Exhibit 10.l

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

LICENSE AGREEMENT

 

5 May, 2008

 

by and between

 

THE SCRIPPS RESEARCH INSTITUTE,

 

a California nonprofit

 

public benefit corporation

 

and

 

PONIARD PHARMACEUTICALS, INC.,

 

a Washington corporation

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

1.

Definitions

1

2.

License

4

 

2.1.

Grant

4

 

2.2.

Sublicensing

4

 

 

2.2.1.      Granting

4

 

 

2.2.2.      Survival of Sublicenses

5

 

2.3.

No Other License

6

 

2.4.

Governmental Interest

6

 

2.5.

Reservation of Rights

6

 

2.6.

Disclosure of Information and Transfer of Materials

7

3.

Royalties

7

 

3.1.

License Issue Royalty

7

 

3.2.

Minimum Annual Royalty

7

 

3.3.

Running Royalties for Licensed Products

7

 

3.4.

Royalty Increase for Licensed Products

7

 

3.5.

Multiple Royalties

7

 

3.6.

Royalty Offsets

8

 

3.7.

Royalty Floor

8

 

3.8.

Arm’s-Length Transactions

8

 

3.9.

No Right to Recoup Royalties

8

4.

Non-Royalty Revenues

9

 

4.1.

Sublicense Payments

9

 

4.2.

Increase in Sublicense Payments

9

 

4.3.

Product Development Milestones

9

5.

Royalty Payments

10

 

5.1.

Sales by Licensee

10

 

5.2.

Sales by Sublicensees

10

6.

Reports on Progress, Sales or Payments

10

 

6.1.

Development Plan and Benchmarks

10

 

6.2.

Progress Reports on Development Plan

10

 

6.3.

Reports on Revenues and Payments

11

 

i

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

TABLE OF CONTENTS
(continued)

 

 

 

 

Page

 

 

 

 

 

6.4.

Royalty Payments

11

 

6.5.

Foreign Sales

12

 

6.6.

Foreign Taxes

12

7.

Record Keeping

12

8.

Patent Matters

13

 

8.1.

Patent Prosecution and Maintenance

13

 

8.2.

Information to Licensee

13

 

8.3.

Patent Costs

13

 

8.4.

Ownership

14

 

8.5.

TSRI Right to Pursue Patent

14

 

8.6.

Infringement Actions

14

 

 

8.6.1.      Notice of Alleged Infringement

14

 

 

8.6.2.      Prosecution and Defense of Infringements

14

 

 

8.6.3.      Allocation of Recovery

15

 

8.7.

Pre-Challenge Requirements

15

9.

Indemnity and Insurance

15

 

9.1.

Indemnity

15

 

9.2.

Insurance

16

 

 

9.2.1.      Amount

16

 

 

9.2.2.      Subrogation

17

 

 

9.2.3.      Notice

17

 

 

9.2.4.      Time Period

17

10.

Limited Warranty

17

11.

Confidentiality and Publication

18

 

11.1.

Treatment of Confidential Information

18

 

11.2.

Publications

19

 

11.3.

Publicity

19

12.

Term and Termination

19

 

12.1.

Term

19

 

12.2.

Termination Upon Mutual Agreement

19

 

12.3.

Termination by TSRI

19

 

12.4.

Termination by Licensee

20

 

12.5.

Rights Upon Expiration

20

 

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

TABLE OF CONTENTS
(continued)

 

 

 

 

Page

 

 

 

 

 

12.6.

Rights Upon Termination

20

 

12.7.

Work-in-Progress

21

 

12.8.

Final Royalty Report

21

13.

Assignment; Successors

21

 

13.1.

Assignment

21

 

13.2.

Binding Upon Successors and Assigns

21

14.

General Provisions

22

 

14.1.

Independent Contractors

22

 

14.2.

Late Payments

22

 

14.3.

Governmental Approvals and Marketing of Licensed Products

22

 

14.4.

Patent Marking

22

 

14.5.

No Use of Name

22

 

14.6.

U.S. Manufacture

22

 

14.7.

Foreign Registration

22

 

14.8.

Arbitration

23

 

 

14.8.1.    Location

23

 

 

14.8.2.    Selection of Arbitrators

23

 

 

14.8.3.    Discovery

23

 

 

14.8.4.    Case Management

23

 

 

14.8.5.    Remedies

24

 

 

14.8.6.    Expenses

24

 

 

14.8.7.    Confidentiality

24

 

14.9.

Entire Agreement; Modification

24

 

14.10.

California Law

24

 

14.11.

Headings

25

 

14.12.

Severability

25

 

14.13.

No Waiver

25

 

14.14.

Name

25

 

14.15.

Attorneys’ Fees

25

 

14.16.

Notices

26

 

14.17.

Compliance with U.S. Laws

26

 

 

 

 

Exhibit A Licensed Patent Rights

 

 

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

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

TABLE OF CONTENTS
(continued)

 

 

Page

 

 

Exhibit B Transfer of Information and Materials

 

 

 

Exhibit C Timeline Benchmarks and Development Plan

 

 

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

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

LICENSE AGREEMENT

 

This License Agreement is entered into and made effective as of this 5th day of
May, 2008 (the “Effective Date”), by and between THE SCRIPPS RESEARCH INSTITUTE,
a California nonprofit public benefit corporation (“TSRI”) located at 10550
North Torrey Pines Road, La Jolla, California 92037, and PONIARD
PHARMACEUTICALS, INC., a Washington corporation (“Licensee”) located at 300
Elliott Avenue West, Suite 500, Seattle, WA 98119, with respect to the facts set
forth below.

 

RECITALS

 

A.                                    TSRI is engaged in fundamental scientific
biomedical and biochemical research including research relating to the discovery
of novel protein kinase inhibitors

 

B.                                    Licensee is engaged in research and
development of pharmaceutical products for the treatment of cancer.

 

C.                                    TSRI has disclosed to Licensee certain
technology and TSRI has the right to grant a license to the technology, subject
to certain rights of the U.S. Government resulting from the receipt by TSRI of
certain funding from the U.S. Government.

 

D.                                    TSRI desires to grant to Licensee, and
Licensee wishes to acquire from TSRI, an exclusive, worldwide right and license
to certain patent rights of TSRI, subject to the terms and conditions set forth
herein.

 

AGREEMENT

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions set
forth herein, TSRI and Licensee hereby agree as follows:

 

1.                                      Definitions

 

Capitalized terms shall have the meaning set forth herein.

 

Affiliate.  The term “Affiliate” shall mean any entity which directly or
indirectly controls, or is controlled by another entity.  The term “control” as
used herein means (a) in the case of corporate entities, direct or indirect
ownership of at least fifty percent (50%) of the stock or shares entitled to
vote for the election of directors; or (b) in the case of non-corporate
entities, direct or indirect ownership of at least fifty percent (50%) of the
equity interest with the power to direct the management and policies of such
non-corporate entities.

 

Challenge.  The term “Challenge” shall mean that Licensee has initiated (or
requests a sublicensee to initiate) a legal action in which it has alleged that
an issued patent included in the Licensed Patent Rights is invalid or
unenforceable or by which it provokes interference with a patent application
included in the Licensed Patent Rights; provided, however, that, in the event
such legal action is initiated by a sublicensee with respect to an issued patent
or patent application it has sublicensed and Licensee terminates such
sublicensee’s sublicense to the issued patent or patent application, such legal
action shall not be deemed to be a “Challenge” for

 

1

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

purposes of this Agreement and provided, further, that in the event Licensee
does not terminate such sublicense due to the “Challenge” by the sublicensee,
such “Challenge” shall only result in consequences to such sublicensee hereunder
(i.e., increase in royalty rates on sublicensee’s Net Sales pursuant to
Section 3.4) and not to Licensee, except that Licensee shall be responsible for
all of such sublicensee’s obligations related to the Challenge if such
sublicensee fails to comply with such obligations as set forth above.

 

Confidential Information.  The term “Confidential Information” shall mean any
and all proprietary or confidential information of TSRI or Licensee which may be
exchanged between the parties at any time and from time to time during the term
of this Agreement.  Information shall not be considered confidential to the
extent that either party can establish by competent proof that it:

 

a.                                      Is publicly disclosed through no fault
of any party hereto, either before or after it becomes known to the receiving
party; or

 

b.                                      Was known to the receiving party prior
to the date of this Agreement, which knowledge was acquired independently and
not from another party hereto (or such party’s employees); or

 

c.                                       Is subsequently disclosed to the
receiving party in good faith by a third party who has a right to make such
disclosure; or

 

d.                                      Has been published by a third party as a
matter of right.

 

If Confidential Information is required to be disclosed by law or court order,
the party required to make such disclosure shall limit the same to the minimum
required to comply with the law or court order, and shall use reasonable efforts
to attempt to seek confidential treatment for that disclosure, and prior to
making such disclosure that party shall notify the other party, not later than
[**] days (or such shorter period of time as may be reasonably practicable under
the circumstances) before the disclosure in order to allow that other party to
comment and/or to obtain a protective or other order, including extensions of
time and the like, with respect to such disclosure.

 

Field.  The term “Field” shall mean the diagnosis, treatment or prevention of
human diseases or conditions.

 

Licensed Patent Rights.  The term “Licensed Patent Rights” shall mean rights
arising out of or resulting from: (a) the provisional patent applications set
forth on Exhibit A attached hereto; (b) U.S. non-provisional/regular patent
applications associated with and entitled to the benefit of the priority date of
the provisional application(s) set forth on Exhibit A; (c) international (PCT)
and foreign patent applications associated with the application(s) referenced in
sub clauses (a)-(b) above; (d) the patents issued from the
application(s) referenced in sub clauses (a)-(c); (e) divisionals,
continuations, reissues, reexaminations, and extensions of any patent or
application set forth in sub clauses (a)-(d) above; and (f) all claims of
continuations-in-part that are entitled to the benefit of the priority date of
the applications referenced in sub clauses (a)-(b) above.  Annually, or earlier
upon request, the parties shall update Exhibit A with

 

2

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

current information identifying the patent applications and patents included in
Licensed Patent Rights.

 

Licensed Product.  The term “Licensed Product” shall mean any product, the
manufacture, use, importation, sale or offer for sale of which would, in the
absence of the license granted by this Agreement, infringe a Valid Claim of any
of the Licensed Patent Rights.

 

Major Market Country.  The term “Major Market Country” shall mean any of the
following countries: the United States of America, the United Kingdom, France,
Germany or Japan.

 

Net Sales.  The term “Net Sales” shall mean the gross amount invoiced by
Licensee, or sublicensees, or any of them, on all sales of Licensed Products in
the country of sale, less (a) discounts, chargebacks (only on a product by
product basis) and rebates actually allowed; (b) credits for claims, allowances,
retroactive price reductions, returned goods or recalls; (c) prepaid freight and
insurance; (d) sales or excise taxes, duties or other governmental charges
actually paid in connection with sales of Licensed Products (but excluding what
are commonly known as income taxes and, if not reimbursed, value added taxes);
and (e) any payment in the nature of a rebate in respect of sales to any
governmental authority in respect of any government-subsidized program,
including, without limitation, Medicare and Medicaid rebates.  Net Sales shall
include all consideration charged by Licensee or sublicensees in exchange for
any Licensed Products, including without limitation any monetary payments or any
other property whatsoever.  For purposes of determining Net Sales, a sale shall
be deemed to have occurred when an invoice therefore shall be generated or the
Licensed Product is shipped for delivery.  Sales of Licensed Products by
Licensee or sublicensee of Licensee to any Affiliate, sublicensee or Licensee
for resale or transfer of active pharmaceutical (API) for making of Licensed
Products for sale shall be excluded, and only the subsequent sale of such
Licensed Products by Affiliates, sublicensees or Licensee to unrelated parties
shall be deemed Net Sales hereunder.  Providing Licensed Product at no charge
for preclinical, clinical, “compassionate use,” or regulatory purposes or as
samples, and sales of Licensed Product for “compassionate use,” shall not be
included in Net Sales.  In the event a Licensed Product is sold in combination
with other components which if sold alone would not be subject to a royalty
payment hereunder (a “Combination Product”), Net Sales of the Licensed Product,
for purposes of this Agreement, shall be calculated by multiplying the actual
Net Sales of the Combination Product by the fraction A/(A+B), where A is the
gross selling price, during the royalty period in question, of the Licensed
Product sold separately (i.e., without the other components) and B is the gross
selling price, during the royalty period in question, of the other components
sold separately.  In the event that no such separate sales are made, Net Sales
shall be calculated by multiplying the actual Net Sales of the Combination
Product by the fraction C/(C+D), where C is the fair market value of the
Licensed Product (not including the other components) and D is the fair market
value of such other components, such costs being determined using generally
accepted accounting principles consistently applied.

 

Sublicense Payments.  The term “Sublicense Payments” shall have the meaning set
forth in Section 4.1.

 

Sublicense Revenue.  The term “Sublicense Revenue” shall mean any and all cash
and noncash consideration (valued at fair market value upon receipt) received by
Licensee from its

 

3

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

sublicensees for the sublicense of the Licensed Patent Rights under this
Agreement upon entering into a sublicense with respect to such Licensed Patent
Rights; provided, however, that Sublicense Revenue shall not include amounts
that are:

 

(a)                                 royalties;

 

(b)                                 [**]

 

(c)                                  [**]

 

(d)                                 [**]

 

(e)                                  [**]

 

(f)                                   [**]

 

(g)                                  [**]

 

(h)                                 [**].

 

[**].

 

Valid Claim.  The term “Valid Claim” shall mean a claim of (a) an issued and
unexpired patent included in the Licensed Patent Rights which has not been held
unenforceable, unpatentable or invalid by a decision of a court or governmental
agency of competent jurisdiction, unappealable or unappealed within the time
allowed for appeal, and which has not been admitted to be invalid or
unenforceable through reissue or disclaimer or otherwise, or (b) a patent
application included in the Licensed Patent Rights that has not been cancelled,
withdrawn or abandoned and that does not have a priority date more than [**]
years earlier.

 

2.                                      License

 

2.1.                            Grant

 

TSRI hereby grants and Licensee accepts, subject to the terms and conditions of
this Agreement and Sections 2.4 and 2.5, an exclusive, worldwide license (with
right to sublicense as permitted under Section 2.2.1) under the Licensed Patent
Rights to make and have made, to use and have used, to offer to sell, to sell
and have sold, and import Licensed Products in the Field.

 

2.2.                            Sublicensing

 

2.2.1.                                     Granting

 

Licensee shall have the right to provide TSRI with one or more lists of
potential sublicensees for preapproval, which preapproval shall not be
unreasonably withheld or delayed by TSRI and which preapproval shall only be
effective for [**] years.  In connection with providing any list of potential
sublicensees for preapproval, Licensee shall also indicate the expected
indication(s) for Licensed Products for which it may be seeking sublicensees,
which indication(s) is for informational purposes only and shall not be binding
or a restriction or

 

4

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

condition to Licensee’s ability or right to sublicense.  Licensee shall have the
right to grant sublicenses with respect to the rights conferred upon Licensee
under this Agreement to any party on the list(s) who has been preapproved within
the last [**] years; provided, however, that any such sublicense shall be
subject in all respects to the provisions contained in this Agreement (excluding
the payments due under Sections 3 and 4, which are Licensee’s responsibility). 
Licensee’s sublicensee(s) shall not have the right to further sublicense without
TSRI’s prior written consent, which consent shall not be unreasonably withheld
or delayed.  TSRI shall consider requests by Licensee’s sublicensee(s) to
further sublicense on a case-by-case basis, which consideration shall take into
account (a) the identity of the proposed sublicensee and (b) a review of
selected provisions (or a redacted form) of an unexecuted draft of the proposed
further sublicense agreement to confirm that TSRI’s rights are properly
protected with respect to the scope of the sublicense (Section 2.1), the
corollary provisions of Section 2.4, 2.5 and 9 of this Agreement in the further
sublicense agreement and the requirement that the further sublicense is subject
in all respects to the provisions contained in this Agreement (excluding the
payments due under Sections 3 and 4, which are Licensee’s responsibility).  Any
further sublicense agreement is subject in all respects to the provisions
contained in this Agreement (excluding the payments due under Sections 3 and 4,
which are Licensee’s responsibility).  Licensee shall forward to TSRI a copy of
any and all fully executed sublicense agreements (including further sublicenses
by a sublicensee) within [**] days of execution, which copies may be redacted
(except for the financial terms related to Sublicense Revenue) to preserve
confidentiality.  Notwithstanding the foregoing, Licensee and its preapproved
sublicensees (including their further sublicensees to which TSRI has given
consent) may sublicense their Affiliates without the preapproval or consent of
TSRI and need not provide TSRI a copy of any executed sublicense agreement with
their Affiliates.

 

2.2.2.                                     Survival of Sublicenses

 

Any sublicense shall, at the election of the applicable sublicensee, survive
termination of this Agreement, in accordance with the provisions of this
Section 2.2.2.  Upon termination of this Agreement, and at the written request
of a sublicensee, TSRI will grant to each sublicensee, not then in default, an
option to obtain directly from TSRI a license agreement on the terms set forth
below, which option shall be exercisable by each sublicensee during the [**] day
period commencing on the later of the date of termination of this Agreement or
when sublicensee learns of such termination.  In the event a sublicensee elects
to exercise this option and provides its written notice thereof within the [**]
day period, as a condition precedent to TSRI’s obligation to grant the direct
license to that sublicensee, such sublicensee must pay to TSRI all past due
royalties, non-royalty revenue, patent costs and all other monies owed by
Licensee to TSRI under this Agreement.  Upon TSRI’s receipt of all such
outstanding monies, TSRI shall enter into a license agreement (a “New License
Agreement”) directly with the requesting sublicensee and the license granted in
each New License Agreement shall be retroactive to the date of termination of
this Agreement.  Each New License Agreement shall be subject to the same
non-financial terms and conditions as those in this Agreement; provided,
however, that each New License Agreement shall contain substantially the same
terms and conditions regarding sublicense scope, sublicense territory, duration
of sublicense grant, and diligence obligations as the sublicense agreement
between such sublicensee and Licensee.  In addition, (i) each sublicensee shall
agree in the New License Agreement to terms providing that in no event shall
TSRI be liable to sublicensee for any actual or alleged breach of such
sublicense agreement by

 

5

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

Licensee; (ii) TSRI shall not have any obligations to such sublicensee other
than TSRI’s obligations to Licensee as set forth herein; and (iii) in no event
shall TSRI be obliged to accept provisions in the New License Agreement
(a) unless such provisions correspond to rights granted by Licensee to
sublicensee in conformance with this Agreement and such provisions are not in
conflict with the rights, duties and obligations accruing to the Licensee under
this Agreement; or (b) where such provisions are inconsistent with the legal
obligations under any other sublicense agreement granted by Licensee, or by
applicable federal, state or local statute or regulation.  The financial
consideration to TSRI under the New License Agreement shall be as follows:
(A) such sublicensee (or if there is at such time more than one such
sublicensee, such sublicensees severally and jointly) shall be required to make
the aggregate minimum annual royalties due pursuant to Section 3.2; and (B) each
such sublicensee shall be required to make any monetary payment(s) that, had
this Agreement not been terminated, Licensee would have been required to make
under this Agreement.  Licensee must include or specifically reference this
Section 2.2.2 in each of its sublicense agreements in order for such sublicensee
to have the option described above.

 

2.3.                            No Other License

 

This Agreement confers no license or rights by implication, estoppel, or
otherwise under any patent applications or patents of TSRI other than Licensed
Patent Rights regardless of whether such patents are dominant or subordinate to
Licensed Patent Rights.

 

2.4.                            Governmental Interest

 

Licensee and TSRI acknowledge that TSRI has received, and expects to continue to
receive, funding from the United States Government in support of TSRI’s research
activities.  Licensee and TSRI acknowledge and agree that their respective
rights and obligations pursuant to this Agreement shall be subject to the rights
of the United States Government, existing and as amended, which may arise or
result from TSRI’s receipt of research support from the United States
Government, including but not limited to, 37CFR401, the NIH Grants Policy
Statement and the NTH Guidelines for Obtaining and Disseminating Biomedical
Research Resources.  To the best knowledge of TSRI, none of the named inventors
of Licensed Patent Rights received grant funding from the United States
Government to support research leading to the inventions described or covered by
Licensed Patent Rights.

 

2.5.                            Reservation of Rights

 

Notwithstanding the exclusive license granted herein, TSRI reserves the right to
use for any noncommercial research or educational purposes any Licensed Patent
Rights, without TSRI being obligated to pay Licensee any royalties or other
compensation.  In addition, TSRI may grant nonexclusive licenses (without the
right to sublicense) to other nonprofit or academic institutions to use for any
noncommercial research or educational purposes any Licensed Patent Rights,
without the nonprofit or academic institution being obligated to pay Licensee
any royalties or other compensation.  Upon Licensee’s request, TSRI shall
provide Licensee, but not more frequently than quarterly, a list of any such
nonexclusive licenses, including the name of the nonprofit or academic
institution and the scope of the license, which shall be deemed to be
confidential information of TSRI under the terms of this Agreement.

 

6

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

2.6.                            Disclosure of Information and Transfer of
Materials

 

To the extent not previously disclosed or transferred to Licensee, TSRI shall
promptly transfer to Licensee the materials and information as listed in
Exhibit B attached hereto.

 

3.                                      Royalties

 

3.1.                            License Issue Royalty

 

Licensee agrees to pay and shall pay to TSRI a non-creditable, nonrefundable
license issue royalty in the amount of [**] U.S. Dollars (U.S. $[**]) within
fifteen (15) days after the later of (a) the Effective Date or (b) transfer to
Licensee of all of the information and materials identified in Exhibit B
attached hereto.  Failure of Licensee to make this payment shall render this
Agreement null and void (ab initio).

 

3.2.                            Minimum Annual Royalty

 

Licensee agrees to pay and shall pay to TSRI a nonrefundable minimum annual
royalty in the amount of [**] U.S. Dollars (U.S. $[**]).  The first payment is
due on the first anniversary of the Effective Date and thereafter on each
subsequent anniversary of the Effective Date.  Such payments may be credited
against running royalties due for that calendar year and Royalty Reports shall
reflect such a credit.  Such payments shall not be credited against milestone
payments (if any), Sublicense Payments (if any), nor against royalties due for
any preceding or subsequent calendar year.

 

3.3.                            Running Royalties for Licensed Products

 

Licensee agrees to pay and shall pay to TSRI a running royalty on a country by
country basis in the amount of (a) [**] percent ([**]%) of aggregate worldwide
Net Sales less than $[**] of Licensed Products made by Licensee or sublicensees
in a calendar year, or (b) [**] percent ([**]%) of aggregate worldwide Net Sales
greater than $[**] of Licensed Products made by Licensee or sublicensees in the
calendar year.

 

3.4.                            Royalty Increase for Licensed Products

 

Notwithstanding Section 3.3, in the event Licensee Challenges an issued patent
or patent application included in the Licensed Patent Rights, the royalty rate
specified in Section 3.3 shall be increased by fifty percent (50%) during the
pendency of the Challenge (and by one hundred percent (100%) in the event
Licensee’s Challenge is unsuccessful) with respect to the Net Sales of the
Licensed Products that would, in the absence of the license granted by this
Agreement, infringe a Valid Claim of the Challenged patent or patent application
in the country of sale, such increase to occur with respect to of the calendar
quarter commencing immediately after the date Licensee first institutes such
Challenge.

 

3.5.                            Multiple Royalties

 

No multiple royalties shall be due because any Licensed Product is covered by
more than one of the Licensed Patent Rights or patent claims therein.  With
respect to a particular sale of a

 

7

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

Licensed Product, Licensee shall pay the highest of the applicable royalties
owed to TSRI pursuant to Sections 3.3 and 3.4.

 

3.6.                            Royalty Offsets

 

If Licensee, its Affiliate or its sublicensee, is required to license or acquire
technology from a third party in order to commercialize a Licensed Product, and
Licensee, its Affiliate or its sublicensee is required to pay such
third-party(ies) royalties or other amounts, then Licensee may deduct up to
fifty percent (50%) of the amount paid to such third parties from the payments
owing to TSRI for such Licensed Product, subject to Section 3.7. 
Notwithstanding the above, Licensee, its Affiliate or its sublicensee shall have
no right to deduct or offset any royalties or other amounts with respect to any
third party technology that is involved in any cross license or similar
arrangements (whether in the same or related transactions) where Licensee, its
Affiliate or its sublicensee grants or provides to such third party or its
agents licenses, options or other rights to existing or future technology,
intellectual property, research or development activities or other information
or materials, other than just improvements to the third party technology. 
Licensee will give TSRI advance written notice of any third-party arrangement
prior to seeking to deduct any payments to the third party under the terms of
this Section 3.6 in order to allow TSRI and Licensee to discuss, if needed,
whether this Section 3.6 applies to such payments (i.e., whether such third
party’s technology is required to commercialize a Licensed Product).

 

3.7.                            Royalty Floor

 

It is understood that, in the event that Section 3.6 should apply to a Licensed
Product, in no event shall the amounts due TSRI hereunder be reduced to less
than fifty percent (50%) of the amount that would otherwise have been owed prior
to the application of Section 3.6.

 

3.8.                            Arm’s-Length Transactions

 

On sales of Licensed Products which are made in other than an arm’s-length
transaction, the value of the Net Sales attributed under this Section 3 to such
a transaction shall be that which would have been received in an arm’s-length
transaction, based on sales of like quality and quantity products on or about
the time of such transaction.

 

3.9.                            No Right to Recoup Royalties

 

In the event Licensee institutes a Challenge, Licensee shall have no right to
recoup, recover, set off or otherwise get reimbursement of any royalties,
Sublicense Payments, milestone payments, patent costs or other monies paid
hereunder during the period of such Challenge.  Licensee hereby voluntarily and
irrevocably waives any right to seek return of such royalties, Sublicense
Payments, milestone payments, patent costs or other monies in the event Licensee
directly or indirectly institutes any Challenge.

 

8

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

4.                                      Non-Royalty Revenues

 

4.1.                            Sublicense Payments

 

Sublicense Revenue shall be reported to TSRI by Licensee within [**] days of
receipt by Licensee.  Licensee shall pay to TSRI a non-creditable,
non-refundable percentage of these Sublicense Revenues, with such report,
according to the following schedule (“Sublicense Payments”):

 

Date of Sublicense Grant
(after the Effective Date)

 

Percent of Sublicense
Revenues to Be Paid to TSRI

 

[**] months

 

[**]

%

[**] months

 

[**]

%

[**] months and beyond

 

[**]

%

 

Any noncash Sublicense Revenue received by Licensee from a sublicensee shall be
valued at its fair market value as of the date of receipt and the amount due
under this Section 4.1 with respect to such amount shall be paid in cash.

 

4.2.                            Increase in Sublicense Payments

 

Notwithstanding Section 4.1, in the event Licensee institutes any Challenges
with respect to an issued patent or patent application within the Licensed
Patent Rights, the percentages in Section 4.1 shall be increased as follows
during and after the pendency of such Challenges with respect to Sublicense
Revenue received for such Challenged patent or patent application after the date
Licensee first institutes such Challenges:

 

Date of Sublicense Grant
(after the Effective Date)

 

Percent of Sublicense
Revenues to Be Paid to TSRI

 

[**] months

 

[**]

%

[**] months

 

[**]

%

[**] months and beyond

 

[**]

%

 

4.3.                            Product Development Milestones

 

Licensee agrees to pay and shall pay (or cause its sublicensee to pay) to TSRI
the following non-creditable, non-refundable product development milestones
within [**] days of the first occurrence of each milestone (in any Major Market
Country):

 

Milestone

 

Payment (US$)

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

[**]

 

$

[**]

 

Total Potential Milestone Payments for all Licensed Products worldwide

 

$

3,000,000

 

 

9

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

5.                                      Royalty Payments

 

5.1.                            Sales by Licensee

 

Royalties payable pursuant to Section 3 herein, shall be payable by Licensee
quarterly, within [**] days after the end of each calendar quarter, based upon
Net Sales during the immediately preceding calendar quarter.

 

5.2.                            Sales by Sublicensees

 

Licensee agrees to pay and shall pay to TSRI, or cause its sublicensees to pay
to TSRI all royalties pursuant to Section 3 herein resulting from the activities
of its sublicensees, within [**] days after the end of each calendar quarter.

 

6.                                      Reports on Progress, Sales or Payments

 

6.1.                            Development Plan and Benchmarks

 

Prior to signing this Agreement, Licensee has provided to TSRI its Development
Plan and under which Licensee intends to bring the subject matter of the
Licensed Patent Rights to the point of commercial use.  Based on this
Development Plan, a development timeline (“Benchmarks”) has been established and
set forth in Exhibit C attached hereto.

 

6.2.                            Progress Reports on Development Plan

 

Licensee shall provide written annual reports on its product development
progress or efforts to commercialize under the Development Plan within [**] days
after June 30 of each calendar year until annual, aggregate worldwide Net Sales
first reach [**] Dollars ($[**]).  Progress reports shall include, but not be
limited to progress on research and development and status of applications for
regulatory approvals, manufacturing, sublicensing, marketing, importing and
sales during the preceding calendar year, as well as plans for the present
calendar year.  TSRI also encourages these reports to include information on any
of Licensee’s public service activities that relate to the Licensed Patent
Rights.  If reported progress differs from that projected in the Development
Plan, Licensee shall explain the reasons for such differences.  In any such
annual report, Licensee may propose amendments to the Development Plan or
Benchmarks, acceptance of which by TSRI may not be denied unreasonably. 
Licensee agrees to provide any additional information reasonably requested by
TSRI to evaluate Licensee’s performance under this Agreement and, upon
reasonable request, to discuss such information with TSRI.  TSRI shall not
unreasonably withhold approval of any request of Licensee to extend the time
periods in the Development Plan or Benchmarks if such request is supported by a
reasonable showing by Licensee of diligence in its performance under the
Development Plan and toward bringing the Licensed Products to the point of
commercial use.  Licensee shall use reasonable and diligent efforts to
commercialize (directly or through sublicense or other arrangements) Licensed
Products in the Major Market Countries.

 

10

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

At any time after [**] years from the Effective Date, TSRI may terminate this
Agreement after reasonable consultation with Licensee if, in TSRI’s sole
reasonable judgment, the progress reports furnished by Licensee do not
demonstrate that Licensee: (a) has put the licensed subject matter into
commercial use in the country or countries hereby licensed, directly or through
a sublicense, and is keeping the licensed subject matter reasonably available to
the public; or (b) is engaged in research, development, manufacturing, marketing
or sublicensing activity appropriate to achieving the goals described in this
Section 6.2, provided, that TSRI has provided express written notice to Licensee
explaining in reasonably specific detail the reasons for such judgment and has
provided Licensee at least [**] days to cure the diligence failure alleged by
TSRI or provide TSRI evidence in support of Licensee’s diligence efforts. 
Notwithstanding the foregoing, achievement of the Benchmarks specified in
Exhibit C shall be considered fulfillment of these efforts.  Licensee shall
report to TSRI the dates for achieving the Benchmarks specified in Exhibit C and
the first commercial sale of a Licensed Product in each Major Market Country
within [**] days of such occurrences.

 

6.3.                            Reports on Revenues and Payments

 

Licensee shall submit to TSRI, no later than [**] days after then end of each
calendar quarter, a royalty report (the “Royalty Report”) setting forth for such
quarter at least the following information:

 

(a)                                 the number of Licensed Products sold by
Licensee and its sublicensees;

 

(b)                                 the gross amounts due or charged for such
Licensed Products;

 

(c)                                  a list of each deduction applicable to
determine the Net Sales of Licensed Products;

 

(d)                                 the amount of Sublicense Revenues received
by Licensee; and

 

(e)                                  the amount of royalty due on all of the
above, or if no royalties are due to TSRI for any reporting period, the
statement that no royalties are due and a detailed explanation why they are not
due for that quarterly period.

 

Such Royalty Report shall be certified as correct by an officer of Licensee and
shall include a detailed listing of all deductions from royalties.

 

6.4.                            Royalty Payments

 

Licensee agrees to pay and shall pay (or cause its sublicensee to pay) to TSRI
with each Royalty Report the amount of royalty due with respect to such
quarter.  If multiple technologies are covered by the license granted hereunder,
Licensee shall specify which Licensed Patent Rights are utilized for each
Licensed Product included in the Royalty Report.  All payments due hereunder
shall be deemed received when funds are credited to TSRI’s bank account and
shall be payable by check or wire transfer in United States Dollars.

 

11

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

6.5.                            Foreign Sales

 

The remittance of royalties payable on sales outside the United States shall be
payable to TSRI in United States Dollar equivalents at the official rate of
exchange of the currency of the country from which the royalties are payable, as
quoted in the Wall Street Journal for the last business day of the calendar
quarter in which the royalties are payable.  If the transfer of or the
conversion into the United States Dollar equivalents of any such remittance in
any such instance is not lawful or possible, the payment of such part of the
royalties as is necessary shall be made by the deposit thereof, in the currency
of the country where the sale was made on which the royalty was based to the
credit and account of TSRI or its nominee in any commercial bank or trust
company of TSRI’s choice located in that country, prompt written notice of which
shall be given by Licensee to TSRI.

 

6.6.                            Foreign Taxes

 

Any tax required to be withheld by Licensee under the laws of any foreign
country for any royalties or other amounts due hereunder or for the accounts of
TSRI shall be promptly paid by Licensee for and on behalf of TSRI to the
appropriate governmental authority, and Licensee shall furnish TSRI with proof
of payment of such tax together with official or other appropriate evidence
issued by the applicable government authority.  Any such tax actually paid on
TSRI’s behalf shall be deducted from royalty payments due TSRI.

 

7.                                      Record Keeping

 

Licensee shall keep, and shall require its Affiliates and sublicensees to keep,
accurate records (together with supporting documentation) of Licensed Products
made, used or sold under this Agreement, appropriate to determine the amount of
royalties, Sublicense Payments, Product Development Milestone Payments and other
monies due to TSRI hereunder.  Such records shall be retained for at least [**]
years following the end of the reporting period to which such records relate. 
They shall be available during normal business hours for examination and copying
by an independent certified public accountant selected by TSRI, for the purpose
of verifying Licensee’s reports and payments hereunder and its compliance with
this Agreement.  In conducting examinations pursuant to this Section, TSRI’s
accountant shall have access to, and may disclose to TSRI, all records which
TSRI reasonably believes to be relevant to the calculation of royalties under
Section 3, non-royalty revenues under Section 4 and Licensee’s compliance with
this Agreement.

 

Except as set forth above, TSRI’s accountant shall not disclose to TSRI any
information other than information relating to the accuracy of reports and
payments made hereunder and to Licensee’s compliance with this Agreement.

 

Such examination by TSRI’s accountant shall be at TSRI’s expense.  If there has
been an underreporting or underpayment in excess of five percent (5%) for any
twelve (12)-month period, then Licensee shall pay the cost of such examination
(including without limitation TSRI’s attorney’s fees, accountant’s fees and
other costs) as well as any additional sum that would have been payable to TSRI
had the Licensee reported correctly, plus interest on said sum

 

12

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

at the rate of one and one-half percent (1-1/2 %) per month.  All payments due
hereunder shall be made within [**] days of receipt of a written demand from
TSRI.

 

8.                                      Patent Matters

 

8.1.                            Patent Prosecution and Maintenance

 

From and after the date of this Agreement, the provisions of this Section 8
shall control the prosecution of any patent application and maintenance of any
patent included within the Licensed Patent Rights.  Subject to the requirements,
limitations and conditions set forth in this Agreement, TSRI shall (a) direct
and control the preparation, filing and prosecution of the United States and
foreign patent applications within Licensed Patent Rights (including without
limitation any reissues, reexaminations, appeals to appropriate patent offices
and/or courts, interferences and foreign oppositions); and (b) maintain the
patents issuing therefrom.  TSRI shall select the outside patent attorney,
subject to Licensee’s written approval, which approval shall not be unreasonably
withheld.  TSRI shall have the right, at its reasonable discretion, to utilize
TSRI’s Office of Patent Counsel in lieu of or in addition to independent counsel
for patent prosecution and maintenance described herein, and the reasonable fees
and expenses associated with the work done by such Office of Patent Counsel
and/or independent counsel shall be paid as set forth below.  Licensee shall
have full rights of consultation with the patent attorney so selected on all
matters relating to Licensed Patent Rights.  TSRI shall use its best efforts to
implement all reasonable and timely requests made by Licensee with regard to the
preparation, filing, prosecution and/or maintenance of the patent applications
and/or patents within the Licensed Patent Rights.

 

8.2.                            Information to Licensee

 

TSRI shall keep Licensee timely informed with regard to the patent application
and maintenance processes and other submissions relating thereto and give
Licensee and Licensee’s counsel reasonable opportunity to review and comment on
the text of each patent application within the Licensed Patent Rights and other
submissions relating thereto before filing, including, but not limited to, the
type and scope of the useful claims and the nature of supporting disclosures. 
TSRI shall deliver to Licensee copies of all patent applications, amendments,
related correspondence, and other related matters in a timely matter.

 

8.3.                            Patent Costs

 

Licensee acknowledges and agrees that the license granted hereunder is in
partial consideration for Licensee’s assumption of patent costs and expenses as
described herein.  Licensee agrees to pay and shall pay for all expenses
referenced in Section 8.1 hereof.  In addition, Licensee agrees to reimburse,
and shall reimburse, TSRI for all reasonable, unreimbursed patent costs and
expenses previously paid or associated with Licensed Patent Rights as of the
Effective Date.  Licensee agrees to pay, and shall pay, all such unreimbursed
past patent costs and expenses and all reasonable future patent expenses
associated with the work on the Licensed Patent Rights performed by TSRI’s
Office of Patent Counsel and/or its independent counsel within thirty (30) days
after Licensee receives an itemized invoice therefor.  Failure of Licensee to
pay patent costs and expenses as set forth in this Section 8.3 shall

 

13

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

immediately relieve TSRI from its obligation to incur any further patent costs
and expenses, For the avoidance of doubt, should Licensee be in arrears for any
patent costs and expenses due to TSRI or independent counsel, TSRI shall have
the right, at its sole discretion, to cease all patent prosecution and allow the
Licensed Patent Rights to go abandoned.  Such action by TSRI shall not
constitute a breach of this Agreement.  Payment can be made directly to
independent counsel, or to TSRI.  Licensee may elect with a minimum of ninety
(90) days prior written notice to TSRI, to discontinue payment for the filing,
prosecution and/or maintenance of any patent application and/or patent within
the Licensed Patent Rights.  Licensee shall remain liable for all patent
prosecution and maintenance costs incurred prior to the date of notice of
election and for a ninety (90) day period following the date of such notice. 
Any such patent application or patent so elected shall immediately be excluded
from the definition of Licensed Patent Rights and from the scope of the licenses
granted under this Agreement, and all rights relating thereto shall revert to
TSRI and may be freely licensed by TSRI.

 

8.4.                            Ownership

 

The Licensed Patent Rights are owned by TSRI and no other third parties.

 

8.5.                            TSRI Right to Pursue Patent

 

If at any time during the term of this Agreement, Licensee’s rights with respect
to the Licensed Patent Rights are terminated, TSRI shall have the right to take
whatever action TSRI deems appropriate to obtain or maintain the corresponding
patent protection.  If TSRI pursues patents under this Section 8.5, Licensee
agrees to cooperate fully, including by providing, at no charge to TSRI, all
appropriate technical data and executing all necessary legal documents.

 

8.6.                            Infringement Actions

 

8.6.1.                                     Notice of Alleged Infringement

 

Each party shall inform the other party promptly in writing of any alleged
infringement by a third party of the Licensed Patent Rights covering the
Licensed Products which comes to its attention and of any reasonably available
evidence thereof.  During the term of this Agreement, the parties shall consult
with each other regarding such infringement of any patent within the Licensed
Patent Rights.

 

8.6.2.                                     Prosecution and Defense of
Infringements

 

Subject to the last sentence of this Section 8,6.2, Licensee shall prosecute any
and all infringements in the Field of any Licensed Patent Rights by third
parties, unless otherwise agreed to between TSRI and Licensee.  Licensee may
enter into settlements, stipulated judgments or other arrangements respecting
such infringement, at its own expense, but only with the prior written consent
of TSRI, which consent shall not be unreasonably withheld.  TSRI shall permit
any action to be brought in its name if required by law, and Licensee shall hold
TSRI harmless from any costs, expenses or liability respecting all such
infringements.  TSRI agrees to provide reasonable assistance of a technical
nature which Licensee may require in any litigation arising in accordance with
the provisions of this Section 8.7.2, for which Licensee shall pay to TSRI a
reasonable hourly rate of compensation.  In the event Licensee decides not to
prosecute any such

 

14

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

infringement, Licensee shall notify TSRI in writing promptly and TSRI shall have
the right, but not the obligation, to prosecute such infringement on its own
behalf.  Failure on the part of Licensee to prosecute any such infringement
shall be grounds for termination of the license granted to Licensee with respect
to the patent(s) at issue, and such patents shall thereafter be excluded from
the definition of Licensed Patent Rights, unless such prosecution would be
unwarranted or unreasonable in view of: [**].

 

8.6.3.                                     Allocation of Recovery

 

Any damages or other recovery from an infringement action undertaken by Licensee
pursuant to Section 8.7.2 shall first be used to reimburse the parties for the
costs and expenses incurred in such action, and shall thereafter be allocated
between the parties as follows: (i) [**] to TSRI and (ii) [**] to Licensee.  If
Licensee fails to prosecute such action to completion and TSRI prosecutes such
action to completion, then any damages or recovery, net of the parties’ costs
and expenses incurred in such infringement action, shall be allocated entirely
to TSRI and shall be the sole property of TSRI.

 

8.7.                            Pre-Challenge Requirements

 

Licensee will provide written notice to TSRI at least [**] days prior to
instituting a legal action that alleges that an issued patent included in the
Licensed Patent Rights is invalid or unenforceable or by which it provokes
interferences with a patent application included in the Licensed Patent Rights. 
Licensee will include with such written notice a list of all prior art and a
description of the other facts and arguments that supports its contention that
such patent is invalid or unenforceable, or such patent application does not
contain patentable subject matter and should not issue, to enable the parties to
attempt in good faith to mutually resolve such issues.

 

9.                                      Indemnity and Insurance

 

9.1.                            Indemnity

 

Licensee hereby agrees to indemnify, defend (by counsel reasonably acceptable to
TSRI) and hold harmless TSRI and any parent, subsidiary or other affiliated
entity and their trustees, directors, officers, employees, scientists, agents,
successors, assigns and other representatives (collectively, the “Indemnitees”)
from and against all damages, claims, liabilities, losses and other expenses,
including without limitation reasonable attorney’s fees, expert witness fees and
costs , whether or not a lawsuit or other proceeding is filed, arising from
claims asserted by third parties (“Claim”), that arise out of or relate to
(a) Licensee’s or any sublicensee’s use of any of the Licensed Patent Rights,
(b) alleged defects or other problems with any of the Licensed Products
manufactured, sold, distributed or rendered by Licensee or any sublicensee,
including without limitation any personal injuries, death or property damages
related thereto, (c) any advertising or other promotion of the Licensed Products
by Licensee or any sublicensees, (d) any allegations that the Licensed Products
developed, manufactured, sold, distributed or rendered by Licensee or any
sublicensee and/or any trademarks, service marks, logos, symbols, slogans or
other materials used in connection with or to market Licensed Products violate
or infringe upon the trademarks, service marks, trade dress, trade names,
copyrights, patents, works of authorship,

 

15

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

inventorship rights, trade secrets, database rights, rights under unfair
competition laws, rights of publicity, privacy or defamation, or any other
intellectual or industrial property rights of any third party, (e) Licensee’s or
any sublicensee’s failure to comply with any applicable laws, rules or
regulations, (f) Licensee’s or any sublicensee’s transactions with third parties
or the operation of their respective businesses, and/or (g) the negligent or
willful acts or omissions of Licensee or any sublicensee; provided that to the
extent any Claim directly arises out of any gross negligent action, or failure
to act, by an Indemnitee, a material breach of any law or regulation by an
Indemnitee, or TSRI’s breach of this Agreement, that has been finally determined
by a court of competent jurisdiction or by arbitration, Licensee’s liability for
the Claim hereunder will be apportioned.  Licensee shall not enter into any
settlement of such Claims that involve TSRI admitting any liability, paying any
money or taking any action that would have an adverse effect on TSRI’s
reputation or business without TSRI’s prior written consent.  Notwithstanding
the above, Indemnitees, at their expense, shall have the right to retain
separate independent counsel to assist in defending any such Claims.  In the
event Licensee fails to promptly indemnify and defend such Claims and/or pay
Indemnitees’ expenses as provided above, Indemnitees shall have the right to
defend themselves, and in that case, Licensee shall reimburse Indemnitees for
all of their reasonable attorney’s fees, costs and damages incurred in settling
or defending such Claims within thirty (30) days of each of Indemnitees’ written
requests.  This indemnity shall be a direct payment obligation and not merely a
reimbursement obligation of Licensee to Indemnitees.

 

9.2.                            Insurance

 

Licensee shall name TSRI and Indemnitees as “additional insured” on any
commercial general liability and product liability insurance policies maintained
by Licensee, its Affiliates and sublicensees applicable to the Licensed
Products.

 

9.2.1.                                     Amount

 

During the time any such Licensed Product is involved in a clinical trial or
being commercially distributed or sold (other than for the purpose of obtaining
regulatory approvals) by Licensee or by a sublicensee, Licensee (or its
sublicensee, as the case may be) shall, at its sole cost and expense, procure
and maintain (a) commercial general liability insurance in amounts not less than
$[**] per occurrence and $[**] annual aggregate and naming TSRI and Indemnitees
as additional insured and (b) product liability insurance in amounts not less
than $[**] per claim and $[**] annual aggregate and naming TSRI and Indemnitees
as additional insured.  Such commercial general liability insurance shall
provide (i) broad form contractual liability coverage for Licensee’s
indemnification under this Agreement and (ii) coverage for litigation costs. 
Such product liability insurance shall provide (x) product liability coverage,
(y) broad form contractual liability coverage for Licensee’s indemnification
under this Agreement, and (z) coverage for litigation costs.  If Licensee elects
to self-insure all or part of the limits described above (including deductibles
or retentions which are in excess of $[**] annual aggregate) such self-insurance
program must be acceptable to TSRI in its reasonable discretion unless Licensee
or its sublicensee has and maintains a market capitalization in excess of [**]
Dollars ($[**]).  The insurance coverage amounts specified herein or the
maintenance of such insurance policies shall not in any way limit Licensee’s
indemnity or other liability under this Agreement.

 

16

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

9.2.2.                                     Subrogation

 

In addition, Licensee, on behalf of itself and its insurance carriers, waives
any and all claims and rights of recovery against TSRI and the Indemnitees for
insured losses, including without limitation all rights of subrogation, with
respect to either party’s performance under this Agreement or for any loss of or
damage to Licensee or its property or the property of others under its control. 
Licensee’s commercial general liability insurance and product liability policies
shall also include a waiver of subrogation consistent with this Section 9.2.2 in
favor of TSRI and the Indemnitees.  Licensee shall be responsible for obtaining
such waiver of subrogation from its insurance carriers.  Licensee’s insurance
policies shall be primary and not contributory to any insurance carried by its
sublicensees or by TSRI.  Upon TSRI’s request, Licensee shall deliver to TSRI
copies of insurance certificates or binders and such waiver of subrogation that
complies with the requirements of this Section 9.

 

9.2.3.                                     Notice

 

Licensee shall provide TSRI with written notice at least [**] days prior to the
cancellation, non-renewal or material change in such insurance.  If Licensee
does not obtain replacement insurance providing comparable coverage within such
[**] day period, TSRI shall have the right to terminate this Agreement effective
at the end of such [**] day period without notice or any additional waiting
periods.

 

9.2.4.                                     Time Period

 

Licensee shall maintain such product liability insurance beyond the expiration
or termination of this Agreement during (a) the period that any Licensed Product
relating to, or developed pursuant to, this Agreement is being commercially
distributed or sold by Licensee or by a sublicensee, Affiliate or agent of
Licensee; and (b) a reasonable period after the period referred to in
Section 9.2.4 (a) above which in no event shall be less than [**] years.

 

10.                               Limited Warranty

 

TSRI hereby represents and warrants that (a) it has the lawful right and power
to grant the licenses provided herein and enter into this Agreement, (b) it is
the owner of the Licensed Patent Rights set forth in Exhibit A, (c) as of the
Effective Date, it has not granted any other party any interest in the Licensed
Patent Rights and (d) to the best of its knowledge, it has not granted and will
not grant any rights or licenses in conflict with this Agreement.  TSRI MAKES NO
OTHER WARRANTIES CONCERNING LICENSED PATENT RIGHTS, MATERIALS/INFORMATION IN
EXHIBIT B OR ANY OTHER MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION ANY
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR ARISING OUT OF COURSE OF
CONDUCT OR TRADE CUSTOM OR USAGE, AND TSRI DISCLAIMS ALL SUCH EXPRESS OR IMPLIED
WARRANTIES.  TSRI MAKES NO WARRANTY OR REPRESENTATION AS TO THE VALIDITY OR
SCOPE OF LICENSED PATENT RIGHTS, OR THAT ANY LICENSED PRODUCT OR
MATERIALS/INFORMATION IN EXHIBIT B WILL BE FREE FROM AN INFRINGEMENT OF PATENTS
OR OTHER INTELLECTUAL PROPERTY RIGHTS OF

 

17

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

THIRD PARTIES, OR THAT NO THIRD PARTIES ARE IN ANY WAY INFRINGING UPON ANY
LICENSED PATENT RIGHTS COVERED BY THIS AGREEMENT.  FURTHER, TSRI HAS MADE NO
INVESTIGATION AND MAKES NO REPRESENTATION THAT THE LICENSED PATENT RIGHTS OR
MATERIALS/INFORMATION IN EXHIBIT B ARE SUITABLE FOR LICENSEE’S PURPOSES.

 

EXCEPT WITH RESPECT TO LICENSEE’S INDEMNITY IN SECTION 9.1, IN NO EVENT SHALL
EITHER PARTY BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, EXEMPLARY OR
CONSEQUENTIAL DAMAGES (INCLUDING WITHOUT LIMITATION DAMAGES FOR LOSS OF PROFITS
OR EXPECTED SAVINGS OR OTHER ECONOMIC LOSSES, OR FOR INJURY TO PERSONS OR
PROPERTY) ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ITS SUBJECT
MATTER.  TSRI’S AGGREGATE LIABILITY, IF ANY, FOR ALL DAMAGES OF ANY KIND
RELATING TO THIS AGREEMENT OR ITS SUBJECT MATTER SHALL NOT EXCEED THE AMOUNT
PAID AT ANY TIME BY LICENSEE TO TSRI UNDER THIS AGREEMENT (WHICH LIABILITY, AS
DETERMINED BY A COURT OF COMPETENT JURISDICTION OR BY ARBITRATION, LICENSEE
MAY USE AS AN OFFSET AGAINST ITS FUTURE PAYMENTS DUE UNDER THIS AGREEMENT).  THE
FOREGOING EXCLUSIONS AND LIMITATIONS SHALL APPLY TO ALL CLAIMS AND ACTIONS OF
ANY KIND AND ON ANY THEORY OF LIABILITY, WHETHER BASED ON CONTRACT, TORT
(INCLUDING, BUT NOT LIMITED TO NEGLIGENCE OR STRICT LIABILITY), OR ANY OTHER
GROUNDS, AND REGARDLESS OF WHETHER TSRI HAS BEEN ADVISED OF THE POSSIBILITY OF
SUCH DAMAGES, AND NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY.  THE PARTIES FURTHER AGREE THAT EACH WARRANTY DISCLAIMER,
EXCLUSION OF DAMAGES OR OTHER LIMITATION OF LIABILITY HEREIN IS INTENDED TO BE
SEVERABLE AND INDEPENDENT OF THE OTHER PROVISIONS SINCE THEY EACH REPRESENT
SEPARATE ELEMENTS OF RISK ALLOCATION BETWEEN THE PARTIES.

 

11.                               Confidentiality and Publication

 

11.1.                     Treatment of Confidential Information

 

The parties agree that during the term of this Agreement, and for a period of
[**] years after this Agreement expires or terminates, a party receiving
Confidential Information of the other party will (a) maintain in confidence such
Confidential Information to the same extent such party maintains its own
proprietary information; (b) not disclose such Confidential Information to any
third party without prior written consent of the other party; and (c) not use
such Confidential Information for any purpose except those permitted by this
Agreement.  TSRI agrees that Licensee and its sublicensees shall be permitted to
disclose Confidential Information that relates to the Licensed Patent Rights in
connection with the exercise of its licenses hereunder as long as the disclosure
is on a need-to-know basis and is protected by a written obligation of
confidentiality that is as restrictive as contained in this Agreement or the
disclosure is to a governmental agency (provided the disclosing party complies
with the procedure in the last paragraph of the definition of “Confidential
Information” in Section 1).

 

18

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

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

11.2.                     Publications

 

Licensee agrees that TSRI shall have a right to publish in accordance with its
general policies; provided, TSRI has complied with the terms of Section 5.2 of
the Research Funding and Option Agreement between TSRI and Licensee dated
August 4, 2005.

 

11.3.                     Publicity

 

Except as otherwise provided herein or required by law, no party shall originate
any publication, news release or other public announcement, written or oral,
whether in the public press, stockholders’ reports, or otherwise, relating to
this Agreement or to any sublicense hereunder, or to the performance hereunder
or under any such sublicense agreements, without the prior written approval of
the other party, which approval shall not be unreasonably withheld and which
approval shall not be required for such publications by Licensee or its
sublicensees that do not in any way mention or refer to TSRI or the Licensed
Patent Rights, or with respect to a script or description previously approved by
TSRI.  Scientific publications published in accordance with Section 11.2 of this
Agreement shall not be construed as publicity governed by this Section 11.3.

 

12.                               Term and Termination

 

12.1.                     Term

 

Unless terminated sooner in accordance with the terms set forth herein, this
Agreement, and the licenses granted hereunder, shall expire upon the last to
expire of any patents included in the Licensed Patent Rights.

 

12.2.                     Termination Upon Mutual Agreement

 

This Agreement may be terminated by mutual written consent of both parties.

 

12.3.                     Termination by TSRI

 

TSRI may terminate this Agreement as follows:

 

(a)                                 If Licensee does not make a payment due
hereunder and fails to cure such non-payment (including the payment of interest
in accordance with Section 14.2) within thirty (30) days after the date of
notice in writing of such non-payment by TSRI;

 

(b)                                 If Licensee defaults in its indemnification
and insurance obligations under Section 9 and has not cured such default within
thirty (30) days of written notice thereof by TSRI;

 

(c)                                  If Licensee shall become insolvent, shall
make an assignment for the benefit of creditors, or shall have a petition in
bankruptcy filed for or against it unless the petition filed by others is
dismissed within ninety (90) days.  Such termination shall be effective
immediately upon TSRI giving written notice to Licensee;

 

19

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

(d)                                 If an examination by TSRI’s accountant
pursuant to Section 7 leads to a determination of an underreporting or
underpayment by Licensee of fifteen percent (15%) or more for any calendar year
and a subsequent examination pursuant to Section 7 leads to a similar
determination of underreporting or underpayment by Licensee of fifteen percent
(15%) or more for any subsequent calendar year;

 

(e)                                  If Licensee is convicted of a felony
relating to the manufacture, use or sale of Licensed Products;

 

(f)                                   In the event Licensee institutes any
Challenges, TSRI has the right, within ninety (90) days of such Challenge, to
immediately terminate this Agreement with respect to the Challenged patent or
patent application without any liability and without any opportunity to cure by
Licensee upon written notice to Licensee;

 

(g)                                  If, at any time after two (2) years from
the Effective Date, TSRI determines that this Agreement should be terminated
pursuant to Section 6.2; or

 

(h)                                 Except as provided in subparagraphs (a) -
(g) above, if Licensee defaults in the performance of any material obligations
under this Agreement and the default has not been remedied within sixty (60)
days after the date of notice in writing of such default by TSRI.

 

12.4.                     Termination by Licensee

 

Licensee may terminate this Agreement or any portion of its license rights
hereunder by giving ninety (90) days advance written notice of termination to
TSRI and paying a termination fee of [**] ($[**]) to TSRI; provided, however,
Licensee may terminate this Agreement without such fee if TSRI defaults in the
performance of any material obligations under this Agreement and the default has
not been remedied within sixty (60) days after the date of notice in writing of
such default by License.

 

12.5.                     Rights Upon Expiration

 

Neither party shall have any further rights or obligations upon the expiration
of this Agreement upon its regularly scheduled expiration date other than the
obligation of Licensee to make any and all reports and payments for the final
quarterly period; provided, however, that upon such expiration, each party shall
be required to continue to abide by its non-disclosure obligations as described
in Section 11.1 which shall survive such expiration.  Sections 2.2, 2.4, 2.5,
6.3, 6.4, 6.5, 6.6, 7, 8.3, 8.4, 9, 10, 12 and 14 shall also survive the
expiration of this Agreement.

 

12.6.                     Rights Upon Termination

 

Notwithstanding any other provision of this Agreement, upon any termination of
this Agreement prior to the regularly scheduled expiration date of this
Agreement, the licenses granted hereunder shall terminate and revert to TSRI,
except that any sublicensee who is not then in breach of its sublicense shall
have the right to continue its license rights as set forth in Section 2.2.2. 
Except as otherwise provided in Section 12.7 of this Agreement with respect to
work-in-progress, upon such termination, Licensee shall have no further right
under this Agreement to

 

20

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

develop, manufacture or market any Licensed Product or to otherwise use any
Licensed Patent Rights hereunder.  Upon any such termination, Licensee shall
promptly return to TSRI or destroy all materials, samples, documents,
information, and other materials that are covered by a Valid Claim of an issued
patent included in the Licensed Patent Rights solely owned by TSRI (“Patent
Rights Materials”); provided, however, that Licensee may retain one archival
copy of the Patent Rights Materials and shall not be obligated to return to TSRI
or destroy proprietary information which Licensee can show that it independently
developed, Patent Rights Materials that may be used pursuant to 35 USC
271(e)(1) without infringing a Valid Claim of an issued patent included in the
Licensed Patent Rights, or Patent Rights Materials to which Licensee has a
non-exclusive license pursuant to the Research Funding and Option Agreement
between TSRI and Licensee dated August 4, 2005.  Any such termination shall not
relieve either party from any obligations accrued to the date of such
termination.  Upon such termination, each party shall be required to abide by
its nondisclosure obligations as described in Section 11.1 which shall survive
such termination.  Sections 2.3.2, 2.4, 2.5, 6.3, 6.4, 6.5, 6.6, 7, 8.3, 8.4, 9,
10, 12 and 14 shall also survive the termination of this Agreement.

 

12.7.                     Work-in-Progress

 

Upon any such early termination of the licenses granted hereunder in accordance
with this Agreement, Licensee shall be entitled to finish any work-in-progress
and to sell any completed inventory of a Licensed Product covered by such
licenses which remain on hand as of the date of the termination, so long as
Licensee sells such inventory in the normal course of business and at regular
selling prices and pays to TSRI the royalties applicable to said subsequent
sales in accordance with the terms and conditions as set forth in this
Agreement, provided that no such sales shall be permitted after the expiration
of [**] months after the date of termination.

 

12.8.                     Final Royalty Report

 

Upon termination or expiration of this Agreement, Licensee shall submit a final
report to TSRI and any payments due TSRI and unreimbursed patent expenses
invoiced by TSRI shall become immediately payable.

 

13.                               Assignment; Successors

 

13.1.                     Assignment

 

Any and all assignments of this Agreement or any rights granted hereunder
without the prior written consent of the other party, which shall not be
unreasonably withheld, are void; provided, however, that either party may,
without such consent, assign this Agreement and transfer its rights and
obligations hereunder in connection with a merger, consolidation or
reorganization of that party or to an Affiliate or a purchaser of all or
substantially all of its assets.

 

13.2.                     Binding Upon Successors and Assigns

 

Subject to the limitations on assignment herein, this Agreement shall be binding
upon and inure to the benefit of any successors in interest and assigns of TSRI
and Licensee.  Any such successor or assignee of Licensee’s interest shall
expressly assume in writing the performance of

 

21

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

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

all the terms and conditions of this Agreement to be performed by Licensee and
such written assumption shall be delivered to TSRI as a condition to TSRI’s
agreement to consent to any such assignment.

 

14.                               General Provisions

 

14.1.                     Independent Contractors

 

The relationship between TSRI and Licensee is that of independent contractors. 
TSRI and Licensee are not joint venturers, partners, principal and agent, master
and servant, employer or employee, and have no other relationship other than
independent contracting parties.  TSRI and Licensee shall have no power to bind
or obligate each other in any manner, other than as is expressly set forth in
this Agreement.

 

14.2.                     Late Payments

 

Late payments of any and all payments due hereunder shall be subject to a charge
of one and one-half percent (1-1/2%) per month, or two hundred and fifty dollars
($250) whichever is greater.

 

14.3.                     Governmental Approvals and Marketing of Licensed
Products

 

Licensee shall be responsible for obtaining all necessary governmental approvals
for the development, production, distribution, performance, sale and use of any
Licensed Product at Licensee’s expense, including, without limitation, any
safety studies.  Licensee shall have sole responsibility for any warning labels,
packaging and instructions as to the use of Licensed Products and for the
quality control for any Licensed Products.

 

14.4.                     Patent Marking

 

To the extent required by applicable law, Licensee shall mark all Licensed
Products or their containers in accordance with the applicable patent marking
laws.

 

14.5.                     No Use of Name

 

The use of the name “The Scripps Research Institute”, “Scripps”, “TSRI” or any
variation thereof in connection with the advertising, sale or performance of
Licensed Products is expressly prohibited.

 

14.6.                     U.S. Manufacture

 

To the extent required, Licensee agrees to abide by the Preference for United
States Industry as set forth in 37 CFR 401.14 (I).

 

14.7.                     Foreign Registration

 

Licensee agrees to register this Agreement with any foreign governmental agency
which requires such registration, and Licensee shall pay all costs and legal
fees in connection therewith.

 

22

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

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

In addition, Licensee shall ensure that all foreign laws affecting this
Agreement or the sale of Licensed Products are fully satisfied.

 

14.8.                     Arbitration

 

Any controversy or claim arising out of or relating to this Agreement, or the
breach thereof shall be settled by binding confidential arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”), and the procedures set forth below.  In the event of any
inconsistency between the Rules of AAA and the procedures set forth below, the
procedures set forth below shall control.  Judgment upon the award rendered by
the arbitrators may be enforced in any court having jurisdiction thereof.

 

14.8.1.                              Location

 

The location of the arbitration shall be in the County of San Diego.  TSRI and
Licensee hereby irrevocably submit to the exclusive jurisdiction and venue of
the American Arbitration Association arbitration panel selected by the parties
and located in San Diego County, California for any dispute regarding this
Agreement and to the exclusive jurisdiction and venue of the federal and state
courts located in San Diego County, California for any action or proceeding to
enforce an arbitration award or as otherwise provided in Section 14.8.5 below,
and waive any right to contest or otherwise object to such jurisdiction or
venue.

 

14.8.2.                              Selection of Arbitrators

 

The arbitration shall be conducted by a panel of three neutral arbitrators who
are independent and disinterested with respect to the parties, this Agreement,
and the outcome of the arbitration.  Each party shall appoint one neutral
arbitrator, and these two arbitrators so selected by the parties shall then
select the third arbitrator, and all arbitrators must have at least ten
(10) years experience in mediating or arbitrating cases regarding the same or
substantially similar subject matter as the dispute between Licensee and TSRI. 
If one party has given written notice to the other party as to the identity of
the arbitrator appointed by the party, and the party thereafter makes a written
demand on the other party to appoint its designated arbitrator within the next
[**] days, and the other party fails to appoint its designated arbitrator within
[**] days after receiving said written demand, then the arbitrator who has
already been designated shall appoint the other two arbitrators.

 

14.8.3.                              Discovery

 

The arbitrators shall decide any disputes and shall control the process
concerning these pre-hearing discovery matters.  Pursuant to the Rules of AAA,
the parties may subpoena witnesses and documents for presentation at the
hearing.

 

14.8.4.                              Case Management

 

Prompt resolution of any dispute is important to both parties; and the parties
agree that the arbitration of any dispute shall be conducted expeditiously.  The
arbitrators are instructed and directed to assume case management initiative and
control over the arbitration process (including scheduling of events,
pre-hearing discovery and activities, and the conduct of the hearing), in

 

23

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

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

order to complete the arbitration as expeditiously as is reasonably practical
for obtaining a just resolution of the dispute.

 

14.8.5.                              Remedies

 

The arbitrators may grant any legal or equitable remedy or relief that the
arbitrators deem just and equitable, to the same extent that remedies or relief
could be granted by a state or federal court, provided however, that no punitive
damages may be awarded.  No court action shall be maintained seeking punitive
damages.  The decision of any two of the three arbitrators appointed shall be
binding upon the parties.  Notwithstanding anything to the contrary in this
Agreement, prior to or while an arbitration proceeding is pending, either party
has the right to seek and obtain injunctive and other equitable relief from a
court of competent jurisdiction to enforce that party’s rights hereunder.

 

14.8.6.                              Expenses

 

The expenses of the arbitration, including the arbitrators’ fees, expert witness
fees, and attorney’s fees, may be awarded to the prevailing party, in the
discretion of the arbitrators, or may be apportioned between the parties in any
manner deemed appropriate by the arbitrators.  Unless and until the arbitrators
decide that one party is to pay for all (or a share) of such expenses, both
parties shall share equally in the payment of the arbitrators’ fees as and when
billed by the arbitrators.

 

14.8.7.                              Confidentiality

 

Except as set forth below, and as necessary to obtain or enforce a judgment upon
any arbitration award, the parties shall keep confidential the fact of the
arbitration, the dispute being arbitrated, and the decision of the arbitrators. 
Notwithstanding the foregoing, the parties may disclose information about the
arbitration to persons who have a need to know, such as directors, trustees,
management employees, witnesses, experts, investors, attorneys, lenders,
insurers, and others who may be directly affected.  Additionally, if a party has
stock which is publicly traded, the party may make such disclosures as are
required by applicable securities laws, but will use commercially reasonable
efforts to seek confidential treatment for such disclosure.

 

14.9.                     Entire Agreement; Modification

 

This Agreement and all of the attached Exhibits, set forth the entire agreement
and understanding between the parties as to the subject matter hereof, and
supersede all prior or contemporaneous agreements or understandings, whether
oral or written, except the Research Funding and Option Agreement between TSRI
and Licensee dated August 4, 2005.  There shall be no amendments or
modifications to this Agreement, except by a written document which is signed by
both parties.

 

14.10.              California Law

 

This Agreement shall be construed and enforced in accordance with the laws of
the State of California without regard to its conflicts or choice of laws
principles thereof.

 

24

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

 

[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

14.11.              Headings

 

The headings for each article and section in this Agreement have been inserted
for convenience of reference only and are not intended to limit or expand on the
meaning of the language contained in the particular article or section.

 

14.12.              Severability

 

Should any one or more of the provisions of this Agreement be held invalid or
unenforceable by a court of competent jurisdiction, it shall be considered
severed from this Agreement and shall not serve to invalidate the remaining
provisions thereof.  The parties shall make a good faith effort to replace any
invalid or unenforceable provision with a valid and enforceable one such that
the objectives contemplated by them when entering this Agreement may be
realized.

 

14.13.              No Waiver

 

Any delay in enforcing a party’s rights under this Agreement or any waiver as to
a particular default or other matter shall not constitute a waiver of such
party’s rights to the future enforcement of its rights under this Agreement,
excepting only as to an express written and signed waiver as to a particular
matter for a particular period of time.

 

14.14.              Name

 

Whenever there has been an assignment or a sublicense by Licensee as permitted
by this Agreement, the term “Licensee” as used in this Agreement shall also
include and refer to, if appropriate, such assignee or sublicensee, except the
definition of Sublicense Revenue and the payment obligations related thereto
shall not apply to a sublicensee as if it were the Licensee unless it receives a
New License Agreement pursuant to Section 2.2.2

 

14.15.              Attorneys’ Fees

 

In the event of a dispute between the parties hereto or in the event of any
default hereunder, the party prevailing in the resolution of any such dispute or
default shall be entitled to recover its reasonable attorneys’ fees and other
costs incurred in connection with resolving such dispute or default. 
Notwithstanding anything to the contrary herein, the parties agree that this
Section 14.15 shall not apply, and attorneys’ fees shall not be awarded to
either party, with respect to any Challenge or any action wherein Licensee
alleges that it is not required to comply with or perform some or all of the
provisions of this Agreement based upon a good faith claim that any of the
Licensed Patent Rights are invalid or unenforceable.  Each party acknowledges
and agrees that this Agreement has been submitted to the scrutiny of the party
and its own counsel, from whom the party has sought advice and received
representation in the negotiation and execution of this Agreement.  This
Agreement shall be given a fair and reasonable interpretation in accordance with
the words hereof, without consideration or weight being given to it having been
drafted by, or on behalf of, one of the parties or its counsel.

 

25

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

14.16.              Notices

 

Any notices required by this Agreement, including approvals, pre-approvals and
consents, shall be in writing, shall specifically refer to this Agreement and
shall be sent by registered or certified airmail, postage prepaid, or by
telefax, telex or cable, charges prepaid, or by overnight courier, postage
prepaid and shall be forwarded to the respective addresses set forth below
unless subsequently changed by written notice to the other party:

 

For
TSRI:                                                                                                                                         
The Scripps Research Institute
10550 North Torrey Pines Road, TPC-9
La Jolla, California 92037
Attention: Director, Technology Development
Fax No.: (858) 784-9910

 

With a copy
to:                                                                                                           
The Scripps Research Institute
10550 North Torrey Pines Road, TPC-8
La Jolla, California 92037
Attention: Chief Business Counsel
Fax No.: (858) 784-9399

 

For
Licensee:                                                                                                                       
Poniard Pharmaceuticals, Inc.
300 Elliott Avenue West, Suite 500
Seattle, WA 98119
Attention: Vice President Legal Fax No.: (206) 286-2537

 

With a copy
to:                                                                                                           
Poniard Pharmaceuticals, Inc.
7000 Shoreline Court, Suite 270
South San Francisco, CA 94080
Attention: Vice President Business Development
Fax No: (650) 583-3789

 

Notices shall be deemed delivered upon the earlier of (a) when received;
(b) three (3) days after deposit into the U.S. mail; (c) the date notice is sent
via telefax, telex or cable; or (d) the day immediately following delivery to an
overnight courier guaranteeing next-day delivery (except Sunday and holidays).

 

14.17.              Compliance with U.S. Laws

 

Nothing contained in this Agreement shall require or permit TSRI or Licensee to
do any act inconsistent with the requirements of any United States law,
regulation or executive order as the same may be in effect from time to time.

 

[Page intentionally left blank.]

 

26

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives as of the date set forth above.

 

TSRI:

LICENSEE:

 

 

THE SCRIPPS RESEARCH INSTITUTE

PONIARD PHARMACEUTICALS, INC.

 

 

 

 

By:

/s/ Polly Murphy

By:

/s/ Gerald McMahon

 

 

Title: Senior Vice President, Business and Scientific Services

Title: CEO and Chairman

 

27

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

EXHIBIT A

 

LICENSED PATENT RIGHTS

 

TSRI Disclosure
No(s)

 

Named Inventors

 

Title of
Application

 

Filing Date

 

Serial No.

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

 

28

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

EXHIBIT B

 

TRANSFER OF INFORMATION AND MATERIALS

 

The following information and materials shall be transferred to Licensee by TSRI
promptly after execution of this Agreement:

 

Item

 

Detailed Description

 

Status

 

Chemistry

 

 

 

 

 

Protocols for all analogs

 

[**]

 

[**]

 

SAR tables

 

[**]

 

[**]

 

Intermediates from project (both contracted and purchased)

 

[**]

 

[**]

 

Final compounds including PFE

 

[**]

 

[**]

 

Master list of cmpds: QA/QC, analytical data (LC/MS, NMR for final cmpds-Zip
files)

 

[**]

 

[**]

 

Biology

 

 

 

 

 

FAK biochemical assay information

 

[**]

 

[**]

 

Cellular assay information

 

[**]

 

[**]

 

PK and tolerability studies: in life protocol and analysis

 

[**]

 

[**]

 

PK in vitro and assay information

 

[**]

 

[**]

 

Bioanalytical methods for [**]

 

[**]

 

[**]

 

[**]

 

[**]

 

[**]

 

Bulk Materials

 

[**]

 

[**]

 

Other

 

 

 

 

 

Final report on collaboration project

 

[**]

 

[**]

 

 

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

[**].

 

29

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[**] = Portions of this exhibit have been omitted pursuant to a confidential
treatment request.  An unredacted version of the exhibit has been filed
separately with the Commission.

 

EXHIBIT C

 

TIMELINE BENCHMARKS AND DEVELOPMENT PLAN

 

Product Development

 

Time from Effective Date

 

[**]

 

[**] years

 

[**]

 

[**] years

 

[**]

 

[**] years

 

[**]

 

[**] years

 

[**]

 

[**] years

 

 

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

[**]

 

30

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