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Syntex / ArQule - Research & License Agreement - Roche Bio Science
Exhibit 10.19 -- ArQule
RESEARCH AND LICENSE AGREEMENT
ARQULE, INC.
ROCHE BIOSCIENCE
TABLE OF CONTENTS
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1. Definitions.................................................1
1.1 Affiliate.............................................1
1.2 Agreement.............................................1
1.3 ArQule Compound.......................................1
1.4 ArQule-ArQule Derivative Compounds....................2
1.5 ArQule Derivative Compounds...........................2
1.6 ArQule-Roche-Derivative Compounds.....................2
1.7 ArQule Patent Rights..................................2
1.8 Array.................................................2
1.9 Base Rate of Interest.................................2
1.10 Chemical Theme........................................2
1.11 Confidential Information..............................2
1.12 Contract Year.........................................2
1.13 DerivativeCompound....................................2
1.14 Directed Array........................................2
1.15 Directed Array Program................................2
1.16 Disclosing Party......................................3
1.17 Effective Date........................................3
1.18 Extraordinary Expenses................................3
1.19 FDA...................................................3
1.20 First Commercial Sale.................................3
1.21 FTE Payment...........................................3
1.22 Full-Time Equivalent or FTE...........................3
1.23 IND...................................................3
1.24 Joint Patent Rights...................................3
1.25 Major European Country................................3
1.26 Molecular Target......................................3
1.27 NDA...................................................3
1.28 Net Sales.............................................3
1.29 Patent Rights.........................................4
1.30 Phase II Clinical Trials..............................4
1.31 Phase III Clinical Trials.............................4
1.32 Preclinical Compound..................................4
1.33 Preclinical Development...............................4
1.34 Receiving Party.......................................4
1.35 Research Committee....................................4
1.36 Research Period.......................................4
1.37 Research Plan.........................................5
1.38 Roche Bioscience Patent Rights........................5
1.39 Royalty-Bearing Product...............................5
1.40 Roche Bioscience Compound.............................5
1.41 Roche Bioscience Derivative Compound..................5
1.42 Royalty Period........................................5
1.43 Royalty Term..........................................5
1.44 Sublicensee...........................................5
1.45 Valid Claim...........................................5
2. Management of Research Program..............................6
2.1 Composition of Research Committee.....................6
2.2 Duties of the Research Committee......................6
2.3 Meetings of the Research Committee....................6
2.4 Cooperation...........................................7
2.5 Visits to Facilities..................................7
3. Directed Array Program......................................7
3.1 Description of Directed Array Program.................7
3.2 Conduct of Directed Array Program.....................8
3.3 Directed Array Program Payments.......................8
3.3.1 FTE Payment....................................8
3.3.2 Extraordinary Expenses.........................9
3.4 Termination of Directed Array Program.................9
4. License Grants; Develpment Rights; Reversion of Rights......9
4.1 Development and Commercialization Licenses............9
4.2 Reversion of Rights; Return of Materials..............9
4.3 Reversion of Certain Rights..........................10
5. Ownership of Compounds.....................................10
5.1 Roche Bioscience Compounds; ArQule Derivative
Compounds; Roche Bioscience Derivative
Compounds..........................................10
5.2 ArQule Compounds.....................................11
6. Intellectual Property Rights...............................11
6.1 Ownership of Patent Rights...........................11
6.2 Management of ArQule Patent Rights...................11
6.3 Management of Joint Patent Rights....................11
6.4 Cooperation of the Parties...........................12
6.5 Infringement by Third Parties........................12
7. Payments, Reports, and Records.............................12
7.1 Milestone Payments...................................12
7.2 Royalties............................................13
7.2.1 Royalties for ArQule-Roche Derivative
Compounds and Certain Roche Bioscience
Derivative Compounds.........................13
7.2.2 Royalties for ArQule Compounds,
ArQule-ArQule Derivative Compounds and
Certain Roche Bioscience Derivative
Compounds....................................13
7.2.3 Combination Product............................14
7.2.4 Third Party Royalties..........................14
7.3 Reports and Payments.................................14
7.4 Invoices; Payments in U.S. Dollars...................14
7.5 Exchange Rate; Manner and Place of Payment...........14
7.6 Payments in Other Currencies.........................15
7.7 Records..............................................15
7.8 Late Payments........................................15
8. Confidential Information...................................16
8.1 Definition of Confidential Information...............16
8.2 Obligations..........................................16
8.3 Exceptions...........................................16
8.4 Publications.........................................17
8.5 Survival of Obligations..............................17
9. Representations and Warranties.............................17
9.1 Authorization........................................17
10. Indemnification and Insurance..............................17
10.1 Roche Bioscience Indemnity Obligations...............17
10.2 Procedure............................................18
11. Term and Termination......................................18
11.1 Term.................................................18
11.2 Breach of Payment Obligations........................18
11.3 Material Breach......................................18
11.4 Effect of Termination................................18
12. Publicity.................................................19
12.1 Review...............................................19
12.2 Standards............................................19
13. Miscellaneous.............................................19
13.1 Relationship of Parties..............................19
13.2 Non-Solicitation.....................................19
13.3 Governing Law........................................19
13.4 Dispute Resolution Procedures........................19
13.5 Counterparts.........................................21
13.6 Headings.............................................21
13.7 Binding Effect.......................................21
13.8 Assignment...........................................21
13.9 Notices..............................................21
13.10 Amendment and Waiver................................22
13.11 Severability........................................22
13.12 Entire Agreement....................................22
13.13 Force Majeure.......................................22
EXHIBIT A......................................................24
RESEARCH AND LICENSE AGREEMENT
This Agreement, dated as of September 13, 1996, is between ArQule, Inc. ("ArQule"), a Delaware corporation, and Roche Bioscience, a division of Syntex (U.S.A.) Inc. ("Roche Bioscience"), a Delaware corporation.
R E C I T A L S
WHEREAS, ArQule has developed certain technology that has applications in the discovery and optimization of pharmaceutical compounds;
WHEREAS, Roche Bioscience desires that ArQule apply its technology to the research and optimization of pharmaceutical compounds for Roche Bioscience; and
WHEREAS, in exchange for payment by Roche Bioscience of research funds, milestone payments and royalties, ArQule is willing to perform certain research and compound optimization activities for Roche Bioscience, subject to the terms and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants set forth in this Agreement, the parties hereby agree as follows:
1. Definitions.
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1.1 "AFFILIATE" shall mean a corporation or other legal entity that controls, is controlled by, or is under common control with such party. For purposes of this definition, "control" means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation; provided, however, Genentech, Inc., with offices located at 460 Point San Bruno Boulevard, South San Francisco, California, 94080, shall not be considered an Affiliate of Roche Bioscience.
1.2 "AGREEMENT" shall mean this Research and Development Agreement, together with EXHIBITS A AND B hereto.
1.3 "ARQULE COMPOUND" shall mean any organic chemical molecule that is initially synthesized by ArQule using its proprietary technology outside the Research Plan for
its own internal research programs and provided by ArQule to Roche Bioscience under the Directed Array Program; provided, however, that this definition shall not include any compound provided to Roche Bioscience or an Affiliate of Roche Bioscience as part of a general screening library pursuant to a separate agreement entered into by and between ArQule and each of Roche Bioscience and such Affiliate.
1.4 "ARQULE-ARQULE DERIVATIVE COMPOUNDS" shall mean a Derivative Compound synthesized by ArQule from an ArQule Compound under the Directed Array Program described in Section 3.1.
1.5 "ARQULE DERIVATIVE COMPOUNDS" shall mean ArQule-ArQule Derivative Compounds and/or ArQule-Roche Derivative Compounds.
1.6 "ARQULE-ROCHE DERIVATIVE COMPOUNDS" shall mean a Derivative Compound synthesized by ArQule from a Roche Bioscience Compound under the Directed Array Program described in Section 3.1.
1.7 "ARQULE PATENT RIGHTS" shall mean Patent Rights controlled or owned by ArQule as of the Effective Date or during the Research Period and Patent Rights controlled or owned by ArQule pursuant to Section 6.1.1.
1.8 "ARRAY" shall mean a set of samples of structurally related chemical compounds arranged in a format such as a microtiter screening plate.
1.9 "BASE RATE OF INTEREST" shall mean the base rate of interest declared from time to time by the Bank of Boston.
1.10 "CHEMICAL THEME" shall mean the chemical or structural characteristics shared by a group of compounds as determined by the Research Committee pursuant to Section 2.2.
1.11 "CONFIDENTIAL INFORMATION" shall have the meaning set forth in Section 8.1.
1.12 "CONTRACT YEAR" shall mean each twelve (12) month period of the Research Period, with the first Contract Year commencing on the Effective Date and concluding twelve (12) months thereafter, and each subsequent year shall commence on the anniversary of the Effective Date and concluding twelve (12) months thereafter.
1.13 "DERIVATIVE COMPOUND" shall mean a chemical compound structurally derived in one or more steps from another by a process of modification or partial
substitution of at least one component wherein at least one structural feature is retained at each process step. The number of intermediate steps or compounds is not relevant to the classification of a compound as a Derivative Compound.
1.14 "DIRECTED ARRAY" shall mean an Array comprised of ArQule Derivative Compounds synthesized by ArQule under the Directed Array Program described in Section 3.1.
1.15 "DIRECTED ARRAY PROGRAM" shall mean each Directed Array Program conducted by ArQule as set forth in Section 3.1.
1.16 "DISCLOSING PARTY" shall mean that party disclosing Confidential Information to the other party under Section 8.
1.17 "EFFECTIVE DATE" shall mean the first business day of the month immediately following the date of execution of this Agreement by the Parties hereto.
1.18 "EXTRAORDINARY EXPENSES" shall mean those capital expenses required solely to further the Directed Array Program in accordance with the Research Plan and as approved in advance by the Research Committee.
1.19 "FDA" shall mean the United States Food and Drug Administration.
1.20 "FIRST COMMERCIAL SALE" of a Royalty-Bearing Product shall mean the first sale for use or consumption of such Royalty-Bearing Product in a country after required marketing and pricing approval has been granted by the governing health regulatory authority of such country. Sale to an Affiliate or Sublicensee shall not constitute a First Commercial Sale unless the Affiliate or Sublicensee is the end user of such Royalty-Bearing Product.
1.21 "FTE PAYMENT" shall have the meaning set forth in Section 3.3.1.
1.22 "FULL-TIME EQUIVALENT" or "FTE" shall mean one (1) or more qualified scientist(s) of a party who, collectively, spend time and effort working on a specific project or task equivalent to the time and effort of one (1) full-time employee.
1.23 "IND" shall mean an Investigational New Drug application, as such term is defined by the FDA.
1.24 "JOINT PATENT RIGHTS" shall mean any Patent Rights that are jointly owned by the Parties, as set forth in Section 6.1.2.
1.25 "MAJOR EUROPEAN COUNTRY" shall mean any of the following countries: United Kingdom, France, Germany, Italy, and Spain.
1.26 "MOLECULAR TARGET" shall mean that specific biomolecule and any related biomolecules that (a) exhibit substantial structural homology with the identified biomolecule, as measured by the degree of similarity in the primary structure (i.e., amino acid sequence, nucleotide sequence, monosaccharide linkages) and secondary structure (i.e., three dimensional structure) and (b) perform a similar function as the identified biomolecule.
1.27 "NDA" shall mean a New Drug Application, as such term is defined by the FDA.
1.28 "NET SALES" shall mean *** ***** ***** ******** ** ***** ********** ** *** ********** ** ************ *** *** *************** ******** ** ************** ***** ******* **** *** ********** ** ******* ********** *********** *** ********* ******* ****** *********** ********* ******** *** ******* ***** ** ******* **** ************* ****** ********** ********** ********* ******* ** *** **** ** ********** ***** ***** *** ***** ***** ****** **** ****** ****** ******** ****** ** *** ******** ** *** ***** ***** ****** ** ******** ** *** ******* ******* ***** ****** ***** ********** ** * *************** ******* ** *************** ******* ***** *** *** ********* ********** ******* *** ****** ** **** ***** ** ******* ********** ** ********* **** ***** ****** ** *** ******* ******* **** ** ******** ** *** **** **** ********* ***** ******** *** **** **** *** ******** ***** ***** ***** ***** ** * **** *** ********* ** **** ******* **** *** ***** ***** ******* ********** ***** *** *** ********* *** ** * ****************** ***** ***** ******* ********* ************** ********** ********* ********* *** ******** ** ****** ****** ******* ********* ******* ***** **** ** *** **** ** ********** **** ********* *** ***** ****** ***** **********
1.29 "PATENT RIGHTS" shall mean all Valid Claims of all issued patents and reissues, reexaminations, extensions and supplementary protection certificates thereof and all patent applications and any divisions, continuations, or continuations-in-part thereof or patents issuing thereon.
1.30 "PHASE II CLINICAL TRIALS" shall mean clinical trials in a small sample of the intended patient population to assess the efficacy for a specific indication of a compound proposed to be used as a prophylactic, therapeutic or diagnostic pharmaceutical product, to determine dose tolerance and the optimal dose range as well as to gather additional information relating to safety and potential adverse effects, and meeting the requirements established by the FDA for Phase II clinical trials.
1.31 "PHASE III CLINICAL TRIALS" shall mean clinical trials designed to demonstrate safety and efficacy of a compound proposed to be used as a prophylactic, therapeutic
* Confidential treatment has been requested for marked portion.
or diagnostic pharmaceutical product in an expanded patient population at geographically dispersed study sites, meeting the requirements established by the FDA for Phase III clinical trials.
1.32 "PRECLINICAL COMPOUND" shall mean any ArQule Compound, ArQule Derivative Compound, or Roche Bioscience Derivative Compound selected by Roche Bioscience to enter into Preclinical Development.
1.33 "PRECLINICAL DEVELOPMENT" shall mean, with respect to any Preclinical Compound, the initiation of IND-enabling toxicology studies.
1.34 "RECEIVING PARTY" shall mean that party receiving Confidential Information under Section 8.
1.35 "RESEARCH COMMITTEE" shall have the meaning set forth in Section 2.1.
1.36 "RESEARCH PERIOD" shall mean the period commencing on the Effective Date and ending on the third anniversary of the Effective Date, unless extended by mutual agreement of the parties or terminated early in accordance with Section 3.4 or Article 11.
1.37 "RESEARCH PLAN" shall mean a plan of research for the Directed Array Program covering a minimum of a six-month period, which shall be updated quarterly pursuant to Section 2.2 to reflect developments during the previous three (3) months and extended for the subsequent three (3) months. The initial Research Plan is attached as EXHIBIT A to this Agreement.
1.38 "ROCHE BIOSCIENCE PATENT RIGHTS" shall mean Patent Rights controlled or owned by Roche Bioscience as of the Effective Date or during the Research Period or Patent Rights owned by Roche Bioscience as set forth in Section 6.1.3.
1.39 "ROYALTY-BEARING PRODUCT" shall mean a product containing as one of its constituents (a) any ArQule Compound; (b) any ArQule Derivative Compound; or (c) any Roche Bioscience Derivative Compound.
1.40 "ROCHE BIOSCIENCE COMPOUND" shall mean any chemical compound provided by Roche Bioscience to ArQule under the Directed Array Program described in Section 3.1 and as set forth on Exhibit B as such Exhibit B may be updated from time to time.
1.41 "ROCHE BIOSCIENCE DERIVATIVE COMPOUND" shall mean a Derivative Compound synthesized by Roche Bioscience from an ArQule Derivative Compound or an ArQule
Compound.
1.42 "ROYALTY PERIOD" shall mean, with respect to each Royalty-Bearing Product, every calendar quarter, or partial calendar quarter, commencing with the First Commercial Sale of such Royalty-Bearing Product in any country. The last Royalty Period for any Royalty-Bearing Product shall be the quarter in which the Royalty Term ends in the applicable country.
1.43 "ROYALTY TERM" shall mean, in the case of any Royalty- Bearing Product, in any country, the period of time commencing on the First Commercial Sale and ending upon the later of (a) ten (10) years from the date of First Commercial Sale in such country; or (b) the expiration of the last to expire of the Patent Rights covering such Royalty-Bearing Product in such country.
1.44 "SUBLICENSEE" shall mean any third party licensed by Roche Bioscience to make, use (except where the right to use accompanies the sale of any Royalty-Bearing Product by Roche Bioscience or its Affiliates or Sublicensees) or sell any Royalty-Bearing Product under any Patent Rights.
1.45 "VALID CLAIM" shall mean either (a) a claim of an issued patent that has not been held unenforceable or invalid by an agency or a court of competent jurisdiction in any unappealable or unappealed decision or (b) a claim of a pending patent application that has not been abandoned or finally rejected without the possibility of appeal or refiling.
1.46 The above definitions are intended to encompass the defined terms in both the singular and plural tenses.
2. Management of Research Program.
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2.1 COMPOSITION OF RESEARCH COMMITTEE. The parties hereby establish a Research Committee comprised of six (6) members, with three (3) representatives appointed by each party. The initial members of the Research Committee shall be as follows:
Arqule Representatives Roche Bioscience Representatives
---------------------- --------------------------------
David Coffen, Ph.D (Team Leader) Hans Maag, Ph.D.
David Casebier, Ph.D Dan Severance, Ph.D.
Zhe Li, Ph.D Robert Wilhelm, Ph.D.
A party may change one or more of its representatives to the Research Committee at any time upon notice to the other party. Each party will designate one of its representatives as its team leader.
2.2 DUTIES OF THE RESEARCH COMMITTEE. The Research Committee shall direct and administer the Directed Array Program, including: (i) the appropriate number and type of Chemical Themes for submission to the Directed Array Program; (ii) the appropriate number of compounds that ArQule should generate in a Directed Array for a particular Chemical Theme; and (iii) the appropriate amount of each compound in a Directed Array that ArQule should deliver to Roche Bioscience for further research and development. The identity and scope of such Chemical Theme will be determined on the basis of the following criteria: (i) the specific reaction or reaction sequence used to combine members of two or more discrete chemical units in which each chemical unit bears the functional group(s) required for the specific reaction(s) that result in the combination of the chemical units; and (ii) the extent to which a class of compounds is related by a recurring structural motif associated with a particular biological activity. In addition, the Research Committee shall (i) determine the allocation of personnel resources to be contributed by the parties under this Agreement, (ii) revise and extend the Research Plan each calendar quarter for the subsequent six (6) months based on prior developments, and (iii) resolve matters involving scientific questions.
2.3 MEETINGS OF THE RESEARCH COMMITTEE. The Research Committee shall conduct monthly telephone conferences and shall prepare and deliver a brief written report describing the significant issues and discussions that take place during such telephone conferences. A representative of the Research Committee jointly appointed by its members shall provide each member with five (5) business days notice of the time of any such telephone conferences and the proposed agenda with respect thereto, unless waived by all members. ArQule will prepare and deliver to the members of the Research Committee a brief progress report at least one week in advance of the telephone conference, which report will list the ArQule employees then working on the Directed Array Program. The Research Committee shall meet at least once each quarter at alternating locations of the facilities of ArQule and Roche Bioscience, or at such other times and locations as the Research Committee determines, with each party to bear all travel and related expenses for its members. A representative of the Research Committee jointly appointed by its members shall provide each member with five (5) business days notice of the time and location of meetings, unless such notice is waived by all members. If a designated representative of a party cannot attend any meeting of the Research Committee, such party may designate a different representative for that meeting without notice to the other party. Except as otherwise provided in this Section 2, all actions and decisions of the Research Committee will require the unanimous consent of all of its members, with the ArQule members cumulatively having one vote and the Roche Bioscience members cumulatively having one vote. If the Research Committee fails to reach agreement upon any matter, the dispute will be resolved in accordance with the procedures set forth in Section 13.4 below; provided, however, that if such
dispute has not been resolved within thirty (30) days after the end of the 15 day negotiation period referred to in Section 13.4 (a), the dispute shall only be sent to non-binding mediation and thereafter by arbitration as described in Sections 13.4 (b) and (c) if and only if it does not relate to allocation of manpower among the various Directed Array Programs or approval of Extraordinary Expenses. If the dispute relates to allocation of manpower among the various Directed Array Programs or approval of Extraordinary Expenses, such decisions shall be made by Roche Bioscience in its sole discretion. Subsequent to each quarterly meeting, the Research Committee shall prepare and deliver, to both parties, a written report describing the decisions made, conclusions and actions agreed upon.
2.4 COOPERATION. Each party agrees to provide the Research Committee with information and documentation as reasonably required for the Research Committee to fulfill its duties under this Agreement. In addition, each party agrees to make available its employees and consultants as reasonably requested by the Research Committee. The parties anticipate that members of the Research Committee will communicate informally with each other and with employees and consultants of the parties on matters relating to the Directed Array Program.
2.5 VISITS TO FACILITIES. Members of the Research Committee shall have reasonable access to the facilities of each party where activities under this Agreement are in progress, but only during normal business hours and with reasonable prior notice. Each party shall bear its own expenses in connection with such site visits.
3. Directed Array Program.
-----------------------
3.1 DESCRIPTION OF DIRECTED ARRAY PROGRAM. Under the direction of the Research Committee and in accordance with the Research Plan, ArQule will synthesize multiple Directed Arrays of compounds derived from each Roche Bioscience Compound provided to ArQule by Roche Bioscience or each ArQule Compound provided by ArQule (hereinafter referred to as a "Directed Array Program"). The parties intend that, during the Research Period, ArQule will produce such Directed Arrays in ***** *** separate Directed Array Programs over *** *** Contract Years or ****** **** separate Directed Array Programs over ***** *** Contract Years; provided, however, that Roche Bioscience shall not be obligated to fund more than an aggregate of ** FTEs over the first *** *** Contract Years and ** FTEs over the first ***** *** Contract Years. Each Directed Array Program will result in the production of approximately ***** *** to ***** *** Directed Arrays comprised of an average of *** ******** ******* ArQule Derivative Compounds per Chemical Theme per year; provided, however, that the number of Chemical Themes actually submitted to the Directed Array Program and the number of ArQule Derivative Compounds actually produced per Chemical Theme will be determined by the Research Committee; and provided further that the intentions of the parties set forth herein and in the Research Plan shall be appropriately adjusted in the event of early termination of the Directed
* Confidential treatment has been requested for marked portion.
Array Program. The parties also intend that ArQule will produce approximately ****** **** milligrams of each ArQule Derivative Compound in the Directed Arrays, subject to the availability of the original Roche Bioscience Compounds and/or the ArQule Compounds; provided, however that the amount of each ArQule Derivative Compound that ArQule actually produces will ultimately be determined by the Research Committee.
3.2 CONDUCT OF DIRECTED ARRAY PROGRAM. The Directed Array Programs shall be conducted in a good scientific manner and in compliance with all applicable legal requirements. The conduct of the Directed Array Programs shall be the primary responsibility of ArQule with participation by Roche Bioscience. Roche Bioscience will support **** *** FTEs per Directed Array Program; provided, however, that Roche Bioscience shall only be obligated to fund up to an aggregate of ** FTEs over the first *** *** Contract Years and ** FTEs over the first ***** *** Contract Years. ArQule shall commit a minimum of *** *** *** **** ***** FTE synthetic chemist employees to each Directed Array Program; provided, however, that the number of FTE's for synthetic chemists may be adjusted by the Research Committee from time to time during the Research Period to achieve the goals set forth in the Research Plan. The FTEs for synthetic chemists will have the required skills for carrying out the Directed Array Programs. Roche Bioscience shall propose Chemical Themes to the Research Committee for inclusion in each Directed Array Program. If the Research Committee approves the inclusion of the proposed Chemical Theme, Roche Bioscience shall provide ArQule with the requisite amount and purity of Roche Bioscience Compounds for that Chemical Theme, as directed by the Research Committee. ArQule shall thereupon diligently synthesize Directed Arrays of ArQule Derivative Compounds in accordance with the Research Plan. Roche Bioscience shall, in its discretion, be responsible for conducting screening for binding affinity and/or functional activity of compounds in the Directed Arrays.
3.3 DIRECTED ARRAY PROGRAM PAYMENTS.
3.3.1 FTE PAYMENT. In consideration of the performance by ArQule of the Directed Array Program, Roche Bioscience shall pay ArQule a one-time research and development fee in the amount of *********** payable on the Effective Date. In addition, Roche Bioscience shall pay ArQule ******** per FTE per year for the first Contract Year (the "FTE Payment"), payable in advance in quarterly installments. The FTE Payment shall be adjusted for the second and third Contract Years to reflect an increase or decrease in the CPI using the following formula:
Adjusted FTE Payment = ******** x (1 + CPI)
Where CPI = a fraction, the numerator of which shall be the
difference between the Consumer Price Index (CPI-U; U.S.
City Average for all items; 1982-84 = 100) as of the
last month of the immediately preceding
* Confidential treatment has been requested for marked portion.
Contract Year and the Consumer Price Index as of the
month immediately preceding the Effective Date and the
denominator of which shall be the Consumer Price Index
as of the month immediately preceding the Effective
ArQule shall use all such FTE Payments to conduct the Direct Array Program in accordance with this Agreement.
3.3.2 EXTRAORDINARY EXPENSES. In addition to the FTE Payments, Roche Bioscience shall pay any and all Extraordinary Expenses of ArQule, provided, however, that any such Extraordinary Expense has been approved by the Research Committee prior to such Extraordinary Expense being incurred.
3.4 TERMINATION OF DIRECTED ARRAY PROGRAM. The Directed Array Program shall commence on the Effective Date and continue for a period of three (3) Contract Years, unless earlier terminated as provided in this Section 3.4 or in Article 11 below. Roche Bioscience may terminate the Directed Array Program at its discretion upon six (6) months written notice to ArQule at any time following the end of the eighteenth (18th) month of the Research Period, subject to the payment of all accrued and unpaid Extraordinary Expenses of ArQule that have been approved by the Research Committee as described in Section 3.3.2. Upon notice of termination, ArQule shall use reasonable efforts to complete the Directed Array Programs then underway in a reasonable and orderly fashion.
4. License Grants; Development Rights; Reversion of Rights.
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4.1 DEVELOPMENT AND COMMERCIALIZATION LICENSES. ArQule shall grant to Roche Bioscience, under any intellectual property rights covering the composition, manufacture or use of any ArQule Compound selected by Roche Bioscience for Preclinical Development, an exclusive world-wide license, with the right to grant sublicences, to make, use, or sell such ArQule Compound; provided, however, that any such sublicense granted by Roche Bioscience shall contain provisions equivalent to those provisions contained in this Agreement that protect ArQule's rights in any ArQule Patent Rights and Joint Patent rights.
4.2 REVERSION OF RIGHTS; RETURN OF MATERIALS. In the event that (i) (a) Roche Bioscience determines to discontinue Preclinical Development of any ArQule Compound within a given Directed Array Program for any reason other than unacceptable safety or efficacy data or (b) Roche Bioscience fails to use commercially reasonable and diligent efforts (as defined below) to commercially develop any ArQule Compound within a given Directed Array Program and (ii) Roche Bioscience is not continuing to develop or sell any Royalty-Bearing Product provided from such Directed Array Program, then ArQule shall have the right to terminate the license granted to Roche Bioscience under Section 4.1 with respect to all ArQule Compounds
within such Directed Array Program. In such event, ArQule shall be free to grant licenses covering all such ArQule Compounds to third parties on the earlier of (a) the date of termination of such Directed Array Program and (b) the termination of the Research Term. Upon termination of such license by ArQule, Roche Bioscience shall (i) grant to ArQule an exclusive, royalty-free license, with the right to grant sublicenses, to manufacture, use or sell such ArQule Compounds under any patent rights of Roche Bioscience covering the composition or use of such ArQule Compounds with such license being exclusive only as to such ArQule Compounds and (ii) return ...
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