Exhibit 10.1

 

AGREEMENT ON MILESTONE PAYMENTS AND ROYALTIES

 

This AGREEMENT ON MILESTONE PAYMENTS AND ROYALTIES is entered into by and
between ArQule, Inc. and Daiichi Sankyo Co., Ltd. (collectively, the “Parties”).

 

WHEREAS, the Parties have entered into that certain Collaborative Research,
Development and License Agreement (the “Agreement”) on November 7, 2008;

 

WHEREAS, Section 5.4 of the Agreement provides that the Parties shall negotiate
in good faith and reach agreement on an amendment to the Agreement or a separate
agreement to be executed by the Parties setting forth certain milestone payments
and royalties to be paid under the License Agreement for each Licensed Product
that is Developed and Commercialized under the Agreement and/or a License
Agreement and additional provisions relating thereto; and

 

WHEREAS, the Parties have agreed upon the milestone events, the amount of
milestone payments and sales milestone payments, and the royalty rates at this
time, and to negotiate other provisions later.

 

NOW, THEREFORE, in consideration of the mutual promises set forth herein and for
other good and valuable consideration, the receipt and sufficiency of which is
acknowledged by the Parties, the Parties hereto, intending to be legally bound,
hereby agree as follows:

 

1.             Terms which are defined in the Agreement are used herein as so
defined.

 

2              The Parties agree that the timing of milestone payments and the
amount of milestone payments and sales milestone payments and the royalty rates
to be included in each License Agreement are as attached hereto as Exhibit A.

 

3              The Parties agree that any term and condition described in
Exhibit A of this agreement and Schedule 3 of the Agreement (except as modified
in Exhibit A of this agreement) shall be included in each License Agreement.

 

4              Notwithstanding Section 5.4 of the Agreement, the Parties agree
to negotiate such additional provisions relating to royalty reports, payment
mechanisms and dates, audit rights, overdue payments, taxes, currency conversion
rates and other provisions as are usual and customary for inclusion in
provisions relating to milestones and royalties at the time of negotiation of
each License Agreement. For purpose of clarity, such additional provisions shall
supplement and shall not materially expand, limit or change any term and
condition agreed in this agreement or set forth in Schedule 3 of the License
Agreement (except as modified in Exhibit A of this agreement).

 

This agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same agreement.

 

*   *   *   *   *   *   *   *

 

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[*] = CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE SECURITIES AND EXCHANGE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.  OMITTED TEXT IS INDICATED BY AN
“*”.

 

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ArQule, Inc.

 

 

 

 

 

 

 

By:

/s/ Paolo Pucci

 

 

Name: Paolo Pucci

 

 

Title: Chief Executive Officer

 

 

 

 

 

 

 

 

 

Daiichi Sankyo Co., Ltd.

 

 

 

 

 

 

 

By:

/s/ Takashi Shoda

 

 

Name: Takashi Shoda

 

 

Title: President and Chief Executive Officer

 

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Exhibit A

 

Milestone Payments and Royalties

 

A. Development and Regulatory Milestones

 

Milestone Event

 

Milestone Payment

 

1. *

 

$* million

 

2. *

 

$* million

 

3. *

 

$* million

 

4. *

 

$* million

 

5. *

 

$* million

 

6. *

 

$* million

 

7. *

 

$* million

 

8. *

 

$* million

 

9. *

 

$* million

 

10. *

 

$* million

 

11. *

 

$* million

 

12. *

 

$* million

 

13. *

 

$* million

 

14. *

 

$* million

 

15. *

 

$* million

 

16. *

 

$* million

 

17. *

 

$* million

 

19. *

 

$* million

 

20. *

 

$* million

 

21. *

 

$* million

 

22. *

 

$* million

 

 

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B. Sales Milestones

 

Milestone Event

 

Milestone Payment

 

Annual Net Sales in a Calendar Year of $* million

 

$* million

 

Annual Net Sales in a Calendar Year of $* million

 

$* million

 

Annual Net Sales in a Calendar Year of $* billion

 

$* million

 

Annual Net Sales in a Calendar Year of $* billion

 

$* million

 

 

C. Royalties

 

Annual Net Sales Increment in the Territory

 

Royalty Rate
applicable for such tier

 

Up to $* million

 

*%

 

Above $* million, but less than or equal to $* billion

 

*%

 

Above $* billion

 

*%

 

 

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