Settlement Agreement Btwn The Company & Scriptgen

EXHIBIT 10.15


SETTLEMENT AGREEMENT


This is a Settlement Agreement entered into March 7, 2000 (the "Effective Date") by and between:


Scriptgen Pharmaceuticals, Inc., a Delaware corporation having a principal place of business at 610 Lincoln Street, Waltham, MA 02451 ("Scriptgen"); and


3-Dimensional Pharmaceuticals, Inc., a Delaware corporation having a principal place of business at 665 Stockton Drive, Exton, PA 19341 ("3DP").


WHEREAS, Scriptgen is the owner of U.S. Patent 5,585,277 ("the `277 patent'"), and U.S. Patent No. 5,679,582 ("the `582 patent'");


WHEREAS on October 13, 1998, Scriptgen filed an action in the United States District Court for the District of Delaware, captioned Scriptgen Pharmaceuticals, Inc. v. 3-Dimensional Pharmaceuticals, Inc., Civil Action No. 98-583-GMS, in which Scriptgen has asserted claims against 3DP for infringement of the `277 patent and the `582 patent and 3DP has asserted defenses and counterclaims against Scriptgen including the non-infringement, invalidity, and unenforceability of the `277 patent and the `582 patent ("the Action"); and


WHEREAS Scriptgen and 3DP desire to settle all claims that have been raised in the Action and wish to avoid any further controversy between them as set forth herein.


NOW THEREFORE, in consideration of the mutual covenants and undertakings of the parties, Scriptgen and 3DP agree as follows:


1. DEFINITIONS


1.1 "Affiliate" shall mean an entity that directly, or indirectly through one
or more intermediaries, controls, or is controlled by, or is under common
control with, 3DP or Scriptgen, as applicable; provided further that
"control(s)(led)" as used in this Section shall mean ownership by a third
party, not including a venture capital fund or group of venture capital
funds, of at least fifty percent (50%) of the equity capital of such
entity.


1.2 "Atlas Technology" shall mean the methods and processes generally disclosed
in the specifications and claims of the `277 patent, the `582 patent and/or
Scriptgen International Application No. PCT/US96/19698.


1.3 "Calendar Quarter" shall mean each three month period, or any portion
thereof, ending on March 31, June 30, September 30 and December 31.


1.4 "Development Compound" shall mean a compound that has entered pre-clinical
regulatory drug safety studies conducted under good laboratory practice
(GLP) guidelines.


1.5 "Hepatitis C Virus Field" shall mean any program(s) whose intent is to
discover or develope a drug that exerts a therapeutic effect in Hepatitis C
Virus Infection.


1.6 "Infection" shall mean the field of treatment with, research on, and/or
development of drugs whose principal aim is to treat or cure infectious
disease in humans. 1.7 "Method Claims" shall mean any claim in a patent or application to a
process or method and shall not include any claim to a product or
apparatus.


1.8 "Net Revenues" shall mean the revenues actually received by a party from
the offering or provision of drug screening services or from the sale of
drug compounds, after allowing deductions for sales, use and other similar
taxes (excluding taxes based on such party's income or revenues), the legal
incidence of which is on such party, returns and other credits.


1.9 "Restriction Period" shall mean the period of time beginning from the
Effective Date and ending on the third (3rd) anniversary of the Effective
Date.


1.10 "Scriptgen" shall mean Scriptgen Pharmaceuticals, Inc., its present and
future Affiliates, and any entity in which Scriptgen Pharmaceuticals, Inc.
owns or controls a majority interest.


1.11 "ThermoFluor Deal" shall mean a business arrangement between 3DP and a
third party collaborator, for any duration of time, involving the use of
3DP's ThermoFluor(R) Screening Technology at one or more research sites
anywhere in the world and operated by 3DP and/or such third party
collaborating with 3DP.


1.12 "ThermoFluor Screening Technology" shall mean the methods, processes and
apparatus generally disclosed in the specifications and claims of U.S.
Patent No. 6,020,141 and/or allowed U.S. Patent Application Serial no.
08/853,459.


1.13 "3DP" shall mean 3-Dimensional Pharmaceuticals, Inc., its present and
future Affiliates, and any entity in which 3-Dimensional Pharmaceuticals,
Inc. owns or controls a majority interest.


1.14 "3DP Internal Program(s)" shall mean drug discovery and/or development
program(s) in any therapeutic field conducted for and by 3DP on-site at a
3DP facility.


2. FINANCIAL PAYMENT AND RELEASE


2.1 [**]


2.2 Each payment shall be by wire transfer to [**]. A letter confirming the
transfer shall be delivered to Scriptgen's counsel, DARBY & DARBY, PC, 805
Third Avenue, New York, NY 10022, by overnight courier.


**Certain portions of this Exhibit have been omitted based upon a request for confidential treatment that has been filed with the Commission. The omitted portions have been filed separately with the Commission.


-2-


2.3 Upon full execution of this Agreement by the parties and receipt by
Scriptgen of the initial non-refundable payment specified in Section 2.1(a)
above, Scriptgen for itself and for its shareholders, officers, directors,
agents, representatives and all persons and entities claiming under or
through it, releases 3DP, and its shareholders, employees, agents,
officers, directors, representatives, customers, suppliers, manufacturers,
partners and distributors, from any and all claims of infringement of the
`277 patent and the `582 patent, and from all injuries and damages which
may have resulted therefrom, whether now known, unforeseen, unanticipated
or latent which Scriptgen ever had, now has, or hereafter can, shall or may
have, by reason of any act, omission or occurrence prior to the Effective
Date.


2.4 3DP, for itself and for its shareholders, officers, directors, agents,
representatives and all persons and entities claiming under or through it,
releases Scriptgen and its shareholders, employees, agents, officers,
directors, representatives, customers, suppliers, manufacturers, partners
and distributors, from any and all claims of any kind and from all injuries
and damages which may have resulted therefrom, whether now known,
unforeseen, unanticipated or latent which 3DP ever had, now has, or
hereafter can, shall or may have, by reason of any act, omission or
occurrence prior to the Effective Date with respect to the subject matter
of the Action.


2.5 The parties will direct their attorneys to sign the Stipulated Order of
Dismissal attached hereto as Exhibit A simultaneously with signing this
Agreement and to cause their respective attorneys to file the signed
Stipulated Order of Dismissal with the Court in the Action within five (5)
days after the full execution of this Agreement and the receipt by
Scriptgen of the initial non-refundable payment specified in Section 2.1(a)
above.


2.6 The parties each agree that within sixty (60) days after entry of the
Stipulated Order of Dismissal, they will each return to the other party, in
accordance with paragraph sixteen (16) of the Stipulation and Order
Governing the Protection and Exchange of Confidential Material in the
Action, dated March 23, 1999, or certify the destruction of, all
confidential documents that were produced by the other party during the
course of the Action.


3. LICENSE GRANT BY SCRIPTGEN TO 3DP


3.1 In settlement of the Action, Scriptgen hereby grants to 3DP beginning on
the Effective Date, and subject to Sections 3.2 through 3.11, a perpetual,
non-exclusive, worldwide, fully-paid license, with the right to sub-
license, under the `277 patent, the `582 patent, and any patents issuing
from Scriptgen International Application No. PCT/US96/19698, any and all
continuing applications, divisional applications, continuation-in-part
applications, reissues, extensions, renewals and reexaminations thereof,
and any U.S. and foreign counterparts thereof. In addition, Scriptgen
agrees not to file any future patent infringement actions against 3DP for
3DP's use of ThermoFluor Screening Technology that is consistent with the
terms of this Agreement.


-3-


3.2 3DP shall not have the right to assign the license granted herein
except as part of the sale of its ThermoFluor Screening Technology or
business, the sale of substantially all the capital stock or assets of the
corporation, or the merger or consolidation of the corporation.


3.3 During the Restriction Period, 3DP shall be permitted to enter into only
one (1) ThermoFluor Deal, including the right to sub-license, and including
unrestricted sales of ThermoFluor Screening Technology instruments, where
the principal focus of such business arrangement is Infection, provided
however that such ThermoFluor Deal may not involve the Hepatitis C Virus
Field, nor involve more than three (3) other anti-viral targets.


3.4 3DP shall be able to freely secure any partnerships or other business
arrangements involving ThermoFluor Screening Technology, except that during
the Restriction Period the principal focus may not be Infection and 3DP
shall not grant any sublicenses for Infection during the Restriction
Period, except as permitted under Sections 3.3 and 3.10 of this Agreement.
In the event that a partner or other third party requests that 3DP screen,
during the Restriction Period, multiple targets which include Intended
Infection targets, 3DP shall inform such party that it cannot screen such
Infection targets, but shall disclose that such screening can be conducted
by Scriptgen. Scriptgen shall pay to 3DP [**] of all Net Revenues received
during the first year of an agreement which demonstrably resulted from such
an introduction by 3DP.


3.5 During the Restriction Period, Scriptgen may refer to 3DP any third parties
that have requested that Scriptgen screen multiple targets to identify
leads or drugs that are effective in any field other than Infection. In
such event, 3DP shall pay to Scriptgen [** ...