Exhibit No. 10.2

 

CONFIDENTIAL

 

 

Confidential Materials omitted and filed separately with the
Securities and Exchange Commission.  Asterisks denote omissions.

 

 

RESEARCH COLLABORATION AND LICENSE AGREEMENT

 

among

 

GENAISSANCE PHARMACEUTICALS, INC.,

 

BAYER AG

 

and

 

BAYER HEALTHCARE LLC

 

dated as of January 15, 2003

 

--------------------------------------------------------------------------------

 

Table of Contents

 

 

 

Page

ARTICLE I

DEFINITIONS

 

 

1.1

“Affiliate”

1

 

1.2

“Approved Diagnostic Product”

1

 

1.3

“ASR Product”

2

 

1.4

“Bayer Genetically-Targeted [**] Drug Product”

2

 

1.5

“Bayer IP Rights”

2

 

1.6

“Bayer Know-How”

2

 

1.7

“Bayer Non-[**] Drug Product”

2

 

1.8

“Bayer Other [**] Drug Product”

2

 

1.9

“Bayer Patent Rights”

2

 

1.10

“Bayer Polymorphism”

2

 

1.11

“Bayer Prior IP”

2

 

1.12

“Bayer Resulting IP”

2

 

1.13

“Bayer SADR Polymorphism Association”

3

 

1.14

“Bayer SER Polymorphism Association”

3

 

1.15

“Calendar Quarter”

3

 

1.16

“Candidate Genes”

3

 

1.17

“Clinical Phenotype”

3

 

1.18

“Collaboration”

3

 

1.19

“Collaboration Marker Association”

3

 

1.20

“Collaboration Period”

3

 

1.21

“Collaboration Plan”

3

 

1.22

“Collaboration [**] Haplotype “

4

 

1.23

“Collaboration SADR Haplotype Association”

4

 

1.24

“Collaboration SER HAP™ Marker Association”

4

 

1.25

“Confidential Information”

4

 

1.26

“Control” or “Controlled”

4

 

1.27

“European Union Country(ies)”

4

 

1.28

“First Commercial Use”

4

 

1.29

“FTE”

5

 

1.30

“Genaissance Collaborator”

5

 

1.31

“Genaissance Genetically-Targeted [**] Drug Product”

5

 

1.32

“Genaissance IP Rights”

5

 

1.33

“Genaissance Know-How”

5

 

1.34

“Genaissance Non-[**] Drug Product”

5

 

1.35

“Genaissance Other [**] Drug Product”

5

 

1.36

“Genaissance Patent Rights”

5

 

1.37

“Genaissance Prior IP”

5

 

1.38

“Genaissance Resulting IP”

6

 

1.39

Genaissance SADR Diagnostic Product”

6

 

1.40

Genaissance SER Diagnostic Product”

6

 

1.41

“Gene”

6

 

1.42

“Genetically-Targeted [**] Drug Product”

6

 

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Page

 

1.43

“GNSC SADR HAPTM Marker Association”

6

 

1.44

“GNSC SER HAPTM Marker Association”

6

 

1.45

“HAP™ Builder Software”

6

 

1.46

“HAPTM Database”

6

 

1.47

“Haplotype”

7

 

1.48

“HAPTM Marker”

7

 

1.49

“HAPTM Marker Association”

7

 

1.50

“HAPTM Marker Association Patent Rights”

7

 

1.51

“HAPTM Marker Patent Rights”

7

 

1.52

“HAPTM Technology”

7

 

1.53

“HAP™ Typing Processes”

7

 

1.54

“Home-Brew Product”

7

 

1.55

“Know-How”

8

 

1.56

“Locus”

8

 

1.57

“Marker”

8

 

1.58

“Marker Association”

8

 

1.59

“Net Sales”

9

 

1.60

“Non-[**] Drug Product”

9

 

1.61

“Other Product”

9

 

1.62

“Party”

9

 

1.63

“Patent Prosecution”

9

 

1.64

“Patent Rights”

10

 

1.65

“Polymorphism”

10

 

1.66

“Prior IP”

10

 

1.67

“Product”

10

 

1.68

“Program Manager”

10

 

1.69

“Regulatory Authority”

10

 

1.70

“[**] Trial”

10

 

1.71

“Resulting IP”

10

 

1.72

“Resulting Patent Rights”

10

 

1.73

“ROW Country(ies)”

10

 

1.74

“Royalty-Paying Party”

10

 

1.75

“Royalty-Receiving Party”

10

 

1.76

“SADR”

10

 

1.77

“SADR Clinical Phenotype”

10

 

1.78

“SADR Confirmation Gene”

10

 

1.79

“SADR Diagnostic Product”

11

 

1.80

“SADR Expansion Gene”

11

 

1.81

“SADR Plan”

11

 

1.82

“SADR Study”

11

 

1.83

“SADR Study Term”

11

 

1.84

“SER”

11

 

1.85

“SER Clinical Phenotype”

11

 

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Page

 

1.86

“SER Confirmation Gene”

11

 

1.87

“SER Diagnostic Product”

11

 

1.88

“SER Expansion Gene”

11

 

1.89

“SER Plan”

11

 

1.90

“SER Study”

12

 

1.91

“SER Study Term”

12

 

1.92

“[**]”

12

 

1.93

“[**] Diagnostic Product”

12

 

1.94

“[**] Drug Product”

12

 

1.95

“STRENGTH Trial”

12

 

1.96

“Sublicense Income”

12

 

1.97

“Surrogate Marker”

12

 

1.98

“Territory”

13

 

1.99

“Third Party”

13

 

1.100

“Valid Claim”

13

 

1.101

Additional Definitions

13

ARTICLE II

COLLABORATION

14

 

2.1

SADR Study Management and Responsibilities

14

 

 

2.1.1

SADR Plan

15

 

 

2.1.2

SADR Study Objectives and Responsibilities

15

 

2.2

SER Study Management and Responsibilities

18

 

 

2.2.1

Notice and Timing

18

 

 

2.2.2

SER Plan

18

 

 

2.2.3

SER Study Objectives and Responsibilities

18

 

2.3

Steering Committee.

20

 

 

2.3.1

Formation and Composition

20

 

 

2.3.2

Steering Committee Functions and Powers

21

 

 

2.3.3

Decisions of the Steering Committee

21

 

 

2.3.4

Minutes and Reports

21

 

2.4

Program Managers

21

 

2.5

Regulatory Cooperation

22

 

2.6

Exchange of Prior IP Information

22

 

2.7

Data Access

22

 

2.8

Product Labeling

22

ARTICLE III

GRANTS OF RIGHTS

23

 

3.1

Research Grants

23

 

 

3.1.1

Genaissance Research Grant

23

 

 

3.1.2

Bayer Research Grant

23

 

3.2

Diagnostic Products Grants

23

 

 

3.2.1

Bayer Diagnostic Products License

23

 

 

3.2.2

SER Diagnostic Products Marketing Rights

24

 

 

3.2.3

Genaissance Diagnostic Products Purchase Rights

27

 

 

3.2.4

Genaissance Diagnostic Products License

27

 

iii

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Page

 

3.3

Therapeutic Products Grants

27

 

 

3.3.1

Genaissance [**] Drug Products License

28

 

 

3.3.2

Genaissance Non-[**] Drug Products License

28

 

 

3.3.3

Bayer [**] Drug Products License

28

 

 

3.3.4

Bayer Non-[**] Drug Products License

29

 

3.4

Other Grants

29

 

 

3.4.1

Bayer Other Products License

29

 

 

3.4.2

Genaissance Other Products License

29

 

3.5

Genaissance Right of First Negotiation

29

 

3.6

Term of Licenses

30

 

3.7

Special Sublicensing Rights

30

 

3.8

Non-Suit Covenant with Respect to Selected Products

30

 

 

3.8.1

Genaissance Covenant

30

 

 

3.8.2

Bayer Covenant

30

 

3.9

Unitary Contract; Rights Upon Rejection

31

 

 

3.9.1

Unitary Contract

31

 

 

3.9.2

Rights Upon Rejection

31

 

3.10

Terms of Licenses and Sublicenses Granted by Parties

31

ARTICLE IV

PAYMENTS

32

 

4.1

HAPTM Typing Fee

32

 

4.2

Sequencing Fee

32

 

4.3

Bayer Royalties

32

 

4.4

Genaissance Royalties

36

 

4.5

Royalty Obligation Exception

39

 

4.6

Royalty Terms

39

 

4.7

Late Payments

41

 

4.8

Tax Withholding

41

 

4.9

Blocked Payments

41

 

4.10

Right of Recoupment

42

ARTICLE V

INTELLECTUAL PROPERTY

42

 

5.1

Ownership of Inventions

42

 

 

5.1.1

Genaissance Inventions

42

 

 

5.1.2

Bayer Inventions

42

 

 

5.1.3

Joint Inventions

42

 

 

5.1.4

Assignment

42

 

 

5.1.5

Inventorship

43

 

5.2

Patent Prosecution

43

 

 

5.2.1

General

43

 

 

5.2.2

Genaissance IP Rights

43

 

 

5.2.3

Bayer IP Rights

43

 

 

5.2.4

Costs and Expenses

43

 

 

5.2.5

Cooperation.

44

 

 

5.2.6

Patent Interference and Opposition

45

 

iv

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Page

 

5.3

Third Party Infringement

46

 

 

5.3.1

Notice

46

 

 

5.3.2

Infringement Action

46

 

 

5.3.3

Recoveries

48

 

 

5.3.4

Patent Invalidity Claim

48

 

5.4

Claimed Infringement

48

 

5.5

Patent Marking

48

ARTICLE VI

CONFIDENTIALITY

49

 

6.1

Nondisclosure and Non-Use Obligations

49

 

 

6.1.1

General

49

 

 

6.1.2

Limitations

49

 

6.2

Injunctive Relief

50

 

6.3

Publication

50

ARTICLE VII

REPRESENTATIONS AND WARRANTIES; LIMITATION OF LIABILITY

 

 

7.1

Representations and Warranties of Genaissance

50

 

7.2

Representations and Warranties of Bayer

50

 

7.3

Warranty Disclaimer

51

 

7.4

Disclaimer of Consequential Damages

53

ARTICLE VIII

INDEMNITY

53

 

8.1

Bayer Indemnity Obligations

53

 

8.2

Genaissance Indemnity Obligations

53

 

8.3

Limitation on Indemnity Obligations

53

 

8.4

Procedure

54

 

8.5

Insurance

54

ARTICLE IX

TERM AND TERMINATION

54

 

9.1

Term of Agreement

54

 

9.2

Termination for Material Breach

54

 

9.3

Bankruptcy

55

 

9.4

Effect of Termination

55

 

 

9.4.1

Effect of Termination by Genaissance

55

 

 

9.4.2

Effect of Termination by Bayer

55

 

9.5

Surviving Provisions

55

 

9.6

Security Interest

56

 

9.7

Rights of Secured Party

56

 

9.8

No Encumbrances

56

 

9.9

Further Assurances

57

ARTICLE X

MISCELLANEOUS

57

 

10.1

Force Majeure

57

 

10.2

Assignment

57

 

10.3

Severability

57

 

10.4

Notices

58

 

10.5

Applicable Law

59

 

v

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Page

 

10.6

Dispute Resolution

59

 

10.7

Entire Agreement

59

 

10.8

Publicity

59

 

 

10.8.1

Agreement

59

 

 

10.8.2

Press Release

60

 

10.9

Headings

60

 

10.10

No Partnership; Independent Contractors

60

 

10.11

Exports

60

 

10.12

Waiver

61

 

10.13

Counterparts

61

 

10.14

No Strict Construction

61

 

vi

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Exhibits

 

Exhibit A

Gene Criteria

Exhibit B

[**] Trial

Exhibit C

SADR Clinical Phenotypes

Exhibit D

SADR Study

Exhibit E

SER Clinical Phenotypes

Exhibit F

SER Study

Exhibit G

STRENGTH Trial

Exhibit H

Draft Press Release

 

vii

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RESEARCH DEVELOPMENT COLLABORATION AND LICENSE AGREEMENT

 

THIS RESEARCH COLLABORATION AND LICENSE AGREEMENT (this “Agreement”) is dated as
of January 15, 2003 (the “Effective Date”) and is made by and among BAYER AG, a
German corporation acting through its business area HealthCare having offices at
Bayerwerk, 51368 Leverkusen, Germany, BAYER HEALTHCARE LLC, a Delaware
corporation acting through its Diagnostics Division having offices at 511
Benedict Avenue, Tarrytown, New York 10591 (collectively, “Bayer”) and
GENAISSANCE PHARMACEUTICALS, INC., a Delaware corporation having offices at Five
Science Park, New Haven, Connecticut 06511 (“Genaissance”).

 

INTRODUCTION

 

1.                                       Genaissance has expertise in
discovering markers of genetic variation and correlating such markers with drug
response, and has conducted the STRENGTH Trial (as that term is defined below)
to identify markers correlated with response to atorvastatin calcium (Lipitor
®), pravastatin sodium (Pravachol®), simvastatin (Zocor®) and lovastatin
(Mevacor®).

 

2.                                       Bayer has expertise in discovering,
developing and commercializing diagnostic products and has undertaken the [**]
Trial (as that term is defined below), in which correlations between genetic
variation and the response to [**] have been identified.

 

3.                                       Bayer and Genaissance wish to
collaborate on identifying single nucleotide polymorphisms and haplotypes for
use in developing and marketing [**] Diagnostic Products (as that term is
defined below) and [**] Drug Products (as that term is defined below) for
populations determined by efficacy and safety responses, and developing other
therapeutics for certain disease fields, by using pharmacogenetic findings of
research undertaken by Genaissance and Bayer based upon the STRENGTH Trial and
the [**] Trial.

 

4.                                       Each of Bayer and Genaissance is
willing to grant the other access to such findings, and to collaborate with the
other in analyzing the results of such research, upon the terms and conditions
set forth in this Agreement.

 

NOW THEREFORE, Bayer and Genaissance agree as follows:

 

ARTICLE I

DEFINITIONS

 

For purposes of this Agreement, the terms defined in this Article I shall have
the meanings specified below:

 

1.1                                 “Affiliate”.  Affiliate means any
corporation or other entity which directly or indirectly controls, is controlled
by or is under common control with a Party.  A corporation or other entity shall
be regarded as in control of another corporation or entity if it owns or
directly or indirectly controls more than fifty percent (50%) of the outstanding
voting stock or other ownership interest of the other corporation or entity, or
if it possesses, directly or indirectly, the power to manage, direct or cause
the direction of the management and policies of the corporation or other entity
or the power to elect or appoint fifty percent (50%) or more of the members of
the

 

1

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governing body of the corporation or other entity.  Any such other relationship
as in fact results in actual control over the management, business and affairs
of a corporation or other entity shall also be deemed to constitute control.

 

1.2                                 “Approved Diagnostic Product”.  Approved
Diagnostic Product means a diagnostic product that has received market clearance
under the 510(k) pre-market notification process, pre-market approval or an
equivalent approval from a Regulatory Authority.

 

1.3                                 “ASR Product”.  ASR Product means an in
vitro diagnostic product (a) that contains one or more Analyte Specific Reagents
capable of detecting a specific chemical or biochemical substance in a
biological specimen and (b) whose sale, distribution and use are restricted
under 21 CFR 864.4020 or under similar regulations issued by another Regulatory
Authority.

 

1.4                                 “Bayer Genetically-Targeted [**] Drug
Product”.  Bayer Genetically-Targeted [**] Drug Product means any
Genetically-Targeted [**] Drug Product that is (a) discovered or developed by
Bayer; and (b) for which labeling approved by the applicable Regulatory
Authority indicates that such Product is approved for a population defined by
(i) one (1) or more HAPTM Markers or Collaboration [**] Haplotypes in a
Collaboration Marker Association or (ii) one (1) or more Surrogate Markers of
such markers.

 

1.5                                 “Bayer IP Rights”.  Bayer IP Rights means
all Bayer Prior IP and Bayer Resulting IP.

 

1.6                                 “Bayer Know-How”.  Bayer Know-How means
Know-How that is developed in the conduct of the Collaboration for which Bayer
is designated as the owner pursuant to the provisions of this Agreement.

 

1.7                                 “Bayer Non-[**] Drug Product”.  Bayer
Non-[**] Drug Product means a Non-[**] Drug Product that is discovered or
developed by Bayer with a demonstrable use of Resulting IP.

 

1.8                                 “Bayer Other [**] Drug Product”.  Bayer
Other [**] Drug Product means a [**] Drug Product, other than a Bayer
Genetically-Targeted [**] Drug Product, that is discovered or developed by Bayer
with a demonstrable use of Resulting IP.

 

1.9                                 “Bayer Patent Rights”.  Bayer Patent Rights
means Patent Rights that claim Bayer Know-How.

 

1.10                           “Bayer Polymorphism”.  Bayer Polymorphism means a
Polymorphism evaluated by Bayer in the [**] Trial independently from the
Collaboration and prior to the end of the Collaboration Period.

 

1.11                           “Bayer Prior IP”.  Bayer Prior IP means all
intellectual property that (a) is Controlled by Bayer and developed
independently from the Collaboration prior to the end of the Collaboration
Period and (b) relates to associations between Polymorphisms and Clinical
Phenotypes discovered in the [**] Trial.  For purposes of clarity, any Know-How
developed by Bayer as a result of the analysis of genotyping data that are
generated in the conduct of the [**]

 

2

--------------------------------------------------------------------------------

 

Trial prior to the first Steering Committee meeting (and any related Patent
Rights) shall be considered intellectual property arising from the [**] Trial
and, therefore, Bayer Prior IP, irrespective of whether such analysis occurs
prior to or after the first Steering Committee meeting.

 

1.12                           “Bayer Resulting IP”.  Bayer Resulting IP means
Bayer Know-How and Bayer Patent Rights.

 

1.13                           “Bayer SADR Polymorphism Association”.  Bayer
SADR Polymorphism Association means a correlation, identified by Bayer in the
[**] Trial independently from the Collaboration and prior to the end of the
Collaboration Period, between (a) a Bayer Polymorphism or a combination of such
Polymorphisms and (b) an SADR Clinical Phenotype (whether or not such
Polymorphism or combination is also correlated with an SER Clinical Phenotype).

 

1.14                           “Bayer SER Polymorphism Association”.  Bayer SER
Polymorphism Association means a correlation, identified by Bayer in the [**]
Trial independently from the Collaboration and prior to the end of the
Collaboration Period, between (a) a Bayer Polymorphism or a combination of such
Polymorphisms and (b) an SER Clinical Phenotype, but not an SADR Clinical
Phenoytype.

 

1.15                           “Calendar Quarter”.  Calendar Quarter means each
successive period of three (3) months beginning on the first day of January,
April, July and October.

 

1.16                           “Candidate Genes”.  Candidate Genes means the set
of Genes that (a) are selected by the Steering Committee pursuant to Section
2.1.2(e), (b) are to be analyzed by a Party or by both Parties in the SADR
Study; and (c) are not either SADR Confirmation Genes or SADR Expansion Genes.

 

1.17                           “Clinical Phenotype”.  Clinical Phenotype means
an SADR Clinical Phenotype or an SER Clinical Phenotype, or both.

 

1.18                           “Collaboration”.  Collaboration means those
activities to be undertaken by the Parties in the conduct of the SADR Study and
the SER Study.

 

1.19                           “Collaboration Marker Association”. 
Collaboration Marker Association means a Collaboration SADR Haplotype
Association or a Collaboration SER HAP™ Marker Association or any combination of
such Associations.

 

1.20                           “Collaboration Period”.  Collaboration Period
means the period of time beginning with the Effective Date until the later of
(a) the end of the SADR Study Term, or (b) the end of the SER Study Term, in
each case unless earlier terminated as provided in Article IX.

 

1.21                           “Collaboration Plan”.  Collaboration Plan means
the SADR Plan and the SER Plan.

 

1.22                           “Collaboration [**] Haplotype ”.  Collaboration
[**] Haplotype means a Haplotype discovered by a Party or by both Parties by
means of the custom sequencing work

 

3

--------------------------------------------------------------------------------

 

performed pursuant to this Agreement using DNA from patients that participated
in the [**] Trial.

 

1.23                           “Collaboration SADR Haplotype Association”. 
Collaboration SADR Haplotype Association means a statistically significant (i.e.
p=or < 0.05) correlation, identified by a Party or by both Parties in the
conduct of the SADR Study, between (a)(i) a HAPTM Marker in an SADR Expansion
Gene or a Candidate Gene or a combination of such HAP Markers or (ii) a
Collaboration [**] Haplotype or a combination of such Haplotypes and (b) an SADR
Clinical Phenotype (whether or not such Polymorphism(s) is also correlated with
an SER Clinical Phenotype).

 

1.24                           “Collaboration SER HAP™ Marker Association”. 
Collaboration SER HAP™ Marker Association means a statistically significant
(i.e. p = or < 0.05) correlation, identified by a Party or by both Parties in
the conduct of the SER Study, between (a) a HAPTM Marker, a Collaboration [**]
Haplotype or a combination of such markers and (b) an SER Clinical Phenotype,
but not an SADR Clinical Phenotype.  For purposes of clarity, a Collaboration
SER HAP™ Marker Association shall not include any GNSC SER HAPTM Marker
Association that is confirmed in the SER Study.

 

1.25                           “Confidential Information”.  Confidential
Information means any information, inventions, copyrights, trade secrets, data
or materials, whether patentable or not, received by a Party from the other
Party in connection with the performance of this Agreement.  All Bayer Know-How
and Genaissance Know-How shall be considered Confidential Information of both
Parties.

 

1.26                           “Control” or “Controlled”.  Control or Controlled
means with respect to any compound, biomaterial, information or intellectual
property right, that the applicable party, in whole or in part, owns or has a
license to such compound, biomaterial, information or intellectual property
right and, if applicable, has the ability to grant access, covenant against
suit, or a license (or a sublicense) without violating the terms of any
agreement or other arrangements with any Third Party existing at the time such
party would be first required to grant such access, covenant, license or
sublicense.

 

1.27                           “European Union Country(ies)”.  European Union
Country(ies) shall mean any member state of the European Union as of the
Effective Date.

 

1.28                           “First Commercial Use”.  First Commercial Use
shall mean with respect to a Product the first use or consumption for the
benefit of the general public of a Product in a country; provided, however, that
use related to test marketing, sampling and promotional uses, clinical trial or
other research purposes or compassionate or similar use shall not be considered
or constitute a First Commercial Use, except in the case of research use of a
diagnostic Product or test results obtained therefrom by a Third Party after
purchase of such Product or test results in an arm’s length transaction from a
Party or one of its licensees or distributors.

 

1.29                           “FTE”.  FTE shall mean a full time equivalent
person year (consisting of a total of 1,880 hours per year) of scientific,
technical or managerial work undertaken by a Party with respect to a Product.

 

4

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1.30                           “Genaissance Collaborator”.  Genaissance
Collaborator means any party that is seeking or has obtained a license from
Genaissance to develop a Genetically-Targeted [**] Drug Product.

 

1.31                           “Genaissance Genetically-Targeted [**] Drug
Product”.  Genaissance Genetically-Targeted [**] Drug Product means a
Genetically-Targeted [**] Drug Product that is (a) discovered or developed by
Genaissance and (b) for which labeling approved by the applicable Regulatory
Authority indicates that such Product is approved for a population defined by
(i) one (1) or more HAPTM Markers or Collaboration [**] Haplotypes in a
Collaboration Marker Association or one (1) or more Surrogate Markers of such
markers or (ii) one (1) or more Bayer Polymorphisms in a Bayer SER Polymorphism
Association or a Bayer SADR Polymorphism Association or one (1) or more
Surrogate Markers of such markers.

 

1.32                           “Genaissance IP Rights”.  Genaissance IP Rights
means all Genaissance Prior IP and Genaissance Resulting IP.

 

1.33                           “Genaissance Know-How”.  Genaissance Know-How
means Know-How that is developed in the conduct of the Collaboration for which
Genaissance is designated as the owner pursuant to the provisions of this
Agreement.

 

1.34                           “Genaissance Non-[**] Drug Product”.  Genaissance
Non-[**] Drug Product means a Non-[**] Drug Product that is discovered or
developed by Genaissance with a demonstrable use of Resulting IP.

 

1.35                           “Genaissance Other [**] Drug Product”. 
Genaissance Other [**] Drug Product means a [**] Drug Product, other than a
Genaissance Genetically-Targeted [**] Drug Product, that is discovered or
developed by Genaissance with a demonstrable use of (a) a Collaboration Marker
Association, a Bayer SER Polymorphism Association or a Bayer SADR Polymorphism
Assocation or (b) a HAP Marker, Collaboration [**] Haplotype or Bayer
Polymorphism referenced in such Association.

 

1.36                           “Genaissance Patent Rights”.  Genaissance Patent
Rights means Patent Rights that claim Genaissance Know-How.

 

1.37                           “Genaissance Prior IP”.  Genaissance Prior IP
means all intellectual property that (a) is Controlled by Genaissance and
developed independently from the Collaboration prior to the end of the
Collaboration Period and (b) relates to associations between Polymorphisms and
Clinical Phenotypes discovered in the STRENGTH Trial or (c) relates to HAP™
Markers referenced in a HAP™ Marker Association or in a Collaboration SADR
Haplotype Association; provided, however, that the term Genaissance Prior IP
shall not include intellectual property related to HAPTM Technology.  For
purposes of clarity, any Know-How developed by Genaissance as a result of the
analysis of genotyping data that are generated in the conduct of the STRENGTH
Trial prior to the first Steering Committee meeting (and any related Patent
Rights) shall be considered intellectual property arising from the STRENGTH
Trial and, therefore, Genaissance Prior IP, irrespective of whether such
analysis occurs prior to or after the first Steering Committee meeting.

 

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1.38                           “Genaissance Resulting IP”.  Genaissance
Resulting IP means Genaissance Know-How and Genaissance Patent Rights.

 

1.39                           Genaissance SADR Diagnostic Product”. 
Genaissance SADR Diagnostic Product means an SADR Diagnostic Product that
detects, directly or indirectly, a Marker (or a Surrogate of such Marker)
referenced in a Marker Association for a given SADR Clinical Phenotype with
respect to which the Bayer SADR Diagnostics License has become non-exclusive
pursuant to the terms of Section 3.2.1(b).

 

1.40                           Genaissance SER Diagnostic Product”.  Genaissance
SER Diagnostic Product means an SER Diagnostic Product that detects, directly or
indirectly, a Marker (or a Surrogate of such Marker) referenced in a Marker
Association for a given SER Clinical Phenotype with respect to which the Bayer
SER Diagnostics License has become non-exclusive or has been terminated pursuant
to the terms of Section 3.2.1(b).

 

1.41                           “Gene”.  Gene means a nucleic acid sequence
(including allelic variations thereof) that (a) encodes a designated protein,
and (b) satisfies the criteria set forth in Exhibit A attached hereto.

 

1.42                           “Genetically-Targeted [**] Drug Product”. 
Genetically-Targeted [**] Drug Product means a [**] Drug Product for which
labeling approved by the applicable Regulatory Authority indicates that such
Product is approved for a population defined by Haplotypes or other
Polymorphisms in a Haplotype association or other Polymorphism association.

 

1.43                           “GNSC SADR HAPTM Marker Association”.  GNSC SADR
HAPTM Marker Association means a statistically significant (i.e. p = or < 0.05)
correlation, identified by Genaissance in the STRENGTH Trial, independently from
the Collaboration and prior to the end of the Collaboration Period, between (a)
a HAPTM Marker or a combination of such markers and (b) a SADR Clinical
Phenotype (whether or not such Polymorphism(s) is also correlated with an SER
Clinical Phenotype).

 

1.44                           “GNSC SER HAPTM Marker Association”.  GNSC SER
HAPTM Marker Association means a statistically significant (i.e. p = or < 0.05)
correlation, identified by Genaissance in the STRENGTH Trial, independently from
the Collaboration and prior to the end of the Collaboration Period, between (a)
a HAPTM Marker or a combination of such markers and (b) an SER Clinical
Phenotype, but not an SADR Clinical Phenotype.

 

1.45                           “HAP™ Builder Software”.  HAP™ Builder Software
means the suite of proprietary algorithms used by Genaissance for (a) deriving
the presence and frequency of HAPTM Markers or Haplotypes from a collection of
genotypes of several individual Polymorphisms in a Gene of interest, and (b)
assigning to an individual a pair of the derived HAPTM Markers or Haplotypes for
the Gene.

 

1.46                           “HAPTM Database”.  HAPTM Database means the HAPTM
Markers database maintained by Genaissance.

 

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1.47                           “Haplotype”.  Haplotype means a type of
Polymorphism that consists of an ordered combination of two (2) or more
Polymorphisms present at a Locus on a single chromosome.

 

1.48                           “HAPTM Marker”.  HAPTM Marker means any
Polymorphism or Haplotype that is (a) contained in the HAPTM Database at the
time of exchange of Prior IP pursuant to Section 2.6 or (b) discovered, pursuant
to Article II, in a SADR Expansion Gene, a SER Expansion Gene or a Candidate
Gene, using DNA samples from the Index Repository or from patients that
participated in the STRENGTH Trial.

 

1.49                           “HAPTM Marker Association”.  HAPTM Marker
Association means a GNSC SADR HAPTM Marker Association, a GNSC SER HAPTM Marker
Association, a Collaboration SER HAP™ Marker Association, or any combination of
such Marker Associations.

 

1.50                           “HAPTM Marker Association Patent Rights”.  HAPTM
Marker Association Patent Rights means Patent Rights that claim a HAPTM Marker
Association or the use thereof.

 

1.51                           “HAPTM Marker Patent Rights”.  HAPTM Marker
Patent Rights means Patent Rights that claim a HAPTM Marker or the use thereof.

 

1.52                           “HAPTM Technology”.  HAPTM Technology means the
technology used by Genaissance for the identification or confirmation of
associations between HAPTM Markers and other generic markers and patient
response to a [**] Drug Product.

 

1.53                           “HAP™ Typing Processes”.  HAP™ Typing Processes
means the processes used by Genaissance to assign to an individual a pair of
previously-derived HAPTM Markers or Haplotypes for a Gene of interest; the
processes including (a) selecting a set of informative polymorphic sites from
the total number of sites in a set of previously derived HAPTM Markers or
Haplotypes for that Gene using Genaissance’s proprietary software and Know-How,
(b) genotyping a genomic DNA sample from an individual at the set of informative
polymorphic sites using sequencing or other genotyping platforms installed at
Genaissance (including but not limited to MassARRAY, TaqMan and Pyrosequencing)
and (c) assigning to the individual a pair of HAPTM Markers or Haplotypes from
the genotype for informative polymorphic sites, where the set of informative
polymorphic sites defines (i) the minimal number of polymorphic sites needed to
deduce which of the previously-derived HAPTM Markers or Haplotypes is present in
the individual or (ii) a desired level of genetic diversity in a patient cohort.

 

1.54                           “Home-Brew Product”.  Home Brew Product means
components of an in vitro diagnostic product or test that (a) are sold or
licensed solely to individual laboratories that are certified under the Clinical
Laboratory Improvement Amendments of 1988, as subsequently amended, and
implementing regulations, or their foreign equivalent, if any, for internal use
by such laboratories and (b) have not been approved by applicable Regulatory
Authorities.

 

1.55                           “Know-How”.  Know-How means any information,
inventions, copyrights, trade secrets, regulatory submissions, data or
materials, whether patentable or not, including, without limitation, biological
materials (such as cell lines, DNA, DNA fragments, RNA, RNA fragments,
organisms, proteins, polypeptides, plasmids, vectors, fragments of such
proteins, polypeptides,

 

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PLASMIDS AND VECTORS, AND DERIVATIVES, PROGENY AND VARIANTS OF ALL OF THE
FOREGOING) AND INTELLECTUAL PROPERTY OF ANY KIND, OTHER THAN PATENT RIGHTS.

 

1.56                           “LOCUS”.  LOCUS MEANS A LOCATION ON A CHROMOSOME
CORRESPONDING TO A GENE OR A GENETICALLY-CONTROLLED PHYSICAL OR PHENOTYPIC
FEATURE OF A HUMAN INDIVIDUAL.

 

1.57                           “MARKER”.  MARKER MEANS A HAP™ MARKER OR A
COLLABORATION [**] HAPLOTYPE REFERENCED IN A MARKER ASSOCIATION.

 

1.58                           “MARKER ASSOCIATION”.  MARKER ASSOCIATION MEANS A
HAPTM MARKER ASSOCIATION OR A COLLABORATION SADR HAPLOTYPE ASSOCIATION, OR ANY
COMBINATION OF SUCH MARKER ASSOCIATIONS.

 

1.59                           “NET SALES”.  NET SALES MEANS, WITH RESPECT TO A
PRODUCT, THE GROSS AMOUNT INVOICED BY THE ROYALTY-PAYING PARTY, ITS AFFILIATES
AND/OR ITS SUBLICENSEES ON SALES OR OTHER DISPOSITIONS OF PRODUCTS TO THIRD
PARTIES, LESS THE FOLLOWING DEDUCTIONS:

 

(A)                                  TRADE, CASH AND/OR QUANTITY DISCOUNTS
ACTUALLY ALLOWED AND TAKEN DIRECTLY WITH RESPECT TO SUCH SALES;

 

(B)                                 TARIFFS, DUTIES, EXCISES, SALES TAXES OR
OTHER TAXES IMPOSED UPON AND PAID DIRECTLY BY A PARTY WITH RESPECT TO THE
PRODUCTION, SALE, DELIVERY OR USE OF THE PRODUCT (EXCLUDING NATIONAL, STATE OR
LOCAL TAXES BASED ON INCOME), AS REFLECTED IN THE AMOUNT INVOICED;

 

(C)                                  AMOUNTS REPAID OR CREDITED BY REASON OF
REJECTIONS, DEFECTS, RECALLS OR RETURNS OR BECAUSE OF CHARGEBACKS, REFUNDS,
REBATES OR RETROACTIVE PRICE REDUCTIONS; AND

 

(D)                                 FREIGHT, INSURANCE AND OTHER TRANSPORTATION
CHARGES INCURRED IN SHIPPING A PRODUCT TO THIRD PARTIES, AS REFLECTED IN THE
AMOUNT INVOICED.

 

Such amounts shall be determined from the books and records of the
Royalty-Paying Party, its Affiliates and/or its sublicensees, maintained in
accordance with generally accepted accounting principles, consistently applied. 
In the case of any sale of Products for consideration other than cash, such as
barter or countertrade, Net Sales shall be calculated on the fair market value
of the consideration received.  In the event the Product is sold as part of a
Combination Product, the Net Sales from the Combination Product, for the
purposes of determining royalty payments, shall be determined by multiplying the
Net Sales of the Combination Product during the applicable royalty reporting
period, by the fraction, A/A+B, where A is the average sale price of the Product
when sold separately in finished form and B is the average sale price of the
other product(s) included in the Combination Product when sold separately in
finished form, in each case during the applicable royalty reporting period or,
if sales of both the Product and the other product(s) did not occur in such
period, then in the most recent royalty reporting period in which sales of both
occurred.  In the event that such average sale price cannot be determined for
both the Product and all other products(s) included in the Combination Product,
Net Sales for the purposes of determining royalty payments shall be calculated
by multiplying the Net Sales of the Combination Product by the fraction of C/C+D
where C is the fair market value of the Product and D is the fair market value
of all other product(s) included in the Combination Product.  In such event, the
Royalty-Paying Party shall in good faith make a determination of the respective

 

8

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fair market values of the Product and all other products included in the
Combination Product, and shall notify the Royalty-Receiving Party of such
determination and provide the Royalty-Receiving Party with data to support such
determination.  The Royalty-Receiving Party shall have the right to review such
determination and supporting data, and to notify the Royalty-Paying Party if it
disagrees with such determination.  If the Royalty-Receiving Party does not
agree with such determination and if the Parties are unable to agree in good
faith as to such respective fair market values, then such matter shall be
referred to the Executive Officers.  As used above, the term “Combination
Product” means, in the case of pharmaceutical products, any pharmaceutical
product that consists of a Product and other active compounds and/or active
ingredients and in the case of diagnostic products, a Product that is sold in
combination with one or more of the following:  instrumentation, financing for
instrumentation, instrument service and other diagnostic products.  With respect
to diagnostic products that are Combination Products and are sold or otherwise
disposed of outside of the United States, for any such Combination Product for
which the Royalty-Paying Party as a matter of established policy does not
maintain accounting records to permit the Royalty-Paying Party to determine the
allocation of revenue among such Product and related instrumentation, financing
and/or service, the Royalty-Paying Party shall have the right to deduct [**]
percent ([**]%) of gross revenue with respect to such Product to reflect costs
of such instrumentation, financing and/or service.

 

1.60                           “NON-[**] DRUG PRODUCT”.  NON-[**] DRUG PRODUCT
MEANS A THERAPEUTIC DRUG PRODUCT THAT IS NOT A [**] DRUG PRODUCT.

 

1.61                           “OTHER PRODUCT”.  OTHER PRODUCT MEANS ANY PRODUCT
DEVELOPED WITH A DEMONSTRABLE USE OF RESULTING IP, OTHER THAN A BAYER
GENETICALLY-TARGETED [**] DRUG PRODUCT, A BAYER OTHER [**] DRUG PRODUCT, A BAYER
NON-[**] DRUG PRODUCT, A GENAISSANCE GENETICALLY-TARGETED [**] DRUG PRODUCT, A
GENAISSANCE OTHER [**] DRUG PRODUCT, A GENAISSANCE NON-[**] DRUG PRODUCT, A SADR
DIAGNOSTIC PRODUCT, A SER DIAGNOSTIC PRODUCT, A GENAISSANCE SADR DIAGNOSTIC
PRODUCT OR A GENAISSANCE SER DIAGNOSTIC PRODUCT.

 

1.62                           “PARTY”.  PARTY MEANS BAYER OR GENAISSANCE;
“PARTIES” MEANS BAYER AND GENAISSANCE.

 

1.63                           “PATENT PROSECUTION”.  PATENT PROSECUTION MEANS
ANY OR ALL OF THE ACTIVITIES RELATED TO THE FILING, PROSECUTION, MAINTENANCE AND
EXTENSION OF PATENT RIGHTS IN ONE OR MORE COUNTRIES.

 

1.64                           “PATENT RIGHTS”.  PATENT RIGHTS MEANS (A) ANY
UNITED STATES OR FOREIGN PATENT APPLICATION, (B) ANY UNITED STATES PATENT OR
FOREIGN PATENT ISSUING FROM SUCH PATENT APPLICATION AND (C) ANY CONTINUATION,
CONTINUATION-IN-PART (TO THE EXTENT THE CLAIMS IN SUCH
CONTINUATION-IN-PART-APPLICATION ARE DIRECTED TO SUBJECT MATTER SPECIFICALLY
DESCRIBED IN SUCH PRIOR PATENT APPLICATION), DIVISIONAL, REISSUE,
RE-EXAMINATION, RENEWAL, SUBSTITUTION, ADDITION, EXTENSION, SUPPLEMENTARY
PROTECTION CERTIFICATE OR FOREIGN COUNTERPART THEREOF OF ANY OF THE FOREGOING.

 

1.65                           “POLYMORPHISM”.  POLYMORPHISM MEANS ANY
ALTERNATIVE SEQUENCE FOUND AT A GIVEN POSITION IN A CHROMOSOME WITHIN A
POPULATION INCLUDING, BUT NOT LIMITED TO:  (A) SINGLE NUCLEOTIDE POLYMORPHISMS
(“SNPS”); (B) INSERTIONS AND DELETIONS OF ONE OR MORE NUCLEOTIDES; (C) REPEATS
OF ONE OR MORE NUCLEOTIDES; (D) RESTRICTION FRAGMENT LENGTH POLYMORPHISMS AND
(E) AN ORDERED COMBINATION OF TWO OR MORE OF SUCH POLYMORPHISMS, E.G.,
HAPLOTYPE.

 

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1.66                           “PRIOR IP”.  PRIOR IP MEANS EITHER BAYER PRIOR IP
OR GENAISSANCE PRIOR IP, OR BOTH.

 

1.67                           “PRODUCT”.  PRODUCT MEANS A BAYER
GENETICALLY-TARGETED [**] DRUG PRODUCT, A BAYER OTHER [**] DRUG PRODUCT, A BAYER
NON-[**] DRUG PRODUCT, A GENAISSANCE GENETICALLY-TARGETED [**] DRUG PRODUCT, A
GENAISSANCE OTHER [**] DRUG PRODUCT, A GENAISSANCE NON-[**] DRUG PRODUCT, A SADR
DIAGNOSTIC PRODUCT, A SER DIAGNOSTIC PRODUCT, A GENAISSANCE SADR DIAGNOSTIC
PRODUCT, A GENAISSANCE SER DIAGNOSTIC PRODUCT AND/OR AN OTHER PRODUCT.

 

1.68                           “PROGRAM MANAGER”.  PROGRAM MANAGER MEANS THE
RESEARCH SCIENTIST APPOINTED BY A PARTY TO SERVE AS SUCH PARTY’S PRINCIPAL
COORDINATOR AND LIAISON FOR THE COLLABORATION.

 

1.69                           “REGULATORY AUTHORITY”.  REGULATORY AUTHORITY
MEANS (A) THE UNITED STATES FOOD AND DRUG ADMINISTRATION OR ANY SUCCESSOR AGENCY
WITH RESPONSIBILITIES COMPARABLE TO THOSE OF THE UNITED STATES FOOD AND DRUG
ADMINISTRATION, OR (B) A REGULATORY AUTHORITY OR AGENCY OF A COUNTRY OTHER THAN
THE UNITED STATES WITH RESPONSIBILITIES COMPARABLE TO THOSE OF THE UNITED STATES
FOOD AND DRUG ADMINISTRATION.

 

1.70                           “[**] TRIAL”.  [**] TRIAL MEANS THE STUDY
UNDERTAKEN BY BAYER AS DESCRIBED IN EXHIBIT B TO THIS AGREEMENT.

 

1.71                           “RESULTING IP”.  RESULTING IP MEANS THE BAYER
RESULTING IP AND THE GENAISSANCE RESULTING IP.

 

1.72                           “RESULTING PATENT RIGHTS”.  RESULTING PATENT
RIGHTS MEANS BAYER PATENT RIGHTS AND GENAISSANCE PATENT RIGHTS.

 

1.73                           “ROW COUNTRY(IES)”.  ROW COUNTRY(IES) MEANS A
COUNTRY OTHER THAN [**].

 

1.74                           “ROYALTY-PAYING PARTY”.  ROYALTY-PAYING PARTY
MEANS THE PARTY PAYING ROYALTIES PURSUANT TO SECTION 4.3 OR SECTION 4.4.

 

1.75                           “ROYALTY-RECEIVING PARTY”.  ROYALTY-RECEIVING
PARTY MEANS THE PARTY TO WHOM ROYALTIES ARE PAID PURSUANT TO SECTION 4.3 OR
SECTION 4.4.

 

1.76                           “SADR”.  SADR MEANS A [**] ADVERSE DRUG REACTION.

 

1.77                           “SADR CLINICAL PHENOTYPE”.  SADR CLINICAL
PHENOTYPE MEANS A TYPE OF ADVERSE EVENT FOLLOWING THE ADMINISTRATION OF A [**]
DRUG PRODUCT, AS SELECTED FROM THE TYPES LISTED ON EXHIBIT C.

 

1.78                           “SADR CONFIRMATION GENE”.  SADR CONFIRMATION GENE
MEANS A GENE IN THE SET OF GENES TO BE ANALYZED BY A PARTY OR BY BOTH PARTIES IN
THE SADR STUDY THAT CONTAINS (A) A HAPTM MARKER THAT IS A PART OF A GNSC SADR
HAPTM MARKER ASSOCIATION, AND (B) IS NOT A SADR EXPANSION GENE.

 

1.79                           “SADR DIAGNOSTIC PRODUCT”.  SADR DIAGNOSTIC
PRODUCT MEANS A [**] DIAGNOSTIC PRODUCT THAT DETECTS DIRECTLY OR INDIRECTLY (A)
ONE (1) OR MORE HAPTM MARKERS OR COLLABORATION [**] HAPLOTYPES REFERENCED IN A
GNSC SADR HAPTM MARKER ASSOCIATION OR A COLLABORATION

 

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SADR HAPLOTYPE ASSOCIATION OR (B) ONE (1) OR MORE SURROGATE MARKERS OF THE
MARKERS REFERENCED IN SUBSECTION (A), WHETHER OR NOT SUCH SADR DIAGNOSTIC
PRODUCT ALSO DETECTS DIRECTLY OR INDIRECTLY (I) ONE (1) OR MORE HAP™ MARKERS
REFERENCED IN A GNSC SER HAP™ MARKER ASSOCIATION OR A COLLABORATION SER HAP™
MARKER ASSOCIATION OR (II) ONE (1) OR MORE SURROGATE MARKERS OF THE MARKERS
REFERENCED IN SUBSECTION (I).

 

1.80                           “SADR EXPANSION GENE”.  SADR EXPANSION GENE MEANS
A GENE IN THE SET OF GENES TO BE ANALYZED BY A PARTY OR BY BOTH PARTIES IN THE
SADR STUDY THAT CONTAINS A BAYER POLYMORPHISM THAT IS A PART OF A BAYER SADR
POLYMORPHISM ASSOCIATION.

 

1.81                           “SADR PLAN”.  SADR PLAN MEANS THE PLAN FOR THE
SADR STUDY SET FORTH ON EXHIBIT D TO THIS AGREEMENT, AS SUCH PLAN MAY BE
MODIFIED FROM TIME TO TIME PURSUANT TO SECTION 2.1.1.

 

1.82                           “SADR STUDY”.  SADR STUDY MEANS THE STUDY TO BE
UNDERTAKEN BY THE PARTIES PURSUANT TO SECTION 2.1.

 

1.83                           “SADR STUDY TERM”.  SADR STUDY TERM MEANS THE
PERIOD COMMENCING UPON THE EFFECTIVE DATE AND ENDING ON THE EARLIER OF (A)
DELIVERY OF THE FINAL SADR STUDY REPORT PURSUANT TO SECTION 2.1.2(G) OR (B) THE
TERMINATION OF THIS AGREEMENT PURSUANT TO ARTICLE IX.

 

1.84                           “SER”.  SER MEANS A [**] EFFICACY RESPONSE.

 

1.85                           “SER CLINICAL PHENOTYPE”.   SER CLINICAL
PHENOTYPE MEANS A TYPE OF EFFICACY ENDPOINT FOLLOWING THE ADMINISTRATION OF A
[**] DRUG PRODUCT, AS SELECTED FROM THE TYPES LISTED ON EXHIBIT E.

 

1.86                           “SER CONFIRMATION GENE”.  SER CONFIRMATION GENE
MEANS A GENE IN THE SET OF GENES TO BE ANALYZED BY A PARTY OR BY BOTH PARTIES IN
THE SER STUDY, THAT CONTAINS A HAPTM MARKER THAT IS A PART OF A GNSC SER HAPTM
MARKER ASSOCIATION.

 

1.87                           “SER DIAGNOSTIC PRODUCT”.  SER DIAGNOSTIC PRODUCT
MEANS A [**] DIAGNOSTIC PRODUCT THAT DETECTS DIRECTLY OR INDIRECTLY (A) ONE (1)
OR MORE HAPTM MARKERS REFERENCED IN A GNSC SER HAPTM MARKER ASSOCIATION OR A
COLLABORATION SER HAP™ MARKER ASSOCIATION OR (B) ONE (1) OR MORE SURROGATE
MARKERS OF THE MARKERS REFERENCED IN SUBSECTION (A), BUT DOES NOT DETECT (I) ONE
(1) OR MORE HAP™ MARKERS OR COLLABORATION [**] HAPLOTYPES REFERENCED IN A GNSC
SADR HAP™ MARKER ASSOCIATION OR A COLLABORATION SADR HAPLOTYPE ASSOCIATION OR
(II) ONE (1) OR MORE SURROGATE MARKERS OF THE MARKERS REFERENCED IN SUBSECTION
(I).

 

1.88                           “SER EXPANSION GENE”.  SER EXPANSION GENE MEANS A
GENE IN THE SET OF GENES TO BE ANALYZED BY A PARTY OR BY BOTH PARTIES IN THE SER
STUDY, THAT (A) CONTAINS A BAYER POLYMORPHISM THAT IS A PART OF A BAYER SER
POLYMORPHISM ASSOCIATION, AND (B) IS NOT AN SER CONFIRMATION GENE.

 

1.89                           “SER PLAN”.  SER PLAN MEANS THE PLAN FOR THE SER
STUDY SET FORTH IN EXHIBIT F TO THIS AGREEMENT, AS SUCH PLAN MAY BE MODIFIED
FROM TIME TO TIME PURSUANT TO SECTION 2.2.2.

 

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1.90                           “SER STUDY”.  SER STUDY MEANS THE STUDY TO BE
UNDERTAKEN BY THE PARTIES PURSUANT TO SECTION 2.2.

 

1.91                           “SER STUDY TERM”.  SER STUDY TERM MEANS THE
PERIOD COMMENCING UPON THE GIVING OF NOTICE BY THE STEERING COMMITTEE PURSUANT
TO SECTION 2.2.1 AND ENDING ON THE EARLIER OF (A) DELIVERY OF THE FINAL SER
STUDY REPORT PURSUANT TO SECTION 2.2.3(E) OR (B) THE TERMINATION OF THIS
AGREEMENT PURSUANT TO ARTICLE IX.

 

1.92                           “[**]”.  [**] MEANS A THERAPEUTIC COMPOUND THAT
[**].

 

1.93                           “[**] DIAGNOSTIC PRODUCT”.  [**] DIAGNOSTIC
PRODUCT MEANS ANY PRODUCT OR SERVICE THAT IS INTENDED FOR USE IN THE PROGNOSIS
OF AN INDIVIDUAL’S RESPONSE TO A [**] DRUG PRODUCT.

 

1.94                           “[**] DRUG PRODUCT”.  [**] DRUG PRODUCT MEANS A
THERAPEUTIC DRUG PRODUCT THAT (A) COMPRISES A [**] AND (B) IS APPROVED FOR
TREATING INDIVIDUALS WITH [**].

 

1.95                           “STRENGTH TRIAL”.  STRENGTH TRIAL MEANS THE STUDY
UNDERTAKEN BY GENAISSANCE AS DESCRIBED IN EXHIBIT G TO THIS AGREEMENT.

 

1.96                           “SUBLICENSE INCOME”.  SUBLICENSE INCOME MEANS
[**] RECEIVED FROM SUBLICENSEES OF A PARTY IN CONNECTION WITH A GRANT OF RIGHTS
PURSUANT TO ARTICLE III BY SUCH PARTY, EXCLUDING (A) [**], (B) [**], (C) [**],
AND (D) [**].  IF NON-MONETARY CONSIDERATION IS SO RECEIVED, THEN [**].

 

1.97                           “SURROGATE MARKER”.  SURROGATE MARKER MEANS ANY
BIOMOLECULE (INCLUDING BUT NOT LIMITED TO POLYMORPHISMS, PROTEINS, SUGARS AND
LIPIDS) OR CHEMICAL COMPOUND (INCLUDING BUT NOT LIMITED TO DRUGS AND METABOLITES
THEREOF), WHERE THE ABSENCE, PRESENCE OR QUANTITY OF SUCH BIOMOLECULE OR
CHEMICAL COMPOUND IN AN INDIVIDUAL IS MEASURABLE OR CORRELATED TO A
STATISTICALLY ROBUST DEGREE WITH ONE OR MORE HAPTM MARKERS, COLLABORATION [**]
HAPLOTYPES OR BAYER POLYMORPHISMS REFERENCED IN A GNSC SADR HAPTM MARKER
ASSOCIATION, COLLABORATION SADR HAPLOTYPE ASSOCIATION, GNSC SER HAPTM MARKER
ASSOCIATION, COLLABORATION SER HAP™ MARKER ASSOCIATION, BAYER SER POLYMORPHISM
ASSOCIATION OR BAYER SADR POLYMORPHISM ASSOCIATION, UNLESS SUCH BIOMOLECULE WAS
INDEPENDENTLY IDENTIFIED AS BEING CORRELATED WITH THE UNDERLYING CLINICAL
PHENOTYPE WITHOUT USE OF INFORMATION RELATING TO SUCH HAP™ MARKERS OR
COLLABORATION [**] HAPLOTYPES OR THE RELATED MARKER ASSOCIATIONS.

 

1.98                           “TERRITORY”.  TERRITORY MEANS ALL COUNTRIES OF
THE WORLD.

 

1.99                           “THIRD PARTY”.  THIRD PARTY MEANS ANY ENTITY
OTHER THAN THE PARTIES OR THEIR RESPECTIVE AFFILIATES.

 

1.100                     “VALID CLAIM”.  VALID CLAIM MEANS EITHER (A) A CLAIM
OF A PENDING PATENT APPLICATION WHICH CLAIM WAS FILED IN GOOD FAITH AND HAS NOT
BEEN ABANDONED OR FINALLY DISALLOWED WITHOUT THE POSSIBILITY OF APPEAL OR
RE-FILING OF SAID PATENT APPLICATION OR (B) A CLAIM OF AN ISSUED AND UNEXPIRED
PATENT WHICH HAS NOT BEEN HELD PERMANENTLY REVOKED, UNENFORCEABLE OR INVALID BY
A DECISION OF A COURT OR OTHER GOVERNMENTAL AGENCY OF COMPETENT JURISDICTION,
UNAPPEALABLE OR UNAPPEALED WITHIN THE TIME ALLOWED FOR APPEAL.  NOTWITHSTANDING
THE FOREGOING, IF A CLAIM OF A PATENT APPLICATION HAS NOT ISSUED AS A CLAIM OF
AN ISSUED PATENT WITHIN THE PATENT RIGHTS WITHIN [**] ([**]) YEARS AFTER THE
FILING DATE FROM WHICH SUCH CLAIM TAKES PRIORITY, SUCH PENDING CLAIM

 

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SHALL CEASE TO BE A VALID CLAIM FOR PURPOSES OF THIS AGREEMENT UNLESS AND UNTIL
SUCH CLAIM BECOMES AN ISSUED CLAIM OF AN ISSUED PATENT WITHIN THE PATENT RIGHTS.

 

1.101                     ADDITIONAL DEFINITIONS.  EACH OF THE FOLLOWING
DEFINITIONS IS SET FORTH IN THE SECTION OF THIS AGREEMENT INDICATED BELOW:

 

Defined Term

 

Section

Agreement

 

Preamble

Average Selling Price

 

3.2.2(c)

Bankruptcy Code

 

3.9.1

Bayer

 

Preamble

Bayer Inventions

 

5.1.2

Bayer SADR Diagnostic License

 

3.2.1(a)

Bayer SER Diagnostic License

 

3.2.1(a)

Blocking IP

 

4.6(b)

Breaching Party

 

9.2.

Collateral

 

9.6

Combination Product

 

1.59

Contract Year

 

3.2.2(b)

Effective Date

 

Preamble

Excluded Bayer Obligations

 

3.10

Excluded Genaissance Obligations

 

3.10

Exons

 

Exhibit A

Exon/Intron Junction

 

Exhibit A

Filings

 

9.6

Final SADR Study Report

 

2.1.2(g)

Final SER Study Report

 

2.2.3(e)

Genaissance Inventions

 

5.1.1

Genaissance

 

Preamble

Genaissance SADR Diagnostic License

 

3.2.4(a)

Genaissance SER Diagnostic License

 

3.2.4(a)

HAP™ Typing Fee

 

4.1

Indemnitee

 

8.4

Indemnitor

 

8.4

Index Repository

 

Exhibit A

Introns

 

Exhibit A

Invalidity Claim

 

5.3.4

Joint Inventions

 

5.1.3

List of Candidate Diagnostic Polymorphisms

 

3.2.1©

Manufacturing Fee

 

3.2.2(b)

Non-Breaching Party

 

9.2.2

Obligations

 

9.6

Party Representatives

 

10.6

Preliminary SADR Study Report

 

2.1.2(g)

Preliminary SER Study Report

 

2.2.3(e0

 

13

--------------------------------------------------------------------------------

 

Defined Term

 

Section

Projected Test Quantity N1

 

3.2.2(b)

Projected Test Quantity N2

 

3.2.2(b)

Promoter

 

Exhibit A

Purchase Price

 

3.2.2(a)

Purchase Shortfall Payment

 

3.2.2(b)

Quantity Sold

 

3.2.2(c)

Royalty Payment

 

3.2.2(a)

Royalty Shortfall Payment

 

3.2.2(b)

Royalty Term

 

4.6(a)

SEC

 

10.8.1

SNPs

 

1.65

SADR Discovery Cohort

 

2.1.2(c)(i)

SADR Validation Cohort

 

2.1.2(c)(i)

SER Discovery Cohort

 

2.2.3(c)(i)

SER Validation Cohort

 

2.2.3(c)(i)

Start Date

 

3.2.2(b)

[**]–Specific SER Diagnostic Product

 

3.2.2(a)

Steering Committee

 

2.3.1

Test Fee

 

3.2.2(b)

Third Party Claim

 

5.4

Third Party Payments

 

4.6(b)

Three-Prime Untranslated Region

 

Exhibit A

 

ARTICLE II

COLLABORATION

 

2.1                                 SADR STUDY MANAGEMENT AND RESPONSIBILITIES.

 

2.1.1                        SADR PLAN.  THE PARTIES SHALL UNDERTAKE THE SADR
STUDY IN ACCORDANCE WITH THIS ARTICLE II AND THE SADR PLAN, WHICH THE STEERING
COMMITTEE SHALL PROVIDE TO THE PARTIES WITHIN SIXTY (60) DAYS AFTER THE
EFFECTIVE DATE, SUCH PLAN TO BE APPENDED HERETO AS EXHIBIT D.  THE PROGRAM
MANAGERS SHALL REVIEW THE SADR PLAN ON AT LEAST A MONTHLY BASIS AND SUBMIT ANY
PROPOSED UPDATES OR AMENDMENTS TO THE STEERING COMMITTEE FOR ITS APPROVAL, AS
WELL AS PROPOSED REVISED RESEARCH GOALS.  ANY SUCH UPDATES OR AMENDMENTS OR
REVISED RESEARCH GOALS SHALL NOT BECOME EFFECTIVE UNTIL APPROVED BY THE STEERING
COMMITTEE.  THE STEERING COMMITTEE SHALL REVIEW AND CONSIDER ANY SUCH PROPOSED
UPDATES OR AMENDMENTS OR REVISED RESEARCH GOALS ON A REASONABLY EXPEDITIOUS
BASIS.  ONCE THE STEERING COMMITTEE DECIDES THAT THE SADR STUDY HAS BEEN
COMPLETED AND NO ADDITIONAL WORK IS TO BE SCHEDULED, THE PARTIES SHALL EXECUTE
THE FINAL DATA TRANSFER ACCORDING TO SECTION 2.1.2(F) AND PREPARE THE
PRELIMINARY SADR STUDY REPORT IN ACCORDANCE WITH SECTION 2.1.2(G).

 

2.1.2                        SADR STUDY OBJECTIVES AND RESPONSIBILITIES.

 

(A)                                  GENERAL.  THE OBJECTIVES OF THE SADR STUDY
ARE TO (I) CONFIRM GNSC SADR HAPTM MARKER ASSOCIATIONS; (II) EXPAND THE BAYER
SADR POLYMORPHISM

 

14

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ASSOCIATIONS TO COLLABORATION SADR HAPLOTYPE ASSOCIATIONS; AND (III) DISCOVER
COLLABORATION SADR HAPLOTYPE ASSOCIATIONS FOR CANDIDATE GENES.  EACH PARTY
AGREES TO USE COMMERCIALLY REASONABLE EFFORTS TO (A) UNDERTAKE THE
RESPONSIBILITIES ASSIGNED TO SUCH PARTY IN THIS ARTICLE II AND THE SADR PLAN,
INCLUDING, BUT NOT LIMITED TO, THE DEDICATION OF LABORATORY FACILITIES,
EQUIPMENT AND PERSONNEL APPROPRIATE TO SUCH EFFORTS, (B) PERFORM ITS OBLIGATIONS
HEREUNDER IN GOOD FAITH IN A SCIENTIFIC AND WORKMANLIKE MANNER, (C) AS
APPROPRIATE, MAKE AVAILABLE TO THE OTHER PARTY THOSE RESOURCES SET FORTH IN
ARTICLE II AND THE SADR PLAN, AND (D) CARRY OUT ALL WORK DONE IN THE COURSE OF
THE SADR STUDY IN MATERIAL COMPLIANCE WITH ALL APPLICABLE FEDERAL, STATE OR
LOCAL LAWS, REGULATIONS AND GUIDELINES GOVERNING THE CONDUCT OF SUCH WORK.

 

(B)                                 CONFIRMATION OF GNSC SADR HAPTM MARKER
ASSOCIATIONS.  AS PART OF THE SADR STUDY, THE PARTIES SHALL UNDERTAKE A
CASE/CONTROL STUDY TO CONFIRM GNSC SADR HAPTM MARKER ASSOCIATIONS BY ANALYZING
SADR CONFIRMATION GENES IN DNA SAMPLES FROM APPROPRIATE PATIENTS FROM THE [**]
TRIAL SELECTED BY THE STEERING COMMITTEE.  BAYER SHALL DELIVER TO GENAISSANCE
THE DNA SAMPLES FOR EACH PATIENT TO BE ANALYZED BY GENAISSANCE TO DETERMINE THE
SUITABILITY OF EACH SUCH SAMPLE FOR USE IN ONE OF GENAISSANCE’S STANDARD HAPTM
TYPING PROCESSES THAT IS CHOSEN BY GENAISSANCE IN CONSULTATION WITH THE STEERING
COMMITTEE FOR EACH SADR CONFIRMATION GENE.  IF GENAISSANCE REASONABLY DETERMINES
THAT ANY SUCH DNA SAMPLE IS UNSUITABLE FOR USE IN SUCH PROCESSES, GENAISSANCE
SHALL PROVIDE WRITTEN NOTICE TO BAYER OF SUCH DETERMINATION AND THE STEERING
COMMITTEE SHALL DETERMINE IN GOOD FAITH A PROPER COURSE OF ACTION.  ALL HAPTM
TYPING PROCESSES AND EXPENSES INCURRED BY GENAISSANCE PURSUANT TO THIS
SUBSECTION (B) SHALL BE BORNE BY GENAISSANCE.

 

(C)                                  EXPANSION OF BAYER SADR POLYMORPHISM
ASSOCIATIONS TO COLLABORATION SADR HAPLOTYPE ASSOCIATIONS.  AS PART OF THE SADR
STUDY, THE PARTIES SHALL UNDERTAKE A CASE/CONTROL STUDY OF SADR EXPANSION GENES
IN ACCORDANCE WITH THIS SUBSECTION (C).  EACH SADR EXPANSION GENE SHALL
PREFERABLY HAVE A KNOWN GENOMIC STRUCTURE; HOWEVER, IF AN SADR EXPANSION GENE
DOES NOT HAVE A KNOWN GENOMIC STRUCTURE, THE STEERING COMMITTEE SHALL DECIDE
WHETHER TO PROCEED WITH A HAPTM MARKER DISCOVERY EFFORT FOR SUCH GENE OR WHETHER
ADDITIONAL MEASURES, SUCH AS CLONING, SHOULD BE UNDERTAKEN TO ACQUIRE THE
GENOMIC SEQUENCE INFORMATION.  THE COSTS OF ACQUIRING SUCH INFORMATION SHALL BE
BORNE BY BAYER.

 

(I)                                     PATIENT SELECTION.  THE STEERING
COMMITTEE SHALL SELECT [**] ADVERSE EVENT CASES, AND [**] MATCHED CONTROLS FROM
[**].  THE CASE DEFINITION USED FOR THIS STUDY SHALL BE DEFINED BY THE STEERING
COMMITTEE.  [**] CASES AND CONTROLS WILL BE USED FOR THE DISCOVERY OF
COLLABORATION SADR HAPLOTYPE ASSOCIATIONS (THE “SADR DISCOVERY COHORT”), AND
[**]CASES AND CONTROLS WILL BE USED FOR THE VALIDATION OF THESE MARKER
ASSOCIATIONS (THE “SADR VALIDATION COHORT”).  BAYER SHALL SEND DNA SAMPLES FROM
THE SELECTED [**] TRIAL PATIENTS TO GENAISSANCE TO ANALYZE THEIR SUITABILITY FOR
USE IN ONE OF GENAISSANCE’S STANDARD HAPTM TYPING PROCESSES CHOSEN BY
GENAISSANCE, WITH THE WRITTEN APPROVAL BY THE STEERING COMMITTEE, FOR EACH SADR
EXPANSION GENE.  IF GENAISSANCE REASONABLY DETERMINES THAT ANY SUCH DNA SAMPLE
IS UNSUITABLE FOR USE IN SUCH PROCESSES, GENAISSANCE SHALL PROVIDE WRITTEN
NOTICE TO BAYER OF SUCH DETERMINATION AND THE STEERING COMMITTEE SHALL DETERMINE
IN GOOD FAITH A PROPER COURSE OF ACTION.

 

15

--------------------------------------------------------------------------------

 

(II)                                  HAPTM MARKER DISCOVERY.  FOR ANY SADR
EXPANSION GENE THAT DOES NOT HAVE HAPTM MARKERS IN THE HAPTM DATABASE UPON
COMMENCEMENT OF THE COLLABORATION, GENAISSANCE SHALL USE ITS STANDARD OPERATING
PROCEDURE AND HAP™ BUILDER SOFTWARE TO DISCOVER HAPTM MARKERS IN ITS INDEX
REPOSITORY, [**]. ANY HAPTM MARKERS SO DISCOVERED SHALL BECOME PART OF THE HAPTM
DATABASE.

 

(III)                               HAPTM MARKER ASSIGNMENT.  USING INFORMATION
IN THE HAPTM DATABASE AND GENAISSANCE’S PROPRIETARY ALGORITHMS, GENAISSANCE
SHALL SELECT A MINIMAL NUMBER OF SNPS NEEDED FOR ASSIGNING HAPTM MARKER PAIRS
FOR EACH OF THE SADR EXPANSION GENES TO THE PATIENTS IN THE SADR DISCOVERY
COHORT AND THE PATIENTS IN THE SADR VALIDATION COHORT.  THE STEERING COMMITTEE
SHALL REVIEW AND APPROVE SUCH SELECTED SNPS.

 

(IV)                              DISCOVERY OF COLLABORATION SADR HAPLOTYPE
ASSOCIATIONS.  GENAISSANCE SHALL GENOTYPE THE SELECTED SNPS FROM THE SADR
EXPANSION GENES IN SAMPLES FROM THE SADR DISCOVERY COHORT BY USING STANDARD
HAPTM TYPING PROCESSES CHOSEN BY GENAISSANCE IN CONSULTATION WITH THE STEERING
COMMITTEE PURSUANT TO SECTION 2.1.2 (C)(I).  GENAISSANCE SHALL USE THE
GENOTYPING DATA AND ITS HAPTM BUILDER SOFTWARE TO ASSIGN A HAPTM MARKER PAIR FOR
EACH SADR EXPANSION GENE TO EACH PATIENT IN THE SADR DISCOVERY COHORT.  BAYER
SHALL PAY GENAISSANCE THE HAPTM TYPING FEE AS SET FORTH IN SECTION 4.1 FOR
ANALYSIS OF EACH SADR EXPANSION GENE IN EACH PATIENT IN THE SADR DISCOVERY
COHORT.

 

(V)                                 VALIDATION OF COLLABORATION SADR HAPLOTYPE
ASSOCIATIONS.  FOR EACH SADR EXPANSION GENE THAT HAS A HAPTM MARKER IN A
COLLABORATION SADR HAPLOTYPE ASSOCIATION DISCOVERED HEREUNDER, GENAISSANCE SHALL
GENOTYPE THE PREVIOUSLY-SELECTED SNPS IN SAMPLES FROM PATIENTS IN THE SADR
VALIDATION COHORT.  GENAISSANCE SHALL USE THE GENOTYPING DATA AND ITS HAPTM
BUILDER SOFTWARE TO ASSIGN A HAPTM MARKER PAIR TO EACH PATIENT IN THE SADR
VALIDATION COHORT.  BAYER SHALL PAY GENAISSANCE THE HAPTM TYPING FEE AS SET
FORTH IN SECTION 4.1 FOR ANALYSIS OF EACH SADR EXPANSION GENE IN EACH PATIENT IN
THE SADR VALIDATION COHORT.

 

(D)                                 DISCOVERY OF HAPLOTYPES IN [**] TRIAL
PATIENTS.  GENAISSANCE SHALL SEQUENCE CERTAIN SADR EXPANSION GENES IN DNA
SAMPLES FROM CERTAIN [**] TRIAL PATIENTS THAT DISPLAYED AN ADVERSE RESPONSE OR
ADVERSE RESPONSE RELATED ENDPOINT.  THE STEERING COMMITTEE SHALL SELECT THE SADR
EXPANSION GENES AND [**] TRIAL PATIENTS.  BAYER SHALL PAY GENAISSANCE THE
SEQUENCING FEE AS SET FORTH IN SECTION 4.2 FOR THIS SEQUENCING SERVICE. 
GENAISSANCE SHALL, [**] USE THE POLYMORPHISM DATA FROM THE SELECTED [**] TRIAL
PATIENTS AND ITS HAPTM BUILDER SOFTWARE TO DETERMINE THE COLLABORATION [**]
HAPLOTYPES PRESENT IN SUCH PATIENTS AND SHALL DISCLOSE SUCH COLLABORATION [**]
HAPLOTYPES TO BAYER.

 

(E)                                  DISCOVERY OF COLLABORATION SADR HAPLOTYPE
ASSOCIATION USING CANDIDATE GENES.  THE PARTIES SHALL ANALYZE CANDIDATE GENES TO
DISCOVER COLLABORATION SADR

 

16

--------------------------------------------------------------------------------

 

HAPLOTYPE ASSOCIATIONS AS DESCRIBED IN SECTIONS 2.1.2 (C)(I) THROUGH (V).  THE
PARTIES AGREE THAT THE STEERING COMMITTEE SHALL SELECT NO MORE THAN [**]
CANDIDATE GENES FOR ANALYSIS.  ADDITIONAL SELECTION CRITERIA FOR CANDIDATE GENES
WILL BE AGREED UPON BY THE STEERING COMMITTEE.  BAYER WILL PAY GENAISSANCE [**]
THE HAPTM TYPING FEE AS SET FORTH IN SECTION 4.1 FOR EACH CANDIDATE GENE AND
EACH PATIENT IN THE SADR DISCOVERY COHORT AND SADR VALIDATION COHORT.

 

(F)                                    DATA ANALYSIS.  GENAISSANCE AND BAYER
SHALL PROVIDE TO EACH OTHER ALL CLINICAL AND HAPTM MARKER DATA GENERATED OR USED
IN THE SADR STUDY ON A REGULAR BASIS SO THAT EACH PARTY MAY PERFORM ITS OWN
ASSOCIATION ANALYSES.  IN PERFORMING SUCH ANALYSES, EACH PARTY MAY ALSO INCLUDE
ANY RELEVANT DATA PRESENT IN [**] [**] BY MEANS OF THE ON-SITE ACCESS PROVIDED
TO THE STEERING COMMITTEE PURSUANT TO SECTION 2.7.

 

(G)                                 SADR STUDY REPORT.  WITHIN SIXTY (60) DAYS
AFTER THE FINAL DATA EXCHANGE PURSUANT TO SECTION 2.1.2 (F), EACH PARTY SHALL
PROVIDE TO THE OTHER PARTY A WRITTEN SUMMARY REPORT IN A MUTUALLY-AGREED FORMAT
SETTING FORTH IN REASONABLE DETAIL SUCH PARTY’S RESULTS WITH RESPECT TO ANY GNSC
SADR HAPTM MARKER ASSOCIATIONS THAT ARE CONFIRMED AND ANY COLLABORATION SADR
HAPLOTYPE ASSOCIATIONS THAT ARE DISCOVERED IN THE SADR STUDY (EACH, A
“PRELIMINARY SADR STUDY REPORT”).  WITHIN THIRTY (30) DAYS THEREAFTER EACH PARTY
SHALL PROVIDE TO THE OTHER PARTY COMMENTS ON THE OTHER PARTY’S PRELIMINARY SADR
STUDY REPORT.  IF A PARTY RECEIVING COMMENTS DISAGREES WITH SUCH COMMENTS, IT
SHALL NOTIFY THE COMMENTING PARTY WITHIN FIFTEEN (15) DAYS AFTER RECEIPT OF THE
COMMENTS, FOLLOWING WHICH THE STEERING COMMITTEE SHALL MEET TO RESOLVE ANY
ISSUES AND AGREE UPON A FINAL VERSION OF BOTH PRELIMINARY SADR STUDY REPORTS
(THE “FINAL SADR STUDY REPORT”).

 

2.2                                 SER STUDY MANAGEMENT AND RESPONSIBILITIES.

 

2.2.1                        NOTICE AND TIMING.  AT THE FIRST STEERING COMMITTEE
MEETING, THE STEERING COMMITTEE SHALL DETERMINE THE APPROPRIATE MAGNITUDE OF THE
SER STUDY BASED ON THE TARGET GENE INFORMATION PROVIDED BY BOTH PARTIES, OR A
PORTION THEREOF, AND SHALL NOTIFY THE PARTIES IN WRITING OF SUCH DECISION.  SUCH
STUDY SHALL PROCEED CONTEMPORANEOUSLY WITH THE SADR STUDY.

 

2.2.2                        SER PLAN.  THE PARTIES SHALL UNDERTAKE THE SER
STUDY IN ACCORDANCE WITH THIS ARTICLE II AND THE SER PLAN, WHICH THE STEERING
COMMITTEE SHALL PROVIDE TO THE PARTIES WITHIN THIRTY (30) DAYS AFTER THE
STEERING COMMITTEE PROVIDES NOTICE AS SET FORTH IN SECTION 2.2.1 THAT THE
STEERING COMMITTEE HAS DETERMINED THE APPROPRIATE MAGNITUDE OF THE SER STUDY. 
THE SER PLAN WILL BE APPENDED HERETO AS EXHIBIT F. THE PROGRAM MANAGERS SHALL
REVIEW THE SER PLAN ON AT LEAST A MONTHLY BASIS AND SUBMIT ANY PROPOSED UPDATES
OR AMENDMENTS TO THE STEERING COMMITTEE FOR ITS REVIEW.  ANY SUCH UPDATES OR
AMENDMENTS SHALL NOT BECOME EFFECTIVE UNTIL APPROVED BY THE STEERING COMMITTEE. 
THE STEERING COMMITTEE SHALL REVIEW AND CONSIDER ANY SUCH PROPOSED UPDATES OR
AMENDMENTS OR REVISED RESEARCH GOALS ON A REASONABLY EXPEDITIOUS BASIS.  ONCE
THE STEERING COMMITTEE DECIDES THAT THE SER STUDY HAS BEEN COMPLETED AND NO
ADDITIONAL WORK IS TO BE SCHEDULED, THE PARTIES SHALL EXECUTE THE FINAL DATA
TRANSFER ACCORDING TO SECTION 2.2.3(D) AND PREPARE THE PRELIMINARY SER STUDY
REPORT IN ACCORDANCE WITH SECTION 2.2.3(E).

 

17

--------------------------------------------------------------------------------

 

2.2.3                        SER STUDY OBJECTIVES AND RESPONSIBILITIES.

 

(A)                                  GENERAL.  THE OBJECTIVES OF THE SER STUDY
ARE TO (I) CONFIRM GNSC SER HAPTM MARKER ASSOCIATIONS, AND (II) EXPAND BAYER SER
POLYMORPHISM ASSOCIATIONS TO COLLABORATION SER HAPTM MARKER ASSOCIATIONS.  EACH
PARTY AGREES TO USE COMMERCIALLY REASONABLE EFFORTS TO (A) UNDERTAKE THE
RESPONSIBILITIES ASSIGNED TO SUCH PARTY IN THIS ARTICLE II AND THE SER PLAN,
INCLUDING, BUT NOT LIMITED TO, THE DEDICATION OF LABORATORY FACILITIES,
EQUIPMENT AND PERSONNEL APPROPRIATE TO SUCH EFFORTS; (B) PERFORM ITS OBLIGATIONS
HEREUNDER IN GOOD FAITH IN A SCIENTIFIC AND WORKMANLIKE MANNER; (C) AS
APPROPRIATE, MAKE AVAILABLE TO THE OTHER PARTY THOSE RESOURCES SET FORTH IN THE
SER PLAN; AND (D) CARRY OUT ALL WORK DONE IN THE COURSE OF THE SER STUDY IN
MATERIAL COMPLIANCE WITH ALL APPLICABLE FEDERAL, STATE OR LOCAL LAWS,
REGULATIONS AND GUIDELINES GOVERNING THE CONDUCT OF SUCH WORK.  [**]SHALL
BEAR[**] COSTS IN PERFORMING [**]OBLIGATIONS SET FORTH IN THE SER PLAN.

 

(B)                                 CONFIRMATION OF GNSC SER HAPTM MARKER
ASSOCIATIONS.  AS PART OF THE SER STUDY, THE PARTIES SHALL UNDERTAKE A
CASE/CONTROL STUDY TO CONFIRM GNSC SER HAP™ MARKER ASSOCIATIONS BY ANALYZING SER
CONFIRMATION GENES IN DNA SAMPLES FROM [**] [**] PATIENTS SELECTED BY THE
STEERING COMMITTEE.  BAYER SHALL DELIVER TO GENAISSANCE THE DNA SAMPLES FOR EACH
SELECTED [**] TRIAL PATIENT TO BE ANALYZED BY GENAISSANCE TO DETERMINE THE
SUITABILITY OF EACH SUCH SAMPLE FOR USE IN ONE OF GENAISSANCE’S STANDARD HAPTM
TYPING PROCESSES THAT IS CHOSEN BY GENAISSANCE IN CONSULTATION WITH THE STEERING
COMMITTEE FOR EACH SER CONFIRMATION GENE.  IF GENAISSANCE REASONABLY DETERMINES
THAT ANY SUCH DNA SAMPLE IS UNSUITABLE FOR USE IN SUCH PROCESSES, GENAISSANCE
SHALL PROVIDE WRITTEN NOTICE TO BAYER OF SUCH DETERMINATION AND THE STEERING
COMMITTEE SHALL DETERMINE IN GOOD FAITH A PROPER COURSE OF ACTION.

 

(C)                                  EXPANSION OF BAYER SER POLYMORPHISM
ASSOCIATIONS TO COLLABORATION SER HAPTM MARKER ASSOCIATIONS.  AS PART OF THE SER
STUDY, THE PARTIES SHALL UNDERTAKE A CASE/CONTROL STUDY OF SER EXPANSION GENES
IN ACCORDANCE WITH THIS SUBSECTION (C).  EACH SER EXPANSION GENE SHALL
PREFERABLY HAVE A KNOWN GENOMIC STRUCTURE; HOWEVER, IF AN SER EXPANSION GENE
DOES NOT HAVE A KNOWN GENOMIC STRUCTURE, THE STEERING COMMITTEE WILL DECIDE
WHETHER TO PROCEED WITH A HAPTM MARKER DISCOVERY EFFORT FOR SUCH GENE OR WHETHER
ADDITIONAL MEASURES SUCH AS CLONING SHOULD BE UNDERTAKEN TO ACQUIRE THE GENOMIC
SEQUENCE INFORMATION.

 

(I)                                     PATIENT SELECTION.  THE STEERING
COMMITTEE SHALL SELECT [**] SETS OF [**] PATIENTS FROM THE [**] AND ASSIGN
PATIENTS FROM EACH SET INTO VARIOUS RESPONSE CATEGORIES [**] THAT WILL BE
DEFINED BY THE STEERING COMMITTEE BASED UPON RESULTS FROM THE [**] TRIAL. 
[**]OF PATIENTS WILL BE USED FOR THE DISCOVERY OF COLLABORATION SER HAPTM MARKER
ASSOCIATIONS (THE “SER DISCOVERY COHORT”), AND [**]OF PATIENTS WILL BE USED FOR
VALIDATION OF THESE MARKER ASSOCIATIONS (THE “SER VALIDATION COHORT”).  BAYER
SHALL SEND DNA SAMPLES FROM THE SELECTED [**] TRIAL PATIENTS TO GENAISSANCE TO
ANALYZE THEIR SUITABILITY FOR USE IN ONE OF GENAISSANCE’S STANDARD HAPTM TYPING
PROCESSES THAT IS CHOSEN BY GENAISSANCE IN CONSULTATION WITH THE STEERING
COMMITTEE FOR EACH SER EXPANSION GENE.  IF GENAISSANCE REASONABLY DETERMINES
THAT ANY SUCH DNA SAMPLE IS

 

18

--------------------------------------------------------------------------------

 

UNSUITABLE FOR USE IN SUCH PROCESSES, GENAISSANCE SHALL PROVIDE WRITTEN NOTICE
TO BAYER OF SUCH DETERMINATION AND THE STEERING COMMITTEE SHALL DETERMINE IN
GOOD FAITH A PROPER COURSE OF ACTION.

 

(II)                                  HAPTM MARKER DISCOVERY.  FOR ANY SER
EXPANSION GENE THAT DOES NOT HAVE HAPTM MARKERS IN THE HAPTM DATABASE UPON THE
COMMENCEMENT OF THE COLLABORATION, GENAISSANCE SHALL USE ITS STANDARD OPERATING
PROCEDURE AND HAP™ BUILDER SOFTWARE TO DISCOVER HAPTM MARKERS IN ITS INDEX
REPOSITORY, [**].  ANY HAPTM MARKERS SO DISCOVERED SHALL BECOME PART OF THE
HAPTM DATABASE.

 

(III)                               HAPTM MARKER ASSIGNMENT.  USING INFORMATION
IN THE HAPTM DATABASE AND GENAISSANCE’S PROPRIETARY ALGORITHMS, GENAISSANCE
SHALL SELECT A MINIMAL NUMBER OF SNPS NEEDED FOR ASSIGNING HAPTM MARKER PAIRS
FOR EACH OF THE SER EXPANSION GENES TO THE PATIENTS IN THE SER DISCOVERY COHORT
AND THE PATIENTS IN THE SER VALIDATION COHORT.  THE STEERING COMMITTEE SHALL
REVIEW AND APPROVE SUCH SELECTED SNPS.

 

(IV)                              DISCOVERY OF COLLABORATION SER HAPTM MARKER
ASSOCIATIONS.  GENAISSANCE SHALL GENOTYPE THE SELECTED SNPS FROM THE SER
EXPANSION GENES IN SAMPLES FROM THE SER DISCOVERY COHORT BY USING STANDARD HAPTM
TYPING PROCESSES CHOSEN BY GENAISSANCE.  GENAISSANCE SHALL USE THE GENOTYPING
DATA AND ITS HAPTM BUILDER SOFTWARE TO ASSIGN A HAPTM MARKER PAIR TO EACH
PATIENT IN THE SER DISCOVERY COHORT.

 

(V)                                 VALIDATION OF COLLABORATION SER HAPTM MARKER
ASSOCIATIONS.  FOR EACH SER EXPANSION GENE THAT HAS A HAPTM MARKER IN A
COLLABORATION SER HAPTM MARKER ASSOCIATION DISCOVERED HEREUNDER, GENAISSANCE
SHALL GENOTYPE THE PREVIOUSLY-SELECTED SNPS IN SAMPLES FROM PATIENTS IN THE SER
VALIDATION COHORT.  GENAISSANCE SHALL USE THE GENOTYPING DATA AND ITS HAPTM
BUILDER SOFTWARE TO ASSIGN A HAPTM MARKER PAIR TO EACH PATIENT IN THE SER
VALIDATION COHORT.

 

(D)                                 DATA ANALYSIS.  GENAISSANCE AND BAYER WILL
PROVIDE TO EACH OTHER ALL CLINICAL AND HAPTM MARKER DATA USED IN THE SER STUDY
ON A REGULAR BASIS SO THAT EACH PARTY MAY PERFORM ITS OWN ASSOCIATION ANALYSES. 
IN PERFORMING SUCH ANALYSES, EACH PARTY MAY ALSO INCLUDE ANY RELEVANT DATA
PRESENT IN THE [**] BY MEANS OF THE ON-SITE ACCESS PROVIDED TO THE STEERING
COMMITTEE PURSUANT TO SECTION 2.7.

 

(E)                                  SER STUDY REPORT.  WITHIN [**] DAYS AFTER
THE FINAL DATA EXCHANGE PURSUANT TO SECTION 2.2.3(D), EACH PARTY SHALL PROVIDE
TO THE OTHER PARTY A WRITTEN SUMMARY REPORT IN A MUTUALLY-AGREED FORMAT SETTING
FORTH IN REASONABLE DETAIL SUCH PARTY’S RESULTS WITH RESPECT TO ANY GNSC SER
HAPTM MARKER ASSOCIATIONS THAT ARE CONFIRMED AND ANY COLLABORATION SER HAPTM
MARKER ASSOCIATIONS THAT ARE DISCOVERED IN THE SER STUDY (EACH, A “PRELIMINARY
SER STUDY REPORT”).  WITHIN [**] THEREAFTER EACH PARTY SHALL PROVIDE TO THE
OTHER PARTY COMMENTS ON THE OTHER PARTY’S PRELIMINARY SER STUDY REPORT.  IF A
PARTY RECEIVING COMMENTS DISAGREES WITH

 

19

--------------------------------------------------------------------------------

 

SUCH COMMENTS, IT SHALL NOTIFY THE COMMENTING PARTY WITHIN [**] DAYS AFTER
RECEIPT OF THE COMMENTS, FOLLOWING WHICH THE STEERING COMMITTEE SHALL MEET TO
RESOLVE ANY ISSUES AND AGREE UPON A FINAL VERSION OF BOTH PRELIMINARY SER STUDY
REPORTS (THE “FINAL SER STUDY REPORT”).

 

2.3                                 STEERING COMMITTEE.

 

2.3.1                        FORMATION AND COMPOSITION.  A JOINT COMMITTEE (THE
“STEERING COMMITTEE”) COMPRISED OF AN EQUAL NUMBER OF REPRESENTATIVES OF EACH OF
BAYER AND GENAISSANCE, ONE TO BE THE PROGRAM MANAGER AND AT LEAST ONE TO BE
[**], SHALL BE APPOINTED BY THE PARTIES WITHIN THIRTY (30) DAYS AFTER THE
EFFECTIVE DATE.  EACH PARTY SHALL ALSO DESIGNATE A CO-CHAIR OF ITS
REPRESENTATIVES TO THE STEERING COMMITTEE WITHIN SUCH 30-DAY PERIOD.  THE
STEERING COMMITTEE SHALL MEET AS NEEDED, BUT NOT LESS FREQUENTLY THAN ONCE EACH
CALENDAR QUARTER DURING THE COLLABORATION PERIOD.  THE STEERING COMMITTEE SHALL,
IF REQUESTED BY A PARTY, MEET WITHIN THIRTY (30) DAYS AFTER THE REQUEST OF SUCH
PARTY TO ACT UPON ANY MATTER REQUIRING ACTION BY THE STEERING COMMITTEE FOR
APPROVAL.  MEETINGS SHALL BE AT SUCH TIMES AGREED TO BY BAYER AND GENAISSANCE
AND SHALL ALTERNATE BETWEEN [**], UNLESS THE PARTIES OTHERWISE AGREE OR SHALL BE
IN SUCH OTHER FORM (E.G., TELEPHONE OR VIDEO CONFERENCE) AS THE MEMBERS OF THE
STEERING COMMITTEE SHALL AGREE.  EACH PARTY SHALL BEAR ANY AND ALL EXPENSES OF
ITS REPRESENTATIVES IN CONNECTION WITH STEERING COMMITTEE PARTICIPATION.  THE
STEERING COMMITTEE SHALL REMAIN IN OPERATION DURING THE COLLABORATION PERIOD
UNLESS OTHERWISE AGREED BY THE PARTIES.  A PARTY MAY CHANGE ONE OR MORE OF ITS
REPRESENTATIVES TO THE STEERING COMMITTEE AND/OR ITS DESIGNATED CO-CHAIR AT ANY
TIME UPON WRITTEN NOTICE TO THE OTHER PARTY.  THE PARTIES MAY MUTUALLY AGREE TO
CHANGE THE NUMBER OF REPRESENTATIVES WHICH COMPRISES THE STEERING COMMITTEE. 
EITHER PARTY MAY PERMIT ADDITIONAL EMPLOYEES AND CONSULTANTS TO ATTEND AND
PARTICIPATE (ON A NON-VOTING BASIS) IN THE STEERING COMMITTEE MEETINGS, SUBJECT
TO THE CONFIDENTIALITY PROVISIONS OF ARTICLE VI.

 

2.3.2                        STEERING COMMITTEE FUNCTIONS AND POWERS.  THE
STEERING COMMITTEE SHALL BE RESPONSIBLE FOR THE OVERALL SUPERVISION AND
MANAGEMENT OF THE COLLABORATION.  IN PARTICULAR, THE STEERING COMMITTEE SHALL:

 

(A)                                  MONITOR AND EVALUATE THE STATUS AND
PROGRESS OF THE COLLABORATION;

 

(B)                                 APPROVE ANY MATERIAL MODIFICATIONS TO THE
SADR PLAN OR SER PLAN;

 

(C)                                  DEFINE JOINT PROCESSES TO MANAGE THE
COLLABORATION AND THE EXCHANGE OF DATA PURSUANT TO SECTION 2.6 AND SECTION 2.7;

 

(D)                                 DETERMINE APPROPRIATE MAGNITUDE OF THE SER
STUDY PURSUANT TO SECTION 2.2.1

 

(E)                                  PERFORM SUCH ADDITIONAL TASKS ASSIGNED TO
IT IN THIS ARTICLE II; AND

 

(F)                                    RESOLVE OPERATIONAL DISPUTES BETWEEN THE
PARTIES.

 

2.3.3                        DECISIONS OF THE STEERING COMMITTEE.  ALL DECISIONS
OF THE STEERING COMMITTEE SHALL BE MADE BY UNANIMOUS VOTE OF THE REPRESENTATIVES
OF THE PARTIES, WITH EACH PARTY’S REPRESENTATIVES COLLECTIVELY HAVING ONE VOTE. 
IF THE STEERING COMMITTEE IS UNABLE TO REACH

 

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AGREEMENT ON ANY MATTER REFERRED TO IT FOR RESOLUTION WITHIN THIRTY (30) DAYS
AFTER THE MATTER IS REFERRED TO IT, SUCH MATTER SHALL BE REFERRED TO THE PARTY
REPRESENTATIVES AND SHALL THEREAFTER BE SUBJECT TO SECTION 10.6. 
NOTWITHSTANDING THE FOREGOING, A DECISION NOT TO APPROVE THE INCLUSION IN THE
SADR STUDY OR THE SER STUDY OF ANY PROPOSED WORK, OR TO REMOVE FROM THE SADR
STUDY OR SER STUDY WORK PREVIOUSLY AGREED TO BE INCLUDED, SHALL BE [**].

 

2.3.4                        MINUTES AND REPORTS.  THE STEERING COMMITTEE SHALL
BE RESPONSIBLE FOR KEEPING ACCURATE MINUTES OF ITS DELIBERATIONS WHICH SHALL
RECORD ALL PROPOSED DECISIONS AND ALL ACTIONS RECOMMENDED OR TAKEN.  WITHIN TEN
(10) BUSINESS DAYS AFTER EACH MEETING, THE PARTY THAT HOSTED THE MEETING SHALL
PROVIDE THE OTHER PARTY WITH DRAFT MINUTES OF SUCH MEETING, INCLUDING A SUMMARY
OF ALL ACTIONS TAKEN AT SUCH MEETING.  WITHIN THIRTY (30) DAYS AFTER EACH
MEETING, THE CO-CHAIRS WILL SIGN FINAL VERSIONS OF THE MEETING MINUTES AND SUCH
MINUTES SHALL THEREAFTER BE RECOGNIZED AS DULY ACCEPTED BY THE PARTIES.  ALL
RECORDS OF THE STEERING COMMITTEE SHALL BE DISTRIBUTED TO AND AVAILABLE TO BOTH
PARTIES.

 

2.4                                 PROGRAM MANAGERS.  GENAISSANCE AND BAYER
SHALL EACH APPOINT A PROGRAM MANAGER WITHIN THIRTY (30) DAYS AFTER THE EFFECTIVE
DATE.  EACH PARTY SHALL HAVE THE RIGHT TO DESIGNATE A DIFFERENT PROGRAM MANAGER
AT ANY TIME.  THE PROGRAM MANAGERS SHALL JOINTLY OVERSEE THE CONDUCT OF THE SADR
STUDY AND SER STUDY AND SHALL BE RESPONSIBLE FOR, AMONG OTHER THINGS,
RECOMMENDING TO THE STEERING COMMITTEE ANY UPDATES AND AMENDMENTS TO THE SADR
PLAN AND SER PLAN.  THE PROGRAM MANAGERS SHALL CONFER WITH EACH OTHER ON A
REGULAR BASIS, AND EACH SHALL KEEP THE OTHER REASONABLY AND CANDIDLY INFORMED OF
ALL DEVELOPMENTS IN THE CONDUCT OF THE COLLABORATION.

 

2.5                                 REGULATORY COOPERATION.  THE PARTIES INTEND
TO OBTAIN REGULATORY APPROVAL FOR THE PRODUCTS.  THE PARTY WITH THE RIGHT TO
COMMERCIALIZE A PRODUCT HEREUNDER SHALL HAVE THE SOLE DISCRETION IN DETERMINING
THE LOCATION AND TIMING OF ANY REGULATORY FILINGS.  SUCH PARTY SHALL OWN ALL
SUCH FILINGS.  EACH PARTY SHALL REASONABLY ASSIST THE OTHER PARTY IN MAKING ANY
REGULATORY APPROVAL FILINGS.

 

2.6                                 EXCHANGE OF PRIOR IP INFORMATION.  AT THE
FIRST STEERING COMMITTEE MEETING, EACH PARTY SHALL PROVIDE THE OTHER PARTY WITH
(A) A LIST OF GENES AND POLYMORPHISMS OR HAPTM MARKERS IN ITS GNSC SADR HAPTM
MARKER ASSOCIATIONS OR BAYER SADR POLYMORPHISM ASSOCIATIONS, AS APPLICABLE, (B)
A LIST OF GENES AND POLYMORPHISMS OR HAPTM MARKERS IN ITS GNSC SER HAPTM
ASSOCIATIONS OR BAYER SER POLYMORPHISM ASSOCIATIONS, AS APPLICABLE; AND (C) A
LIST OF GENES AND POLYMORPHISMS THAT [**], AS APPLICABLE.  ADDITIONAL
INFORMATION WITH RESPECT TO PRIOR IP THAT IS DEVELOPED BY A PARTY PRIOR TO THE
END OF THE COLLABORATION PERIOD SHALL BE PROVIDED IN WRITING BY SUCH PARTY TO
THE OTHER PARTY WITHIN TWENTY (20) DAYS AFTER THE END OF THE COLLABORATION
PERIOD.

 

2.7                                 DATA ACCESS.  TO FACILITATE PATIENT
SELECTION AND ASSOCIATION ANALYSIS PURSUANT TO THE SADR STUDY AND THE SER STUDY,
EACH PARTY SHALL SHARE WITH THE OTHER PARTY [**].  BAYER SHALL PROVIDE THE
STEERING COMMITTEE WITH ON-SITE ACCESS TO [**]DATA [**].  GENAISSANCE SHALL
PROVIDE THE STEERING COMMITTEE WITH ON-SITE ACCESS TO [**]DATA [**].  THE
STEERING COMMITTEE’S ACCESS TO [**] SHALL CEASE [**] ([**]) DAYS AFTER THE LATER
OF RECEIPT OF THE SADR STUDY REPORT BY BOTH PARTIES OR THE RECEIPT OF THE SER
STUDY REPORT BY BOTH PARTIES.  THE DATA ACCESS ALSO INCLUDES [**].

 

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2.8                                 PRODUCT LABELING.  IN SO FAR AS IS PERMITTED
BY THE RELEVANT REGULATORY AUTHORITIES, THE GENAISSANCE NAME AND LOGO SHALL EACH
BE DISPLAYED IN THE PACKAGE INSERT OF ANY DIAGNOSTIC PRODUCT DEVELOPED,
MANUFACTURED OR COMMERCIALIZED BY BAYER.  IN SO FAR AS IS PERMITTED BY THE
RELEVANT REGULATORY AUTHORITIES, ALL LABELING, PRINTED AND ELECTRONIC MATERIALS
ASSOCIATED WITH SUCH PRODUCTS SHALL INDICATE THAT PRODUCTS WERE DEVELOPED WITH
THE USE OF GENAISSANCE TECHNOLOGY.  GENAISSANCE SHALL GRANT BAYER AN APPROPRIATE
TRADEMARK LICENSE FOR SUCH PURPOSE.  THE BAYER NAME AND LOGO SHALL BE DISPLAYED
ON ANY PRODUCT DEVELOPED, MANUFACTURED OR COMMERCIALIZED BY GENAISSANCE ONLY IF
GENAISSANCE HAS OBTAINED THE PRIOR WRITTEN CONSENT OF BAYER WITH RESPECT TO SUCH
PRODUCT.

 

ARTICLE III

GRANTS OF RIGHTS

3.1                                 RESEARCH GRANTS.

 

3.1.1                        GENAISSANCE RESEARCH GRANT.  SUBJECT TO THE TERMS
AND CONDITIONS OF THIS AGREEMENT, BAYER HEREBY GRANTS TO GENAISSANCE A
NON-EXCLUSIVE, NON-ROYALTY-BEARING LICENSE IN THE TERRITORY, WITHOUT THE RIGHT
TO GRANT SUBLICENSES, UNDER THE BAYER IP RIGHTS, TO PRACTICE THE KNOW-HOW
COVERED BY OR INCLUDED IN THE BAYER IP RIGHTS, TO THE EXTENT NECESSARY OR USEFUL
FOR GENAISSANCE TO PERFORM THOSE ACTIVITIES TO BE UNDERTAKEN BY GENAISSANCE IN
THE CONDUCT OF THE COLLABORATION AS SET FORTH IN THIS AGREEMENT AND IN THE
COLLABORATION PLAN.

 

3.1.2                        BAYER RESEARCH GRANT.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, GENAISSANCE HEREBY GRANTS TO BAYER A
NON-EXCLUSIVE, NON-ROYALTY-BEARING LICENSE IN THE TERRITORY, WITHOUT THE RIGHT
TO GRANT SUBLICENSES, UNDER THE GENAISSANCE IP RIGHTS, TO PRACTICE THE KNOW-HOW
COVERED BY OR INCLUDED IN THE GENAISSANCE IP RIGHTS, TO THE EXTENT NECESSARY OR
USEFUL FOR BAYER TO PERFORM THOSE ACTIVITIES TO BE UNDERTAKEN BY BAYER IN THE
CONDUCT OF THE COLLABORATION AS SET FORTH IN THIS AGREEMENT AND IN THE
COLLABORATION PLAN.

 

3.2                                 DIAGNOSTIC PRODUCTS GRANTS.

 

3.2.1                        BAYER DIAGNOSTIC PRODUCTS LICENSE.

 

(A)                                  LICENSE.  SUBJECT TO THE TERMS AND
CONDITIONS OF THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE TERMS OF
SECTION 3.2.2, GENAISSANCE HEREBY GRANTS TO BAYER (I) AN EXCLUSIVE,
ROYALTY-BEARING (AS SET FORTH IN SECTION 4.3(A)) LICENSE IN THE TERRITORY, WITH
THE RIGHT TO GRANT SUBLICENSES, UNDER GENAISSANCE IP RIGHTS, TO RESEARCH,
DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL AND SELL SADR DIAGNOSTIC
PRODUCTS (THE “BAYER SADR DIAGNOSTIC LICENSE”), AND (II) AN EXCLUSIVE,
ROYALTY-BEARING (AS SET FORTH IN SECTION 4.3(B)) LICENSE IN THE TERRITORY, WITH
THE RIGHT TO GRANT SUBLICENSES, UNDER GENAISSANCE IP RIGHTS, TO RESEARCH,
DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL AND SELL SER DIAGNOSTIC
PRODUCTS (THE “BAYER SER DIAGNOSTIC LICENSE”).  FOR THE PURPOSES OF CLARITY,
NEITHER THE BAYER SADR DIAGNOSTIC LICENSE NOR THE BAYER SER DIAGNOSTIC LICENSE
SHALL INCLUDE A RIGHT UNDER GENAISSANCE IP RIGHTS TO RESEARCH, DEVELOP OR
COMMERCIALIZE THERAPEUTIC DRUG PRODUCTS.

 

(B)                                 TERMS.  BAYER SHALL [**] FOR ANY BAYER SER
DIAGNOSTIC LICENSE OR BAYER SADR DIAGNOSTIC LICENSE.  THE BAYER SADR DIAGNOSTIC
LICENSE SHALL BECOME NON-EXCLUSIVE WITH RESPECT TO A GIVEN MARKER ASSOCIATION
AND ITS COMPONENT MARKERS IF BAYER FAILS TO

 

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MEET ITS DILIGENCE OBLIGATIONS AS SET FORTH IN THIS SUBSECTION (B), PROVIDED,
THAT, (I) IF BAYER [**] OR (II) IF [**], THEN THE BAYER SADR DIAGNOSTIC LICENSE
SHALL REMAIN EXCLUSIVE FOR ALL MARKERS IN ALL MARKER ASSOCIATIONS FOR SUCH SADR
CLINICAL PHENOTYPE.  THE BAYER SER DIAGNOSTIC LICENSE SHALL BECOME NON-EXCLUSIVE
WITH RESPECT TO A GIVEN MARKER ASSOCIATION AND ITS COMPONENT MARKERS IF BAYER
FAILS TO MEET ITS DILIGENCE OBLIGATIONS AS SET FORTH IN THIS SUBSECTION (B),
PROVIDED, THAT (I) IF BAYER [**],  OR (II) IF [**], THEN THE BAYER SER
DIAGNOSTIC LICENSE SHALL REMAIN EXCLUSIVE FOR ALL MARKERS IN ALL MARKER
ASSOCIATIONS FOR SUCH SER CLINICAL PHENOTYPE.

 

(C)                                  DILIGENCE.  DILIGENCE OBLIGATIONS FOR
DIAGNOSTIC PRODUCT DEVELOPMENT, ON A CLINICAL PHENOTYPE-BY-CLINICAL PHENOTYPE
BASIS, SHALL INCLUDE FOUR (4) STAGES SPANNING NO MORE THAN [**] ([**]) MONTHS. 
STAGE I DILIGENCE SHALL MEAN GENERATION OF A PRODUCT DEVELOPMENT PLAN FOR EACH
CLINICAL PHENOTYPE WITHIN [**] ([**]) MONTHS AFTER THE END OF THE COLLABORATION
PERIOD.  NOTWITHSTANDING ANY OTHER PROVISION HEREIN TO THE CONTRARY, BAYER’S SER
DIAGNOSTIC LICENSE WITH RESPECT TO A GNSC SER HAP™ MARKER ASSOCIATION FOR A
GIVEN SER CLINICAL PHENOTYPE SHALL TERMINATE IF BAYER FAILS TO MEET STAGE I
DILIGENCE FOR SUCH CLINICAL PHENOTYPE.  STAGE II DILIGENCE SHALL MEAN THE
VERIFICATION OF A DIAGNOSTIC PLATFORM WITHIN [**] ([**]) MONTHS AFTER THE END OF
THE COLLABORATION PERIOD.  STAGE III DILIGENCE SHALL MEAN THE COMPLETION OF
TECHNICAL FEASIBILITY, COMMERCIAL FEASIBILITY AND FINAL PRODUCT DESIGN
REQUIREMENTS WITHIN [**] ([**]) MONTHS AFTER COMPLETION OF STAGE II DILIGENCE
AND RECEIPT FROM GENAISSANCE OF A LIST OF THE CANDIDATE POLYMORPHISMS FOR
DETECTING THE HAPLOTYPE(S) IN EACH LICENSED MARKER ASSOCIATION (THE “LIST OF
CANDIDATE DIAGNOSTIC POLYMORPHISMS”).  STAGE IV DILIGENCE SHALL MEAN THE FILING
OF AN APPLICATION FOR REGULATORY APPROVAL FOR MARKETING OF A DIAGNOSTIC PRODUCT
IN [**] WITHIN [**] ([**]) MONTHS AFTER STAGE III COMPLETION.  BAYER SHALL HAVE
THE RIGHT TO EXTEND FOR A REASONABLE PERIOD, ANY OF THE DILIGENCE DEADLINES SET
FORTH ABOVE, IF UNEXPECTED NON-TECHNICAL-, OR TECHNICAL-RELATED, EVENTS OR
DIFFICULTIES OCCUR DURING DIAGNOSTIC PRODUCT DEVELOPMENT, PROVIDED, THAT SUCH
REASONABLE PERIOD FOR EXTENDING ANY GIVEN DILIGENCE DEADLINE FOR
NON-TECHNICAL-RELATED EVENTS OR DIFFICULTIES SHALL NOT BE LONGER THAN [**]
PERCENT ([**]%) OF THE ORIGINAL TIME PERIOD FOR SUCH DILIGENCE STAGE (E.G., THE
REASONABLE PERIOD FOR EXTENDING STAGE II DILIGENCE SHALL NOT EXCEED [**] ([**])
MONTHS).  FOR EXTENSIONS DUE TO TECHNICAL-RELATED EVENTS OR DIFFICULTIES, BAYER
SHALL PROVIDE GENAISSANCE WITH A WRITTEN REPORT EVERY MONTH AFTER THE DILIGENCE
DEADLINE THAT STATES WHAT TECHNICAL-RELATED EVENTS OR DIFFICULTIES ARE CAUSING
THE NEED FOR AN EXTENSION OF THE DILIGENCE PERIOD AND SUMMARIZES WHAT BAYER HAS
DONE AND PLANS TO DO TO SOLVE SUCH TECHNICAL-RELATED EVENTS OR DIFFICULTIES. 
GENAISSANCE SHALL RECEIVE [**] PERCENT ([**]%) OF SUBLICENSE INCOME RECEIVED BY
BAYER IN CONNECTION WITH ANY SUBLICENSES GRANTED BY BAYER PURSUANT TO THIS
SECTION 3.2.1.

 

3.2.2                        SER DIAGNOSTIC PRODUCTS MARKETING RIGHTS.

 

(A)                                  RIGHT TO COMMERCIALIZE. AT ANY TIME DURING
THE TERM OF THE BAYER SER DIAGNOSTIC LICENSE, UPON THE WRITTEN REQUEST OF
GENAISSANCE, BAYER SHALL ENTER INTO GOOD FAITH NEGOTIATIONS WITH GENAISSANCE OR
A GENAISSANCE COLLABORATOR REGARDING THE RIGHT TO RESEARCH, DEVELOP AND
COMMERCIALIZE AN SER DIAGNOSTIC PRODUCT (A “[**]-SPECIFIC SER DIAGNOSTIC
PRODUCT”) THAT IS SPECIFICALLY DESIGNED FOR OR MARKETED FOR USE WITH PRESCRIBING
A GENETICALLY-TARGETED [**] DRUG PRODUCT THAT IS CONTROLLED BY GENAISSANCE OR
SUCH GENAISSANCE COLLABORATOR.  IN SUCH EVENT, BAYER SHALL ENTER INTO WITH
GENAISSANCE OR SUCH GENAISSANCE COLLABORATOR, AS THE CASE MAY BE, AN AGREEMENT
PROVIDING THAT (I) IN EXCHANGE FOR A QUARTERLY ROYALTY PAYMENT (THE “ROYALTY
PAYMENT”) CALCULATED AS SET FORTH IN SECTION 3.2.2(B), BAYER SHALL

 

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GRANT TO GENAISSANCE OR SUCH GENAISSANCE COLLABORATOR, AS THE CASE MAY BE, AN
EXCLUSIVE LICENSE, WITH THE RIGHT TO SUBLICENSE, UNDER BAYER IP RIGHTS AND ANY
INTELLECTUAL PROPERTY RIGHTS GRANTED BY GENAISSANCE TO BAYER PURSUANT TO SECTION
3.2.1(A)(II), TO RESEARCH, DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL
AND SELL SUCH [**]-SPECIFIC SER DIAGNOSTIC PRODUCT UNDER GENAISSANCE’S OR SUCH
GENAISSANCE COLLABORATOR’S LABEL, OR (II) IN EXCHANGE FOR THE PAYMENT OF A
PURCHASE PRICE (THE “PURCHASE PRICE”) CALCULATED AS SET FORTH IN SECTION
3.2.2(B), BAYER SHALL (A) ENTER INTO AN EXCLUSIVE SUPPLY AGREEMENT WITH
GENAISSANCE OR SUCH GENAISSANCE COLLABORATOR, AS THE CASE MAY BE, THAT OBLIGATES
BAYER TO EXCLUSIVELY SUPPLY TO GENAISSANCE OR SUCH GENAISSANCE COLLABORATOR, AS
THE CASE MAY BE, SUCH [**]-SPECIFIC SER DIAGNOSTIC PRODUCT RESEARCHED, DEVELOPED
AND MANUFACTURED BY BAYER FOR MARKETING AND SALE BY GENAISSANCE OR SUCH
GENAISSANCE COLLABORATOR, AS THE CASE MAY BE, UNDER GENAISSANCE’S OR SUCH
GENAISSANCE COLLABORATOR’S LABEL, AND (B) AGREE TO NOT MARKET AND SELL SUCH
[**]-SPECIFIC SER DIAGNOSTIC PRODUCT UNDER BAYER’S OWN LABEL.  NOTWITHSTANDING
ANY OTHER PROVISION HEREIN TO THE CONTRARY, BAYER SHALL RETAIN THE RIGHT TO SELL
UNDER BAYER’S OWN LABEL ANY SER DIAGNOSTIC PRODUCT THAT HAS USES OTHER THAN
DETERMINING WHETHER TO PRESCRIBE A GENETICALLY-TARGETED [**] DRUG PRODUCT THAT
IS CONTROLLED BY GENAISSANCE OR A GENAISSANCE COLLABORATOR, WHETHER OR NOT SUCH
SER DIAGNOSTIC PRODUCT CAN ALSO BE USED TO DETERMINE WHETHER TO PRESCRIBE A
GENETICALLY-TARGETED [**] DRUG PRODUCT THAT IS CONTROLLED BY GENAISSANCE OR A
GENAISSANCE COLLABORATOR.

 

(B)                                 PAYMENTS.  FOR ANY [**]SPECIFIC SER
DIAGNOSTIC PRODUCT, THE ROYALTY PAYMENT, IF APPLICABLE, SHALL BE EQUAL TO THE
PRODUCT OF THE APPLICABLE TEST FEE (THE “TEST FEE”) MULTIPLIED BY THE ACTUAL
QUANTITY OF TESTS PERFORMED PER QUARTER, AND THE PURCHASE PRICE, IF APPLICABLE,
SHALL BE EQUAL TO THE PRODUCT OF THE TEST FEE PLUS A MANUFACTURING FEE (THE
“MANUFACTURING FEE”) MULTIPLIED BY THE QUANTITY OF TESTS PURCHASED.  FAILURE TO
PAY ANY REQUIRED ROYALTY PAYMENT OR PURCHASE PRICE IF NOT CURED WITHIN [**]
([**]) DAYS AFTER NOTICE OF DEFAULT SHALL BE GROUNDS FOR TERMINATION OF THE
LICENSE OR SUPPLY AGREEMENT.  IN THE CASE OF A LICENSE AGREEMENT FOR A
[**]-SPECIFIC SER DIAGNOSTIC PRODUCT, IF THE ANNUAL QUANTITY OF TESTS PERFORMED
IN ANY PERIOD OF [**] CONSECUTIVE CALENDAR QUARTERS (A “[**]”) COMMENCING WITH
THE FIRST DAY OF THE FIRST CALENDAR QUARTER AFTER THE FIRST COMMERCIAL SALE OF
SUCH [**]-SPECIFIC SER DIAGNOSTIC PRODUCT (THE “START DATE”) OR ANY ANNIVERSARY
OF THE START DATE IS LESS THAN A FIRST PROJECTED ANNUAL QUANTITY (N1) OF TESTS
TO BE PERFORMED (THE “PROJECTED TEST QUANTITY N1”), THE LICENSEE SHALL BE
REQUIRED TO MAKE A ROYALTY SHORTFALL PAYMENT (THE “ROYALTY SHORTFALL PAYMENT”)
WITHIN [**] ([**]) DAYS AFTER THE END OF THE [**] EQUAL TO THE DIFFERENCE
BETWEEN THE AGGREGATE ROYALTY PAYMENTS THAT WOULD HAVE BEEN PAYABLE HAD N1 TESTS
BEEN PERFORMED DURING THE [**] AND THE AGGREGATE AMOUNT OF THE ROYALTY PAYMENTS
ACTUALLY MADE FOR SUCH [**].   IN THE CASE OF A SUPPLY AGREEMENT FOR A
[**]-SPECIFIC SER DIAGNOSTIC PRODUCT, IF THE ANNUAL QUANTITY OF TESTS PERFORMED
IN ANY [**] IS LESS THAN A SECOND PROJECTED ANNUAL QUANTITY (N2) OF TESTS TO BE
PERFORMED (THE “PROJECTED TEST QUANTITY N2”), THE PURCHASER SHALL BE REQUIRED TO
MAKE A PAYMENT (THE “PURCHASE SHORTFALL PAYMENT”) WITHIN [**] ([**]) DAYS AFTER
THE END OF THE [**] EQUAL TO THE DIFFERENCE BETWEEN THE AGGREGATE PURCHASE PRICE
THAT WOULD HAVE BEEN PAYABLE HAD N2 TESTS BEEN PURCHASED DURING THE [**] AND THE
AMOUNT OF THE PURCHASE PRICE ACTUALLY MADE FOR SUCH [**].  IF THE [**]-SPECIFIC
SER DIAGNOSTIC PRODUCT IS ON THE LABEL OF THE GENETICALLY-TARGETED [**] DRUG,
AND THE APPLICABLE ROYALTY SHORTFALL PAYMENT OR PURCHASE SHORTFALL PAYMENT IS
NOT MADE AND SUCH FAILURE IS NOT CURED WITHIN [**] DAYS AFTER NOTICE FROM BAYER
REQUIRING THAT SUCH PAYMENT BE MADE IN ORDER TO MAINTAIN EXCLUSIVITY, THEN THE
APPLICABLE LICENSE AGREEMENT OR SUPPLY AGREEMENT SHALL BECOME NON-EXCLUSIVE.  IF
THE [**]-SPECIFIC SER DIAGNOSTIC PRODUCT IS NOT ON THE LABEL OF THE
GENETICALLY-TARGETED [**] DRUG, AND THE APPLICABLE ROYALTY SHORTFALL PAYMENT OR
PURCHASE

 

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SHORTFALL PAYMENT IS NOT MADE AND SUCH FAILURE IS NOT CURED WITHIN [**] DAYS
AFTER NOTICE FROM BAYER, THEN THE APPLICABLE LICENSE AGREEMENT OR SUPPLY
AGREEMENT SHALL BECOME NON-EXCLUSIVE OR SHALL BE TERMINATED, AS SPECIFIED IN
BAYER’S NOTICE.

 

(C)                                  PAYMENT VALUES.  BAYER AGREES THAT IT WILL
NOT REFUSE TO ENTER INTO A LICENSE AGREEMENT OR SUPPLY AGREEMENT SOLELY ON THE
BASIS OF A DISPUTE WITH RESPECT TO THE TEST FEE, THE PROJECTED TEST QUANTITY N1
AND/OR THE PROJECTED TEST QUANTITY N2 IF IN SUCH AGREEMENT THE TEST FEE, THE
PROJECTED TEST QUANTITY N1 AND THE PROJECTED TEST QUANTITY N2 HAVE THE FOLLOWING
VALUES:

 

(I)                                     THE VALUE FOR THE TEST FEE IS [**] U.S.
DOLLARS ($[**]), SUBJECT TO ANNUAL ADJUSTMENT EFFECTIVE JANUARY 1 OF EACH YEAR
BEGINNING WITH JANUARY 1, 2004 TO REFLECT CHANGES IN THE PRODUCER PRICE INDEX
FOR INTERMEDIATE GOODS LESS FOOD AND ENERGY (“PPI”), AS FIRST PUBLISHED BY THE
UNITED STATES BUREAU OF LABOR STATISTICS FOR THE TWELVE (12) MONTHS ENDING WITH
SEPTEMBER OF THE PRECEDING YEAR ;

 

(II)                                  THE VALUE FOR THE PROJECTED TEST QUANTITY
N1 IS [**] DURING THE [**], AND [**] DURING [**]; AND

 

(III)                               THE VALUE FOR THE PROJECTED TEST QUANTITY N2
IS [**] DURING THE [**], AND [**] DURING [**];

 

provided, that if any Bayer SER Diagnostic Product has, in any third or
subsequent year of product sales following launch of such product by Bayer, an
average selling price (the “Average Selling Price”) that is at least [**]percent
([**]%) less than the value for the Test Fee or has a quantity sold (the
“Quantity Sold”) that is at least [**] percent ([**]%) less than the value for
the Projected Test Quantity N1 or the Projected Test Quantity N2, as applicable,
then the values for the Test Fee and the Projected Test Quantity N1 or the
Projected Test Quantity N2, as applicable, for any [**]-Specific SER Diagnostic
Product sold by Genaissance or such Genaissance Collaborator shall be reset to
equal the Average Selling Price and the Quantity Sold, respectively, for the
third and subsequent [**] for such [**]-Specific SER Diagnostic Product.  Bayer
shall have no obligation to negotiate with respect to any proposal with respect
to the Test Fee amount, Projected Test Quantity N1 or Projected Test Quantity N2
that differs from the provisions set forth in the preceding sentence.

 

(D)                                 TERMS.  THE TERMS OF ANY EXCLUSIVE LICENSE
AGREEMENT OR ANY EXCLUSIVE SUPPLY AGREEMENT ENTERED INTO BY BAYER PURSUANT TO
SECTION 3.2.2(A) SHALL BE COMMERCIALLY REASONABLE AND CUSTOMARY IN THE
DIAGNOSTICS FIELD.  NOTWITHSTANDING ANYTHING SET FORTH HEREIN TO THE CONTRARY,
ANY SUCH LICENSE OR SUPPLY AGREEMENT WITH GENAISSANCE SHALL TERMINATE UPON THE
TERMINATION OF ANY LICENSE GRANTED BY GENAISSANCE TO BAYER UNDER THIS AGREEMENT
OTHER THAN DUE TO A MATERIAL BREACH BY BAYER OR A FAILURE BY BAYER TO MEET ITS
DILIGENCE OBLIGATIONS UNDER SUCH LICENSE.  BAYER MAY TERMINATE ANY SUCH LICENSE
OR SUPPLY AGREEMENT WITH A COLLABORATOR OF GENAISSANCE UPON TERMINATION OF ANY
LICENSE GRANTED BY GENAISSANCE TO BAYER UNDER THIS AGREEMENT THAT IS REQUIRED BY
BAYER TO PERFORM ITS OBLIGATIONS PURSUANT TO SUCH LICENSE OR SUPPLY AGREEMENT,
UNLESS THE TERMINATION OF SUCH LICENSE GRANTED BY

 

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GENAISSANCE IS DUE TO A MATERIAL BREACH BY BAYER OR FAILURE BY BAYER TO MEET ITS
DILIGENCE OBLIGATIONS UNDER SUCH LICENSE.

 

3.2.3                        GENAISSANCE DIAGNOSTIC PRODUCTS PURCHASE RIGHTS.

 

BAYER SHALL SELL TO GENAISSANCE PRODUCTS (INCLUDING ASR PRODUCTS AND/OR APPROVED
DIAGNOSTIC PRODUCTS) DEVELOPED BY BAYER UNDER THE BAYER SADR DIAGNOSTIC LICENSE
OR THE BAYER SER DIAGNOSTIC LICENSE, FOR INTERNAL USE BY GENAISSANCE IN
PROVIDING CLINICAL TESTING SERVICES, ON TERMS NO LESS FAVORABLE THAN THOSE
AVAILABLE TO ANY OTHER CUSTOMER PURCHASING SUCH PRODUCTS; PROVIDED, HOWEVER,
THAT IN COMPARING PRICES FOR REAGENT PRODUCTS PURCHASED UNDER ARRANGEMENTS,
WHERE INSTRUMENTATION, FINANCING AND SERVICE ARE INCLUDED IN THE PRICE OF THE
REAGENTS, ANY INCREASE IN THE PRICE PER TEST TO GENAISSANCE RESULTING FROM
AMORTIZATION OF INSTRUMENTATION, FINANCING AND SERVICE OVER LOWER VOLUMES SHALL
NOT BE INCLUDED IN SUCH COMPARISON.  NOTWITHSTANDING ANYTHING ELSE TO THE
CONTRARY HEREIN, SUCH OBLIGATION TO SELL SHALL TERMINATE UPON THE TERMINATION OF
ANY LICENSE GRANTED BY GENAISSANCE TO BAYER UNDER THIS AGREEMENT OTHER THAN DUE
TO A MATERIAL BREACH BY BAYER OR A FAILURE BY BAYER TO MEET ITS DILIGENCE
OBLIGATIONS UNDER SUCH LICENSE.

3.2.4                        GENAISSANCE DIAGNOSTIC PRODUCTS LICENSE.

 

(A)                                  IF BAYER FAILS TO MEET ITS DILIGENCE
OBLIGATIONS WITH RESPECT TO AN SADR CLINICAL PHENOTYPE IN THE BAYER SADR
DIAGNOSTIC LICENSE, THEN, SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT,
BAYER SHALL GRANT TO GENAISSANCE A NON-EXCLUSIVE, ROYALTY-BEARING (AS SET FORTH
IN SECTION 4.4(A)) LICENSE IN THE TERRITORY, WITH THE RIGHT TO GRANT NO MORE
THAN ONE SUBLICENSE FOR A SPECIFIC FIELD OF USE, EXCLUDING ANY SUBLICENSES WITH
RESPECT TO CONTRACT, MANUFACTURING OR OTHER SIMILAR SERVICES, UNDER BAYER IP
RIGHTS, TO RESEARCH, DEVELOP, MAKE, USE, IMPORT, OFFER TO SELL AND SELL THE
APPLICABLE GENAISSANCE SADR DIAGNOSTIC PRODUCT (A “GENAISSANCE SADR DIAGNOSTIC
LICENSE”).  IF BAYER FAILS TO MEET ITS DILIGENCE OBLIGATIONS WITH RESPECT TO AN
SER CLINICAL PHENOTYPE IN THE BAYER SER DIAGNOSTIC LICENSE THEN, SUBJECT TO THE
TERMS AND CONDITIONS OF THIS AGREEMENT, BAYER SHALL GRANT TO GENAISSANCE A
NON-EXCLUSIVE, ROYALTY-BEARING (AS SET FORTH IN SECTION 4.4(B)) LICENSE IN THE
TERRITORY, WITH THE RIGHT TO GRANT NO MORE THAN ONE SUBLICENSE IN A SPECIFIC
FIELD OF USE, EXCLUDING ANY SUBLICENSES WITH RESPECT TO CONTRACT, MANUFACTURING
OR OTHER SIMILAR SERVICES, UNDER BAYER IP RIGHTS, TO RESEARCH, DEVELOP, MAKE,
USE, IMPORT, OFFER TO SELL AND SELL THE APPLICABLE GENAISSANCE SER DIAGNOSTIC
PRODUCTS (A “GENAISSANCE SER DIAGNOSTIC LICENSE”).  FOR THE PURPOSES OF CLARITY,
NEITHER A GENAISSANCE SADR DIAGNOSTIC LICENSE NOR A GENAISSANCE SER DIAGNOSTIC
LICENSE SHALL INCLUDE A RIGHT UNDER BAYER IP RIGHTS TO RESEARCH, DEVELOP OR
COMMERCIALIZE THERAPEUTIC DRUG PRODUCTS OR ANY OTHER DIAGNOSTIC PRODUCTS. 
GENAISSANCE SHALL NOT BE OBLIGATED TO PAY A LICENSE ISSUE FEE FOR ANY
GENAISSANCE SADR DIAGNOSTIC LICENSE AND GENAISSANCE SER DIAGNOSTIC LICENSE. 
BAYER SHALL RECEIVE [**] PERCENT ([**]%) OF SUBLICENSE INCOME RECEIVED BY
GENAISSANCE IN CONNECTION WITH ANY SUBLICENSES GRANTED BY GENAISSANCE PURSUANT
TO THIS SECTION 3.2.4.

 

3.3                                 THERAPEUTIC PRODUCTS GRANTS.

 

3.3.1                        GENAISSANCE [**] DRUG PRODUCTS LICENSE.  SUBJECT TO
THE TERMS AND CONDITIONS OF THIS AGREEMENT, BAYER HEREBY GRANTS TO GENAISSANCE
AN EXCLUSIVE, ROYALTY-BEARING (AS SET FORTH IN SECTION 4.4(C) AND (D)) LICENSE
IN THE TERRITORY, WITH THE RIGHT TO GRANT SUBLICENSES,

 

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UNDER BAYER IP RIGHTS, TO USE GNSC SADR HAPTM MARKER ASSOCIATIONS, COLLABORATION
SADR HAPLOTYPE ASSOCIATIONS, BAYER SADR POLYMORPHISM ASSOCIATIONS, GNSC SER
HAPTM MARKER ASSOCIATIONS, COLLABORATION SER HAP™ MARKER ASSOCIATIONS, BAYER SER
POLYMORPHISM ASSOCIATIONS AND THEIR COMPONENT HAPTM MARKERS AND/OR COLLABORATION
[**] HAPLOTYPES AND/OR BAYER POLYMORPHISMS OR ANY OTHER RESULTING IP TO
RESEARCH, DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL AND SELL ANY [**]
DRUG PRODUCT, SUBJECT TO BAYER’S RETENTION OF A ROYALTY-BEARING (AS SET FORTH IN
SECTIONS 4.3(C) AND (D)) RIGHT IN THE TERRITORY, WITHOUT THE RIGHT TO LICENSE,
TO USE BAYER SADR POLYMORPHISM ASSOCIATIONS, BAYER SER POLYMORPHISM
ASSOCIATIONS, COLLABORATION SADR HAPLOTYPE ASSOCIATIONS AND THEIR COMPONENT
BAYER POLYMORPHISMS AND COLLABORATION [**] HAPLOTYPES OR ANY OTHER BAYER
RESULTING IP TO RESEARCH, DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL
AND SELL ANY [**] DRUG PRODUCT.  GENAISSANCE SHALL NOT BE OBLIGATED TO PAY A
LICENSE FEE FOR ANY SUCH LICENSE.  WITHIN [**] ([**]) MONTHS FOLLOWING THE END
OF THE COLLABORATION PERIOD, THE PARTIES SHALL NEGOTIATE REASONABLE DUE
DILIGENCE OBLIGATIONS WITH RESPECT TO THE DEVELOPMENT AND SALES OF A [**] DRUG
PRODUCT BASED, AT LEAST IN PART, ON BAYER IP RIGHTS FOR GENAISSANCE TO MAINTAIN
THE EXCLUSIVITY OF ITS LICENSE.  IF THE PARTIES ARE UNABLE TO AGREE ON THE DUE
DILIGENCE OBLIGATIONS WITHIN SUCH [**] ([**]) MONTH PERIOD, EITHER PARTY MAY
DEMAND RESOLUTION BY AN INDEPENDENT EXPERT.  WITHIN [**] ([**]) DAYS AFTER THE
DATE OF SUCH DEMAND, EACH PARTY SHALL SUBMIT ITS PROPOSAL TO AN INDEPENDENT
EXPERT IN PHARMACEUTICAL LICENSING SELECTED JOINTLY BY THE PARTIES, AND SUCH
EXPERT SHALL ACCEPT THE PROPOSAL OF ONE PARTY OR THE OTHER PARTY IN ITS
ENTIRETY.  BAYER SHALL RECEIVE [**] PERCENT ([**]%) OF SUBLICENSE INCOME
RECEIVED BY GENAISSANCE IN CONNECTION WITH ANY SUBLICENSES GRANTED BY
GENAISSANCE PURSUANT TO THIS SECTION 3.3.1; PROVIDED, HOWEVER, THAT IF
GENAISSANCE GRANTS SUBLICENSES UNDER BAYER IP SOLELY TO USE BAYER SADR
POLYMORPHISM ASSOCIATIONS AND /OR BAYER SER POLYMORPHISM ASSOCIATIONS AND THEIR
COMPONENT BAYER POLYMORPHISMS, THEN BAYER SHALL RECEIVE [**] PERCENT ([**]%) OF
SUBLICENSE INCOME RECEIVED BY GENAISSANCE IN CONNECTION WITH ANY SUCH SUBLICENSE
GRANTED PURSUANT TO THIS SECTION 3.3.1.

 

3.3.2                        GENAISSANCE NON-[**] DRUG PRODUCTS LICENSE. 
SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, BAYER HEREBY GRANTS TO
GENAISSANCE A NON-EXCLUSIVE, ROYALTY-BEARING (WITH TERMS TO BE NEGOTIATED
PURSUANT TO SECTION 4.4(E)), LICENSE IN THE TERRITORY, WITH THE RIGHT TO GRANT
SUBLICENSES, UNDER BAYER IP RIGHTS, TO USE COLLABORATION SADR HAPLOTYPE
ASSOCIATIONS, COLLABORATION SER HAPTM MARKER ASSOCIATIONS AND THEIR COMPONENT
HAPTM MARKERS AND/OR COLLABORATION [**] HAPLOTYPES OR ANY OTHER RESULTING IP TO
RESEARCH, DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL AND SELL ANY
NON-[**] DRUG PRODUCT.  BAYER SHALL RECEIVE [**] PERCENT ([**]%) OF SUBLICENSE
INCOME RECEIVED BY GENAISSANCE IN CONNECTION WITH ANY SUBLICENSES GRANTED BY
GENAISSANCE PURSUANT TO THIS SECTION 3.3.2.

 

3.3.3                        BAYER [**] DRUG PRODUCTS LICENSE.  SUBJECT TO THE
TERMS AND CONDITIONS OF THIS AGREEMENT, GENAISSANCE HEREBY GRANTS TO BAYER A
NON-EXCLUSIVE, ROYALTY-BEARING (AS SET FORTH IN SECTIONS 4.3(C) AND (D)) LICENSE
IN THE TERRITORY, WITHOUT THE RIGHT TO GRANT SUBLICENSES, UNDER GENAISSANCE IP
RIGHTS, TO USE COLLABORATION SADR HAPLOTYPE ASSOCIATIONS AND COLLABORATION SER
HAPTM MARKER ASSOCIATIONS AND THEIR COMPONENT HAPTM MARKERS OR ANY OTHER
RESULTING IP TO RESEARCH, DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL
AND SELL ANY [**] DRUG PRODUCT.

 

27

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3.3.4                        BAYER NON-[**] DRUG PRODUCTS LICENSE.

 

(A)                                  SUBJECT TO THE TERMS AND CONDITIONS OF THIS
AGREEMENT, GENAISSANCE HEREBY GRANTS TO BAYER A NON-EXCLUSIVE, ROYALTY-BEARING
(AS SET FORTH IN SECTION 4.3(E)), LICENSE IN THE TERRITORY, WITH THE RIGHT TO
GRANT SUBLICENSES, UNDER GENAISSANCE IP RIGHTS, TO USE COLLABORATION SADR
HAPLOTYPE ASSOCIATIONS, COLLABORATION SER HAPTM MARKER ASSOCIATIONS AND THEIR
COMPONENT HAPTM MARKERS AND/OR COLLABORATION [**] HAPLOTYPES AND ANY OTHER
RESULTING IP TO RESEARCH, DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL
AND SELL ANY NON-[**] DRUG PRODUCT.  GENAISSANCE SHALL RECEIVE [**] PERCENT
([**]%) OF SUBLICENSE INCOME RECEIVED BY BAYER IN CONNECTION WITH ANY
SUBLICENSES GRANTED BY BAYER PURSUANT TO THIS SECTION 3.3.4.

 

3.4                                 OTHER GRANTS.

 

3.4.1                        BAYER OTHER PRODUCTS LICENSE.  SUBJECT TO THE TERMS
AND CONDITIONS OF THIS AGREEMENT, GENAISSANCE HEREBY GRANTS TO BAYER A
NON-EXCLUSIVE, ROYALTY-BEARING (AS SET FORTH IN SECTION 4.3(F)), LICENSE IN THE
TERRITORY, WITH THE RIGHT TO GRANT SUBLICENSES, UNDER GENAISSANCE RESULTING IP,
TO USE COLLABORATION SADR HAPLOTYPE ASSOCIATIONS, COLLABORATION SER HAPTM MARKER
ASSOCIATIONS AND THEIR COMPONENT HAPTM MARKERS AND/OR COLLABORATION [**]
HAPLOTYPES OR ANY OTHER RESULTING IP TO RESEARCH, DEVELOP, MAKE, HAVE MADE, USE,
IMPORT, OFFER TO SELL AND SELL ANY OTHER PRODUCT.

 

3.4.2                        GENAISSANCE OTHER PRODUCTS LICENSE.  SUBJECT TO THE
TERMS AND CONDITIONS OF THIS AGREEMENT, BAYER HEREBY GRANTS TO GENAISSANCE A
NON-EXCLUSIVE, ROYALTY-BEARING (WITH TERMS TO BE NEGOTIATED PURSUANT TO SECTION
4.4(F)), LICENSE IN THE TERRITORY, WITH THE RIGHT TO GRANT SUBLICENSES, UNDER
BAYER RESULTING IP, TO USE COLLABORATION SADR HAPLOTYPE ASSOCIATIONS,
COLLABORATION SER HAPTM MARKER ASSOCIATIONS AND THEIR COMPONENT HAPTM MARKERS
AND/OR COLLABORATION [**] HAPLOTYPES OR ANY OTHER RESULTING IP TO RESEARCH,
DEVELOP, MAKE, HAVE MADE, USE, IMPORT, OFFER TO SELL AND SELL ANY OTHER PRODUCT.

 

3.5                                 GENAISSANCE RIGHT OF FIRST NEGOTIATION. 
BAYER HEREBY GRANTS TO GENAISSANCE A RIGHT OF FIRST NEGOTIATION TO PERFORM
GENOTYPING AND CLINICAL ASSOCIATION ANALYSES WITH RESPECT TO ADDITIONAL
PHARMACOGENOMIC STUDIES TO BE UNDERTAKEN BY BAYER BUSINESS GROUP DIAGNOSTICS
WITHIN FIVE (5) YEARS AFTER THE DATE OF THIS AGREEMENT TO IDENTIFY CORRELATIONS
BETWEEN GENETIC MARKERS AND SADR CLINICAL PHENOTYPES AND/OR SER CLINICAL
PHENOTYPES FOR [**] AS A CLASS OR FOR INDIVIDUAL [**].  IF BAYER INTENDS TO
BEGIN NEGOTIATIONS WITH A THIRD PARTY TO PERFORM SUCH ANALYSES (EACH, AN
“OPPORTUNITY”), BAYER SHALL PROVIDE WRITTEN NOTICE OF SUCH INTENT TO GENAISSANCE
AND GENAISSANCE SHALL NOTIFY BAYER IN WRITING WITHIN THIRTY (30) DAYS (THE
“RESPONSE PERIOD”) AS TO WHETHER IT HAS A BONA FIDE INTEREST IN DISCUSSING SUCH
OPPORTUNITY.  SUCH WRITTEN NOTICE FROM BAYER SHALL INCLUDE INFORMATION
REASONABLY NECESSARY TO ENABLE GENAISSANCE TO MAKE AN INFORMED DECISION WITH
RESPECT TO SUCH OPPORTUNITY.  IF, DURING THE RESPONSE PERIOD, GENAISSANCE
INDICATES THAT IT IS INTERESTED IN DISCUSSING SUCH OPPORTUNITY, THE PARTIES
SHALL ENTER INTO GOOD FAITH NEGOTIATIONS ON SUCH TERMS AS MAY BE MUTUALLY
AGREEABLE.  IF (A) GENAISSANCE DOES NOT INDICATE DURING THE RESPONSE PERIOD THAT
IT IS INTERESTED IN DISCUSSING SUCH OPPORTUNITY, (B) GENAISSANCE INDICATES THAT
IT HAS NO INTEREST IN SUCH OPPORTUNITY, OR (C) GENAISSANCE INDICATES AN INTEREST
IN SUCH OPPORTUNITY DURING THE RESPONSE PERIOD, BUT THE PARTIES ARE UNABLE TO
REACH MUTUAL AGREEMENT WITH RESPECT TO THE OPPORTUNITY WITHIN SIXTY (60) DAYS,
BAYER SHALL BE FREE TO ENTER INTO A TRANSACTION RELATING TO SUCH OPPORTUNITY
WITH A THIRD PARTY OR AFFILIATE.  NOTWITHSTANDING THE FOREGOING, SUCH RIGHT OF
FIRST NEGOTIATION (I) SHALL BE SUBJECT TO THE

 

28

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TERMS OF THE AGREEMENT DATED AUGUST 31, 1999, BETWEEN BAYER AND THE UNIVERSITY
OF REGENSBURG AND (II) SHALL TERMINATE UPON A BAYER COMPETITOR ACQUIRING A
MAJORITY OF THE OUTSTANDING SHARES OF STOCK OF GENAISSANCE OR UPON A MERGER,
CONSOLIDATION, OR SALE OF SUBSTANTIALLY ALL THE ASSETS OF GENAISSANCE WITH OR TO
A BAYER COMPETITOR.

 

3.6                                 TERM OF LICENSES.  UNLESS EARLIER TERMINATED
IN ACCORDANCE WITH ARTICLE IX HEREOF, EACH LICENSE GRANTED HEREUNDER SHALL
CONTINUE UNTIL THE LATER OF (A) THE FIRST DATE ON WHICH ALL CLAIMS OF ALL PATENT
RIGHTS INCLUDED IN SUCH LICENSE HAVE EXPIRED IN ALL COUNTRIES AND NO
APPLICATIONS FOR ANY SUCH PATENT RIGHTS ARE PENDING IN ANY COUNTRY OR (B) TWENTY
(20) YEARS FROM THE EFFECTIVE DATE; PROVIDED, THAT WITH RESPECT TO KNOW HOW NOT
COVERED BY ANY VALID CLAIM OF ANY PATENT RIGHT, EACH SUCH LICENSE SHALL BE
BECOME FULLY-PAID UP AND PERPETUAL ON THE LATER OF SUCH TWO DATES IF NOT
TERMINATED PURSUANT TO ARTICLE IX PRIOR THERETO.

 

3.7                                 SPECIAL SUBLICENSING RIGHTS.  IN THE EVENT
THAT A PARTY TRANSFERS TO A THIRD PARTY ITS BUSINESS OPERATIONS AND ASSETS
RELATING TO ONE OR MORE OF THE FIELDS IN WHICH SUCH PARTY HOLDS A LICENSE
WITHOUT SUBLICENSING RIGHTS HEREUNDER, SUCH PARTY MAY GRANT A SUBLICENSE TO THE
TRANSFEREE COVERING SUCH FIELD(S), PROVIDED THAT SUCH PARTY DOES NOT RETAIN ANY
RIGHT ITSELF TO PRACTICE IN THE FIELD(S) COVERED BY SUCH LICENSE

 

3.8                                 NON-SUIT COVENANT WITH RESPECT TO SELECTED
PRODUCTS.

 

3.8.1                        GENAISSANCE COVENANT.  GENAISSANCE COVENANTS NOT TO
SUE BAYER (OR ITS AFFILIATES, LICENSEES, SUBLICENSEES, CONTRACTORS OR AUTHORIZED
PURCHASERS OF PRODUCTS) UNDER ANY PATENT RIGHTS NOW OR AT ANYTIME HEREAFTER
OWNED OR OTHERWISE CONTROLLED BY GENAISSANCE, OTHER THAN GENAISSANCE IP RIGHTS,
IN THE EXERCISE BY BAYER (OR ITS LICENSEES OR SUBLICENSEES) OF ITS RIGHTS UNDER
THE BAYER SADR DIAGNOSTIC LICENSE AND THE BAYER SER DIAGNOSTIC LICENSE. 
GENAISSANCE FURTHER COVENANTS THAT IT SHALL ENSURE THAT NEITHER ITS LICENSEES
NOR SUBLICENSEES SHALL SUE BAYER (OR ITS AFFILIATES, LICENSEES, SUBLICENSEES,
CONTRACTORS OR AUTHORIZED PURCHASERS OF PRODUCTS) UNDER ANY PATENT RIGHTS OWNED
OR OTHERWISE CONTROLLED BY SUCH LICENSEES OR SUBLICENSEES OF GENAISSANCE THAT
COVER ANY INVENTIONS MADE THROUGH THE USE OF BAYER IP RIGHTS OR GENAISSANCE
RESULTING IP, IN THE EXERCISE BY BAYER (OR ITS LICENSEES OR SUBLICENSEES) OF ITS
RIGHTS UNDER THE BAYER SADR DIAGNOSTIC LICENSE AND THE BAYER SER DIAGNOSTIC
LICENSE.

 

3.8.2                        BAYER COVENANT.  BAYER COVENANTS NOT TO SUE
GENAISSANCE (OR ITS AFFILIATES, LICENSEES, SUBLICENSEES, CONTRACTORS OR
AUTHORIZED PURCHASERS OF PRODUCTS) UNDER ANY PATENT RIGHTS NOW OR AT ANYTIME
HEREAFTER OWNED OR OTHERWISE CONTROLLED BY BAYER, OTHER THAN BAYER IP RIGHTS, IN
THE EXERCISE BY GENAISSANCE (OR ITS LICENSEES OR SUBLICENSEES) OF ITS RIGHTS
UNDER THE LICENSE GRANT SET FORTH IN SECTION 3.3.1 TO RESEARCH, DEVELOP AND
COMMERCIALIZE ANY GENETICALLY-TARGETED [**] DRUG PRODUCT.  BAYER FURTHER
COVENANTS THAT IT SHALL ENSURE THAT NEITHER ITS LICENSEES NOR SUBLICENSEES SHALL
SUE GENAISSANCE (OR ITS AFFILIATES, LICENSEES, SUBLICENSEES, CONTRACTORS OR
AUTHORIZED PURCHASERS OF PRODUCTS) UNDER ANY PATENT RIGHTS OWNED OR OTHERWISE
CONTROLLED BY SUCH LICENSEES OR SUBLICENSEES OF BAYER THAT COVER ANY INVENTIONS
MADE THROUGH THE USE OF GENAISSANCE IP RIGHTS OR BAYER RESULTING IP, IN THE
EXERCISE BY GENAISSANCE (OR ITS LICENSEES OR SUBLICENSEES) OF ITS RIGHTS UNDER
THE LICENSE GRANT SET FORTH IN SECTION 3.3.1 TO RESEARCH, DEVELOP OR
COMMERCIALIZE ANY [**] DRUG PRODUCT.

 

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3.9                                 UNITARY CONTRACT; RIGHTS UPON REJECTION.

 

3.9.1                        UNITARY CONTRACT.  THE PARTIES ACKNOWLEDGE AND
STIPULATE THAT THIS AGREEMENT AND THE LICENSES AND OTHER RIGHTS GRANTED UNDER
THIS AGREEMENT ARE AN INTEGRATED UNITARY CONTRACT AND ARE PART OF A SINGLE
TRANSACTION AMONG THE PARTIES.  THE PARTIES FURTHER ACKNOWLEDGE AND STIPULATE
THAT IN THE EVENT THAT A PARTY BECOMES A DEBTOR IN A PROCEEDING UNDER ANY
CHAPTER OF THE UNITED STATES BANKRUPTCY CODE, 11 U.S.C. §101 ET SEQ., AS AMENDED
(THE “BANKRUPTCY CODE”), SUCH PARTY (OR ANY SUCCESSOR IN INTEREST, INCLUDING ANY
TRUSTEE AS SUCH TERM IS USED WITHIN SECTION 365 OF THE BANKRUPTCY CODE) MAY ONLY
ASSUME OR REJECT THIS AGREEMENT IN ITS ENTIRETY.  NOTWITHSTANDING THE FOREGOING,
THAT PORTION OF THIS AGREEMENT THAT CONSTITUTES A SECURITY AGREEMENT IS
NON-EXECUTORY AND SHALL NOT BE SUBJECT TO REJECTION IN THE EVENT OF A
BANKRUPTCY.

 

3.9.2                        RIGHTS UPON REJECTION.  THE PARTIES ACKNOWLEDGE AND
STIPULATE THAT THIS AGREEMENT IS INTENDED TO AND SHALL BE DEEMED TO BE A LICENSE
OF RIGHTS TO INTELLECTUAL PROPERTY WITHIN THE MEANING OF SECTION 365(N) OF THE
BANKRUPTCY CODE.  IN THE EVENT THAT ANY PARTY REJECTS THIS AGREEMENT UNDER WHICH
SUCH PARTY IS A LICENSOR OF SUCH RIGHTS TO INTELLECTUAL PROPERTY, THE OTHER
PARTY SHALL BE ENTITLED TO MAKE THE ELECTION SET FORTH IN SECTION 365(N)(1)(A)
OR (B) OF THE BANKRUPTCY CODE IN ACCORDANCE THEREWITH.  IN THE EVENT THAT THE
NON-REJECTING PARTY ELECTS TO RETAIN ITS RIGHTS, AS DESCRIBED IN SECTION
365(N)(1)(B), THE NON-REJECTING PARTY SHALL CONTINUE TO MAKE ALL ROYALTY
PAYMENTS DUE UNDER THIS AGREEMENT FOR THE DURATION OF THE TERM OF THIS
AGREEMENT, BUT ALL SUCH ROYALTY PAYMENTS SHALL REMAIN SUBJECT TO THE
ROYALTY-PAYING PARTY’S RIGHT TO RECOUP ANY DAMAGES ARISING FROM OR RELATING TO
THE OTHER PARTY’S FAILURE TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT (BUT
EXCLUDING ANY RIGHT TO OFFSET DAMAGES ARISING SOLELY FROM THE REJECTION OF THIS
AGREEMENT) WITHOUT PREJUDICE TO ANY AND ALL OTHER RIGHTS OR REMEDIES AVAILABLE
TO SUCH PARTY, WHETHER ARISING UNDER SECTION 365(N) OF THE BANKRUPTCY CODE, THIS
AGREEMENT, THE SECURITY INTEREST GRANTED TO BAYER HEREUNDER, OR AT EQUITY OR IN
LAW.

 

3.10                           TERMS OF LICENSES AND SUBLICENSES GRANTED BY
PARTIES.  EACH LICENSE OF BAYER RESULTING IP AND EACH SUBLICENSE OF GENAISSANCE
IP RIGHTS GRANTED BY BAYER TO A THIRD PARTY SHALL PROVIDE FOR ASSIGNMENT THEREOF
TO GENAISSANCE AS REQUIRED PURSUANT TO SECTION 9..4.1, SHALL REQUIRE COMPLIANCE
BY THE LICENSEE OR SUBLICENSEE WITH THE TERMS OF THIS AGREEMENT WITH RESPECT TO
SALES OF PRODUCTS BY SUCH LICENSEE OR SUBLICENSEE AND SHALL PROVIDE THAT
GENAISSANCE SHALL HAVE NO LIABILITY FOR ANY OBLIGATIONS OF BAYER UNDER SUCH
LICENSE OR SUBLICENSE (“EXCLUDED BAYER OBLIGATIONS”) (I) ARISING PRIOR TO THE
DATE THAT SUCH ASSIGNMENT HAS BEEN EXECUTED BY BAYER AND ACKNOWLEDGED BY THE
LICENSEE OR SUBLICENSEE OR (II) THAT DOES NOT CORRESPOND TO THE OBLIGATIONS
UNDERTAKEN BY GENAISSANCE WITH RESPECT TO THE LICENSES GRANTED BY GENAISSANCE
HEREUNDER.  BAYER AGREES TO INDEMNIFY, DEFEND, AND TO HOLD GENAISSANCE HARMLESS
OF AND FROM ANY AND ALL LIABILITY, LOSS OR DAMAGE THAT IT MAY OR MIGHT INCUR BY
REASON OF ANY CLAIMS OR DEMANDS AGAINST GENAISSANCE BASED ON OR ARISING OUT OF
AN ALLEGED ASSUMPTION OF ANY BAYER EXCLUDED OBLIGATIONS.  EACH LICENSE OF
GENAISSANCE RESULTING IP AND EACH SUBLICENSE OF BAYER IP RIGHTS GRANTED BY
GENAISSANCE TO A THIRD PARTY SHALL PROVIDE FOR ASSIGNMENT THEREOF TO BAYER AS
REQUIRED PURSUANT TO SECTION 9.4.2, SHALL REQUIRE COMPLIANCE BY THE LICENSEE OR
SUBLICENSEE WITH THE TERMS OF THIS AGREEMENT WITH RESPECT TO SALES OF PRODUCTS
BY SUCH LICENSEE OR SUBLICENSEE AND SHALL PROVIDE THAT BAYER SHALL HAVE NO
LIABILITY FOR ANY OBLIGATION OF GENAISSANCE UNDER SUCH LICENSE OR SUBLICENSE
(“EXCLUDED GENAISSANCE OBLIGATIONS”) (I) ARISING PRIOR TO THE DATE THAT SUCH
ASSIGNMENT HAS BEEN EXECUTED BY GENAISSANCE AND ACKNOWLEDGED BY THE LICENSEE OR
SUBLICENSEE OR (II) THAT DOES NOT CORRESPOND TO THE OBLIGATIONS UNDERTAKEN BY
BAYER WITH RESPECT TO THE LICENSES GRANTED BY BAYER HEREUNDER.  GENAISSANCE
AGREES TO INDEMNIFY, DEFEND, AND TO HOLD

 

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BAYER HARMLESS OF AND FROM ANY AND ALL LIABILITY, LOSS OR DAMAGE THAT IT MAY OR
MIGHT INCUR BY REASON OF ANY CLAIMS OR DEMANDS AGAINST BAYER BASED ON OR ARISING
OUT OF AN ALLEGED ASSUMPTION OF ANY GENAISSANCE EXCLUDED OBLIGATIONS.

 

ARTICLE IV

PAYMENTS

 

4.1                                 HAPTM TYPING FEE.  BAYER SHALL PAY TO
GENAISSANCE A NONREFUNDABLE FEE (“HAPTM TYPING FEE”) CALCULATED IN ACCORDANCE
WITH THIS SECTION 4.1, FOR ASSIGNING A PAIR OF HAPTM MARKERS TO A PATIENT SAMPLE
ON A PER SNP ASSAYED PER SAMPLE BASIS, WHETHER OR NOT SUCCESSFUL, IN CONNECTION
WITH THE SADR STUDY, AS SPECIFICALLY SET FORTH IN SECTION 2.1.  ON THE EFFECTIVE
DATE, BAYER SHALL PAY TO GENAISSANCE [**] DOLLARS ($[**]) TO BE CREDITED TOWARD
THE HAPTM TYPING FEES TO BE INCURRED BY BAYER DURING THE SADR STUDY. 
THEREAFTER, GENAISSANCE SHALL SEND TO BAYER MONTHLY INVOICES SETTING FORTH THE
HAPTM TYPING FEES FOR THE PRIOR CALENDAR MONTH.  IF THE ACTUAL AMOUNT OF HAPTM
TYPING FEES OWED BY BAYER TO GENAISSANCE PURSUANT TO THIS AGREEMENT IS LESS THAN
SUCH PREPAID AMOUNT FOR ANY REASON, INCLUDING THE TERMINATION OF THIS AGREEMENT,
THEN GENAISSANCE SHALL RETURN THE EXCESS PREPAYMENT AMOUNT TO BAYER.

 

Number of SNPs Assayed

 

Fee Per SNP

 

1 – [**]

 

$

[**]

 

Over [**]

 

$

[**]

 

 

4.2                                 SEQUENCING FEE.  BAYER SHALL PAY TO
GENAISSANCE A NONREFUNDABLE FEE (“SEQUENCING FEE”) OF $[**] FOR EACH SEQUENCING
RUN, WHETHER OR NOT SUCCESSFUL, PERFORMED BY GENAISSANCE IN CONNECTION WITH THE
SADR STUDY, AS SPECIFICALLY SET FORTH IN SECTION 2.1.2(D).  ON THE EFFECTIVE
DATE, BAYER SHALL PAY TO GENAISSANCE [**] DOLLARS ($[**]) TO BE CREDITED TOWARD
THE SEQUENCING FEES TO BE INCURRED BY BAYER DURING THE SADR STUDY.  THEREAFTER,
GENAISSANCE SHALL SEND TO BAYER MONTHLY INVOICES SETTING FORTH THE SEQUENCING
FEES FOR THE PRIOR CALENDAR MONTH.  IF THE ACTUAL AMOUNT OF SEQUENCING FEES OWED
BY BAYER TO GENAISSANCE PURSUANT TO THIS AGREEMENT IS LESS THAN SUCH PREPAID
AMOUNT FOR ANY REASON, INCLUDING THE TERMINATION OF THIS AGREEMENT, THEN
GENAISSANCE SHALL RETURN THE EXCESS PREPAYMENT AMOUNT TO BAYER.

 

4.3                                 BAYER ROYALTIES.

 

(A)                                  SADR DIAGNOSTIC PRODUCT ROYALTIES.  SUBJECT
TO SECTIONS 4.5 AND 4.6, BAYER SHALL PAY TO GENAISSANCE ROYALTIES IN AN AMOUNT
EQUAL TO THE FOLLOWING PERCENTAGE OF THE NET SALES OF EACH SADR DIAGNOSTIC
PRODUCT THAT (I) IS SOLD OR OTHERWISE DISPOSED OF BY BAYER, ITS AFFILIATES
AND/OR ITS SUBLICENSEES AND (II) (A) COVERED BY A VALID CLAIM INCLUDED WITHIN
GENAISSANCE IP RIGHTS OR BAYER PATENT RIGHTS, OR (B) EMBODIES OR IS DISCOVERED
OR DEVELOPED USING KNOW-HOW INCLUDED WITHIN GENAISSANCE IP RIGHTS OR BAYER
KNOW-HOW:

 

Cumulative Net Sales of such Product

 

Royalty Rate

 

 

 

 

 

$0 < $U.S.[**]

 

[**]

%

 

 

 

 

$U.S. [**] < $U.S. [**]

 

[**]

%

 

 

 

 

$U.S. [**] < $U.S. [**]

 

[**]

%

 

 

 

 

> $U.S. [**]

 

[**]

%

 

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Notwithstanding the foregoing, if in any [**] ([**]) consecutive Calendar
Quarters the amount of Net Sales of a SADR Diagnostic Product subject to
royalties in accordance with the preceding sentence is more than [**] percent
([**]%) lower than the amount of Net Sales of such SADR Diagnostic Product for
the corresponding Calendar Quarters of the prior [**], then commencing with the
[**] of such [**] Calendar Quarters, and continuing for the duration of the
Royalty Term for such SADR Diagnostic Product, the applicable royalty rate shall
be the lower of the royalty rate determined in accordance with the preceding
sentence and a royalty rate determined as follows, based on the Net Sales of
such SADR Diagnostic Product to date for the [**] in which such [**] Calendar
Quarter occurs:

 

Annual Net Sales to date of such Product

 

Royalty Rate

 

 

 

 

 

Equal to or greater than $U.S. [**]

 

[**]

%

 

 

 

 

Equal to or greater than $U.S. [**] but less than $U.S. [**]

 

[**]

%

 

 

 

 

Equal to or greater than $U.S. [**] but less than $U.S. [**]

 

[**]

%

 

 

 

 

Less than $U.S. [**]

 

[**]

%

 

(B)                                 SER DIAGNOSTIC PRODUCT ROYALTIES.  SUBJECT
TO SECTIONS 4.5 AND 4.6, BAYER SHALL PAY TO GENAISSANCE ROYALTIES IN AN AMOUNT
EQUAL TO THE FOLLOWING PERCENTAGE OF THE NET SALES OF EACH SER DIAGNOSTIC
PRODUCT THAT (I) IS SOLD OR OTHERWISE DISPOSED OF BY BAYER, ITS AFFILIATES
AND/OR ITS SUBLICENSEES AND (II) (A) COVERED BY A VALID CLAIM INCLUDED WITHIN
GENAISSANCE IP RIGHTS OR BAYER PATENT RIGHTS, OR (B) EMBODIES OR IS DISCOVERED
OR DEVELOPED USING KNOW-HOW INCLUDED WITHIN GENAISSANCE IP RIGHTS OR BAYER
KNOW-HOW: 

 

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Cumulative Net Sales of such Product

 

Royalty Rate

 

 

 

 

 

$0 < $U.S. [**]

 

[**]%

 

 

 

 

 

$U.S. [**] < $U.S. [**]

 

[**]%

 

 

 

 

 

$U.S. [**] < $U.S. [**]

 

[**]%

 

 

 

 

 

> $U.S. [**]

 

[**]% (if the [**])

 

 

 

 

 

 

 

[**]% (if the [**])

 

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutive Calendar
Quarters the amount of Net Sales of a SER Diagnostic Product subject to
royalties in accordance with the preceding sentence is more than [**] percent
([**]%) lower than the amount of Net Sales of such SER Diagnostic Product for
the corresponding Calendar Quarters of the prior [**], then commencing with the
[**] of such [**] Calendar Quarters, and continuing for the duration of the
Royalty Term for such SER Diagnostic Product, the applicable royalty rate shall
be the lower of the royalty rate determined in accordance with the preceding
sentence and a royalty rate determined as follows, based on the Net Sales of
such SER Diagnostic Product to date for the [**] in which such [**] Calendar
Quarter occurs:

 

Annual Net Sales to date of such Product

 

Royalty Rate

 

 

 

 

 

Equal to or greater than $U.S. [**]

 

[**]% if the [**])

 

 

 

 

 

 

 

[**]% if the [**])

 

 

 

 

 

Equal to or greater than $U.S. [**] but less than $U.S. [**]

 

[**]%

 

 

 

 

 

Equal to or greater than $U.S. [**] [**] but less than $U.S. [**]

 

[**]%

 

 

 

 

 

Less than $U.S. [**]

 

[**]%

 

 

(C)                                  BAYER GENETICALLY-TARGETED [**] DRUG
PRODUCT ROYALTIES.  SUBJECT TO SECTIONS 4.5 AND 4.6, BAYER SHALL PAY TO
GENAISSANCE ROYALTIES IN AN AMOUNT EQUAL TO (I) [**] PERCENT ([**]%) OF THE NET
SALES OF EACH BAYER GENETICALLY-TARGETED [**] DRUG PRODUCT THAT (A) IS APPROVED
FOR A POPULATION DEFINED BY ONE (1) OR MORE HAP™ MARKERS IN A COLLABORATION SER
HAP™ MARKER ASSOCIATION, OR ONE (1) OR MORE SURROGATE MARKERS OF SUCH MARKERS,
(B) IS COVERED BY A VALID CLAIM INCLUDED WITHIN GENAISSANCE IP RIGHTS OR BAYER
PATENT RIGHTS, OR (C) EMBODIES OR IS DISCOVERED OR DEVELOPED USING KNOW-HOW
INCLUDED WITHIN GENAISSANCE IP RIGHTS OR BAYER KNOW-HOW, AND (II) ONE PERCENT
(1%) OF THE NET SALES OF EACH BAYER GENETICALLY-TARGETED [**] DRUG PRODUCT THAT
(A) IS APPROVED FOR A POPULATION DEFINED BY ONE (1) OR MORE

 

33

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HAP™ MARKERS OR COLLABORATION [**] HAPLOTYPES IN A COLLABORATION SADR HAPLOTYPE
ASSOCIATION, OR ONE (1) OR MORE SURROGATE MARKERS OF SUCH MARKERS, (B) IS
COVERED BY A VALID CLAIM INCLUDED WITHIN GENAISSANCE IP RIGHTS OR BAYER PATENT
RIGHTS, OR (C) EMBODIES OR IS DISCOVERED OR DEVELOPED USING KNOW-HOW INCLUDED
WITHIN GENAISSANCE IP RIGHTS OR BAYER KNOW-HOW.

 

(D)                                 BAYER OTHER [**] DRUG PRODUCT ROYALTIES. 
SUBJECT TO SECTIONS 4.5 AND 4.6, BAYER SHALL PAY TO GENAISSANCE ROYALTIES IN AN
AMOUNT EQUAL TO ONE-HALF PERCENT (0.5%) OF THE NET SALES OF EACH BAYER OTHER
[**] DRUG PRODUCT THAT IS COVERED BY A VALID CLAIM INCLUDED WITHIN GENAISSANCE
IP RIGHTS OR BAYER PATENT RIGHTS, OR EMBODIES OR IS DISCOVERED OR DEVELOPED
USING KNOW-HOW INCLUDED WITHIN GENAISSANCE IP RIGHTS OR BAYER KNOW-HOW.

 

(E)                                  BAYER NON-[**] DRUG PRODUCT ROYALTIES.
SUBJECT TO SECTIONS 4.5 AND 4.6, BAYER SHALL PAY TO GENAISSANCE ROYALTIES ON THE
NET SALES OF EACH BAYER NON-[**] DRUG PRODUCT THAT IS COVERED BY A VALID CLAIM
INCLUDED WITHIN GENAISSANCE IP RIGHTS OR BAYER PATENT RIGHTS, OR EMBODIES OR IS
DISCOVERED OR DEVELOPED USING KNOW-HOW INCLUDED WITHIN GENAISSANCE IP RIGHTS OR
BAYER KNOW-HOW, AT A ROYALTY RATE OF NOT LESS THAN [**] PERCENT ([**]%) AND NOT
MORE THAN [**] PERCENT ([**]%) TO BE AGREED UPON BY THE PARTIES AS TO ANY CLASS
OF NON-[**] DRUG PRODUCTS AT ANY TIME UPON REQUEST BY BAYER DURING THE TERM OF
THE LICENSE DESCRIBED IN SECTION 3.3.4.  IF THE PARTIES ARE UNABLE TO AGREE UPON
THE ROYALTY RATE FOR A CLASS OF NON-[**] DRUG PRODUCTS WITHIN [**] ([**]) MONTHS
AFTER BAYER’S REQUEST, THEN BAYER MAY DEMAND RESOLUTION BY AN INDEPENDENT
EXPERT.  WITHIN [**] ([**]) DAYS AFTER THE DATE OF SUCH DEMAND, EACH PARTY SHALL
SUBMIT ITS PROPOSAL TO AN INDEPENDENT EXPERT IN PHARMACEUTICAL LICENSING
SELECTED JOINTLY BY THE PARTIES, AND SUCH EXPERT SHALL ACCEPT THE PROPOSAL OF
ONE PARTY OR THE OTHER IN ITS ENTIRETY.  ANY RATE OF ROYALTY FOR A CLASS OF
NON-[**] DRUG PRODUCTS ESTABLISHED PURSUANT TO THIS PARAGRAPH SHALL ALSO BE
DEEMED ESTABLISHED PURSUANT TO PARAGRAPH 4.4(E).

 

(F)                                    BAYER OTHER PRODUCT ROYALTIES.  SUBJECT
TO SECTIONS 4.5 AND 4.6, BAYER SHALL PAY TO GENAISSANCE ROYALTIES ON THE NET
SALES OF EACH OTHER PRODUCT THAT (A) IS SOLD OR OTHERWISE DISPOSED OF BY BAYER,
ITS AFFILIATES AND/OR ITS SUBLICENSEES, PURSUANT TO THE GRANT SET FORTH IN
SECTION 3.4.1, AND (B) IS COVERED BY A VALID CLAIM INCLUDED WITHIN THE RESULTING
PATENT RIGHTS, OR EMBODIES OR IS DISCOVERED OR DEVELOPED USING KNOW-HOW INCLUDED
WITHIN THE RESULTING IP, AT A ROYALTY RATE OF NOT LESS THAN [**] PERCENT ([**]%)
AND NOT MORE THAN [**] PERCENT ([**]%) FOR A THERAPEUTIC DRUG PRODUCT AND AT A
ROYALTY RATE OF NOT LESS THAN [**] PERCENT ([**]%) AND NOT MORE THAN [**]
PERCENT ([**]%) FOR A DIAGNOSTIC PRODUCT.  THE ROYALTY RATE SHALL AS TO ANY
CLASS OF OTHER PRODUCTS SHALL BE AGREED UPON BY THE PARTIES UPON REQUEST BY
BAYER AT ANY TIME DURING THE TERM OF THE LICENSE DESCRIBED IN SECTION 3.4.1.  IF
THE PARTIES ARE UNABLE TO AGREE UPON THE ROYALTY RATE FOR A CLASS OF OTHER
PRODUCTS WITHIN [**] ([**]) MONTHS AFTER BAYER’S REQUEST, THEN BAYER MAY DEMAND
RESOLUTION BY AN INDEPENDENT EXPERT.  WITHIN [**] ([**]) DAYS AFTER THE DATE OF
SUCH DEMAND, EACH PARTY SHALL SUBMIT ITS PROPOSAL TO AN INDEPENDENT EXPERT IN
LICENSING IN THE FIELD AT ISSUE SELECTED JOINTLY BY THE PARTIES, AND SUCH EXPERT
SHALL ACCEPT THE PROPOSAL OF ONE PARTY OR THE OTHER IN ITS ENTIRETY.  ANY RATE
OF ROYALTY FOR A CLASS OF OTHER PRODUCTS ESTABLISHED PURSUANT TO THIS PARAGRAPH
SHALL ALSO BE DEEMED ESTABLISHED PURSUANT TO PARAGRAPH 4.4(F).

 

34

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4.4                                 GENAISSANCE ROYALTIES.

 

(A)                                  SADR DIAGNOSTIC PRODUCT ROYALTIES.  SUBJECT
TO SECTIONS 4.5 AND 4.6, GENAISSANCE SHALL PAY TO BAYER ROYALTIES IN AN AMOUNT
EQUAL TO THE FOLLOWING PERCENTAGE OF THE NET SALES OF EACH GENAISSANCE SADR
DIAGNOSTIC PRODUCT THAT (I) IS SOLD OR OTHERWISE DISPOSED OF BY GENAISSANCE, ITS
AFFILIATES AND/OR ITS SUBLICENSEES AND (II) (A) IS COVERED BY A VALID CLAIM
INCLUDED WITHIN BAYER IP RIGHTS OR GENAISSANCE PATENT RIGHTS OR (B) EMBODIES OR
IS DISCOVERED OR DEVELOPED USING KNOW-HOW INCLUDED WITHIN BAYER IP RIGHTS OR
GENAISSANCE KNOW-HOW.

 

Cumulative Net Sales of such Product

 

Royalty Rate

 

 

 

 

 

$0 < $U.S. [**]

 

[**]%

 

 

 

 

 

$U.S. [**] < $U.S. [**]

 

[**]%

 

 

 

 

 

$U.S. [**] < $U.S. [**]

 

[**]%

 

 

 

 

 

> $U.S. [**]

 

[**]% (if the [**])

 

 

 

 

 

 

 

[**]% (if the [**])

 

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutive Calendar
Quarters the amount of Net Sales of a SADR Diagnostic Product subject to
royalties in accordance with the preceding sentence is more than [**] percent
([**]%) lower than the amount of Net Sales of such SADR Diagnostic Product for
the corresponding Calendar Quarters of the prior [**], then commencing with the
[**] of such [**] Calendar Quarters, and continuing for the duration of the
Royalty Term for such SADR Diagnostic Product, the applicable royalty rate shall
be the lower of the royalty rate determined in accordance with the preceding
sentence and a royalty rate determined as follows, based on the Net Sales of
such SADR Diagnostic Product to date for the [**] in which such [**] Calendar
Quarter occurs:

 

Annual Net Sales to date of such Product

 

Royalty Rate

 

 

 

 

 

Equal to or greater than $U.S. [**]

 

[**]% if the [**])

 

 

 

 

 

 

 

[**]% if the [**])

 

 

 

 

 

Equal to or greater than $U.S. [**] but less than $U.S. [**]

 

[**]%

 

 

 

 

 

Equal to or greater than $U.S. [**] but less than $U.S. [**]

 

[**]%

 

 

 

 

 

Less than $U.S. [**]

 

[**]%

 

 

(B)                                 SER DIAGNOSTIC PRODUCT ROYALTIES.  SUBJECT
TO SECTIONS 4.5 AND 4.6, GENAISSANCE SHALL PAY TO BAYER ROYALTIES IN AN AMOUNT
EQUAL TO THE FOLLOWING PERCENTAGE OF THE

 

35

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NET SALES OF EACH GENAISSANCE SER DIAGNOSTIC PRODUCT THAT (I) IS SOLD OR
OTHERWISE DISPOSED OF BY GENAISSANCE, ITS AFFILIATES AND/OR ITS SUBLICENSEES AND
(II) (A) IS COVERED BY A VALID CLAIM INCLUDED WITHIN BAYER IP RIGHTS OR
GENAISSANCE PATENTS RIGHTS OR (B) EMBODIES OR IS DISCOVERED OR DEVELOPED USING
KNOW-HOW INCLUDED WITHIN BAYER IP RIGHTS OR GENAISSANCE KNOW-HOW: 

 

Cumulative Net Sales of such Product

 

Royalty Rate

 

 

 

 

 

$0 < $U.S. [**]

 

[**]

%

 

 

 

 

$U.S. [**] < $U.S. [**]

 

[**]

%

 

 

 

 

$U.S. [**] < $U.S. [**]

 

[**]

%

 

 

 

 

> $U.S. [**]

 

[**]

%

 

Notwithstanding the foregoing, if in any [**] ([**]) consecutive Calendar
Quarters the amount of Net Sales of a SER Diagnostic Product subject to
royalties in accordance with the preceding sentence is more than [**] percent
([**]%) lower than the amount of Net Sales of such SER Diagnostic Product for
the corresponding Calendar Quarters of the prior [**], then commencing with the
[**] of such [**] Calendar Quarters, and continuing for the duration of the
Royalty Term for such SER Diagnostic Product, the applicable royalty rate shall
be the lower of the royalty rate determined in accordance with the preceding
sentence and a royalty rate determined as follows, based on the Net Sales of
such SER Diagnostic Product to date for the [**] in which such [**] Calendar
Quarter occurs:

 

Annual Net Sales to date of such Product

 

Royalty Rate

 

 

 

 

 

Equal to or greater than $U.S. [**]

 

[**]

%

 

 

 

 

Equal to or greater than $U.S. [**] but less than $U.S. [**]

 

[**]

%

 

 

 

 

Equal to or greater than $U.S. [**] but less than $U.S. [**]

 

[**]

%

 

 

 

 

Less than $U.S. [**]

 

[**]

%

 

(C)                                  GENAISSANCE GENETICALLY-TARGETED [**] DRUG
PRODUCT ROYALTIES.  SUBJECT TO SECTIONS 4.5 AND 4.6, GENAISSANCE SHALL PAY TO
BAYER ROYALTIES IN AN AMOUNT EQUAL TO [**] PERCENT ([**]%) OF THE NET SALES OF
EACH GENAISSANCE GENETICALLY-TARGETED [**] DRUG PRODUCT THAT IS COVERED BY A
VALID CLAIM INCLUDED WITHIN BAYER IP RIGHTS OR GENAISSANCE PATENT RIGHTS OR
EMBODIES OR IS DISCOVERED OR DEVELOPED USING KNOW-HOW INCLUDED WITHIN BAYER IP
RIGHTS OR GENAISSANCE KNOW-HOW.

 

36

--------------------------------------------------------------------------------

 

(D)                                 GENAISSANCE OTHER [**] DRUG PRODUCT
ROYALTIES.  SUBJECT TO SECTIONS 4.5 AND 4.6, GENAISSANCE SHALL PAY TO BAYER
ROYALTIES IN AN AMOUNT EQUAL TO [**] PERCENT ([**]%) OF THE NET SALES OF EACH
GENAISSANCE OTHER [**] DRUG PRODUCT THAT IS COVERED BY A VALID CLAIM INCLUDED
WITHIN BAYER IP RIGHTS OR GENAISSANCE PATENT RIGHTS OR EMBODIES OR IS DISCOVERED
OR DEVELOPED USING KNOW-HOW INCLUDED WITHIN BAYER IP RIGHTS OR GENAISSANCE
KNOW-HOW.

 

(E)                                  GENAISSANCE NON-[**] DRUG PRODUCT
ROYALTIES.  SUBJECT TO SECTIONS 4.5 AND 4.6, GENAISSANCE SHALL PAY TO BAYER
ROYALTIES ON THE NET SALES OF EACH GENAISSANCE NON-[**] DRUG PRODUCT THAT IS
COVERED BY A VALID CLAIM INCLUDED WITHIN BAYER IP RIGHTS OR GENAISSANCE PATENT
RIGHTS OR EMBODIES OR IS DISCOVERED OR DEVELOPED USING KNOW-HOW INCLUDED WITHIN
BAYER IP RIGHTS OR GENAISSANCE KNOW-HOW, AT A ROYALTY RATE OF NOT LESS THAN [**]
PERCENT ([**]%) AND NOT MORE THAN [**] PERCENT ([**]%).  THE ROYALTY RATE AS TO
ANY CLASS OF NON-[**] DRUG PRODUCTS SHALL BE AGREED UPON BY THE PARTIES UPON
REQUEST BY GENAISSANCE AT ANY TIME DURING THE TERM OF THE LICENSE DESCRIBED IN
SECTION 3.3.2.  IF THE PARTIES ARE UNABLE TO AGREE UPON THE ROYALTY RATE FOR A
CLASS OF NON-[**] DRUG PRODUCTS WITHIN [**] ([**]) MONTHS AFTER GENAISSANCE’S
REQUEST, THEN GENAISSANCE MAY DEMAND RESOLUTION BY AN INDEPENDENT EXPERT. 
WITHIN [**] ([**]) DAYS AFTER THE DATE OF SUCH DEMAND, EACH PARTY SHALL SUBMIT
ITS PROPOSAL TO AN INDEPENDENT EXPERT IN PHARMACEUTICAL LICENSING SELECTED
JOINTLY BY THE PARTIES, AND SUCH EXPERT SHALL ACCEPT THE PROPOSAL OF ONE PARTY
OR THE OTHER IN ITS ENTIRETY.  ANY RATE OF ROYALTY FOR A CLASS OF NON-[**] DRUG
PRODUCTS ESTABLISHED PURSUANT TO THIS PARAGRAPH SHALL ALSO BE DEEMED ESTABLISHED
PURSUANT TO PARAGRAPH 4.3(E).

 

(F)                                    GENAISSANCE OTHER PRODUCT ROYALTIES. 
SUBJECT TO SECTIONS 4.5 AND 4.6, GENAISSANCE SHALL PAY TO BAYER ROYALTIES ON THE
NET SALES OF EACH OTHER PRODUCT THAT (A) IS SOLD OR OTHERWISE DISPOSED OF BY
GENAISSANCE, ITS AFFILIATES AND/OR ITS SUBLICENSEES, PURSUANT TO THE GRANT SET
FORTH IN SECTION 3.4.2 AND (B) IS COVERED BY A VALID CLAIM INCLUDED WITHIN THE
RESULTING PATENT RIGHTS OR EMBODIES OR IS DISCOVERED OR DEVELOPED USING KNOW-HOW
INCLUDED WITHIN THE RESULTING IP, AT A ROYALTY RATE OF NOT LESS THAN [**]
PERCENT ([**]%) AND NOT MORE THAN [**] PERCENT ([**]%) FOR A THERAPEUTIC DRUG
PRODUCT AND AT A ROYALTY RATE OF NOT LESS THAN [**] PERCENT ([**]%) AND NOT MORE
THAN [**] PERCENT ([**]%) FOR A DIAGNOSTIC PRODUCT.  THE ROYALTY RATE AS TO ANY
CLASS OF OTHER PRODUCTS SHALL BE AGREED UPON BY THE PARTIES UPON REQUEST BY
BAYER AT ANY TIME DURING THE TERM OF THE LICENSE DESCRIBED IN SECTION 3.4.2.  IF
THE PARTIES ARE UNABLE TO AGREE UPON THE ROYALTY RATE FOR A CLASS OF OTHER
PRODUCTS WITHIN [**] ([**]) MONTHS AFTER BAYER’S REQUEST, THEN BAYER MAY DEMAND
RESOLUTION BY AN INDEPENDENT EXPERT.  WITHIN [**] ([**]) DAYS AFTER THE DATE OF
SUCH DEMAND, EACH PARTY SHALL SUBMIT ITS PROPOSAL TO AN INDEPENDENT EXPERT IN
LICENSING IN THE FIELD AT ISSUE SELECTED JOINTLY BY THE PARTIES, AND SUCH EXPERT
SHALL ACCEPT THE PROPOSAL OF ONE PARTY OR THE OTHER IN ITS ENTIRETY.  ANY RATE
OF ROYALTY FOR A CLASS OF OTHER PRODUCTS ESTABLISHED PURSUANT TO THIS PARAGRAPH
SHALL ALSO BE DEEMED ESTABLISHED PURSUANT TO PARAGRAPH 4.3(F).

 

4.5                                 ROYALTY OBLIGATION EXCEPTION. 
NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, NO ROYALTIES SHALL
BE PAYABLE BY A PARTY UNDER THIS ARTICLE IV WITH RESPECT TO THE SALE OR OTHER
DISPOSITION OF A PRODUCT BY SUCH PARTY, ITS AFFILIATES OR ITS SUBLICENSEES WHERE
SUCH PRODUCT (A) IS NEITHER COVERED BY A VALID CLAIM INCLUDED WITHIN THE OTHER
PARTY’S PRIOR IP OR WITHIN THE RESULTING IP NOR DISCOVERED OR DEVELOPED USING
KNOW-HOW INCLUDED WITHIN THE OTHER PARTY’S PRIOR IP OR WITHIN THE RESULTING IP,
AND (B) CAN BE SOLD OR OTHERWISE DISPOSED OF BY SUCH

 

37

--------------------------------------------------------------------------------

 

PARTY, ITS AFFILIATES OR ITS SUBLICENSEES IN THE ABSENCE OF ANY LICENSE SET
FORTH IN ARTICLE III WITHOUT THE MISAPPROPRIATION OF ANY KNOW-HOW INCLUDED
WITHIN THE OTHER PARTY’S PRIOR IP.

 

4.6                                 ROYALTY TERMS.

 

(A)                                  LENGTH OF ROYALTY PAYMENTS; ROYALTY
REDUCTION.  THE ROYALTIES PAYABLE UNDER SECTION 4.3 AND SECTION 4.4 SHALL BE
PAID ON A COUNTRY-BY-COUNTRY BASIS ON EACH PRODUCT UNTIL THE LATER OF (I) THE
EXPIRATION OF THE LAST-TO-EXPIRE VALID CLAIM INCLUDED WITHIN THE PATENT RIGHTS
OF THE ROYALTY-RECEIVING PARTY OR WITHIN THE RESULTING PATENT RIGHTS OF THE
ROYALTY PAYING PARTY THAT COVER SUCH PRODUCT OR COMPONENT THEREOF IN SUCH
COUNTRY, OR (II) THE EARLIER OF (A) TEN (10) YEARS AFTER THE FIRST COMMERCIAL
USE OF SUCH PRODUCT IN SUCH COUNTRY OR (B) TWENTY (20) YEARS FROM THE EFFECTIVE
DATE (THE “ROYALTY TERM”), PROVIDED, HOWEVER, THAT AT ANY TIME DURING THE
ROYALTY TERM, WITH RESPECT TO A PRODUCT, WHEN NO VALID CLAIM INCLUDED WITHIN THE
PATENT RIGHTS OF THE ROYALTY-RECEIVING PARTY OR WITHIN THE RESULTING PATENT
RIGHTS OF THE ROYALTY-PAYING PARTY COVERS SUCH PRODUCT OR ANY COMPONENT THEREOF
WITHIN A COUNTRY, THE ROYALTY RATE ON SUCH PRODUCT IN SUCH COUNTRY SHALL BE
REDUCED TO [**] PERCENT ([**]%) OF THE APPLICABLE RATE SET FORTH IN SECTION 4.3
OR SECTION 4.4.  NOTWITHSTANDING THE FOREGOING, (A) THE FIRST COMMERCIAL USE OF
A PRODUCT IN ANY EUROPEAN UNION COUNTRY SHALL BE [**], AND THE FIRST COMMERCIAL
USE IN ANY ROW COUNTRY SHALL BE [**], AND (B) A DIAGNOSTIC PRODUCT SHALL NOT BE
CONSIDERED A NEW PRODUCT HAVING A NEW DATE OF FIRST COMMERCIAL USE UNLESS (1)
[**] OR (2) [**].

 

(B)                                 REQUIRED THIRD PARTY PAYMENTS.  THE
ROYALTY-PAYING PARTY SHALL BE ENTITLED TO DEDUCT FROM THE ROYALTY PAYMENTS
REQUIRED TO BE PAID PURSUANT TO SECTION 4.3 OR SECTION 4.4, PAYMENTS MADE BY THE
ROYALTY-PAYING PARTY TO A THIRD PARTY WITH RESPECT TO SALES OF A PRODUCT IN A
COUNTRY TO LICENSE PATENTS THAT THE ROYALTY-PAYING PARTY REASONABLY DETERMINES
TO BE REQUIRED TO MAKE, USE OR SELL THE PRODUCT IN SUCH COUNTRY (“THIRD PARTY
PAYMENTS”); PROVIDED, HOWEVER, THAT, (I) NO MORE THAN [**] PERCENT ([**]%) OF
THIRD PARTY PAYMENTS MAY BE DEDUCTED FOR LICENSES UNDER THIRD PARTY PATENTS
COVERING [**] (“BLOCKING IP”), (II) NO MORE THAN [**] PERCENT ([**]%) OF THIRD
PARTY PAYMENTS MAY BE DEDUCTED FOR LICENSES UNDER THIRD PARTY PATENTS COVERING
[**] (“ENABLING IP”) AND (III) IN NO EVENT SHALL A DEDUCTION UNDER THIS SECTION
4.5(B) FOR THIRD PARTY PAYMENTS FOR EITHER OR BOTH OF BLOCKING IP AND ENABLING
IP REDUCE ANY ROYALTY PAYMENT OTHERWISE DUE TO THE ROYALTY-RECEIVING PARTY IN A
COUNTRY IN A REPORTING PERIOD BY MORE THAN [**] PERCENT ([**]%).  ANY DEDUCTION
THAT IS NOT USABLE IN A REPORTING PERIOD PURSUANT TO THIS SECTION 4.5(B) MAY BE
CARRIED FORWARD FOR USE IN A FUTURE REPORTING PERIOD.

 

(C)                                  ROYALTIES PAYABLE ONLY ONCE.  THE
OBLIGATION TO PAY ROYALTIES IS IMPOSED ONLY ONCE WITH RESPECT TO THE SAME UNIT
OF A PRODUCT.  EXCEPT AS SPECIFICALLY PROVIDED IN THIS AGREEMENT, IT IS
UNDERSTOOD AND AGREED THAT THERE SHALL BE NO DEDUCTIONS FROM THE ROYALTIES
PAYABLE UNDER THIS AGREEMENT.

 

(D)                                 SALES TO AFFILIATES AND SUBLICENSEES.  SALES
OF PRODUCTS BETWEEN THE ROYALTY-PAYING PARTY AND ITS AFFILIATES OR PERMITTED
SUBLICENSEES, OR AMONG SUCH AFFILIATES AND PERMITTED SUBLICENSEES, SHALL NOT BE
SUBJECT TO ROYALTIES UNDER SECTION 4.3 OR 4.4, BUT IN SUCH CASES THE ROYALTIES
SHALL BE CALCULATED ON THE NET SALES BY SUCH AFFILIATES OR SUBLICENSEES TO A
THIRD PARTY.

 

38

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(E)                                  ROYALTY REPORTS AND ACCOUNTING.

 

(i)                                     Royalty Reports; Royalty Payments.  The
Royalty-Paying Party shall deliver to the Royalty-Receiving Party, within sixty
(60) days after the end of each Calendar Quarter, reasonably detailed written
accountings of Net Sales of Products that are subject to royalty payments due to
the Royalty-Receiving Party for such Calendar Quarter.  Such quarterly reports
shall indicate Net Sales on a country-by-country and product-by-product basis,
and the resulting calculation of royalties, provided, that where a Party
receives reports of Net Sales from Affiliates or sublicensees on a regional
rather than country basis, reporting hereunder may use such regional Net Sales
figures.  When the Royalty-Paying Party delivers such accountings to the
Royalty-Receiving Party, the Royalty-Paying Party shall also deliver all royalty
payments due under Section 4.3 or Section 4.4 to the Royalty-Receiving Party for
the Calendar Quarter, provided that if both Parties have incurred royalty
obligations during a Calendar Quarter, no payments shall be due with the reports
and instead the Royalty-Paying Party owing the greater amount shall remit a net
payment of the difference between the two royalty amounts within fifteen (15)
days after the later of (i) receipt by such Party of the other Party’s
accounting for such Calendar Quarter or (ii) the due date for such Party’s own
accounting for such Calendar quarter.  With respect to sales of Products
invoiced in United States Dollars, the sales and royalties payable shall be
expressed in United States Dollars.  With respect to sales of Products invoiced
in a currency other than United States Dollars, the sales and royalties payable
shall be expressed in their United States Dollar equivalent, calculated using
the applicable conversion rates for buying United States dollars published by
The Wall Street Journal on the last business day of the Calendar Quarter to
which the royalty report relates, provided that a Party may elect to use the
conversion method used generally in its audited financial statements.

 

(ii)                                  Audits.  The Royalty-Paying Party shall
keep, and shall require its Affiliates and sublicensees to keep, complete and
accurate records of the latest three (3) years of sales to which royalties
attach.  For the sole purpose of verifying royalties payable to the
Royalty-Receiving Party, the Royalty-Receiving Party shall have the right
annually at the Royalty-Receiving Party’s expense to retain an independent
certified public accountant selected by the Royalty-Receiving Party and
reasonably acceptable to the Royalty-Paying Party, to review such records in the
location(s) where such records are maintained by the Royalty-Paying Party, its
Affiliates or its sublicensees upon reasonable notice and during regular
business hours and under obligations of confidence.  Results of such review
shall be made available to both the Royalty-Receiving Party and the
Royalty-Paying Party.  If the review reflects an underpayment of royalties to
the Royalty-Receiving Party, such underpayment shall be promptly remitted to the
Royalty-Receiving Party, together with interest calculated in the manner
provided in Section 4.6.  If the underpayment is equal to or greater than [**]
percent ([**]%) of the royalty amount that was otherwise due, the Royalty-Paying
Party shall pay all of the costs of such review.  If the review reflects an
overpayment of royalties to the Royalty-Receiving Party, the amount of such
overpayment shall be credited against future royalties owned by the
Royalty-Paying Party to the Royalty-Receiving Party.

 

4.7                                 LATE PAYMENTS.  THE ROYALTY-PAYING PARTY
SHALL PAY INTEREST TO THE ROYALTY-RECEIVING PARTY ON THE AGGREGATE AMOUNT OF ANY
PAYMENTS THAT ARE NOT PAID ON OR BEFORE THE DATE SUCH PAYMENTS ARE DUE UNDER
THIS AGREEMENT AT A RATE PER ANNUM THAT IS EQUAL TO THE LESSER OF [**] FOR THE
APPLICABLE PERIOD, OR THE HIGHEST RATE PERMITTED BY APPLICABLE LAW, CALCULATED
ON THE NUMBER OF DAYS SUCH PAYMENT IS DELINQUENT.

 

39

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4.8                                 TAX WITHHOLDING.  THE PARTIES SHALL USE ALL
REASONABLE AND LEGAL EFFORTS TO REDUCE TAX WITHHOLDING ON PAYMENTS MADE TO THE
ROYALTY-RECEIVING PARTY HEREUNDER.  NOTWITHSTANDING SUCH EFFORTS, IF THE
ROYALTY-PAYING PARTY CONCLUDES THAT TAX WITHHOLDINGS UNDER THE LAWS OF ANY
COUNTRY ARE REQUIRED WITH RESPECT TO PAYMENTS TO THE ROYALTY-RECEIVING PARTY,
THE ROYALTY-PAYING PARTY SHALL WITHHOLD THE REQUIRED AMOUNT AND PAY IT TO THE
APPROPRIATE GOVERNMENTAL AUTHORITY.  IN SUCH A CASE, THE ROYALTY-PAYING PARTY
SHALL PROMPTLY PROVIDE THE ROYALTY-RECEIVING PARTY WITH ORIGINAL RECEIPTS OR
OTHER EVIDENCE REASONABLY DESIRABLE AND SUFFICIENT TO ALLOW THE
ROYALTY-RECEIVING PARTY TO DOCUMENT SUCH TAX WITHHOLDINGS ADEQUATELY FOR
PURPOSES OF CLAIMING FOREIGN TAX CREDITS AND SIMILAR BENEFITS.

 

4.9                                 BLOCKED PAYMENTS.  IN THE EVENT THAT, BY
REASON OF APPLICABLE LAWS OR REGULATIONS IN ANY COUNTRY, IT BECOMES IMPOSSIBLE
OR ILLEGAL FOR THE ROYALTY-PAYING PARTY OR ITS AFFILIATES OR SUBLICENSEES, TO
TRANSFER, OR HAVE TRANSFERRED ON ITS BEHALF, ROYALTIES OR OTHER PAYMENTS TO THE
ROYALTY-RECEIVING PARTY, SUCH ROYALTIES OR OTHER PAYMENTS SHALL BE DEPOSITED IN
LOCAL CURRENCY IN THE RELEVANT COUNTRY TO THE CREDIT OF THE ROYALTY-RECEIVING
PARTY IN A RECOGNIZED BANKING INSTITUTION DESIGNATED BY THE ROYALTY-RECEIVING
PARTY OR, IF NONE IS DESIGNATED BY THE ROYALTY-RECEIVING PARTY WITHIN A PERIOD
OF THIRTY (30) DAYS, IN A RECOGNIZED BANKING INSTITUTION SELECTED BY THE
ROYALTY-PAYING PARTY OR ITS AFFILIATES OR SUBLICENSEES, AS THE CASE MAY BE, AND
IDENTIFIED IN A NOTICE IN WRITING GIVEN TO THE ROYALTY-RECEIVING PARTY.

 

4.10                           RIGHT OF RECOUPMENT.  NOTWITHSTANDING THE
ROYALTIES PAYABLE UNDER SECTION 4.3 AND SECTION 4.4, THE ROYALTY-PAYING PARTY
SHALL BE ENTITLED TO RECOUP THE AMOUNT OF ANY OBLIGATION OF THE
ROYALTY-RECEIVING PARTY TO THE ROYALTY-PAYING PARTY ARISING OUT OF ANY MATERIAL
BREACH OF THIS AGREEMENT BY THE ROYALTY-RECEIVING PARTY AND NOT OTHERWISE
RECOVERED.

 

ARTICLE V

INTELLECTUAL PROPERTY

 

5.1                                 OWNERSHIP OF INVENTIONS.

 

5.1.1                        GENAISSANCE INVENTIONS.  SUBJECT TO SECTION 5.1.4,
GENAISSANCE SHALL EXCLUSIVELY OWN ALL INVENTIONS MADE SOLELY BY ITS EMPLOYEES,
AGENTS AND CONSULTANTS IN THE CONDUCT OF THE COLLABORATION (“GENAISSANCE
INVENTIONS”).

 

5.1.2                        BAYER INVENTIONS.  SUBJECT TO SECTION 5.1.4, BAYER
SHALL EXCLUSIVELY OWN ALL INVENTIONS MADE SOLELY BY ITS EMPLOYEES, AGENTS AND
CONSULTANTS IN THE CONDUCT OF THE COLLABORATION (“BAYER INVENTIONS”).

 

5.1.3                        JOINT INVENTIONS.  SUBJECT TO SECTION 5.1.4, ALL
INVENTIONS MADE JOINTLY BY EMPLOYEES, AGENTS AND CONSULTANTS OF BAYER AND
EMPLOYEES, AGENTS AND CONSULTANTS OF GENAISSANCE IN THE CONDUCT OF THE
COLLABORATION (“JOINT INVENTIONS”) SHALL BE OWNED JOINTLY ON THE BASIS OF EACH
PARTY HAVING AN UNDIVIDED INTEREST IN THE WHOLE.

 

5.1.4                        ASSIGNMENT.  NOTWITHSTANDING THE FOREGOING, (A)
GENAISSANCE HEREBY ASSIGNS TO BAYER ALL OF ITS RIGHT, TITLE AND INTEREST IN AND
TO GENAISSANCE INVENTIONS AND JOINT INVENTIONS EACH RELATING EXCLUSIVELY TO (I)
COLLABORATION [**] HAPLOTYPES AND (II) COLLABORATION SADR HAPLOTYPE
ASSOCIATIONS, EXCLUDING, IN EACH OF (I) AND (II), INVENTIONS RELATING
EXCLUSIVELY TO HAPTM MARKERS AND HAPTM MARKER ASSOCIATIONS, (B) BAYER HEREBY
ASSIGNS TO GENAISSANCE ALL

 

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OF ITS RIGHT, TITLE AND INTEREST IN AND TO BAYER INVENTIONS AND JOINT INVENTIONS
EACH RELATING EXCLUSIVELY TO HAPTM MARKERS AND HAPTM MARKER ASSOCIATIONS,
EXCLUDING ANY INVENTIONS RELATING EXCLUSIVELY TO BAYER POLYMORPHISMS, (C)
GENAISSANCE HEREBY ASSIGNS TO BAYER ALL OF ITS RIGHT, TITLE AND INTEREST IN AND
TO GENAISSANCE INVENTIONS AND JOINT INVENTIONS NOT REFERRED TO IN (A) OR (B)
MADE USING SAMPLES OWNED BY BAYER, (D) BAYER HEREBY ASSIGNS TO GENAISSANCE ALL
OF ITS RIGHT, TITLE AND INTEREST IN AND TO BAYER INVENTIONS AND JOINT INVENTIONS
NOT REFERRED TO IN (A) OR (B) MADE USING SAMPLES OWNED BY GENAISSANCE, (E)
GENAISSANCE HEREBY ASSIGNS TO BAYER ALL OF ITS RIGHT, TITLE AND INTEREST IN AND
TO GENAISSANCE INVENTIONS AND JOINT INVENTIONS NOT REFERRED TO IN (A), (B), (C)
AND (D) FOR WHICH BAYER OWNS THE MOST CLOSELY RELATED PRIOR ART, (F) BAYER
HEREBY ASSIGNS TO GENAISSANCE ALL OF ITS RIGHT, TITLE AND INTEREST IN AND TO
BAYER INVENTIONS AND JOINT INVENTIONS NOT REFERRED TO IN (A), (B), (C), (D) OR
(E),   EACH GENAISSANCE INVENTION, BAYER INVENTION OR JOINT INVENTION, AS
APPLICABLE, ASSIGNED PURSUANT TO THE IMMEDIATELY PRECEDING SENTENCE SHALL
THEREBY CEASE TO BE A GENAISSANCE INVENTION, BAYER INVENTION OR JOINT INVENTION,
AS THE CASE MAY BE, AS ORIGINALLY OWNED AND BECOME A BAYER INVENTION OR
GENAISSANCE INVENTION, AS THE CASE MAY BE, IN ACCORDANCE WITH THE ASSIGNMENT
THEREOF, AS SET FORTH ABOVE.

 

5.1.5                        INVENTORSHIP.  THE DETERMINATION OF INVENTORSHIP
SHALL BE MADE IN ACCORDANCE WITH THE RELEVANT PATENT LAW OF THE COUNTRY IN WHICH
THE PARTICULAR INVENTION HAS BEEN GENERATED.

 

5.2                                 PATENT PROSECUTION.

 

5.2.1                        GENERAL.  THE PARTIES RECOGNIZE THAT A SINGLE
PATENT APPLICATION MAY DISCLOSE AND CLAIM MORE THAN ONE INVENTION, E.G., A
GENAISSANCE INVENTION AND A BAYER INVENTION.  IN SO FAR AS PRACTICABLE, THE
PARTIES SHALL DRAFT THEIR RESPECTIVE PATENT APPLICATIONS SUCH THAT ASSIGNMENTS
MADE IN ACCORDANCE WITH SECTION 5.1.4 SHALL RESULT IN ASSIGNMENT OF THE ENTIRE
RIGHT, TITLE AND INTEREST IN AND TO A GIVEN PATENT APPLICATION.  FURTHERMORE,
THE PARTIES AGREE TO FILE ANY CONTINUATION OR DIVISIONAL PATENT APPLICATIONS
NEEDED TO EFFECT THE SEPARATE PROSECUTION OF GENAISSANCE INVENTIONS AND BAYER
INVENTIONS.  IF UNDER THE CIRCUMSTANCES OF A GIVEN PATENT APPLICATION, SUCH
SEPARATE PROSECUTION IS NOT PRACTICABLE OR MATERIALLY ADVERSELY AFFECTS
PATENTABILITY, THEN THE PARTIES SHALL AGREE AS TO WHICH OF THEM SHALL BE
RESPONSIBLE FOR THE PATENT PROSECUTION OF SUCH PATENT APPLICATION AND ANY
RESULTING PATENT, AND SUCH PATENT PROSECUTION SHALL BE PURSUED IN ACCORDANCE
WITH SECTIONS 5.2.4 AND 5.2.5.

 

5.2.2                        GENAISSANCE IP RIGHTS.  GENAISSANCE SHALL HAVE THE
EXCLUSIVE RIGHT AND OPTION TO PURSUE THE PATENT PROSECUTION OF GENAISSANCE IP
RIGHTS; PROVIDED, HOWEVER, THAT IN THE EVENT THAT GENAISSANCE DECLINES TO PURSUE
THE PATENT PROSECUTION OF (A) ANY GENAISSANCE IP RIGHTS COVERING (I) AN SADR
DIAGNOSTIC PRODUCT THAT IS THE SUBJECT OF THE BAYER SADR DIAGNOSTIC LICENSE
AND/OR (II) AN SER DIAGNOSTIC PRODUCT THAT IS THIS SUBJECT OF THE BAYER SER
DIAGNOSTIC LICENSE AS LONG AS ANY SUCH LICENSE REMAINS EXCLUSIVE, OR (B) ANY
GENAISSANCE RESULTING IP, GENAISSANCE SHALL GIVE BAYER NO LESS THAN SIXTY (60)
DAYS WRITTEN NOTICE TO THIS EFFECT AND THEREAFTER BAYER MAY, UPON WRITTEN NOTICE
TO GENAISSANCE, ELECT TO ASSUME SOLE CONTROL OVER THE PATENT PROSECUTION OF SUCH
GENAISSANCE IP RIGHTS IN GENAISSANCE’S NAME; PROVIDED, FURTHER, THAT IN THE
EVENT THAT BAYER CEASES TO PURSUE THE PATENT PROSECUTION OF ANY SUCH GENAISSANCE
IP RIGHTS, BAYER SHALL GIVE GENAISSANCE NO LESS THAN SIXTY (60) DAYS WRITTEN
NOTICE TO THIS EFFECT AND THEREAFTER GENAISSANCE MAY, UPON WRITTEN NOTICE TO
BAYER, ELECT TO ASSUME SOLE CONTROL OVER THE PATENT PROSECUTION OF SUCH
GENAISSANCE IP RIGHTS.  IN THE EVENT THAT THE BAYER

 

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SADR DIAGNOSTIC LICENSE AND/OR THE BAYER SER DIAGNOSTIC LICENSE BECOMES
NON-EXCLUSIVE, BAYER’S RIGHTS UNDER THIS SECTION 5.2.2 WITH RESPECT TO
GENAISSANCE IP RIGHTS OTHER THAN GENAISSANCE RESULTING IP SHALL TERMINATE TO THE
EXTENT THAT GENAISSANCE IS WILLING TO, AND DOES, RESUME CONTROL OVER THE PATENT
PROSECUTION OF THE RELEVANT GENAISSANCE IP RIGHTS OTHER THAN GENAISSANCE
RESULTING IP.

 

5.2.3                        BAYER IP RIGHTS.  BAYER SHALL HAVE THE EXCLUSIVE
RIGHT AND OPTION TO PURSUE THE PATENT PROSECUTION OF THE BAYER IP RIGHTS;
PROVIDED, HOWEVER, THAT IN THE EVENT THAT BAYER DECLINES TO PURSUE THE PATENT
PROSECUTION OF (A) ANY BAYER IP RIGHTS COVERING (I) A GENAISSANCE SADR
DIAGNOSTIC PRODUCT AND/OR (II) A GENAISSANCE SER DIAGNOSTIC PRODUCT AND/OR (III)
A [**]-SPECIFIC SER DIAGNOSTIC PRODUCT THAT IS THE SUBJECT OF A LICENSE, IF ANY,
TO GENAISSANCE OR A GENAISSANCE COLLABORATOR PURSUANT TO SECTION 3.2.2, AND/OR
(IV) A [**] DRUG PRODUCT THAT IS THE SUBJECT OF A LICENSE TO GENAISSANCE
PURSUANT TO SECTION 3.3.1(A), AS LONG AS ANY SUCH LICENSE REMAINS EXCLUSIVE OR
CO-EXCLUSIVE, AS THE CASE MAY BE, OR (B) ANY BAYER RESULTING IP, BAYER SHALL
GIVE GENAISSANCE NO LESS THAN SIXTY (60) DAYS WRITTEN NOTICE TO THIS EFFECT AND
THEREAFTER GENAISSANCE (OR, IN THE CASE OF A [**]-SPECIFIC SER DIAGNOSTIC
PRODUCT, A GENAISSANCE COLLABORATOR, IF APPLICABLE) MAY, UPON WRITTEN NOTICE TO
BAYER, ELECT TO ASSUME SOLE CONTROL OVER THE PATENT PROSECUTION OF SUCH BAYER IP
RIGHTS AND MAINTAIN SUCH BAYER IP RIGHTS IN BAYER’S NAME; PROVIDED, FURTHER,
THAT IN THE EVENT THAT GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF
APPLICABLE) CEASES TO PURSUE THE PATENT PROSECUTION OF ANY SUCH BAYER IP RIGHTS,
GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) SHALL GIVE BAYER NO
LESS THAN SIXTY (60) DAYS WRITTEN NOTICE TO THIS EFFECT AND THEREAFTER BAYER
MAY, UPON WRITTEN NOTICE TO GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF
APPLICABLE), ELECT TO ASSUME SOLE CONTROL OVER THE PATENT PROSECUTION OF SUCH
BAYER IP RIGHTS.  IN THE EVENT THAT A LICENSE DESCRIBED IN THIS SECTION 5.2.3
BECOMES NON-EXCLUSIVE, GENAISSANCE’S (OR A GENAISSANCE COLLABORATOR’S, IF
APPLICABLE) RIGHTS UNDER THIS SECTION 5.2.3 WITH RESPECT TO IP OTHER THAN BAYER
RESULTING IP TO THE EXTENT THAT BAYER IS WILLING TO, AND DOES, RESUME CONTROL
OVER THE PATENT PROSECUTION OF THE RELEVANT BAYER IP RIGHTS.

 

5.2.4                        COSTS AND EXPENSES.  [**] IN ACCORDANCE WITH THIS
SECTION 5.2.

 

5.2.5                        COOPERATION.

 

(A)                                  GENERAL.  EACH PARTY AGREES TO COOPERATE
WITH THE OTHER WITH RESPECT TO PATENT PROSECUTION PURSUANT TO THIS SECTION 5.2,
INCLUDING, WITHOUT LIMITATION, THE EXECUTION OF ALL SUCH DOCUMENTS AND
INSTRUMENTS AND THE PERFORMANCE OF SUCH ACTS AS MAY BE REASONABLY NECESSARY IN
ORDER TO PERMIT THE OTHER PARTY TO CONTINUE ANY PATENT PROSECUTION THAT SUCH
PARTY HAS ELECTED NOT TO PURSUE, AS PROVIDED FOR IN THIS SECTION 5.2.  EACH
PARTY SHALL, ON AN ANNUAL BASIS, PROVIDE TO THE OTHER PARTY A LIST OF ALL
PATENTS AND PATENT APPLICATIONS FILED, PROSECUTED MAINTAINED AND/OR EXTENDED BY
IT PURSUANT TO THIS SECTION 5.2, INCLUDING THE STATUS THEREOF.

 

(B)                                 BAYER.  BAYER SHALL HAVE THE RIGHT TO
RECEIVE, WITHIN TEN (10) BUSINESS DAYS AFTER RECEIPT BY GENAISSANCE, COPIES OF
ALL CORRESPONDENCE TO AND FROM PATENT OFFICES THAT ARE RELATED TO PATENT
APPLICATIONS AND/OR PATENTS WITHIN THE GENAISSANCE RESULTING IP OR WITHIN THE
BAYER IP RIGHTS FOR WHICH GENAISSANCE HAS ASSUMED CONTROL OF THE PATENT
PROSECUTION IN ACCORDANCE WITH SECTION 5.2.3, AND SHALL FURTHER HAVE THE RIGHT
TO REVIEW AND COMMENT UPON SUCH PATENT APPLICATIONS AND/OR PATENTS, AND THE
PATENT PROSECUTION THEREOF BY

 

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GENAISSANCE, INCLUDING THE RIGHT TO RECEIVE AND REVIEW DRAFTS OF PATENT
APPLICATIONS NO LESS THAN TEN (10) BUSINESS DAYS PRIOR TO FILING WITH ANY PATENT
OFFICE.  GENAISSANCE SHALL CONSIDER BAYER’S COMMENTS IN GOOD FAITH.

 

(C)                                  GENAISSANCE.  GENAISSANCE SHALL HAVE THE
RIGHT TO RECEIVE, WITHIN TEN (10) BUSINESS DAYS AFTER RECEIPT BY BAYER, COPIES
OF ALL CORRESPONDENCE TO AND FROM PATENT OFFICES THAT ARE RELATED TO PATENT
APPLICATIONS AND/OR PATENTS WITHIN THE BAYER RESULTING IP OR WITHIN THE
GENAISSANCE IP RIGHTS FOR WHICH BAYER HAS ASSUMED CONTROL OF THE PATENT
PROSECUTION IN ACCORDANCE WITH SECTION 5.2.2, AND SHALL FURTHER HAVE THE RIGHT
TO REVIEW AND COMMENT UPON SUCH PATENT APPLICATIONS, AND/OR PATENTS, AND THE
PATENT PROSECUTION THEREOF BY BAYER, INCLUDING THE RIGHT TO RECEIVE AND REVIEW
DRAFTS OF PATENT APPLICATIONS NO LESS THAN TEN (10) BUSINESS DAYS PRIOR TO
FILING WITH ANY PATENT OFFICE.  BAYER SHALL CONSIDER GENAISSANCE’S COMMENTS IN
GOOD FAITH.

 

5.2.6                        PATENT INTERFERENCE AND OPPOSITION.

 

(A)                                  BAYER.  BAYER SHALL HAVE THE EXCLUSIVE
RIGHT AND OPTION TO DETERMINE AND UNDERTAKE THE COURSE OF ACTION REQUIRED IN THE
EVENT OF THE DISCOVERY OF A REQUEST FOR, OR THE FILING OR DECLARATION OF ANY
INTERFERENCE, OPPOSITION, OR REEXAMINATION PROCEEDING (EACH, AN “INTERFERENCE
ACTION”) WITH RESPECT TO THE BAYER IP RIGHTS; PROVIDED, HOWEVER, THAT IN THE
EVENT THAT BAYER FAILS TO TAKE SUCH APPROPRIATE ACTION IN CONNECTION WITH AN
INTERFERENCE ACTION WITH RESPECT TO THE BAYER IP RIGHTS FOR WHICH GENAISSANCE
(OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) HAS ASSUMED, OR HAS THE RIGHT TO
ASSUME, CONTROL OF THE PATENT PROSECUTION IN ACCORDANCE WITH SECTION 5.2.3
WITHIN NINETY (90) DAYS AFTER BECOMING AWARE OF SUCH ACTION, THEN GENAISSANCE
(OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) MAY, IN ITS DISCRETION, AS LONG
AS GENAISSANCE’S (OR A GENAISSANCE COLLABORATOR’S, IF APPLICABLE) RIGHTS UNDER
SECTION 5.2.3 REMAIN IN EFFECT, PROVIDE BAYER WITH WRITTEN NOTICE OF ITS INTENT
TO TAKE SUCH APPROPRIATE ACTION, SUCH NOTICE TO BE PROVIDED WITHIN THIRTY (30)
DAYS AFTER THE EXPIRATION OF SUCH NINETY (90) DAY PERIOD.  IF GENAISSANCE (OR A
GENAISSANCE COLLABORATOR, IF APPLICABLE) PROVIDES SUCH NOTICE AND BAYER FAILS TO
TAKE SUCH APPROPRIATE ACTION WITHIN THIRTY (30) DAYS AFTER RECEIPT OF SUCH
NOTICE FROM GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE), THEN
GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) SHALL HAVE THE RIGHT
TO TAKE APPROPRIATE ACTION THAT IT BELIEVES IS REASONABLY REQUIRED TO PROTECT
THE RELEVANT BAYER IP RIGHTS.  GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF
APPLICABLE) SHALL GIVE BAYER SUFFICIENT ADVANCE NOTICE OF ITS INTENT TO TAKE ANY
SUCH ACTION AND THE REASONS THEREFOR, AND SHALL PROVIDE BAYER WITH AN
OPPORTUNITY TO MAKE SUGGESTIONS AND COMMENTS REGARDING SUCH ACTION.  THE PARTIES
SHALL COOPERATE WITH EACH OTHER AND EACH SHALL PROVIDE THE OTHER WITH ANY
INFORMATION OR ASSISTANCE THAT THE OTHER MAY REASONABLY REQUEST WITH ANY ACTION
SO TAKEN.  IN THE EVENT THAT GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF
APPLICABLE) TAKES ACTION IN CONNECTION WITH AN INTERFERENCE ACTION WITH RESPECT
TO BAYER IP RIGHTS IN ACCORDANCE WITH THIS SECTION 5.2.6(A), GENAISSANCE (OR A
GENAISSANCE COLLABORATOR, IF APPLICABLE) SHALL KEEP BAYER INFORMED OF ALL
DEVELOPMENTS IN SUCH INTERFERENCE, OPPOSITION, REEXAMINATION OR REISSUE,
INCLUDING TO THE EXTENT PERMISSIBLE THE STATUS OF ANY SETTLEMENT NEGOTIATIONS
AND THE TERMS OF ANY SETTLEMENT OFFER.  GENAISSANCE (OR A GENAISSANCE
COLLABORATOR, IF APPLICABLE) SHALL PROVIDE BAYER WITH COPIES OF ALL SUBMISSIONS
OR AGREEMENTS ARISING IN CONNECTION WITH SUCH PROCEEDING SUFFICIENTLY IN ADVANCE
OF THEIR FILING OR DUE DATE SO AS TO GIVE BAYER SUFFICIENT TIME TO COMMENT
THEREON.  GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) SHALL GIVE
GOOD FAITH CONSIDERATION TO BAYER’S COMMENTS.

 

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GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) SHALL NOT ENTER INTO
ANY SETTLEMENT OR CONSENT DECREE REGARDING ANY BAYER IP RIGHTS WITH RESPECT TO
WHICH GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) HAS TAKEN
ACTION IN CONNECTION WITH AN INTERFERENCE ACTION IN ACCORDANCE WITH THIS SECTION
5.2.6 OR ASSENT TO THE GRANT OF ANY REISSUED OR REEXAMINED PATENT WITHIN THE
BAYER IP RIGHTS WITHOUT THE PRIOR WRITTEN CONSENT OF BAYER, WHICH SHALL NOT BE
WITHHELD OR DELAYED UNREASONABLY.

 

(B)                                 GENAISSANCE.  GENAISSANCE SHALL HAVE THE
EXCLUSIVE RIGHT AND OPTION TO DETERMINE AND UNDERTAKE THE COURSE OF ACTION
REQUIRED IN THE EVENT OF ANY INTERFERENCE ACTION WITH RESPECT TO THE GENAISSANCE
IP RIGHTS; PROVIDED, HOWEVER, THAT IN THE EVENT THAT GENAISSANCE FAILS TO TAKE
SUCH APPROPRIATE ACTION IN CONNECTION WITH AN INTERFERENCE ACTION WITH RESPECT
TO THE GENAISSANCE IP RIGHTS FOR WHICH BAYER HAS ASSUMED, OR HAS THE RIGHT TO
ASSUME, CONTROL OF THE PATENT PROSECUTION IN ACCORDANCE WITH SECTION 5.2.2
WITHIN NINETY (90) DAYS AFTER BECOMING AWARE OF SUCH ACTION, THEN BAYER MAY, IN
ITS DISCRETION, AS LONG AS BAYER’S RIGHTS UNDER SECTION 5.2.2 REMAIN IN EFFECT,
PROVIDE GENAISSANCE WITH WRITTEN NOTICE OF ITS INTENT TO TAKE SUCH APPROPRIATE
ACTION, SUCH NOTICE TO BE PROVIDED WITHIN THIRTY (30) DAYS AFTER THE EXPIRATION
OF SUCH NINETY (90) DAY PERIOD.  IF BAYER PROVIDES SUCH NOTICE AND GENAISSANCE
FAILS TO TAKE SUCH APPROPRIATE ACTION WITHIN THIRTY (30) DAYS AFTER RECEIPT OF
SUCH NOTICE FROM BAYER, THEN BAYER SHALL HAVE THE RIGHT TO TAKE APPROPRIATE
ACTION THAT IT BELIEVES IS REASONABLY REQUIRED TO PROTECT THE RELEVANT
GENAISSANCE IP RIGHTS. BAYER SHALL GIVE GENAISSANCE SUFFICIENT ADVANCE NOTICE OF
ITS INTENT TO TAKE ANY SUCH ACTION AND THE REASONS THEREFOR, AND SHALL PROVIDE
GENAISSANCE WITH AN OPPORTUNITY TO MAKE SUGGESTIONS AND COMMENTS REGARDING SUCH
ACTION.  THE PARTIES SHALL COOPERATE WITH EACH OTHER AND EACH SHALL PROVIDE THE
OTHER WITH ANY INFORMATION OR ASSISTANCE THAT THE OTHER MAY REASONABLY REQUEST
WITH ANY ACTION SO TAKEN.  IN THE EVENT THAT BAYER TAKES ACTION IN CONNECTION
WITH AN INTERFERENCE ACTION WITH RESPECT TO GENAISSANCE IP RIGHTS IN ACCORDANCE
WITH THIS SECTION 5.2.6(B), BAYER SHALL KEEP GENAISSANCE INFORMED OF ALL
DEVELOPMENTS IN SUCH INTERFERENCE, OPPOSITION, REEXAMINATION OR REISSUE,
INCLUDING TO THE EXTENT PERMISSIBLE THE STATUS OF ANY SETTLEMENT NEGOTIATIONS
AND THE TERMS OF ANY SETTLEMENT OFFER.  BAYER SHALL PROVIDE GENAISSANCE WITH
COPIES OF ALL SUBMISSIONS OR AGREEMENTS ARISING IN CONNECTION WITH SUCH
PROCEEDING SUFFICIENTLY IN ADVANCE OF THEIR FILING OR DUE DATE SO AS TO GIVE
GENAISSANCE SUFFICIENT TIME TO COMMENT THEREON.  BAYER SHALL GIVE GOOD FAITH
CONSIDERATION TO GENAISSANCE’S COMMENTS.  BAYER SHALL NOT ENTER INTO ANY
SETTLEMENT OR CONSENT DECREE REGARDING ANY GENAISSANCE IP RIGHTS WITH RESPECT TO
WHICH BAYER HAS TAKEN ACTION IN CONNECTION WITH AN INTERFERENCE ACTION IN
ACCORDANCE WITH THIS SECTION 5.2.6 OR ASSENT TO THE GRANT OF ANY REISSUED OR
REEXAMINED PATENT WITHIN THE GENAISSANCE IP RIGHTS WITHOUT THE PRIOR WRITTEN
CONSENT OF GENAISSANCE, WHICH SHALL NOT BE WITHHELD OR DELAYED UNREASONABLY.

 

5.3                                 THIRD PARTY INFRINGEMENT.

 

5.3.1                        NOTICE.  EACH PARTY SHALL PROMPTLY REPORT IN
WRITING TO THE OTHER PARTY DURING THE TERM OF THIS AGREEMENT ANY (A) KNOWN OR
SUSPECTED INFRINGEMENT OF ANY OF THE PATENT RIGHTS OF THE OTHER PARTY, OR (B)
UNAUTHORIZED USE OF ANY OF THE KNOW-HOW OF THE OTHER PARTY, OF WHICH SUCH PARTY
BECOMES AWARE, AND SHALL PROVIDE THE OTHER PARTY WITH ALL AVAILABLE EVIDENCE
SUPPORTING SUCH INFRINGEMENT, SUSPECTED INFRINGEMENT, UNAUTHORIZED USE OR
SUSPECTED UNAUTHORIZED USE.

 

 

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5.3.2                        INFRINGEMENT ACTION.

 

(A)                                  BAYER.  BAYER SHALL HAVE THE EXCLUSIVE
RIGHT AND OPTION TO INITIATE A SUIT OR TAKE OTHER APPROPRIATE ACTION THAT IT
BELIEVES IS REASONABLY REQUIRED TO PROTECT THE BAYER IP RIGHTS; PROVIDED,
HOWEVER, THAT IN THE EVENT THAT BAYER FAILS TO INITIATE SUCH SUIT OR TAKE SUCH
OTHER APPROPRIATE ACTION WITHIN NINETY (90) DAYS AFTER BECOMING AWARE OF THE
ALLEGED INFRINGEMENTS OR UNAUTHORIZED USE OF BAYER IP RIGHTS FOR WHICH
GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) HAS ASSUMED, OR HAS
THE RIGHT TO ASSUME, CONTROL OF THE PATENT PROSECUTION IN ACCORDANCE WITH
SECTION 5.2.3, THEN GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE)
MAY, IN ITS DISCRETION, AS LONG AS GENAISSANCE’S (OR A GENAISSANCE
COLLABORATOR’S, IF APPLICABLE) RIGHTS UNDER SECTION 5.2.3 REMAIN IN EFFECT,
PROVIDE BAYER WITH WRITTEN NOTICE OF ITS INTENT TO INITIATE SUCH SUIT OR TAKE
SUCH OTHER APPROPRIATE ACTION, SUCH NOTICE TO BE PROVIDED WITHIN THIRTY (30)
DAYS AFTER THE EXPIRATION OF SUCH NINETY (90) DAY PERIOD.  IF GENAISSANCE (OR A
GENAISSANCE COLLABORATOR, IF APPLICABLE) PROVIDES SUCH NOTICE AND BAYER FAILS TO
INITIATE SUCH SUIT OR TAKE SUCH OTHER APPROPRIATE ACTION WITHIN THIRTY (30) DAYS
AFTER RECEIPT OF SUCH NOTICE FROM GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF
APPLICABLE), THEN GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE)
SHALL HAVE THE RIGHT TO INITIATE A SUIT OR TAKE OTHER APPROPRIATE ACTION THAT IT
BELIEVES IS REASONABLY REQUIRED TO PROTECT THE RELEVANT BAYER IP RIGHTS. 
GENAISSANCE (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) SHALL GIVE BAYER
SUFFICIENT ADVANCE NOTICE OF ITS INTENT TO FILE ANY SUCH SUIT OR TAKE ANY SUCH
ACTION AND THE REASONS THEREFOR, AND SHALL PROVIDE BAYER WITH AN OPPORTUNITY TO
MAKE SUGGESTIONS AND COMMENTS REGARDING SUCH SUIT OR ACTION.  GENAISSANCE (OR A
GENAISSANCE COLLABORATOR, IF APPLICABLE) SHALL HAVE THE SOLE AND EXCLUSIVE RIGHT
TO SELECT COUNSEL FOR ANY SUIT INITIATED BY IT PURSUANT TO THIS SUBSECTION,
WHICH COUNSEL SHALL BE REASONABLY ACCEPTABLE TO BAYER.  IF NECESSARY OR
DESIRABLE, BAYER SHALL JOIN AS A PARTY TO THE SUIT.  BAYER SHALL HAVE THE RIGHT
TO PARTICIPATE IN AND BE REPRESENTED IN ANY SUCH SUIT BY ITS OWN COUNSEL AT ITS
OWN EXPENSE.

 

(B)                                 GENAISSANCE.  GENAISSANCE SHALL HAVE THE
EXCLUSIVE RIGHT AND OPTION TO INITIATE A SUIT OR TAKE OTHER APPROPRIATE ACTION
THAT IT BELIEVES IS REASONABLY REQUIRED TO PROTECT THE GENAISSANCE IP RIGHTS
PROVIDED, HOWEVER, THAT IN THE EVENT THAT GENAISSANCE FAILS TO INITIATE SUCH
SUIT OR TAKE SUCH OTHER APPROPRIATE ACTION WITHIN NINETY (90) DAYS AFTER
BECOMING AWARE OF THE ALLEGED INFRINGEMENTS OR UNAUTHORIZED USE OF GENAISSANCE
IP RIGHTS FOR WHICH BAYER HAS ASSUMED, OR HAS THE RIGHT TO ASSUME, CONTROL OF
THE PATENT PROSECUTION IN ACCORDANCE WITH SECTION 5.2.2, THEN BAYER MAY, IN ITS
DISCRETION, AS LONG AS BAYER’S RIGHTS UNDER SECTION 5.2.2 REMAIN IN EFFECT,
PROVIDE GENAISSANCE WITH WRITTEN NOTICE OF ITS INTENT TO INITIATE SUCH SUIT OR
TAKE SUCH OTHER APPROPRIATE ACTION, SUCH NOTICE TO BE PROVIDED WITHIN THIRTY
(30) DAYS AFTER THE EXPIRATION OF SUCH NINETY (90) DAY PERIOD.  IF BAYER
PROVIDES SUCH NOTICE AND GENAISSANCE FAILS TO INITIATE SUCH SUIT OR TAKE SUCH
OTHER APPROPRIATE ACTION WITHIN THIRTY (30) DAYS AFTER RECEIPT OF SUCH NOTICE
FROM BAYER, THEN BAYER SHALL HAVE THE RIGHT TO INITIATE A SUIT OR TAKE OTHER
APPROPRIATE ACTION THAT IT BELIEVES IS REASONABLY REQUIRED TO PROTECT THE
RELEVANT GENAISSANCE IP RIGHTS.  BAYER SHALL GIVE GENAISSANCE SUFFICIENT ADVANCE
NOTICE OF ITS INTENT TO FILE ANY SUCH SUIT OR TAKE ANY SUCH ACTION AND THE
REASONS THEREFOR, AND SHALL PROVIDE GENAISSANCE WITH AN OPPORTUNITY TO MAKE
SUGGESTIONS AND COMMENTS REGARDING SUCH SUIT OR ACTION.  BAYER SHALL HAVE THE
SOLE AND EXCLUSIVE RIGHT TO SELECT COUNSEL FOR ANY SUIT INITIATED BY IT PURSUANT
TO THIS SUBSECTION, WHICH COUNSEL SHALL BE REASONABLY ACCEPTABLE TO
GENAISSANCE.  IF NECESSARY OR DESIRABLE, GENAISSANCE SHALL JOIN AS A PARTY TO
THE SUIT.  GENAISSANCE SHALL HAVE THE RIGHT TO PARTICIPATE IN AND BE REPRESENTED
IN ANY SUCH SUIT BY ITS OWN COUNSEL AT ITS OWN EXPENSE

 

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(C)                                  COOPERATION. EACH PARTY (OR A GENAISSANCE
COLLABORATOR, IF APPLICABLE) SHALL KEEP THE OTHER PARTY (OR A GENAISSANCE
COLLABORATOR, IF APPLICABLE) PROMPTLY INFORMED, AND SHALL FROM TIME TO TIME
CONSULT WITH THE OTHER PARTY (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE)
REGARDING THE STATUS OF ANY SUCH SUIT OR ACTION UNDERTAKEN BY SUCH PARTY (OR A
GENAISSANCE COLLABORATOR, IF APPLICABLE) PURSUANT TO THIS SECTION 5.3.2, AND
SHALL PROVIDE THE OTHER PARTY (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE)
WITH COPIES OF ALL MATERIAL DOCUMENTS (I.E., COMPLAINTS, ANSWERS, COUNTERCLAIMS,
MATERIAL MOTIONS, ORDERS OF THE COURT, MEMORANDA OF LAW AND LEGAL BRIEFS,
INTERROGATORY RESPONSES, DEPOSITIONS, MATERIAL PRE-TRIAL FILINGS, EXPERT
REPORTS, AFFIDAVITS FILED IN COURT, TRANSCRIPTS OF HEARINGS AND TRIAL TESTIMONY,
TRIAL EXHIBITS AND NOTICES OF APPEAL) FILED IN, OR OTHERWISE RELATING TO, SUCH
SUIT OR ACTION.  EACH PARTY (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) SHALL
OFFER REASONABLE ASSISTANCE TO THE PARTY (OR A GENAISSANCE COLLABORATOR, IF
APPLICABLE) UNDERTAKING SUCH SUIT OR ACTION IN CONNECTION THEREWITH AT NO CHARGE
TO THE PARTY (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) UNDERTAKING SUCH
SUIT OR ACTION EXCEPT FOR REIMBURSEMENT OF REASONABLE OUT-OF-POCKET EXPENSES
INCURRED IN RENDERING SUCH ASSISTANCE.  THE PARTY (OR A GENAISSANCE
COLLABORATOR, IF APPLICABLE) UNDERTAKING ANY SUCH SUIT OR ACTION SHALL ASSUME
AND PAY ALL OF ITS OWN OUT-OF-POCKET COSTS INCURRED IN CONNECTION WITH ANY
LITIGATION OR PROCEEDINGS DESCRIBED IN THIS SECTION 5.3.2, INCLUDING, WITHOUT
LIMITATION, THE FEES AND EXPENSES OF THE COUNSEL SELECTED BY IT.  IN THE EVENT
THAT A PARTY (OR A GENAISSANCE COLLABORATOR, IF APPLICABLE) INITIATES A SUIT OR
TAKES OTHER APPROPRIATE ACTION WITH RESPECT TO THE PATENT RIGHTS AND/OR KNOW-HOW
OF THE OTHER PARTY IN ACCORDANCE WITH THIS SECTION 5.3, THE PARTY (OR A
GENAISSANCE COLLABORATOR, IF APPLICABLE) UNDERTAKING SUCH SUIT OR ACTION SHALL
NOT SETTLE ANY SUCH SUIT OR ACTION WITHOUT OBTAINING THE PRIOR WRITTEN CONSENT
OF THE OTHER PARTY, WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD OR DELAYED.

 

5.3.3                        RECOVERIES.  ANY RECOVERY OBTAINED AS A RESULT OF
ANY PROCEEDING DESCRIBED IN THIS SECTION 5.3 SHALL BE APPLIED IN THE FOLLOWING
ORDER OF PRIORITY:

 

(A)                                  FIRST, THE PARTY INITIATING THE SUIT OR
ACTION SHALL BE REIMBURSED FOR ALL COSTS IN CONNECTION WITH SUCH PROCEEDING PAID
BY SUCH PARTY AND NOT OTHERWISE RECOVERED;

 

(B)                                 SECOND, THE OTHER PARTY SHALL BE REIMBURSED
FOR ALL COSTS IN CONNECTION WITH SUCH PROCEEDING PAID BY THE OTHER PARTY AND NOT
OTHERWISE RECOVERED;

 

(C)                                  THIRD, ANY REMAINDER SHALL BE PAID [**]
PERCENT ([**]%) TO THE PARTY INITIATING SUCH SUIT OR ACTION AND [**] PERCENT
([**]%) TO THE OTHER PARTY.

 

5.3.4                        PATENT INVALIDITY CLAIM.  IF A THIRD PARTY AT ANY
TIME ASSERTS A CLAIM THAT ANY PATENT RIGHT IS INVALID OR OTHERWISE UNENFORCEABLE
(AN “INVALIDITY CLAIM”), WHETHER AS A DEFENSE IN AN INFRINGEMENT ACTION BROUGHT
BY A PARTY PURSUANT TO THIS SECTION 5.3 OR IN A THIRD PARTY CLAIM BROUGHT
AGAINST GENAISSANCE OR BAYER, THE PARTIES SHALL COOPERATE AND SHALL ENDEAVOR TO
AGREE UPON AN APPROPRIATE COURSE OF ACTION.

 

5.4                                 CLAIMED INFRINGEMENT.  IN THE EVENT THAT A
THIRD PARTY AT ANY TIME PROVIDES TO A PARTY WRITTEN NOTICE OF A CLAIM, OR BRINGS
AN ACTION, SUIT OR PROCEEDING AGAINST A PARTY CLAIMING, THAT THE ACTIVITIES TO
BE PERFORMED UNDER THIS AGREEMENT BY SUCH PARTY INFRINGE SUCH THIRD PARTY’S
PATENT RIGHTS OR MAKE UNAUTHORIZED USE OF SUCH THIRD PARTY’S KNOW-HOW (A “THIRD
PARTY CLAIM”), SUCH PARTY SHALL PROMPTLY NOTIFY THE OTHER PARTY OF THE CLAIM OR
THE COMMENCEMENT OF

 

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SUCH ACTION, SUIT OR PROCEEDING, ENCLOSING A COPY OF THE CLAIM AND/OR ALL PAPERS
SERVED.  THE PARTIES SHALL COOPERATE AND SHALL ENDEAVOR TO AGREE UPON AN
APPROPRIATE COURSE OF ACTION.  EACH PARTY AGREES TO MAKE AVAILABLE TO THE OTHER
PARTY ITS REASONABLE ADVICE AND COUNSEL REGARDING THE TECHNICAL MERITS OF ANY
SUCH CLAIM AND TO OFFER REASONABLE ASSISTANCE TO THE OTHER PARTY.  SUCH ADVICE,
COUNSEL AND ASSISTANCE SHALL BE PROVIDED WITHOUT CHARGE TO THE OTHER PARTY,
UNLESS SUCH ADVICE, COUNSEL AND ASSISTANCE WOULD REQUIRE SUCH ASSISTING PARTY TO
INCUR MATERIAL EXTERNAL COSTS, IN WHICH CASE THE ASSISTING PARTY SHALL NOT BE
REQUIRED TO PROVIDE SUCH ADVICE, COUNSEL AND ASSISTANCE UNLESS THE OTHER PARTY
AGREES TO REIMBURSE THEM.

 

5.5                                 PATENT MARKING.  THE PARTIES AGREE TO COMPLY
WITH ANY APPLICABLE PATENT MARKING STATUTES IN ANY COUNTRY IN WHICH ANY PRODUCT
IS SOLD BY A PARTY, ITS AFFILIATES OR ITS SUBLICENSEES.

 

ARTICLE VI

CONFIDENTIALITY

 

6.1                                 NONDISCLOSURE AND NON-USE OBLIGATIONS.

 

6.1.1                        GENERAL.  EXCEPT AS OTHERWISE PROVIDED IN THIS
ARTICLE VI, DURING THE TERM OF THIS AGREEMENT AND FOR A PERIOD OF [**] ([**])
YEARS THEREAFTER, EACH PARTY SHALL MAINTAIN THE CONFIDENTIAL INFORMATION OF THE
OTHER PARTY IN CONFIDENCE AND USE IT ONLY FOR PURPOSES SPECIFICALLY AUTHORIZED
UNDER THIS AGREEMENT.

 

6.1.2                        LIMITATIONS.  THE PARTIES AGREE THAT THE RECEIVING
PARTY SHALL NOT HAVE ANY OBLIGATION OF CONFIDENTIALITY WITH RESPECT TO SUCH
CONFIDENTIAL INFORMATION THAT:

 

(A)                                  IS OR BECOMES PART OF THE PUBLIC DOMAIN
OTHER THAN BY UNAUTHORIZED ACTS OF THE PARTY OBLIGATED NOT TO DISCLOSE SUCH
CONFIDENTIAL INFORMATION;

 

(B)                                 CAN BE SHOWN BY WRITTEN DOCUMENTS TO HAVE
BEEN DISCLOSED TO THE RECEIVING PARTY BY A THIRD PARTY, PROVIDED, THAT SUCH
CONFIDENTIAL INFORMATION WAS NOT OBTAINED BY SUCH THIRD PARTY FROM THE OTHER
PARTY TO THIS AGREEMENT PURSUANT TO A CONFIDENTIALITY AGREEMENT;

 

(C)                                  PRIOR TO DISCLOSURE UNDER THIS AGREEMENT,
WAS ALREADY IN THE POSSESSION OF THE RECEIVING PARTY, PROVIDED, THAT SUCH
CONFIDENTIAL INFORMATION WAS NOT OBTAINED FROM THE OTHER PARTY TO THIS AGREEMENT
PURSUANT TO A CONFIDENTIALITY AGREEMENT;

 

(D)                                 CAN BE SHOWN BY WRITTEN DOCUMENTS TO HAVE
BEEN INDEPENDENTLY DEVELOPED BY THE RECEIVING PARTY WITHOUT BREACH OF ANY OF THE
PROVISIONS OF THIS AGREEMENT;

 

(E)                                  IS DISCLOSED BY THE RECEIVING PARTY
PURSUANT TO AN ORDER OR DEMAND ISSUED BY A COURT OR GOVERNMENTAL AGENCY OR AS
OTHERWISE REQUIRED BY LAW; PROVIDED, THAT THE RECEIVING PARTY NOTIFIES THE OTHER
PARTY PRIOR TO DISCLOSURE, GIVING SUCH OTHER PARTY SUFFICIENT ADVANCE NOTICE, IF
POSSIBLE, TO PERMIT IT TO SEEK A PROTECTIVE ORDER OR OTHER SIMILAR ORDER WITH
RESPECT TO SUCH CONFIDENTIAL INFORMATION AND PROVIDED, FURTHER, THAT THE
RECEIVING PARTY FURNISHES ONLY THAT PORTION OF THE CONFIDENTIAL INFORMATION
WHICH IT IS ADVISED BY COUNSEL IS LEGALLY REQUIRED WHETHER OR NOT A PROTECTIVE
ORDER OR OTHER SIMILAR ORDER IS OBTAINED BY THE OTHER PARTY; OR

 

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(F)                                    WHERE THE RECEIVING PARTY REASONABLY
BELIEVES SUCH DISCLOSURE IS NECESSARY OR APPROPRIATE TO FULFILL ITS OBLIGATIONS
OR EXERCISE ITS RIGHTS UNDER THIS AGREEMENT, WITH SUCH DISCLOSURE BEING LIMITED
TO:

 

(I)                                     ACTUAL OR POTENTIAL LICENSEES OR
SUBLICENSEES, CONSULTANTS, OUTSIDE CONTRACTORS AND CLINICAL INVESTIGATORS, ON A
NEED-TO-KNOW BASIS AND ON CONDITION THAT SUCH ENTITIES OR PERSONS AGREE TO KEEP
THE CONFIDENTIAL INFORMATION CONFIDENTIAL TO THE SAME EXTENT AS SUCH PARTY IS
REQUIRED TO KEEP THE CONFIDENTIAL INFORMATION CONFIDENTIAL FOR A TERM NOT LESS
THAN [**] ([**]) YEARS FROM THE DATE OF DISCLOSURE TO SUCH PARTY; PROVIDED,
THAT, BAYER SHALL NOT HAVE THE RIGHT TO DISCLOSE ANY HAP MARKER TO ANY EXTERNAL
GENOTYPING CONTRACTOR HIRED BY BAYER, UNLESS SUCH HAP MARKER WAS KNOWN TO BAYER
PRIOR TO THE FIRST STEERING COMMITTEE MEETING, AS EVIDENCED BY CONTEMPORARY
WRITTEN DOCUMENTATION; AND

 

(II)                                  GOVERNMENT OR OTHER REGULATORY AUTHORITIES
TO THE EXTENT THAT SUCH DISCLOSURE IS REASONABLY NECESSARY TO OBTAIN OR MAINTAIN
PATENTS OR AUTHORIZATIONS TO CONDUCT CLINICAL TRIALS OF, AND TO COMMERCIALLY
MARKET, PRODUCTS PURSUANT TO THIS AGREEMENT.

 

6.2                                 INJUNCTIVE RELIEF.  THE PARTIES UNDERSTAND
AND AGREE THAT REMEDIES AT LAW MAY BE INADEQUATE TO PROTECT AGAINST ANY BREACH
OF ANY OF THE PROVISIONS OF THIS ARTICLE VI BY EITHER PARTY OR THEIR EMPLOYEES,
AGENTS, OFFICERS OR DIRECTORS OR ANY OTHER PERSON ACTING IN CONCERT WITH IT OR
ON ITS BEHALF.  ACCORDINGLY, EACH PARTY SHALL BE ENTITLED TO THE GRANTING OF
INJUNCTIVE RELIEF BY A COURT OF COMPETENT JURISDICTION AGAINST ANY ACTION THAT
CONSTITUTES ANY SUCH BREACH OF THIS ARTICLE VI.

 

6.3                                 PUBLICATION.  THE PARTIES AGREE TO USE
COMMERCIALLY REASONABLE EFFORTS TO MONITOR PUBLIC SCIENTIFIC AND OTHER
DISCLOSURES OF THE RESULTS OF THE COLLABORATION TO PREVENT ANY PREMATURE PUBLIC
DISCLOSURE OF SUCH RESULTS.  THE PARTIES SHALL ESTABLISH A PROCEDURE FOR
PUBLICATION REVIEW, WHICH SHALL INCLUDE STEERING COMMITTEE APPROVAL, NOT TO BE
UNREASONABLY WITHHELD.  EACH PARTY SHALL FIRST SUBMIT TO THE OTHER PARTY AN
EARLY DRAFT OF ALL SUCH PUBLICATIONS, WHETHER THEY ARE TO BE PRESENTED ORALLY OR
IN WRITTEN FORM, AT LEAST [**] ([**]) DAYS PRIOR TO SUBMISSION (IF IN WRITTEN
FORM, INCLUDING ABSTRACTS) OR PRESENTATION (IF AN ORAL DISCLOSURE) TO DETERMINE
(A) WHETHER THE PROPOSED DISCLOSURE CONTAINS ANY CONFIDENTIAL INFORMATION OF THE
OTHER PARTY OR (B) WHETHER THE INFORMATION CONTAINED IN THE PROPOSED DISCLOSURE
SHOULD BE THE SUBJECT OF A PATENT APPLICATION PRIOR TO SUCH DISCLOSURE.  THE
OTHER PARTY SHALL HAVE [**] ([**]) DAYS FROM ITS RECEIPT OF ANY SUCH ABSTRACT,
MANUSCRIPT OR PRESENTATION IN WHICH TO NOTIFY THE PARTY IN WRITING OF ANY
SPECIFIC OBJECTIONS TO THE DISCLOSURE, BASED ON EITHER THE NEED TO SEEK PATENT
PROTECTION OR CONCERN REGARDING THE SPECIFIC DISCLOSURE OF THE CONFIDENTIAL
INFORMATION OF SUCH PARTY.  IN THE EVENT A PARTY OBJECTS TO THE DISCLOSURE, THE
OTHER PARTY AGREES NOT TO SUBMIT THE PUBLICATION OR MAKE THE PRESENTATION
CONTAINING THE OBJECTED-TO INFORMATION UNTIL THE PARTY IS GIVEN A REASONABLE
ADDITIONAL PERIOD OF TIME (NOT TO EXCEED AN ADDITIONAL [**] ([**]) DAYS) TO SEEK
PATENT PROTECTION FOR ANY MATERIAL IN THE DISCLOSURE WHICH IT BELIEVES IS
PATENTABLE OR, IN THE CASE OF CONFIDENTIAL INFORMATION, TO ALLOW THE PARTY TO
DELETE ANY CONFIDENTIAL INFORMATION OF THE OTHER PARTY FROM THE PROPOSED
DISCLOSURE.  EACH PARTY AGREES TO DELETE FROM THE PROPOSED DISCLOSURE ANY
CONFIDENTIAL INFORMATION OF THE OTHER PARTY UPON REQUEST.  THE PARTIES AGREE
THAT ALL PUBLICATIONS OF RESULTS OF

 

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THE COLLABORATION SHALL ACKNOWLEDGE THE CONTRIBUTION OF THE OTHER PARTY TO SUCH
RESULTS, WHICH SHALL BE CO-AUTHORSHIP IN ACCORDANCE WITH ACCEPTED PRACTICES OF
AUTHORSHIP JUSTIFICATION.

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES; LIMITATION OF LIABILITY

 

7.1                                 REPRESENTATIONS AND WARRANTIES OF
GENAISSANCE.  GENAISSANCE REPRESENTS AND WARRANTS TO BAYER AS OF THE EFFECTIVE
DATE THAT:

 

(A)                                  GENAISSANCE IS A CORPORATION DULY
ORGANIZED, VALIDLY EXISTING AND IN CORPORATE GOOD STANDING UNDER THE LAWS OF
DELAWARE, WHOSE ORGANIZATION NUMBER ASSIGNED BY THE SECRETARY OF STATE OF
DELAWARE IS 2288980;

 

(B)                                 GENAISSANCE HAS THE LEGAL RIGHT, AUTHORITY
AND POWER TO ENTER INTO THIS AGREEMENT, PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT, AND GRANT TO BAYER THE LICENSES, SECURITY INTEREST AND OTHER RIGHTS
GRANTED PURSUANT TO THIS AGREEMENT;

 

(C)                                  UPON THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THIS AGREEMENT SHALL CONSTITUTE A VALID AND BINDING OBLIGATION OF
GENAISSANCE ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, EXCEPT AS ENFORCEABILITY
MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM
OR SIMILAR LAWS AFFECTING CREDITORS’ AND CONTRACTING PARTIES’ RIGHTS GENERALLY
AND EXCEPT AS ENFORCEABILITY MAY BE SUBJECT TO GENERAL PRINCIPLES OF EQUITY
(REGARDLESS OF WHETHER SUCH ENFORCEABILITY IS CONSIDERED IN A PROCEEDING IN
EQUITY OR AT LAW);

 

(D)                                 ALL NECESSARY CONSENTS, APPROVALS AND
AUTHORIZATIONS OF ALL GOVERNMENT AUTHORITIES AND OTHER PERSONS REQUIRED TO BE
OBTAINED BY IT IN CONNECTION WITH THE EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT HAVE BEEN OBTAINED;

 

(E)                                  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PERFORMANCE OF
GENAISSANCE’S OBLIGATIONS IN THE CONDUCT OF THE COLLABORATION AND THE LICENSES,
SECURITY INTEREST AND OTHER RIGHTS GRANTED PURSUANT TO THIS AGREEMENT (I) DO NOT
CONFLICT WITH OR VIOLATE ANY REQUIREMENT OF APPLICABLE LAWS OR REGULATIONS
EXISTING AS OF THE EFFECTIVE DATE, AND (II) DO NOT CONFLICT WITH, VIOLATE,
BREACH OR CONSTITUTE A DEFAULT UNDER ANY CONTRACTUAL OBLIGATIONS OF GENAISSANCE
EXISTING AS OF THE EFFECTIVE DATE;

 

(F)                                    ALL OF ITS EMPLOYEES, OFFICERS,
CONSULTANTS AND ADVISORS WHO ARE OR WILL BE INVOLVED IN THE COLLABORATION HAVE
EXECUTED OR WILL HAVE EXECUTED AGREEMENTS OR HAVE EXISTING OBLIGATIONS UNDER LAW
REQUIRING ASSIGNMENT TO GENAISSANCE OF INVENTIONS MADE BY THEM IN THE CONDUCT OF
THE COLLABORATION, AND OBLIGATING SUCH INDIVIDUALS TO MAINTAIN AS CONFIDENTIAL
BAYER’S CONFIDENTIAL INFORMATION, TO THE EXTENT REQUIRED TO SUPPORT
GENAISSANCE’S OBLIGATIONS UNDER THIS AGREEMENT;

 

(G)                                 TO THE KNOWLEDGE OF GENAISSANCE, THE
GENAISSANCE PRIOR IP AND THE GENAISSANCE KNOW-HOW THAT WILL BE USED BY THE
PARTIES IN THE COLLABORATION HAVE NOT BEEN DEVELOPED OR OBTAINED BY GENAISSANCE
IN VIOLATION OF ANY CONTRACTUAL OBLIGATION TO ANY THIRD PARTY NOR HAVE THEY BEEN
MISAPPROPRIATED FROM ANY THIRD PARTY OR OBTAINED WITHOUT THE PROPER CONSENT OF
ANY THIRD PARTY;

 

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(H)                                 EXCEPT AS OTHERWISE DISCLOSED TO BAYER BY
GENAISSANCE AS OF THE EFFECTIVE DATE, THERE IS NO ACTION, SUIT OR PROCEEDING
WHICH IS PENDING OR, TO THE KNOWLEDGE OF THE OFFICERS OF GENAISSANCE, NO WRITTEN
CLAIM OR DEMAND OF ANY THIRD PARTY THAT HAS BEEN RECEIVED, THAT CHALLENGES OR
WOULD MATERIALLY ADVERSELY AFFECT (I) THE RIGHT OF GENAISSANCE TO USE IN THE
CONDUCT OF THE COLLABORATION THE GENAISSANCE PRIOR IP, THE GENAISSANCE KNOW-HOW
OR THE GENAISSANCE PATENT RIGHTS THAT ARE REASONABLY EXPECTED TO BE UTILIZED BY
THE PARTIES TO FULFILL THEIR DUTIES UNDER THE COLLABORATION PLAN, OR (II) THE
RIGHT OF GENAISSANCE TO GRANT TO BAYER THE RIGHTS AND LICENSES TO USE SUCH
GENAISSANCE PRIOR IP, GENAISSANCE KNOW-HOW OR GENAISSANCE PATENT RIGHTS, AS
CONTEMPLATED UNDER THIS AGREEMENT.

 

7.2                                 REPRESENTATIONS AND WARRANTIES OF BAYER. 
BAYER REPRESENTS AND WARRANTS TO GENAISSANCE AS OF THE EFFECTIVE DATE THAT:

 

(A)                                  (I) BAYER AG IS A CORPORATION DULY
ORGANIZED, VALIDLY EXISTING AND IN CORPORATE GOOD STANDING UNDER THE LAWS OF
GERMANY AND (II) BAYER CORPORATION IS A CORPORATION DULY ORGANIZED VALIDLY
EXISTING AND IN CORPORATE GOOD STANDING UNDER THE LAWS OF INDIANA;

 

(B)                                 BAYER HAS THE LEGAL RIGHT, AUTHORITY AND
POWER TO ENTER INTO THIS AGREEMENT, AND PERFORM ITS OBLIGATIONS UNDER THIS
AGREEMENT, AND GRANT TO GENAISSANCE THE LICENSES AND OTHER RIGHTS GRANTED
PURSUANT TO THIS AGREEMENT;

 

(C)                                  UPON THE EXECUTION AND DELIVERY OF THIS
AGREEMENT, THIS AGREEMENT SHALL CONSTITUTE A VALID AND BINDING OBLIGATION OF
BAYER ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, EXCEPT AS ENFORCEABILITY MAY BE
LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM OR
SIMILAR LAWS AFFECTING CREDITORS’ AND CONTRACTING PARTIES’ RIGHTS GENERALLY AND
EXCEPT AS ENFORCEABILITY MAY BE SUBJECT TO GENERAL PRINCIPLES OF EQUITY
(REGARDLESS OF WHETHER SUCH ENFORCEABILITY IS CONSIDERED IN A PROCEEDING IN
EQUITY OR AT LAW);

 

(D)                                 ALL NECESSARY CONSENTS, APPROVALS AND
AUTHORIZATIONS OF ALL GOVERNMENT AUTHORITIES AND OTHER PERSONS REQUIRED TO BE
OBTAINED BY IT IN CONNECTION WITH THE EXECUTION, DELIVERY AND PERFORMANCE OF
THIS AGREEMENT HAVE BEEN OBTAINED;

 

(E)                                  NOTWITHSTANDING ANYTHING TO THE CONTRARY IN
THIS AGREEMENT, THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE PERFORMANCE OF
BAYER’S OBLIGATIONS IN THE CONDUCT OF THE COLLABORATION AND THE LICENSES AND
OTHER RIGHTS GRANTED PURSUANT TO THIS AGREEMENT (I) DO NOT CONFLICT WITH OR
VIOLATE ANY REQUIREMENT OF APPLICABLE LAWS OR REGULATIONS EXISTING AS OF THE
EFFECTIVE DATE AND (II) DO NOT CONFLICT WITH, VIOLATE, BREACH OR CONSTITUTE A
DEFAULT UNDER ANY CONTRACTUAL OBLIGATIONS OF BAYER EXISTING AS OF THE EFFECTIVE
DATE;

(F)                                    ALL OF ITS EMPLOYEES, OFFICERS,
CONSULTANTS AND ADVISORS WHO ARE OR WILL BE INVOLVED IN THE COLLABORATION HAVE
EXECUTED OR WILL HAVE EXECUTED AGREEMENTS OR HAVE EXISTING OBLIGATIONS UNDER LAW
REQUIRING ASSIGNMENT TO BAYER OF INVENTIONS MADE BY THEM IN THE CONDUCT OF THE
COLLABORATION, AND OBLIGATING SUCH INDIVIDUALS TO MAINTAIN AS CONFIDENTIAL
GENAISSANCE’S CONFIDENTIAL INFORMATION, TO THE EXTENT REQUIRED TO SUPPORT
BAYER’S OBLIGATIONS UNDER THIS AGREEMENT;

 

(G)                                 TO THE KNOWLEDGE OF BAYER, THE BAYER PRIOR
IP AND THE BAYER KNOW-HOW THAT WILL BE USED BY THE PARTIES IN THE COLLABORATION
HAVE NOT BEEN DEVELOPED OR OBTAINED BY

 

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BAYER IN VIOLATION OF ANY CONTRACTUAL OBLIGATION TO ANY THIRD PARTY NOR HAVE
THEY BEEN MISAPPROPRIATED FROM ANY THIRD PARTY OR OBTAINED WITHOUT THE PROPER
CONSENT OF ANY THIRD PARTY; AND

 

(H)                                 EXCEPT AS OTHERWISE DISCLOSED TO GENAISSANCE
BY BAYER AS OF THE EFFECTIVE DATE, THERE IS NO ACTION, SUIT OR PROCEEDING WHICH
IS PENDING OR, TO THE KNOWLEDGE OF THE OFFICERS OF BAYER, NO WRITTEN CLAIM OR
DEMAND OF ANY THIRD PARTY THAT HAS BEEN RECEIVED, THAT CHALLENGES OR WOULD
MATERIALLY ADVERSELY AFFECT (I) THE RIGHT OF BAYER TO USE IN THE CONDUCT OF THE
COLLABORATION THE BAYER PRIOR IP, THE BAYER KNOW-HOW OR THE BAYER PATENT RIGHTS
THAT ARE REASONABLY EXPECTED TO BE UTILIZED BY THE PARTIES TO FULFILL THEIR
DUTIES UNDER THE COLLABORATION PLAN, OR (II) THE RIGHT OF BAYER TO GRANT TO
GENAISSANCE THE RIGHTS AND LICENSES TO USE SUCH BAYER PRIOR IP, BAYER KNOW-HOW
OR BAYER PATENT RIGHTS, AS CONTEMPLATED UNDER THIS AGREEMENT.

 

7.3                                 WARRANTY DISCLAIMER.  EXCEPT AS OTHERWISE
EXPRESSLY PROVIDED IN ARTICLE VII OF THIS AGREEMENT, THE PARTIES MAKE NO
REPRESENTATIONS AND EXTEND NO WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED,
STATUTORY OR OTHERWISE.  THE PARTIES HEREBY DISCLAIM WARRANTIES OF TITLE,
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT WITH
RESPECT TO PRODUCTS, BAYER POLYMORPHISMS, BAYER SADR POLYMORPHISM ASSOCIATIONS,
BAYER SER POLYMORPHISM ASSOCIATIONS, HAPTM MARKERS, MARKER ASSOCIATIONS AND
COLLABORATION [**] HAPLOTYPES.

 

7.4                                 DISCLAIMER OF CONSEQUENTIAL DAMAGES. 
NEITHER PARTY WILL BE LIABLE FOR SPECIAL, INCIDENTAL, PUNITIVE, EXEMPLARY,
MULTIPLE, CONSEQUENTIAL OR OTHER INDIRECT DAMAGES ARISING OUT OF THIS AGREEMENT
OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR ANY LOST PROFITS, LOST SAVINGS, LOST
REVENUES OR LOST DATA, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES.  NOTHING IN
THIS SECTION 7.4 IS INTENDED TO LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR
OBLIGATIONS OF EITHER PARTY UNDER ARTICLE VIII.

 

ARTICLE VIII

INDEMNITY

 

8.1                                 BAYER INDEMNITY OBLIGATIONS.  BAYER AGREES
TO DEFEND, INDEMNIFY AND HOLD GENAISSANCE AND ITS DIRECTORS, OFFICERS, EMPLOYEES
AND AGENTS HARMLESS FROM ALL LOSSES, DAMAGES OR EXPENSES (INCLUDING ATTORNEYS’
FEES) ARISING AS A RESULT OF ANY THIRD PARTY CLAIMS RELATING TO:  (A) CLAIMS FOR
BODILY INJURY, DEATH OR PROPERTY DAMAGE ATTRIBUTABLE TO THE DEVELOPMENT,
MANUFACTURE, OR USE OF PRODUCTS DEVELOPED, MANUFACTURED OR SOLD BY BAYER, ITS
AFFILIATES, OR ITS SUBLICENSEES (EXCLUDING THOSE CLAIMS FOR WHICH GENAISSANCE
INDEMNIFIES BAYER PURSUANT TO SECTION 8.2); (B) A RECALL OF ANY PRODUCT
DEVELOPED, MARKETED, SOLD OR MANUFACTURED BY BAYER (EXCLUDING THOSE CLAIMS FOR
WHICH GENAISSANCE INDEMNIFIES BAYER PURSUANT TO SECTION 8.2) ORDERED BY A
GOVERNMENTAL AGENCY OR REQUIRED BY A CONFIRMED PRODUCT FAILURE; (C) A BREACH OF
ANY OF THE REPRESENTATIONS, WARRANTIES OR MATERIAL OBLIGATIONS OF BAYER UNDER
THIS AGREEMENT; OR (D) PERFORMANCE BY BAYER OF ITS OBLIGATIONS UNDER THIS
AGREEMENT OR AS A RESULT OF BAYER’S USE OF ITS

 

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PROPRIETARY TECHNOLOGY AND/OR ANY THIRD PARTY TECHNOLOGY INCLUDING, BUT NOT
LIMITED TO, ANY CLAIM THAT[**].

 

8.2                                 GENAISSANCE INDEMNITY OBLIGATIONS. 
GENAISSANCE AGREES TO DEFEND, INDEMNIFY AND HOLD BAYER AND ITS DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS HARMLESS FROM ALL LOSSES, DAMAGES OR EXPENSES
(INCLUDING ATTORNEYS’ FEES) ARISING AS A RESULT OF ANY THIRD PARTY CLAIMS
RELATING TO (A) CLAIMS FOR BODILY INJURY, DEATH OR PROPERTY DAMAGE ATTRIBUTABLE
TO THE DEVELOPMENT, MANUFACTURE, OR USE OF ANY PRODUCTS DEVELOPED, MANUFACTURED
OR SOLD BY GENAISSANCE, ITS AFFILIATES, OR ITS SUBLICENSEES (EXCLUDING THOSE
CLAIMS FOR WHICH BAYER INDEMNIFIES GENAISSANCE PURSUANT TO SECTION 8.1); (B) A
RECALL OF ANY PRODUCT DEVELOPED, MARKETED, SOLD OR MANUFACTURED BY GENAISSANCE
WHICH IS ORDERED BY A GOVERNMENTAL AGENCY OR REQUIRED BY A CONFIRMED PRODUCT
FAILURE (EXCLUDING THOSE CLAIMS FOR WHICH BAYER INDEMNIFIES GENAISSANCE PURSUANT
TO SECTION 8.1); (C) A BREACH OF ANY OF THE REPRESENTATIONS, WARRANTIES OR
MATERIAL OBLIGATIONS OF GENAISSANCE UNDER THIS AGREEMENT; OR (D) PERFORMANCE BY
GENAISSANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR AS A RESULT OF
GENAISSANCE’S USE OF ITS PROPRIETARY TECHNOLOGY AND/OR ANY THIRD PARTY
TECHNOLOGY INCLUDING, BUT NOT LIMITED TO, ANY CLAIM THAT[**].

 

8.3                                 LIMITATION ON INDEMNITY OBLIGATIONS. 
NEITHER PARTY NOR ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS SHALL
BE ENTITLED TO THE INDEMNITIES SET FORTH IN SECTION 8.1 AND SECTION 8.2 WHERE
THE CLAIM, LOSS, DAMAGE OR EXPENSE FOR WHICH INDEMNIFICATION IS SOUGHT WAS
CAUSED BY A NEGLIGENT ACT OR OMISSION OR WILLFUL MISCONDUCT BY SUCH PARTY, ITS
DIRECTORS, OFFICERS, EMPLOYEES OR AUTHORIZED AGENTS.

 

8.4                                 PROCEDURE.  IF THE PARTY BEING INDEMNIFIED
HEREUNDER OR ITS RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES OR AGENTS (THE
“INDEMNITEE”) INTENDS TO CLAIM INDEMNIFICATION UNDER THIS ARTICLE VIII, THE
INDEMNITEE SHALL PROMPTLY NOTIFY THE OTHER PARTY (THE “INDEMNITOR”) OF ANY LOSS,
CLAIM, DAMAGE, LIABILITY OR ACTION IN RESPECT OF WHICH THE INDEMNITEE INTENDS TO
CLAIM SUCH INDEMNIFICATION, AND THE INDEMNITOR SHALL MANAGE AND CONTROL, AT ITS
SOLE EXPENSE, THE DEFENSE OF THE CLAIM AND ITS SETTLEMENT.  THE INDEMNITEE SHALL
COOPERATE WITH THE INDEMNITOR AND MAY, AT ITS OPTION AND ITS OWN EXPENSE, BE
REPRESENTED IN ANY SUCH ACTION OR PROCEEDING.  THE INDEMNITOR SHALL NOT BE
LIABLE FOR ANY LITIGATION COSTS OR EXPENSES INCURRED BY THE INDEMNITEE THAT HAVE
NOT BEEN APPROVED IN ADVANCE IN WRITING BY THE INDEMNITOR.  THE INDEMNITY
OBLIGATIONS UNDER THIS ARTICLE VIII SHALL NOT APPLY TO AMOUNTS PAID IN
SETTLEMENT OF ANY LOSS, CLAIM, DAMAGE, LIABILITY OR ACTION IF SUCH SETTLEMENT IS
EFFECTED WITHOUT THE CONSENT OF THE INDEMNITOR.  THE INDEMNITOR MAY ENTER INTO A
SETTLEMENT WITHOUT THE CONSENT OF THE INDEMNITEE UNLESS SUCH SETTLEMENT (A) DOES
NOT INCLUDE A COMPLETE RELEASE OF THE INDEMNITEE FROM ALL LIABILITY WITH RESPECT
THERETO, OR (B) IMPOSES ANY RESTRICTIONS ON THE INDEMNITEE.  THE INDEMNITEE
UNDER THIS ARTICLE VIII SHALL COOPERATE FULLY WITH THE INDEMNITOR AND ITS LEGAL
REPRESENTATIVES IN THE INVESTIGATION OF ANY ACTION, CLAIM OR LIABILITY COVERED
BY THIS INDEMNIFICATION.  THE INDEMNITOR SHALL ADDITIONALLY BE LIABLE TO PAY THE
REASONABLE LEGAL COSTS AND ATTORNEYS’ FEES INCURRED BY THE INDEMNITEE IN
ESTABLISHING ITS CLAIM FOR INDEMNITY.

 

8.5                                 INSURANCE.  EACH PARTY SHALL MAINTAIN
INSURANCE, INCLUDING PRODUCT LIABILITY INSURANCE, WITH RESPECT TO ITS ACTIVITIES
HEREUNDER.  SUCH INSURANCE SHALL BE IN SUCH AMOUNTS AND SUBJECT TO SUCH
DEDUCTIBLES AS THE PARTIES MAY AGREE BASED UPON STANDARDS PREVAILING IN THE
INDUSTRY AT THE TIME, PROVIDED THAT, AS OF THE FIRST COMMERCIAL USE, EACH PARTY
SHALL MAINTAIN A MINIMUM OF [**] DOLLARS ($[**]) IN PRODUCT LIABILITY
INSURANCE.  EITHER PARTY MAY SATISFY ITS

 

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OBLIGATIONS UNDER THIS SECTION 8.5 THROUGH REASONABLE SELF-INSURANCE TO THE SAME
EXTENT.  A PARTY SHALL NAME THE OTHER PARTY AS AN ADDITIONAL INSURED ON ANY
POLICIES IT MAINTAINS PERTAINING TO THE DEVELOPMENT, MANUFACTURING, MARKETING OR
SALE OF ANY PRODUCTS.

 

ARTICLE IX

TERM AND TERMINATION

 

9.1                                 TERM OF AGREEMENT.  THIS AGREEMENT SHALL
BECOME EFFECTIVE AS OF THE EFFECTIVE DATE, MAY BE TERMINATED AS SET FORTH IN
THIS ARTICLE IX, AND SHALL OTHERWISE REMAIN IN EFFECT UNTIL THE LATER OF: (I)
THE EXPIRATION OF ALL OBLIGATIONS TO MAKE PAYMENTS SET FORTH IN ARTICLE IV, OR
(II) THE EXPIRATION OF ALL LICENSES AND OTHER RIGHTS GRANTED IN ARTICLE III,
OTHER THAN LICENSES HAVING A PERPETUAL TERM.

 

9.2                                 TERMINATION FOR MATERIAL BREACH.  UPON ANY
MATERIAL BREACH OF A PROVISION OF THIS AGREEMENT BY A PARTY (THE “BREACHING
PARTY”), THE OTHER PARTY (THE “NON-BREACHING PARTY”) MAY TERMINATE THIS
AGREEMENT BY PROVIDING [**] ([**]) DAYS WRITTEN NOTICE TO THE BREACHING PARTY,
SPECIFYING THE MATERIAL BREACH.  THE TERMINATION SHALL BECOME EFFECTIVE AT THE
END OF THE [**] ([**]) DAY PERIOD, OR IF SUCH BREACH IS NOT SUSCEPTIBLE TO CURE
WITHIN [**] ([**]) DAYS AFTER THE RECEIPT OF WRITTEN NOTICE OF THE BREACH, AND
IF THE BREACHING PARTY IS DILIGENTLY PURSUING A CURE, THEN TERMINATION SHALL
BECOME EFFECTIVE WITHIN [**] ([**]) DAYS OF THE RECEIPT OF WRITTEN NOTICE OF THE
BREACH.  NOTWITHSTANDING THE FOREGOING, IF SUCH BREACH, BY ITS NATURE, IS
INCURABLE, THIS AGREEMENT MAY BE TERMINATED IMMEDIATELY.  THE PARTIES SHALL USE
REASONABLE EFFORTS TO WORK TOGETHER TO CURE ANY BREACH.

 

9.3                                 BANKRUPTCY.  EACH PARTY MAY TERMINATE THIS
AGREEMENT IF THE OTHER PARTY (I) MAKES AN ASSIGNMENT FOR THE BENEFIT OF
CREDITORS; (II) APPLIES FOR, SEEKS, CONSENTS TO, ACQUIESCE IN, OR HAVE APPOINTED
FOR IT A RECEIVER, CUSTODIAN, TRUSTEE, EXAMINER, LIQUIDATOR OR SIMILAR OFFICIAL
FOR IT OR SUBSTANTIALLY ALL OF ITS PROPERTY; (III) INSTITUTES ANY PROCEEDING
SEEKING AN ORDER FOR RELIEF UNDER THE BANKRUPTCY CODE OR ANY OTHER PROCEEDING
SEEKING TO ADJUDICATE IT A BANKRUPT OR INSOLVENT, OR SEEKING DISSOLUTION,
WINDING UP, LIQUIDATION, OR COMPOSITION OF IT OR ITS DEBTS UNDER ANY LAW
RELATING TO BANKRUPTCY, INSOLVENCY, OR REORGANIZATION OF ALL OR SUBSTANTIALLY
ALL OF ITS ASSETS; OR (IV) HAS INSTITUTED AGAINST IT AN INVOLUNTARY PROCEEDING
UNDER THE BANKRUPTCY CODE OR ANY BANKRUPTCY, REORGANIZATION OF ALL OR
SUBSTANTIALLY ALL OF ITS ASSETS, ARRANGEMENT, INSOLVENCY OR SIMILAR PROCEEDINGS
UNDER THE LAWS OF ANY JURISDICTION, IF NOT DISMISSED OR STAYED WITHIN [**]
([**]) DAYS AFTER SUCH COMMENCEMENT.

 

9.4                                 EFFECT OF TERMINATION.

 

9.4.1                        EFFECT OF TERMINATION BY GENAISSANCE.  IF THIS
AGREEMENT IS TERMINATED BY GENAISSANCE UNDER SECTION 9.2 OR SECTION 9.3, THEN,
TO THE EXTENT PERMITTED UNDER THE BANKRUPTCY CODE OR UNDER OTHER APPLICABLE LAW,
(A) THE LICENSE GRANTS TO BAYER UNDER SECTIONS 3.1.2, 3.2.1, 3.3.3, 3.3.4 AND
3.4.1 AND THE OTHER RIGHTS GRANTED TO BAYER UNDER SECTION 3.8.1 SHALL TERMINATE
AND ALL RIGHTS UNDER SUBLICENSES GRANTED BY BAYER WITH RESPECT TO GENAISSANCE IP
RIGHTS SHALL BE ASSIGNED TO GENAISSANCE, (B) SUBJECT TO GENAISSANCE’S COMPLIANCE
WITH ALL OBLIGATIONS SET FORTH IN SECTION 9.5 AND WITHOUT PREJUDICE TO BAYER’S
RIGHTS TO RECEIVE PAYMENTS UNDER ARTICLE IV OF THIS AGREEMENT, NET OF THE AMOUNT
OF ANY DAMAGES INCURRED BY GENAISSANCE AS A RESULT OF BREACH OF THIS AGREEMENT
BY BAYER AND NOT OTHERWISE RECOVERED, THE LICENSE GRANTS TO GENAISSANCE UNDER

 

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SECTIONS 3.1.1, 3.2.4, IF ANY, 3.3.1, 3.3.2 AND 3.4.2 AND THE OTHER RIGHTS
GRANTED TO GENAISSANCE UNDER SECTIONS 3.2.2, 3.2.3, 3.5 AND 3.8.2 SHALL SURVIVE
TERMINATION OF THIS AGREEMENT; (C) ALL BAYER RESULTING IP AND, ALL RIGHTS UNDER
LICENSES GRANTED THEREUNDER BY BAYER SHALL BE ASSIGNED TO GENAISSANCE AND
BAYER’S RIGHTS TO AND UNDER THE BAYER RESULTING IP SHALL IMMEDIATELY AND
AUTOMATICALLY CEASE, WITHOUT PREJUDICE TO BAYER’S RIGHTS TO RECEIVE PAYMENTS
UNDER ARTICLE IV OF THIS AGREEMENT, NET OF THE AMOUNT OF ANY DAMAGES INCURRED BY
GENAISSANCE AS A RESULT OF BREACH OF THIS AGREEMENT BY BAYER AND NOT OTHERWISE
RECOVERED, AND (D) ANY AND ALL CONFIDENTIAL INFORMATION OF, AND MATERIALS
PROVIDED BY THE PARTIES PURSUANT TO THIS AGREEMENT, AND ANY COPIES THEREOF
(INCLUDING ELECTRONIC COPIES) SHALL BE PROMPTLY RETURNED BY EACH PARTY TO THE
OTHER PARTY OR DESTROYED, EXCEPT TO THE EXTENT NECESSARY TO EXERCISE RIGHTS
RETAINED PURSUANT TO THIS SECTION.

 

9.4.2                        EFFECT OF TERMINATION BY BAYER.  IF THIS AGREEMENT
IS TERMINATED BY BAYER UNDER SECTION 9.2. OR SECTION 9.3, THEN, TO THE EXTENT
PERMITTED UNDER THE BANKRUPTCY CODE OR UNDER OTHER APPLICABLE LAW, (A) THE
LICENSE GRANTS TO GENAISSANCE UNDER SECTION 3.1.1 3.2.4, IF ANY, 3.3.1, 3.3.2
AND 3.4.2 AND THE OTHER RIGHTS GRANTED TO GENAISSANCE UNDER SECTIONS 3.2.2,
3.2.3, 3.5 AND 3.8.2 SHALL TERMINATE AND ALL RIGHTS UNDER SUBLICENSES GRANTED BY
GENAISSANCE WITH RESPECT TO BAYER IP RIGHTS SHALL BE ASSIGNED TO BAYER; (B)
SUBJECT TO BAYER’S COMPLIANCE WITH ALL OBLIGATIONS SET FORTH IN SECTION 9.5, AND
WITHOUT PREJUDICE TO GENAISSANCE’S RIGHT TO RECEIVE PAYMENTS UNDER ARTICLE IV OF
THIS AGREEMENT, NET OF THE AMOUNT OF ANY DAMAGES INCURRED BY BAYER AS A RESULT
OF BREACH OF THIS AGREEMENT BY GENAISSANCE AND NOT OTHERWISE RECOVERED, THE
LICENSE GRANTS TO BAYER UNDER SECTIONS 3.1.2, 3.2.1, 3.3.3, 3.3.4 AND 3.4.1 AND
THE OTHER RIGHTS GRANTED TO BAYER UNDER SECTION 3.8.1 SHALL SURVIVE SUCH
TERMINATION OF THIS AGREEMENT; AND (C) ALL GENAISSANCE RESULTING IP AND ALL
RIGHTS UNDER LICENSES GRANTED THEREUNDER BY GENAISSANCE SHALL BE ASSIGNED TO
BAYER AND GENAISSANCE’S RIGHTS TO AND UNDER THE GENAISSANCE RESULTING IP SHALL
IMMEDIATELY AND AUTOMATICALLY CEASE, WITHOUT PREJUDICE TO GENAISSANCE’S RIGHTS
TO RECEIVE PAYMENTS UNDER ARTICLE IV OF THIS AGREEMENT, NET OF THE AMOUNT OF ANY
DAMAGES INCURRED BY BAYER AS A RESULT OF BREACH OF THIS AGREEMENT BY GENAISSANCE
AND NOT OTHERWISE RECOVERED, AND (D) ANY AND ALL CONFIDENTIAL INFORMATION OF,
AND MATERIALS PROVIDED BY THE PARTIES PURSUANT TO THIS AGREEMENT, AND ANY COPIES
THEREOF (INCLUDING ELECTRONIC COPIES) SHALL BE PROMPTLY RETURNED BY EACH PARTY
TO THE OTHER PARTY OR DESTROYED, EXCEPT TO THE EXTENT NECESSARY TO EXERCISE
RIGHTS RETAINED PURSUANT TO THIS SECTION.

 

9.5                                 SURVIVING PROVISIONS.  THE EXPIRATION OR
TERMINATION OF THIS AGREEMENT SHALL NOT RELIEVE THE PARTIES OF ANY OBLIGATION
ACCRUING PRIOR TO SUCH EXPIRATION OR TERMINATION.  THE PROVISIONS OF ARTICLES
IV, VI, VIII, IX AND X AND SECTIONS 5.1, 7.3 AND 7.4 HEREOF SHALL SURVIVE THE
EXPIRATION OR TERMINATION OF THIS AGREEMENT.

 

9.6                                 SECURITY INTEREST.  TO SECURE THE PROMPT AND
COMPLETE PERFORMANCE WHEN DUE OF ALL OBLIGATIONS OF GENAISSANCE UNDER THIS
AGREEMENT (THE “OBLIGATIONS”), GENAISSANCE HEREBY GRANTS TO BAYER A FIRST
PRIORITY SECURITY INTEREST IN ALL OF GENAISSANCE’S RIGHTS, TITLE AND INTERESTS
IN AND TO THE GENAISSANCE RESULTING IP (WHETHER NOW EXISTING OR HEREAFTER
ARISING) , ALL LICENSES THEREOF, AND ALL OF THE RIGHTS AND BENEFITS THEREFROM,
INCLUDING WITHOUT LIMITATION ALL LICENSE PAYMENTS AND ROYALTIES, THE RIGHT TO
SUE FOR PAST, PRESENT AND FUTURE INFRINGEMENTS AND PROCEEDS THEREOF (THE
“COLLATERAL”).  GENAISSANCE HEREBY AUTHORIZES THE FILING OF APPROPRIATE UCC
FINANCING STATEMENTS RELATING THERETO AND ANY OTHER FEDERAL OR STATE FILINGS
THAT MAY BE REQUIRED TO PERFECT OR OTHERWISE SECURE BAYER’S SECURITY INTEREST IN
THE COLLATERAL AS GRANTED HEREIN (COLLECTIVELY, “FILINGS”), AND BAYER SHALL HAVE
THE RIGHT TO FILE THE SAME IN ORDER TO SECURE ITS

 

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INTERESTS THEREIN.  TO THE EXTENT PERMITTED BY LAW, BAYER SHALL INCLUDE IN THE
FILINGS (OTHER THAN CONTINUATION STATEMENTS) A STATEMENT THAT THE COLLATERAL
SECURES ONLY THE OBLIGATIONS.  GENAISSANCE’S SOLE REMEDY FOR ANY BREACH OF
BAYER’S OBLIGATION UNDER THE PRECEDING SENTENCE SHALL BE TO REQUIRE BAYER TO
AMEND, AND BAYER SHALL SO AMEND, AS PROMPTLY AS IS REASONABLY PRACTICABLE THE
RELEVANT FILING TO COMPLY WITH THE FOREGOING REQUIREMENT.

 

9.7                                 RIGHTS OF SECURED PARTY.  BAYER SHALL HAVE,
IN ADDITION TO THE RIGHTS AND REMEDIES GIVEN UNDER THIS AGREEMENT, THOSE RIGHTS
ALLOWED BY LAW OR AT EQUITY AND THE RIGHTS AND REMEDIES OF A SECURED PARTY UNDER
THE UNIFORM COMMERCIAL CODE.  NOTWITHSTANDING ANYTHING HEREIN OR UNDER ANY
APPLICABLE LAW TO THE CONTRARY, BAYER SHALL NOT EXERCISE OR OTHERWISE ENFORCE
ITS RIGHTS TO THE COLLATERAL AS A SECURED PARTY UNTIL THIS AGREEMENT IS
TERMINATED BY BAYER UNDER SECTION 9.2 OR UNTIL THE OCCURRENCE OF ANY EVENT
DESCRIBED IN SECTION 9.3 WITH RESPECT TO GENAISSANCE.

 

9.8                                 NO ENCUMBRANCES.  GENAISSANCE REPRESENTS,
WARRANTS AND AGREES THAT NEITHER THE GENAISSANCE RESULTING IP NOR THE LICENSES,
PROCEEDS NOR RIGHTS TO PAYMENTS RELATED THERETO IS, OR HEREAFTER SHALL BE,
ENCUMBERED (BY ACT OF GENAISSANCE OR BY OPERATION OF LAW) WITHOUT THE PRIOR
WRITTEN CONSENT OF BAYER, EXCEPT FOR (I) THE SECURITY INTEREST IN FAVOR OF BAYER
GRANTED HEREUNDER, (II) LIENS ARISING IN THE ORDINARY COURSE OF BUSINESS FOR
SUMS NOT OVERDUE OR BEING CONTESTED IN GOOD FAITH BY APPROPRIATE PROCEEDINGS AND
NOT INVOLVING ANY BORROWED MONEY OR THE DEFERRED PURCHASE PRICE OF PROPERTY OR
SERVICES, AND IN EACH CASE, FOR WHICH GENAISSANCE MAINTAINS ADEQUATE RESERVES;
AND (III) LICENSES PERMITTED BY THIS AGREEMENT.

 

9.9                                 FURTHER ASSURANCES.  GENAISSANCE SHALL FROM
TIME TO TIME PROMPTLY EXECUTE AND DELIVER ANY FILINGS AND SUCH OTHER INSTRUMENTS
AND DOCUMENTS THAT COMPLY WITH THE TERMS OF SECTION 9.6 AS BAYER MAY REASONABLY
REQUEST TO EVIDENCE BAYER’S SECURITY INTEREST IN THE COLLATERAL OR FOR BAYER TO
OBTAIN THE FULL BENEFITS OF THE RIGHTS GRANTED UNDER SECTION 9.6.

 

ARTICLE X

MISCELLANEOUS

 

10.1                           FORCE MAJEURE.  NEITHER PARTY SHALL BE HELD
LIABLE OR RESPONSIBLE TO THE OTHER PARTY NOR BE DEEMED TO HAVE DEFAULTED UNDER
OR BREACHED THIS AGREEMENT FOR FAILURE OR DELAY IN FULFILLING OR PERFORMING ANY
TERM OF THIS AGREEMENT WHEN SUCH FAILURE OR DELAY IS CAUSED BY OR RESULTS FROM
CAUSES BEYOND THE REASONABLE CONTROL OF THE AFFECTED PARTY, INCLUDING BUT NOT
LIMITED TO FIRE, FLOODS, EMBARGOES, WAR, ACTS OF WAR (WHETHER WAR IS DECLARED OR
NOT), TERRORISM, INSURRECTIONS, RIOTS, CIVIL COMMOTION, STRIKES, LOCKOUTS OR
OTHER LABOR DISTURBANCES, ACTS OF GOD OR ACTS, OMISSIONS OR DELAYS IN ACTING BY
ANY GOVERNMENTAL AUTHORITY OR THE OTHER PARTY; PROVIDED THAT THE PARTY SO
AFFECTED SHALL USE REASONABLE COMMERCIAL EFFORTS TO AVOID OR REMOVE SUCH CAUSES
OF NONPERFORMANCE, AND SHALL CONTINUE PERFORMANCE HEREUNDER WITH REASONABLE
DISPATCH WHENEVER SUCH CAUSES ARE REMOVED.  EITHER PARTY SHALL PROVIDE THE OTHER
PARTY WITH PROMPT WRITTEN NOTICE OF ANY DELAY OR FAILURE TO PERFORM THAT OCCURS
BY REASON OF FORCE MAJEURE.  THE PARTIES SHALL MUTUALLY SEEK A RESOLUTION OF THE
DELAY OR THE FAILURE TO PERFORM AS NOTED ABOVE.

 

10.2                           ASSIGNMENT.  THIS AGREEMENT MAY NOT BE ASSIGNED
OR OTHERWISE TRANSFERRED BY EITHER PARTY WITHOUT THE CONSENT OF THE OTHER PARTY;
PROVIDED, THAT EITHER GENAISSANCE OR BAYER MAY, WITHOUT SUCH CONSENT, ASSIGN ITS
RIGHTS AND OBLIGATIONS UNDER THIS AGREEMENT (A) TO ANY

 

55

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AFFILIATE, OR (B) IN CONNECTION WITH A MERGER, CONSOLIDATION OR SALE OF
SUBSTANTIALLY ALL OF SUCH PARTY’S ASSETS RELATING TO THIS AGREEMENT TO A THIRD
PARTY; PROVIDED, FURTHER, THAT SUCH PARTY’S RIGHTS AND OBLIGATIONS UNDER THIS
AGREEMENT SHALL BE ASSUMED BY ITS SUCCESSOR IN INTEREST IN ANY SUCH TRANSACTION
AND SHALL NOT BE TRANSFERRED SEPARATE FROM ALL OR SUBSTANTIALLY ALL OF ITS OTHER
BUSINESS ASSETS RELATING TO THIS AGREEMENT, INCLUDING THOSE BUSINESS ASSETS THAT
ARE THE SUBJECT OF THIS AGREEMENT.  ANY PURPORTED ASSIGNMENT IN VIOLATION OF THE
PRECEDING SENTENCE SHALL BE VOID.  ANY PERMITTED ASSIGNEE SHALL ASSUME ALL
OBLIGATIONS OF ITS ASSIGNOR UNDER THIS AGREEMENT.

 

10.3                           SEVERABILITY.  IF ANY PROVISION HEREOF SHOULD BE
HELD INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT IN ANY JURISDICTION, THEN,
TO THE FULLEST EXTENT PERMITTED BY LAW, (A) ALL OTHER PROVISIONS HEREOF SHALL
REMAIN IN FULL FORCE AND EFFECT IN SUCH JURISDICTION AND SHALL BE LIBERALLY
CONSTRUED IN ORDER TO CARRY OUT THE INTENTIONS OF THE PARTIES AS NEARLY AS MAY
BE POSSIBLE AND (B) SUCH INVALIDITY, ILLEGALITY OR UNENFORCEABILITY SHALL NOT
AFFECT THE VALIDITY, LEGALITY OR ENFORCEABILITY OF SUCH PROVISION IN ANY OTHER
JURISDICTION.

 

10.4                           NOTICES.  ANY CONSENT, NOTICE OR REPORT REQUIRED
OR PERMITTED TO BE GIVEN OR MADE UNDER THIS AGREEMENT BY ONE OF THE PARTIES TO
THE OTHER PARTY SHALL BE IN WRITING, DELIVERED PERSONALLY OR BY FACSIMILE (AND
PROMPTLY CONFIRMED BY TELEPHONE, PERSONAL DELIVERY OR COURIER) OR COURIER,
POSTAGE PREPAID (WHERE APPLICABLE), ADDRESSED TO SUCH OTHER PARTY AT ITS ADDRESS
INDICATED BELOW, OR TO SUCH OTHER ADDRESS AS THE ADDRESSEE SHALL HAVE LAST
FURNISHED IN WRITING TO THE ADDRESSOR AND SHALL BE EFFECTIVE UPON RECEIPT BY THE
ADDRESSEE.

 

If to Genaissance:

Genaissance Pharmaceuticals, Inc.
Five Science Park
New Haven, Connecticut 06511
Attention:  Chief Executive Officer
Telephone:  (203) 773-1450
Facsimile:   (203) 562-9377

 

 

With a copy to:

Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
Attention:  Steven D. Singer
Telephone:  (617) 526-6000
Facsimile:   (617) 526-5000

 

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If to Bayer:

BAYER HEALTHCARE LLC, Diagnostics Division
511 Benedict Avenue
Tarrytown, New York 10591
Attention:  President
Telephone:  914-631-8000
Facsimile:  914-524-2132

 

 

And

 

 

Bayer Aktiengesellschaft
Bayer HealthCare
Bayerwerk
51368 Leverkusen
Germany
Attention:  CAO
Telephone: +49-30-76732
Facsimile: +49-30-52248

 

 

With a copy to:

BAYER HEALTHCARE LLC, Diagnostics Division
511 Benedict Avenue
Tarrytown, New York 10591
Attention:  Law & Patents
Telephone:   914-631-8000
Facsimile:  914-524-3594

 

 

And

 

 

Bayer Aktiengesellschaft
Bayer HealthCare
Bayerwerk
51368 Leverkusen
Germany
Attention: General Counsel
Telephone: +49-30-56247
Facsimile: +49-30-82986

 

10.5                           APPLICABLE LAW.  THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF [**], WITHOUT
GIVING EFFECT TO THE CHOICE OF LAWS PROVISIONS THEREOF.

 

10.6                           DISPUTE RESOLUTION.  THE PARTIES HEREBY AGREE
THAT THEY WILL ATTEMPT IN GOOD FAITH TO RESOLVE ANY CONTROVERSY OR CLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT PROMPTLY BY NEGOTIATIONS.  IF A CONTROVERSY
OR CLAIM SHOULD ARISE HEREUNDER, THE MATTER SHALL BE REFERRED TO AN INDIVIDUAL
DESIGNATED BY THE CHIEF EXECUTIVE OFFICER (OR THE EQUIVALENT POSITION) OF
GENAISSANCE AND AN INDIVIDUAL DESIGNATED BY THE HEAD OF BAYER’S BUSINESS GROUP
DIAGNOSTICS (OR THE EQUIVALENT POSITION) OF BAYER (THE “PARTY
REPRESENTATIVES”).  IF THE MATTER HAS NOT BEEN RESOLVED WITHIN [**] ([**]) DAYS
AFTER THE FIRST MEETING OF THE PARTY REPRESENTATIVES (WHICH PERIOD MAY BE

 

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EXTENDED BY MUTUAL AGREEMENT) CONCERNING SUCH MATTER, SUBJECT TO RIGHTS TO
INJUNCTIVE RELIEF AND SPECIFIC PERFORMANCE, AND UNLESS OTHERWISE SPECIFICALLY
PROVIDED FOR HEREIN, ANY CONTROVERSY OR CLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR THE BREACH THEREOF, MAY AT THE ELECTION OF EITHER PARTY BE PURSUED
BY WHATEVER OTHER REMEDIES ARE LEGALLY AVAILABLE TO RESOLVE THE DISPUTE.

 

10.7                           ENTIRE AGREEMENT.  THIS AGREEMENT, TOGETHER WITH
THE EXHIBITS HERETO, CONTAINS THE ENTIRE UNDERSTANDING OF THE PARTIES WITH
RESPECT TO THE SUBJECT MATTER HEREOF.  ALL EXPRESS OR IMPLIED AGREEMENTS AND
UNDERSTANDINGS, EITHER ORAL OR WRITTEN, HERETOFORE MADE ARE EXPRESSLY SUPERSEDED
BY THIS AGREEMENT.  THIS AGREEMENT MAY BE AMENDED, OR ANY TERM HEREOF MODIFIED,
ONLY BY A WRITTEN INSTRUMENT DULY EXECUTED BY BOTH PARTIES.

 

10.8                           PUBLICITY.

 

10.8.1                  AGREEMENT.  EXCEPT AS REQUIRED BY LAW, AND SUBJECT TO
SECTION 10.8.2, GENAISSANCE AND BAYER EACH AGREE NOT TO DISCLOSE THE EXISTENCE
OR ANY TERMS OR CONDITIONS OF THIS AGREEMENT TO ANY THIRD PARTY WITHOUT THE
PRIOR WRITTEN PERMISSION OF THE OTHER PARTY; PROVIDED, THAT EITHER PARTY MAY
MAKE SUCH DISCLOSURES TO ITS FINANCIAL AND LEGAL ADVISERS OR ACTUAL OR POTENTIAL
INVESTORS, ACQUIRORS, LICENSEES OR SUBLICENSEES ON A NEED TO KNOW BASIS AND
SUBJECT TO A CONFIDENTIALITY AGREEMENT.  IN THE EVENT THAT THIS AGREEMENT SHALL
BE INCLUDED IN ANY REPORT, STATEMENT OR OTHER DOCUMENT FILED BY EITHER PARTY OR
AN AFFILIATE OF EITHER PARTY WITH THE UNITED STATES SECURITIES AND EXCHANGE
COMMISSION (THE “SEC”), SUCH PARTY SHALL PROVIDE THE OTHER PARTY WITH REASONABLE
NOTICE AND SHALL USE, OR SHALL CAUSE ITS AFFILIATE, AS THE CASE MAY BE, TO USE,
REASONABLE EFFORTS TO OBTAIN CONFIDENTIAL TREATMENT FROM THE SEC OF ANY
FINANCIAL INFORMATION OR OTHER INFORMATION OF A COMPETITIVE OR CONFIDENTIAL
NATURE, AND SHALL INCLUDE IN SUCH CONFIDENTIALITY REQUEST SUCH PROVISIONS OF
THIS AGREEMENT AS MAY BE REASONABLY REQUESTED BY THE OTHER PARTY.

 

10.8.2                  PRESS RELEASE.  NOTWITHSTANDING THE FOREGOING,
GENAISSANCE AND BAYER AGREE THAT A PRESS RELEASE MAY BE ISSUED PROMPTLY AFTER
EXECUTION OF THIS AGREEMENT BY EITHER PARTY IN THE FORM(S) AGREED BY THE PARTIES
AND AS SET FORTH IN EXHIBIT H ATTACHED HERETO.  THE PARTIES AGREE THAT ANY
ANNOUNCEMENT BY EITHER PARTY WILL NOT CONTAIN CONFIDENTIAL BUSINESS OR TECHNICAL
INFORMATION AND, IF DISCLOSURE OF CONFIDENTIAL BUSINESS OR TECHNICAL INFORMATION
IS REQUIRED BY LAW OR REGULATION, WILL MAKE COMMERCIALLY REASONABLE EFFORTS TO
MINIMIZE SUCH DISCLOSURE AND OBTAIN CONFIDENTIAL TREATMENT FOR ANY SUCH
INFORMATION WHICH IS DISCLOSED TO A GOVERNMENTAL AGENCY OR GROUP.  EACH PARTY
AGREES TO PROVIDE TO THE OTHER PARTY A COPY OF ANY PUBLIC ANNOUNCEMENT WITH
RESPECT TO THIS AGREEMENT OR THE SUBJECT MATTER OF THIS AGREEMENT AS SOON AS
REASONABLY PRACTICABLE UNDER THE CIRCUMSTANCES PRIOR TO ITS SCHEDULED RELEASE. 
EXCEPT UNDER EXTRAORDINARY CIRCUMSTANCES, EACH PARTY SHALL PROVIDE THE OTHER
PARTY WITH AN ADVANCE COPY OF ANY SUCH PRESS RELEASE AT LEAST [**] ([**])
BUSINESS DAYS PRIOR TO THE SCHEDULED DISCLOSURE.  EACH PARTY SHALL HAVE THE
RIGHT TO REVIEW AND RECOMMEND CHANGES TO ANY ANNOUNCEMENT REGARDING THIS
AGREEMENT OR THE SUBJECT MATTER OF THIS AGREEMENT.  EXCEPT AS OTHERWISE REQUIRED
BY LAW, THE PARTY WHOSE PRESS RELEASE HAS BEEN REVIEWED SHALL REMOVE ANY
INFORMATION THE REVIEWING PARTY REASONABLY DEEMS TO BE INAPPROPRIATE FOR
DISCLOSURE AND SHALL USE ALL REASONABLE EFFORTS TO ACCOMMODATE THE REVIEWING
PARTY’S OTHER COMMENTS.  THE CONTENTS OF ANY SUCH ANNOUNCEMENT OR SIMILAR
PUBLICITY WHICH HAS BEEN REVIEWED AND APPROVED BY THE REVIEWING PARTY CAN BE
RE-RELEASED BY EITHER PARTY WITHOUT A REQUIREMENT FOR RE-APPROVAL.

 

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10.9                           HEADINGS.  THE CAPTIONS TO THE SEVERAL ARTICLES
AND SECTIONS HEREOF ARE NOT A PART OF THIS AGREEMENT, BUT ARE MERELY GUIDES OR
LABELS TO ASSIST IN LOCATING AND READING THE SEVERAL ARTICLES AND SECTIONS
HEREOF.

 

10.10                     NO PARTNERSHIP; INDEPENDENT CONTRACTORS.  IT IS
EXPRESSLY AGREED THAT THE RELATIONSHIP BETWEEN GENAISSANCE AND BAYER SHALL NOT
CONSTITUTE A PARTNERSHIP, JOINT VENTURE OR AGENCY.  NEITHER GENAISSANCE NOR
BAYER SHALL HAVE THE AUTHORITY TO MAKE ANY STATEMENTS, REPRESENTATIONS OR
COMMITMENTS OF ANY KIND, OR TO TAKE ANY ACTION, WHICH SHALL BE BINDING ON THE
OTHER, WITHOUT THE PRIOR CONSENT OF THE OTHER PARTY TO DO SO.

 

10.11                     EXPORTS.  THE PARTIES ACKNOWLEDGE THAT THE EXPORT OF
TECHNICAL DATA, MATERIALS OR PRODUCTS IS SUBJECT TO THE EXPORTING PARTY
RECEIVING ANY NECESSARY EXPORT LICENSES AND THAT THE PARTIES CANNOT BE
RESPONSIBLE FOR ANY DELAYS ATTRIBUTABLE TO EXPORT CONTROLS WHICH ARE BEYOND THE
REASONABLE CONTROL OF EITHER PARTY.  GENAISSANCE AND BAYER AGREE NOT TO EXPORT
OR RE-EXPORT, DIRECTLY OR INDIRECTLY, ANY INFORMATION, TECHNICAL DATA, THE
DIRECT PRODUCT OF SUCH DATA, SAMPLES OR EQUIPMENT RECEIVED OR GENERATED UNDER
THIS AGREEMENT IN VIOLATION OF ANY APPLICABLE EXPORT CONTROL LAWS OR
GOVERNMENTAL REGULATIONS.  GENAISSANCE AND BAYER AGREE TO OBTAIN SIMILAR
COVENANTS FROM THEIR LICENSEES, SUBLICENSEES AND CONTRACTORS WITH RESPECT TO THE
SUBJECT MATTER OF THIS SECTION.

 

10.12                     WAIVER.  THE WAIVER BY EITHER PARTY OF ANY RIGHT
HEREUNDER OR OF THE FAILURE TO PERFORM OR OF A BREACH BY THE OTHER PARTY SHALL
NOT BE DEEMED A WAIVER OF ANY OTHER RIGHT HEREUNDER OR OF ANY OTHER BREACH OR
FAILURE BY THE OTHER PARTY WHETHER OF A SIMILAR NATURE OR OTHERWISE.

 

10.13                     COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED 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.

 

10.14                     NO STRICT CONSTRUCTION.  THIS AGREEMENT HAS BEEN
PREPARED JOINTLY AND SHALL NOT BE STRICTLY CONSTRUED AGAINST EITHER PARTY.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Parties have caused their duly authorized officers to
execute and deliver this Agreement as of the date first set forth above.

 

BAYER AG

 

By:

/s/ Dr. Jan-Anders Karlsson

 

 

 

Name:

Dr. Jan-Anders Karlsson

 

 

 

Title:

Executive Vice President

 

 

 

And by:

/s/ [Illegible]

 

 

 

Name:

[Illegible]

 

 

 

Title:

Head of [Illegible]

 

 

 

BAYER HEALTHCARE LLC, Diagnostics Division

 

By:

/s/ Peter C. Knueppel

 

 

 

Name:

Peter C. Knueppel

 

 

 

Title:

Senior Vice President

 

 

 

GENAISSANCE PHARMACEUTICALS, INC.

 

By:

/s/ Kevin Rakin

 

 

 

Name:

Kevin Rakin

 

 

 

Title:

President and Chief Executive Officer

 

 

60

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Exhibit A

 

Gene Criteria

 

The HAPTM Database shall consist of Genaissance’s proprietary information and
publicly available information.

 

The current procedure for discovering HAPTM Markers for a Gene is to sequence,
from Genaissance’s collection of individuals of diverse ancestry (the “Index
Repository”), ninety-three (93) individual samples of human genomic DNA and one
(1) sample of chimpanzee genomic DNA.  The genomic regions of each Gene, which
are targeted for sequencing, are as follows.

 

(i) “Exons” shall mean the genomic DNA segments of a Gene whose sequence
information is translated into the protein product of that Gene.  The goal is to
obtain sequence information for all Exons of a Gene.

 

(ii) “Exon/Intron Junction” shall mean the junctions between the Exons and the
Introns in genomic DNA.  Beginning with the initiation codon at one end of a
Gene and ending with the termination codon at the other end of a Gene, the goal
is to obtain sequence information for each Exon/Intron Junction within this
genomic region.

 

(iii) “Introns” shall mean the genomic DNA segments of a Gene, which are located
between Exons.  Beginning with the initiation codon at one end of a Gene and
ending with the termination codon at the other end of a Gene, the goal is to
obtain a minimum of ten (10) to twenty (20) bases and a maximum of one hundred
(100) bases of sequence information from the Exon/Intron Junction into the
Intron for every Intron within this genomic region.

 

(iv) “Promoter” shall mean the genomic region that is immediately upstream of
the transcription start site of the Gene.  The goal is to obtain sequence
information for up to one (1) thousand bases of the Promoter.

 

(v) “Three-Prime Untranslated Region” shall mean the genomic region immediately
downstream from the termination codon of a Gene.  The goal is to obtain sequence
information for at least one hundred (100) bases of the Three-Prime Untranslated
Region downstream of the termination codon.

 

Specific genomic sequence information is required to meet the goals outlined in
(i) through (v) above.  If genomic sequence information is available for a
majority of these regions, even if the available genomic sequence information is
not sufficient to meet all of the goals in (i) through (v) above, a Gene will
still be queued for HAPTM Marker discovery.

 

Once a Gene is completely sequenced, HAPTM Markers will be constructed for that
Gene and placed into the HAPTM Database.  A Gene shall be considered completely
sequenced if sequence information is obtained for at least [**] of the [**].  A
specific region

 

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targeted for sequencing within a Gene shall be considered completely sequenced
if sequence information is obtained for at least [**].

 

If a Gene is not completely sequenced after each fragment targeted for
sequencing has been attempted once, each of the failed fragments will be
resequenced using redesigned amplification/sequencing primers.  However, the
presence of runs of guanine and cytosine, secondary structure or errors in
publicly available sequence information may prevent the generation of sufficient
sequence information for that Gene to be considered completely sequenced.  Thus,
if the Gene does not meet the completely sequenced criteria after the above
resequencing step, [**].

 

Genaissance shall use commercially reasonable efforts to incorporate into the
HAPTM Database other information about Genes, including: (i) genomic structure;
(ii) cDNA and protein sequences; (iii) publicly available Polymorphisms and
Haplotypes; (iv) location of these publicly available polymorphic sites within
the genomic structure and also in the messenger RNA if these Polymorphisms cause
coding changes; (v) publicly available association(s) of Polymorphism(s) with
phenotype(s); and (vi) whether the publicly available Polymorphism(s) is/are in
linkage disequilibrium with any of Genaissance’s proprietary Polymorphisms.

 

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Exhibit B

 

[**] Trial

 

The [**] Trial was a [**] trial run in [**] with [**] patients, aged [**].  Of
the [**] patients, [**] have signed informed consents to have their DNA isolated
and analyzed for scientific purposes related to the study.  The study was
designed such that [**]of the patients were given [**] and the other [**] of the
patients was given [**].  The purpose of the study was [**].  All [**].  The
study [**].

Bayer has started an association study using samples collected from the [**]
Trial.  [**] Trial were examined.  The [**] serve as controls.

 

The [**] examined in the association study [**].  Another [**].  The rationale
for [**].

 

All [**] patients [**] were genotyped for more than [**] SNPs.  These SNPs were
chosen because they were located within Genes that are known or believed to play
a role in [**].  The more than [**] SNPs were identified because [**].  From
these more than [**] SNPs, a number of SNPs were identified as being associated
with [**].  In addition, a number of SNPs were found to be associated with an
[**].  Moreover, a further number of SNPs were identified as being associated
with [**] and with [**].

 

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Exhibit C

 

SADR Clinical Phenotypes

 

[**]

 

Clinical Diagnosis:  [**]

 

[**]

 

[**]

[**]

 

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Exhibit D

 

SADR Plan

 

The SADR Study will be conducted as per the SADR Plan, which will be designed
and finalized by the Steering Committee.

 

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Exhibit E

 

SER Clinical Phenotypes

 

[**] [**]

 

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Exhibit F

 

SER Plan

 

The SER Study will be conducted as per the SER Plan, which will be designed and
finalized by the Steering Committee.

 

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Exhibit G

 

STRENGTH Trial

 

The STRENGTH Trial includes both the STRENGTH I trial and the STRENGTH II trial
and comprises an open-label examination of the relationship between treatment
response and HAPTM Markers.  Various efficacy and safety endpoints were measured
before and after treatment of seven hundred ninety-six (796) patients with one
of five (5) statins (Cerivastatin, Pravastatin, Atorvastatin, Simvastatin, and
Lovastatin).  Subjects were administered the recommended starting dose of one of
these statins for eight (8) weeks and then administered the highest allowed
dose, according to the drug label, for an additional eight (8) weeks.

 

All patients were sequenced for one hundred one (101) genes known or believed to
play a role in lipid metabolism, lipid trafficking, energy metabolism, and
inflammation.  Additionally,[**]all patients will be genotyped for SNPs from
ADME Genes (some of which are also contained in the set of 101 sequenced
Genes).  The genotyping and sequencing information derived will then be used to
assign specific HAPTM Marker pairs to each of the STRENGTH Trial patients for
all of the Genes.

 

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Exhibit H

 

Press Release

 

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