Project. Know-How does not include rights to ATLAS
Screening.
SECTION 1.9. "Lilly Compound means those compounds, Target Proteins
and Natural Products furnished by Lilly for Project purposes as described
under this Agreement.
SECTION 1.10. "Lilly Patent Right(s)" means a Patent Right(s) owned or
controlled by Lilly.
3
SECTION 1.11. "Major Markets" shall mean the United States, United
Kingdom, Germany, France, Italy and Japan.
SECTION 1.12. "Natural Products" means natural product extracts.
SECTION 1.13. "Net Sales" means, with respect to a Product, the gross
amount invoiced by Lilly or a Lilly Affiliate or sublicensee to unrelated
third parties for the Product, in the territory, less:
[***]
SECTION 1.14. "Patent Right(s)" means a patent or patent application
and all divisions, continuations, continuations-in-part, reissues,
extensions, Supplementary Protection Certificates, foreign counterparts
thereof, and any similar intellectual
4
property that is owned or controlled by Scriptgen or by Lilly, at least one
claim of which covers the making, using or selling of a Successful Compound
or Product, or methods, assays, or substances useful in discovering the
Successful Compound or Product. For avoidance of any doubt, "Patent Right(s)"
does not include rights related to Atlas Screening.
SECTION 1.15. "Phase II Clinical Trials" means human clinical trials
conducted in patients to establish proof of concept in the particular
indication tested and clinical trials conducted in patients to achieve a
statistically significant indication of efficacy in the particular indication
tested, as well as to obtain some indication of the dosage regimen required.
SECTION 1.16. "Phase III Clinical Trials" means large scale human
clinical trials conducted in patients to establish Product efficacy in the
particular indication tested and required to obtain Product registration with
health regulatory authorities.
SECTION 1.17. "Product" means any pharmaceutical composition comprising
of a Successful Compound for use as a human therapeutic in the Field.
SECTION 1.18. "Product Decision" means a decision made [***]
SECTION 1.19. "Project" means the research program to be conducted by
Scriptgen in connection with this Agreement. The Project is described more
fully in the Project Plan attached hereto as Exhibit A, and incorporated by
reference.
SECTION 1.20."Project IP-Rights" means (1) Patent Rights, (2) Know-How
and (3) patentable and unpatentable, information and inventions conceived in
the course of and within the scope of the Project and, in the case of
patentable inventions, are reduced to practice within the course of the
Project or within twelve (12) months after its expiration or termination. For
avoidance of any doubt, "Project IP-Rights" does not include rights related
to Atlas Screening.
SECTION 1.21. "Project Phase I" means the phase of the Project which
involves preliminary characterization for assay configuration for each
Initial Target Protein. Except as the parties may otherwise agree, during
this phase, Lilly will provide Scriptgen approximately [***] of each Initial
Target Proteins from which Scriptgen shall determine the technical
requirements for ATLAS Screening of each Initial Target Protein by
5
characterizing the unfolding of each Initial Target Protein. In the event
that an Initial Target Protein's unfolding behavior is such that it is not
amenable to Atlas Screening, Lilly will be allowed up to [***] for each of
the Initial Target Proteins at [***] until such Initial Target Proteins are
amenable to Atlas Screening. If Lilly so desires, it may substitute Initial
Target Proteins in excess of the [***] described in the preceding sentence,
provided that it pays an additional fee of [***] to Scriptgen for each
substitution that exceeds [***] Initial Target Protein substitution. This
phase will take [***]. Scriptgen will configure the necessary assays for each
of the Initial Target Proteins received from Lilly simultaneously, provided
that Scriptgen receives each of the Initial Target Proteins from Lilly on or
about the same time. Project Phase I is more fully described in the Project
Plan. In the event Lilly substitutes Initial Target Protein as specified
above, this phase will take an additional [***] or [***] to complete for each
Initial Target Protein substituted.
SECTION 1.22. "Project Phase II" means the phase of the Project that
follows Project Phase I which utilizes ATLAS Screening to establish the
optimal conditions for the specific high throughput screen for each Initial
Target Protein. This phase will result in the assay being fully validated and
standard deviations established for a sub set of compounds and controls.
Assay sensitivity will also be established, during this phase, so as to
determine the Initial Target Protein requirements for the screening. At
Lilly's option and upon its request, up to [***] will be provided for Project
purposes including validation, [***]. If Scriptgen Compounds are requested by
Lilly for Project purposes above the [***] limitation described above, Lilly
will be charged a fee of [***]. In the event Lilly requests the use of
Scriptgen Compounds for Project purposes as described above, Lilly may select
such Scriptgen Compounds from any such Scriptgen Compounds within the
Scriptgen Library and, furthermore, shall have a reasonable opportunity to
review and screen such Scriptgen Compounds prior to such selection, although
Lilly win use its best efforts to complete the selection process within [***].
Except as otherwise provided for in this Agreement, such selection process
shall be [***] to Lilly provided Lilly selects Scriptgen Compounds on a plate
by plate basis (each plate contains [***]). In the event, Lilly desires to
select Scriptgen Compounds not on a plate by plate basis, [***]. At the
commencement of this phase, Lilly will provide to Scriptgen, approximately
[***] of each Initial Target Protein or as otherwise mutually agreed
6
to by the parties. [***] to complete provided antibodies are furnished by
Lilly. In the event antibodies are not furnished by Lilly, this phase will
take approximately [***]. For avoidance of any doubt, if Lilly does not
furnish the antibodies necessary for the Project or portions thereof,
Scriptgen shall bear the ultimate responsibility and obligation for
furnishing the antibodies necessary for the Project at its sole expense.
Project Phase II is more fully described in the Project Plan.
SECTION 1.23. "Project Phase III" means the phase of the Project that
follows Project Phase II and involves running the ATLAS Screens for each of
the Initial Target Proteins using [***] compounds for each Initial Target
Protein. At Lilly's option as describe in Section 1.22 above, the compounds
and/or Natural Products will be furnished by either Lilly or the Scriptgen
Library or as the parties may otherwise mutually agree. At the commencement
of this phase, Lilly will provide to Scriptgen, approximately [***] of each
Initial Target Protein or as otherwise mutually agreed to by the parties.
During this phase, Scriptgen will [***] for each compound, and determine an
[***]. Scriptgen estimates that this phase will take [***]. Project Phase III
is more fully described in the Project Plan.
In addition, Scriptgen will use the Atlas assay to evaluate [***]
supplied by Lilly for up to [***]. These samples will be produced at Lilly in
the initial phases of fractionation and purification of the Natural Product
extracts called novelty and fingerprint determination. The testing of these
samples may occur after the Final Comprehensive Report has been sent to
Lilly, but in no event any later than six (6) months after receipt by Lilly
of the Final Comprehensive Report.
SECTION 1.24. "Project Plan" means the written plan attached hereto as
Exhibit A and incorporated by reference.
SECTION 1.25. "Proof of Principle" means that ATLAS Screening is deemed
successful with respect to the Initial Target Proteins because either: [***]
7
SECTION 1.26. "PTAC" means the point in Lilly's development program
[***]
SECTION 1.27. "Scriptgen Compound" shall mean a compound or Natural
Product furnished by Scriptgen from its Scriptgen Library for Project
purposes as described under this Agreement.
SECTION 1.28. "Scriptgen FTEs" means a full time equivalent scientific
person week or a total of [***] of scientific work on or directly related to
the Project, carried out by a Scriptgen employee, having at least [***].
SECTION 1.29. "Scriptgen Library" means a library of approximately
250,000 compounds and 15,000 Natural Products owned and controlled by
Scriptgen.
SECTION 1.30. "Scriptgen Patent Right" means a Patent Right owned or
controlled by Scriptgen.
SECTION 1.3 1. "Successful Compound" means any compound and/or Natural
Product screened for Lilly by Scriptgen which is identified by Scriptgen
through ATLAS Screening or otherwise within the scope of the Project and
determined by Lilly as a potential pharmaceutical drug candidate.
SECTION 1.32. "Target Protein" means a purified target protein
furnished to Scriptgen by Lilly for purposes of Project research as
contemplated in this Agreement.
SECTION 1.33. "Valid Claims" means (a) any claim(s) pending in a patent
application or in an unexpired patent which has not been held unenforceable,
unpatentable or invalid by a decision of a court or other governmental agency
of competent jurisdiction, unappealable or unappealed within the time allowed
for appeal, and which has not been admitted to be invalid or unenforceable
through reissue or disclaimer, or (b) a claim of a pending patent application
which claim was filed in good faith and has not been abandoned or finally
disallowed without the possibility of appeal or refiling of said application.
If in any country there should be two or more such decisions conflicting with
respect to the validity of the same claim, the decision of the higher or
highest tribunal shall thereafter control; however, should the tribunals be
of equal rank, then the decision or decisions upholding the claim shall
prevail when the decisions are equal in number, and the majority of decisions
shall prevail when the conflicting decisions are unequal in number.
8
ARTICLE II
STAFFING, PLANNING AND EXECUTION OF PROJECT
SECTION 2.1. COMMENCEMENT AND REASONABLE EFFORTS. Upon execution of
this Agreement, Lilly and Scriptgen shall commence work on the Project that
is generally described in the Project Plan. Both parties will carry out their
respective roles and use reasonable efforts in conducting work on the Project
in order to achieve the research contemplated in this Agreement. Except as
the parties may otherwise agree in writing or as otherwise provided in this
Agreement, Scriptgen shall use its reasonably commercial efforts to complete
the Project with respect to the Initial Target Proteins within 28 to 34 weeks
after it receives the Initial Target Proteins. The parties hereby acknowledge
that the time period outlined in the preceding sentence may need to be
extended as may be applicable depending upon the number of Initial Target
Proteins that are substituted under Section 1.21 of this Agreement.
SECTION 2.2. SCRIPTGEN EFFORT ON THE PROJECT. Except as the parties may
otherwise agree, for each Initial Target Protein provided by Lilly to
Scriptgen in accordance with the Project Plan, Scriptgen shall, subject to
increases caused by the substitution of Initial Target Proteins as described
in Section 1.21, devote at least [***] to the Project distributed by project
phase as follows:
(a) Project Phase I [***]
(b) Project Phase II [***]
(c) Project Phase III [***]
Upon a reasonable request by Lilly that a specific scientist be
assigned to the Project as part of the Scriptgen FTE's, Scriptgen will use
reasonable efforts to assign such person to the project for at least [***].
The names of the Scriptgen employees who are initially scheduled to work on
the Project are set forth in Exhibit C.
SECTION 2.3. CONDUCT OF STUDIES. All work done in connection with the
Project shall be carried out in compliance with any federal, state, or local
laws, regulations, or guidelines governing the conduct of research at the
site where such work is being conducted. In addition, any laboratory animals
covered by this Agreement shall be provided humane care and treatment in
accordance with the most acceptable current veterinary practices.
SECTION 2.4. TREATMENT OF CHEMICAL AND BIOLOGICAL MATERIALS. Each party
agrees that it will not permit any third party to observe or have access
9
to the other party's chemical or biological materials unless a duly
authorized representative of the other party agrees in writing.
SECTION 2.5. SAFETY CONCERNS. Each party agrees to provide the other
with handling instructions, including all safety information known to such
party relating to chemical and biological material.
SECTION 2.6. ADDITIONAL TARGET PROTEINS. In the event that Proof of
Principle is achieved (either (a) or (b) as defined in Section 1.25) and
Lilly has received the Final Comprehensive Report for the last Initial Target
Protein within at least ninety (90) days after the expiration of the timeline
set forth in the last sentence of Section 2.1 of this Agreement (provided
that such period shall be extended to the extent that any delay beyond such
period was caused by Lilly), Lilly and Scriptgen hereby agree to expand the
Project to include two (2) additional Target Proteins for ATLAS Screening
(the "Additional Target Proteins") under exactly the same terms as are
applicable to the Target Proteins under this Agreement except that: (a) the
Research Fee described in Section 3.1 shall be [***] for both of the
Additional Target Proteins as opposed to the [***] Research Fee that applies
to the Initial Target Proteins; and (b) the first installment payment of such
Research Fee under Section 3.2 hereof, for the Additional Target Proteins
shall be paid within thirty (30) days of Lilly's receipt of the Final
Comprehensive Report for the last Initial Target Protein as opposed to thirty
(30) days after the execution of this Agreement. For avoidance of any doubt
the second installment payment of the Research Fee shall be paid within
thirty (30) days after Lilly's receipt of the Final Comprehensive Report with
respect to the Additional Target Proteins.
SECTION 2.7. CONSULTATION AND VISITATION. From time to time Lilly
personnel, may consult with Scriptgen personnel regarding matters relevant to
the Project and may also at reasonable times and upon reasonable prior notice
visit the facilities being used for the Project to permit observation of
procedures being employed.
ARTICLE III
FUNDING OF PROJECT
SECTION 3.1. AMOUNT OF RESEARCH FEE. In consideration for the research
to be conducted by Scriptgen as contemplated in this Agreement, Lilly shall
pay Scriptgen a research fee in the amount of [***] (the "Research Fee").
Section 3.2. Manner of Payments. The Research Fee shall be in U.S.
Dollars and payable in [***]. The first payment shall be
10
made within thirty (30) days of execution of this Agreement. The second
payment shall be made within thirty (30) days after Lilly's receipt of the
Final Comprehensive Report.
SECTION 3.3. ACCOUNTING. Scriptgen shall maintain complete records of
all monies Lilly pays to Scriptgen for research under the Project and shall,
within sixty (60) days after the end of the calendar year during the Project
and at the end of the Project, provide Lilly with a report, stating: a) the
dollar amount of funds Lilly supplied for that year; b) the research
activities conducted during the year which account for such support, using
Scriptgen's standard project accounting procedures; and c) any supporting
details as are reasonably required by Lilly. To the extent permitted by law,
Lilly shall be entitled to any tax credits due on account of research and
development expenses for the funds paid by Lilly.
ARTICLE IV
RESULTS OF PROJECT
SECTION 4.1. RESULTS AND REPORTS. Scriptgen shall provide to Lilly
written bi-monthly reports which describes the results and progress of the
Project. Upon completion of the Project or termination of this Agreement,
Scriptgen shall promptly provide Lilly with a comprehensive written final
report describing the results of the Project with respect to each Target
Protein including, but not limited to, an [***] for all Successful Compounds
(the "Final Comprehensive Report"). A Final Comprehensive Report shall not be
complete unless, to the extent commercially reasonably possible, the
structures of Scriptgen Compounds that are Successful Compounds are revealed
and confirmed in such report and, in any event, notwithstanding Scriptgen's
commercially reasonable efforts, if Scriptgen Compounds are the only
Successful Compounds identified in the Project, at least the structure of one
such compound must be revealed and confirmed in such report (Scriptgen shall
have the primary responsibility for identifying the structure of such
compounds, however, Lilly hereby agrees to provide reasonable assistance to
Scriptgen with respect to identifying the structure of such compounds).
Furthermore, Scriptgen shall use its best efforts to provide Lilly with
reference samples [***] of all Successful Compounds that were not furnished
by Lilly for purposes of the Project. These reference samples shall be
provided to Lilly in sufficient quantity so as to enable Lilly to reasonably
replicate such Successful Compounds for development and other purposes as it
may deem appropriate. Scriptgen shall also reasonably cooperate with Lilly in
transferring Scriptgen's Know-how and other information related to the
Successful Compounds to the extent provided in Article V and subject to the
provisions of Article VIII.
11
SECTION 4.2. OWNERSHIP. Subject to the licenses granted hereunder, an
Project IP-Rights shall be owned by the inventor of such patentable
invention, such inventorship, to be determined by the laws of inventorship,
under the United States. However, notwithstanding the foregoing, any Project
IP-Rights related to Lilly Compounds shall be owned by Lilly and Scriptgen
shall assign any and all interests that it may have in such Project IP-Rights
to Lilly. Scriptgen shall execute such documents and perform such acts as may
be reasonably necessary to convey any interest that it may have in Project
IP-Rights related to Lilly Compounds.
SECTION 4.3. JOINTLY OWNED PATENTABLE INVENTIONS. Except for Project
IP-Rights related to Lilly Compounds as described in Section 4.2, if any
Project IP-Rights are determined under Section 4.2, to be jointly invented by
Lilly and Scriptgen ("Joint Inventions"), Lilly and Scriptgen shall jointly
own such invention and shall discuss that Joint Invention and the
desirability of filing a United States patent application covering the
invention, as well as any foreign counterparts. If no decision is made
regarding whether to file and prosecute the application covering such Joint
Invention, Lilly shall make the decision. Such patent applications (including
filing, prosecution and maintenance thereof) shall be handled by a third
party mutually acceptable to both parties (such mutual acceptance shall not
be unreasonably withheld).
SECTION 4.4. SCRIPTGEN COMPOUND INVENTIONS. Except for IP-Rights
related to Lilly Compounds as described in Section 4.2, if any Project
IP-Rights are determined under Section 4.2, to be solely invented by
Scriptgen and are related to a Scriptgen Compound ("Scriptgen Compound
Invention"), Scriptgen shall own such invention and Lilly and Scriptgen shall
discuss that Scriptgen Compound Invention and the desirability of filing a
United States patent application covering the invention, as well as any
foreign counterparts. If no decision is made regarding whether to file and
prosecute the application covering such Scriptgen Compound Invention,
Scriptgen shall make the decision. Such patent applications (including
filing, prosecution and maintenance thereof) shall be handled by a third
party mutually acceptable to both parties (such mutual acceptance shall not
be unreasonably withheld).
SECTION 4.5. REVIEW AND COMMENT. In connection with any Joint
Inventions or Scriptgen Compound Inventions, each party shall provide the
other party with a copy of any patent application which first discloses any
specific invention within the scope of the Project or other relevant Project
IP-Rights and information prior to first filing the first of such
applications in any jurisdiction, if possible, for review and comment by each
party, or its respective designees, Each party and designees thereof shall
maintain any such patent application in confidence pursuant to Article VIII.
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SECTION 4.6. NOTICE OF DECISION If a party decides not to file,
prosecute or maintain an application or patent (including the prosecution of
any interference proceedings with respect thereto) with respect to a Joint
Invention or Scriptgen Compound Invention (the "Non-Prosecuting Party"), in
any country, it shall give the other party reasonable notice to this effect.
After such notice, the other party shall have the sole discretion to file or
maintain the application or patent with respect to such Joint Invention or
Scriptgen Compound Invention. If such other party elects to file or maintain
such application or patent, the Non-Prosecuting Party shall assign any and
all ownership rights in such invention to such other party. Furthermore, the
Non-Prosecuting Party shall execute such documents and perform such acts as
may be reasonably necessary to convey such ownership rights and for the other
party to continue prosecution or maintenance of any intellectual property
rights related thereto.
SECTION 4.7. THIRD PARTY INFRINGEMENT Scriptgen and Lilly each agrees
to take reasonable actions to protect Know-How from unauthorized use, when,
from its own knowledge or upon notice by the other party, the party with
knowledge or receiving notice becomes aware of the reasonable probability
that such unauthorized use exists.
SECTION 4.8. COOPERATION If within sixty (60) days of becoming aware of
the reasonable probability of an interference or infringement of Project
IP-Rights with respect to a Joint Invention or Scriptgen Compound Invention,
the owner (or one of the joint-owners) refuses to institute an infringement
suit or take other appropriate action (the "Non-Action Party") that the other
party feels is reasonably required to protect the Project IP-Rights, the
other party shall have the right at its sole discretion to institute such
suit or other appropriate action in the name of either or both parties. In
such event, the Non-Action Party shall cooperate with the other party to the
extent reasonably possible.
SECTION 4.9. NOTICE OF CERTIFICATION Scriptgen and Lilly each shall
immediately give notice to the other of any certification filed under the
U.S. "Drug Price Competition and Patent Term Restoration Act of 1984"
claiming that Project IP-Rights (or any portion thereof) are invalid or that
any infringement will not arise from the manufacture, use or sale of any
product that is competitive with a Product within the scope of this Agreement
by a third party. If Lilly decides not to bring infringement proceedings
against the entity making such a certification, Lilly shall give notice to
Scriptgen of its decision not to bring suit within sixty (60) days after
receipt of notice of such certification. Scriptgen may then, but is not
required to, bring suit against the party that filed the certification. Any
suit by Lilly or Scriptgen shall either be in the name of Lilly or in the
name of Scriptgen, or jointly by Lilly and Scriptgen, as may be required by
law. For this purpose, the party
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not bringing suit shall execute such legal papers necessary for the
prosecution of such suit as may be reasonably requested by the party bringing
suit. Notwithstanding the foregoing, this Section 4.9 shall not apply to
matters regarding Lilly Compounds or Atlas Screening and/or the intellectual
property rights related thereto.
SECTION 4.10. COSTS AND EXPENSES Lilly shall bear costs of filing,
prosecuting, maintaining and extending any Lilly Patent Rights and Scriptgen
shall bear the costs of filing, prosecuting, maintaining and extending any
Scriptgen Patent Rights. Lilly and Scriptgen shall equally bear the cost of
filing, prosecuting, maintaining and extending any Project IP-Rights related
to Joint Inventions.
SECTION 4.11. NOTICE OF INFRINGEMENT If the activities of either party
in connection with the Project or as the result of making, using or selling a
Product result in a claim of patent infringement or other violation of the
intellectual property rights of any third party, the party to this Agreement
first having notice of that claim shall promptly notify the other party in
writing. The notice shall set forth the facts of the claim in reasonable
detail. Except as otherwise provided herein, Lilly shall have the primary
right, in its sole discretion, to defend against said claim (whether or not
it arises as a counterclaim in any infringement action commenced by Scriptgen
hereunder) and to prosecute any counterclaims, or any other claims that may
arise in connection with such litigation. Scriptgen shall cooperate with
Lilly in such defense and prosecution and shall have the right to be
represented by counsel of its own choice. If Lilly shall fail to diligently
commence and continue defense against such claim (or prosecution of any claim
or counterclaim), Scriptgen may assume the primary right for such defense or
prosecution, and Lilly shall cooperate with Scriptgen and shall have the
right to be represented by counsel of its own choice. Notwithstanding the
foregoing, if the claim involves an allegation of a violation of the trade
secret rights of a third party, the party accused of such violation shall
have the obligation to defend against such claim and shall indemnify the
other party against all costs associated with such claim. Furthermore,
notwithstanding the foregoing, this Section 4.11 shall not apply to matters
regarding Lilly Compounds or Atlas Screening and/or the intellectual property
rights related thereto.
SECTION 4.12. LITIGATION EXPENSES Each party shall assume and pay all
of its own out-of-pocket costs incurred in connection with an litigation
described in this Article IV, including without limitation, the fees and
expenses of that party's counsel.
SECTION 4.13. SETTLEMENT APPROVAL Neither party shall settle any such
proceeding described in this Article IV without the approval of the other
14
party, which approval shall not be unreasonably withheld. Notwithstanding the
foregoing, this Section 4.13 shall not apply to matters regarding Lilly
Compounds or Atlas Screening and/or the intellectual property rights related
thereto.
SECTION 4.14. RECOVERY Any recovery obtained by any party as a result
of any proceeding directly related to a Product (or a Successful Compound
within the Field) during the term that royalties are paid to Scriptgen
hereunder, by settlement or otherwise, shall be applied in the following
order of priority:
(a) first, to reimburse each party for all litigation costs in
connection with such proceeding paid by that party under Section
4.13 and not otherwise recovered; and
(b) second, [***]
SECTION 4.15. PATENT TERM EXTENSIONS The parties shall cooperate with
each other in gaining patent term extension wherever applicable to Project
IP-Rights covering Successful Compounds or Products. Lilly shall determine
which patents shall be extended. All filings for such extension shall be made
by Lilly provided, however, that in the event that Lilly elects not to file
for an extension, Lilly shall (i) inform Scriptgen of its intention not to
file and (ii) grant Scriptgen the right to file for such extension.
ARTICLE V
LICENSE
Subject to Section 6.9 of this Agreement, Scriptgen hereby grants to
Lilly a perpetual, exclusive (even as to Scriptgen), worldwide,
non-cancelable license, with the right to grant sublicenses, under
Scriptgen's interests in Project IP-Rights for all purposes including, but
not limited to, to make, have made, use, have used, import, offer for sale,
and have sold any Successful Compound and/or Product for any and all purposes
subject to Scriptgen retaining the rights to its ATLAS Screening technology
and retaining any rights that it may have outside the Field with respect to
Scriptgen Compounds as described in Section 6.9 of this Agreement.
ARTICLE VI
COMMERCIAL TERMS
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section 6.1. Milestones. As consideration for the licenses granted
hereunder, Lilly shall pay to Scriptgen within forty-five (45) days of the
occurrence of a milestone event the following milestone payments [***]
*Notwithstanding the foregoing, [***]
Regardless of the number of indications or products that may be
developed by Lilly under this Agreement, [***]. In other words, [***].
Furthermore, any milestone payment made under this Section 6.1 shall [***] of
this Agreement. For avoidance of any doubt, Lilly shall [***] of this
Agreement.
SECTION 6.2. ROYALTY PAYMENTS TO SCRIPTGEN ON PRODUCTS. As additional
consideration for the licenses granted hereunder, except as otherwise
provided in this Agreement, Lilly shall pay to Scriptgen a royalty equal to
[***] of the Net Sales of Products. Royalties shall be reported and paid
quarterly in accordance with Section 6.4 of this Agreement.
SECTION 6.3. TERM OF ROYALTY PAYMENTS BY LILLY. Royalties under Section
6.2 shall be paid on a country-by-country basis from the date of the
16
first commercial sale of each Product in a particular country [***].
SECTION 6.4. ROYALTY PAYMENT AND REPORTS. Royalty payments under this
Agreement shall be made to Scriptgen within ninety (90) days following the
end of each calendar quarter for which royalties are due. Each royalty
payment shall be accompanied by a statement summarizing the Net Sales and
royalty by United States and outside the United States showing: (i) the Net
Sales of the Products sold by Lilly, its Affiliates, and its sublicensees
during the reporting period; (ii) the royalty due thereon; and (iii)
withholding taxes, if any, required by law to be deducted in respect of such
royalties. If no royalty is due for any royalty period hereunder, Lilly shall
so report. Lilly shall keep complete and accurate records in sufficient
detail to properly reflect all gross sales and Net Sales and to enable the
royalties payable hereunder to be determined.
SECTION 6.5. TAXES. Any and all taxes levied on account of royalties
accruing under this Article shall be paid by Scriptgen. If Lilly is required
by the United States government or other authorities to withhold any tax on
the amounts payable by Lilly to Scriptgen under this Agreement, Lilly shall
be allowed to do so, and shall in such case remit royalty payments to
Scriptgen net of such withheld amount, provided that Lilly furnishes
Scriptgen with proof of payment annually within ninety (90) days following
December 31 of each year in order that Scriptgen may use the withholding tax
paid as a tax credit.
SECTION 6.6. EXCHANGE RATES All payments to be made by Lilly to
Scriptgen under this Agreement shall be made in United States dollars. In the
case of sales outside the United States by Lilly, the rate of exchange to be
used in computing the amount of currency equivalent in United States dollars
due Scriptgen shall be made using Lilly's then current standard exchange rate
methodology, which methodology shall be in conformity with generally accepted
accounting principles.
SECTION 6.7. AUDITS. Upon the written request of Scriptgen, Lilly shall
permit an independent public accountant selected by Scriptgen and acceptable
to Lilly, which acceptance shall not be unreasonably withheld or delayed, to
have access during normal business hours to such records of Lilly as may be
reasonably necessary to verify the accuracy of the royalty reports described
herein, in respect of any fiscal year ending not more than thirty-six (36)
months prior to the date of such request. All such verifications shall be
conducted at Scriptgen's expense and not more than once in each calendar
year. In the event such Scriptgen representative concludes that additional
17
royalties were owed to Scriptgen during such period, the additional royalty
shall be paid by Lilly within thirty (30) days of the date Scriptgen delivers
to Lilly such representative's written report so concluding unless Lilly
objects thereto, specifying in writing the basis for its objection in
reasonable detail. The fees charged by such representative shall be paid by
Scriptgen unless the audit discloses that the royalties payable by Lilly for
the audited period are incorrect by more than [***], in which case Lilly
shall pay the reasonable fees and expenses charged by such representative.
Scriptgen agrees that all information subject to review under this Section
6.7 is confidential and that is representative shall only disclose to
Scriptgen the royalty amount determined from such audit and that Scriptgen
shall cause its representative to retain all such information in confidence.
SECTION 6.8. INTEREST ON LATE PAYMENTS. Any payments by Lilly to
Scriptgen that are not paid on or before the fifth day after the date such
payments are due under this Agreement shall bear interest, to the extent
permitted by applicable law, [***] above the Prime Rate of interest declared
from time to time by The First National Bank of Boston in Boston, Massachusetts,
calculated on the number of days payment is delinquent. The right to receive
interest shall be in addition to any other rights and remedies of Scriptgen.
[***]
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ARTICLE VII
SAMPLES
SECTION 7.1. SUPPLY OF SAMPLES AND OTHER COMPOUNDS. Lilly shall retain
ownership in any Initial Target Proteins, compounds, Natural Product and
similar items (or portions thereof) that it supplies to Scriptgen under this
Agreement whether contained in cassettes form or otherwise (the "Samples").
Unless otherwise agreed by the parties in writing, the Samples shall be
supplied blinded.
SECTION 7.2. SAMPLE MAINTENANCE AND STRUCTURE DETERMINATION. Scriptgen
hereby agrees that it (i) [***] (ii) will, upon Lilly's request, return or
dispose of unused Samples; (iii) will not [***] except as contemplated under
this Agreement; (iv) will not attempt to determine the structures of the
Samples; and (v) will not attempt to replicate the Samples without Lilly's
prior written permission. Scriptgen, further, agrees that Lilly shall have
the ability to [***] under this Section 7.2 at such times and intervals as is
reasonably convenient to both parties.
ARTICLE VIII
CONFIDENTIALITY AND PUBLICATION
SECTION 8.1. CONFIDENTIALITY. Except as otherwise provided in writing
by the parties, both parties shall use their best efforts to retain in
confidence and not use, except as provided in this Agreement, all information
relating to the Project. Such information may, however, be disclosed insofar
as such disclosure is necessary (where possible, with adequate safeguards for
confidentiality) to allow either party to institute or defend against
litigation with a third-party, to file and prosecute patent applications or
to comply with governmental regulations, provided neither party shall use the
other party's information in any patent application without written approval
from the other party.
This obligation of confidentiality and non-use shall not apply to
information which (i) is in the public domain, (ii) comes into the public
domain through no fault of the receiving party, (iii) was known by the
receiving party prior to disclosure under this Agreement or under the prior
confidentiality agreement between Lilly and Scriptgen, (iv) is disclosed to
the receiving party without an obligation of confidentiality by a third party
having a lawful right to make the disclosure, or (v) is disclosed under the
provisions of Section 8.2 of this Agreement.
20
In furtherance of the objectives of the Project and with the approval
of the parties, either party may disclose confidential information obtained
or generated under this Agreement to a third party who has agreed in writing
to be bound by the same or similar obligations of confidence set forth in
this Section, provided the third party agrees not to use the confidential
information without authorization from the party owning the information,
except that such authorization shall not be required in connection with the
exercise of the rights granted under any license granted under this Agreement.
All obligations of confidentiality and non-use imposed upon the parties
under this Agreement shall expire on the later of (i) the date [***]; or (ii)
the expiration of all obligations to pay royalties under Section 6.3 of this
Agreement.
Lilly agrees to mark all Lilly Information provided to Scriptgen in
documentary form as "Confidential". If such Lilly Information is provided to
Scriptgen in oral form, Lilly shall thereafter summarize the disclosure in
writing, mark it as "Confidential," and provide a copy to Scriptgen within
thirty (30) days of the oral disclosure. In the same manner, Scriptgen agrees
to mark all Scriptgen Information provided to Lilly in documentary form as
"Confidential." If such Scriptgen Information is provided to Lilly in oral
form, Scriptgen shall thereafter summarize the disclosure in writing, mark it
"Confidential," and provide a copy to Lilly within thirty (30) days of the
oral discussion.
SECTION 8.2. PUBLICATIONS. Lilly and Scriptgen agree that, during the
term of the Project and for [***] thereafter, neither party shall publish the
results of studies carried out under this Agreement without the opportunity
for prior review by the other party. During the term of the Project and for
[***], each party agrees to provide the other party the opportunity to
review any proposed abstracts or manuscripts which relate to the Project at
least [***] prior to their intended submission for publication and agrees,
upon request, not to submit such an abstract or manuscript for publication
until the other party is given a reasonable period of time to secure patent
protection for any material in such publication which it believes to be
patentable. Upon request, confidential information of the non-disclosing
party shall be removed from such proposed publication. Nothing contained in
this Section shall prohibit the inclusion of information necessary for a
patent application, provided the non-filing party is given a reasonable
opportunity to review the information to be included. During the term of the
Project and for [***] thereafter, the parties agree that all publications
relating to the results of studies carried out under this Agreement shall be
submitted for review and approval by each Party to ensure that, to the
21
extent appropriate, scientific credit is given to researchers at both Lilly
and Scriptgen.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 INDEMNIFICATION BY LILLY. Lilly agrees to indemnify, defend
and hold Scriptgen harmless from and against any losses, including product
liability, which arise from any claim, lawsuit or other action by a third
party arising out of the manufacture and sales of Products, the execution by
Lilly of this Agreement, the performance or breach by Lilly of its warranties
or obligations under this Agreement, or the negligence or willful misconduct
of Lilly, its employees or its agents within the scope of this Agreement,
except to the extent such losses result from (i) the breach by Scriptgen of
its warranties or obligations hereunder or (ii) the negligence or willful
misconduct of Scriptgen, its employees or its agents within the scope of this
Agreement.
SECTION 9.2 INDEMNIFICATION BY SCRIPTGEN. Scriptgen agrees to
indemnify, defend and hold Lilly harmless from and against any losses which
arise from any claim, lawsuit or other action by a third party arising out of
the execution by Scriptgen of this Agreement, the performance or breach by
Scriptgen of its warranties or obligations under this Agreement, or the
negligence or willful misconduct of Scriptgen, its employees or its agents
within the scope of this Agreement, except to the extent such losses result
from (i) the breach by Lilly of its warranties or obligations hereunder or
(ii) the negligence or- willful misconduct of Lilly, its employees or its
agents within the scope of this Agreement.
SECTION 9.3 INDEMNIFICATION PROCEDURES. A party seeking indemnification
pursuant to this Article shall notify, in writing, the other party within
thirty (30) days of the assertion of any claim or discovery of any fact upon
which the party intends to base a claim for indemnification. A party's
failure to so notify the indemnifying party shall not, however, relieve such
indemnifying party from any liability under this Agreement to the indemnified
party with respect to such claim except to the extent that such indemnifying
party is actually prejudiced by such failure. The party from whom
indemnification is being sought, while reserving the right to contest its
obligation to indemnify, shall be responsible for the defense of any claim,
demand, lawsuit or other proceeding in connection with which the other party
claims indemnification hereunder. The indemnified party shall have the right
at its own expense to participate jointly with the indemnifying party in the
defense of any such claim, demand, lawsuit or other proceeding, but with
respect to any issue involved in such claim, demand, lawsuit or
22
other proceeding with respect to which the indemnifying party has
acknowledged its obligation to indemnify the other party hereunder, the
indemnifying party shall have the sole right to select counsel, settle, try
or otherwise dispose of or handle such claim, demand, lawsuit or other
proceeding on such terms as the indemnifying party, in its sole discretion
shall deem appropriate.
ARTICLE X
DISPUTE RESOLUTION
SECTION 10.1 GOOD FAITH NEGOTIATIONS. The parties will attempt in good
faith to resolve any controversy or claim arising out of or relating to this
Agreement promptly by negotiations between the following senior executives of
the parties who have authority to settle the controversy (and who do not have
direct responsibility for administration of this agreement):
(i) For Lilly - Vice President of Infectious Diseases or similar
position
(ii) For Scriptgen - its Chief Executive Officer
SECTION 10.2 NOTICE AND MEETING. The disputing party(ies) shall give
the other party(ies) written notice of the dispute. Within ten (10) days
after receipt of said notice, the receiving party(ies) shall submit to the
other(s) a written response. The notice and response shall include (a) a
statement of supporting its position, and (b) the name and title of the
executive who will represent that party. The executives shall meet at a
mutually acceptable time and place within ten (10) days of the date of the
disputing party's notice and thereafter as often as they reasonably deem
necessary to exchange relevant information and to attempt to resolve the
dispute.
SECTION 10.3 LITIGATION. If the matter has not been resolved within
[***] of the disputing party's notice, or if the party receiving said notice
will not meet within [***] either party may initiate litigation upon [***]
written notice to the other party.
SECTION 10.4 DEADLINES. All deadlines specified in this Article X may
be extended by mutual agreement.
SECTION 10.5 NON-EXCLUSIVE PROCEDURES. The procedures specified in this
Article X shall be non-exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement. Without
limitation of the foregoing, any party may seek a preliminary injunction or
other preliminary judicial relief if in its judgment such action is necessary
to avoid irreparable damage. Despite such action, the parties will continue to
23
participate in good faith in the procedures specified in this Article X. All
applicable statutes of limitation shall be tolled while the procedures
specified in this Article X are pending. The parties will take such action,
if any, required to effectuate such tolling.
ARTICLE XI
TERM AND TERMINATION
SECTION 11.1. TERM. Except as otherwise provided for herein, this
Agreement shall become effective as of the date hereof and shall remain in
effect until the expiration of all obligations of Confidentiality under
Article VIII.
SECTION 11.2. TERM AND EXTENSION OF PROJECT. Except as otherwise
provided for herein, the Project term shall begin as of the date hereof and
continue until completion of Project Phase III for each Initial Target
Protein and Additional Target Protein and until Lilly has received the Final
Comprehensive Report for each Initial Target Protein and Additional Target
Protein.
SECTION 11.3. TERMINATION FOR DEFAULT. If either party is in default of
any of its material obligations under this Agreement and fails to remedy that
default within ninety (90) days after the other party sends written notice of
the default (thirty (30) days in the event of failure to pay monies when due)
the party not in default may terminate the Project immediately by giving
written notice of the termination. The termination date shall be the date of
the notice of termination. If either party has materially defaulted and such
default has not been cured as described herein, the licenses and royalty
obligations hereunder shall survive; however, a termination under this
Section 11.3 is neither a waiver nor will it prejudice the non-defaulting
party from seeking a legal or equitable remedy against the defaulting party
for such material default.
SECTION 11.4. TERMINATION DUE TO ASSIGNMENT. In the event Scriptgen
assigns this Agreement, pursuant to Section 15.6, to an acquiring third-party
which is a pharmaceutical or biotechnology company, Lilly may terminate the
Project upon thirty (30) days notice without terminating the licenses (and
associated royalty obligations) granted to Lilly under this Agreement.
SECTION 11.5. RESIDUAL RIGHTS. Upon expiration or termination of this
Agreement, except as provided herein to the contrary, all rights and
obligations of the parties shall cease, except as follows:
24
(a) Obligations to pay royalties and other sums accruing hereunder up to
the date of termination;
(b) The obligation (if any) to pay milestones as achieved and royalties
with respect to Products;
(c) All provisions regarding confidentiality shall continue in full
force and effect;
(d) Obligations of defense and indemnity;
(e) Obligations set forth in Article XV, but only with respect to those
causes of action which accrued prior to such termination;
(f) Any cause of action or claim of Scriptgen or Lilly accrued or to
accrue because of any breach or default by the other party
hereunder;
(g) All license and audit rights granted hereunder; and
(h) All other terms, provisions, representations, rights and obligations
contained in this Agreement that by their sense and context are
intended to survive until performance thereof by either or both
parties.
ARTICLE XII
DISCLOSURE OF AGREEMENT
SECTION 12.1. DISCLOSURE OF AGREEMENT. Except as provided below,
neither Scriptgen nor Lilly shall release any information to any third party
with respect to the existence and terms of this Agreement without the prior
written consent of the other, which shall not be unreasonably withheld. This
prohibition includes, but is not limited to, press releases, educational and
scientific conferences, promotional materials, governmental filings, and
discussions with lenders, investment bankers, public officials, and the media
provided, however, that Scriptgen may disclose the existence of the Agreement
to its lenders, investors and potential investors and the existence and terms
of the Agreement to its attorneys and accountants on a confidential basis.
SECTION 12.2. RELEASES REQUIRED BY LAW. If either party determines a
release of further information is required by law or governmental regulation,
it shall notify the other in writing at least thirty (30) days (or such
shorter time where legally required) before the time of the proposed release.
The notice shall include the exact text of the proposed release and the time
and manner of the release.
If requested, the party seeking to release information shall furnish to
the other an opinion of counsel that the release of that information is
required by law. At the other party's request, and before the release, the
party desiring to release further information shall consult with the other
25
party on the necessity for the disclosure and the text of the proposed
further release. In no event shall a release include further information
regarding the existence or terms of this Agreement that is not required by
law or governmental regulation.
ARTICLE XIII
REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS
SECTION 13.1. WARRANTY OF TITLE. Scriptgen hereby warrants that it has
the unencumbered right to enter into this Agreement and to grant the
license(s) contained herein. Lilly hereby warrants that it has the
unencumbered right to enter into this Agreement and to perform its
obligations hereunder.
SECTION 13.2. WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT, (A) NEITHER PARTY MAKES ANY REPRESENTATION OR
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER
WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, (B) NEITHER PARTY MAKES ANY
REPRESENTATION OR WARRANTY THAT EXERCISE OF THE RIGHTS GRANTED IN THIS
AGREEMENT WILL NOT INFRINGE ANY THIRD PARTY PATENT OR OTHER PROPRIETARY
RIGHT, AND (C) NEITHER PARTY ASSUMES ANY RESPONSIBILITIES WHATSOEVER WITH
RESPECT TO PROJECT IP-RIGHTS.
SECTION 13.3. LIMITATIONS. Nothing in this Agreement shall be construed
as:
(a) a warranty or representation by either party as to the validity or
scope of any Project IP-Rights.
(b) a warranty or representation that anything made, used, sold or
otherwise disposed of under the rights granted in this Agreement is or will
be free from infringement of a third-party patent or other proprietary right;
or
(c) conferring by implication, estoppel or otherwise any license or
other right under any patents or technology of either party except as
otherwise expressly provided in this Agreement.
ARTICLE XIV
GOVERNMENTAL CONTROL
26
SECTION 14.1. AUTHORITY. This Agreement is made subject to any
restrictions concerning the export of products or technical information from
the United States of America which may be imposed upon or related to
Scriptgen or Lilly from time to time by the government of the United States
of America.
ARTICLE XV
MISCELLANEOUS PROVISIONS
SECTION 15.1. NO AGENCY. It is understood and agreed that Scriptgen
shall have the status of an independent contractor under this Agreement and
that nothing in this Agreement shall be construed as authorization for either
Lilly or Scriptgen to act as agent for the other.
SECTION 15.2. FORCE MAJEURE. Both parties to the Agreement shall be
excused from the performance of their obligations under this Agreement if
such performance is prevented by Force Majeure and the nonperforming party
promptly provides notice of the prevention to the other party. Such excuse
shall be continued so long as the condition constituting Force Majeure
continues and the nonperforming party takes reasonable efforts to remove the
condition.
For purposes of this Agreement, Force Majeure shall include, but not
limited to, conditions beyond the control of the parties, including without
limitation, an act of God, voluntary or involuntary compliance with any
regulation, law or order of any government, war, civil commotion, epidemic,
failure or default of public utilities or common carriers, destruction of
production facilities or materials by fire, earthquake, storm or like
catastrophe.
SECTION 15.3. AMENDMENT. This Agreement may not be amended,
supplemented, or otherwise modified except by an instrument in writing signed
by both parties.
SECTION 15.4. NOTICES. Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed to have been
sufficiently given for all purposes if mailed by first class certified or
registered mail, postage prepaid. Unless otherwise specified in writing, the
mailing addresses of the parties shall be as described below.
For Scriptgen: Scriptgen Pharmaceuticals, Inc.
200 Boston Avenue
Medford, MA 02155
Attention: Karen A. Hamlin
27
For Lilly: Eli Lilly and Company
Lilly Corporate Center
Indianapolis, Indiana 46285
Attention: General Counsel
SECTION 15.5. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Indiana, excluding any
choice of law rules which may direct the application of the law of any other
jurisdiction. Questions effecting the construction and effect of any Project
IP-Rights shall be determined by the laws of the country in which the Project
IP-Rights have been applied for and granted.
SECTION 15.6. ASSIGNMENT. Neither party may assign its rights and
obligations under this Agreement without the prior written consent of the
other, except a party may make such an assignment without the other party's
consent in connection with any merger, reorganization or sale of all or
substantially all of its assets to which this Agreement relates. This
Agreement shall be binding upon and shall inure to the benefit of the
successors and permitted assigns of the parties.
SECTION 15.7. CONSENTS NOT UNREASONABLY WITHHELD. Whenever provision is
made in this Agreement for either party to secure the consent or approval of
the other, that consent or approval shall not unreasonably be withheld, and
whenever in this Agreement provisions are made for one party to object to or
disapprove a matter, such objection or disapproval shall not unreasonably be
exercised.
SECTION 15.8. NO STRICT CONSTRUCTION. This Agreement has been prepared
jointly and shall not be strictly construed against either party.
SECTION 15.9. HEADINGS. The captions or headings of the Sections or
other subdivisions hereof are inserted only as a matter of convenience or for
reference and shall have no effect on the meaning of the provisions hereof.
SECTION 15.10. SEVERANCE OF CLAUSES/INSOLVENCY. Each party agrees that,
should any provision of this Agreement be determined by a court of competent
jurisdiction to violate or contravene any applicable law or policy, such
provision will be severed or modified by the court to the extent necessary to
comply with the applicable law or policy, and such modified provision and the
remainder of the provisions hereof will continue in full force and effect. In
addition the parties hereto intend that the Agreement shall not be deemed an
executory contract under the Bankruptcy/Insolvency laws of the United States.
28
SECTION 15.11. NO WAIVER. The waiver of a breach hereunder may be
effected only by a writing signed by the waiving party and shall not
constitute a waiver of any other breach.
SECTION 15.12. ENTIRE AGREEMENT. The Agreement institutes the entire
agreement of the parties relating to the subject matter, and may not be
amended, modified or canceled except by written instrument executed by both
Scriptgen and Lilly.
SECTION 15.13. COUNTERPARTS. This Agreement has been executed in two
(2) counterparts, all of which shall constitute an original, but which
together shall constitute are and the same instrument.
IN WITNESS WHEREOF, the parties by their respective authorized
officers, have executed this Agreement.
SCRIPTGEN ELI LILLY AND COMPANY
PHARMACEUTICALS, INC
By: /s/ Karen L. Hamlin By: /s/ August M. Watanabe
------------------------- -------------------------
Karen L. Hamlin August M. Watanabe
Title: Senior Director of Operations Title: Executive Vice President
Date: May 8, 1997 Date: May 7, 1997
Exhibit A
ATLAS Set Up and Screening Plan: Two Eli Lilly Bacterial Targets
[***]
Exhibit B
[TEXT OF UNITED STATES PATENT NUMBER 5,585,277]
[***]
Exhibit C
Exhibit C: Staff involved in ATLAS application to Eli Lilly targets.
[***]: Overall supervision and project contact:
ALAN CORIN, PH.D., SENIOR RESEARCH FELLOW: Biophysical chemist with sixteen
years of industrial and academic postdoctoral experience.
JULIE BRYAN, ASSOCIATE SCIENTIST II: Biochemist with four years experience in
ATLAS technology implementation.
IAN GLOMSKI: ASSISTANT SCIENTIST: Biochemist with two years ATLAS experience.
JILL HEIL, ASSISTANT SCIENTIST: One year experience in ATLAS assay
establishment and high throughput screening.