Exhibit 10.1

 

Confidential treatment has been requested for portions of this exhibit. The copy
filed herewith omits the information subject to the confidentiality request.
Omissions are designated as **. A complete version of this exhibit has been
filed separately with the Securities and Exchange Commission.

 

LICENSE AGREEMENT

 

THIS LICENSE AGREEMENT (“Agreement”), originally entered into as of July 16,
1993, (the “Original Effective Date”), as amended and restated effective as of
October 6, 1995 (the “First Amendment Date”), and as further amended and
restated effective as of July 1, 2003 (the “Second Amendment Date”), among THE
TRUSTEES OF COLUMBIA UNIVERSITY IN THE CITY OF NEW YORK, a New York Corporation
(“Columbia”), and COLD SPRING HARBOR LABORATORY, a New York corporation (“Cold
Spring”) (hereinafter collectively referred to as “Licensor”), and PHARMACOPEIA
DRUG DISCOVERY, INC., a Delaware corporation that is the successor to the rights
and obligations hereunder of PHARMACOPEIA, INC. (the “Company”).

 

RECITALS

 

1.                                       The Company has been formed for the
purposes of developing combinatorial chemical libraries for the development of
human pharmaceutical products and methods of preparing and using such libraries
to discover, develop and sell products.

 

2.                                       Licensor is the owner of certain
technology, materials, patents and patent applications relating to combinatorial
chemical libraries and methods of preparing and using the same, and Columbia and
Cold Spring are, respectively, the employers of Dr. W. Clark Still (“Dr. Still”)
and Dr. Michael H. Wigler (“Dr. Wigler”), each of whom is a named inventor on
such patents and patent applications.

 

3.                                       The Company desires to obtain, and
Licensor desires to grant to the Company, a license under the technology,
materials, patents and patent applications of Licensor relating to combinatorial
chemical libraries and methods of preparing and using the same.

 

4.                                       Licensor and the Company have
previously executed and delivered the following prior versions of, and additions
and amendments to, this Agreement: (a) the original Agreement effective July 16,
1993; (b) a letter agreement dated December 12, 1994 (the “December 1994
Amendment”); (c) a letter agreement dated January 23, 1995 (the “January 1995
Amendment”); (d) the amended and restated License Agreement effective October 6,
1995; and (e) the Tolling Agreement effective on or about October 7, 2004, as
amended. The documents referred to in this paragraph 4 are attached hereto as
Exhibit A.

 

5.                                       The parties have executed this
Agreement as of May 23, 2005, to be retroactive to the Second Amendment Date. 
Thus, from and after the Second Amendment Date, this Agreement shall amend and
supersede in full all prior versions, additions and amendments (a) through
(e) identified in paragraph 4 above, and this Agreement shall be applicable to
all matters and actions occurring on or after the Second Amendment Date.

 

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Now, Licensor and the Company agree as follows:

 

1.                                       Definitions.

 

a.                                       “Affiliate” shall mean any corporation
or other business entity that directly or indirectly controls, is controlled by,
or is under common control with, the Company. Control means ownership or other
beneficial interest in 50% or more of the voting stock or other voting interest
of a corporation or other business entity.

 

b.                                      “ECLiPS” is an acronym for “encoded
combinatorial libraries on polymeric support,” and is meant to refer to any
chemical compound prepared by, or on behalf of, the Company using any Licensed
Subject Matter and/or any research programs carried out and involving any use of
Licensed Subject Matter.

 

c.                                       “ECLiPS-enabled Revenues” shall have
the meaning set forth in Section 3.a.(iii) below.

 

d.                                      “Field” shall mean combinatorial
chemical libraries encoded by detachable electrophoric tags and methods of
preparing and using the same.

 

e.                                       “Geographic Area” shall mean all
countries and other territories in the world.

 

f.                                         “ITD Costs” means internal technology
development costs.  “Corporate ITD Costs” and “Pro Rata ITD Costs” are defined
in Section 3.a.(iii) below.

 

g.                                      “Licensed Patents” shall mean the
patents and patent applications, including any division, continuation,
continuation in part, substitute, renewal, reissue, extension, confirmation,
reexamination or registration and any patent issuing thereon, for which the
Company was granted a license as of the Original Effective Date pursuant to the
original Agreement effective July 16, 1993. A list of Licensed Patents as of
May 5, 2005 is attached as Exhibit B.

 

h.                                      “Licensed Products” shall mean any
product or service incorporating, or discovered utilizing, Licensed Subject
Matter.

 

i.                                          “Licensed Materials” shall mean
materials provided by Licensor to the Company relating to the Field, including
any chemical compound or substance.

 

j.                                           “Licensed Subject Matter” shall
mean the Licensed Patents, Licensed Materials and Licensed Technology.

 

k.                                       “Licensed Technology” shall mean any
technology communicated by Licensor to the Company relating to the Field and not
covered by a claim of a Licensed Patent.

 

1.                                       “Net Sales” shall mean all ** charged
by the Company or an Affiliate for the **, **

 

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**. In the case of ** by an Affiliate, Net Sales shall be based upon the greater
of the ** or ** by the Company to a Third Party and the ** or ** by the Company
to the Affiliate.

 

m.                                    “R&D Costs” (“research and development
costs”) are defined in Section 3.a.(iii) below.

 

n.                                      “Sublicensees” shall mean Third Parties
to whom the Company has granted sublicenses under the Licensed Subject Matter.

 

o.                                      “Third Party” shall mean any party other
than (i) Licensor or (ii) the Company.

 

2.                                       License Grant.

 

a.                                       Licensor grants to the Company and its
Affiliates, subject to all the terms and conditions of this Agreement, an
exclusive, worldwide license under the Licensed Subject Matter, with the right
to sublicense, to develop, manufacture, have made, use, sell, rent, or lease
Licensed Products for the term of this Agreement, provided that any Sublicensee
agrees to comply with terms and provisions of this Agreement, where applicable,
and that the Company takes all reasonable steps to safeguard the proprietary
nature of the Licensed Technology in connection with any such sublicense. No
Sublicensee shall have any right to further grant sublicenses. With respect to
any such sublicense: (i) Company shall continue to be responsible to Licensor
for any obligations of Company under this Agreement; (ii) Licensor shall have no
responsibility to any such Sublicensee; and (iii) Company shall be responsible
for enforcing compliance by Sublicensees with applicable provisions of
Section 10.

 

b.                                      All rights granted by Licensor to the
Company under this Section 2 and under this Agreement are subject to the
requirements of 35 U.S.C. §200 et seq. and implementing regulations.

 

3.                                       Royalties and Payments.

 

a.                                       In consideration of the license granted
under Section 2(a) of this Agreement, the Company shall pay to Licensor:

 

(i)                                    non-refundable annual license fees which
shall be payable in accordance with the following schedule:

 

(a)                                 One-hundred thousand dollars ($100,000.00),
in four equal installments of twenty-five thousand dollars ($25,000) each,
during the third and each subsequent year of this Agreement after the Original
Effective Date, payable at the end of each three (3) month period of each such
year. Such annual non-refundable license fees shall be creditable in full
against royalty payments due Licensor from the Company pursuant to
Section 3(a)(ii) and, against payments due Licensor from the Company pursuant to
Section 3(a)(iii) hereof, in each case for the year in which such annual fee is

 

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paid. To the extent any portion of such annual fee has not been so credited,
fifty percent (50%) of the remaining uncredited portion amount shall be
creditable against royalty payments due Licensor from the Company after such
year. For purposes of this Agreement, a “year” means the period from July 1 of a
calendar year through June 30 of the following calendar year.

 

(b)  Licensor and the Company confirm that all the annual license fees set forth
in sub-sections 3.a.(i)(a) through (c) of the version of this Agreement that was
amended and restated effective as of October 6, 1995 have been paid by Company
in their entirety.

 

(ii)                                  a “Direct Payment,” equal to ** percent
(**%) of all Net Sales made by the Company and its Affiliates of Licensed
Products manufactured, used, or sold by the Company and its Affiliates for use
by consumers as a pharmaceutical product or for manufacture into a
pharmaceutical product for use by consumers.

 

(iii)                               a “Pass-Through Payment,” equal to **
percent (**%) of all ECLiPS-enabled Revenues received by the Company and its
Affiliates, net of certain costs, as represented by the following formula, and
as further defined below:

 

Pass-Through Payment = ** * {**},

 

where “*” means “multiplied by.”

 

“ECLiPS-enabled Revenues” means any payments, royalties, milestones, or other
consideration of any kind (collectively, “revenues”), recognized by the Company
and its Affiliates, from a Third Party with respect to any ** by, or on behalf
of, the Company **. If the Company recognizes non-cash ECLiPS-enabled Revenues,
at the Company’s option, but such option to be available only if such non-cash
ECLiPS-enabled Revenues have been recognized pursuant to a bona fide transaction
negotiated at arm’s length, the Company may **. “ECLiPS-enabled Revenues” also
means any revenues recognized by the Company and its Affiliates with respect to
the **. For example, but without limitation, the following would constitute
categories of ECLiPS-enabled Revenues: (I) revenues resulting from ** using
Licensed Subject Matter; (II) subject to the immediately following paragraph,
revenues associated with any ** involved the use of Licensed Subject Matter;
(III) revenues resulting from the ** using Licensed Subject

 

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Matter; or (IV) revenues resulting from the Company’s **. “ECLiPS-enabled
Revenues” shall exclude payments to **, except (a) to the extent that such **
and (b) to the extent, if any, by which the **.

 

For purposes of explanation and clarification of the definition of
“ECLiPS-enabled Revenues,” when the Company enters into a collaborative
agreement with a Third Party involving the use of both (i) Licensed Subject
Matter and (ii) any other technology, ** of such collaborative agreement.
Notwithstanding the preceding sentence, in the event that an **. For purposes of
the preceding sentence, to enable the Licensor to verify non-use of Licensed
Subject Matter, the Company shall allow the Licensor to conduct appropriate
personnel interviews and provide to the Licensor the Company’s written records,
including without limitation laboratory notebooks, publications and
presentations and other relevant materials, as provided under Section 4(e).

 

“Corporate R&D Costs” and “Corporate ITD Costs” mean (I) the Company’s **; and
(II) other ** the Company’s drug discovery, drug optimization and drug
development business. The distinction between “Corporate R&D Costs” and
“Corporate ITD Costs” is that the former are attributable to a ** or program,
while the latter are **. Categories of Corporate R&D Costs and Corporate ITD
Costs include, but are not limited to, **

 

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** Corporate R&D Costs and Corporate ITD Costs do not include any ** costs
accounted for as such in the Company’s financial statements.

 

“Collaboration R&D Costs” are those Corporate R&D Costs charged directly or
apportioned (for example, **) to **. Such “Collaboration R&D Costs” shall
include those expenses normally included as ** for the time period in which the
applicable ECLiPS-enabled Revenues were recognized. “Collaboration R&D Costs”
may also include amounts which were included as ** for a time period during
which, or before, the applicable ECLiPS-enabled Revenues were recognized.

 

In the event that certain Corporate R&D Costs are apportioned to a research
program of the Company that is not currently generating ECLiPS-enabled Revenues,
such R&D Costs may be ** and shall not **. For example, if the Company
identifies an active compound during the course of a research program that is
conducted without sponsorship by a Third Party, the Corporate R&D Costs
apportioned to such program ** in the above formula unless and until the Company
has ** pursuant to the above formula. Whenever any such accrued Corporate R&D
Costs become Collaboration R&D Costs, in no event shall such Collaboration R&D
Costs be applied retroactively to reduce prior ECLIPS-enabled Revenues.

 

“Pro Rata ITD Costs” are those Corporate ITD Costs apportioned to **. The
aggregate percentage of Corporate ITD Costs apportioned to such collaborations,
products or programs shall be equal to the percentage of **. In the event that
certain Corporate ITD Costs are apportioned to a collaboration, product or
program of the Company that is not currently generating ECLiPS-enabled Revenues,
such ITD Costs may be ** pursuant to the above formula. Whenever any such
accrued ITD Costs become Pro Rata ITD Costs, in no event shall such Pro Rata ITD
Costs be applied **. The Company’s internal accounting system will track and
measure Corporate ITD Costs and Pro Rata ITD Costs. For the avoidance of doubt,
Pro Rata ITD Costs shall not include any ITD Costs related to Company **;
provided, however, that in the

 

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event that any such Company research and development program or project reaches
the ** pursuant to the above formula.

 

For the avoidance of doubt, neither Collaboration R&D Costs nor Pro Rata ITD
Costs shall include any ** accounted for as such in the Company’s financial
statements. Further, neither Collaboration R&D Costs nor Pro Rata ITD costs
shall include any costs or expenses of any kind incurred by the Company in
connection with any **.

 

Each Payment Report pursuant to Section 4 below shall specify the amounts of
ECLiPS-enabled Revenues recognized by the Company and its Affiliates during the
applicable period, along with the amounts of Collaboration R&D Costs and Pro
Rata ITD Costs, and shall be certified by an officer of the Company, and the
calculation thereof shall be subject to the review contemplated by Section 4d.
Each Payment Report shall specify the total amount of ECLiPS-enabled Revenues
recognized by the Company and its Affiliates during the applicable period, along
with the total amounts of Collaboration R&D Costs and Pro Rata ITD Costs.
Further, each Payment Report shall specify the amount of ECLiPS-enabled
Revenues, Collaboration R&D Costs and Pro Rata ITD Costs recognized or incurred
(as the case may be) by the Company with respect to each pertinent Third Party.

 

(iv)                              Company shall be obligated upon the terms and
conditions specified to make either a Direct Payment (Section 3(a)(ii)) or a
Pass-Through Payment (Section 3(a)(iii)), as the case may be, with respect to
all transactions involving Licensed Subject Matter as contemplated by Sections
3(a)(ii) and (iii), but not both a Direct Payment and a Pass-Through Payment. If
it is not clear whether a Direct Payment or a Pass-Through Payment is
appropriate in a particular circumstance, the parties shall negotiate in good
faith to resolve the matter.

 

(v)                                 In order to resolve any disagreement among
the parties concerning the amounts of the royalties and/or payments owed by the
Company to the Licensor pursuant to Sections 3 and 4 for the period from the
Original Effective Date until the Second Amendment Date, the Company agrees to
pay the Licensor the amount of one million dollars ($1,000,000) (the “Additional
Payment”). The Additional Payment shall be paid in two installments: a first
installment of five-hundred thousand dollars ($500,000) payable by June 15,
2005, and a second installment of five-hundred thousand dollars ($500,000)
payable by June 15, 2006. The parties agree that the Additional Payment, in view
of the payments already made by the Company under this Agreement, fully
satisfies any and all amounts owed by the Company to the Licensor under this
Agreement for the period from the Original Effective Date until the Second
Amendment Date. In addition, in consideration of the Additional Payment and
other good and valuable consideration, receipt of which is hereby acknowledged,
each of Columbia and Cold Spring, for itself and for its affiliates and
successors, hereby releases, quitclaims, and forever discharges the Company, its
Affiliates and successors (collectively, the “Company Released Parties”), from
any and all claims, losses, demands, or causes of action of any type or nature
whatsoever, known or unknown, suspected or unsuspected, and whether or not
heretofore asserted which either Columbia or Cold Spring ever had, now has or
may hereafter have against the Company

 

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Released Parties or any of them with respect to this Agreement for the period
from the Original Effective Date until the Second Amendment Date. The parties
agree that the payment by the Company of the Additional Payment does not
constitute an admission or acknowledgement by the Company of any incorrect
conduct or practice by the Company with respect to this Agreement. Further, in
consideration of the release provided to the Company Released Parties by
Columbia and Cold Spring, and other good and valuable consideration, receipt of
which is hereby acknowledged, each of the Company Released Parties, for itself
and for its affiliates and successors, hereby releases, quitclaims, and forever
discharges Columbia, Cold Spring and the Affiliates and successors of each of
them (collectively, the “Licensor Released Parties”), from any and all claims,
losses, demands, or causes of action of any type or nature whatsoever, known or
unknown, suspected or unsuspected, and whether or not heretofore asserted which
any Company Released Party ever had, now has or may hereafter have against the
Licensor Released Parties or any of them with respect to this Agreement for the
period from the Original Effective Date until the Second Amendment Date.

 

b.                                      Company shall provide to Licensor copies
of any (i) sublicenses hereunder and (ii) documents defining or governing Third
Party relationships that are expected to or do generate ECLiPS-enabled Revenues,
in conjunction with the Payment Report referred to in Section 4 below. Licensor
shall hold such copies in strict confidence and use them solely to ensure
compliance by Company with the terms of this Agreement.

 

4.                                       Reports and Payments.

 

a.                                       On or before the last business day of
February, May, August, and November of each year of this Agreement, the Company
shall submit to Licensor a written report with respect to the preceding calendar
quarter (the “Payment Report”) stating:

 

(i)                                     Net Sales made by the Company and any
Affiliate during such quarter for Licensed Products;

 

(ii)                                  In the case of transfers or sales of
Licensed Products by the Company to an Affiliate for sale by the Affiliate, Net
Sales made by the Company from the Affiliate and by the Affiliate from its
customers during such quarter;

 

(iii)                               Amounts accruing to the Company from its
Sublicensees during such quarter;

 

(iv)                              Net sales made by Sublicensees during such
quarter; and

 

(v)                                A calculation under Section 3 of the amounts
due to Licensor, making reference to each subsection.

 

b.                                      Simultaneously with the submission of
each Payment Report, the Company shall make payments to Licensor of the amounts
due for the calendar quarter covered by the Payment Report; provided, however,
that any amount due to the Licensor from the Company under this Agreement for
the period beginning on July 2, 2003 and ending on December 31, 2004, and not

 

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yet paid, shall be paid by the Company to the Licensor no later than ten days
after execution of this Agreement by the Licensor.

 

c.                                       Within sixty (60) days following
June 30 of each year of this Agreement, the Company shall submit to the Licensor
a written report with respect to the preceding year under this Agreement (the
“Reconciliation Report”) detailing: (i) the expenditures by the Company during
such year in connection with the development and commercialization of the
Licensed Subject Matter; (ii) the Company’s activities during such year and the
progress toward commercialization of the Licensed Subject Matter and (iii) a
reconciliation of the (1) revenues, (2) collaborative research and development
costs and (3) ITD Costs set forth in the Payment Reports to the corresponding
data set forth in the Company’s financial statements included in its reports
filed with the U.S. Securities and Exchange Commission.  The Company and
Licensor will schedule an annual meeting to be held among them within thirty
(30) days following the above-mentioned sixty (60) day period to discuss the
Reconciliation Report.

 

d.                                      Annual Reconciliation.  After the
conclusion of each year of this Agreement, the Company shall, acting reasonably
and in good faith, determine whether it has made any overpayment or underpayment
of amounts due under Section 3 during the course of such year. Within sixty (60)
days after conclusion of such year, the Company shall notify Licensor
accordingly, and, subject to prior verification by the Licensor of the claimed
overpayment or underpayment (the Company to cooperate reasonably with the
Licensor in making such prior verification), shall add the applicable amount to,
or deduct the applicable amount from, any payment due with a Payment Report
during the following calendar quarter.  If the amount of such an overpayment
exceeds the amount owed by the Company during the following calendar quarter
(such excess, the “Excess Amount”), the Company shall credit this unapplied
overpayment, plus interest as provided below, against future royalty payments
until such time as the total overpayment has been applied.

 

e.                                       The Company shall maintain usual books
of account and records and other relevant materials (including, without
limitation, laboratory notebooks, publications, and presentations) showing its
actions under this Agreement, such as the Company’s use or non-use of Licensed
Subject Matter. Once per calendar year, upon reasonable notice, such books,
records and materials shall be open to inspection and copying, along with access
to supervisory and/or other knowledgeable personnel, during usual business
hours, by an independent certified public accountant to whom the Company has no
reasonable objection, for two years after the calendar quarter to which they
pertain, for purposes of verifying the accuracy of the amounts paid to Licensor
by the Company under this Agreement. The accounting firm shall report to
Licensor only whether there is an error with regard to the royalty payments made
by the Company hereunder and, if so, the amount thereof.

 

f.                                         Notwithstanding anything to the
contrary in this Agreement, and without limiting any of the Company’s or the
Licensor’s rights and remedies hereunder, any payment required hereunder that is
made late (including unpaid portions of amounts due) shall bear simple interest
at the rate of prime plus one percent (1%) per annum, as the prime rate is
reported in The Wall Street Journal from time to time.  Any interest charged or
paid in excess of the maximum rate permitted by applicable law shall be deemed
the result of a mistake, and interest paid in excess of

 

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the maximum rate shall be credited or refunded (at the payor’s option) to the
Company or the Licensor, as applicable.

 

g.                                      All reports and payments provided
pursuant to this Section 4 shall be kept in confidence by Licensor except for
disclosures required by law and made after notice to the other party and after
requesting confidential treatment and a protective order, if available.

 

5.                                       Use for Research Purpose of Licensed
Subject Matter.  Licensor reserves the right to use the Licensed Subject Matter
for non-commercial research purposes and to permit other entities or individuals
to use same for non-commercial research purposes. Licensor shall obtain from all
such entities or individuals an agreement in writing not to use the Licensed
Subject Matter for any commercial purposes and shall inform the Company of the
identity of all such entities or individuals and the manner of their use of the
Licensed Subject Matter.

 

6.                                       Due Diligence.

 

Licensor and the Company confirm that all the due diligence requirements of
Section 6 of the prior versions of this Agreement have been fulfilled in their
entirety.

 

7.                                       Infringement.

 

a.                                       Licensor will protect Licensed Patents
from infringement and prosecute infringers at its own expense when in its sole
judgment such action may be reasonably necessary, proper and justified.

 

b.                                      If the Company shall have supplied
Licensor with written evidence demonstrating prima facie infringement of a claim
of a Licensed Patent, the Company may by notice request Licensor to take steps
to protect the Licensed Patent. Unless Licensor shall within three months of the
receipt of such notice either (i) cause such infringement to terminate or
(ii) initiate legal proceedings against the infringer, the Company may upon
notice to Licensor initiate legal proceedings against the infringer at the
Company’s expense.  In such event the Company may deduct from payments due
hereunder to Licensor its reasonable costs and expenses, including without
limitation legal and experts fees incurred to conduct such proceedings, but in
no event shall any such payments be reduced by more than ** percent of the
amount otherwise due to Licensor hereunder. Any recovery by the Company in such
proceedings shall first be used to reimburse the Company for its reasonable
costs and expenses incurred to conduct such proceedings and next to pay any
amounts withheld from Licensor by the Company under this Section 7 during the
pendency of the proceedings. Any remaining balance shall be **. Any other
provision of this Agreement notwithstanding, other than as provided in this
Section 7b, no amounts payable by the Company pursuant to this Section 7b shall
be recoverable by the Company from the Licensor.

 

c.                                       In the event the Licensor or the
Company shall initiate or carry on legal proceedings to enforce any Licensed
Patent against an alleged infringer, the other parties to this Agreement shall
use their best efforts to cooperate fully with and shall supply all assistance
reasonably requested by the party initiating or carrying on such proceedings. 
The party that

 

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institutes any proceeding to protect or enforce a Licensed Patent shall have
sole control of that proceeding and shall bear the reasonable expenses incurred
by said other parties in providing such assistance and cooperation as is
requested pursuant to this paragraph.

 

8.                                       Patents.

 

a.                                       Licensor will be responsible for
preparing, filing, prosecution and maintaining all Licensed Patents and shall
use patent counsel acceptable to the Company.  All reasonable expenses relating
to the preparation, filing, prosecution and maintenance of Licensed Patents will
be paid by the Company except that the Company may upon sixty (60) days advance
written notice advise Licensor that it no longer wishes to pay such expenses,
whereupon the Licensed Patents for which the Company has given Licensor such
notice shall no longer be Licensed Patents within the scope of this Agreement
and Licensor at its option may either pay such expenses or permit such Licensed
Patents to become abandoned or lapse. Any other provision of this Agreement
notwithstanding, no amounts payable by the Company pursuant to this Section 8a
shall be recoverable by the Company from the Licensor.

 

b.                                      Licensor shall consult with the Company
regarding all activities with respect to prosecution and maintenance of Licensed
Patents, shall provide the Company copies of any documents relating to the
Licensed Patents which will be filed in any patent office for review and comment
at least thirty (30) days prior to the filing of such documents, shall obtain
the Company’s approval with respect to any action concerning the Licensed
Patents, which approval shall not unreasonably be withheld, and shall provide to
the company copies of all office actions and other communications concerning the
Licensed Patents within three (3) weeks after receipt thereof.

 

c.                                       The Company will provide all reasonable
cooperation required by Licensor in the preparation, prosecution and maintenance
of Licensed Patents.

 

d.                                      Licensor shall file patent applications
corresponding to Licensed Patents, or covering subsequent inventions which
became part of the Licensed Subject Matter, in such countries as the Company in
its sole discretion shall select. Should the Company expressly decline to have
patent applications filed in any country, Licensor, at its discretion and
expense may file, prosecute and maintain such patent applications in such
country, which patent application, or patent resulting therefrom, shall not be a
Licensed Patent within the scope of this Agreement but shall be the subject of a
separately negotiated License Agreement should the Company desire rights
thereunder.

 

e.                                       In partial consideration for the
Additional Payment set forth in Section 3.a.(v), Licensor agrees to provide the
Company, on or before June 15, 2005, with a list of all patent applications
currently being prosecuted by Licensor pursuant to sub-section 8(d), above.
Licensor further agrees to provide written notice to the Company within thirty
(30) days after the issuance of any patent prosecuted by Licensor pursuant to
sub-section 8(d), above. In the event Licensor believes that the Company
requires a license under any such issued patent in order to carry out its
business activities, Licensor’s notice to the Company shall state such belief
and the reasons therefor.  Such notice further shall contain an offer to
negotiate a License Agreement

 

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with the Company with respect to the applicable patent.

 

9.                                       Prohibition Against Use of Name.  The
Company will not use the name, insignia, or symbols of Licensor, their faculties
or departments, or any variation or combination thereof, or the name of any
trustee, faculty member, other employee, or student of Licensor for any purpose
whatsoever without Licensor’s prior written consent.

 

10.                                 Compliance with Governmental Obligation.

 

a.                                       Notwithstanding any provisions in this
Agreement,  Licensor disclaims any obligations or liabilities arising under the
license provisions of this Agreement if the Company is charged in a governmental
action for not complying with or fails to comply with governmental regulations
in the course of developing any Licensed Product.

 

b.                                      The Company shall comply, upon
reasonable notice from Licensor, in all material respects with all governmental
requests directed to either Licensor or the Company and provide all information
and assistance necessary to comply with the governmental requests; provided,
however, that the Company shall have the right to contest or defend itself by
all lawful means from compliance with any governmental request which it in good
faith believes is overbroad, improper or injurious to the Company or its
business.

 

c.                                       The Company shall insure that research,
development, and marketing under this Agreement will comply in all material
respects with all government regulations in force and effect including, but not
limited to, federal, state, and municipal legislation; provided, however, that
the Company shall have the right to contest or defend itself by all lawful means
from compliance with any governmental request which it in good faith believes is
overbroad, improper or injurious to the Company or its business.

 

11.                                 Indemnity and Insurance.

 

a.                                       The Company will indemnify and hold
Licensor harmless against any and all actions, suits, claims, demands,
prosecutions, liabilities, costs, and expenses (including reasonable attorneys’
fees) based on or arising out of this Agreement, other than those relating to a
breach of this Agreement by Licensor, including, without limitation, the
manufacture, packaging, use, sale, rental, or lease of Licensed Products, even
if altered for use for a purpose not intended, or use of Licensed Subject Matter
by the Company, its Affiliates, its Sublicensees or its (or their) customers and
any representation made or warranty given by the Company, its Affiliates or
Sublicensees with respect to Licensed Products or Licensed Subject Matter.
Licensor shall consult with the Company respecting the conduct of the defense
and/or any proposed settlement of any such action, suit, claim, demand,
prosecution, liability, cost, and expense (including reasonable attorneys’
fees).

 

b.                                      The Company shall maintain, during the
term of this agreement, comprehensive general liability insurance, including
products liability insurance, with reputable and financially secure insurance
carriers reasonably acceptable to Licensor to cover the activities of the
Company, its Affiliates and its Sublicensees, for minimum limits of $** combined
single

 

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[**]=Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

 

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limit for bodily injury and property damage per occurrence and in the aggregate.
Such insurance shall **. The Company shall furnish a certificate of insurance
evidencing such coverage, with thirty days written notice to Licensor of
cancellation or material change.

 

The Company’s insurance shall be primary coverage; any insurance Licensor may
purchase shall be excess and noncontributory. Such insurance shall be written to
cover claims incurred, discovered, manifested, or made during or after the
expiration of this Agreement.

 

The Company shall at all times comply with all statutory workers’ compensation
and employers’ liability requirements covering its employees with respect to
activities performed under this Agreement.

 

12.                                 Marking.  Prior to the issuance of patents,
the Company and its Affiliates will mark Licensed Products made, sold, or
otherwise disposed of by any of them under the license granted in this Agreement
with the words “Patent Pending”, and following the issuance of one or more
patents, with the numbers of such patents. Company shall use reasonable business
efforts to require that its Sublicensees similarly mark their Licensed Products.

 

13.                                 Representations and Warranties.

 

a.                                       Licensor Warranties.  Licensor, the
Trustees of Columbia University of the City of New York and Cold Spring Harbor
Laboratory jointly and severally represent and warrant that to the best of their
knowledge, (i) they have the full right, power and authority to grant to Company
the license granted in the License Agreement, (ii) they have not previously
granted and shall not grant to any Third Party any rights which are inconsistent
with the rights granted to Company herein or in the License Agreement,
(iii) they have full power to enter into this Agreement, to carry out their
obligations under this Agreement, and to grant the rights granted to Company
herein and in the License Agreement; and (iv) they have fully complied with all
requirements of 35 U.S.C. §200 et seq. and all implementing regulations
necessary to perfect title to the rights and License granted to the Company
herein.

 

b.                                      Company Warranties.  Company warrants
that it has full power to enter into this Agreement and to carry out its
obligations under this Agreement.

 

c.                                       Limited Warranty.  Nothing in this
Agreement shall be construed as a warranty or representation by any party as to
the validity of any Licensed Patent. Nothing in this Agreement shall be
construed as a warranty or representation by any party that anything made, used,
sold, or otherwise disposed of under any license granted under this Agreement is
or will be free from infringement of domestic or foreign patents of Third
Parties.

 

14.                                 Breach and Cure.

 

a.                                       The Company shall be considered to be
in material breach of this Agreement for (i) failure to pay fully and promptly
amounts due pursuant to Section 3 and payable pursuant to Section 4 which are
material to the transactions and payments contemplated by this Agreement

 

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[**]=Certain information on this page has been omitted and filed separately with
the Commission. Confidential treatment has been requested with respect to the
omitted portions.

 

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taken as a whole; or (ii) failure of similar materiality to comply with
governmental requests, subject to Section 10(b).

 

b.                                      Either party shall have the right to
cure its material breach. The cure shall be effected within a reasonable period
of time but in no event later than ninety (90) days after notice of any breach
given by the non-breaching party, unless such default is of such nature that it
cannot reasonably be completely cured within ninety (90) days, in which case
Company shall have the right to cure such default within one hundred eighty
(180) days, provided that Company commences work to cure such default within the
ninety (90) days and thereafter proceeds with reasonable diligence and in good
faith to cure such default. If there exists a good faith dispute as to whether a
material breach has occurred and/or whether a cure has been effected, the
parties shall negotiate in good faith to resolve the dispute promptly. The right
to terminate shall be stayed for up to ninety (90) days while the parties
negotiate to resolve the dispute.

 

15.                               Term of Agreement.

 

a.                                       This Agreement shall be effective as of
the Original Effective Date and shall continue in full force and effect, unless
terminated in accordance with this Section 15, for the later of twenty (20)
years from the Original Effective Date or the expiration of the last to expire
of the Licensed Patents. Thereafter, the Company shall have a paid-up license
under Licensed Technology and Licensed Materials.

 

b.                                      The license granted under this Agreement
may be terminated by Licensor (i) upon thirty (30) days written notice to the
Company for the Company’s material breach of the Agreement and the Company’s
failure to cure such material breach in accordance with Section 14(b), or
(ii) should the Company commit any act of bankruptcy, become insolvent, file a
petition under any bankruptcy or insolvency act or have any such petition filed
against it which is not dismissed within sixty (60) days.

 

c.                                       Upon any termination of this Agreement
pursuant to Section 15(b), all sublicenses granted by the Company under it shall
be assigned to Licensor.

 

16.                               Notices.  Any notice required or permitted to
be given under this Agreement shall be sufficient if sent by certified mail
(return receipt requested), postage pre-paid, if to Licensor, to:

 

 

 

Columbia University Science and Technology Ventures

 

 

80 Claremont Ave. #4F (at 120th St.), Mail Code 9606

 

 

New York, New York 10027

 

 

Attention: Executive Director

 

 

 

copy to:

 

Office of the General Counsel

 

 

Columbia University

 

 

412 Low Memorial Library

 

 

Mail Code 4308

 

 

535 West 116th Street

 

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New York, New York 10027

 

 

Attention: General Counsel

 

 

 

 

 

Cold Spring Harbor Laboratory

 

 

P.O. Box 100

 

 

Cold Spring Harbor, New York 11724

 

 

Attention: Director, Office of Technology Transfer

 

 

 

if to the Company, to:

 

Pharmacopeia Drug Discovery, Inc.

 

 

P.O. Box 5350

 

 

Princeton, NJ 08543-5350

 

 

Attention: Leslie J. Browne, Ph.D.

 

 

 

copy to:

 

James J. Marino, Esq.

 

 

Dechert LLP

 

 

Princeton Pike Corporate Center

 

 

P.O. Box 5218

 

 

Princeton, NJ 08543-5218

 

or to such other address as a party may specify by notice hereunder. Notices
shall be deemed to have been served when delivered.

 

17.                                 Assignment.  This Agreement may not be
assigned without the written consent of the other parties except the Company may
assign this Agreement to a successor in business of all or substantially all of
its assets without the consent of Licensor.

 

18.                                 Governing Law.  This Agreement shall be
governed by New York law applicable to agreements made and to be performed in
New York.

 

19.                                 Severability.  If any provision of this
Agreement shall be found or be held invalid or unenforceable by any court of
competent jurisdiction in any jurisdiction in which this Agreement is being
performed, the remainder of this Agreement shall be valid and enforceable, and
the parties shall negotiate, in good faith, a substitute, valid and enforceable
provision which most nearly effects the parties’ intent in entering into this
Agreement.

 

20.                                 Waiver.  The failure of any party to enforce
at any time the provisions of this Agreement shall in no way be constituted to
be a present or future waiver of such provisions, nor in any way affect the
right of any party to enforce each and every such provision thereafter.

 

21.                                 Counterparts.  This Agreement may be
executed in two or more counterparts, all of which together shall be regarded as
one instrument.

 

22.                                 Entire Agreement.  The terms and conditions
contained herein constitute the entire agreement between the parties and
supersede all previous agreements and understandings, whether oral or written,
between the parties hereto with respect to the subject matter hereof. No

 

15

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change, modification, termination or waiver of this Agreement or any or its
provisions shall be valid unless made in writing and signed by a duly authorized
representative of each party.

 

IN WITNESS THEREOF, Licensor and the Company have caused this Agreement to be
executed by their duly authorized representatives as of the day and year set
forth in Recital 5 above.

 

 

THE TRUSTEES OF COLUMBIA UNIVERSITY
IN THE CITY OF NEW YORK

 

 

 

 

 

By

/s/ Scot G. Hamilton

 

 

Scot G. Hamilton

 

 

Senior Director

 

 

Science & Technology Ventures

 

 

Columbia University Science & Technology Ventures

 

 

 

 

 

COLD SPRING HARBOR LABORATORY

 

 

 

 

 

By

/s/ John Maroney

 

 

John Maroney

 

 

Director, Office of Technology Transfer

 

 

Legal Counsel

 

 

 

 

 

PHARMACOPEIA DRUG DISCOVERY, INC.

 

 

 

 

 

By

/s/ Brian M. Posner

 

 

Brian M. Posner

 

 

Vice-President, Finance

 

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