-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G/b0RVovX9w/A/g7u2OTEAtsftNj9dCadt2tD1mKGSxHKn/vNPE9TpSI7oeJvADw kKnzEHs5b7jkkXedRqOMMQ== 0000950123-97-001439.txt : 19970222 0000950123-97-001439.hdr.sgml : 19970222 ACCESSION NUMBER: 0000950123-97-001439 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONCOGENE SCIENCE INC CENTRAL INDEX KEY: 0000729922 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 133159796 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-15190 FILM NUMBER: 97536056 BUSINESS ADDRESS: STREET 1: 106 CHARLES LINDBERGH BLVD CITY: UNIONDALE STATE: NY ZIP: 11553 BUSINESS PHONE: 5162220023 MAIL ADDRESS: STREET 1: 106 CHARLES LINDBERGH BLVD CITY: UNIONDALE STATE: NY ZIP: 11553-3649 10-Q 1 ONCOGENE FORM 10-Q: PERIOD END 12/31/96 1 WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-15190 ONCOGENE SCIENCE, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-3159796 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 106 Charles Lindbergh Blvd., Uniondale, New York 11553 (Address of principal executive offices) (Zip Code) 516-222-0023 (Registrant's telephone number, including area code) (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- APPLICABLE ONLY TO CORPORATE ISSUERS: At January 31, 1997 the registrant had outstanding 22,188,630 shares of common stock .$01 par value. 2 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES INDEX Page No. -------- PART I - FINANCIAL INFORMATION Consolidated Balance Sheets - December 31, 1996 and September 30, 1996 3 Consolidated Statements of Operations - Three months ended December 31, 1996 and 1995 4 Consolidated Statements of Cash Flows - Three months ended December 31, 1996 and 1995 5,6 Notes to Consolidated Financial Statements 7 Management's Discussion and Analysis of Financial 8-11 Condition and Results of Operations PART II - OTHER INFORMATION 12,13 EXHIBIT INDEX 14 SIGNATURES 15 * * * * 3 PART 1. FINANCIAL INFORMATION ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
December 31, September 30, Assets 1996 1996 - ------ ------------- ------------- Current assets: (unaudited) Cash and cash equivalents $ 13,293,263 $ 13,409,866 Short-term investments 30,730,857 34,132,879 Receivables, including trade receivables of $363,944 and $215,201 at December 31 and September 30, 1996, respectively 2,633,941 2,031,950 Interest receivable 485,920 480,050 Grants receivable 535,911 331,014 Prepaid expenses and other 661,134 623,827 ------------- ------------- Total current assets 48,341,026 51,009,586 ------------- ------------- Property, equipment and leasehold improvements - net 6,566,721 6,495,112 Fungi cultures - net 4,773,206 5,048,584 Loans to officers and employees 37,342 37,342 Other assets 526,009 300,949 Intangible assets - net 10,280,296 10,645,481 ------------- ------------- $ 70,524,600 $ 73,537,054 ============= ============= Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 3,021,958 $ 3,686,638 Current portion of unearned revenue 106,645 141,541 ------------- ------------- Total current liabilities 3,128,603 3,828,179 ------------- ------------- Other liabilities: Long-term portion of unearned revenue 90,166 104,497 Loan payable 232,143 83,244 Deferred acquisition costs 590,675 590,675 Accrued postretirement benefits cost 654,396 643,500 ------------- ------------- Total liabilities 4,695,983 5,250,095 ------------- ------------- Stockholders' equity: Common stock, $.01 par value; 50,000,000 shares authorized, 22,184,394 and 22,175,214 issued and outstanding at December 31 and September 30, 1996, respectively 221,844 221,752 Additional paid-in capital 104,397,349 104,347,231 Accumulated deficit (38,767,930) (36,071,476) Cumulative translation adjustments 8,954 (5,355) Unrealized holding loss on short-term investments (31,600) (205,193) ------------- ------------- Total stockholders' equity 65,828,617 68,286,959 ------------- ------------- Commitments and contingencies $ 70,524,600 $ 73,537,054 ============= =============
See accompanying notes to consolidated financial statements. 3 4 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended December 31, --------------------------------- Revenues: 1996 1995 ------------ ------------ Collaborative program revenues, principally from related parties $ 1,833,182 $ 1,987,458 Other research revenue 481,607 288,790 ------------ ------------ 2,314,789 2,276,248 ------------ ------------ Expenses: Research and development 3,474,333 2,683,262 Selling, general and administrative 1,768,856 1,353,402 Amortization of intangibles 365,185 363,189 ------------ ------------ 5,608,374 4,399,853 ------------ ------------ Loss from operations (3,293,585) (2,123,605) ------------ ------------ Other income (expense): Net investment income 603,458 364,524 Other expense - net (6,327) (11,513) ------------ ------------ Net loss (2,696,454) (1,770,594) ============ ============ Weighted average number of shares of common stock outstanding 22,176,112 17,476,132 ============ ============ Net loss per weighted average share of common stock outstanding $ (.12) $ (.10) ============ ============
See accompanying notes to consolidated financial statements. 4 5 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended December 31, ------------------------------- 1996 1995 ----------- ----------- Cash flow from operating activities: Net loss $(2,696,454) $(1,770,594) Adjustments to reconcile net loss to net cash used by operating activities: Gain on sale of investments (6,411) (27,608) Depreciation and amortization 680,180 341,240 Amortization of intangibles 365,185 363,189 Foreign exchange loss 14,309 15,449 Changes in assets and liabilities: Receivables (601,991) (933,518) Interest receivable (5,870) (22,506) Grants receivable (204,897) 223,782 Prepaid expenses and other (37,307) (133,874) Other receivable -- (145,956) Other assets (225,060) 1,082 Accounts payable and accrued expenses (664,679) (1,018,793) Unearned revenue (49,227) 28,795 Accrued postretirement benefit cost 10,896 33,126 ----------- ----------- Net cash used by operating activities $(3,421,326) $(3,046,186) ----------- -----------
Continued 5 6 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED)
Three Months Ended December 31, --------------------------------- 1996 1995 ------------ ------------ Cash flows from investing activities: Additions to short-term investments (2,269,650) (15,772,162) Maturities and sales of short-term investments 5,851,675 2,500,000 Additions to property, equipment and leasehold improvements (476,411) (76,730) Net change in loans to officers and employees -- 52 ------------ ------------ Net cash provided by (used in) investing activities 3,105,614 (13,348,840) ------------ ------------ Cash flows from financing activities: Net change in loan payable 148,899 -- Proceeds from exercise of stock options and employee stock purchase plan 50,210 263,407 ------------ ------------ Net cash provided by financing activities 199,109 263,407 ------------ ------------ Net decrease in cash and cash equivalents (116,603) (16,131,619) Cash and cash equivalents at beginning of period 13,409,866 17,919,609 ------------ ------------ Cash and cash equivalents at end of period $ 13,293,263 $ 1,787,990 ============ ============
See accompanying notes to consolidated financial statements. 6 7 ONCOGENE SCIENCE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) Basis of Presentation In the opinion of Management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company's financial position as of December 31, 1996 and September 30, 1996, its results of operations and its cash flows for the three months ended December 31, 1996 and 1995. Certain reclassifications have been made to the prior financial statements to conform them to the current presentation. It is recommended that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto in the Company's 1996 Annual Report on Form 10-K. Results for interim periods are not necessarily indicative of results for the entire year. Net loss per share of common stock outstanding is based on the weighted average number of shares outstanding. Common share equivalents (stock options and warrants) are not included in the computation for the three months ended December 31, 1996 and 1995 since their inclusion would be anti-dilutive. (2) Subsequent Events -- Bayer Collaboration In December 1996, the Company and Bayer Corporation's Business Group Diagnostics Division announced a collaborative research and development agreement in which the two companies will jointly develop novel products for use in diagnostic oncology. Under the agreement, which became effective on January 1, 1997, Bayer will provide the Company with funding for research and development of potential diagnostic products, as well as the clinical development of the Company's existing clinical research products. 7 8 ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THE THREE MONTHS ENDED DECEMBER 31, 1995. REVENUES Revenues for the quarter ended December 31, 1996 were approximately $2,315,000, an increase of $39,000, or 2% compared to revenues of $2,276,000 reported for the quarter ended December 31, 1995. Collaborative program revenue decreased approximately $154,000 or 8%. This was due to the completion of the Company's collaborative program in cancer diagnostic with Becton, Dickinson and Company ("Becton"). The Company is continuing the development of serum-based cancer diagnostics under a new research collaboration with Bayer Corporation. Other research revenues, consisting primarily of government grants and service revenue from the pharmaceutical division of the Company's Aston Molecules Ltd. ("Aston") subsidiary, have increased approximately $193,000 or 67%. The Company acquired Aston in September 1996. The increase is due primarily to the inclusion of the subsidiary's service revenues in the current quarter only and is supplemental to the Company's medicinal chemistry operations. EXPENSES The Company's operating expenses increased by approximately $1,209,000 or 27% for the quarter ended December 31, 1996 compared to the same quarter for the previous fiscal year. Research and development expenses increased approximately $791,000 or 29% as compared to the same period last year. This was due primarily to an increase in expenditures in the Company's joint venture with BioChem Pharma (International) Inc., ("BioChem Pharma"), the expansion of the Company's proprietary programs, expenses associated with operation of the natural products chemistry facilities of the Company's MYCOsearch, Inc. ("MYCOsearch") subsidiary (which the Company acquired in April 1996), and the medicinal and pharmaceutical facilities of Aston, as well as amortization expense on MYCOsearch's library of fungi cultures. Selling, general and administrative expenses increased approximately $415,000 or 31% for the quarter ended December 31, 1996 as compared to the same quarter in the previous fiscal year. These increases were primarily related to the expenses associated with the Company's recent corporate development activities and the general and administrative costs associated with the Company's recently acquired subsidiaries. OTHER INCOME AND EXPENSES Investment income increased approximately $239,000, or 66% for the quarter ended December 31, 1996 as compared to the quarter ended in the same period for the previous fiscal year. This increase was largely due to the investment of the proceeds of approximately $30.3 million from the Company's sale of common stock in April 1996. LIQUIDITY AND CAPITAL RESOURCES At December 31, 1996, working capital (representing primarily cash, cash equivalents and short-term investments) aggregated approximately $45.2 million. 8 9 The Company is dependent upon collaborative research revenues, government research grants, interest income and cash balances, and will remain so until products developed from its technology are successfully commercialized. In April 1996, the Company completed a public offering of its common stock as well as the sale of 500,000 shares of common stock to BioChem Pharma that provided total net proceeds of approximately $30.3 million. The Company and Hoechst Marion Roussel, Inc. ("HMRI") have jointly announced an agreement in principle to continue under one overall agreement through December 31, 2001 as opposed to the separate collaborative programs previously formed between the Company and each of Hoechst AG ("Hoechst"), Hoechst Roussel Pharmaceuticals, Inc. ("HRPI") and Marion Merrell Dow Inc. ("MMDI"). During 1995, the pharmaceutical operations of Hoechst, HRPI and MMDI were consolidated into HMRI, and HMRI is conducting a review of all its research and development programs. In accordance with the agreement in principle, HMRI is expected to provide up to $12.5 million in research funding through December 31, 2001. HMRI and the Company have not yet executed a new definitive overall agreement. The Company's tissue based cancer diagnostics collaboration with Becton, which commenced in October 1991 (after an earlier collaboration from 1984 to 1989), ended on its scheduled expiration date of September 30, 1996. The Company is continuing the development of serum-based cancer diagnostic products, however, and commenced a research collaboration with Bayer Corporation ("Bayer") in this area in January 1997. Bayer will provide annual research funding of $1.5 million for the first two years of this five-year program and $1 million for each subsequent year, subject to Bayer's right to terminate the program at the end of the second year. The Company's collaboration with Wyeth-Ayerst Laboratories Division of American Home Products Corporation ("Wyeth") concluded on December 31, 1996 in accordance with the collaborative research agreement. The Company had received approximately $1.6 million annually in research and development funding from Wyeth pursuant to this collaborative agreement. In April 1996, the Company purchased MYCOsearch, owner of a collection of fungi and actinomycetes, for approximately $1.75 million in cash and $3.4 million in common stock and warrants. In September 1996, the Company acquired Aston, a provider of medicinal and pharmaceutical chemistry expertise, for $2.4 million in stock and rights valued at approximately $591,000. 9 10 The Company believes that with the funding from its collaborative research programs, government research grants, interest income, and cash balances, its financial resources are adequate for its operations for the foreseeable future. However, the Company's capital requirements may vary as a result of a number of factors, including competitive and technological developments, and the time and expense required to obtain governmental approval of products, some of which factors are beyond the Company's control. The Company's capital requirements may also vary depending on the funds required for expansion of the Company's technology platform, including possible joint ventures, collaborations and acquisitions. Examples of such ventures include the formation of Anaderm Research Corporation in April 1996 with Pfizer Inc. and New York University, and the Company's co-venture with BioChem Pharma, which commenced in May 1996. Generally the Company expects to commit greater resources to such programs in exchange for greater commercialization rights, as compared to its traditional collaborative research programs in which the Company receives research funding and royalty rights with respect to future sales of commercialized products. In the absence of additional ventures, collaborations or acquisitions, the Company expects to continue its current level of expenditures and capital investment over the next several years to enhance its drug discovery technologies, pursue internal proprietary drug discovery programs, and to commit resources to co-ventures with pharmaceutical companies. There can be no assurance that scheduled payments will be made by third parties, that current agreements will not be canceled, that government research grants will continue to be received at current levels or that unanticipated events requiring the expenditure of funds will not occur. Further, there can be no assurance that the Company will be able to obtain any additional required funds on acceptable terms, if at all. Failure to obtain additional funds when required would have a material adverse effect on the Company's business, financial condition and results of operations. FORWARD LOOKING STATEMENTS A number of the matters and subject areas discussed in this Item 2 "Management's Discussion and Analysis of Financial Condition" that are not historical or factual deal with potential future circumstances and developments. The discussion of such matters and subject areas is qualified by the inherent risks and uncertainties surrounding future expectations generally, and such discussion may materially differ from the Company's actual future experience involving any one or more of such matters and subject areas. Examples of this are the discussions in this Item 2 describing the Company's expectations with regard to the consolidation of its collaborative research programs with HMRI and receipt of funding from Bayer. Factors that may arise in the future that prevent the execution of a definitive overall agreement with HMRI include possible technological developments by competitors that render the compounds being pursued by HMRI and the Company less commercially viable, shifts in strategic direction on the part of HMRI that would de-emphasize the therapeutic areas or technologies in which the Company is involved, and negative results in the Company's current programs with HMRI. 10 11 The Company's diagnostics collaboration with Bayer is subject to similar risks. Consequently, the future payments from Bayer are uncertain. The forward looking statements described above, as well as all other discussions contained herein that may deal with potential future circumstances and developments, are also subject generally to other risks and uncertainties that are described from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission. 11 12 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. Not applicable. ITEM 2. CHANGES IN SECURITIES. Not applicable. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable. ITEM 5. OTHER INFORMATION. Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) EXHIBITS. 3.1 Certificate of Incorporation, as amended (1) 3.2 By-Laws, as amended (1) *10.1 Collaborative Research and License Agreement dated as of January 1, 1997 between the Company and Bayer Corporation. *10.2 Collaborative Research, Development and Commercialization Agreement dated as of May 1, 1996 between the Company and BioChem Pharma (International) Inc. 27 Financial Data Schedule ------------------------ * Portions of this exhibit have been redacted and are subject to a confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. 12 13 (1) Included as an exhibit to the Company's registration statement on Form S-3 (File No. 333-937) initially filed on February 14, 1996, and incorporated herein by reference. (b) REPORTS ON FORM 8-K. The Company filed a Current Report on Form 8-K on November 8, 1996. The earliest event covered by such report occurred on September 13, 1996. The items included on this report, as amended, consisted of: Item 5. Other Events (a) Changes in Personnel at Management and Board Levels (b) Acquisition of Aston Molecules Limited Item 7. Financial Statements and Exhibits (a) News Release dated September 13, 1996 (b) News Release dated September 18, 1996 (c) News Release dated September 19, 1996 13 14 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ONCOGENE SCIENCE, INC. (Registrant) Date February 14, 1997 /s/ Gary E. Frashier ------------------- --------------------- Gary E. Frashier Chief Executive Officer Date February 14, 1997 /s/ Robert L. Van Nostrand ------------------- --------------------------- Robert L. Van Nostrand Vice President Finance & Administration 14 15 EXHIBIT INDEX Exhibit No. Description - ----------- ----------- 3.1 Certificate of Incorporation, as amended (1) 3.2 By-Laws, as amended (1) *10.1 Collaborative Research and License Agreement dated as of January 1, 1997 between the Company and Bayer Corporation. *10.2 Collaborative Research, Development and Commercialization Agreement dated as of May 1, 1996 between the Company and BioChem Pharma (International) Inc. 27 Financial Data Schedule - ------------------------- * Portions of this exhibit have been redacted and are subject to a confidential treatment request filed with the Secretary of the Securities and Exchange Commission pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended. (1) Included as an exhibit to the Company's registration statement on Form S-3 (File No. 333-937) initially filed on February 14, 1996, and incorporated herein by reference. 15 EX-10.1 2 RESEARCH AND LICENSE AGREEMENT 1 Portions of this Exhibit 10.1 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission. 2 COLLABORATIVE RESEARCH AND LICENSE AGREEMENT This COLLABORATIVE RESEARCH AND LICENSE AGREEMENT is entered by and between BAYER CORPORATION, an Indiana corporation acting through its Business Group Diagnostics, having an office at 511 Benedict Avenue, Tarrytown, New York 10591 ("Bayer"), and ONCOGENE SCIENCE, INC., a Delaware corporation, having an office at 106 Charles Lindbergh Blvd., Uniondale, New York 11533 ("OSI"). WHEREAS, OSI was organized to develop, produce and market research, diagnostic and therapeutic products for, among other things, the early detection, monitoring and treatment of human disease, particularly cancer; WHEREAS, Bayer has the capability to develop, format, manufacture, attain regulatory approvals for, market and distribute diagnostic products and instrumentation systems throughout the world; and WHEREAS, Bayer desires to commercialize proprietary cancer assays in the Clinical Diagnostic Market (as defined herein) and OSI desires to establish proprietary cancer assays for the Clinical Research Market (as defined herein); and WHEREAS, Bayer and OSI wish to collaborate in research to identify and develop proprietary cancer diagnostic assays. NOW, THEREFORE, in consideration of the premises and promises contained herein, the parties agree as follows: 3 1. Definitions Whenever used in this Agreement, the terms defined in this Section 1 shall have the meanings specified. 1.1 "Affiliate" means any corporation or other legal entity controlled by, controlling, or under common control with the affected party, wherein control means direct or indirect ownership of a least forty percent (40%) of the voting stock, or at least forty percent (40%) interest in the income, of such corporation or other business entity or in either case the maximum amount allowed by local law. 1.2 "Allocated Costs" means the amount of costs, determined in accordance with generally accepted accounting principles, incurred by OSI and allocated to the Research Program. 1.3 "Annual Commitment" means the maximum amount agreed upon by the Joint Management Committee to fund the OSI/Bayer Annual Operating Plan and Budget for any Commitment Year. 1.4 "Bayer" means Bayer Corporation and its Affiliates. 1.5 "Bayer Confidential Matter" means all information, material or other matter encompassed within Bayer Technology which is disclosed or provided by Bayer to OSI, orally or in writing, and is designated by Bayer, in writing, "Confidential", or words to the same effect, no later than thirty (30) days after the time of first disclosure or provision to OSI, but excluding any such information, material or matter that is (i) already known to OSI at the time of disclosure or provision to it, other than by virtue of a prior confidential disclosure or provision to OSI by Bayer, (ii) at any time disclosed in the published literature or - 2 - 4 otherwise generally known or available to the public, or (iii) at any time obtained from a Third Person free from any obligation of secrecy. 1.6 "Bayer Patent Rights" shall mean all Patent Rights comprised in Bayer Technology. Bayer Patent Rights shall be owned by Bayer subject to the rights granted to OSI under this Agreement. 1.7 "Bayer Technology" means all Technology that was: (a) developed by employees of, or consultants to, Bayer alone or jointly with Third Persons on or prior to the Effective Date which Bayer determines in its sole discretion to contribute to the Research Program; or (b) acquired by purchase, license, assignment or other means from Third Persons by Bayer on or prior to the Effective Date which Bayer determines in its sole discretion to contribute to the Research Program. Bayer Technology shall be owned by Bayer subject to the rights granted to OSI under this Agreement. 1.8 "Bayer/OSI Patent Rights" means all Patent Rights comprised in Bayer/OSI Technology. 1.9 "Bayer/OSI Technology" means Technology that is: (a) developed by employees of, or consultants to, OSI alone or jointly with Bayer during the term hereof in the Field; or (b) acquired by purchase, license, assignment or other means from Third Persons by OSI, Bayer or both Bayer and OSI - 3 - 5 after the Effective Date in the Field in accordance with Paragraph 2.1.1(a) hereof. Bayer/OSI Technology shall be owned by Bayer subject to the rights granted to OSI under this Agreement. 1.10 "Clinical Diagnostic Market" means those medical centers, laboratories, cancer centers, clinicians, pathologists, oncologists and others that typically utilize regulatory approved diagnostic kits and systems to provide clinical information to assist in the diagnosis, prognosis, monitoring or screening of cancer or potential cancer patients. 1.11 "Clinical Diagnostic Product" means test kits or systems, other than manual or semi-automated microtiter plate-based test kits and systems, which are developed pursuant hereto for use in the Field, it being understood that such product format is typically targeted for the Clinical Diagnostic Market; provided, however, that such products shall exclude any products that are subject to any exclusive rights held by any of the Other Companies pursuant to agreements with OSI in effect prior to the Effective Date. 1.12 "Clinical Research Market" means those medical centers, laboratories, cancer centers, clinical researchers, pathologists, oncologists and others that typically utilize test kits and systems which do not require approval by the United States Food and Drug Administration (the "FDA") to establish clinical utility and correlation and that often publish the results in academic or research journals, but shall specifically exclude any utilization of research products in life science research typically performed - 4 - 6 with non-human specimens that is the subject of the sublicense granted by OSI to Calbiochem-Novabiochem Corporation under the Sublicense Agreement dated as of August 2, 1995. 1.13 "Clinical Research Product" means manual or semi-automated microtiter plate-based test kits or systems which are developed pursuant hereto for use in the Field, it being understood that such product format is typically targeted for the Clinical Research Market; provided, however, that such products shall exclude any products that are subject to any exclusive rights held by any of the Other Companies pursuant to agreements with OSI prior to the Effective Date. 1.14 "Commitment Year" means a twelve-month period commencing each January 1. 1.15 "Contract Period" means the period beginning on the Effective Date and ending on the date on which this Agreement terminates. 1.16 "Effective Date" shall mean January 1, 1997. 1.17 "Event(s) of Termination" has the meaning set forth in Section 10.3. 1.18 "Field" means methods and reagents, test compositions, test devices and other products useful in the diagnosis of cancer. To the extent that a method or product is first discovered to be useful in the diagnosis of cancer and subsequently is discovered to be useful in the diagnosis of one or more other conditions, all such uses of such method or product shall be included in "Field"; whereas to the extent that a method or product is first discovered to be useful in the diagnosis of at least one condition other than - 5 - 7 cancer and subsequently is discovered to be useful in the diagnosis of cancer, only such use in cancer diagnosis shall be included in "Field". 1.19 "Fully absorbed costs" means all direct expenses of OSI, as well as OSI's proportional allocation of overhead consistent with OSI's usual practice. 1.20 "Joint Management Committee" has the meaning specified in Section 2.2. 1.21 "Licensed Diagnostic Product" means a Clinical Diagnostic Product that employs Bayer, OSI and/or Bayer/OSI Technology in its manufacture, use or sale. 1.22 "Licensed Research Product" means a Clinical Research Product that employs Bayer, OSI and/or Bayer/OSI Technology in its manufacture, use or sale. 1.23 "Licensed Product" means a Clinical Diagnostic Product or a Clinical Research Product, as the case may be. 1.24 "Net Sales" means the gross amount received by Bayer (and its sublicensee) or OSI (and its permitted sublicensees, if any), as the case may be for arm's length sales to a Third Person of Licensed Products, respectively, after deducting, where applicable, the following: (a) normal and customary trade discounts actually allowed and taken; (b) returns and credits; (c) taxes (the legal incidence of which is on the purchaser and separately shown on the shipping invoice); and - 6 - 8 (d) transportation, insurance and postage charges (if prepaid and invoiced as a separate item). In the event that a Licensed Product sold by Bayer can be identified as having been sold (a) at a price which is increased to include an amount or amounts to cover instrument systems, service, interest and/or other costs, such as under a Reagent Agreement or Reagent Rental Plan (herein referred to as "RAP"), (b) as part of an arrangement in which the customer pays a comprehensive monthly or other periodic charge for a fixed total volume of assays from a product list that may include both Licensed Products as well as assays which are not Licensed Products, and the customer then selects the quantity of each different assay to be delivered, such as under a Cost Management Plan (herein referred to as "CMP"), or (c) some other reagent plan, the Net Sales of such reagent Licensed Product sold under a RAP, CMP or other reagent plan ("Reagent Plans") shall be calculated by (i) multiplying the total number of reagent Licensed Product units sold under Reagent Plans by the fraction E/F where E is the total net revenue invoiced for sales of Licensed Product when sold (i.e., independent of a Reagent Plan) in the United States and F is the total number of units of Licensed Product sold (i.e., independent of a Reagent Plan) in the United States, and (ii) then multiplying the result of (i) by the adjustment factor 0.55, which is estimated (subject to audit) by Bayer to reflect the portion of net revenue invoiced that is attributable to the sale of such reagent Licensed Product. Such adjustment factor shall be recalculated by Bayer in accordance with generally - 7 - 9 accepted accounting principles at the close of each calendar year after the first commercial sale of the first Licensed Product to be sold, and a retroactive correction made to the royalties paid during such prior calendar year, with settlement of any overpayment or underpayment of royalties being made in the payment for the first quarter royalties for the new calendar year and with the new adjustment factor being applied to royalties to be paid on sales during the new calendar year. Bayer hereby represents and warrants that the adjustment factor set forth herein is equal to the adjustment factor used by Bayer in those of its agreements with Third Persons which contain the foregoing formula. In the event that Bayer changes the adjustment factor in any of those agreements or provides for a different adjustment factor in agreements it enters into with Third Persons during the Term hereof, resulting in either case in the adjustment factor being more favorable to any such Third Person than the adjustment factor set forth herein, then this Agreement shall be deemed to be amended to provide for the more favorable adjustment factor. 1.25 "OSI" means Oncogene Science, Inc. and its Affiliates. 1.26 "OSI Confidential Matter" means all information, material or other matter encompassed within OSI Technology which is disclosed or provided by OSI to Bayer, orally or in writing, and is designated by OSI, in writing, "Confidential", or words to the same effect, no later than thirty (30) days after the time of first disclosure or provision to Bayer, but excluding any such information, material or matter that is (i) already known to Bayer at the time of disclosure or provision to it, other than by virtue - 8 - 10 of prior confidential disclosure or provision to Bayer by OSI, (ii) at any time disclosed in the published literature or otherwise generally known or available to the public, or (iii) at any time obtained from a Third Person free from any obligation of secrecy. 1.27 "OSI Patent Rights" means all Patent Rights comprised in OSI Technology. OSI Patent Rights shall be owned by OSI subject to the rights granted to Bayer under this Agreement. The OSI Patent Rights existing on the Effective Date are listed on Exhibit C, attached hereto. 1.28 "OSI Technology" means all Technology relating to the Field that was: (a) developed by employees of, or consultants to, OSI alone or jointly with Third Persons on or prior to the Effective Date, but specifically excludes any Technology that is subject to any exclusive rights held by any of the Other Companies pursuant to agreements with OSI in effect prior to the Effective Date; or (b) acquired by purchase, license, assignment or other means from Third Persons by OSI on or prior to the Effective Date, but specifically excludes any Technology transferred, assigned or sold to any of the Other Companies with respect to which OSI does not retain a co-exclusive license as set forth in Exhibit A attached hereto. OSI Technology shall be owned by OSI subject to the rights granted to Bayer under this Agreement. - 9 - 11 1.29 "OSI/Bayer Annual Operating Plan and Budget" means the written plan describing the research, projects, contemplated products, clinical trials, timetables, technical goals, manufacturing, regulatory approvals and marketing to be carried out during each Commitment Year by Bayer and OSI. 1.30 "Other Companies" shall mean each of Becton, Dickinson and Company and Calbiochem-Novabiochem International, Inc. The essential terms and conditions of the agreements between OSI and the respective Other Companies affecting the rights of Bayer in OSI Technology are set forth in Exhibit A attached hereto and forming a part hereof. 1.31 "Patent Rights" means all patentable inventions, including all applications for patents, whether domestic or foreign, disclosing or claiming such inventions, all continuations, continuations-in-part, divisions, renewals and patents of addition thereof, all patents granted thereon, whether domestic or foreign, and all reissued or reexamined patents based thereon. 1.32 "Person" means any individual, estate, trust, partnership, joint venture, association, firm, corporation, company or other entity. 1.33 "Product" means any Clinical Diagnostic Product, Licensed Diagnostic Product, Clinical Research Product or Licensed Research Product. 1.34 "Research Program" means the research conducted pursuant to the terms and conditions of this Agreement. - 10 - 12 1.35 "Technology" means Patent Rights and all know-how, trade secrets and confidential technical information and material, including, without limitation, all laboratory notebooks, research plans, inventions, cultures, strains, vectors, genes and gene fragments and other sequences, cell lines, hybridomas, monoclonal and polyclonal antibodies, proteins and protein fragments, assay methodology, processes, materials and methods for production, recovery and purification of natural products, formulae, plans, specifications, characteristics, marketing surveys and plans and business plans. 1.36 "Third Person" means a Person other than OSI or Bayer, or other than any employee of, or consultant to, OSI or Bayer. 1.37 "Valid Claim" means a claim in an active, unexpired patent within Patent Rights, so long as such claim shall not have been disclaimed or held invalid in a final decision rendered by a tribunal of competent jurisdiction from which no appeal has been or can be taken. 2. Collaborative Research Program 2.1 OSI/Bayer Annual Operating Plan and Budget. The OSI/Bayer Annual Operating Plan and Budget for the initial Commitment Year is set forth in Exhibit B and attached hereto. For each Commitment Year after the initial Commitment Year, the OSI/Bayer Annual Operating Plan and Budget shall be prepared by the Joint Management Committee no later than ninety (90) days before the end of the prior Commitment Year. The OSI/Bayer Annual Operating Plan and Budget for each Commitment Year shall be appended to and made part of this Agreement. - 11 - 13 2.1.1 Exclusivity as to Research Activities. (a) OSI agrees that, during the Contract Period, OSI shall not conduct research itself, sponsor any research with a Third Person, engage in any research sponsored by any Third Person, or acquire (by license, purchase or otherwise) Technology from a Third Person, in the Field. If OSI becomes aware, during the Contract Period, of an opportunity to conduct or sponsor research relating to the Field or to engage in such research sponsored by a Third Person in the Field, it shall promptly notify the Joint Management Committee of such opportunity. The Joint Management Committee then shall determine whether the opportunity is worth pursuing. If it is determined that the opportunity is worth pursuing, Bayer and OSI shall negotiate, in good faith, for a period not to exceed one hundred eighty (180) days, an agreement by which such opportunity can be incorporated into this Agreement or otherwise used to their mutual advantage. If the Joint Management Committee cannot agree concerning the incorporation of such opportunity as part of this Agreement, OSI shall be free to pursue such opportunity with such Third Person without further obligation to Bayer, provided that the opportunity shall not detract from or delay the work to be performed by OSI under the OSI/Bayer Annual Operating Plan and Budget or make use of Bayer or Bayer/OSI Technology. (b) Bayer agrees that during the Contract Period, Bayer shall not conduct research itself, sponsor any research with a Third Person, engage in any research sponsored by any Third Person, or acquire (by license, purchase or otherwise) Technology - 12 - 14 from a Third Person in the Field if the objectives of such research are in conflict with the Research Program. In all other respects, Bayer shall be free to conduct research itself, sponsor any research with a Third Person, engage in any research sponsored by any Third Person or acquire (by license, purchase or otherwise) Technology from a Third Person, in the Field. 2.2 Joint Management Committee. 2.2.1 Purpose. The Joint Management Committee shall: (a) prepare the OSI/Bayer Annual Operating Plan and Budget (including the Annual Commitment) for each Commitment Year; (b) review, evaluate progress under and modify the OSI/Bayer Annual Operating Plan and Budget for each Commitment Year; (c) coordinate and monitor publications of research results obtained from, and the exchange of information and materials that relate to, Bayer/OSI Technology; (d) discuss matters relating to the activities set forth in Section 7 hereof; (e) with respect to each Licensed Diagnostic Product or Licensed Research Product prior to commercialization, discuss whether a license(s) need be obtained from a Third Person(s) in order to make, use or sell such Licensed Diagnostic Product or Licensed Product; (f) determine priority of assays for the Clinical Diagnostic Market to be commercialized by Bayer; (g) determine priority of assays for the Clinical Research Market to be established by OSI; - 13 - 15 (h) determine funding breakdown of the Research Program pursuant to this Agreement; (i) discuss in-licensing of technology or products that have the potential to benefit the objectives of Bayer and OSI under this Agreement; and (j) discuss the patent/intellectual property strategy and implementation plan for internal development and external commercialization. 2.2.2 Membership. Bayer and OSI each shall appoint, in its sole discretion, three members to the Joint Management Committee. Substitutes may be appointed at any time upon written notice. The members initially shall be: Appointees: -----------
For Bayer: For OSI: * * * * * *
2.2.3 Chair. The Joint Management Committee shall be chaired by one member appointed by Bayer. 2.2.4 Meetings. The Joint Management Committee shall meet at least quarterly at mutually agreeable dates and places. Representatives of Bayer or OSI or both, in addition to members of - -------- * This portion redacted pursuant to a request for confidential treatment. - 14 - 16 the Joint Management Committee, may attend such meetings at the invitation of either party. 2.2.5 Minutes. The Joint Management Committee shall keep accurate minutes which record all proposed decisions and all actions recommended or taken. The minutes shall be delivered to all Joint Management Committee members within five (5) business days after each meeting. The party hosting the meeting shall be responsible for the preparation of the minutes. 2.2.6 Decisions. Subject to the provisions of 2.1.1, decisions of the Joint Management Committee shall be made by majority vote of the members. In the case of a tie vote, the vote of the chair shall control. 2.2.7 Expenses. Bayer and OSI shall each bear all expenses of their respective members related to the participation of the Joint Management Committee. 2.3 Reports and Materials. 2.3.1 Reports. During the Contract Period, Bayer and OSI each shall furnish to the Joint Management Committee: (a) summary reports within fifteen (15) days after the end of each three-month period, commencing with the period ending March 31, 1997, describing its progress under the OSI/Bayer Annual Operating Plan and Budget; and (b) comprehensive written reports within thirty (30) days after the end of each Commitment Year describing in detail the work accomplished by it under the OSI/Bayer Annual Operating Plan and Budget during the Commitment Year and discussing and evaluating the results of such work. - 15 - 17 2.3.2 Materials. OSI and Bayer shall, during the Contract Period as a matter of course as described in the OSI/Bayer Annual Operating Plan and Budget, or upon each other's written request, furnish to each other samples of biochemical, biological or chemical materials which are part of the OSI, Bayer or Bayer/OSI Technology and which are necessary for each party to perform in accordance with the OSI/Bayer Annual Operating Plan and Budget. To the extent that the quantities of materials requested by either party exceed the quantities set forth in the OSI/Bayer Annual Operating Plan and Budget, the requesting party shall reimburse the other party for the reasonable costs of such materials if they are furnished. 2.4 Laboratory Facilities and Personnel. OSI and Bayer shall each provide suitable laboratory facilities, equipment and personnel for the work to be done in carrying out the OSI/Bayer Annual Operating Plan and Budget. 2.5 Clinical Diagnostic Products and Clinical Research Products. 2.5.1 Bayer shall have the exclusive right to commercialize Clinical Diagnostic Products. It is understood that Bayer also has rights to immunohistochemical and flow cytometric assays for certain analytes otherwise not included in the definition of Clinical Diagnostic Products which are not exclusive, but rather co-exclusive (as a minimum right), in view of prior rights of Becton (as defined elsewhere herein). - 16 - 18 2.5.2 OSI shall have the exclusive right to commercialize, itself or through a Third Person, Clinical Research Products. 2.6 Diligent Efforts. Bayer and OSI each shall use reasonably diligent efforts to achieve the objectives of the OSI/Bayer Annual Operating Plan and Budget. Specifically, OSI shall use diligent efforts to allocate those resources necessary (i.e., manpower, facilities, equipment) to meet the objectives of OSI/Bayer Annual Operating Plan and Budget at the funding levels set forth therein. Bayer shall use diligent efforts consistent with products of like potential and consistent with reasonable commercial judgment to commercialize Clinical Diagnostic Products. 3. Funding of the OSI/Bayer Annual Operating Plan and Budget. 3.1 Amount. The Annual Commitment for each of the first two (2) Commitment Years shall be $1,500,000, and for each subsequent Commitment Year shall be at least $1,000,000 to be determined by Bayer, which such Annual Commitments shall be adjusted annually for inflation as determined by the Joint Management Committee. 3.2 Funding Payments. So long as this Agreement is in effect, Bayer shall provide to OSI the Annual Commitment. In no event shall Bayer be obligated to fund more than the Annual Commitment if expenses in any Commitment Year exceed the Annual Commitment for that year. 3.2.1 The Annual Commitment shall be paid in equal quarterly installments in advance. Each quarterly payment shall be paid within five (5) business days of the first day of the - 17 - 19 applicable quarter. The first quarterly payment due under this Agreement shall be paid within two (2) business days of the Effective Date. 3.2.2 In addition to the Annual Commitment provided by Bayer and commencing with the third Commitment Year, the research conducted or managed by OSI pursuant to this Agreement shall also be funded with a maximum amount of $500,000 per such third or subsequent Commitment Year by any "net revenue" that is received by OSI during the first two (2) Commitment Years from the following: (a) out-licensing of the OSI Technology in the Field; (b) profit margins (determined in accordance with generally accepted accounting principles) of Clinical Research Products sold by OSI; and (c) royalties received by OSI from the sale of Clinical Diagnostic Products by Bayer. Any "net revenue" from the aforementioned sources that exceeds in the aggregate $500,000 per Commitment Year shall not be used to fund the OSI research conducted pursuant to this Agreement and shall belong to OSI exclusively. For purposes of this Section 3.2.2 and for Section 3.2.3 below, "net revenue" shall mean the net income received by OSI from the enumerated sources, determined in accordance with generally accepted accounting principles. 3.2.3 In addition to the Annual Commitment provided by Bayer and commencing with the third Commitment Year, the difference, if any, between (i) the actual amount of funding - 18 - 20 provided by OSI per such Commitment Year pursuant to Section 3.2.2 and (ii) the maximum amount of funding by OSI of $500,000 per such Commitment Year, shall be funded by any revenue, net of costs and expenses, that is received by OSI, commencing with the third Commitment Year, from the following: (a) out-licensing of the OSI Technology in the Field; (b) profit margins (determined in accordance with generally accepted accounting principles) of Clinical Research Products sold by OSI; and (c) royalties received by OSI from the sale of Clinical Diagnostic Products by Bayer. Any "net revenue" from the aforementioned sources that exceeds in the aggregate $500,000 per Commitment Year shall not be used to fund the OSI research conducted pursuant to this Agreement and shall belong to OSI exclusively. 3.2.4 Bayer shall fund any assay clinical trials conducted in connection with its commercialization of Clinical Diagnostic Products. Any reagent components, products or materials supplied by OSI to Bayer for such trials shall be paid for by Bayer at OSI's actual fully absorbed cost plus 10%. 3.2.5 In the event of early termination of this Agreement, any portion of a Funding Payment advanced to OSI and not spent shall be returned to Bayer. 3.2.6 For three (3) years after each Commitment Year, OSI shall keep complete and accurate records of its expenditures of Funding Payments under the OSI/Bayer Annual Operating Plan and - 19 - 21 Budget for such Commitment Year. Bayer shall have the right, at its own expense, during the term of this Agreement and during the subsequent three-year period, to appoint an independent certified public accountant to examine such records, during regular business hours at the place or places where such records are customarily kept, upon reasonable notice from Bayer, to the extent reasonably necessary to verify the accuracy of the expenditures and required reports. This right of inspection shall not be exercised more than once in any calendar year and not more than once with respect to records covering any specific period of time. Bayer agrees to hold in confidence all information concerning such expenditures, other than their total amounts, and all information learned in the course of any audit or inspection, except to the extent that it is necessary for Bayer to reveal the information in order to enforce any rights it may have pursuant to this Agreement or if disclosure is required by law. Failure by Bayer to request verification of any expenditures after the three-year period shall be considered acceptance of the accuracy of such expenditures, and OSI shall have no obligation to maintain any records pertaining to such report or statement beyond the three-year period. 4. Treatment of Confidential Matter. 4.1 Confidentiality. 4.1.1 Bayer and OSI each recognize that the other's Confidential Matter constitutes highly valuable proprietary information. Subject to the terms and conditions of the License Agreement, the disclosure obligations set forth in Sections 4.3 and 4.4 and publication rights set forth in Section 4.2, Bayer and - 20 - 22 OSI agree that for five (5) years from the termination of this Agreement, they will keep confidential, and will cause their Affiliates to keep confidential, all Confidential Matter that is disclosed or provided to them or to any of their Affiliates pursuant to this Agreement. Neither Bayer nor OSI nor any of their Affiliates shall use the other's Confidential Matter except as expressly permitted in this Agreement or the License Agreement. 4.1.2 Bayer and OSI agree that any disclosure or provision of Confidential Matter to any officer, employee or agent of the other or of any of the other's Affiliates shall be made only to the extent necessary to carry out its responsibilities under this Agreement. The receiving party agrees not to disclose the other's Confidential Matter to any Third Persons under any circumstance without written permission. Both Bayer and OSI shall take such action to preserve the confidentiality of each other's Confidential Matter as they would customarily take to preserve the confidentiality of their own Confidential Matter. Each party, upon the other's request, will return all the Confidential Matter disclosed or provided pursuant to this Agreement, including all copies and extracts of documents, within sixty (60) days of the request after the termination of this Agreement, except for one (1) copy, which shall be retained for archival purposes only. 4.2 Publication. Notwithstanding Section 4.1, any results obtained in the course of this Agreement may be submitted for publication following scientific review by the Joint Management Committee and subsequent approval by OSI's and Bayer's managements. After receipt of the proposed publications by both - 21 - 23 Bayer's and OSI's managements, written approval or disapproval shall be provided within thirty (30) days for a manuscript or within fourteen (14) days for a transcript of an oral presentation to be given at a scientific meeting. Bayer and OSI agree to delay any publication if the Joint Management Committee determines that Patent Rights are involved and additional time is needed to file patent applications(s). 4.3 Disclosure of Inventions. Each party shall promptly inform the Joint Management Committee about all inventions within OSI Patent Rights, Bayer Patent Rights and OSI/Bayer Patent Rights. 4.4 Restrictions on Transferring Materials. Bayer and OSI recognize that the biological, chemical and biochemical materials which are part of OSI Technology, Bayer Technology or Bayer/OSI Technology represent valuable commercial assets. Accordingly, throughout the Contract Period and for five (5) years thereafter, OSI and Bayer agree not to transfer to any Third Person any such material which constitute Technology owned solely by the other party. Additionally, throughout the Contract Period and for six (6) months thereafter, or for the life of any License Agreement applicable thereto, whichever is later, OSI and Bayer agree not to transfer to any Third Person any biological, chemical or biochemical materials which are part of Bayer/OSI Technology and which comprise, consist of or are useful in the manufacture of any Product, unless prior consent for any such transfer is obtained from the other party, which consent may not be unreasonably withheld and unless such Third Person agrees as a condition of any - 22 - 24 such transfer not to transfer the material further and to use the material for research purposes not directed toward the development of Clinical Diagnostic Products. The provisions of this Section 4.4 specifically do not apply to any transfer to any of the Other Companies pursuant to the agreements between OSI and any of the Other Companies in effect prior to the Effective Date, as set forth in Exhibit A, attached hereto. 5. Licenses. 5.1 License Granted to Bayer. 5.1.1 Exclusive License. OSI hereby grants to Bayer the exclusive, worldwide license, including the right to grant sublicenses to parties reasonably acceptable to OSI, to use OSI Technology (i) during the Contract Period, to carry out the Research Program and (ii) during the Contract Period and thereafter, to make, have made for itself, use and sell Clinical Diagnostic Products based upon analytes with respect to which Bayer commenced development during the Contract Period, subject to the following conditions: (a) Such license shall be subject to the prior rights granted to and held by the Other Companies to any OSI Technology and OSI Patent Rights as set forth on Exhibit A, attached hereto. (b) OSI and/or its licensees shall retain the exclusive right to make, have made for itself, use and sell Clinical Research Products for all applications, including, without limitation, for use in developing clinical research data in support of product development programs. - 23 - 25 The exclusive license granted in clause (ii) above shall (i) with respect to OSI Patent Rights, continue for the life of such patents and (ii) with respect to unpatented OSI Technology, continue in perpetuity provided, however, that in the event that Bayer does not introduce a commercial Clinical Diagnostic Product based upon a particular analyte within five (5) years of the termination of this Agreement, then the license under OSI Technology with regard to such Clinical Diagnostic Product based upon such analyte shall become non-exclusive. 5.1.2 Non-exclusive License. In the event that Bayer desires to extend this Agreement upon expiration of the initial 5-year term or any extension period thereafter pursuant to Section 10.2 hereof and OSI desires not to renew, upon expiration of such initial 5-year term or any extension period thereafter, as the case may be, OSI grants to Bayer a nonexclusive license to use the OSI Technology to make, have made for itself, use and sell Clinical Diagnostic Products other than those based upon analytes with respect to which Bayer has been granted the exclusive license pursuant to Section 5.1.1 above, subject to the prior rights granted to and held by the Other Companies to any OSI Technology and OSI Patent Rights as set forth on Exhibit A, attached hereto. 5.2 License Granted to OSI. Bayer hereby grants to OSI the exclusive, worldwide license, including the right to grant sublicenses to parties reasonably acceptable to Bayer, to use Bayer Technology and Bayer/OSI Technology (i) during the Contract Period, to carry out the Research Program and (ii) during the Contract Period and thereafter, to make, have made for itself, use - 24 - 26 ' and sell Clinical Research Products based upon analytes with respect to which OSI commenced development during the Contract Period. The license granted in clause (ii) above shall (i) with respect to Bayer and Bayer/OSI Patent Rights, continue for the life of such patents and (ii) with respect to unpatented Bayer and Bayer/OSI Technology, continue in perpetuity; provided, however, that in the event that OSI does not introduce a commercial Clinical Research Product based upon a particular analyte within five (5) years of the termination of this Agreement, then the license under Bayer Technology and Bayer/OSI Technology with regard to such Clinical Research Product based upon such analyte shall become non-exclusive. 6. Royalties, Payments of Royalties, Accounting for Royalties and Recordkeeping . 6.1 Royalties to be Paid by Bayer. Bayer shall pay to OSI a royalty of * of Net Sales by Bayer of any Clinical Diagnostic Product (net of all other royalties) utilizing Bayer/OSI Patent Rights or OSI Patent Rights in countries where such sales are covered by a Valid Claim. Such royalty shall be paid for two (2) full years from the date of first commercial sale of each of such products and, thereafter, such royalty shall be *, continuing for the life of such patents. For sales of Clinical Diagnostic Products utilizing OSI Technology or Bayer/OSI Technology in countries and not - -------- * This portion redacted pursuant to a request for confidential treatment. - 25 - 27 covered by a Valid Claim, the royalty rate (net of all other royalties) shall be * of Net Sales for two (2) full years from the date of first commercial sale of each of such products and, thereafter, such royalty shall be * of Net Sales until the expiration of ten (10) years from the date of first commercial sale of each of such Products. 6.2 Royalties to be Paid by OSI. 6.2.1 OSI shall pay to Bayer a royalty of * of Net Sales by OSI of Clinical Research Products based on Bayer/OSI Patent Rights or Bayer Patent Rights in countries where such sales are covered by a Valid Claim. Such royalty shall be paid for two (2) full years from the date of first commercial sale of each of such products and, thereafter, such royalty shall be *, continuing for the life of such patents. For sales of Clinical Research Products utilizing Bayer/OSI Technology or Bayer Technology in countries not covered by a Valid Claim, the royalty rate shall be * of Net Sales for two (2) full years from the date of first commercial sale of each of such products and, thereafter, such royalty shall be * of Net Sales until the expiration of ten (10) years from the date of first commercial sale of each of such Products. 6.2.2 With respect to royalties received by OSI from Third Persons pursuant to permitted licenses under Bayer or Bayer/OSI Technology, OSI shall pass on to Bayer * of all revenues in whatever form received (earned royalties, - -------- * This portion redacted pursuant to a request for confidential treatment. - 26 - 28 licensing fees and the like) from such Third Persons; provided, however, that the foregoing obligation shall not take effect until OSI shall have received the amounts provided for in Sections 3.2.2 and 3.2.3 hereof from the sources listed therein, i.e., $500,000 per each Commitment Year. 6.3 Single Royalty. The parties acknowledge that only one royalty rate, the highest one applicable, will apply to Net Sales of each Clinical Diagnostic Product or Clinical Research Product regardless of the number of patents (or patent applications) within the Patent Rights or the extent of Technology licensed under this Agreement which may apply. 6.4 Payment Dates. Within sixty (60) days after March 31, June 30, September 30 and December 31 of each year during the term of this Agreement occurring after the date of the first commercial sale of its first Licensed Product, each party shall deliver to the other party a true and accurate report stating for each royalty-bearing Clinical Diagnostic Product or Clinical Research Product, as the case may be, for the preceding three (3) calendar months (a) Net Sales, (b) the royalties payable thereon, and (c) the amount of any credit taken against royalties payable not already taken in computing Net Sales. Except as otherwise provided, simultaneously with the delivery of each such report, each party shall pay to the other party the amount, if any, due for the period of such report. If no payments are due, it shall be so reported. 6.5 Accounting. All amounts payable hereunder shall be payable in United States Dollars; provided, however, that if any - 27 - 29 payment on account of Net Sales by a party, its Affiliates or sublicensees is received in a foreign currency, such amount shall be converted monthly to United States funds at the rate set by the party's finance department for internal financial reporting purposes. 6.6 Records. During the term of this Agreement, each party shall keep complete and accurate records of Net Sales in sufficient detail to enable the other party to determine payments owed to it under this Agreement for a period of three (3) years after such payments are due. Each party shall permit an independent certified public accountant, acceptable to the other party and appointed by the requesting party and at the requesting party's expense, to examine its books, ledgers and records covering Net Sales during regular business hours for the purpose of verifying, and only to the extent necessary to verify, the amount of royalty due and payable but in no event more than once per calendar year. The accountant shall maintain all information received during such examination in confidence, and shall report to the party requesting examination only with respect to the accuracy of any report. Any report not examined within three (3) years of its having been made shall be deemed true and accurate. In the event the records examined reveal that a party has paid less than ninety-five percent (95%) of the amount due to the other party, the party being examined shall pay the costs of the audit and shall pay the additional amount due plus accrued interest at the rate of ten percent (10%) per annum. - 28 - 30 7. Legal Action. 7.1 Actual or Threatened Disclosure or Infringement. If information comes to the attention of Bayer or OSI to the effect that any Patent Rights relating to a Clinical Diagnostic Product, have been or are threatened to be infringed, Bayer shall have the right, at its expense, to take such action as it may deem necessary to prosecute or prevent such infringement, including the right to bring or defend any suit, action or proceeding involving any such infringement. Bayer shall notify OSI promptly of the receipt of any such information and of the commencement of any such suit, action or proceeding. If Bayer determines that it is necessary or desirable for OSI to join any such suit, action or proceeding, OSI shall execute all papers and perform such other acts as may be reasonably required to permit Bayer to act in OSI's name. In the event that Bayer brings a suit, it shall be entitled to all sums recovered in such suit or in its settlement without any further obligation to OSI. If Bayer does not, within 120 days after giving notice to OSI of the above-described information, notify OSI of Bayer's intent to bring suit against any infringer, OSI shall have the right to bring suit for such alleged infringement, but it shall not be obligated to do so. OSI may join Bayer as party plaintiff, if appropriate, in which event OSI shall hold Bayer free, clear and harmless from any and all costs and expenses of such litigation, including reasonable attorneys' fees, and all sums recovered in any such suit or in its settlement shall belong to OSI without any further obligation to Bayer. Each party shall always have the right to be represented by counsel of its - 29 - 31 own selection and at its own expense in any suit instituted by the other for infringement, under the terms of this Section. If Bayer lacks standing to bring any such suit, action or proceeding, then OSI shall do so at the request of Bayer and at Bayer's expense. If neither party brings suit, then the applicable royalty rate set forth in Section 6.1 hereof shall be reduced by fifty percent (50%) with regard to Net Sales made 60 days after expiration of the 120-day notice period set forth above. If information comes to the attention of Bayer or OSI to the effect that any Patent Rights relating to a Product to which rights have been retained by OSI pursuant to this Agreement or to a Clinical Research Product have been or are threatened to be infringed, OSI shall have the right, at its expense, to take such action as it may deem necessary to prosecute or prevent such infringement, including the right to bring or defend any suit, action or proceeding involving any such infringement. OSI shall notify Bayer promptly of the receipt of any such information and of the commencement of any such suit, action or proceeding. If OSI determines that it is necessary or desirable for Bayer to join any such suit, action or proceeding, Bayer shall execute all papers and perform such other acts as may be reasonably required to permit OSI to act in Bayer's name. In the event that OSI brings a suit, it shall be entitled to all sums recovered in such suit or in its settlement without any further obligation to Bayer. Bayer shall always have the right to be represented by counsel of its own selection and at its own expense in any suit instituted by OSI for infringement, under the terms of this Section. If OSI - 30 - 32 lacks standing to bring any such suit, action or proceeding, then Bayer shall do so at the request of OSI and at OSI's expense. 7.2 Infringement Claims. 7.2.1 Defense of Infringement Claims. Each party will cooperate with the other in the defense of any suit, action or proceeding against either such party or any sublicensee of such party alleging the infringement of the intellectual property rights of a Third Person by reason of the use of Patent Rights or other Technology in the manufacture, use or sale of a Clinical Diagnostic Product or a Clinical Research Product. Each party shall give the other party prompt written notice of the commencement of any such suit, action or proceeding or claim of infringement and will furnish the other party with a copy of each communication relating to the alleged infringement. The party defending any such suit or action shall have full authority (including the right to exclusive control of defense of any such suit, action or proceeding and the exclusive right to compromise, litigate, settle or otherwise dispose of any such suit, action or proceeding), to defend or settle any such suit, action or proceeding. If the parties agree that the other party should institute or join any suit, action or proceeding pursuant to this Section 7.2.1, the non-moving party may join the other party as a defendant if necessary or desirable, and each such party shall execute all documents and take all other actions, including giving testimony, which may reasonably be required in connection with the prosecution of such suit, action or proceeding. - 31 - 33 7.2.2 Costs of Infringement Claims. In any given year, with regard to a suit, action or proceeding brought against Bayer, OSI will be responsible for the lesser of (a) 50% of the costs incurred under Section 7.2.1 above ("Infringement Litigation Costs") for such year or (b) 50% of total amount of royalties due to OSI for such year (such amount being herein referred to as "OSI's Share"). Bayer shall recoup from the royalties due to OSI in such year 50% of the OSI Share and shall recoup the remaining 50% in the succeeding year. If additional Infringement Litigation Costs are incurred in the next year, the formula set forth above shall be applicable to such costs; provided, however, the amount carried over from the preceding year shall not be included in the determination of the OSI Share for such year. Bayer shall be responsible for the Infringement Litigation Costs in excess of OSI's Share. 7.3 Licenses under Patents. If Bayer obtains a license under a patent owned by a Third Person, which patent in the opinion of Bayer would be infringed by the manufacture, use or sale of a Clinical Diagnostic Product, then one-half (1/2) of any payments made by Bayer to such Third Person during a reporting period shall be fully creditable under Section 6.1 hereof against royalty payments due from Bayer to OSI under Section 6.1 hereof for such reporting period or subsequent reporting periods, but in no event during a reporting period shall the royalty payment be reduced by more than fifty percent (50%) in any reporting period. If OSI is of the opinion that such manufacture, use or sale would not infringe such patent owned by a Third Person, OSI may, at its - 32 - 34 election, bring suit against such Third Person seeking a declaration that such patent is invalid or not infringed by Bayer's manufacture, use or sale of the Product involved, or may bring opposition, nullity or other proceedings against such patent, as appropriate. If OSI is successful in such suit, Bayer shall resume paying royalties in such country as provided in Section 6.1. If OSI does not bring such suit or is unsuccessful in such suit, it shall join Bayer in an attempt to obtain a license under such patent, and one-half (1/2) of any payments made by Bayer to such Third Person for such license shall be fully creditable under Section 6.2 hereof against royalty payments due from Bayer to OSI as to that patent and that country pursuant to this Agreement but in no event shall the royalty payment be reduced by more than fifty percent (50%) in any reporting period. 8. Provisions Concerning the Filing, Prosecution and Maintenance of Patent Rights. 8.1 The Joint Management Committee shall decide whether (and where) to file any patent application within the Bayer/OSI Patent Rights. The Joint Management Committee also shall select counsel, reasonably acceptable to both parties, to prepare and prosecute such applications. Counsel selected shall report to the Joint Management Committee or its designees. Bayer shall be responsible for in all expenses incurred by such counsel. 8.2 In the event the Joint Management Committee elects not to file or elects not to continue prosecution of an application on any invention covered by Section 8.1, Bayer may file and prosecute any such application(s) at its own expense. - 33 - 35 8.3 In the event that OSI determines that it is no longer interested in prosecuting or maintaining a particular patent application or granted patent included in OSI Patent Rights, OSI shall so inform Bayer in sufficient time to permit Bayer to assume the responsibility and expense for the further prosecution and/or maintenance of such application or patent. If Bayer assumes such responsibility and expense, any royalty thereafter due OSI from Bayer based on such application or patent shall cease. 9. Other Rights of the Parties. 9.1 Research Outside the Field. During the Contract Period, OSI shall have the right to apply for and receive grants or contracts from public or private sources, including, without limitation, the National Institutes of Health, the American Cancer Society and the National Science Foundation, for research to be performed outside the Field. OSI shall also have the right to enter into co-venture arrangements, whether written or oral, with Third Persons, including, without limitation, the National Institutes of Health, the American Cancer Society and the National Science Foundation, to develop any product for use outside the Field. In any contract or arrangement entered into by OSI outside the Field, OSI shall take all steps necessary to prevent the use of any Bayer Technology or Bayer/OSI Technology. OSI shall have no right to disclose any Bayer Technology or Bayer/OSI Technology to a Third Person with whom it may contract. 9.2 No Rights to Technology or Products Outside the Field. Bayer and OSI acknowledge that neither party is granting to the - 34 - 36 other, pursuant to this Agreement, any rights or licenses to Technology or Products outside the Field. 10. Term Extension, Termination and Disengagement. 10.1 Term. This Agreement shall commence as of the Effective Date and shall expire five (5) years from the Effective Date unless sooner terminated or unless extended under Section 10.2. 10.2 Extension. After the initial five (5) year term, this Agreement shall be automatically extended for additional successive one-year terms unless a party gives six months' written notice to the other party of its intent not to renew. 10.3 Event(s) of Termination. The following events shall constitute Events of Termination under this Agreement: (a) Any representation or warranty by OSI or Bayer, or any of its officers, under or in connection with this Agreement shall prove to have been incorrect in any material respect when made; or (b) OSI or Bayer shall fail in any material respect to perform or observe any term, covenant or understanding contained in this Agreement or in any of the other documents or instruments delivered pursuant to, or concurrently with, this Agreement, and any such failure shall remain unremedied for ninety (90) days after written notice to the failing party. 10.4 Termination. Upon the occurrence of any Event of Termination, the party not responsible shall have the right, by written notice to the other party, to immediately terminate this Agreement. - 35 - 37 10.5 Early Termination. Bayer shall have the right to terminate this Agreement for any reason to be effective at any time after this Agreement has been in effect for a period of twenty-four (24) months from the Effective Date, provided that Bayer has given (12) months' prior written notice to OSI. 10.6 Survival. Without limitation, the rights and obligations arising from the following provisions shall survive any expiration or termination of this Agreement: Articles 1, 4, 5, 7 and 13-16. 11. Representations and Warranties. OSI and Bayer each represent and warrant as follows: 11.1 It is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and Indiana, respectively. It is qualified to do business and is in good standing as a foreign corporation in each jurisdiction in which the conduct of its business or the ownership of its properties requires such qualification. It has all requisite power and authority, corporate or otherwise, to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement. 11.2 The execution, delivery and performance by it of this Agreement has been duly authorized by all necessary corporate action and does not and will not (a) require the consent or approval of its stockholders, (b) violate any provision of any law, rule, regulation, order, write, judgment, injunction, decree, determination or award presently in effect having applicability to it or any provision of its charter or by-laws or (c) result in a - 36 - 38 breach of or constitute a default under any material agreement, mortgage, lease, license, permit or other instrument or obligation to which it is a party or by which it or its properties may be bound or affected. 11.3 This Agreement is a legal, valid and binding obligation of it enforceable against it in accordance with its terms and conditions, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws, from time to time in effect, affecting creditors' rights generally. 11.4 It is not under any obligation to any Person, contractual or otherwise, that is conflicting or inconsistent in any respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations. 11.5 It has good and marketable title to or valid leases or licenses for, all of its properties, rights and assets necessary for the fulfillment of its responsibilities under this Agreement, subject to no claim of any Third Person other than the relevant lessors or licensors. 12. Covenants of OSI and Bayer. Throughout the Contract Period, each of OSI and Bayer shall: (a) Maintain and preserve its corporate existence, rights, franchises and privileges in the jurisdiction of its incorporation, and qualify and remain qualified as a foreign corporation in good standing in each jurisdiction in which such qualification is from time to time necessary or desirable in view - 37 - 39 of its business and operations or the ownership of its properties; and (b) Comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any government authority to the extent necessary to conduct the OSI/Bayer Annual Operating Plan and Budget. 13. Dispute Resolution. The parties recognize that disputes arise from time to time regarding either party's rights or obligations under this Agreement. The parties agree to follow the procedures set forth below in this Article in order to facilitate the speedy resolution of any disputes under this Agreement. The parties agree to cooperate and attempt in good faith to resolve any dispute between them. Any dispute that cannot be resolved by good faith negotiation shall be referred, by written notice from either party or to the other, to the respective officers of the parties designated below (or their successors): For Bayer: Senior Vice President Finance and Administration For OSI: Vice President Finance These executive officers shall negotiate in good faith to achieve a resolution of the dispute within thirty (30) days after they are notified of the dispute. If the designated officers are not able to resolve the dispute within this thirty (30) day period, either party may then initiate binding arbitration proceedings to resolve the dispute in accordance with the Commercial Arbitration Rules of the American Arbitration Association, and judgment upon the award - 38 - 40 rendered by the arbitrator may be entered in any court having jurisdiction thereof; provided, however, any claim for consequential, special, or punitive damages shall not be heard or considered by the arbitrator and any finding or award of consequential, special, or punitive damages shall be null, void and unenforceable as if never having been made. 14. Notices. All notices shall be mailed via certified mail, return receipt requested, or courier, addressed as follows, or to such other address as may be designated from time to time: If to Bayer: To Bayer at its address as set forth at the beginning of this Agreement, Attention: with a copy to: Legal Department If to OSI: To OSI at its address as set forth at the beginning of this Agreement, Attention: President with a copy to: * Services shall be deemed given as of the date of receipt. 15. Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York. - -------- * This portion redacted pursuant to request for confidential treatment. - 39 - 41 16. Miscellaneous. 16.1 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties and their respective legal representatives, successors and permitted assigns. 16.2 Headings. Paragraph headings are inserted for convenience of reference only and do not form a part of this Agreement. 16.3 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original. 16.4 Amendment; Waiver; etc. This Agreement may be amended, modified, superseded or cancelled, and any of the terms may be waived, only by a written instrument executed by each party or, in the case of waiver, by the party or parties waiving compliance. The delay or failure of any party at any time or times to require performance of any provision shall in no manner affect the rights at a later time to enforce the same. 16.5 No Third Party Beneficiaries. No Person not a party to this Agreement, including any employee of any party to this Agreement, shall have or acquire any rights by reason of this Agreement. Neither party shall enter into or incur, or hold itself out to third parties as having authority to enter into or incur on behalf of the other party, any contractual obligation, expense, or liability whatsoever. The performance of each party hereunder is undertaken as an independent contractor, and nothing contained in this Agreement shall be deemed to constitute the parties partners with each other or any Person. - 40 - 42 16.6 Assignment and Successors. This Agreement may not be assigned by either party, except that either party may assign this Agreement and the rights and interests of such party to an Affiliate or a purchaser of substantially all of the assets of such party's business to which this Agreement pertains, upon notice to the other party. 16.7 Severability. If performance of this Agreement or any part hereof by either party shall be rendered unenforceable or impossible under, or in conflict with any law, regulation, or official action by any government agency having jurisdiction over such party, then such party shall not be considered in default by reason of failure to perform and the validity of all remaining provisions hereof shall not be affected by such result. 16.8 Unforeseen Circumstances. Neither party shall be liable in damages for, nor shall this Agreement be terminable or cancelable by reason of, any delay or default in any such party's performance hereunder if such default or delay is caused by events beyond such party's reasonable control including, without limitations, acts of God, regulation or law or other action of any government or agency thereof, war or insurrection, civil commotion, destruction of production facilities or materials by earthquake, fire, flood or storm, labor disturbances, epidemic, or failure of suppliers, public utilities or common carriers. Each party agrees to endeavor to resume its performance hereunder if such performance is delayed or interrupted by reason of such forces majeure as listed above. - 41 - 43 16.9 Integration. This writing constitutes the entire agreement between the parties relating to the subject matter hereof. There are no understandings, representations, or warranties of any kind except as expressly set forth herein. - 42 - 44 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly authorized representatives. BAYER CORPORATION By: ----------------------------- Title: -------------------------- ONCOGENE SCIENCE, INC. By: ----------------------------- Title: -------------------------- - 43 - EX-10.2 3 DEVELOPEMENT AND COMMERCIALIZATION AGREEMENT 1 Portions of this Exhibit 10.2 have been redacted and are the subject of a confidential treatment request filed with the Secretary of the Securities and Exchange Commission. 2 COLLABORATIVE RESEARCH, DEVELOPMENT AND COMMERCIALIZATION AGREEMENT BETWEEN: BIOCHEM PHARMA (INTERNATIONAL) INC., a corporation incorporated under the laws of Canada and having its registered office at Commerce Court West, Suite 5300, Toronto, Ontario, M5L 1B9 (hereinafter called "BioChem"). AND: ONCOGENE SCIENCE, INC., a corporation incorporated under the laws of Delaware and having its principal place of business at 106 Charles Lindbergh Boulevard, Uniondale, New York, 11553 (hereinafter called "Oncogene"). WHEREAS each of BioChem and its Affiliates and Oncogene and its Affiliates is currently conducting research in respect of antiviral agents which target certain illnesses; WHEREAS BioChem and its Affiliates, on the one hand, and Oncogene and its Affiliates, on the other hand, have decided to collaborate and combine their efforts in connection with the research, development and commercialization of antiviral agents which primarily target protein/nucleic interactions for the treatment of certain illnesses; WHEREAS BioChem and its Affiliates and Oncogene and its Affiliates are willing to use their research facilities, scientists, research assistants, technicians and other personnel to conduct their obligations under this Agreement. NOW THEREFORE, THE PARTIES AGREE AS FOLLOWS: ARTICLE 1 INTERPRETATION 1.1 Defined terms. In this Agreement, unless the context or subject matter is inconsistent therewith, the following terms and expressions shall have the following meanings: (a) "Acquisition" shall have the meaning ascribed thereto at Section 8.2(f) hereof. (b) "Affiliate" shall mean, with respect to any Person (including a Party), any other Person which directly or indirectly controls or is controlled by, or is under direct or indirect common control with, such first mentioned Person or any Person which is directly or indirectly controlled by a Person which controls 3 the first mentioned Person; for the purpose of this definition, "control" shall mean, with respect to any Person (including any Party), the ownership of more than 50% of the voting shares or other voting equity of that Person. (c) "Agreement" shall mean this collaborative research, development and commercialization agreement and all instruments supplemental hereto or in amendment or in confirmation hereof; "herein", "hereof", "hereto", "hereunder" and similar expressions mean and refer to this Agreement and not to any particular article, section, subsection or other subdivision; "article", "section", "subsection" or other subdivision of this Agreement shall mean and refers to the specific article, section, subsection or other said subdivision of this Agreement. (d) "BioChem Confidential Information" shall mean all confidential information disclosed to Oncogene verbally and subsequently confirmed in writing as "confidential" or designated as "confidential" by Biochem or its Affiliates at the time of disclosure to Oncogene, to the extent that such information as of the date of disclosure to Oncogene is not (i) demonstrably known to Oncogene as evidenced by written documentation other than by virtue of a prior confidential disclosure to Oncogene by BioChem or its Affiliates, or (ii) disclosed in the published literature or otherwise to the public through no fault of Oncogene, its Affiliates, employees or consultants, or (iii) obtained from an independent Third party without binder of secrecy, provided that such independent Third Party has no obligation of confidentiality to BioChem or its Affiliates. (e) "BioChem Technology" shall mean and include all technology and technical information willing to a Lead Compound or used or furnished by BioChem and/or its Affiliates in respect of the performance by it of its obligations hereunder, including all inventions, chemical structures and methods for synthesis, structure-activity relationships, assay methodology, methods, processes, formulae, plans, specifications, characteristics, equipment and equipment designs, know how, trade secrets, discoveries, results, formulations and biological, toxicological and clinical data and physical, chemical or biological material which are developed by employees of, or consultants to, BioChem and/or its Affiliates, prior to or during the term of this Agreement or acquired by purchase, license, assignment or other means from third parties prior to or during the term of this Agreement that is not Joint Technology, but only to the extent that BioChem or its Affiliates is legally entitled to disclose such Technology and technical information and use it in connection with the performance by it of its obligations hereunder. (f) "Commercial Product" shall mean any and all products in Final Pharmaceutical Form emanating from Lead Compounds and any and all -2- 4 formulations, mixtures or compositions thereof emanating from the Research Program pursued pursuant to this Agreement, the making or use of which embodies any of BioChem Technology, Oncogene Technology or Joint Technology and in respect of which BioChem and Oncogene each has rights to commercialize pursuant to this Agreement or any other agreement executed between the Parties in furtherance to this Agreement. (g) "Commercialization Agreement" shall have the meaning ascribed thereto at Section 6.2 hereof. (h) "Commitment Year" shall mean each calendar year during the term of this Agreement and, in respect of the First Commitment Year, the period commencing on the Effective Date and terminating on December 31, 1996. (i) "Compound" shall mean any compound in connection with the Field being analyzed by the Parties pursuant to the Research Program or developed by BioChem and Oncogene and/or their respective Affiliates pursuant to the provisions of this Agreement. (j) "Confidential Information" shall mean BioChem Confidential Information or Oncogene Confidential Information, as the case may be. (k) "Deficiency Amount" shall have the meaning ascribed thereto at Section 2.4.1 hereof. (l) "Development Candidate" shall mean a Lead Compound which has been designated by the Joint Steering Committee as a potential Commercial Product and which should be the subject of a Development Program. (m) "Development Program" shall mean the written development plan to be prepared and approved by the Joint Steering Committee describing the development and other obligations of each Party in respect of the development of any Compound for preclinical and clinical development, which plan shall be approved by the Joint Development Committee no later than ninety (90) days following the declaration by the Joint Steering Committee that a Lead Compound has been designated as a Development Candidate, failing which the matter shall be referred to the President of BioChem and the Chief Executive Officer of Oncogene for discussion and resolution. (n) "Effective Date" shall mean May 1, 1996. (o) "Electing Party" shall have the meaning ascribed thereto at Section 9.1 hereof. -3- 5 (p) "Election Notice" shall have the meaning ascribed thereto at Section 9.1 hereof. (q) "Event of Termination" shall have the meaning ascribed thereto at Section 8.2 hereof. (r) "FDA" shall mean the United States Food and Drug Administration. (s) "Field" shall mean, unless otherwise determined by the Joint Steering Committee pursuant to Section 2.2, Hepatitis C ("HCV") and Human Immunodeficiency Virus ("HIV") and such other viral targets designated by the Joint Steering Committee. (t) "Final Pharmaceutical Form" shall mean any presentation of a Commercial Product in any final packaged and labelled pharmaceutical dosage form suitable for sale to and use by an end user. (u) "Full Development" shall mean the first of the two events described at Section 6.2 to occur. (v) "Indemnified Party" shall have the meaning ascribed thereto at Section 5.10 hereof. (v) "Indemnified Party" shall have the meaning ascribed thereto at Section 5.10 hereof. (w) "Indemnifying Party" shall have the meaning ascribed thereto at Section 5.10 hereof. (x) "Independent Third Party" shall mean any Person other than BioChem, Oncogene and/or any of their respective Affiliates. (y) "Initial Term" shall have the meaning ascribed thereto at Section 8.1 hereof. (z) "Joint Development Committee" or "JDC" shall have the meaning ascribed thereto at Section 6.1 hereof. (aa) "Joint Research Committee" or "JRC" shall have the meaning ascribed thereto at Section 2.4 hereof. (ab) "Joint Steering Committee" or "JSC" shall have the meaning ascribed thereto at Section 2.4 hereof. -4- 6 (ac) "Joint Technology" shall mean and include all technology and information including all inventions, chemical structures and methods for synthesis, structure-activity relationships, assay methodology, methods, processes, formulae, plans, specifications, characteristics, equipment and equipment designs, know how, trade secrets, discoveries, formulations and biological, toxicological and clinical data which are developed jointly by employees of, or consultants to, BioChem and Oncogene, or, solely in respect of the Field, licensed by either of the Parties or on behalf of the Parties during the term of this Agreement, such that BioChem and Oncogene, each having contributed to the development of such technology and technical information, owns an undivided interest therein. (ad) "Lead Compound" shall mean, subject to the provisions of Section 2.16, any Compound designated as a Lead Compound by the Joint Steering Committee and which has demonstrated such properties of chemical structure, potency, mechanism of action, selectivity and non-cytotoxicity as deemed necessary by the JSC for such Compound to be a potential candidate for chemical optimization studies. (ae) "Net Invoiced Sales Value" shall mean the gross invoice price charged for Commercial Products sold by BioChem, Oncogene and/or their respective Affiliates and sublicensees to Independent Third Parties, less all allowances or credits granted on such sales, including those in respect of rejected or returned goods, recalls, transportation charges or allowances, insurance charges, normal and customary trade, quantity and trade discounts, and taxes or other governmental charges on, or measured by, the sale, transportation, or use of Commercial Products, which BioChem, Oncogene and/or their respective Affiliates and sublicensees have to pay or absorb on such sales. (af) "Net Sales" shall mean in the case of any Commercial Products sold in a particular country by either Party and/or their respective Affiliates and sublicensees in Final Pharmaceutical Form to an Independent Third Party: (i) uncompounded with any other active ingredient, the Net Invoiced Sales Value of such Commercial Products; (ii) compounded with any other active therapeutic ingredient, the value of the total declared amount of the Commercial Product contained therein, as agreed by discussions between BioChem and Oncogene; if the value cannot be agreed upon there it should be decided by an independent accountant mutually acceptable to BioChem and Oncogene, whose decision shall be binding upon them; and -5- 7 (iii) in bulk, the Net Invoiced Sales Value of such Commercial Product sold to said Independent Third Party in Final Pharmaceutical Form. (ag) "Non-Electing Party" shall have the meaning ascribed thereto at Section 9.1 hereof. (ah) "Notice" shall have the meaning ascribed thereto at Section 9.1 hereof. (ai) "Notice of Opportunity" shall have the meaning ascribed thereto at Section 9.1 hereof. (aj) "Notifying Party" shall have the meaning ascribed thereto at Section 9.2 hereof. (ak) "Oncogene Confidential Information" shall mean all confidential information disclosed to BioChem verbally and subsequently confirmed in writing as "confidential" or designated as "confidential" by Oncogene or its Affiliates at the time of disclosure to BioChem, to the extent that such information as of the date of disclosure to BioChem is not (i) demonstrably known to BioChem as evidenced by written documentation other than by virtue of a prior confidential disclosure to BioChem by Oncogene or its Affiliates, or (ii) disclosed in the published literature or otherwise to the public through no fault of BioChem, its Affiliates, employees or consultants, or (iii) obtained from an Independent Third Party without binder of secrecy, provided that such Independent Third Party has no obligation of confidentiality to Oncogene or its Affiliates. (al) "Oncogene Technology" shall mean and include all technology and technical information relating to a Lead Compound or used or furnished by Oncogene and/or its Affiliates in respect of the performance by it of its obligations hereunder, including all inventions, chemical structures and methods for synthesis, structure-activity relationships, assay methodology, methods, processes, formulae, plans, specifications, characteristics, equipment and equipment designs, know how, trade secrets, discoveries, results, formulations and biological, toxicological and clinical data and physical, chemical or biological material which are developed by employees of, or consultants to, Oncogene and/or its Affiliates, prior to or during the term of this Agreement or acquired by purchase, license, assignment or other means from third parties prior to or during the term of this Agreement that is not Joint Technology, but only to the extent that Oncogene or its Affiliates is legally entitled to disclose such Technology and technical information and use it in connection with the performance by it of its obligations hereunder. -6- 8 (am) "Parties" shall mean BioChem and Oncogene; and "Party" shall mean any one of them. (an) "Patent Expenses" shall mean all external fees and costs incurred by a Party in financing the activities relating to a Patent Right, including, without limitation, fees and reasonable attorneys' charges in connection with the preparation, filing, prosecution, maintenance and defense of the Patent Rights and translation charges. (ao) "Patent Rights" shall mean all patents and patent applications, including any divisional, continuation, continuation-in-part, reissue, renewal or extension thereof, or substitute therefor, and the letters patent that may be issued thereon, any registration or confirmation of such letters patent, relating to any Technology, Lead Compounds or Commercial Products, their methods of manufacture or uses of intermediates therefor, or formulations thereof. "Oncogene Patent Rights" shall mean Patent Rights claiming inventions that are conceived and reduced to practice solely by employees of Oncogene or its Affiliates. "Joint Patent Rights" shall mean Patent Rights claiming inventions that are conceived or reduced to practice jointly by employees or consultants of Oncogene and employees or consultants of BioChem and of their respective Affiliates. "BioChem Patent Rights" shall mean Patent Rights claiming inventions that are conceived and reduced to practice solely by employees or consultants of BioChem or its Affiliates. (ap) "Person" shall mean any individual, corporation, company, cooperative, partnership, trust, unincorporated association or any other entity which possesses a juridical personality, including any governmental authorities or body of competent jurisdiction; and pronouns when referring to a Person, shall have a similar extended meaning. (aq) "Program Representative" shall mean an employee of a Party designated by such Party as its representative for consultation and communication with the other party. Any Party may change its Program Representative at any time by written notice given to the other Party or designate more than one Program Representative provided that each of its representatives shall be assigned different responsibilities. (ar) "Renewal Period" shall have the meaning ascribed thereto at section 8.1 hereof. (as) "Research Program" shall mean the written research plan annexed hereto as Schedule A, as subsequently revised or replaced by the Joint Steering Committee, which plan describes the research and other obligations to be -7- 9 carried out during each Commitment Year by each of BioChem and Oncogene and their Affiliates. (at) "Secret Information" shall have the meaning ascribed thereto at Section 4.1 hereof. (au) "Submitted License" shall have the meaning ascribed thereto at Section 9.1 hereof. (av) "Target" shall have the meaning ascribed thereto at Section 8.2 hereof. (aw) "Technology" shall mean, collectively, BioChem Technology, Oncogene Technology and Joint Technology. (ax) "Valid Claim" shall mean a claim included among the Joint Patent Rights so long as such claim shall not have been irrevocably abandoned or held invalid in a final decision of a court or other authority of competent jurisdiction. ARTICLE 2 RESEARCH PROGRAM 2.1 General. Subject to the terms and conditions of this Agreement, each of BioChem and Oncogene agrees, as of the Effective Date, to undertake and to cause its Affiliates to undertake, the Research Program and, in the Field, to collaborate in respect thereof. 2.2 Scope. The scope of the Research Program shall comprise the identification, research and development of Lead Compounds derived from BioChem Technology, Oncogene Technology and Joint Technology or which may be contained in any compound library prepared by or on behalf of any Party or to which the Parties and their Affiliates hereto have access to in respect of the Field. The scope of the Research Program shall also comprise any derivatives, or families of derivatives, which may result from the research performed during the term of this Agreement, pursuant to the Research Program and extend to any other antiviral targets identified by the Joint Steering Committee. 2.3 General Obligations of the Parties. During the term of this Agreement, the Parties hereto hereby agree to diligently pursue, and to cause their respective Affiliates to diligently pursue, the Research Program and to do the following: (a) Each of BioChem and Oncogene and/or their respective Affiliates has synthesized and isolated and/or shall continue to synthesize and/or isolate Compounds within the Field. -8- 10 (b) Each of BioChem and Oncogene and/or their respective Affiliates shall provide the other Party with information concerning, and, if required by the JRC, with samples of, Compounds falling within the Field, including those which pass primary screening in order that the other Party may collaborate in the evaluation for potential activity as antiviral agents which target the Field. (c) Each of BioChem and Oncogene shall aid, and shall cause their respective Affiliates to aid, the other Party in the fulfillment of its obligations hereunder, provide structural chemistry analysis and access to combinatorial chemistry technology and scale up potential antiviral Compounds for in vitro and in vivo studies, as well as provide through in vitro and in vivo evaluations, toxicity and mechanisms of action studies in order to select, as promptly as possible, Lead Compounds for development. (d) Each of BioChem and Oncogene shall provide to the other Party access to appropriate discovery technologies. (e) Each of BioChem and Oncogene shall provide to the other Party access, limited for use or access by such other Party in the Field to compound libraries made by it or on its behalf or to which it has access to in connection with the conduct of the Research Program. (f) Each of BioChem and Oncogene shall provide to the other Party access to all Technology within its control or within the control of its Affiliates, including technology licensed from Independent Third Parties to the extent permitted to do so. (g) Each of BioChem and Oncogene shall, and each shall cause its Affiliates to, conduct research and development activities in respect of targets identified by the JSC. (h) BioChem and Oncogene agree, on their behalf and on behalf of their respective Affiliates, (i) to fulfil their respective obligations under, and pursue the goals of, the Research Program and (ii) to perform their responsibilities as outlined in the Research Program or allocated to it by the Joint Steering Committee. (i) Each of BioChem and Oncogene agrees to provide laboratory facilities and equipment and research staff in accordance with the provisions hereof to fulfil its obligations hereunder and to give effect to the intention of the Parties to collaborate in the research and development of Compounds. (j) Oncogene shall provide BioChem and/or its Affiliates with technology transfer and access to technological know how related to existing robotic screening technology, to permit the implementation of necessary screening infrastructures, -9- 11 the whole in accordance with the Technology Transfer and License Agreement to be negotiated diligently and in good faith by the parties and to be annexed hereto as Schedule B. 2.4 Joint Steering Committee. 2.4.1 Purpose. A steering committee (the "Joint Steering Committee" or "JSC") is hereby established by BioChem and Oncogene to manage all business and commercial aspects between the Parties pursuant to this Agreement (including financial planning, resource allocation, prioritization, addition of new targets within the Field), agree upon and assign responsibilities (other than specific scientific tasks) within the Research Program to each Party, approve the annual budgets to be spent by each Party during any Commitment Year and review and monitor work conducted by the Joint Research Committee and to process and approve technical and scientific recommendations of both the JRC and JDC. In particular, the JSC will be responsible, throughout the term of this Agreement, for (i) reviewing the Research Program and revising it as necessary, (ii) for preparing, monitoring and revising on an annual basis the budgets necessary for the performance by the Parties of their obligations pursuant to the Research Program and this Agreement, (iii) monitoring the fulfillment by each Party of its obligations pursuant to this Agreement, (iv) designating any Compounds as Lead Compounds, (v) determining the allocation between the Parties of their resources in connection with the conduct of the Research Program, (vi) designating Development Candidates, (vii) negotiating and soliciting, if appropriate, third parties to collaborate for purposes of conducting the Research Program, (viii) determining on an annual basis the amount, if any, (the "Deficiency Amount") in order that contributions of both Parties during any Commitment Year referred to in Section 2.8 be approximately the same, and (ix) determining the rules and principles applicable for purposes of the accounting and maintenance of books and records by both Parties including harmonization of the Canadian and American GAP. Either Party may in committee propose that the Parties commence development of a promising Lead Compound. 2.4.2 Expansion of Research Program. Save for the first Commitment Year, in which case the Research Program is defined as set out in Schedule A of this Agreement and a general outline in respect of the other Commitment Years, the JSC shall define the Research Program in each Commitment Year and amend, if it deems appropriate, the Field. 2.4.3 Composition. BioChem and Oncogene each shall appoint, in their sole discretion, two (2) members to the JSC. Alternates or replacements of any Party may be appointed by such Party at any time by notice to the other Party. Initially the members shall be: -10- 12 for BioChem: * for Oncogene: * 2.4.4 Voting. Each member of the JSC shall have one vote, and decisions shall be made by unanimity. Where a vote on any decision does not produce a consensus between all members, the matters at issue shall be submitted to the President of BioChem and the Chief Executive Officer of Oncogene for discussion and resolution. 2.4.5 Chair. A Chairperson shall be nominated alternatively by BioChem and Oncogene for one year terms, the first term being served by a nominee appointed by Oncogene. 2.4.6 Meetings. Meetings shall be convened at least two times a year at locations and times determined by a JSC resolution. Representatives of Oncogene, BioChem, or both, in addition to members of each of the Parties on the JSC, may attend meetings but shall have no voting rights. Meetings shall be held alternatively at each Party's facilities. Minutes of each meeting shall, be prepared by a representative of the Parties on an alternate basis and distributed to all members of the JSC within thirty (30) days following any meeting. 2.4.7 Expenses. The Parties will each bear their own expenses and those expenses related to the participation of their appointees of the JSC. 2.5 Joint Research Committee. 2.5.1 Purpose. A research committee (the "Joint Research Committee" or "JRC") is hereby established by BioChem and Oncogene to (i) review and discuss scientific questions which may arise in connection with the execution of the Research Program and scientific inventions, break throughs or developments in the Field made pursuant to the Research Program, (ii) manage and deal with such other responsibilities which may, from time to time, be delegated to it by the Joint Steering Committee, (iii) recommend to the JSC any Compound as Lead Compounds, and (iv) recommend to the JSC any Lead Compounds as Development Candidates. 2.5.2 Composition. BioChem and Oncogene each shall appoint, in their sole discretion, three (3) members to the JRC. Replacements of any Party may be - -------- * This portion redacted pursuant to a request for confidential treatment. -11- 13 appointed by such Party at any time by notice to the other Party. Initially, the members shall be: for BioChem: * for Oncogene: * 2.5.3 Decisions. Any decision of the JRC shall require consensus between all members, failing which the matter of issue shall be submitted to the Joint Steering Committee for discussion and resolution. 2.5.4 Meetings. Meetings of the JRC shall be held at least four times per year at locations and times determined unanimously by the JRC. Minutes of each meeting shall be prepared and distributed to all members of the JRC. 2.5.5 Reports. During the term of this Agreement, each Party shall cause its members of the JRC to prepare and submit to the Joint Steering Committee summary reports within thirty (30) days following the end of each calendar quarter, describing the progress under the Research Program during the preceding calendar quarter and recommending any qualified Compounds to be designated as Lead Compounds. 2.6 Reports. During the term of this Agreement, BioChem and Oncogene each shall provide to the JSC and to the other Party access to primary data derived or used in connection with the performance by it of its obligations hereunder and the following: (a) minutes of each JSC meeting to be distributed within fifteen (15) days of each meeting; (b) on an annual basis and no later than sixty (60) days following the end of each Commitment Year, a statement of all costs and expenses incurred by such Party and its Affiliates pursuant to Section 3.1; and a summary written reports describing the work accomplished under the Research Program and discussing and evaluating the results of such work. 2.7 Laboratory Facilities. BioChem and Oncogene each agree to provide, or cause their respective Affiliates, suitable laboratory facilities and equipment for carrying out its obligations under the Research Program and this Agreement. 2.8 Research Staff. Each of BioChem and Oncogene shall, no later than fifteen (15) days following execution of this Agreement, appoint research team comprised of such - -------- * This portion redacted pursuant to a request for confidential treatment. -12- 14 number of suitably qualified Ph.D. scientists and other suitable qualified scientists and other personnel as may be needed and agreed to between the Parties from time to time each to achieve the goals of the Research Program, it being understood that over the term of this Agreement, each Party shall have contributed, in terms of out-of-pocket expenses incurred by the Parties and their Affiliates (including salaries and such other costs and expenses referred to in Section 3.1 hereof), approximately equally in connection with the performance of their obligations under the Research Program and this Agreement. 2.9 Inspection. BioChem and Oncogene shall each have the right to arrange for its employees, external consultants, and such other persons as it may reasonably delegate, to visit the other Party at its offices and laboratories and to discuss work under the Research Program and its results in detail with the other Party's Program Representative, the staff, and consultants of the other Party; provided that such visits are during normal business hours, have been arranged on not less than five (5) business days notice and shall not unreasonably interrupt the operations of the other Party. 2.10 Patent and Confidential Information Agreements. Each of BioChem and Oncogene shall require all of its employees, all employees of its Affiliates and all independent Third Parties involved in, or associated with the Research Program to have executed an agreement for the assignment of inventions and for the protection of Secret Information in such reasonable form as may from time to time be used by BioChem and Oncogene for such purpose. 2.11 Flexibility. In conducting its research and other obligations under this Agreement, each of BioChem and Oncogene shall have and maintain sufficient flexibility to allow a shift in effort and emphasis within the Research Program that will, in the opinion of the JSC, achieve the best results in the attainment of the objectives of the Research Program. 2.12 Arrangements with Independent Third Parties. Each of BioChem and Oncogene shall have the right to contract with its Affiliates and Independent Third Parties for the performance of work, or the provisions of consulting services, in connection with the Research Program provided that the other Party shall have the opportunity to review, comment on and approve any such proposed contract with Independent Third Parties prior to its execution. Approval of any such contract shall not be unreasonably withheld, and a response to a request for approval shall be provided within thirty (30) days after its receipt by the other Party. Each Party will provide the other Party with a complete copy of each such executed contract. The costs incurred by any of BioChem or Oncogene, as the case may be, in respect of such contract and the work and consultation services to be performed thereunder shall be borne by the Party having contracted with such Affiliate or Independent Third Party. Each Party represents and warrants to the other Party that, as at the date hereof, Schedule C -13- 15 annexed hereto contains a full list of all arrangements with Independent Third Parties relating to Technology and hereby agrees to use its best efforts to obtain consent, where required, to disclose to the other Party such Technology. 2.13 No Independent Research within the Scope of the Research Program. During the term of this Agreement, the Parties to this Agreement shall not undertake independent research, either directly or indirectly through any Affiliate or any other Person, in any area falling within the Field or which competes with any Compound being developed pursuant to this Agreement without the consent of the Joint Steering Committee. 2.14 Other Research Permitted. The Parties and their Affiliates have the right to conduct research on Compounds and use Joint Technology outside the Field, notwithstanding their potential utility in the treatment of illnesses or disorders being the object of the Field, it being understood that any such Party shall not, in the course of such use or conduct, take or omit to take any action which would cause prejudice to the other Party. 2.15 Clinical Data. All clinical data obtained from studies conducted pursuant to the Research Program and the Development Program shall be jointly owned by BioChem and Oncogene and may be used by either Party and its Affiliates outside the Field, it being understood that any such Party shall not, in the course of such use or conduct, take or omit to take any action which would cause prejudice to the other Party or to the Research Program. 2.16 Lead Compounds. Notwithstanding any provision of this Agreement, if a Lead Compound is not designated as a Development Candidate within two (2) years following its designation by the JSC as a Lead Compound, such Lead Compound shall cease to be considered a Compound within the meaning of this Agreement and all rights, title and interest to such Compound shall be returned to the Party having contributed such Compound to the Research Program and the other Party shall cease to have any right in respect of such Compound. ARTICLE 3 COSTS AND EXPENSES OF THE RESEARCH PROGRAM 3.1 Payment of Costs and Expenses. Each Party shall be responsible for all expenses and costs incurred by it and its employees, its Affiliates and its consultants in the performance of such Party's obligations hereunder, including, without limitation, in respect of Patent Expenses relating to its Patent Rights, salaries of its employees, fees of its consultants, materials, equipment and administrative expenses and travel costs of its employees, employees of its Affiliates and consultants. A Party shall reimburse the other Party one-half of the Deficiency Amount within ninety (90) days from the end of any year, except in respect of the first three years of the term of this Agreement where -14- 16 such calculation and payment shall be made for such period within thirty (30) days of the third anniversary date of this Agreement. ARTICLE 4 SECRET INFORMATION 4.1 General. Each of BioChem and Oncogene recognizes that the other Party's Confidential Information, BioChem Technology, Oncogene Technology, Joint Technology and the results of the Research Program (collectively, the "Secret Information") all constitute highly valuable proprietary confidential information. 4.2 Treatment of Secret Information. (a) Subject to the disclosure obligations set forth in this Article 4, each of BioChem and Oncogene agree that, during the term of this Agreement, each Party will maintain, and shall cause its Affiliates to maintain, the Secret Information in confidence and shall not disclose, divulge or otherwise communicate such Secret Information to Independent Third Parties (except its own Confidential Information, or its own Technology), or use it for any purpose except pursuant to, and in order to carry out the terms and objectives of this Agreement. Notwithstanding any provision of an Agreement, BioChem and Oncogene hereby agree that they shall, together with their Affiliates, be entitled to use, outside of the Field, know how obtained during the term of this Agreement (other than any information relating to Lead Compounds). (b) Each Party further agrees to exercise, and shall cause its Affiliates to exercise, every reasonable precaution to prevent and restrain the unauthorized disclosure of such Secret Information by any of its directors, officers, employees, consultants, subcontractors, sublicensees or agents or those of its Affiliates. (c) Each Party shall maintain, and shall cause its Affiliates to maintain, the other Party's Confidential Information in confidence. During the term of this Agreement and for a period of ten (10) years thereafter each Party shall not disclose, divulge or otherwise communicate the other Party's Confidential Information to Independent Third Parties except in the event of an assignment by such Party of its rights hereunder in accordance with the provisions hereof. 4.3 Press Releases and Announcements. (a) Neither Oncogene or BioChem shall, and Oncogene and BioChem shall cause their Affiliates not to, issue any press release or other public announcement relating to or disclosing any Secret Information (other that its own Confidential Information or its own Technology) without the prior written consent of the -15- 17 other Party, except where such announcements or press releases are required by law for the purposes of securing the registration of, and or governmental approval to market, in accordance with this Agreement, any Commercial Products, or for the procurement of patent protection of a Joint Patent Right. Notwithstanding the foregoing, each Party shall have the right to disclose the existence of this Agreement in any prospectus, offering memorandum or other document or filing required by applicable securities laws or other applicable law or regulation. (b) Where a press release or public announcement is required by law, the Party required to disclose Secret Information shall inform the other Party and provide it with a copy of any such press release or public announcement. (c) Each of BioChem and Oncogene shall inform the other Party of any Secret Information which it is required to disclose. 4.4 Contracts with Independent Third Parties. If BioChem or Oncogene or any of their Affiliates, enters into any contract with an Independent Third Party involving disclosure of Secret Information, it shall first obtain the approval of the other Party, and, after signing, provide a copy of such contract to the other Party. 4.5 Publications. Notwithstanding the provisions of Sections 4.1, 4.2 and 4.3, a Party or its Affiliates, following review by the JSC and the JRC, may submit the results obtained in the course of the Research Program for publication subject to the following applicable restrictions: (a) the Party intending to publish, directly or indirectly, shall provide the other Party with a copy of the manuscript (including any abstract) for any proposed publication or presentation no later than thirty (30) days prior to the submission of such proposed publication or presentation to a journal, editor or other Independent Third Party for the purpose of review and comment. The other Party shall have the right to request modifications of any manuscript to be published or presented, if such manuscript will jeopardize a Patent Right, patent, trade secret, or other proprietary right related to this Agreement. If the Party intending to publish does not agree with such modification, the Parties shall consult independent patent counsel satisfactory to both Parties whose determination shall be final and binding on the Parties. (b) If such other Party informs the publishing Party within thirty (30) days of receipt of an advance copy of a proposed publication that such publication in its reasonable judgement could be expected to have material adverse effect on Joint Patent Rights or Secret Information, the publishing Party shall delay or prevent such publication as proposed. In the case of inventions, such Party shall delay or cause the author to delay submission of the work for publication -16- 18 or other public disclosure for up to six (6) months after filing of a patent application. ARTICLE 5 INTELLECTUAL PROPERTY RIGHTS 5.1 General. The following provisions relate to inventions and know how developed, directly or indirectly through Affiliates, by BioChem or Oncogene or BioChem and Oncogene, jointly, during the course of carrying out the Research Program. 5.2 Research. Except for that which arises within or as a result of the Research Program and this Agreement, all Technology, information, data, discoveries and inventions arising and Programs of research carried out by Oncogene and its Affiliates, on the one hand, or by BioChem and its Affiliates, on the other hand, and all intellectual property rights relating thereto shall be the exclusive property of Oncogene or BioChem and their Affiliates, as the case may be, and shall be returned to such Party upon termination of this Agreement, except as provided herein. 5.3 Maintenance of Joint Patent Rights. BioChem and Oncogene shall be jointly responsible for taking all necessary actions to obtain, sustain and enforce patent protection for joint Patent Rights [excluding patent applications outside the Field] and for those inventions arising from the Research Program including, without derogation from the foregoing: (a) filing applications for patents on any patentable inventions included within Joint Patent Rights; provided that any Party wishing to file such application ding reform the other Party and the Joint Steering Committee regarding countries in which such applications should be filed; the JSC shall determine which countries where such applications shall be made; (b) prosecuting all pending and new patent applications included within Joint Patent Rights and responding to opposition or any other form of action for invalidity or revocation of Patent Rights filed by Independent Third Parties against the grant of patents for such applications; and (c) maintaining in force any patents included within Joint Patent Rights by duly filing all necessary papers and paying any fees required by the patent laws of the particular country, in which such patents were granted. Each Party undertakes to provide all necessary assistance to the JSC and the other Party to achieve the objectives of this Section 5.3. Both Parties shall continue, through patent agents, to prosecute and maintain all relevant patent property, including that in the U.S.A. and Canada, relating to Technology within the Field in full -17- 19 consultation with the JSC. Each Party shall keep the other Party informed as to all developments with respect to Joint Patent Rights by copying all documents and correspondence related to such protection and maintenance. If the JSC decides to abandon a patent application or an issued patent included within Joint Patent Rights, any Party whose appointees on the JSC shall have voted against such abandonment shall have the option, at its expense, of continuing to prosecute any such patent application or of keeping the issued patent in force. If a Party so elects to file, at its own expense, patent applications in respect of Joint Patent Rights in countries in which the JSC has elected not to file, such Party shall have the unrestricted right to negotiate licenses with Independent Third Parties in such non-elected countries or exploit it directly. 5.4 Infringement. Each Party shall promptly inform the other Party of any suspected infringement of any Joint Patent Rights. During the term of this Agreement, both Parties shall have the right to institute an action for infringement of the Joint Patent Rights against such Independent Third Party in accordance with the following: (a) both Parties shall institute suit jointly, the suit shall be brought in both their names and the out-of-pocket costs thereof shall be borne equally. Any recovery or settlement received by a Party shall be shared equally. The JSC shall decide upon the manner in which any Party shall exercise control over such action. Any Party may, if it so desires, also be represented by separate counsel of its own selection, the fees for which counsel shall be paid by it. (b) in the absence of agreement to institute a suit jointly, any Party may institute suit, and, at its opinion, name the other Party as a plaintiff. The Party instituting shall bear the entire costs of such litigation, including defending any counterclaims brought against the other Party and paying any judgments rendered against the other Party, and shall be entitled to retain the entire amount of any recovery of settlement. (c) should either Party commence a suit under the provisions of this Section 5.4 and thereafter elect to abandon such suit, the abandoning Party shall give timely notice to the other Party who may, if it so desires, continue prosecution of such suit, provided that the sharing of expenses and any recovery in such suit shall be as agreed upon between both Parties. 5.5 Costs for Applying, Prosecuting and Maintaining. The costs of applying for, prosecuting and maintaining patent applications and patents as specified in Section 5.3 shall be borne equally by BioChem and Oncogene. 5.6 Disclosure of Inventions. Each of BioChem and Oncogene shall promptly inform the other Party of all inventions and Joint Technology that are conceived, made or -18- 20 developed in the course of carrying out the Research Program by its respective employees, its Affiliates or consultants, whether invented solely or jointly with employees of or consultants to the other Party. 5.7 Ownership of Joint Intellectual Property. BioChem and Oncogene shall jointly own the entire right, title and interest in all Technology, patents, know how and other rights in any idea, design, invention, discovery, improvement or other creation, including any Compound, method or apparatus conceived, reduced to practice of developed by BioChem and Oncogene, in the course of the Research Program. The commercial exploitation by BioChem and Oncogene as joint owners of their rights is subject to the provisions of Article 6 of this Agreement. 5.8 Copies of Patent Applications. [Each Party shall provide to the other Party copies of all patent applications for Joint Patent Rights prior to filing, for the purpose of obtaining comments and advice from the other Party's patent advisors and the other Party's approval to so file which approval shall be provided within a reasonable time. Upon the other Party's approval, such Party shall be free to file said patent applications covered by this Agreement. Such Party shall also consult with the other Party on the prosecution of said applications and provide to such Party copies of all documents relating to the prosecution of said applications. Such Party shall provide to the other Party every six (6) months a report detailing the status of all patent applications that are part of Joint Patent Rights.] 5.9 Other Patent Rights. Each Party shall be responsible for taking all necessary actions to obtain, sustain and enforce patent protection for those of its Patent Rights which are not Joint Patent Rights or Patent Rights of the other Party and those outside the scope of the Research Program, including the following: (a) filing applications for such patents on any patentable inventions; (b) prosecuting all pending and new patent applications and responding to opposition or any other form of action for invalidity or revocation or Patent Rights filed by Independent Third Parties against the grant of patents for such application; (c) maintaining in force any patents by duly filing all necessary papers and paying any fees required by the patent legislation of the particular country in which such patents were granted. In the event that a Party institutes suit to protect its own Patent Rights against suspected infringement, it shall notify the other Party who shall, have the option, to be exercised in writing no later than thirty (30) days from receipt of the notice, to elect to assume 50% of all expenses relating to such suit, including attorneys' fees, in which case any recovery or settlement received by the Party having instituted suit shall be -19- 21 shared equally by both Parties. The Party having instituted suit shall have the authority to make all decisions concerning such suit, including without limitation, the right to compromise the claim. 5.10 Indemnification. Each Party (the "Indemnifying Party") shall indemnify the other Party, its directors, officers, employees and consultants (the "Indemnified Party") from and against any and all claims, demands, losses, liabilities, expenses or damages which the Indemnified Party may suffer, pay or incur as a result of claims, demands or suits against the Indemnified Party arising or alleged to arise by reason of or in connection with any and all personal injury and property damage caused or contributed to, in whole or in part, by the Indemnifying Party's actions or infringement. ARTICLE 6 DEVELOPMENT AND COMMERCIALIZATION 6.1 Decision to Commercialize. The Joint Steering Committee has the authority, following recommendation from the JRC, to determine that a Lead Compound is suitable for development and therefore qualifies as a Development Candidate. This authority of the JSC is governed by Section 2.5. No later than thirty (30) days following the determination that the first Compound is suitable for development the Parties shall establish a development committee (the "Joint Development Committee"). 6.2 Commercialization Agreement. Where a Lead Compound has been designated as a Development Candidate, the Parties shall enter into a commercialization agreement (the "Commercialization Agreement") for the development and commercialization of that Compound as soon as possible after the first to occur of the following events: (i) the decision to enter into a full clinical development program as approved by the JSC, or (ii) the beginning of Phase III clinical studies, conducted to support the application for marketing approval of the Development Candidate for an indication. 6.3 Content of Commercialization Agreement. The Commercialization Agreement shall provide that the Parties will jointly exploit any Commercial Products in the Field. The mechanism for commercialization will be negotiated between the Parties through good faith negotiations and shall take into account the respective contributions of the Parties pursuant to Section 2.8 which should, unless agreed to by the Parties, be essentially the same. The Parties agree that they shall both have commercialization rights in the United States of America and Europe and that BioChem shall have the commercialization rights in Canada. The Commercialization Agreement shall provide that rights thereunder may be sublicensed to a third party by mutual agreement of the Parties. -20- 22 6.4 Joint Development Committee. 6.4.1 Purpose. The Joint Development Committee purpose is to manage, agree upon and assign specific responsibilities within the Development Program to each party. The Joint Development Committee will be responsible, throughout the duration of the Development Program, for preparing and reviewing the Development Program and revising it as necessary and will participate in all aspects of the planning and development work carried out on any Development Candidate as well as the information and data generated by that work. The Joint Development Committee shall, when establishing the Development Program, determine the responsibilities of each Party in seeking regulatory approvals and in particular, notwithstanding that the JRC will be responsible for nominating any Lead Compound for full clinical development, and that such nomination will require approval of the JSC. 6.4.2 Composition. BioChem and Oncogene each shall appoint, in their sole discretion, three members to the Joint Development Committee. Replacements of any Party may be appointed by such Party at any time by notice to the other Party. 6.4.3 Voting. Each member of the Joint Development Committee shall have one vote, and decisions shall be made by unanimity. Where a vote on any decision does not produce a consensus between all members, the matters at issue shall be submitted to the President of BioChem and the Chief Executive Officer of Oncogene for discussion and resolution. 6.4.4 Chair. A Chairperson shall be nominated alternatively by BioChem and Oncogene for one year terms, the first term being served by a nominee appointed by BioChem. 6.4.5 Meetings. Meetings shall be convened at least four times a year at locations and times determined by a Joint Development Committee resolution. Representatives of Oncogene, BioChem, or both, in addition to members of each of the Parties on the Joint Development Committee, may attend meetings but shall have no voting rights. Meetings shall be held alternatively at each Party's facilities. 6.4.6 Expenses. The Parties will each bear their own expenses and those expenses related to the participation of their appointees of the Joint Development Committee. 6.5 No Support. If any Party's representatives on the JSC, JRC or the Joint Development Committee declines to support the advancement of a Compound to a Lead Compound stage or a Lead Compound to a development stage for reasons which may include, but -21- 23 are not limited to, the proposed market being outside the scope of its interest or being too small, and the other Party's representatives on the JSC, JRC or the Joint Development Committee support the advancement of said Compound to a Lead Compound stage or of a Lead Compound to a development stage with an objective of commercialization of said Compound, then the JSC, JRC or the Joint Development Committee, as the case may be, shall record a notice (a "Notice of Opportunity") in the minutes of the meeting where the representatives express such positions. For a period of sixty (60) days after the date of such Notice of Opportunity the Parties shall negotiate in good faith to resolve the issue in a mutually agreeable manner. If the Parties are unable to resolve the issue then for a period of one hundred and twenty (120) days thereafter the other Party having supported the advancement of the Compound or the Lead Compound (the "Notifying Party") shall have a first right to undertake worldwide development and commercialization of such Compound or Lead Compound. Upon the Notifying Party exercising such right, such Party shall be granted a worldwide royalty license from the other Party which shall contain usual term and conditions for agreements of that type and provide for the payment by the Notifying Party to the other Party of royalties of * of Net Sales to be paid within thirty (30) days following the end of any calendar quarter. If, at any time, a Party which has commenced development on a Compound or a Lead Compound, halts such development, then the other Party shall have the right to undertake development of said Compound or Lead Compound, under the same mechanism and subject to the same conditions as described in this Section 6.5. ARTICLE 7 OTHER RESEARCH, VENTURES ETC. 7.1 Acquisition of Rights from Third Parties. During the term of this Agreement, BioChem and Oncogene shall promptly notify the other in writing of any and all opportunities to acquire from Independent Third Parties, whether by license, assignment or otherwise, technology or patents which may be useful in, or may relate to, the purposes of the Research Program. BioChem and Oncogene shall work together in a manner mutually agreeable and beneficial to secure technology or patents which they have determined would be useful in or relate to the purpose of the Research Program. Each Party shall (1) inform the other Party of all third party technology or patents that may be useful or relate to the Research Program, (2) solicit the other Party's participation and approval in the formulation and implementation of a strategy for securing such technology or patents and, (3) provide status reports on the progress of such strategy. - -------- * This portion redacted pursuant to a request for confidential treatment. -22- 24 ARTICLE 8 TERM, EXTENSION, TERMINATION AND DISENGAGEMENT 8.1 Term. The initial term (the "Initial Term") of this Agreement shall be five (5) years, commencing on the Effective Date; provided, however, that either Party may terminate this Agreement at any time following the third anniversary of the Effective Date by providing the other Party with one hundred and eighty (180) days' prior written notice. Following the expiration of the Initial Term, this Agreement shall be automatically renewed for additional successive one-year periods (each, a "Renewal Period") unless either Party gives the other notice of its intent not to renew one hundred and twenty (120) days prior to the expiration of the Initial Term or any Renewal Period, as the case may be. 8.2 Events of Termination. The following events shall constitute events of termination (each an "Event of Termination"): (a) Any representation or warranty by BioChem or Oncogene in this Agreement proves incorrect, or inaccurate, in any material respect when made or deemed made as determined by an independent arbitrator and the defaulting Party does not remedy or cure such incorrect on inaccurate representation or warranty within sixty (60) days following written notice from the other Party of such breach. (b) BioChem or Oncogene fails to perform or observe any term of this Agreement or Schedules thereto and such failure remains unremedied for a period of sixty (60) days following written notice thereof from the non-defaulting Party or such longer period if the defaulting Party is diligently taking action to remedy such failure. (c) BioChem or Oncogene makes an assignment for the benefit of its creditors, becomes insolvent, files a petition in bankruptcy, petitions or applies to any tribunal for the appointment of a custodian, receiver or any trustee for it or a substantial part of its assets, or commences any proceeding under any bankruptcy, reorganization, arrangement, readjustment of debt, dissolution or liquidation law or statute of any jurisdiction, whether now or hereafter in effect; or if there has been filed any such petition or application against BioChem or Oncogene, or any such proceeding has been commenced against it, in which an order for relief is entered or which remains undismissed for a period of thirty (30) days or more; or BioChem or Oncogene by any act or omission indicates its consent to, approval of or acquiescence in, any such petition, application or proceeding or order for relief or the appointment of a custodian, receiver or any trustee for it or any substantial part of any of its properties, or is the subject of any such custodianship, receivership or trusteeship that continues undischarged for a period of thirty (30) days or more. -23- 25 (d) BioChem or Oncogene generally fails to pay its debts as such debts become due. (e) Either of BioChem or Oncogene assigns this Agreement and that portion of its business related to the Research Program to a company which sells products or services, which are in the reasonable opinion of the other Party, in direct competition with BioChem or Oncogene. (f) In respect of any Party, if a Person acquires (the "Acquisition") shares of such Party (the "Target"), directly or indirectly, which carry the right to cast, in the aggregate, more than 50% of the votes for the election of directors or, if such Person is, in the reasonable opinion of the Party, a competitor of such other Party, more than 35% of the votes for the election of directors. For purposes of this Section 8.2, a Person shall be deemed to be a competitor or to be in competition if such Person or its Affiliates is, directly or indirectly, considered a biotechnological or pharmaceutical company which carries research and development activities in the Field. ARTICLE 9 CONSEQUENCES OF TERMINATION 9.1 Licenses upon Termination. Where this Agreement is terminated pursuant to Section 8.1, each Party's intellectual property rights shall revert to such Party and the Parties shall execute cross-licensing agreements for any Joint Patent Rights or Joint Technology arising from this Agreement. The Parties shall immediately following the delivery of a notice pursuant to Section 8.1, negotiate in good faith such cross-licensing agreements. If the Parties fail to negotiate and sign cross-licensing agreements before the expiration of a period of one hundred and eighty (180) days following delivery of the notice pursuant to Section 8.1, either Party (the "Electing Party") may, by written notice (the "Notice") accompanied by a Submitted License (as defined hereinafter) at its option offer to the other Party: (i) to have an exclusive worldwide license for the Joint Patent Rights or Joint Technology, the whole in accordance with the terms and conditions of an agreement to be submitted by the Electing Party to the other Party (the "Submitted License"); or (ii) to grant to the other Party (the "Non-Electing Party") an exclusive worldwide license for the Joint Patent Rights or Joint Technology in accordance with the Submitted License. The Non-Electing Party shall have the option to either (i) grant to the Electing Party a worldwide exclusive license for the Joint Patent Rights or Joint Technology in accordance with the terms and conditions of the Submitted License, or (ii) to have an -24- 26 exclusive worldwide license for Joint Patent Rights or Joint Technology in accordance with the terms of the Submitted License. Such election may be made by the Non-Electing Party in writing, addressed to the Electing Party (the "Election Notice") within ninety (90) days following receipt of the Notice, failing which he shall be deemed to have elected to grant the Electing Party a license upon the term of the Submitted License. The Parties shall execute a license based on the Submitted License within six (6) months following receipt by the Electing Party of the Election Notice. 9.2 Termination upon the Occurrence of an Event of Termination. Upon the occurrence of any Event of Termination set forth in Section 8.2, for a period of sixty (60) days from the date of the occurrence of any Event of Termination the Parties shall negotiate in good faith to resolve the issue in a mutually agreeable manner and if the Parties are unable to resolve the issue then the Party not responsible for such Event of Termination may, by notice to the other Party, terminate this Agreement. In the event of any termination by a Party (the "Notifying Party") pursuant to Section 8.2, all information and data, including Joint Technology and Joint Patent Rights, accumulated throughout the term of this Agreement shall become the sole exclusive property of the Notifying Party, and the other Party shall execute and perform all transfers and assignments to the Notifying Party which are required by law. Notwithstanding the foregoing, upon the occurrence of an Event of Termination described in Section 8.2(f), the Party, the shall of which are not being acquired may, at its option, in which case the other Party shall not be considered in default hereunder, (i) require the Target to pay, in which event the Target shall pay, royalties on Net Sales made by such Target and its Affiliates in the amount of * for Commercial Products which where not, at the time of the Acquisition, in Full Development or * for Commercial Products which where, at the time of the Acquisition, in Full Development, and (ii) require the Target to reimburse the other Party for all costs and expenses incurred by such Party in the performance of its obligations under this Agreement in respect of Commercial Products which have not reached Full Development. 9.3 Survival of Obligations: Return of Confidential Information. Notwithstanding any termination of this Agreement, the obligations of the Parties with respect to the protection and non-disclosure of Confidential Information shall survive and continue to be enforceable. Upon any termination of this Agreement, each Party shall promptly return to the other Party all of that other Party's Confidential Information, and all copies thereof. Biochem and Oncogene acknowledge that after termination of this Agreement each Party will be free to use its own Confidential Information and Technology without restriction. - -------- * This portion redacted pursuant to a request for confidential treatment. -25- 27 ARTICLE 10 REPRESENTATIONS AND WARRANTIES Each of BioChem and Oncogene represents and warrants as follows: (a) Good Standing. It is a corporation duly organized, validly existing and is in good standing under the laws of its jurisdiction of incorporation and has all requisite power and authority, corporate or otherwise, to conduct its business as now being conducted, to own, lease and operate its properties and to execute, deliver and perform this Agreement. (b) Proper Authorization. The execution, delivery and performance of this Agreement have been duly authorized by all necessary corporate action and do not and win not (a) require any consent or approval of its stockholders, (b) violate any provision of any law, rule, regulation, order, writ, judgement, injunction, decree, determination or award presently in effect having applicability to it or any provision of its charter or by-laws or (c) result in a breach of or constitute a default under any material agreement, mortgage, lease, license, permit or other instrument or obligation to which it is a party or by which it or its properties may be bound or affected. (c) Binding Agreement. This Agreement is a legal, valid and binding obligation of it enforceable against it in accordance with its terms and conditions, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws, from time to time in effect, affecting creditors' rights generally. (d) Absence of Conflict. It is not under any obligation to any Person, contractual or otherwise, that is conflicting or inconsistent in any respect with the terms of this Agreement or that would impede the diligent and complete fulfillment of its obligations hereunder. (e) Title. Each of BioChem and Oncogene for itself represents it has good and marketable title to or valid leases or licenses for, all of its properties, rights and assets, excluding patent property, to be used in the fulfillment of this responsibilities under the Research Program, subject to no claim of any third party other than the relevant lessors or licensors. -26- 28 ARTICLE 11 COVENANTS 11.1 Affirmative Covenants Other than Reporting Requirements. Throughout the term of this Agreement, each of BioChem and Oncogene shall: (a) comply in all material respects with the requirements of all applicable laws, rules, regulations and orders of any government authority to the extent necessary to conduct the Research Program; (b) maintain and preserve all of its properties, rights and assets to be used in the proper conduct of the Research Program in good working order and condition in accordance with the general practice of other companies of similar size and character; (c) conduct all experiments related to the Research Program and maintain all facilities used in connection therewith in accordance with Medical Research Council Guidelines, where applicable, and with all applicable federal, provincial, and local environmental requirements; (d) pay to the other Party, if any, any Deficiency Amount determined by the JSC. ARTICLE 12 DISPUTE RESOLUTION In the event BioChem and Oncogene cannot agree on any matter requiring agreement between the Parties, the matter of differences shall be determined by arbitration. Arbitration shall be conducted under the Commercial Arbitration Rules of the American Arbitration Association by one (1) person appointed by the Parties or, if the Parties cannot agree within thirty (30) days following notification by one Party that it wishes to refer a matter to arbitration, by such person empowered by the American Arbitration Association to so appoint an arbitrator. Arbitration shall take place in a location agreed to by the Parties, or absent such agreement, chosen by the arbitrator. The decision of the arbitrator shall be final and binding on both Parties. The fees and expenses of the arbitrator shall be borne equally by the Parties. ARTICLE 13 NOTICES Any notice, statement, payment or other document required to be given hereunder shall be in writing and shall be given either personally, by mailing the same, postage prepaid, by certified or registered mail (return receipt requested), in the absence of an actual or apprehended disruption of mail service or delivered by telecopier addressed as follows, or to -27- 29 such other addresses as may be designated from time to time by notice given, in the manner provided in this Article 13. If to BioChem: BioChem Pharma (International) Inc. c/o BioChem Therapeutic Inc. Armand-Frappier Blvd. Laval, Quebec H7V 4A7 Attention: President --------------------- Telecopier: (514) 978-7767 If to Oncogene: Oncogene Science, Inc. 106 Charles Lindbergh Blvd. Uniondale, New York 11553-3649 Attention: Chief Executive Officer ----------------------------------- Telecopier: (516) 745-6429 Notices given personally shall be deemed given as of the date delivered. Notices given by telecopier shall be deemed given on the first business day following the date of transmission. Mailed notices shall be deemed given on the fifth business day following the date of such mailing. ARTICLE 14 MISCELLANEOUS 14.1 Binding Effect. This Agreement shall be binding upon and enure to the benefit of the Parties hereto and their respective legal representatives, successors and permitted assigns. 14.2 Headings. The headings contained in this Agreement are for convenience of reference only and do not form a part of this Agreement, and no construction or inference shall be derived therefrom. 14.3 Entire Agreement. This Agreement and the documents and other agreements referred to herein or signed concurrently herewith set forth the entire agreement and understanding of the Parties. 14.4 Severability. In the event that any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable because it is invalid or in conflict with any law of any relevant jurisdiction, the validity of the remaining provisions shall be -28- 30 construed and enforced as if the Agreement did not contain the particular provisions held to be unenforceable. 14.5 Counterparts. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 14.6 Amendment, Waiver, etc. This Agreement may be amended, modified, superseded or cancelled, and any of the terms hereof may be waived, only by a written instrument executed by each Party hereto or, in the case of waiver, by the Party or Parties waiving compliance. The delay or failure of any Party at any time or times to require performance of any provision hereof shall in no manner affect the rights at a later time to enforce the same. No waiver by any Party of any condition or of the breach of any term contained in this Agreement, whether by conduct or otherwise, in any one or more instance, shall be deemed to be, or construed as, a further or continuing waiver of any such condition or of the breach of such term or any other term of this Agreement. 14.7 Force Majeure. In the event that either Party is prevented from or is unable to perform any of its obligations under this Agreement due to any act of God, fire, casualty, flood, war, strike, lockout, failure of public utilities, injunction of any act, exercise, assertion or requirement of governmental authority, including any governmental law, order, or regulation permanently or temporarily prohibiting or reducing the level of research and development work hereunder, epidemic, destruction or production facilities, riots, insurrection, inability to procure or use materials, labour, equipment, transportation or energy sufficient to meet experimentation needs, or any other cause beyond the reasonable control of the Party invoking this Article 14 if such Party shall have used its best efforts to avoid such occurrence, such Party shall give notice to the other Party in writing promptly, and thereupon the affected Party's performance shall be excused and the time for performance shall be extended for the period of delay or inability to perform due to such occurrence. 14.8 Independent Contractor. Nothing in this Agreement shall be construed as constituting both Parties as partners or joint venturers with respect to this Agreement. Both Parties are independent contractors under this Agreement. 14.9 Assignment and Successors. This Agreement and the rights and interests hereunder may not be assigned by either Party in whole or in part except to an Affiliate, a purchaser of all or substantially all of the assets of a Party or to any successor corporation resulting from any merger or consolidation of either Party with or into such corporation. 14.10 Governing Law. This Agreement shall be construed and interpreted in accordance with the laws of the State of New York. -29- 31 14.11 Language. The Parties hereto have expressly requested that this Agreement and a related documents and notices be drafted in the English language. Les parties aux presentes ont exige, de facon expresse, que la presente convention de meme que tous les documents et avis qui s'y rattachent soient rediges en langue francaise. IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed as a sealed instrument in their names by their properly and duly authorized representatives as of the date first written above. BIOCHEM PHARMA (INTERNATIONAL) INC. By: /s/ Francois Legault ----------------------------------- Francois Legault By: /s/ Michael Grey ----------------------------------- Michael Grey ONCOGENE SCIENCE, INC. By: /s/ Gary E. Frashier ----------------------------------- Gary E. Frashier -30- EX-27 4 FINANCIAL DATA SCHEDULE
5 1 U.S. DOLLARS 3-MOS SEP-30-1997 OCT-01-1996 DEC-31-1996 1 13,293,263 30,730,857 2,633,941 87,974 0 48,341,026 15,828,962 9,262,241 70,524,600 3,128,603 0 0 0 221,844 65,606,773 70,524,600 0 2,314,789 0 5,608,374 6,327 0 629 (2,696,454) 0 0 0 0 0 (2,696,454) (0.12) (0.12)
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