Exhibit

10.2




 




RESEARCH AGREEMENT




 




BETWEEN




 




DAVID

HENRY SMALL, Ph.D. of 35 Munro Avenue, Ashburton, Victoria, 3147,

Australia  (the “Supervisor”)




 




AND




 




AXONYX

INC. of 825 Third Avenue, New York, NY 10022 (the “Sponsor”)




 




RECITALS:




 




A.                                   The

Sponsor wishes to conduct research in the field of the development of a high

throughput screening (“HTS”) process including but not limited to the study of

the toxicity and binding of cholesterol and A.beta peptides to vascular smooth

muscle cells and neurons, A.beta toxicity and Alzheimer’s disease, and various

pathological mechanisms of Alzheimer’s disease and biomarkers for the detection

of Alzheimer’s disease.




 




B.                                     The

Sponsor has requested the Supervisor to conduct the research on its behalf and

the Supervisor has agreed to conduct the research in accordance with the terms

and conditions of this Agreement.




 




The parties agree as

follows.




 




1.             DEFINITIONS




 




“Commencement Date” means October 1, 2002.




 




“Confidential Information”

means all business, scientific, technical, financial and other information

belonging to a party which is disclosed to or accessed by one party or its

respective personnel hereunder, which is by its nature confidential or

otherwise designated as confidential by the disclosing party.  Confidential Information shall include but

not be limited to inventions, trade secrets, know-how, data, specifications,

protocols, diagrams, sales and sales forecasts, marketing and marketing

forecasts, pricing, cost information, supplier information, production data and

schedules, technical processes, formulae, methodologies, plans and reports,

information relating to the Intellectual property, the Supervisor Intellectual

Property, the Sponsor Intellectual Property, research




 





























 




and development plans, experiments, results, the existence, structure

of function of compounds, therapeutic leads, candidates and products, clinical

and preclinical data, regulatory, personnel, customer information and lists,

and other financial, technical and business information and plans, whether in

oral, written, graphic or electronic form and whether in existence as of the

Effective Date or developed or acquired in the future.




 




“Effective Date” of this Agreement is

September 1, 2002.




 




“First Commercial Sale”

shall mean, with respect to a Product, the first Sale by Sponsor, its

affiliates, or its sublicensees for end use or consumption of such Product in a

country after all required approvals, including without limitation Health

Registrations, have been granted by the governing regulatory authority of such

country.




 




“Health Registrations”

shall mean the technical, medical and scientific licenses; registration,

authorizations and/or approvals of a Product (including any prerequisite

manufacturing approvals or authorizations related thereto) that are required or

deemed necessary by any national, supra-national (e.g., the European Commission

or the Council of the European Union), regional, state or local regulatory

agency, department, bureau or other governmental entity, and any pricing, third

party reimbursement approvals and labeling approvals required or deemed

necessary by such agencies, departments, bureaus or entities for the

manufacture, distribution, use or sale of such Product.




 




“Host Institution” means

the University of Melbourne or such other institution where the Research

Project is conducted from time to time.




 




“Intellectual Property”

means industrial and intellectual property whether protected at common law or

under statute and includes (without limitation) all inventions (both patentable

and unpatentable), patents, designs, copyrights, circuit layouts, plant variety

rights, trade marks, trade secrets, know-how and all other Confidential

Information.




 




“Net Sales” shall mean the

amounts received by Sponsor, an affiliate of the Sponsor, or its sublicensees

for all Sales of Product to unaffiliated third parties, less the reasonable and

customary deductions from such gross amounts including:




 




(a)                                   trade,

cash and quantity discounts, rebates, reimbursements, allowances and credits;




 




(b)                                  credits

or allowances actually granted for damaged goods, returns or rejections of a

Product;




 




(c)                                   sales

taxes levied on the sale or use of a Product;




 




(d)                                  freight,

postage, shipping, customs duties and insurance charges directly related to the

sale of a Product;




 




(e)                                   costs

and expenses incurred by Sponsor in providing Product-related services to third

parties; and




 




2





























 




(f)                                     commissions

paid to third parties other than sales personnel and sale representatives or

sales agents.




 




For purposes of calculating Net Sales under this Agreement, all Sales

of any Product hereunder, whether made for cash or otherwise, shall be deemed

to be made for cash, at the applicable fair market value of such Product.  Net Sales shall also mean the transfer or

assignment by the Sponsor of the right, title and interest in the Research

Project Intellectual Property (other than as excluded under the definition of

“Sale, Sell or Sold”, below).




 




“Patent” shall mean the

following: (a) any existing or future United States or foreign patent or patent

application claiming an invention, and (b) all continuations,

continuations-in-part, divisions, reissues, reexaminations, extensions or other

government actions which extend the subject matter of such patent or

application, reissues, reexaminations, extensions or other government actions,

and any corresponding foreign patent applications, and any patents, patents of

addition, or other equivalent foreign patent rights issuing, granted or

registered based on or resulting from the patents and patent applications.




 




“Product” means any good

or product (or any part of a good or product) which applies, includes, or is

made according to, all or any part of the Research Project Intellectual

Property.




 




“Project Term” means the

term of the Research Project, being the period commencing on the Commencement

Date and ending on the termination of this Agreement.




 




“Reports” means the

reports to be provided by the Supervisor as set out in clause 2.4.




 




“Research Project” means

the research project to be undertaken by the Supervisor pursuant to the

Statement of Work.




 




“Research Project Intellectual

Property” means all Intellectual Property which is developed by or

on behalf of the Supervisor or Sponsor in connection with the Research Project.




 




“Sale, Sell or Sold”

means, provided that Sponsor receives consideration specifically for Product,

or for the transfer or assignment of the Research Project Intellectual

Property: selling, licensing, hiring out, assigning or otherwise supplying or

disposing of or allowing the use by third parties of or any use by Sponsor on

behalf of third parties who hired Sponsor, or providing to third parties any

Products or Research Project Intellectual Property for consideration.  For the purposes of clarity, the following

shall not be a “Sale” pursuant to this Agreement (regardless of whether Sponsor

receives consideration), and no royalty obligation shall arise as a result of

such transactions:  (i) any assignment

of this Agreement by Sponsor pursuant to Section 13.5; (ii) any transfer of

Intellectual Property by Sponsor in connection with a merger, sale, or other

change in corporate structure of Sponsor, its successor or assigns; (iii)

financings or investments in Sponsor, its successors or assigns; or (iv) any

other consideration received by Sponsor which is not solely related to Product.




 




3





























 




“Sponsor” means

Axonyx Inc., a United States Corporation with offices at 825 Third Avenue, 40th

Floor, New York N.Y. 10022 USA.




 




“Sponsor Intellectual Property”

means all Intellectual Property which is the property of, claimed by, or

licensed to the Sponsor prior to the Effective Date, or which is developed in

the future by or on behalf of the Sponsor and independently of the Research

Project.




 




“Statement of Work”

means the document agreed by the parties pursuant to a separate Consulting

Agreement entered into by the parties contemporaneously with this Agreement, as

it may be altered or amended from time to time by agreement between the parties

in writing.




 




“Supervisor” means

Dr David Henry Small.




 




“Supervisor Intellectual Property”

means all Intellectual Property which is the property of, claimed by, or

licensed to the Supervisor prior to the Effective Date, or which is developed

by or on behalf of the Supervisor independently of the Research Project during

the term of this Agreement or the Consulting Agreement between Supervisor and

Sponsor.




 




“Valid Claim” means

a claim of an issued and unexpired patent or patent application included within

the scope of protection afforded by Research Project Intellectual Property that

has not lapsed, been revoked or abandoned or held unenforceable or invalid by a

court or other appropriate body of competent jurisdiction, and that has not been

disclaimed, denied or admitted to be invalid or unenforceable through reissue,

re-examination, disclaimer or otherwise.




 




2.             SETTING-UP

AND MANAGEMENT OF THE RESEARCH PROJECT




 




2.1                                  Commencement

and Term.  The Research Project

shall commence on the Commencement Date and continue for three years from the

Commencement Date, subject to earlier termination in accordance with this

Agreement.  Upon Sponsor’s request,

Supervisor shall negotiate in good faith with Sponsor any extension or change

in scope to the Research Project.




 




2.2                                  Performance

of Research Project.  The Supervisor

shall carry out the Research Project during the Project Term in accordance with

the requirements specified in this Section 2, including by:




 




(a)                                   exerting

diligent efforts consistent with the highest professional standards to conduct

the Research Project; and




 




(b)                                  using

the funds provided by Sponsor solely for 

expenses incurred in the performance of the Research Project.




 




2.3                                  Management

Committee.  The parties will

organize a management committee (the “MC”) to undertake the management of the

Research Project comprising one




 




4





























 




representative from the Sponsor and one representative from the

Supervisor and/or the Supervisor.  The

powers of the MC to manage the Research Project include the power to oversee

preservation of confidentiality and protection of Intellectual Property and

Research Project Intellectual Property and to oversee and guide the direction

of the Research Project.  The MC will meet

prior to the end of each year of the Research Project to review the Reports (as

detailed below, in Section 2.4) to date, to, among other things, make

recommendations to the Sponsor concerning the advisability of continuing the

Research Project and, if applicable, to review the amount of payments needed to

continue the Research Project in the following year.  Each member of the MC may delegate his/her powers and

responsibilities as a member of the MC to another person on written notice to

the other party.   All decisions of the

MC are to be resolved by unanimous agreement and all members are to have equal

voting powers.




 




2.4                                  Reports.  The Supervisor shall provide Sponsor and the

MC with information relative to the conduct and results of the Research Project

through quarterly written reports that include a description of the status and

progress of the Research Project, including all relevant findings and a summary

of all relevant data developed to date. 

The Reports shall also include a statement itemizing the use of the

research funding during the prior quarter. 

The Supervisor shall provide Sponsor with a final report within 60 days

of the completion of the Research Project.




 




2.5                                  Meetings

of the MC.  In person meetings of

the MC, or telephone conferences shall be held at Sponsor’s reasonable

discretion during the Supervisor’s business hours, on no less than fifteen days

notice to the Supervisor, to discuss the progress of the Research Project and

any related topic.




 




3.             SPONSOR’S

OBLIGATIONS




 




If the parties execute a

Statement of Work, Sponsor shall provide Supervisor with financial support for

the Research Project for a three year period commencing on the Commencement

Date and ending October 1, 2005 in the amount of Ninety Thousand AU. dollars

(AU $90,000) per year, less all payments made to Supervisor pursuant to the

Consulting Agreement between Supervisor and Sponsor, which Consulting Agreement

is dated as of the Effective Date. 

Payments will be made on an annual basis, the initial payment to be made

on the three month anniversary of the Commencement Date and thereafter on each

annual anniversary of such date.




 




4.             ASSIGNMENT;

REVENUE SHARE




 




4.1                                  Assignment.

All Research Project Intellectual Property shall be and remain, upon its

creation, the sole property of Sponsor. Supervisor hereby assigns all rights,

title and interest in the Research Project Intellectual Property to

Sponsor.  Supervisor shall promptly

notify Sponsor in writing of any Research Project Intellectual Property

promptly upon its discovery.  Supervisor

agrees to cooperate with all of Sponsor’s reasonable requests to effectuate and

perfect the assignment set forth in this Section 4.1, including, without

limitation, executing other documents, and assisting Sponsor in obtaining

signatures of any third parties that may be required to effectuate and perfect

the assignment set forth in this Section 4.1.




 




5





























 




4.2                                  Revenue

Share. Subject to the terms and conditions of this Agreement, and after

repayment of the Recoupment (as defined in Section 4.7, below) Sponsor shall

pay, or cause to be paid, to the Supervisor a quarter-annual royalty on a share

of its revenues from Net Sales of Products in an amount equal to the following:




 




(a)                                   with

respect to yearly Net Sales of all Products covered by a Valid Claim at or

below Two Million Five Hundred Thousand U.S. dollars (U.S. $2,500,000.00),

three percent (3%) of such Net Sales; and




 




(b)                                  with

respect to yearly Net Sales of all Products covered by a Valid Claim between

Two Million Five Hundred Thousand U.S. dollars (U.S. $2,500,000.00) and Six

Million Two Hundred Fifty Thousand U.S. dollars (U.S. $6,250,000.00), two

percent (2%) of such Net Sales; and,




 




(c)                                   with

respect to yearly Net Sales of all Products covered by a Valid Claim above Six

Million Two Hundred Fifty Thousand U.S. dollars (U.S. $6,250,000.00) one

percent (1%) of such Net Sales.




 




For calculation of the

percentage of revenue share due in any Royalty Quarter, (as defined below)

(e.g., 3%, 2%, or 1%), the Net Sales for such Royalty Quarter shall be deemed

to be the yearly Net Sales for such Royalty Quarter plus all preceding Royalty

Quarters; however, the royalty due shall be calculated solely on the Net Sales

actually accrued in such Royalty Quarter.




 




4.3                                  No

Double Payment. Royalties shall be payable only once on any Sale of Product

under this Agreement.  The parties

acknowledge that Supervisor, Sponsor and individuals by the names of

Marie-Isabel Aguilar, Ph.D. and Supundi Subasinghe have as of the Effective Date

entered into an Assignment Agreement which also provides for Net Sales to be

paid by Sponsor to Supervisor in the event of Sales of Product (as “Product” is

defined in the Assignment Agreement). 

The parties further acknowledge that a Product which is Sold by Sponsor

may be construed to be a “Product” as defined in this Agreement and also a

“Product” as defined in the Assignment Agreement, and hereby agree that Sponsor

shall be obligated to pay to Supervisor only one royalty on Net Sales of such

Product, which payment shall be made under the Assignment Agreement.  Accordingly, the parties hereby agree that

in the event of a conflict or overlap between the Net Sales or royalty

provisions under this Agreement and under the Assignment Agreement, the terms of

the Assignment Agreement shall control, and Sponsor shall be obligated to pay

royalties on a Product only once under the Assignment Agreement and not

pursuant to this Agreement.




 




4.4                                  Negotiation

in the Event of Competing Products. 

In the event that there (i) is a product with a mechanism of action

substantially equivalent to that of any Product  (ii) which has an approved Health Registration in a given country

for an indication for which a Product also has an approved Health Registration

in such country and (iii) which competing product has a market share of 25% or

more in such country as measured by sales or other similar information for such

country, Supervisor agrees to discuss in good faith with the Sponsor the

re-negotiation of the revenue share provided in this Section 4.




 




6





























 




4.5                                  Revenue

Share Payments. Payments pursuant to this Section 4 shall be paid in United

States dollars in New York, New York or at such other place as Supervisor may

reasonably designate consistent with the laws and regulations controlling in

any foreign country.  Any withholding

taxes which Sponsor, its Affiliate or any sublicensee shall be required by law

to withhold on remittance of the revenue share payments pursuant to Section 4

hereof shall be deducted from such revenue share payment to Supervisor.  If any currency conversion shall be required

in connection with the payment of royalties hereunder, such conversion shall be

made by using the exchange rate prevailing at Citibank, N.A. (or such

applicable successor entity) in New York, New York on the last business day of

the calendar quarter to which such revenue share payments relate.




 




4.6                                  Timing

of Payments. Payments payable to Supervisor pursuant to this Section 4

shall be paid after the Recoupment (defined below in Section 4.7) is repaid and

shall be paid quarter-annually (each, a “Royalty Quarter”) in arrears without

deduction, demand, set-off counterclaim and any bank or government charges or

duties other than the withholding tax, commencing on the three month

anniversary of the date on which Sponsor first receives income from the sale of

Product.  Such payment will be made by

cheque or such other means as notified by the Supervisor to the Sponsor from

time to time.  Any payments which are

not made within sixty (60) days’ of their being due shall be subject to a 1%

penalty on the amount due, or, if lower, the maximum interest rate allowed by

law.




 




4.7                                  

Recoupment.  Supervisor

acknowledges that Sponsor has paid certain legal fees of the law firm of

Griffith Hack on behalf of the Supervisor. 

In consideration for Sponsor’s payment of such legal fees, the parties

hereby agree that Sponsor shall be entitled to recoup an  amount equal to such legal fees  out of the Royalties which would otherwise

be payable to Supervisor hereunder (the “Recoupment”).  No royalties shall be payable until the

Recoupment has been repaid.




 




4.8                                  Term

of the Revenue Share Obligation. 

Sponsor’s obligation to make payments under Section 4 of this Agreement

with respect to any country shall extend from the date of the First Commercial

Sale of a Product in a country to the date of expiration or invalidation of all

of the Valid Claims of the Patent(s) under which such Product is covered.




 




4.9                                  The

Sponsor must keep true and accurate records of all matters connected with the

Sales of the Products and must also keep proper books of account relating to

the calculation of payments to the Supervisor under this Agreement.  On the Supervisor’s reasonable written

request (which shall be not more than once per year and upon at least thirty

(30) days’ written notice), the Sponsor must produce these records and books of

account, and must permit those records and books to be examined by a certified

public accountant on behalf of the Supervisor. 

The Supervisor may conduct such an audit at its own cost, unless the

examination identifies an underpayment to Supervisor equal to or greater than

10% in the amounts identified as payable to the Supervisor, in which case the

costs are to be paid by the Sponsor.




 




7





























 




4.10                            The

Sponsor shall use reasonable commercial efforts to exploit the Research Project

Intellectual Property.  The Sponsor

shall provide to the Supervisor such information as the Supervisor may

reasonably request concerning the Sponsor’s plans for and efforts in exploiting

the Research Project Intellectual Property and selling the Products.  The Sponsor must not engage in any activity

that conflicts with its obligation under this clause.




 




5.             INTELLECTUAL

PROPERTY RIGHTS




 




5.1                                  Sponsor

retains all rights to Sponsor Intellectual Property and Supervisor retains all

rights to Supervisor Intellectual Property.




 




5.2                                  During

the Term of this Agreement, the Sponsor grants to the Supervisor a royalty

free, non exclusive, nontransferable, nonsublicensable right to use the Sponsor

Intellectual Property solely to the extent that it is necessary for the

carrying out of the Research Project.




 




5.3                                  The

Sponsor grants to the Supervisor a non exclusive, personal, nonsublicensable,

nontransferable, royalty free, worldwide, perpetual and irrevocable license to

use for his own research and educational purposes the Research Project

Intellectual Property for the duration that a Valid Claim subsists in the Research

Project Intellectual Property.




 




5.4                                  The

Supervisor grants to the Sponsor a royalty free, perpetual, irrevocable, non

exclusive right to use the Supervisor Intellectual Property to the extent that

it is necessary for the carrying out of the Research Project, or exploiting the

results of the Research Project, all to the extent of the Supervisor’s rights

in such Supervisor Intellectual Property.




 




6.             PATENTS

AND INFRINGEMENT




 




6.1                                  General.  In carrying out its obligations under this

Section 6, Sponsor shall (i) consult with Supervisor or Supervisor’s nominee

with respect to all material decisions; and (ii) use good faith and reasonable

discretion in exercising its duties hereunder. 

Notwithstanding the foregoing, all decisions with respect to patents and

infringement shall be made by Sponsor, in Sponsor’s sole discretion.




 




6.2                                  Patent

Support and Protection.  Sponsor

must provide funds for all appropriate patent protection (in Sponsor’s sole but

reasonable discretion) and support related expenses, including the cost of

retaining patent counsel with respect to the Research Project Intellectual

Property and the cost of making all necessary patent filings, so long as this

Agreement is in effect.  Sponsor shall

have the right, but not the obligation, to select primary patent counsel for

the Research Project Intellectual Property.




 




6.3                                  Filing,

Prosecuting and Maintaining Patents. 

Sponsor shall have sole responsibility for filing, prosecuting and

maintaining all U.S. and foreign patent applications and Patents issuing

thereon for any Research Project Intellectual Property.  Sponsor may provide Supervisor with all

relevant documentation (including any draft applications, official papers from

any patent office requiring a response, and any proposed response




 




8





























 




thereto) for any patent application or Patent claiming Research Project

Intellectual Property, and Supervisor shall cooperate and provide such

assistance as Sponsor reasonably requests in relation to filing, prosecuting

and maintaining such patent applications and Patents.




 




6.4                                  Infringement.  Each of Sponsor and Supervisor shall

promptly provide written notice to the other party of any alleged infringement

by a third party of the Research Project Intellectual Property and provide such

other party with any available evidence of such infringement.




 




6.5                                  Defense.

During the term of this Agreement, Sponsor shall have the right, but not the

obligation, to prosecute and/or defend, at its own expense and utilizing

counsel of its choice, any infringement of, and/or challenge to, the Research

Project Intellectual Property.  In

furtherance of such right, Supervisor hereby agrees that Sponsor may join

Supervisor as a party in any such suit, without expense to Supervisor.  No settlement, consent judgment or other

voluntary final disposition of any such suit which would adversely affect the

rights of Supervisor may be entered into without the consent of Supervisor,

which consent shall not be unreasonably withheld.




 




6.6                                  Allocation

of Recovery.  Any recovery of

damages by Sponsor, in any such suit, shall be applied first in satisfaction of

any unreimbursed expenses and legal fees of Sponsor relating to the suit and

then to Supervisor for any revenue share credited in accordance with Section

6.8, below.  The balance remaining from

any such recovery shall be treated as Net Sales received by Sponsor.




 




6.7                                  Defense.  In the event that a claim or suit is

asserted or brought against Sponsor alleging that the manufacture or sale of

any Product by Sponsor, an Affiliate of Sponsor, or any sublicensee, or the use

of such Licensed Product, infringes the proprietary rights of a third party,

Sponsor shall give written notice thereof to Supervisor.  Sponsor may, in its sole discretion, modify

such Licensed Product to avoid such infringement and/or may settle on terms

that it deems advisable in its sole discretion after consultation with the

Supervisor.  In any case, Sponsor shall

have the right, but not the obligation, to defend any such claim or suit.




 




6.8                                  Credits.  Sponsor may credit any litigation costs

incurred by Sponsor in any country pursuant to this Article 6 and any amounts

paid in judgment or settlement of litigation within this Article 6 against

revenue share payments thereafter payable to Supervisor pursuant to Section 4

above for such country.  If such

aggregate amounts in such country exceed 50% of revenue share payable to

Supervisor pursuant to Section 4 above in any year in which such costs are incurred,

then the amount of such costs, expenses and amounts paid in judgment or

settlement in excess of such 50% of such revenue share payable shall be carried

over and credited against revenue share payments pursuant to Section 4 hereof

in future years for such country.




 




6.9                                  Cooperation.  In any suit to enforce and/or defend the

Research Project Intellectual Property pursuant to this Agreement, Supervisor

shall, at the request and expense of Sponsor, cooperate in all respects and, to

the extent possible, have its employees testify




 




9





























 




when requested and make available relevant records, papers,

information, samples, specimens, and the like.




 




7.             PUBLICATIONS




 




7.1                                  Sponsor

recognizes that Supervisor may wish to publish or otherwise publicly disclose

the results of the Research Project. 

Supervisor agrees to submit all such intended publications or

presentations to Sponsor at least thirty (30) days prior to any submission for

publication or other public disclosure and to acknowledge, as scientifically appropriate,

any contribution of Sponsor’s personnel. 

If Sponsor determines that the publication or intended presentation

contains patentable subject matter related to any Research Project Intellectual

Property or Confidential Information of Sponsor, Supervisor agrees to postpone

publication or presentation for an additional ninety (90) days to permit the

filing of a patent application, or, upon Sponsor’s request, to delete any

Sponsor Confidential Information contained therein provided that the Sponsor will

not unreasonably withhold permission to publish the Sponsor Confidential

Information.




 




8.             CONFIDENTIAL

INFORMATION




 




8.1                                  Except

as otherwise expressly provided herein, the parties agree that a party

receiving Confidential Information (“the Receiving Party”) from the other party

(the “Disclosing Party”) shall not and shall ensure that its employees,

students, agents, licensees, sub-licensees, contractors and sub-contractors

shall not, except as expressly provided in this Section 8, disclose to any

third party or use for any purpose any Confidential Information furnished to it

by the Disclosing Party, except to the extent that it can be established by the

Receiving Party by written records that such information:




 




(a)                                   was

already known to the Receiving Party, other than under an obligation of

confidentiality, at the time of disclosure;




 




(b)                                  was

generally available to the public or otherwise part of the public domain at the

time of its disclosure to the Receiving Party;




 




(c)                                   became

generally available to the public or otherwise part of the public domain after

its disclosure and other than through any act or omission of the Receiving

Party in breach of this Agreement; or




 




(d)                                  was

lawfully disclosed to the Receiving Party by a third party who had no

obligation to keep such information confidential in favor of the Disclosing

Party;




 




(e)                                   was

independently developed by employees of the Receiving Party having no knowledge

of such Confidential Information; or




 




(f)                                     is

required to be disclosed pursuant to applicable law, governmental rule or

regulation or rule or regulation of any securities exchange, provided the

Receiving Party uses reasonable efforts to limit disclosure and to obtain

confidential treatment or a protective order and has allowed the Disclosing

Party to participate in such proceedings.




 




10





























 




8.2                                  Any

use or disclosure of Confidential Information by any employees, agents,

licensees, sub-licensees, contractors and sub-contractors of the Receiving

Party is deemed use or disclosure by the Receiving Party.




 




9.             TERMINATION

OF AGREEMENT




 




9.1                                  Unless

otherwise agreed to by the parties in writing, this Agreement will

automatically terminate and become null and void if the parties do not execute

a Statement of Work prior to October 1, 2002.




 




9.2                                  Sponsor

shall have the right to terminate this Agreement without cause upon 90 days’

written notice prior to the end of each anniversary of the Effective Date.  In the event of such termination, the

Supervisor shall be paid for all obligations properly incurred in accordance

with this Agreement prior to the date of notice of such termination.




 




9.3                                  The

Sponsor may terminate this Agreement immediately upon notice if the Product(s)

infringe, or is likely to infringe, a third party’s Intellectual Property

rights and if Sponsor deems in its sole but reasonable discretion that

proceeding with its obligations under this Agreement as a result of the infringement or likely infringement is not

feasible or desirable.




 




9.4                                  If

either party should materially fail to perform its obligations under this

Agreement, the other party may notify the non-performing party of its

breach.   The breaching party will have

30 days from receipt of such notification to cure such breach.  The failure to cure such breach during such

30 day period will result in the termination, at the discretion of the

non-breaching party, of this Agreement, as of the date of end of such period.

Termination shall be without prejudice to any other rights the parties may

have,  provided however that termination

by the Sponsor pursuant to clauses 10.9 or 10.10 shall not entitle the Sponsor

to any compensation from the Supervisor or to institute legal proceedings

against the Supervisor. The Supervisor shall be entitled to terminate this Agreement

immediately on written notice to the Sponsor if any amount payable to the

Supervisor under this Agreement is in arrears and the Sponsor fails to pay

within 30 days after receipt of the Supervisor’s written notice requiring

payment.




 




9.5                                  Upon

termination of this Agreement,




 




(a)                                   if

termination takes place prior to completion of the Research Project, the

Supervisor has no further obligation to complete the Research Project and the

Sponsor is not required to make any further payments except as is necessary to

meet contractual obligations incurred by the Supervisor prior to the date of

service of the notice of termination, provided that the Supervisor has provided

Sponsor with notice of any such obligation and that the Supervisor has taken

all reasonable steps to minimize any such obligation; and




 




9.6                                  each

party will promptly return to the other party (or destroy and so certify as to

its destruction) upon demand all Confidential Information of that party

(including without limitation all copies of the Confidential Information and

all analyses and summaries of any of it).




 




11





























 




10.          COMPLIANCE

WITH HOST INSTITUTIONS  REQUIREMENTS




 




10.1                            The

parties acknowledge that Supervisor is an employee of the University of Melbourne

and, as such, he is bound by certain obligations to incorporate certain

provisions into this Agreement, as set forth in this Section 10 and Section 12,

below.




 




10.2                            Supervisor

represents and warrants to Sponsor that (i) he has disclosed to Sponsor all of

his obligations to the University of Melbourne, and the terms of this Agreement

comply with the rules and regulations of the University of Melbourne; and (ii)

he shall comply with all of the obligations on Supervisor set forth in the

statutes of the University of Melbourne.




 




10.3                            Sponsor

and Supervisor undertake not to use The University of Melbourne’s name without

first obtaining The University of Melbourne’s written consent, which consent

may be withheld or given at The University of Melbourne’s absolute discretion

without being required to assign any reason therefor.




 




10.4                            The

parties hereby acknowledge that The University of Melbourne is not obliged to

promote, support or defend any legal action in relation to or arising from the

exercise of any rights hereunder. Neither Supervisor nor Sponsor shall

institute proceedings against The University of Melbourne or join The

University of Melbourne in any proceedings brought by another person with

respect to Research Progam Intellectual Property.




 




10.5                            Sponsor

hereby agrees to carry insurance appropriate in scope to cover the commercial

exploitation of Intellectual Property hereunder, which shall name The

University of Melbourne as a named insured.




 




10.6                            Sponsor

acknowledges the rights of the University of Melbourne which are set forth in

Statute 14.1.5 of the rules of the University of Melbourne.




 




10.7                            Sponsor

hereby acknowledges the provisions of Section 14.1 of the Statute of the

University of Melbourne.




 




10.8                            The

Sponsor acknowledges that the Supervisor may be required to pay rent and

overhead and administrative charges to The University of Melbourne or another

Host Institution for the provision of space and services.  The Sponsor accepts responsibility for

payment of reasonable rent and charges, payment to be made to The University of

Melbourne or such other Host Institution prior to the commencement of the

Research Project and annually on the anniversary of the Commencement Date.




 




10.9                            The

Supervisor will enter into bona fide negotiations with The University of

Melbourne or another Host Institution prior to the Commencement Date and with

The University of Melbourne or such other Host Institution 9 months after the

Commencement Date and every 12 months thereafter during the term of the

Agreement to determine the rent and charges payable for the following 12 month

period.  In the event that the

Supervisor and The University of Melbourne or the applicable Host Institution

are at any time unable to agree on the rent and charges payable, then the




 




12





























 




parties shall enter into bona fide discussions and negotiations to find

a replacement Host Institution, failing which the Sponsor shall be entitled to

terminate this Agreement in accordance with clause 9.4.




 




10.10                      Should

the relationship with the University of Melbourne terminate for any reason,

Supervisor shall use his best efforts in order to transfer the Research Project

to another Host Institution with suitable space and facilities which is within

an eighty (80) km radius of the city of Melbourne, Australia, subject to the

prior written consent of the Sponsor, such consent not to be unreasonably

withheld.  If Supervisor does not find

another Host Institution with suitable space and facilities which is within an

eighty (80) km radius of the city of Melbourne, Australia within 30 days of the

termination of the arrangements with The University of Melbourne, Sponsor may

terminate this Agreement pursuant to the provisions of Section 9.4.




 




11.          REPRESENTATIONS

AND WARRANTIES




 




11.1                            General.  Each party represents and warrants to the

other party that as of the Effective Date:




 




(i)                                     it

has the legal right and authority to extend the rights granted in this

Agreement;




 




(ii)                                  it

has the legal right and authority to enter into this Agreement and to perform

all of its obligations hereunder;




 




(iii)                               all

consents, approvals and authorizations of all governmental authorities and

other persons required to be obtained by such party in connection with this

Agreement and its responsibilities and activities hereunder have been obtained;




 




(iv)                              its

execution, delivery and performance of this Agreement does not and will not

conflict with, or constitute a breach or default under, or require the consent

of any third party under, its charter documents or any material license, loan

or other agreement, contract, commitment or instrument to which it is a party

or any of its assets are bound or violate any provision of law, statute, rule

or regulation or any ruling, writ, injunction, order, judgment or decree of any

court, administrative agency or other governmental body;




 




(v)                                 when

executed by both parties, this Agreement will constitute the valid and legally

binding obligation of such party and shall be enforceable against such party in

accordance with its terms;




 




(vi)                              there

are no existing or threatened actions, suits or claims pending or, to the best

of its knowledge threatened against it that may affect the performance of its

obligations under the Agreement.




 




11.2                            By

Supervisor.  Supervisor hereby

represents and warrants to Sponsor that:




 




13





























 




(i)                                     Supervisor

has disclosed to Sponsor all of his obligations to the University of Melbourne,

and the terms of this Agreement comply with the rules and regulations of the

University of Melbourne; and (ii) he shall comply with all of the obligations

on Supervisor set forth in the statutes of the University of Melbourne;




 




(ii)                                  to

the best of Supervisor’s knowledge, information and belief the Research Project

Intellectual Property developed in the course of this Agreement shall not

infringe any third party’s Intellectual Property rights; and




 




(iii)                               Supervisor

has the right to perform all of the services and other obligations of

Supervisor set forth in this Agreement, including, without limitation, to

perform the Research Project.




 




12.           INDEMNITY




 




12.1                            General.  Each party hereto agrees to indemnify,

defend and hold the other party and its Affiliates, directors, officers,

employees and agents harmless from and against any losses, costs, claims,

damages, liabilities or expense (including without limitation, fees and

disbursements of counsel incurred by the such indemnified parties

(collectively, “Liabilities”) arising out of or in connection with third party

claims relating to a breach of the other party’s representations and warranties

set forth in this Agreement.




 




12.2                            By

Sponsor.  Sponsor agrees to

indemnify, defend and hold the University of Melbourne harmless from and

against any Liabilities arising solely as a result of the Sponsor’s commercial

exploitation of Products hereunder.




 




12.3                            Procedure.  A party (the “Indemnitee”) that intends to

claim indemnification under this Agreement shall promptly notify the other

party (the “Indemnitor”) of any claim, demand, action or other proceeding for

which the Indemnitee intends to claim such indemnification, and the Indemnitor

shall have the right to participate in, and, to the extent the Indemnitor so

desires, to assume sole control of the defense thereof with counsel selected by

the Indemnitor; provided, however, that the Indemnitee shall have the absolute

right to retain its own counsel, with the fees and expenses to be paid by the

Indemnitee.  The indemnity obligations

under this Agreement shall not apply to amounts paid in settlement of any loss,

claim, damage, liability or action if such settlement is effected without the

consent of the Indemnitor, which consent shall not be unreasonably withheld or

delayed.  The failure to deliver notice to

the Indemnitor within a reasonable time after the commencement of any such

action, if prejudicial to Indemnitor’s ability to defend such action, shall

relieve the Indemnitor of any liability to the Indemnitee under this Agreement,

but the omission to deliver such notice to the Indemnitor shall not relieve it

of any liability that it may have to the Indemnitee otherwise than under this

Agreement.  The Indemnitee, its

employees and agents, shall cooperate fully with the Indemnitor and its legal

representatives in the investigation of any action, claim or liability covered

by an indemnification from the Indemnitor. 

No Indemnitor shall, without the prior written consent of the

Indemnitee, effect any settlement of any pending or threatened action, suit or

proceeding in respect of which any Indemnitee is or could have been a party and




 




14





























 




indemnity could have been sought hereunder by such Indemnitee, unless

such settlement includes an unconditional release of such Indemnitee from all

liability on claims that are the subject matter of such action, suit or

proceeding.




 




13.          MISCELLANEOUS




 




13.1                            Use

of Consultants.  Nothing in this

Agreement shall be construed as restricting either party’s right to engage any

consultant in furtherance of its obligations under this Agreement; provided,

however that the party engaging the consultant will remain liable for the acts

and omissions of the consultant pursuant to this Agreement and provided further

that, that such party shall require each consultant to sign (i) a non-disclosure

agreement the provisions of which shall be no less restrictive than those set

forth in this Agreement and (ii) an agreement which provides for the assignment

of all Intellectual Property rights in and to the consultants’ work product and

inventions made for the hiring party, to the hiring party (who is in turn

subject to the ownership provisions contained herein).




 




13.2                            Survival.  Sections 4.1, 5.1, 5.4, 6.9, 8, 9.5 and 12

through 13 shall survive any termination of this Agreement.




 




13.3                            Governing

Law and Jurisdiction.  This

Agreement is governed by the laws of the State of Victoria, Commonwealth of

Australia, without reference to its conflicts of law provisions.  Each party hereby irrevocably submits to the

jurisdiction of the courts of the State of Queensland with respect to all

matters concerning this Agreement.




 




13.4                            Waiver.  It is agreed that no waiver by either party

hereto of any breach or default of any of the covenants or agreements herein

set forth shall be deemed a waiver as to any subsequent and/or similar breach

or default.




 




13.5                            Assignment.  This Agreement may be assigned by Sponsor,

but shall not be assignable by Supervisor to any third party without the prior

written consent of Sponsor.  This

Agreement shall be binding upon and accrue to the benefit of any permitted

assignee, and any such assignee shall agree to perform the obligations of the

assignor. Any assignment of this Agreement by Sponsor pursuant to this Section

13.5 shall not be deemed to be a “Sale” under this Agreement, and no royalty

obligation shall arise as a result of such transaction.




 




13.6                            Independent

Contractors.  The parties expressly

agree that the relationship between them is that of independent

contractors.  The parties hereto shall

not be deemed to be agents, partners or joint venturers of the other for any

purpose as a result of this Agreement or the transactions contemplated hereby.




 




13.7                            Compliance

with Applicable Laws.  In connection

with their respective activities under this Agreement, the parties and their

Affiliates shall fully comply in all material respects with the requirements of

any and all applicable laws, regulations, rules and orders of any governmental

body having jurisdiction over the exercise of rights under this Agreement

including, without limitation, those applicable to the research, discovery,




 




15





























 




development, and patent prosecution, manufacture, distribution, import

and export and sale of any products pursuant to this Agreement.




 




13.8                            Notices.  All notices, reports, consents, requests and

other communications hereunder shall be in writing and shall be personally

delivered, sent by registered or certified mail, postage prepaid, or by

facsimile (with proof of receipt and a confirmation copy sent by registered or

certified mail, postage prepaid) or sent by overnight delivery service, in each

case to the respective address specified below, or such other address as may be

specified in writing to the other party hereto and shall be deemed to have been

given upon receipt:




 




	

   


  	

  If to Sponsor:


  	

  Axonyx Inc.


  
	

   


  	

   


  	

  825 Third Avenue, 40th

  Floor


  
	

   


  	

   


  	

  New York, NY 10022


  
	

   


  	

   


  	

  Attention: Dr. Marvin

  S. Hausman, M.D.


  
	

   


  	

   


  	

  Fax:  (212) 688-4843


  
	

   


  	

   


  	

   


  
	

   


  	

  If to Supervisor:


  	

  David Henry Small,

  Ph.D.


  
	

   


  	

   


  	

  35 Munro Avenue


  
	

   


  	

   


  	

  Ashburton, Victoria


  
	

   


  	

   


  	

  3147, Australia


  





 




13.9                            Severability.  In the event that any provision of this

Agreement becomes or is declared by a court of competent jurisdiction to be

illegal, unenforceable or void, this Agreement shall continue in full force and

effect without said provision, and the parties shall amend this Agreement to

the extent feasible to lawfully include the substance of the excluded term to

as fully as possible realize the intent of the parties and their commercial

bargain.




 




13.10                      SPECIAL,

INCIDENTAL AND CONSEQUENTIAL DAMAGES. 

NEITHER PARTY WILL BE LIABLE UNDER ANY CONTRACT, NEGLIGENCE, STRICT

LIABILITY OR OTHER THEORY FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES

WITH RESPECT TO ANY SUBJECT MATTER OF THIS AGREEMENT.




 




13.11                      Force

Majeure.  Neither party shall lose

any rights hereunder or be liable to the other party for damages or losses or

be deemed to have defaulted under or breached this Agreement on account of failure

of performance by the defaulting party if the failure is occasioned by war, acts

of war (whether declared or not), strike, insurrections, riots, civil

commotions, fire, act of God, earthquake, flood, lockout or other labor

disturbances, embargo, governmental acts or orders or restrictions, or any

other reason where failure to perform is beyond the reasonable control and not

caused by the negligence, intentional conduct or misconduct of the

non-performing party and such party has exerted all commercially reasonable

efforts to avoid and remedy such force majeure; provided, however, that the

non-performing party shall notify the other party in writing that such

condition exists within five (5) days of the start of learning that such

conditions exists.




 




16





























 




Should such Force Majeure condition continue for a period of thirty

(30) days beyond the date of notice that such condition exists, the parties

shall meet and use their best efforts to assist the performing party to seek

performance from a third party (if appropriate).




 




13.12                      Entire

Agreement.  This Agreement and the

Exhibits attached constitute the entire agreement, both written and oral,

between the parties with respect to the subject matter hereof, and all

prior agreements  respecting the subject

matter hereof, either written or oral, expressed or implied, shall be

abrogated, canceled, and are null and void and of no effect.  The parties hereby agree that the

Confidential Disclosure Agreement between the parties dated May 21, 1998, as

amended, shall terminate as of the Effective Date, but shall continue in full

force and effect under its terms and for the term indicated therein with

respect to any Proprietary Information, as defined in that Agreement, disclosed

by either party prior to the Effective Date. 

No amendment or change hereof or addition hereto shall be effective or

binding on either of the parties hereto unless reduced to writing and executed

by the respective duly authorized representatives of the parties.




 




13.13                      Headings.  The captions to the several Articles and

Sections hereof are not a part of this Agreement, but are included merely for convenience

of reference and location only and shall not affect its meaning or

interpretation.




 




13.14                      Counterparts.  This Agreement may be executed in two or

more counterparts, each of which shall be deemed to be an original and all of

which together shall be deemed to be one and the same instrument.




 




13.15                      Resolution

of Disputes. If a dispute arises between the parties (“the Dispute”), the

parties agree to negotiate in good faith to resolve the Dispute.  If the Dispute has not been resolved by

negotiation within a reasonable time then either party may refer the Dispute to

mediation and will do so before initiating proceedings in a court to resolve

the Dispute.  A Dispute which is

referred to mediation will be referred to the Australian Commercial Dispute

Centre Ltd (“ACDC”) and will be conducted in accordance with the conciliation

rules of ACDC and will be heard by one conciliator appointed under the relevant

rules in Victoria.  If the Dispute has

not been resolved within 60 days of referral to ACDC either party is free to

initiate proceedings in a court. 

Nothing in this clause will prevent a party from seeking interlocutory

relief through courts of appropriate jurisdiction.




 




 




	

  AXONYX

  INC.


  	

  DAVID

  HENRY SMALL


  
	

   


  	

   


  
	

  By: 


  	

  /s/ Marvin S. Hausman,

  M.D.


  	

   


  	

  By: 


  	

  /s/ David Henry Small,

  Ph.D.


  	

   


  
	

   


  	

  Marvin S. Hausman, M.D.


  	

   


  	

  David Henry Small,

  Ph.D.


  
								





 




17